Appeals court rules with states challenging Obama's immigration action

U.S. President Barack Obama delivers remarks at the Memorial Day observance at Arlington National Cemetery in Arlington, Virginia May 25, 2015. REUTERS/Jonathan Ernst

By Julia Edwards WASHINGTON (Reuters) - President Barack Obama's plan to shield millions of undocumented immigrants from deportation was dealt another setback on Tuesday when a U.S. appeals court refused to lift a block put in place by 26 states that argued Obama overstepped his authority. By a 2-1 vote that could pave the way to a Supreme Court ruling, the judges from the 5th U.S. Circuit Court of Appeals in New Orleans ruled that Obama's executive action should remain on hold pending further judicial proceedings. The decision further delays Obama's immigration order, which was first blocked by a Brownsville, Texas lower court judge in February. The plaintiffs, all states led by Republican governors, said the federal government exceeded its authority in demanding whole categories of immigrants be protected. Democrat Obama's administration has said it is within its rights to ask the Department of Homeland Security to use discretion before deporting nonviolent migrants with U.S. family ties. But the judges' opinion said the approval rate of Obama's earlier executive action on immigration, aimed at people brought into the United States as children, was too high to reflect true discretion. The case has become the focal point of Obama's efforts to change U.S. immigration policy. Seeing no progress on legislative reform in Congress, Obama announced in November he would take executive action to help immigrants. He has since faced criticism from Republicans who say the program grants amnesty to lawbreakers. On Tuesday, Texas Governor Greg Abbott said in a statement, "The President’s attempt to bypass the will of the American people was successfully checked again today." The White House said the two appeals court judges who ruled against the administration chose to "misinterpret the facts and the law." "The president's actions... are squarely within the bounds of his authority and they are the right thing to do for the country," White House spokeswoman Brandi Hoffine said. The U.S. Department of Justice was evaluating the ruling and considering next steps, a U.S. official said. The 5th Circuit will rule again in the coming months on whether the Obama administration can appeal the block to the executive order. That decision may be made by a new panel of judges and will take into account more evidence. Immigration advocates have been wary of the prospect that the 5th Circuit, known as one of the most conservative in the nation, would rule with the administration. "We are disappointed, but this is not unexpected at all," Marielena Hincapie, executive director of the National Immigration Law Center, said on a conference call with reporters. Hincapie said immigration advocates were still optimistic that the executive order would prevail. If the Obama administration is denied an appeal it may ask the Supreme Court to consider the case, potentially delaying the start of the immigration programs until June 2016, a politically sensitive time in the run-up to the November presidential election. "If the programs go into effect next June, there will be real electoral consequences," said Marshall Fitz, vice president of immigration policy at left-leaning Washington think tank Center for American Progress. "There is a clear contrast between (Democratic front-runner Hillary) Clinton and any Republican in the current field." Clinton has said she would like to see Obama's action expanded to shield even more immigrants from deportation.