New Orleans on Friday became the epicenter of the battle over President Barack Obama’s stymied move last year to overhaul U.S. immigration policy without congressional approval.

A three-judge panel of the 5th U.S. Circuit Court of Appeals heard nearly three hours of arguments over the Obama administration’s move to shield more than 4 million undocumented immigrants from deportation, a policy shift that would clear them to apply for three-year work permits and benefits that might include driver’s licenses.

The focus of much of the hearing was whether a Texas-led coalition of 26 states can legally challenge what it labels an illegal move by Obama to usurp congressional power.

The courtroom arguments were periodically interrupted by chants of “Si se puede!” and the blare of brass bands rising from Camp Street, where hundreds of immigrant advocates had converged from across the country.

“We feel responsible for this. Our governor started this,” said Mary Moreno, of the Texas Organizing Project, which brought three busloads of activists from Houston, San Antonio and Dallas. “We wanted to shout loud enough so (the judges) would hear. It’s life and death for a lot of people.”

Demonstrators blocked the busy corner of Poydras Street and Loyola Avenue in front of the federal Immigration and Customs Enforcement office. A New Orleans Police Department spokesman said 14 citations were issued for obstructing public passages.

Inside the courthouse, Judges Carolyn Dineen King, Jerry Smith and Jennifer Walker Elrod homed in on the key question of whether Obama’s executive action — halted for now by a district judge in Brownsville, Texas — can be challenged by states that claim it saddles them with a costly burden.

Two judges on the 5th Circuit panel — Republican appointees Smith and Elrod — already have ruled against the Obama administration in the same lawsuit. In May, they denied a White House request to lift the district judge’s temporary stay on Obama’s order so his policies could go into effect before oral arguments took place before the appeals court.

Obama announced his action in November, calling it a lawful response to Republican stalling on immigration reform.

Under the president’s action, the U.S. Department of Homeland Security would stop deporting some undocumented parents of U.S. citizens and permanent residents, while vastly expanding a “deferred action” program to protect young immigrants from deportation if they were brought to the U.S. illegally as children.

To his critics, Obama was effectively changing laws established by Congress.

On Friday, Benjamin Mizer, an acting assistant U.S. attorney general, argued that the executive branch has wide leeway to grant undocumented immigrants revocable permission to remain in the country temporarily. The “natural and inevitable” consequence of deferred action is “lawful presence,” which isn’t a special legal status but merely a welcome mat to apply for work permits and other benefits, Mizer argued.

“It only removes certain barriers to certain benefits, but it does not confer those benefits,” he said.

Texas Solicitor General Scott Keller sharply disputed that notion while insisting that the states were well within their right to sue over the Obama plan. He also argued that the administration had changed the law, treading on the prerogatives of a Congress that over time has classified specific groups — for instance, widows, refugees and asylum seekers — as eligible to remain in the country temporarily.

Keller argued that deferred action is more than a time out for undocumented immigrants deemed a low priority for deportation; it is a way of effectively granting them legal status, he said.

“We contend there is no substantive authority to grant lawful presence and work authorization to 4.3 million,” Keller said. “The federal executive has abdicated his responsibility to enforce congressional statutes. ... We don’t need to show a specific quantum of injury. We just need to show there will be injury.”

Elrod, an appointee of President George W. Bush, bore in on why Congress would specify certain groups if the executive branch could grant deferred action to anyone.

“So the secretary has boundless discretion to give work authorization to whoever it chooses?” Elrod asked, referring to the head of the Homeland Security Department.

King, who was appointed by President Jimmy Carter, was more skeptical of the states’ legal challenge, saying a Homeland Security policy memo that detailed the change only broadened a long-established practice.

“If it’s ever revoked,” she said, “we have a whole class of people who are deportable, and now we know who they are.”

Under questioning by King, Keller acknowledged that the states are challenging the Obama order only because it would clear the way for immigrants to get benefits that might prove costly to Texas and the other states.

“They can stay,” she said from the bench. “You just don’t want them to be able to work lawfully.”

Keller replied, “We are absolutely challenging any affirmative granting of lawful presence.”

The panel did not immediately issue a ruling on whether to lift the preliminary injunction, nor on a related issue of whether an immigrants rights group can intervene in the case on behalf of three Texas mothers who claim the federal government can’t adequately represent their interests in the case.

The arguments on Friday drew immigrants rights champions from around the country.

U.S. Rep. Luis Gutierrez, D-Ill., emerged from the courthouse to the cheers of demonstrators on the steps. A prominent national voice for immigration reform, Gutierrez lambasted the states’ argument.

“Today, we learned the true hand of the Republican Party,” he told the crowd. “And our response is, ‘Dignity for all.’ Work is valuable. We need to make sure they don’t steal our wages. We need to make sure they don’t exploit our women and they don’t exploit us in the workplace.”

Marielena Hincapie, executive director of the National Immigration Law Center, said after the hearing that she was frustrated by “a lack of understanding by the judges.”

“If you don’t have that work authorization, employers can exploit that,” Hincapie said, referring to undocumented immigrants working jobs in the U.S. “That is the benefit unscrupulous employers are getting from the status quo.”

Fernando Lopez, a community organizer with the Congress of Day Laborers, said the court hearing distracted from the daily struggle against what he considers overzealous enforcement by immigration agents.

“The reality is, people aren’t thinking about what the argument’s going to be,” Lopez said. “They’re waking up hoping they’re going to be able to make it back home” without being taken into custody.

In a statement, ICE spokesman Bryan Cox cited statistics showing the federal agency removed about 316,000 people from the U.S. last year — down from 369,000 in 2013.

Nearly 60 percent had previous criminal convictions, including 85 percent of those removed from interior states, the statement said.

Despite allegations of heavy-handed enforcement, Cox insisted that the federal agency “does not conduct sweeps or raids to target undocumented immigrants indiscriminately.”

The agency “remains committed to sensible, effective immigration enforcement that focuses on its priorities, including convicted criminals and other public safety threats,” the statement said.

Follow John Simerman on Twitter, @johnsimerman.