(CBS News) -- October 14, 2011 --
Alabama has put itself on the front lines of the battle against illegal immigration with a tough new law. But that law is being challenged as unconstitutional. On Friday, a panel of federal judges in Atlanta weighed in on the most controversial parts of the law, overturning -- at least for now -- two major provisions.
The law requires schools to check the immigration status of students, which the judges have suspended. It also requires legal immigrants to carry papers proving their legal status; the judges suspended that too. But the court let stand a provision that allows the police to detain immigrants they suspect are illegal.
The law took effect six weeks ago and had swift and dramatic effects in Alabama. CBS News correspondent Mark Strassman reports on what this all means.
Liz Betancourt is scared to leave the house in Florence, Alabama.
"I am illegal," she said. "I am not from here."
Her family moved from Mexico to the U.S. when Liz was an infant. She's now 19, but has never applied for citizenship or a green card.
Under the state's new law, if she's picked up by police, she could be deported. And during that process, which can take months, there's no legal guarantee her daughter Idelfy -- born in Alabama and a U.S. citizen -- would stay with her.
But the widespread perception among illegal immigrants is deportation would split families apart -- although deported parents would be allowed to take their children with them.
"We just came here to work," said Betancourt. "Our parents ... they just come here to give their children a good education."
Even a routine trip to the store has many illegal immigrants here worried they'll end up arrested. And in case they're deported, some parents are signing papers, turning over legal care of their kids to someone else.
If Betancourt's deported, her aunt, a U.S. citizen, would care for Idelfy so the baby could stay here.
Fear of deportation is spreading through families living here illegally. In Albertville, Alabama's public schools, 81 of 1,100 Hispanic students have dropped out in the last two weeks.
Alabama employers like farmer Keith Smith are also feeling the effects. Smith needs 20 workers to harvest his sweet potatoes. Most mornings, he's lucky now if only nine show up.
"They're putting me out of business, this law," said Smith, "And if things don't change, if they don't come up with something better, people like me -- we're a has-been."
On the contrary, Scott Beason, the Republican state senator who sponsored the state's new law, argued: "They're displacing Alabama workers. And our goal is to have many Alabamians as possible working."
He points to Alabama's unemployment rate -- just under 10 percent -- and the estimated $290 million Alabama spends educating and caring for illegal immigrants.
"Has the impact been what you expected?" Strassman asked.
"I think so," answered Beason. "All the focus is on the illegal alien and the challenge they may have for being here illegally. People always forget the person who were unable to start a business or who lost their business because the competitor down the road hired an illegal alien."
The Friday decision by the 11th Circuit Court of Appeals here in Atlanta is only temporary. Its final decision could be months away. And Liz Betancourt -- the woman interviewed in our story -- was fired by her cleaning company right after she spoke with CBS News.
CBS Evening News anchor Scott Pelley asked Strassman what happens next in the court fight.
"Friday's decision conflicts with the Ninth Circuit Court of Appeals' decision about a similar provision in Arizona's law -- the provision that focuses on whether a local or state police agency can check the immigration status of someone simply because they're suspected of a crime. Because those decisions conflict, legal scholars now say it is much more likely this issue will reach the U.S. Supreme Court."