Kelly, whom Trump appointed in 2017, is hearing the outlets' request for a temporary restraining order, a short-term court order, NBC News reported.
The order would restore their reporters' White House press passes.
Courts have held that the White House cannot revoke a journalist's access without notice and a chance to appeal, CNN reported. Kelly said that process "wasn't played out here."
"I just say to both sides that's where I am," Kelly said. "Before we get to any core First Amendment issues, there is a due process claim and a due process issue that seems to me the first stop in figuring out how to resolve the motion."
Kelly also said he is bound by two earlier appeals court rulings on revoked press passes, the Sherrill and Karem cases, Adam Klasfeld of All Rise News reported on X. Both rulings cut against Trump's position.
Trump announced the ban on Sept. 18, saying he didn't like the outlets' "negative stories," and the Secret Service seized their reporters' passes the next day, CNN reported earlier this week. The White House sent the outlets letters explaining its reasons on Sept. 22.
MS NOW's copy of the letter, filed in the case, gives the outlet until 5 p.m. Friday to contest the decision.
Ted Boutrous, the attorney for the three outlets, told Kelly the letters announced the White House's standards "after the fact," leaving the outlets no chance to follow them. Boutrous said he "didn't think they were real" at first, Klasfeld reported, noting the letters carry no letterhead or signature.
The MS NOW letter is signed simply "White House Press Office."
"I don't know how a letter they got after the pass was revoked could provide them with the standards that they'd have to conform their conduct to. It's a piece of paper they got saying you've already violated that," Kelly said later in the hearing, according to Jeremy Barr, a media reporter for The Guardian.
"There's not a semblance of due process," Boutrous said as he opened his argument, calling the ban "a severe punishment on the plaintiffs," according to reporter Scott MacFarlane.
Boutrous called Trump the media outlets' "lead witness" because the president keeps saying the ban is about their stories.
"The President wears his heart on his sleeve … he says he's doing this because the coverage is too negative," Boutrous said.
"Not only do we have an expressed statement that this is content discrimination and antipathy toward the reporters …" the attorney argued, according to MacFarlane. "It's coming from the President."
"It's just so over the top … it's clear retaliation," Boutrous pointed out.
Boutrous told Kelly the harm to the outlets could not be undone. He noted that CNN had been scheduled to serve as this week's television pool, filming the president's events and sharing the footage with other networks.
The White House's letter to MS NOW cites national security to justify the ban, accusing the outlet of "publishing sensitive or classified information" and pointing to its reporting on an FBI leak investigation and the Iran conflict.
"They are literally arguing that reporters shouldn't scrutinize national security," Boutrous said, according to CNN. "That's the sin."
Boutrous said the administration was using "national security" to mask a "blatant violation" of due process, treating the phrase as "magic words."
Boutrous also said the articles the White House cited were "just garden variety reporting." Only one of the CNN stories on the list was written by a reporter with a White House pass, and the White House renewed that reporter's pass after the story ran, he said.
When the Justice Department's turn came, attorney Michael Velchik argued that reporters should already know the White House's standards, including on "professionalism." He said reporters "can't have a get out of jail free card" just by pointing to Trump's past criticism of their work.
Velchik urged Kelly to hold off on a ruling until the Friday deadline in the letters.
"None of us are that naive. They're going to keep playing games," Boutrous shot back.
"All of a sudden … this is a national security issue," Boutrous noted in his rebuttal, which observed that Trump did not cite national security when he previously attacked CNN's coverage.
Boutrous argued that "suddenly, the lightbulb went off" for Trump to invoke national security only after the outlets sued.
The hearing ended "abruptly" without a ruling, Klasfeld reported. Kelly took the arguments under advisement, meaning he will decide later. He appeared to acknowledge the case is time-sensitive, MacFarlane wrote.
Kelly concluded by telling the lawyers he will "try to get an answer as soon as I can."
