The ban bars more than 150 million people, mostly Muslims, from the U.S., Mitchell Reich, representing Hawaii, told the court.
The 9th Circuit is considering a ruling by a Hawaii judge who blocked nearly the entire ban on the grounds that it "plainly discriminates based on nationality."
The Honolulu-based judge ruled in a lawsuit filed by the state of Hawaii.
The 9th Circuit panel includes Judges Michael Daly Hawkins and Ronald M. Gould in addition to Paez -- all Bill Clinton appointees -- and had previously limited the scope of the Hawaii decision.
The panel had decided that the latest version of the ban could be enforced except against visitors who had close personal or professional ties to a person or entity in the U.S.
The Trump administration appealed to the Supreme Court, leading to Monday's decision allowing full enforcement while the lower courts hear challenges.
The high court's decision, issued in a brief order with only two dissents, strongly suggested that it believes the current travel ban does not exceed Trump's powers or amount to unconstitutional religious discrimination against Muslims.
The 4th U.S. Circuit Court of Appeals, based in Richmond, Va., will hear arguments on a different challenge to the ban on Friday.
Both circuit decisions are expected to be appealed to the Supreme Court.
Gould said the 9th Circuit would rule "as soon as practical."
Judges are randomly selected to sit on cases, but Democratic appointees on the 9th Circuit outnumber Republican-named judges by about 2 to 1.
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