North Carolina Gov. Pat McCrory has filed a lawsuit against the Justice Department and two individuals seeking clarification of federal law in a response to last week's Justice Department demand that the state abandon its new bathroom law.
Mr. McCrory said the Obama administration is "attempting to rewrite the law and set restroom policies for public and private employers across the country, not just North Carolina."
The lawsuit asks the federal U.S. District Court in the Eastern District of North Carolina for a declaration that the state bathroom law is lawful under Title VII and Violence Against Women Reauthorization Act of 2013.
"This is now a national issue that applies to every state and it needs to be resolved at the federal level," Mr. McCrory said.
Mr. McCrory was facing a 5 p.m. Monday deadline to respond to a Justice Department demand on May 4 that North Carolina drop its law requiring transgender people to use the public bathroom corresponding to the sex on their birth certificate. The federal government sent similar letters to the University of North Carolina and state's Secretary of Public Safety.
Mr. McCrory said he was initiating the lawsuit to "ensure that North Carolina continues to receive federal funding until the courts resolve this issue." The state receives billions of dollars in federal funds, including $1 billion in elementary and secondary education funds. Attorney General Loretta Lynch and Vanita Gupta, principal deputy attorney general, are named in the suit.
A Justice Department spokeswoman didn't immediately respond to requests for comment on the lawsuit.
"The [Justice] Department's position is a baseless and blatant overreach," states the complaint, which was filed in U.S. District Court for the Eastern District of North Carolina. "This is an attempt to unilaterally rewrite long-established federal civil-rights laws in a manner that is wholly inconsistent with the intent of Congress and disregards decades of statutory interpretation by the Courts."
The complaint states that the "overwhelming weight of legal authority recognizes that transgender status is not a protected class under Title VII" of the Civil Rights Act.
Mr. McCrory recently said he would not agree that the law is discriminatory, setting up an almost certain court battle. He told Fox News Sunday that he asked the federal government for an extension on Friday but didn't receive one because he was unwilling to say that the law violated the Civil Rights Act. Mr. McCrory, like Republican legislators, said the letter is a federal overreach that seeks to create transgender policy.
"They're trying to define gender identity," Mr. McCrory said. "And there is no clear identification or definition of gender identity."
Duke University School of Law professor Carolyn McAllaster said it is common for universities or other entities who receive a federal demand to negotiate and settle. "We're pretty much in uncharted territory," she said.
The Obama administration's view of civil-rights law recently prevailed in a lawsuit filed by a transgender student in Virginia challenging a school district policy banning him from the boys' restroom. The ruling by the Richmond-based Fourth U.S. Circuit Court of Appeals reinstated legal claims by high school junior Gavin Grimm that his school's policy violated a federal law barring discrimination based on sex.
"The Fourth Circuit gave great deference to their interpretation of the civil-rights laws," Ms. McAllaster said. "They probably feel they're on very firm ground."
The state legislature passed the bathroom law, known as House Bill 2, or HB2, in a one-day March emergency session to block a Charlotte, N.C., ordinance that would have allowed transgender people to use the bathroom corresponding to the gender with which they identify. The law also removes citizens' right to sue in state court over wrongful termination on the basis of discrimination, according to law professors.
HB2 has dealt an economic blow to the state, as companies like PayPal Holdings Inc. have dropped investments and entertainers like Demi Lovato have boycotted the state.
Charlotte City Council member Claire Green Fallon said she supports transgender people but voted against the original Charlotte ordinance because she saw it as too far-reaching.
"There's fault on both sides," she said. "It was insensitive of us to think that we could push through what we wanted. It was punishment on the government up there in Raleigh to show us that we cannot do what we want to do."
Charlotte Mayor Jennifer Roberts met with legislative leaders last week in the hopes of reaching some compromise, Ms. Fallon said.
While there is virtually no chance of an agreement being reached Monday, Ms. Fallon said she still hopes some deal might be reached soon.
"There has to be a compromise some place," Ms. Fallon said. "It's going to take a long, long time to mitigate the damage that's been done to this state."