Who will blink first in House Bill 2 battle?

RALEIGH (WTVD) -- The letter addressed to Gov. Pat McCrory from the U.S. Department of Justice reads in part, "the state is engaging in a pattern or practice of discrimination against transgender state employees."

It warns the governor that North Carolina could be sued by the Justice Department. And hundreds of millions of dollars in federal funds could be on the line.

Read the entire letter here

Less than two hours after receiving the DOJ's letter, Gov. McCrory sat down for a scheduled interview in front of state business leaders at the North Carolina Chamber of Commerce's event in downtown Raleigh.

"We've just gotten this in the last two hours, and we're still reviewing it," McCrory told the audience about the letter.


Echoing GOP leaders in the legislature, McCrory called the letter extreme government overreach by the Obama administration.

When asked if his inclination was to fight the DOJ, the governor responded, "I don't know yet."


"This is one interpretation by one agency," McCrory said. "I don't know (if this ends up in the courts)."

The government's interpretation is that House Bill 2 violates the federal Civil Rights Act, which bars workplace discrimination based on sex. And portions of the law violate anti-discrimination protections for transgender state employees.

It warns that North Carolina's 17 state universities risk losing hundreds of millions of dollars in federal funding for Title IX violations.

"I believe strongly that HB 2 is not reflective of who we are as North Carolinians," said Roy Cooper, state Attorney General and McCrory's Democratic rival for governor. Cooper made his comments addressing the NC Chamber hours before McCrory arrived.

Outside the chamber's event at the North Carolina Museum of History, the loud blare of air horns echoed down Edenton Street. The so-called Air horn Orchestra, a band of anti-HB 2 demonstrators, did all they could to disrupt the governor's remarks inside the auditorium. You could hear them faintly from inside. And this time they brought along anti-HB 2 small-business owners.

Read more: NC in violation of Civil Rights Act...now what?

"While the media focuses on PayPal, Deutsche Bank, and Bruce Springsteen," said small-business lawyer Greg Doucette, "the daily losses that pile up from canceled events and detoured visits of ordinary people hit those of us the hardest who are further down the economic ladder."

Read more about HB2 here

The governor and Republican leaders in the General Assembly say they're now consulting with legal counsel to plan their next move.

The Justice Department is giving North Carolina until Monday to indicate it will not comply with or implement House Bill 2.

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