Musicians, film productions, sporting events and major employers have said they will stop doing business in North Carolina over House Bill 2, a measure that state lawmakers passed in special session this year that restricts transgender use of bathrooms and blocks local governments from enacting their own anti-discrimination laws.

Now threatening to boycott the state as well: the federal government.

The U.S. Department of Justice issued letters to Gov. Patrick McCrory and state university leaders on Wednesday warning that HB2 violates the U.S. Civil Rights Act. The letters threaten to withhold federal funding for education starting next week if the governor doesn’t promise not to attempt to uphold HB2.

That threat, which potentially endangers tens of millions in federal dollars for schools, drew a mixed reaction from politicians and activists across the state, including in Western North Carolina.

GOP noncommittal defiance

Rep. Chris Whitmire, R-Transylvania, who was among HB2’s co-sponsors, told Carolina Public Press in an email Wednesday that he supports a defiant stance taken by House Speaker Tim Moore, R-Cleveland.

“The letters received today serve to give notice that President Obama intends to sue the State of North Carolina unless we yield to his views,” Moore said in a statement.

“They are not court decrees or automatic declarations of law and the issues raised in his letters are far from being decided. President Obama’s interpretation of Title VII and Title IX would radically change all universally accepted protections of privacy and safety that are based on the anatomical differences between the sexes.”

Despite the sharp rhetoric, including calling the White House’s agenda “extreme” and its legal interpretations “radical,” Moore stopped short of saying legislators would ignore the warnings on Wednesday, but went a step further the next day.

“We will discuss these issues with the Governor and the Senate and determine next steps,” he said initially. McCrory remarks Wednesday were similarly defiant but noncommittal.

“The Obama administration has not only staked out its position for North Carolina, but for all states, universities and most employers in the U.S.,” the governor said in a statement.

“The right and expectation of privacy in one of the most private areas of our personal lives is now in jeopardy. We will be reviewing to determine the next steps.”

But by noon Thursday that review process had apparently developed to the point at which Moore was prepared to say publicly that the state would call the Department of Justice’s bluff on the Monday deadline, if not more broadly.

Meanwhile, Democrats had a strong ideas, very different from Republican leaders, about what the state’s next steps ought to be.

Democrats react

Sen. Terry Van Duyn, D-Buncombe, said undoing what she sees as harm from HB2 will take action from North Carolina leaders and not just federal intervention.

“Although I am grateful for this first step by the Department of Justice, it will not fix the most serious problems created by HB2,” Van Duyn told CPP in an email Wednesday.

“North Carolina’s reputation as a wonderful place to live and work will not be restored until we repeal the entire law. The Legislature created this mess, and they need to fix it by saying, once and for all, that North Carolina does not discriminate. We are open for business to all. We can disagree and still treat each other with respect.”

Van Duyn also noted that the federal move shouldn’t have come as a surprise to state lawmakers. “The question of potential lost federal education funding came up during the special session debate and was dismissed,” she said.

Rep. John Ager, D-Buncombe, voiced similar sentiments in an email to CPP on Thursday, expressing strong concerns about the costly legal morass the state could face if it tries to fight the federal government.

“I voted against HB2 and believe that a full repeal is necessary to ending the furor over this ill-conceived bill,” Ager said.

“If the Department of Justice determination provides an avenue for repeal, then it will prove to have been a timely and effective remedy. If on the other hand, it creates an expensive legal battle, North Carolina will pay dearly in dollars and loss of jobs for months and years to come.”

Also concerned about the economic impact of continued boycotts is Rep. Brian Turner, D-Buncombe. “HB2 has already cost Buncombe County 500 jobs and millions of dollars in tourism revenue,” Turner wrote in an email to CPP on Thursday. “Now the leadership in Raleigh’s refusal to repeal this discriminatory bill will cost North Carolina public schools hundreds of millions of dollars. North Carolina can’t afford this.”

The Rev. Jasmine Beach-Ferrara, an Asheville Democrat running for Buncombe County Board of Commissioners who is executive director of the Campaign for Southern Equality, also applauded the federal move.

“This letter from the Department of Justice confirms what was clear from the start, HB2 is discriminatory and unconstitutional,” Beach-Ferrara said in a statement Wednesday.

“We continue to call for the immediate repeal of HB2. We also call for the North Carolina General Assembly to pass full legal protections for the LGBT North Carolinians.”

North Carolina Attorney General Roy Cooper, who is challenging McCrory’s bid for re-election in November, also issued a statement calling for the governor and legislators to back down.

“Enough is enough,” Cooper said. “It’s time for the Governor to put our schools and economy first and work to repeal this devastating law.”

HB2 was passed in an acrimonious special session, which saw Democrats walk out of the Senate rather than participate in the final vote.

But 11 Democrats in the House joined with most Republicans in supporting the bill, supposedly due to concerns that a Charlotte ordinance could have put young girls at risk from sexual predators who would falsely claim to be transgender in order to hang around women’s restrooms.

Since its passage, some of those lawmakers have expressed regret, especially as provisions in HB2 that stripped away other anti-discrimination protections under state law have come to light.

Republican dissent

Some Republicans have differed with the party’s leaders in Raleigh on HB2. That includes the GOP’s presumptive nominee for president, Donald Trump, who won the North Carolina presidential primary handily in March, but has since sharply criticized HB2.

Among three House Republicans who were notably absent from the special session, was Rep. Chuck McGrady, R-Henderson.

In an email to CPP on Wednesday, McGrady expressed disappointment with the entire situation and the positions staked out by the various sides.

“I’m disappointed that the Obama Administration felt compelled to weigh into the issue,” he said. “It seems like everyone wants to play politics.”

But McGrady saved his harshest criticism for North Carolina politicians.

“The city of Charlotte overreached when it enacted its ordinance; there was no need to get into bathroom and locker room issues in that ordinance,” McGrady said.

“The legislature then overreacted causing outside groups and some big corporations to jumped into the debate, and now the federal government decides threats are the way to resolve the issue.”

Editor’s note: An earlier version of this article described Rep. Chuck McGrady’s re-election status incorrectly. Rep. McGrady is currently seeking re-election after facing no opposition in the Republican primary. The reference has been removed from the article. Also, an earlier version described Jasmine Beach-Ferrara as a sitting Buncombe County commissioner. She is running for a seat on the commission, but she has not yet been elected. The reference has been removed from the article.

