Mary Orndorff Troyan

USA TODAY Washington Bureau

WASHINGTON – The battle over transgender rights expanded dramatically Monday when North Carolina and the federal government sued each other over a new state law that requires people to use the restroom that corresponds with their gender at birth.

Hours after North Carolina Gov. Pat McCrory accused the federal government of wrongly applying federal civil rights laws to transgender people, the Justice Department sued North Carolina for what it called "state-sponsored discrimination" against the transgender community.

The sharply worded exchanges between McCrory and Attorney General Loretta Lynch escalated the legal fight over the rights of people who no longer identify with their birth gender.

Federal officials allege McCrory’s willingness to enforce his state's restroom law, known as House Bill (HB) 2, “constitutes a pattern or practice of employment discrimination on the basis of sex” in violation of the federal civil rights law. Lynch, saying North Carolina is her home state, compared the state's actions to historic resistance to desegregation.

"This is a time to summon our national virtues of inclusivity, diversity, compassion and open-mindedness," she said.

North Carolina's "compliance with and implementation of HB2 stigmatizes and singles out transgender employees, results in their isolation and exclusion, and perpetuates a sense that they are not worthy of equal treatment and respect,” the Justice Department's lawsuit says.

The suit was filed in the Middle District of North Carolina; McCrory’s case was filed in the Eastern District.

"This action is about a great deal more than just bathrooms," Lynch said. "This is about the dignity and respect we accord our fellow citizens and the laws that we, as a people and as a country, have enacted to protect them – indeed, to protect all of us."

Hours earlier, McCrory sued the federal government , saying he wants the federal courts to clarify the law.

“The Obama administration is bypassing Congress by attempting to rewrite the law and set restroom policies for public and private employers across the country, not just North Carolina," McCrory said. "This is now a national issue that applies to every state and it needs to be resolved at the federal level. They are now telling every government agency and every company that employs more than 15 people that men should be allowed to use a women’s locker room, restroom or shower facility.”

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The Justice Department's civil rights division last week notified the state that the HB2 law violates Title VII of the Civil Rights Act, which prohibits discrimination against people on the basis of sex. The agency warned the state, its Department of Public Safety and the University of North Carolina enforcing HB2 would amount to a pattern or practice of discrimination against transgender state employees.

“Access to sex-segregated restrooms and other workplace facilities consistent with gender identity is a term, condition or privilege of employment," according to the May 4 letter from the Justice Department. "Denying such access to transgender individuals, whose gender identity is different from their gender assigned at birth, while affording it to similarly situated non-transgender employees, violates Title VII."

In addition to defining the rights of transgender people, the battle between McCrory and the federal government also could affect the state’s access to federal funding for education and other state functions.

“I’m taking this initiative to ensure that North Carolina continues to receive federal funding until the courts resolve this issue,” McCrory said in Monday's statement.

Lynch said withholding federal funds from North Carolina is an option, but she has no immediate plans to pursue that route.

McCrory said HB2 provides “common sense bodily privacy protections” and that transgender people cannot be a special protected class under federal civil rights laws without a new law passed by Congress.

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“North Carolina does not treat transgender employees differently from non-transgender employees,” McCrory's lawsuit states. “All state employees are required to use the bathroom and changing facilities assigned to persons of their same biological sex, regardless of gender identity, or transgender status.”

McCrory accused the Justice Department of a “radical reinterpretation” of civil rights law.

“The Department’s position is a baseless and blatant overreach,” his lawsuit states. “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.”

McCrory, speaking to reporters in Raleigh on Monday, said the Justice Department wanted him to state publicly that he agrees with the agency’s assertion that anti-discrimination laws apply to transgender people, in exchange for getting more time to respond to the Justice Department. McCrory said he declined, which is why he filed suit on Monday.

“I could not agree with that because I do not agree with their interpretation of federal law,” McCrory said.

He said he wants a federal court or Congress – not a single federal agency – to settle how to balance expectations of personal privacy and equality when it comes to restroom policy.

“The majority of our citizens… did not seek out this issue,” the governor said. “However, the state of North Carolina and this governor welcome the opportunity to be a part of the solution for all of the states and especially our nation.”

White House Press Secretary Josh Earnest said federal agencies continue to review whether federal funding to North Carolina should be revoked because of the law.

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"The position of the North Carolina government has not changed. They're asserting that this mean-spirited law is somehow consistent with the Civil Rights Act and with our values,” he said. “And I think the president has spoken pretty powerfully to the idea that what the state of North Carolina has passed in a one-day special session is inconsistent with the values of fairness, equality and justice that we hold dear in this country.”

U.S. Rep. Mark Meadows, R-N.C., supported McCrory's lawsuit.

"This action by the DOJ is yet another example of the federal government attempting to bully states by engaging in serious executive overreach and rewriting state laws to fit their own agenda," Meadows said.

Asheville resident Zeke Christopoulos called McCrory’s move ludicrous. Christopoulos, who co-directs Tranzmission, a local nonprofit working to support the lives of transgender and gender nonbinary populations, said HB2 is bad for the state and will result in expensive, lengthy legal battles and a loss of federal money.

“It’s a scary time,” he said. “Because of their egos, they are putting the whole state at risk.”

For transgender populations and their allies, the governor’s intransigence strikes a personal cord, added Christopoulos, a transgender male. “It keeps us living in a place of fear,” he said. “It’s something that is basically vilifying us, saying we’re bad people. There are huge psychological and social costs associated with that.”

Allison Scott has lived in Asheville all her life. The governor’s actions make her ashamed to be from North Carolina. “I find it amazing that McCrory is calling the federal government’s step an overreach, when that’s the same thing he did to Charlotte,” she said. “He wants to defend a blatantly discriminatory law.”

Opponents of the HB2 plan to take their message to McCrory later this week, protesting during the annual Spring Open House at the North Carolina Governor’s Western Residence on May 14.

“The question before us now is simply how long will it take for the General Assembly to repeal the law or for the courts to strike it down,” said Aaron Sarver, spokesman for the Campaign for Southern Equality. “HB2 is unconstitutional.”

Since the bill’s initial passage, more than 100 local businesses have put up “all gender” bathroom signs distributed by the nonprofit advocacy group fighting for equal rights for LGBT populations throughout the South.

Although the support in Asheville has been unprecedented, more needs to be done, Sarver said.

This bill has instigated a frenzy and furor of discrimination against transgender people that hasn’t been seen in years, added Scott, a transgender female. “This law wants people like me to use a restroom we don’t belong in, one we don’t fit in and it puts us in danger.”

Contributing: Beth Walton, Asheville Citizen-Times; Gregory Korte, USA Today.