The U.S. Department of Justice moved Friday to intervene in a federal lawsuit filed by Elon Musk's artificial intelligence company xAI against Colorado, contending the state's new AI regulation violates constitutional protections by mandating ideological bias in AI systems.

xAI launched the suit on April 9 in U.S. District Court in Denver, targeting Senate Bill 24-205, or the Colorado AI Act. The law, signed by Democratic Gov. Jared Polis in 2024 despite his reservations, takes effect June 30 and regulates "high-risk" AI systems used in consequential decisions such as employment screening, housing, health care and education.

The statute requires developers and deployers of such systems to exercise "reasonable care" to avoid "algorithmic discrimination," defined as disparate treatment or impacts based on protected characteristics including race, sex, religion and national origin. It mandates risk assessments, transparency notices, bias monitoring and reporting of discrimination to the state attorney general within 90 days.

xAI argues the law compels it to alter its Grok AI model to reflect Colorado's views on diversity and racial justice, infringing on First Amendment free speech rights and the Fourteenth Amendment's Equal Protection Clause. The company claims the measure is unconstitutionally vague, favors certain forms of discrimination aimed at promoting "diversity" or redressing historical inequities while prohibiting others, and burdens innovation.

The DOJ's Civil Rights and Civil divisions filed a motion to intervene as a party, echoing xAI's claims that the law discriminates by exempting pro-diversity discrimination and requires AI firms to prevent unintentional disparate impacts on protected groups. "Laws that require AI companies to infect their products with woke DEI ideology are illegal," said Assistant Attorney General for Civil Rights Harmeet K. Dhillon. Her Civil Division counterpart, Assistant Attorney General Brett A. Shumate, added that such mandates threaten U.S. leadership in the global AI race by prioritizing ideology over merit-based outputs.

The intervention marks the Trump administration's first constitutional challenge to a state AI law and aligns with its broader pushback against diversity, equity and inclusion initiatives. DOJ attorneys argued the statute "fosters further discrimination" and could force developers to censor lawful speech to comply.

Colorado Attorney General Phil Weiser's office declined immediate comment on the original suit, while bill sponsors dismissed xAI's claims as misinterpretations unrelated to free speech. The case, docketed as xAI v. Weiser (1:26-cv-01515), awaits a ruling on preliminary injunction requests.

The dispute underscores growing tensions over AI regulation, with Colorado positioning itself as a pioneer in consumer protections amid federal inaction.