North Carolina is suing the US Department of Justice over its attempts to bar the state from upholding its anti-LGBT "bathroom bill".
The justice department had given the state a Monday deadline to respond to a letter demanding it abandon the controversial law.
The law violates federal civil rights protections, the department has said.
North Carolina could lose funding for state universities if it upholds the legislation.
The law invalidated several local anti-discrimination measures that protected gay and transgender people.
It also requires people to use public toilets that correspond to the sex listed on their birth certificates.
The lawsuit seeks to keep the law upheld, calling the law a "common sense privacy policy" and accuses the federal government of "baseless and blatant overreach".
"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 lawsuit said.
http://www.bbc.com/news/world-us-canada-36250284
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