DENVER — Elon Musk’s artificial intelligence company xAI filed a federal lawsuit Thursday against Colorado, seeking to block the state’s first-in-the-nation artificial intelligence regulation law before it takes effect in June.
The lawsuit targets a 2024 state law that would hold companies liable for discrimination by their AI products and require them to notify consumers when AI is used to make decisions in areas such as employment, finance or healthcare. xAI argues the law violates the First Amendment by restricting how developers design AI systems and limiting speech on controversial public issues.
State Rep. Manny Rutinel, a Democrat who co-sponsored the 2024 law and is running for Congress, pushed back on the free speech argument.
“I think that this bill is about transparency and accountability, just like other anti-discrimination statutes,” Rutinel said. “Free speech is fundamental to everything I believe in, and it has nothing to do with that. This is about corporate accountability.”
Rutinel said the legislation is meant to protect everyday Coloradans.
“I think this is an important bill to make sure that consumers and workers are protected, and that’s my job as a legislator,” he said. “Of course, sometimes billionaires like Elon Musk decide to fight back in their own way through the court system, but that’s what our offices are for here at the Colorado Capitol.”
The lawsuit comes as Musk’s Grok AI chatbot has faced scrutiny over bias-related issues. xAI contends Colorado’s law would force AI developers to alter how their systems respond to avoid the appearance of discrimination, which the company argues amounts to a First Amendment violation
Democratic Gov. Jared Polis has expressed reservations about the law since signing it in 2024, warning it could stall innovation and drive companies out of Colorado. Polis has called for lawmakers to amend the law and, last month, a working group he convened announced a policy framework for potential revisions, though legislation has not yet been introduced.
The governor’s office declined to answer questions about whether Polis agrees with the arguments made in the lawsuit.
Polis was under no obligation to sign the bill. From 2019 through 2024, he vetoed 31 bills, about five per year. Last year alone, he vetoed 11 bills.
The law’s effective date has already been delayed. It was originally set to take effect in February 2026, then pushed back, and is now scheduled to go into effect in June.
State Sen. Robert Rodriguez, another sponsor, declined to comment Thursday. Rodriguez previously said the legislation is focused specifically on AI decision-making, not development.
“All it’s simply asking you to do is to do a risk assessment on something that’s making these decisions,” Rodriguez said in a previous interview.
Rutinel said he supports updating the law as the technology evolves.
“I think we passed a good law,” Rutinel said. “As more information comes in as to how AI technology is progressing, we need to make sure that we come to the table and continue to chat with stakeholders to update it.”
The lawsuit also points to a White House executive order issued last year that blocks states from enforcing their own AI regulations, calling for a national standard instead. The Trump administration has framed state-by-state AI laws as creating conflicting requirements that could burden companies operating across state lines.