DOJ and xAI Force Colorado to Repeal AI Act and Defend Mississippi Data Center
In a series of unprecedented legal interventions, the U.S. Department of Justice (DOJ) has partnered with artificial intelligence firm xAI to block state-level regulation of algorithmic discrimination and protect AI physical infrastructure from environmental lawsuits. These actions mark a coordinated federal effort to prevent local laws from hampering American AI innovation and national security.
The Colorado AI Act Battle and Ultimate Repeal
In April 2026, the DOJ intervened in a lawsuit filed by xAI (the developer of the Grok large language model) challenging Colorado’s landmark Senate Bill 24-205 (the Colorado AI Act). Scheduled to take effect on June 30, 2026, the Colorado AI Act would have imposed strict duties on AI "developers" and "deployers" to prevent "algorithmic discrimination" (unintentional disparate impact based on protected characteristics like race and sex).
xAI challenged the law on multiple constitutional grounds, including the First Amendment (compelled speech and viewpoint discrimination), the Dormant Commerce Clause (excessive extraterritorial burdens), and the Fourteenth Amendment's Equal Protection Clause.
On April 24, 2026, the DOJ moved to intervene, filing its own Complaint in Intervention alleging that the Colorado law violates the Equal Protection Clause. The DOJ argued that by imposing disparate-impact liability based on statistical disparities alone, the law would force AI companies to engage in demographic-conscious engineering of their models, essentially compelling racial and characteristic-based discrimination in "zero-sum" contexts like hiring or lending.
Assistant Attorney General Harmeet K. Dhillon of the DOJ's Civil Rights Division stated:
"Laws that require AI companies to infect their products with woke DEI ideology are illegal. The Justice Department will not stand on the sidelines while states such as Colorado coerce our nation’s technological innovators into producing harmful products that advance a radical, far left worldview at odds with the Constitution."
Following the joint opposition by xAI and the DOJ, enforcement of the Colorado AI Act was suspended. Ultimately, on May 14, 2026, Colorado Governor Jared Polis signed Senate Bill 26-189, which completely repealed the original AI Act (SB24-205) and replaced it with a far less restrictive disclosure-and-rights framework focused on automated decision-making technology (ADMT)—representing a complete pivot away from European-style AI regulations.
Federal Intervention in Mississippi Data Center Pollution Lawsuit
The DOJ has also intervened to protect the physical infrastructure powering AI model training. On June 15, 2026, the DOJ's Environment and Natural Resources Division (ENRD) filed a motion to intervene and dismiss a private citizen lawsuit seeking to shut down or power down xAI's massive AI data facility in Southaven, Mississippi.
Private litigants had sued xAI and its subsidiary MZX Tech LLC, alleging Clean Air Act permitting violations related to the facility's power sources. Although the State of Mississippi had determined that no permit was required, the plaintiffs sought an injunction and damages.
The DOJ moved to dismiss the lawsuit, citing national security, the Department of War's reliance on AI, and President Donald J. Trump's June 2026 executive order, "Promoting Advanced Artificial Intelligence Innovation and Security." The executive order tasks federal agencies with prioritizing AI innovation and preventing overly burdensome regulations or private environmental lawsuits from threatening technological growth.
Principal Deputy Assistant General Adam Gustafson of ENRD stated:
"The Department of Justice will not sit idly by while private organizations use environmental laws to undermine our national security. This case reflects the important work of the Environment and Natural Resources Division to unleash American energy for the sake of innovation and security."