Elon Musk's artificial intelligence company xAI filed a federal lawsuit Thursday targeting a Colorado law set to regulate AI systems. The move joins a growing national battle over who should have the authority to govern artificial intelligence—the states or the federal government.
Among those obligations, according to the bill's text, developers must make publicly available statements about the types of high-risk systems they've built and how they manage potential risks of algorithmic discrimination. Deployers—companies that put those systems to use—must implement risk management programs, conduct annual reviews, and give consumers the right to appeal adverse decisions made by AI, including through human review when technically feasible.
xAI argues the law crosses constitutional lines. The company says the statute violates the First Amendment by dictating how developers must design their AI products and compelling them to take positions on contested public debates. Specifically, xAI contends the law would force it to modify its flagship AI model, Grok, to reflect the state of Colorado's positions on diversity and discrimination rather than allowing the system to operate objectively.
"Government regulation that is applied at the state level in a patchwork across the country can have the effect to hamper innovation and deter competition in an open market," xAI said in a statement.
The company is asking the court to declare the law unconstitutional and to issue an injunction barring its enforcement. The lawsuit also points to White House executive orders that have criticized fragmented, state-by-state AI regulation, and federal warnings that such a patchwork of laws could threaten U.S. AI leadership and national security.
xAI, which recently merged with SpaceX, is not alone in its position. Some technology companies and Republican lawmakers have pushed for AI oversight to be handled exclusively at the federal level. President Donald Trump's AI advisers favor a streamlined national framework over the current state-by-state approach.
But not everyone agrees that waiting on Washington is the way to go. California's attorney general has cautioned against putting full faith in Congress, pointing to years of stalled action on data privacy and technology legislation as evidence that federal solutions can be slow to materialize.
Under Colorado's law, violations are treated as deceptive trade practices under the state's Consumer Protection Act, and the attorney general holds both rulemaking authority and exclusive enforcement power. The measure does carve out exceptions—including federally regulated financial institutions subject to examination by state or federal regulators and insurers operating under applicable state insurance guidelines.
The Colorado Attorney General's Office did not immediately respond to a request for comment from NTD News.