Colorado AI Bias Law Paused as Musk’s xAI Seeks Injunction (2)

Colorado’s sweeping AI antidiscrimination law set to take effect June 30 won’t be enforced until a federal court rules on a forthcoming motion from Elon Musk’s artificial intelligence company xAI to block it.

Alleged violations that occur on or before the 14th day following the court’s preliminary injunction decision will be protected from penalties and investigation, Magistrate Judge Cyrus Y. Chung of the US District Court for the District of Colorado said Monday.

Chung’s order comes four days after xAI, the US Justice Department, and Colorado Attorney General Phil Weiser (D) filed a joint motion to suspend deadlines and cancel an upcoming hearing in the case, pointing to the possibility that state legislators will replace or amend the law before its effective date.

The Justice Department’s intervention in the case on behalf of xAI is the Trump administration’s first litigation move to limit states’ power to regulate artificial intelligence. The Colorado law, initially passed as SB 205 in 2024, is the broadest measure enacted by any state thus far to govern how businesses use AI tools in making employment, housing, credit, insurance, and other “consequential decisions.”

xAI and the DOJ argue the Colorado law infringes on AI tech developers’ First Amendment rights by forcing them to embed “state-enforced orthodoxy” related to diversity, equity, and inclusion. The law requires developers and users of AI decision-making tools to take steps to prevent discrimination, but it explicitly allows for the use of those tools in ways that promote diversity.

Gov. Jared Polis (D) and the tech industry have called for revising the law since the moment the governor signed it two years ago, raising concerns about inhibiting innovation.

Polis released a framework in March that would strip out requirements for bias audits and detailed mitigation plans, instead focusing on transparency notices. The governor’s office said the proposal had broad support from industry and consumer advocates.

Colorado Lawmakers

With two weeks left in Colorado’s regular 2026 legislative session, no bill to revise SB 205 has been formally introduced, as lawmakers negotiate the details of a possible measure. The governor’s office didn’t immediately respond to a request for comment on the legislative efforts Monday.

Waiting until the end of session is “par for the course” for Colorado lawmakers navigating a complex topic like AI regulation, said state Rep. Brianna Titone (D). SB 205, which she co-sponsored, was introduced near the end of the 2024 session, she said, and she predicted lawmakers will pass a rewrite of the AI law before it takes effect.

In addition to transparency requirements, the revised version is likely to include language specifying who should be liable under existing Colorado civil rights law when the use of AI for consequential decision-making leads to a discrimination claim, Titone said.

The legislative language that Polis released last month calls for holding the AI developers liable if their technology yields discriminatory outcomes when the company deploying the tools uses them as they were designed. If the deployer modifies the AI tools or uses them in a manner that the developer didn’t intend, then the deployer would be held liable instead of the developer.

Monday’s court order also called for xAI to submit a new preliminary injunction motion or amended complaint, if necessary, within 28 days after the state AG issues final regulations implementing the law or lawmakers pass legislation to replace it.

Wheeler Trigg O’Donnell LLP represents xAI.

The case is xAI v. Weiser, D. Colo., 1:26-cv-01515, 4/27/26.