Elon Musk’s Fight With Colorado Over AI Law Hits Pause as State Considers Revisions

Colorado’s legal fight with Elon Musk’s artificial intelligence company xAI is on pause for now.

In a joint filing on Friday, xAI and Colorado Attorney General Phil Weiser asked a federal court to cancel the June 16 scheduling conference and suspend all case deadlines in xAI’s lawsuit challenging Senate Bill 24-205, the state’s law aimed at preventing “algorithmic discrimination” in high-risk AI systems.

The filing also temporarily halts enforcement of SB24-205, or any replacement law passed this legislative session. At the same time, Colorado lawmakers consider revisions, and the court weighs xAI’s expected motion for a preliminary injunction.

Earlier this month, xAI sued Colorado seeking to block the state’s law before it takes effect. The company argues that SB24-205 would force developers to alter how AI systems operate and restrict how models generate responses.

“SB24-205 is decidedly not an anti-discrimination law,” xAI’s attorneys wrote in the original complaint. “It is instead an effort to embed the State’s preferred views into the very fabric of AI systems.”

The lawsuit argues the SB24-205 violates the First Amendment by forcing xAI’s chatbot, Grok, to answer certain questions in ways that match Colorado’s views on diversity and fairness. It also argues that the law is too unclear to enforce fairly, tries to regulate behavior outside Colorado, and treats some AI systems more favorably than others based on the kinds of answers they produce.

The joint filing says a Colorado AI policy group formed by Gov. Jared Polis released a draft bill on March 17 to repeal and replace SB24-205. The attorney general said his office will not enforce the law or issue rules until the legislative session and rulemaking process are complete.

Under the agreement, the attorney general said he will not launch enforcement actions or investigations against xAI for alleged violations until 14 days after the court rules on xAI’s expected injunction request.

xAI agreed to file its motion for a preliminary injunction within 28 days after final adoption of rules implementing the law or any replacement measure.

The legal fight escalated last week when the U.S. Department of Justice moved to intervene in support of xAI.

The case is part of a broader fight over who should regulate artificial intelligence in the United States, as states including Colorado, New York, and California advance their own rules while the Trump administration pushes for a federal approach.