The controversy over North Carolina’s anti-LGBT “bathroom law” escalated dramatically this week, dominating much of the national media’s attention. The U.S. Department of Justice threw down the gauntlet Friday, threatening to cut off federal funds to the state if North Carolina enforces the law and, on Monday, Governor Patrick McCrory picked up that gauntlet and promised a major effort to defend the law.

The Republican governor filed a lawsuit in federal court Monday morning, seeking a declaration that the law is not discriminatory. And at a press conference Monday afternoon, U.S. Attorney General Loretta Lynch responded with strong words, indicating that the DOJ and the Obama administration would do “everything we can to protect [transgender people] going forward.”

Lynch likened the North Carolina law to Jim Crow laws that, for decades following the Civil War, tried to segregate blacks from whites. She also compared it to laws that attempted to ban same-sex couples from obtaining marriage licenses.

Lynch said the DOJ would file a federal civil rights lawsuit against McCrory, North Carolina, and other North Carolina entities, seeking to have the state law declared in violation of federal law. She said DOJ would also retain the option of curtailing federal funding to the state.

The state received more than $4 billion from the federal government in 2015 for educational programs and $1 billion for highway and transportation needs.

Noting that she is a native of North Carolina, Lynch said the bathroom law is a “pretext for discrimination and harassment” that “inflict[s] further indignity on a population that has already suffered.”

“This is not the first time that we have seen discriminatory responses to historic moments of progress for our nation,” said Lynch, referring to Jim Crow laws that sought to enforce racial segregation.

“State-sanctioned discrimination never looks good and never works in hind sight,” she said. “…It was not so very long ago that states, including North Carolina, had other signs above restrooms, water fountains, and on public accommodations, keeping people out based on a distinction without a difference. We’ve moved beyond those dark days….”

McCrory signed House Bill 2, also known as House Bill 2 or HB 2, on March 23, setting off an onslaught of protest and media scrutiny, prompting a number of corporations and celebrities to cancel activities in the state.

While most of the widespread national media attention has focused on the bill’s requirement that people use public restrooms based on the gender indicated by their birth certificate, the law also prohibits any local jurisdiction in the state from enforcing non-discrimination laws to punish any discrimination beyond that based on race, religion, color, national origin, age, biological sex, or handicap. The latter provision is aimed at undoing local ordinances that prohibit discrimination based on sexual orientation and gender identity.

DOJ official Vanita Gupta, the principal deputy assistant attorney general at DOJ, sent a May 4 letter to McCrory, saying the law violates Title VII of the U.S. Civil Rights Act and the federal Violence Against Women Act (VAWA). It notes that Title VII prohibits an employer from discriminating based on sex and that the U.S. Supreme Court, in Price Waterhouse v. Hopkins in 1989, ruled that discrimination based on sex includes any “sex-based consideration.”

The DOJ gave North Carolina until 5 p.m. EDT Monday, May 9, to confirm whether it intends to enforce House Bill 2. After first asking for an extension of the deadline, McCrory instead announced Monday morning that the state would sue for relief.

The lawsuit, McCrory v. U.S., says DOJ’s claim against the state law is “a baseless and blatant overreach” by DOJ. It notes that the governor issued an executive order on April 12 to expand “discrimination protections to state employees on the basis of sexual orientation and gender identity, among others.” And it asks the court to declare that HB2 does not violate federal law.

In various interviews and press statements since last Friday, McCrory has claimed that North Carolina has “not taken away any rights that currently existed in any city” in the state. He said opponents of the law have “distorted the truth” and are “smearing our state in an inaccurate way.”

He characterized HB 2 a “basic, common sense bill” that protects the privacy rights of individuals.

McCrory’s lawsuit and public statements this week stood in stark contrast to his reaction last month to a Fourth Circuit U.S. Court of Appeals ruling. That ruling, in Grimm v. Gloucester, said Title IX of the federal Education Amendments Act prohibits discrimination based on gender identity. McCrory said then that he would “respect” the 4th Circuit panel decision as it applies to federally funded educational facilities.

North Carolina’s HB 2 has been the subject of many news reports during the past month, including the 2016 presidential campaign. Only one candidate –Republican presidential hopeful Ted Cruz—spoke in favor of the law. He tried to use the issue to drum up support for his campaign in Indiana’s primary last week. But Cruz came in a distant second in that primary and subsequently dropped out of the race.

In her remarks Monday afternoon, Attorney General Lynch spoke director to transgender people, promising that the DOJ and the entire Obama administration “see you …stand with you and we will do everything we can to protect you going forward.”

Lambda Legal and the ACLU, which have filed their own federal lawsuit against the North Carolina law, applauded the DOJ’s actions Monday. Jon Davidson, legal director for Lambda Legal, issued a statement Monday afternoon saying, “We are fighting this case with everything we have.  We have the law on our side, we have the facts on our side, and we have the federal government on our side.”

The Williams Institute estimates that more than 336,000 LGBT people live in North Carolina.