UPDATE 9:09 a.m. 

North Carolina's Republican leaders are calling a federal warning about the legality of the state's new law limiting LGBT anti-discrimination rules a broad overreach by the government McCrory and state legislative leaders are deciding what to do in response, but it doesn't sound like the Republicans' plans will include canceling the law.

ORIGINAL STORY: 

The U.S. Justice Department is weighing in on North Carolina's controversial House Bill 2. Federal officials say the law violates the Civil Rights Act.

Last month, a U.S. Appeals Court affirmed in a Virginia ruling that the definition of a person's “sex” also includes their “gender identity.”

Now, the Department of Justice has notified Governor Pat McCrory that HB2 violates the Civil Rights Act.

Among other things, HB2 carries a provision that compels transgender people to use the bathroom of their biological sex in public buildings, not their gender identity. According to the Department of Justice, that's discrimination.

The McCrory administration now has until Monday afternoon to assure the Department of Justice it will not implement the law.

If the determination is upheld, the state could be at risk of losing potentially hundreds of millions of dollars in school funding.

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