JUDY WOODRUFF: It was an openly contentious day, as the fight intensified over a controversial state law in North Carolina, restricting bathroom use to one's gender at birth.

Both the state's governor and legislature sued the federal government, rejecting the Justice Department's view that the law violates civil rights.

As we heard a few moments ago, U.S. Attorney General Loretta Lynch vowed to stand by the transgender community.

We are joined now by North Carolina's Republican governor, Pat McCrory.

Governor McCrory, welcome.

You know…

GOV. PAT MCCRORY (R), North Carolina: Thank you, Judy.

JUDY WOODRUFF: Thank you for being with us.

You know what the attorney general said today. She said the Justice Department is going to take action to block implementation of this law. So, will you comply with that move by Justice? Or will you go ahead and try to continue to implement?

GOV. PAT MCCRORY: No, we're actually taking them to court also.

And this is what we are seeking, is clarity in the judicial system to further define gender identity and gender identity's usage in our restrooms in our high schools, our junior highs, our elementary schools, our universities and our highway rest stops.

We just — we are seeking basic clarity of this, because the executive branch doesn't have the power to interpret law. That's the power of the judicial branch. And that's what we're seeking.

But what the attorney general has done now with her new ruling is basically all employers in the United States of America and all universities in the United States of America, based upon her letter of interpretation, is saying that all employers must allow gender identity in the private sector for any employer over 15 employees.

That means a man who believes they're a woman would be able to go into a woman's restroom, locker room or shower facility. And that's where the dispute is, and we're asking for basic clarity of that. It is a very complex and emotional issue. And I think the courts are the right way to do it. And then, sooner or later, I think the U.S. Congress has got to get clarity on this whole issue also.

JUDY WOODRUFF: Well, Governor, we will see how it plays out legally.

But I'm sure you heard the attorney general say today — she said this amounts to state-sponsored discrimination. She compared it to the Jim Crow laws of decades ago, wherein African-American, black Americans were not allowed to use restrooms that white people were. She said this is harming innocent people.

GOV. PAT MCCRORY: That's extremely divisive rhetoric and dangerous rhetoric, which is totally be related to an issue on whether a male or female should use a male bathroom or a female restroom.

In fact, my chief of staff, whose father was a civil rights pioneer in Durham, where the attorney general also grew up, we were watching that together. And he went, don't — don't go there. There is absolutely no connection.

This is an issue which is really about privacy vs. equality and that balance. And people have an expectation of privacy, according to many of our citizens, not just in North Carolina, but, again, this is now going to be a nationwide issue. When you go to a restroom or to a locker room or to a shower facility, there is an expectation of privacy, that the only other people in that room, in a very private moment, I might add, will be people of the same gender.

And we have got to resolve this very complex and new issue that was actually brought up by the left, political left, not the political right.

JUDY WOODRUFF: Well, Governor — Governor, as I'm sure you also know, what the transgender community would argue is that their privacy is at stake as well.

And we heard the attorney general say, she said — and I guess this is the language in the lawsuit — they say this is causing transgender people to suffer emotional harm, mental anguish, distress, humiliation, indignity.

Do you acknowledge that there is that effect from this law?

GOV. PAT MCCRORY: I acknowledge we need to work this out. And what we do in North Carolina and what many states are doing right now — I think over 27 other states have almost identical laws as North Carolina, so this is not just a North Carolina issue — is, we — I actually encourage other types of arrangements for people of transgender.

It might be a unisex restroom or shower facility that is not in a multipurpose area, to respect both the unique needs of a transgender or to meet the unique needs of girls and boys and men and women and their families, which are the norms that we have been using in America for generations. It is a very complex issue.

I'm extremely sensitive to people's gender identity, which is a brand-new term in the last several years. But they are now interpreting, not only gender identity. There's a new term, gender expression, which has not been clearly defined. And we need to get that definition. And I don't think it's the executive branch's role to define that.

I think that belongs either in the courts. Or, frankly, I think the U.S. Congress needs to quit ignoring this issue. And, by the way, I'm talking to my Republicans. I think they need to get clarity on this issue for all of the nation and all employers.

JUDY WOODRUFF: Governor McCrory, do you know anyone who is transgender, and, if so, what have they said to you about this?

GOV. PAT MCCRORY: You know, different reactions. Some of the transgender community that I have talked to is frankly upset that the political left brought this up, because they didn't think there was much of a problem.

I didn't know — we weren't having a problem in North Carolina until the city of Charlotte, before that, the city of Houston, brought up a mandate for all private sector employers. And I might add, just six months ago, the city of Houston rejected by a 61 percent of the vote of the people a similar mandate.

And no one, including the attorney general, attacked the city of Houston. But, for some reason, they're now attacking the state where she grew up in. And, again, this is not just a North Carolina issue. This needs clarity by the courts and by the U.S. Congress.

I don't think we should have different anti-discrimination laws relating to this across the nation. I think this is a federal issue, as most discrimination laws are. And I think we need consistency. And this is where the courts need to step in. And I am very, very sensitive to all sides of this issue.

JUDY WOODRUFF: Very quickly, Governor, we have just a few seconds left. We know that a number of businesses have expressed their unhappiness about this, said that they're either not going to move to the state or they're not going to bring events to the state. How big a hit are you prepared to take to see North Carolina take financially?

GOV. PAT MCCRORY: Well, that's why I am taking it to the courts.

We are had one business, PayPal, which, by the way, does business in Sudan, and Iran and Saudi Arabia, where the gay and lesbian community is not welcomed at all. In fact, they are killed. So there is a little selective hypocrisy by one or two companies.

But we want to work with the private sector. And, again, this is not just a North Carolina issue. This is going to be an issue for the entire United States, and I think the federal government does need to step in through the courts or through the U.S. Congress and give us all clarity in not only state government, but local governments throughout the United States.

JUDY WOODRUFF: North Carolina Governor Pat McCrory, we thank you.

GOV. PAT MCCRORY: Thank you very much, Judy.