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SpaceX condemns Justice Division subpoena to analyze hiring practices as "transgression".

The SpaceX Falcon 9 rocket and Crew Dragon capsule stand upright on the launchpad at NASA's Kennedy Space Center prior to the launch of Demo 2.

Elon Musk's SpaceX condemned a Justice Department subpoena for his corporate hiring records, saying in a lawsuit that the federal agency's immigration and labor rights investigation "is exactly the definition of transgression".

"SpaceX draws the line on IER's exaggerated attempt to incorporate this solitary, frivolous accusation into the far-reaching (and expanding) sample or field investigations the agency is currently conducting," said the company, represented by attorneys at Akin Gump Strauss Hauer & Feld wrote in reply.

The strong response comes as SpaceX's first public comment on the DOJ's investigation, which has been investigating for months whether the space company discriminates against foreign applicants when it comes to recruiting.

SpaceX's battle against the DOJ subpoena will be heard by a California federal judge later this month.

The DOJ has declined CNBC's request for comment on its investigation, while SpaceX has failed to respond to multiple requests for comment.

An examination of hiring practices

The federal agency's immigration and labor rights division opened an investigation last year after Fabian Hutter, a SpaceX applicant, complained to the government that the company had discriminated against him.

In a previous interview with CNBC, Hutter said he believed SpaceX decided not to hire him after answering a question about his citizenship status for a position as an associate in technical strategy last March.

Hutter has dual citizenship in Austria and Canada, but is legally permanent resident in the USA. This is evident from court records filed in the US District Court for the Central District of California.

However, in addition to investigating the complaint, the DOJ division said it could "investigate whether (SpaceX) engages in a pattern or practice of discrimination" that is excluded by federal law.

Investigators issued a subpoena in October requesting SpaceX to provide information and documents related to recruitment and employability review procedures, which SpaceX has not fully complied with.

The company's lawyers argue that the DOJ's investigation is arrogant given the original complaint.

"Regardless of how liberally 'relevance' of administrative subpoenas is construed, neither the legal and regulatory agency on which the IER relies nor the Fourth Amendment to the US Constitution allows the IER to issue the Scoured papers by SpaceX on a whim and without reasonable justification, "SpaceX said.

"And even if the IER was belated to justify its ongoing investigation, the IER's subpoena is unduly widespread. The IER's request for an order to comply with the subpoena should be denied," the company added.

Settings guidelines available

SpaceX is allowed to hire non-citizens who hold a green card under US international arms regulations.

These rules state that only Americans or non-citizens with a US green card can have physical or digital access to items on the US ammunition list, which consists of defense-related equipment, software, and other materials.

SpaceX found that it currently has more than 9,500 employees, "including hundreds of non-US citizens".

In response to the subpoena, the company explained its side of the interview process with Hutter, emphasizing that his résumé "clearly stated that he was a dual Austrian and Canadian national".

He was among the "hundreds" applicants for the position and one of seven applicants who advanced to a telephone screening, the company said.

Doug Tallmadge, a SpaceX employee, had Hutter confirm his citizenship status in an interview, the company said.

Tallmadge stopped "asking" about Hutter's citizenship in a follow-up interview, SpaceX added.

According to SpaceX, Tallmadge was "unimpressed" by the applicant's answers in the second interview and wrote in an assessment that it was "unclear" what motivation Hutter had for wanting to work on the company's Starlink project.

The company didn't hire Hutter or anyone else for the position, saying it had eliminated the role.

Federal judge Michael Wilner is expected to hear the case on the morning of March 18.

The judge hinted in a previous filing that SpaceX might have a hard time blocking the subpoena, referring to a previous decision it had made on an unrelated case. In this other case, Wilner flatly dismissed a company's arguments against complying with a subpoena to discontinue information.

Read SpaceX's full answer below:

– CNBC's Dan Mangan contributed to this report.

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