State Rep. Bill Sanderson cited the health of his son-in-law and his growing winery business as his reasons for resigning, but some claim messages he sent to gay men were the real reason Sanderson stepped down.
Pro-LGBT rights organizations sent the report to Education Secretary Betsy DeVos this week.
Politicians are playing on ignorance and fear to build divisions among Americans.
Historically, the states' rights and religious freedom arguments have been a cover for bigotry.
The bill would require people to use restrooms that correspond with the gender on their birth certificate, not the gender with which they identify.
The companies' brief says they are "concerned about the stigmatizing and degrading effects" of the policy adopted by the school board.
The eight justices are due to hear oral arguments on March 28 on whether the Gloucester County School Board in Virginia can block Gavin Grimm, a female-born transgender high school student, from using the boys' bathroom.
Reversing the Obama guidelines stands to inflame passions in the latest conflict in America between believers in traditional values and social progressives, and is likely to prompt more of the street protests that followed Trump's Nov. 8 election.
The law known as House Bill 2, which bars transgender people from using government-run restrooms that match their gender identity and limits local nondiscrimination protections, will doom the state's chances, Dupree wrote in a letter.
The states are following the lead of North Carolina, which made international headlines over its House Bill 2.
A Texas Republican state senator introduced legislation on Thursday to limit public restroom access for transgender people.
The state in March became the first to bar transgender people from using public restrooms that match their gender identity.
Incoming Democratic Governor Roy Cooper says the state legislature may call a special session to consider scrapping HB2, which sparked economic boycotts.
Critics bashed the Fort Peck Reservation in Montana for its new bathroom policy, which was inspired by legislation in North Carolina.
People might care about sharing bathrooms with transgender people, but only because they are misinformed, acting out of a misplaced fear of predation or bigoted.
Conservative officials from 11 states sued the federal government on Wednesday to overturn a directive that transgender students be allowed to use the bathroom matching their gender identity.
Lawmakers in the state are also expected to take up a measure as early as Friday that would allow students to claim a religious right to have separate but equal bathrooms.