A federal appeals court has upheld the dismissal of a charge for possessing AI-generated child sexual abuse material (CSAM) at home, while leaving separate charges involving its production, distribution and transfer to a minor intact.
The Seventh Circuit's 25 August 2026 ruling in United States v. Anderegg turned on a distinction between images depicting actual children and entirely virtual ones. Prosecutors conceded that the charged images did not depict, and could not be linked to, an actual child. Existing Supreme Court decisions therefore protected the private possession at issue, the panel concluded.
The Possession Ruling Left Other Charges Intact
In October 2023, Meta reported that an Instagram account had allegedly sent explicit, computer-generated imagery to a minor. The company reported the transmission to the National Center for Missing and Exploited Children, and investigators linked the account to Steven Anderegg.
Prosecutors alleged that Anderegg used Stable Diffusion to generate the images. He was charged with production, distribution, transfer to a minor under 16 and possession. The district court dismissed only the possession count, and the government appealed that decision.
The distinction between the images' subjects and their alleged recipient matters. No actual child was depicted, but a real minor was allegedly sent the material. The appeals court's decision did not resolve that transfer charge or the other remaining counts.
Home Privacy and Virtual Images Shaped the Decision
The protection comes partly from Stanley v. Georgia, a 1969 Supreme Court decision holding that the government cannot criminalise mere possession of obscene material in the privacy of someone's home. That does not create a corresponding right to distribute it.
Material involving actual child victims is treated differently. In Osborne v. Ohio in 1990, the Supreme Court upheld a prohibition on possessing such material, including at home, because the government has a compelling interest in protecting children from exploitation.
Then, in Ashcroft v. Free Speech Coalition in 2002, the Supreme Court struck down a prohibition that extended to non-obscene virtual depictions of minors engaged in sexually explicit conduct, made without actual children. Such depictions did not record a child's abuse during production, so the child-protection rationale for banning material involving actual victims did not justify the challenged prohibition.
Together, those decisions controlled Anderegg's case. Although the possession charge concerned allegedly obscene material, it involved virtual children and private possession at home. The panel found the possession provision in 18 U.S.C. § 1466A(b)(1) unconstitutional as applied to him, rather than striking it down altogether.
Two Judges Asked for Further Supreme Court Guidance
Prosecutors argued that synthetic imagery could be used to groom children, encourage abuse and make it harder for investigators to distinguish fictional subjects from real children needing help.
The panel said the Supreme Court had already rejected the justifications offered in the appeal. Advances in technology did not give a lower court authority to disregard those decisions. Its conclusion concerned what precedent required, not whether AI-generated imagery was harmless.
Judge John Lee, who wrote the panel's opinion, also wrote a separate concurrence joined by Judge Joshua Kolar, seeking further Supreme Court guidance if an appropriate case arises. The concurrence highlighted images increasingly difficult to distinguish from records of actual abuse and the resulting demands on investigators.
It also raised a question extending beyond what the generated image depicts: whether actual abuse material was involved in training the technology. The concurrence cited scholarship reporting that researchers had found hundreds of CSAM images in a major dataset used to train image-generating AI, suggesting a possible connection between synthetic imagery and exploitation of real children.
The record in Anderegg's case was insufficient to evaluate that connection. The panel resolved the possession issue before it, but whether abuse material used in model training changes the constitutional analysis remained unanswered.
