Published on July 3, 2025 5:26 PM GMT

Welcome to the AI Safety Newsletter by the Center for AI Safety. We discuss developments in AI and AI safety. No technical background required.

In this edition: The Senate removes a provision from Republican's “Big Beautiful Bill” aimed at restricting states from regulating AI; two federal judges split on whether training AI on copyrighted books in fair use.

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Senate Removes State AI Regulation Moratorium

The Senate removed a provision from Republican's “Big Beautiful Bill” aimed at restricting states from regulating AI. The moratorium would have prohibited states from receiving federal broadband expansion funds if they regulated AI—however, it faced procedural and political challenges in the Senate, and was ultimately removed in a vote of 99-1. Here’s what happened.

A watered-down moratorium cleared the Byrd Rule. In an attempt to bypass the Byrd Rule, which prohibits policy provisions in budget bills, the Senate Commerce Committee revised the original moratorium to be a prerequisite for states to receive federal broadband expansion funds rather than a blanket restriction. On Wednesday, Senate Parliamentarian Elizabeth MacDonough judged that the moratorium would only clear the Byrd Rule if it was tied to only the new $500 million in federal broadband expansion funds provided by the reconciliation bill—not all $42.45 billion previously appropriated.

This significantly weakened the moratorium—even if it had been passed, states might have decided that regulating AI was worth foregoing new broadband expansion funds.

The moratorium moved to a vote in the Senate. On Saturday, the senate voted 51-49 to move to general debate on the reconciliation bill, beginning the process of a “vote-a-rama” which saw many amendments debated and voted on in rapid succession. Senators Josh Hawley and Maria Cantwell were expected to bring an amendment to remove the moratorium from the bill.

Ted Cruz and Sen. Marsha Blackburn—another critic of the original moratorium—were set to pitch a compromise draft that shortened the moratorium from ten to five years and exempt state legislation establishing internet protections. However, on Tuesday, Blackburn abandoned that compromise after Steve Bannon and others reportedly reached out to her.

Instead, she brought an amendment with Sen. Cantwell to remove the moratorium entirely. Lacking enough support, even Cruz voted for the amendment, which passed 99-1.

*Sen. Blackburn cosponsored the Kids Online Safety Act last year.* (*Source*.)

Even if the moratorium had survived the Senate, it could have faced an uphill battle in the House—Representatives Marjorie Taylor Greene and Thomas Massie came out against it, along with other prominent Republicans like Arkansas Governor Sarah Huckabee Sanders and Steve Bannon.

Judges Split on Whether Training AI on Copyrighted Material is Fair Use

Last week, two U.S. district judges decided cases involving Anthropic and Meta on the question of whether training LLMs on copyrighted works qualifies as fair use. While both judges sided with the AI companies, they sharply disagreed about how the Copyright Act should apply to similar cases—leaving legal precedent on the question ambiguous.

One judge ruled that training Anthropic’s Claude on copyrighted books is fair use. U.S. District Judge William Alsup granted a summary judgment that Anthropic using copyrighted books to train LLMs qualifies as fair use. The order held that three out of four of the factors considered when determining whether a given use of a copyrighted work is a fair use favored Anthropic’s use in training LLMs.

The purpose and character of the use.

The nature of the copyrighted work.

The amount and substantiality of the portion used.

The effect of the use upon the potential market for or value of the copyrighted work.

Digitizing print books Anthropic lawfully bought is also protected—but piracy is not. Judge Alsup drew a sharp line between scanning paperbacks Anthropic had purchased and the millions of volumes it admitted downloading from pirate libraries. Turning a lawfully owned print copy into a PDF is fair use, but pirating books is not. That issue will proceed to trial.

In a case against Meta, another judge reached the opposite conclusion. While U.S. District Judge Vince Chhabria sided with Meta in its case, his order made clear he only did so because he believed the plaintiffs made the wrong arguments and presented the wrong evidence.

His analysis of whether using copyrighted books to train LLMs is fair use agrees with Judge Alsup’s on the first three factors—but sharply disagrees on the relevance of market effects. The upshot, he writes, is that “in many circumstances it will be illegal to copy copyright-protected works to train generative AI models without permission.” He sided with Mate only because the plaintiffs failed to provide arguments or evidence showing that Meta’s LLMs resulted in market harm to their books.

The judges disagree on whether “indirect displacement” is a relevant market effect under the Copyright Act. Both orders assume that LLMs may now or soon be able to generate many competitors to human-written books, which could harm the market for human-written books.

Judge Alsup writes that the authors’ complaint about such an effect is “no different than it would be if they complained that training schoolchildren to write well would result in an explosion of competing works,” which is “not the kind of competitive or creative displacement that concerns the Copyright Act.”

However, Judge Chhabria responds that “using books to teach children to write is not remotely like using books to create a product that a single individual could employ to generate countless competing works with a miniscule fraction of the time and creativity it would otherwise take.” That is, he argues that a similarity in kind does not outweigh a vast difference in magnitude.

Higher courts will likely settle the dispute. While Judge Alsup’s order might have provided precedence for similar cases, Chhabria’s disagreement leaves precedent ambiguous. However, both decisions fall under the jurisdiction of the Ninth Circuit, which has yet to rule on AI fair use. The authors in Anthropic’s case, at least, indicated that they will appeal the decision to the Ninth Circuit—and, ultimately, the issue may be up to the Supreme Court to decide.