A major federal appeals court decision out of Chicago may influence how law enforcement in the tri-state area handles cases involving AI-generated sexual images of children.

On August 25, 2026, the U.S. Court of Appeals for the Seventh Circuit ruled that the private possession of purely AI-generated images depicting children in sexual situations is protected by the First Amendment, as long as no real child is shown in the material. The decision came in the case of a Wisconsin man, Steven Anderegg, who was charged with creating and possessing thousands of AI-generated images.

Circuit Judge John Z. Lee, writing for the court, said long-standing Supreme Court precedents forced the ruling. The court relied on a 1969 decision that protects the private possession of obscene material inside a person’s home and a 2002 decision that treated virtual (non-real) child sexual images differently from those involving actual children.

Importantly, the ruling only dismissed the charge for possessing the images in the home. Charges related to producing the images, distributing them, and sending some to a minor remain active.

Why it matters in the Dubuque area

Although Iowa sits in a different federal circuit, the decision is being closely watched across the Midwest. Dubuque County and other local agencies have already dealt with AI-related cases involving students, including deepfake-style images created with artificial intelligence. Iowa lawmakers have also discussed strengthening state laws covering AI-generated child sexual abuse material.

Local officials and parents may see the ruling as a reminder of how quickly technology is moving faster than existing laws. Judge Lee himself noted the difficulty, writing that today’s AI can create images “virtually indistinguishable” from those involving real children, and that current legal lines drawn more than 20 years ago are becoming harder to apply.

The decision does not legalize creating or sharing such material, nor does it affect cases that involve real children. It only limits the government’s ability to prosecute someone solely for privately possessing purely computer-generated images that depict no actual child.

As AI tools become more common and easier to use, both law enforcement and families in the tri-state region are likely to face more of these complex cases in the years ahead.

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