I don't think that there are laws against LLM distillation in the United States. It's only a terms of service violation. For all of the complaints about model distillation that OpenAI and Anthropic make, you don't see them saying that it's against the law:

https://openai.com/index/disrupting-a-coordinated-model-dist...

https://www.anthropic.com/news/detecting-and-preventing-dist...

They would probably like it to be against the law ("Distillation attacks at this scale require a coordinated response across the AI industry, cloud providers, and policymakers") but I hope that legislators decline to grant their wish.