He is saying that weaker models, as measured by a benchmark to distinguish "frontier" models, would be exempted. So an academic lab or startup that isn't yet producing frontier models would be exempted, but once it crossed some benchmark based threshold it would be subject to this kind of oversight.

Of course, right now you've got benchmaxxing going on; some companies specifically targetting benchmarks to appear stronger than they are on a wider range of tasks. Now you might see bench sandbagging, specifically looking weaker on certain benchmarks to avoid regulatory oversight.

For instance, once way I could see this going for open models is to release them undercooked; stop the RLVR process a bit early, leaving them a bit weaker on tool calls and agentic performance, but also release the RLVR environment so people can finish the process themselves.

In fact, this is fairly close to what Nvidia is already doing, the Nemotron 3 models are somewhat undercooked but they are releasing their full training pipeline, to encourage people to use these models as a base for further training, which will generally be done on Nvidia hardware.