For the second year in a row, a powerful, agenda-driven organization posing as a “nonpartisan” group of lawyers is at the center of important legislative battles raging in states across the country.
The group is called the Uniform Law Commission (ULC), and although the organization has clearly aligned itself in recent years with far-left values, it remains one of the most influential forces in nearly every state capitol, including in the deepest-of-deep-red states.
Thus far in the 2024 legislative session, perhaps the biggest fight involving the ULC centers around a bill proposed in South Dakota, where the state legislature and the governor’s office are controlled by Republicans. (Although it’s important to note that similar legislation will likely soon be offered in other states, and the ULC will almost certainly be the primary opponent in those states as well.)
The bill in question is House Bill 1199. It seeks to change the Uniform Commercial Code in South Dakota so that investors in the state retain their property rights when they purchase securities, such as stocks, bonds, exchange-traded funds, and other investments.
Although most Americans don’t know it, under the current Uniform Commercial Code—a uniform state law that has been passed in every state, varying only slightly from one place to the next—investors who purchase securities, including through retirement accounts like 401(k) accounts, have no ownership of the securities themselves. The broker—Fidelity, for example—retains ownership of most of the securities underlying the investments.
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To make matters worse, the UCC also allows the broker to use investors’ investments as collateral in its own financial agreements, putting individuals’ wealth at risk in the event of a large financial crisis.
For example, if you buy 10 shares of Microsoft stock from a major broker—say, Merrill Lynch—either through a personal or retirement account, you might think you own those ten stocks of Microsoft. But you don’t. The broker—Merrill Lynch, in this case—owns the stock. You merely own a “security entitlement,” which is essentially a contract that provides a number of benefits but does not transfer ownership of the stock to you, even if you paid for the stock and broker fees in full.
The reason this is so important is because if you don’t own your investments, then your broker can use them in their own financial arrangements. As long as the economy hums along without any problems, you likely won’t notice that you don’t own your investments. But if there is a major financial crash, you could end up being at risk of losing much of your wealth and retirement savings.
This disturbing situation has been made possible by the Uniform Commercial Code, but it wasn’t always this way. The Uniform Commercial Code has been around for seventy years, but it was only in the 1990s that the changes were made to allow brokers to seize control of customers’ property rights.
That’s where the Uniform Law Commission comes in. The ULC, an allegedly “non-partisan” group of powerful lawyers and academics, is the mastermind behind the Uniform Commercial Code. For more than one-hundred years, it has worked tirelessly to build strong relationships with Republican and Democratic lawmakers alike.
Although most voters have never heard of this powerful group, when the ULC tells lawmakers that changes are needed to the Uniform Commercial Code, a notoriously complex law, legislators simply do whatever the ULC wants, often without any understanding of what the ULC is advocating for.
This has opened the door to truly radical changes to state legal codes, such as the legal changes that effectively stole investors’ property rights away in the 1990s.
This year, many Republican state lawmakers are learning about these outrageous rules in the UCC for the first time. And some lawmakers are working hard to change them—most notably, at present, in South Dakota. That’s the entire purpose of House Bill 1199.
Unsurprisingly, though, the ULC doesn’t want individuals to get their property rights back, and it is busy at work gaslighting Republican legislators into believing that the Uniform Commercial Code does not do what the text plainly says it does.
If House Bill 1199 dies in South Dakota this year, it will be almost entirely because the ULC was able to trick some Republicans into thinking it’s a safe bill, when, in reality, it is now a well-documented fact that the UCC fails to protect investors’ property rights.
The ULC has managed to accomplish this impressive feat by resting on its reputation. In the eyes of many Republicans, the ULC is an honest, well-informed source of important legal information. But the evidence is overwhelming that there is a dark side to the Uniform Law Commission. Its anti-freedom agenda is apparent for all to see, all one has to do is look.
Consider, for instance, that the ULC has been the primary supporter of making alterations to state codes across the country that would make it easier for a programmable, controllable, traceable central bank digital currency to be used in commercial transactions in the future.
Even more disturbingly, the ULC has formally drafted and approved authoritarian model legislation titled the Public-Health Emergency Authority Act (PHEAA). The PHEAA would effectively allow governors to become quasi-dictators in the event of another “public health emergency.”
Among other things, if the ULC has its way, governors would have the authority to unilaterally declare public health emergencies and easily renew those emergency orders when a predetermined expiration period ends.
In the midst of a public health emergency, governors would be empowered to regulate nearly every part of life, including, for example, the “zoning, operation, commandeering, management, or use of buildings, shelters, facilities, parks, outdoor space, or other physical space, and the management of activities in those places.”
Governors could also suspend “a provision of any statute, order, rule, or regulation if strict compliance would hinder efforts to respond to the public-health emergency or pose undue hardship or risk,” kill or take any plants and animals deemed to be a threat, surveil or monitor the “emergency” or “its effects,” among numerous other terrifying powers.
The Uniform Law Commission is clearly not a friend to conservative causes or individual rights, and neither is anyone who continues to support the ULC or its mission while knowing about its far-left policy objectives.
Justin Haskins (Jhaskins@heartland.org) is a New York Times bestselling author and the director of the Socialism Research Center at The Heartland Institute.
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