Federalism, Technology, and Uniform State Legislation: Reflections on the 127th Uniform Law Commission Annual Meeting

By Commissioner V. David Zvenyach

(This blog post was originally posted at https://medium.com/@vdavez/federalism-technology-and-uniform-state-legislation-reflections-on-the-127th-uniform-law-2d60904a6570)

A feature of our Constitution is that powers are distributed between the federal and state governments. When new technologies emerge, this feature (called federalism) can sure look like a bug: each state might adopt different rules and regulations, making things expensive and complicated, and the alternative — federal politics — can be uniquely… messy. Inevitably, when new technologies arrive, there are calls for Congress or the President to act, to DO SOMETHING, and when they do, it can seem like everyone loses. There’s an alternative path, though, albeit less well-trodden: cooperative action by the states.

In this post, I describe the role of the Uniform Law Commission (“ULC”) in helping preserve federalism while advancing technological innovation. (Disclosure: I’m a member of the Uniform Law Commission, as a delegate from the state of Wisconsin, and a member of the ULC’s Technology Committee. All views in this blog post are mine alone, and do not reflect those of the state of Wisconsin, the ULC or its committees, or anyone else.)

Last month, I participated in the 127th annual meeting of the ULC, in which representatives from among the states gathered in Louisville, KY, to debate proposed uniform laws to be adopted by those states.

If you haven’t heard of the ULC, don’t be embarrassed. Most people, including most lawyers, haven’t heard of it. To quote Justice Sandra Day O’Connor in a foreword of Forming a More Perfect Union:

“American law” actually consists of 50 separate and potentially differing bodies of state law, co-existing with federal law. The fact that most Americans are unaware of the complexity of our legal system is due in some measure to the great success of the Uniform Law Commission.

Cool, right?

What is the ULC?

What is the ULC, then? Well, here’s what the ULC website has to say about it:

The Uniform Law Commission (ULC, also known as the National Conference of Commissioners on Uniform State Laws), established in 1892, provides states with non-partisan, well-conceived and well-drafted legislation that brings clarity and stability to critical areas of state statutory law.

ULC members must be lawyers, qualified to practice law. They are practicing lawyers, judges, legislators and legislative staff and law professors, who have been appointed by state governments as well as the District of Columbia, Puerto Rico and the U.S. Virgin Islands to research, draft and promote enactment of uniform state laws in areas of state law where uniformity is desirable and practical.

I.e., we’re a bunch of lawyers from all over the US, appointed by our state governments to gather together and figure out how to draft laws that should be uniformly adopted by all of the states. We are nonpartisan, and value diversity of perspectives and ideas.

We meet once a year for a week (including a full Saturday and a half Sunday!), this year in Louisville, KY, and we hash out proposed uniform acts. Almost everyone who attends a meeting of the ULC is immediately struck by how deliberate it is. It’s awesomely nerdy and wonky. It’s also intensely tedious; we go line-by-line through the proposed legislation, twice, after having gone through around half a dozen committees, and we debate until we have an act that is “enactable” across the US. We take this consensus and uniformity stuff seriously.

You may have heard of other organizations that are known for adopting model legislation, such as the American Law Institute, American Legislative Exchange Council, even subject-matter-specific associations. What sets the ULC apart from those organization is that we are not an industry association or interest group; we are appointed pursuant to each state’s law, and therefore our interest is the state’s interest in uniformity.

Technology and Uniformity

This year, more than in years past, it really hit home for me that the impact of the internet and digital technologies has created a new urgency for the ULC’s role in promoting uniformity of state legislation.

During this year’s meeting, we debated a number of cutting-edge legal issues on the floor:

  • What are the obligations of virtual-currency businesses that control their customers’ virtual currencies, and should virtual currencies be available as collateral for commercial loans?
  • Should “deepfakes” be included in the definition of an “intimate image” for purposes of civil remedies against revenge porn?
  • How should publicly available criminal records be published and corrected?
  • How should notaries public perform notarial acts (love that!) using audiovisual communication technologies?
  • Should individuals be allowed to have a digital last will and testament?
  • How should vehicles with automated driving systems be regulated across state lines?
  • What tort laws should apply to the use of drones?

These issues, as you can tell, involve novel and challenging policy questions. Questions where states could reasonably disagree and diverge. And where such divergence would create cost, complexity, and slow innovation.

In my estimation, it’s precisely because reasonable disagreement is possible that the ULC can play an important role. Even if you have a specific viewpoint about any of these questions, the ULC’s commitment to uniformity compels policy choices that allow diverse state legislatures to agree. The same bill must be passed in Alabama and California and Texas and Connecticut.

That’s tough, tough work. Especially when the technologies themselves are emergent. And often times, in the absence of such consensus, Congress is called upon to step in and legislate for the whole country. In some cases, that’s not such a terrible thing, but there are always tradeoffs. For example, if Congress steps in, it means that states are often preempted from experimentation and innovation in policymaking, making technology innovation less achievable over time. Similarly, even though Congress can achieve finality on a subject, that doesn’t imply that Congress has achieved consensus.

Against that backdrop, the ULC has a uniquely successful history of developing uniform laws related to emergent technologies.

For example, less than a year after the first successful human heart transplant, the ULC adopted the Uniform Anatomical Gift Act (1968), which set the basic framework for organ donation in the United States. Think about it: in 1967, there was no legal construct to handling “ante-mortem gifts” of body parts. Instead, the rules were a hodgepodge of common-law rules that varied state to state. It would be totally unworkable to allow for organ transplants to occur if physicians needed to hire an attorney before performing the transplant. Today, in part because of the work of the ULC, there are over 100 million organ donors in the US. And the ULC helped ensure that there aren’t different rules for organ donation across state lines.

Similarly, in 1999, the ULC adopted the Uniform Electronic Transactions Act, which “establishe[d] the legal equivalence of electronic records and signatures with paper writings and manually-signed signatures, removing barriers to electronic commerce.”

If it wasn’t for UETA, you’d have a lot more paper, a lot more friction, more uncertainty, and more cost when it comes to commerce. Meanwhile, UETA’s stood the test of time. Today’s “hype” technology is blockchain-based smart contracts. And, despite almost 20 years of new technology developments, UETA is still flexible enough to cover innovative new technologies and business models, including smart contracts.

From past to prologue?

It may seem strange that the ULC, an organization that was created in 1892 and is entirely composed of lawyers, would be well situated to address the policy implications of new technologies. But we have a relatively strong track record of doing so. We may be lawyers, but we care about getting it right.

To be perfectly honest, I’m not even sure why the ULC is so capable of doing it well. My hypothesis is that technology is never really neutral, that it always develops against a regulatory backdrop. So finding true consensus that can advance the technology but balances public concerns actually helps move both forward. Again, though, this is speculative as to causation.

What I can say is that the ULC has done well in the past. And, based on last month’s debates on the floor, my assessment is that ULC is capable of getting it mostly right in the future.

That’s important, because, in the coming years, the ULC will likely continue to tackle new challenges presented by emerging technologies. This year, for example, the ULC executive committee approved a new study committee on Online Privacy Protection. Whatever you may think of GDPR, it’s abundantly clear that — if there is to be an “American law” version — you wouldn’t want more than 50 different versions. And frankly Congress has a less-than-stellar track record when it comes to online privacy legislation.

To borrow again from Justice O’Connor:

A federal system like ours cannot endure if uniformity of law is continually imposed on the states by the national government. It would mean that federal courts, not states courts, would be the interpreters of the legislative design. With a uniform law passed by all the states it is otherwise; state courts retain their authority to interpret what the state uniform law means.

When the ULC is at its best, through hard work and interstate cooperation we can avoid unnecessary complexity inherent in our federalism. No one can know what the future may hold for new technologies and laws; if history is a guide, it should be deeply encouraging that the ULC is up to the task.

Federalism, Technology, and Uniform State Legislation: Reflections on the 127th Uniform Law Commission Annual Meeting

Report from the Criminal Records Accuracy Drafting Committee

The Criminal Records Accuracy Drafting Committee concluded its final in-person meeting in preparation for the act’s second reading at the ULC annual meeting in San Diego. The act requires criminal justice agencies to use biometric information to accurately identify individuals, maintain accurate records, report dispositions of arrests and charges, and provides remedies by which an individual can seek correction of their criminal history record. By complying with the requirement that they report the disposition of arrests and dispositions of cases, criminal justice agencies will greatly reduce, if not eliminate, a major cause of inaccurate criminal records. It also provides an important measure to guard against mistaken arrests by creating a mistaken identity registry.  Persons whose name or identifying characteristics are similar to that of a person who has a criminal history record may apply to have their names included in the mistaken identity registry and receive a document which they can use to demonstrate that they are not the person with a criminal history record.

Robert J. Tennessen, Chair
Drafting Committee on Criminal Records Accuracy

Report from the Criminal Records Accuracy Drafting Committee

Update from the Drafting Committee on an Electronic Registry for Residential Mortgage Notes

The Drafting Committee on an Electronic Registry for Residential Mortgage Notes met March 17 and 18, 2017, in Bethesda, Maryland.  The primary issue for the Drafting Committee was whether to move forward with drafting a state electronic mortgage note registry at this time or to continue for now to monitor and provide comment on the Federal Reserve Bank of New York proposal for a federal electronic registry for residential mortgage notes.

The Committee was assisted in its deliberations by four very informative presentations. Mr. Bill Beckmann, CEO of MERSCORP Holdings, Inc., gave a presentation regarding MERSCORP’s electronic registries, MERS System and MERS eRegistry.  Corinne Milliken, Esq., an attorney with the New York Federal Reserve, presented an overview of the latest draft of the New York Federal Reserve’s proposed National Mortgage Note Repository Act of 2017.  Mr. Tod McDonald, Co-Founder, COO, and Head of Partnership for R3, LLC,  and Isabelle Corbett, Esq., Senior Counsel and Director of Regulatory Affairs for R3,  gave a presentation on distributive ledger technology and its possible use with regard to an electronic registry.  Eric Fish, Esq., Senior Vice President for Legal Services, Federation of State Medical Boards, gave a presentation on development of an interstate compact among the states.  The Committee is very grateful to all of the presenters for taking the time to share their knowledge with the Committee.

The Committee also received input from stakeholders, including representatives of the FHFA, Fannie Mae and consumer interests, and from its ABA Advisors, Prof. James Durham and Barry Nekritz, Esquire.  After a thorough discussion, the Committee had a good idea of what might be the likely structure and contours of a state electronic mortgage note registry.  The consensus of the Committee, however, based on the input it received, was that it was not inclined to begin drafting of a state electronic mortgage note registry at this time.  Instead, the Committee agreed that for now it will continue to monitor and comment upon the New York Federal Reserve’s proposed National Mortgage Note Repository Act as that draft act moves forward through the Federal Reserve’s vetting process and is presented for consideration by Congress.

The Committee also provided Ms. Milliken with its comments on the latest draft of the proposed National Mortgage Note Repository Act.

H. Kathleen Patchel and Carlyle C. Ring, Co-Chairs
Drafting Committee on Electronic Registry for Residential Mortgage Notes

Update from the Drafting Committee on an Electronic Registry for Residential Mortgage Notes

Update from the Drafting Committee on Non-Parental Child Custody and Visitation Act

The Non-Parental Child Custody and Visitation Act drafting committee met for a fifth time on March 24-25, 2017, in Washington, DC.  This was our second drafting meeting since the first reading last summer at the ULC Annual Meeting in Stowe, Vermont.  The committee continues to focus on concerns raised on the floor, and has decided to:  1) delete the concept of de facto parenting, and 2) limit the act to suits filed by non-parents who have either acted as “consistent caretakers” or have had “substantial contact with the child and denial of contact would present a detriment” to the child.  One of the committee’s primary challenges has been to provide a structure that would allow non-parents who have not had actual care, custody and control of a child to seek court-ordered access without violating Troxel.  We continue to make progress on these issues, and look forward to further comment from the floor this summer in San Diego.

Debra Lehrmann, Chair
Drafting Committee on Non-Parental Child Custody and Visitation Act

Update from the Drafting Committee on Non-Parental Child Custody and Visitation Act

Update from the Drafting Committee to Amend UCC Articles 1, 3, and 9 in connection with a registry for electronic mortgage notes

The Committee met for a second time on March 24 and 25, 2017, in Washington, DC.  The Committee had before it a draft of federal National Mortgage Note Registry Act which would establish an electronic registry for notes secured by residential real property and a draft of proposed amendments to Articles 1,3 and 9 of the Uniform Commercial Code to modify the rules for negotiable instruments and secured transactions to accommodate electronic mortgage notes filed in the registry.

The current draft of the amendments provides for a number of changes to the Official Text of the Uniform Commercial Code:

Article 1

  • The term “holder” is to include a person who has submitted a negotiable or transferable record to the repository system that converts to an electronic mortgage note (EMN).

Article 3

  • The term “negotiable instrument” includes an EMN.
  • A transfer of an EMN in the records of the repository system is a “negotiation” and “indorsement”.  An indorsement other than a general one needs to be evidenced by the records of the repository operator.
  • The registrant in the repository system is the person entitled to enforce the instrument.
  • A record of discharge in the repository system is a notice is discharge for holder in due course status.
  • If the legacy submission to the repository system was not a negotiable instrument or transferrable record, there can be no holder in due course of the EMN.
  • A record of an EMN certified by the repository system showing the plaintiff as the registrant evidences the plaintiff’s right to enforce the EMN.
  • An instrument converted to an EMN and later destroyed under the system rules is not a lost or destroyed note for purposes of 3-309 and does not discharge the obligor.
  • No presentment or notice of dishonor is required for the EMN.

Article 8

  • An EMN is not a security but may be a financial asset if held in a securities account.

Article 9

  • An EMN is located in DC for purposes of the Article 9 choice-of-law rules.
  • New 9-313A gives a secured party who is a “registrant” or an “authorized  transferor” of an EMN (with the registrant waiving the right to transfer the EMN)  “possession” of the EMN  for purposes of Article 9 with the same priority as possession of a paper negotiable instrument.

The meeting was attended by a number of observers including representatives from the Federal Reserve Bank of New York who are drafting the federal statute.  We had a good discussion on a number of issues and expect to have revised drafts of the federal statute and the amendments available for an initial reading of the amendments at the Annual Meeting this summer in San Diego, California.

Edwin E. Smith
Chair, Committee to Amend Uniform Commercial Code Articles 1, 3 and 9


Update from the Drafting Committee to Amend UCC Articles 1, 3, and 9 in connection with a registry for electronic mortgage notes

Update from the Drafting Committee to Revise the Uniform Parentage Act

The Uniform Parentage Act (UPA) Drafting Committee has been hard at work since the last annual meeting on revising the UPA to integrate same-sex couples into the act; to update the act’s surrogacy provisions; and to provide children of assisted reproduction with a right to information about their genetic heritage.  Since the annual meeting, the ULC Executive Committee has expanded our committee’s scope to revise the act (rather than merely amending it) and to include the concept of “de facto” parentage in the act.

Our committee was structured to include current or former legislators from Washington, Idaho, Nevada, Minnesota, and Colorado and significant political diversity.  We have also benefited from a large and engaged group of observers.  We agreed early on that our objective should be to create an act that can be widely adopted.  We held in-person meetings in Minneapolis on October 28-29, 2016, and in Seattle on March 10-11, 2017, to read and review proposed changes to the entire act.  In addition, we held six telephone meetings focused on several thorny issues in the act as follows:

  • September 14: in light of concerns at the annual meeting about including “de facto” parents in the Non-Parental Child Custody and Visitation Act, we discussed taking the approach of many states to treat people who meet listed criteria to be established as full legal parents.
  • November 16: we discussed the appropriate distinctions between gestational and genetic surrogacy.
  • December 20: after consultation with federal child support enforcement authorities, we broadened the current acknowledgement of paternity process to provide a streamlined means for some same-sex couples to establish parentage through an acknowledgement.
  • January 23: we worked on specific language for “de facto” parentage concept and agreed that the act should provide alternatives for states either to limit the maximum number of legal parents to two or to establish more than two parents in extraordinary circumstances.
  • February 7: we discussed the effect of noncompliant surrogacy agreements and whether gestational and genetic surrogacy agreements should be treated differently.
  • March 29: we re-read language regarding genetic testing, the adjudication process, and assisted reproduction that had been the subject of substantial revisions at our in-person meeting earlier in the month.

We are hopeful that the act will be ready for its final reading this summer in San Diego and look forward to your comments and questions!

Jamie Pedersen
Chair, Drafting Committee to Revise the Uniform Parentage Act

Update from the Drafting Committee to Revise the Uniform Parentage Act

Update from the Regulation of Virtual Currency Businesses Act Drafting Committee

The Regulation of Virtual Currency Businesses Act drafting committee met for its final drafting committee meeting in Chicago on March 3 and 4, 2017. The focus was on deciding a number of open issues and polishing the act for its final reading before the Conference this summer in San Diego. One major change occurred when the drafting committee, in order to clarify the application of commercial law rules, particularly those of UCC Article 9, to virtual currency transactions, voted to mandate the application of UCC Article 8 treating virtual currency as a financial asset. The act will be worked on by the Style Committee at its May meeting, and simultaneously will be distributed to the committee roster for comments, before preparing the draft that will be submitted to the annual meeting in San Diego.

Fred Miller, Chair
Drafting Committee on Regulation of Virtual Currency Businesses Act

Update from the Regulation of Virtual Currency Businesses Act Drafting Committee