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The Keene Act was a national law passed in 1977 by the United States Congress that outlawed "costumed adventuring". Passed by a United States senator named John David Keene, it immediately made illegal any form of vigilantism by costumed adventurers, except for the few who worked solely in the remit of the United States government.
According to Doctor Manhattan, vigilantism had been made officially legal shortly after his creation, as this allowed him to wipe out organized crime en masse and demonstrate his powers to the world, intimidating America's enemies and reassuring allies. While the activities of the Minutemen had been tolerated, they were never officially sanctioned by the government. With this new legalization, Captain Metropolis attempted to form a new team of heroes, only to have his former teammate the Comedian destroy his efforts. However individually the various members of the proposed team remained active, each with varying levels of success.
The public's trust in vigilantes began to falter following the Vietnam War. People began to harbor distaste for vigilantism and became suspicious of the currently active roster of costumed heroes, in part due to the actions of one particular costumed hero: Rorschach. Already known for his brutality in dispatching criminals, he was now openly murdering them without due process of law, and this only served to further the growing divides between the heroes and the communities they served. The final straw came when a police strike broke out on the east coast, causing widespread riots. While the heroes did what they could to contain them, including one infamously violent incident involving the Comedian and Nite Owl, Congress entered an emergency session and passed the Keene Act. It was later stated to have been on the table for some time, only coming into play following the crisis.
Passage of the Keene Act seems to have ended the strike action. Only Dr. Manhattan and the Comedian chose to continue to use their careers in service of the government -- though both had in fact been working for the government for some time previously. Although Laurie Juspeczyk's identity had been public knowledge throughout her career, and although she entered government service at this time (largely as Dr. Manhattan's lover), she nevertheless chose to retire her Silk Spectre identity. Dan Dreiberg also chose to retire, but without revealing his identity. Adrian Veidt had retired from superhero work and made his identity public two years before the law was passed, thereby paving the way for the foundation of his multi-billion dollar corporation.
Only Rorschach refused to comply, becoming a wanted fugitive in order to continue his crusade against the criminal elements of New York City. In order to make his intentions clear, he left the dead body of multiple-rapist Harvey Charles Furniss outside a police precinct with a note bearing only his symbolized signature and the word "neveR!".
DC Universe Rebirth
The Keene Act is replaced with a similar act passed by a fictionalized version of Senator Joe McCarthy, who infamously was one of the driving forces behind the Red Scare during the Cold War. This act, however, was not aimed at ending public vigilantism, but the covert government-sponsored activities of the Justice Society of America. The motivations behind this are unknown, but the Justice Society's existence was then covered up by the government and their existence forgotten by the general public. Only Johnny Thunder, trapped in a mental hospital and believed insane, remembers them. He is encouraged by Wally West, the original Kid Flash, to locate them in order to help prevent an unknown force (revealed to the reader as Doctor Manhattan) from once again rewriting their history and destroying their lives.
- The Keene Act and YOU 1977 video