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The 198 have since chafed at the constant O*N*E surveillance, as well as their inability to leave the school grounds without being tracked by monitoring chips.
When it was discovered the chips could also deliver a powerful electric discharge to assure the 198 could be subdued, they rioted.
In a battle between Nitro and the New Warriors, Nitro exploded, seemingly killing the entire team and a huge number of civilians (including 60 school children nearby).
This led the United States government to introduce a "Living Weapon of Mass Destruction" registry for all super-powered individuals.
Public opinion had been lukewarm for the Superhuman Registration Act before; now it passed the tipping point. They, on the other hand, were supportive and felt it was time for Peter to finally get some recognition for his good work.
During a live, nationally televised broadcast, he pulled off his mask and announced, "My name is Peter Parker, and I've been Spider-Man since I was fifteen years old." The X-Men, on behalf of the mutant community, declared neutrality in the growing conflict.
The logical extension of the often-proposed, never-passed Mutant Registration Act, the Superhuman Registration Act arose following the devastating attack on Manhattan in reprisal for Nick Fury's "Secret War" Following M-Day, 90% of the Earth's mutant population found itself spontaneously depowered.
With the mutant population suddenly far less visible and extremist groups claiming the event marked a turn in the tide of growing mutantdom (if not divine punishment against all mutants), sympathy for the group was near an all-time low.
When Namorita attempted to capture Nitro, he used his explosive powers and destroyed several city blocks, including the elementary school at the epicenter. seemed to have assumed the brunt of enforcing the act under acting director Maria Hill. After his escape, Cap began organizing other anti-registration heroes into a group the press dubbed the "Secret Avengers." Most of his core group (Captain America, Hercules, Bill Foster, Luke Cage, Daredevil (Daniel Rand), Falcon, and Cable) had to take on a series of identities to avoid capture, literally becoming outlaws. Mister Fantastic (Reed Richards), with the help of Yellowjacket and Tony Stark, began work on designing a prison (nicknamed 42 because it was the forty-second idea on Tony's list of ways to improve the world) to detain superpowered violators.
Mister M used his powers to remove the chips and they left the mansion.
Bishop, Sabra, and Micromax were given permission to apprehend them, threatening to shatter Cyclops' neutrality.
The now mostly-depowered Morlocks and the residents of New York's once entirely mutant ghetto Mutant Town remained easy targets for hate groups now that they had reverted to more-or-less normal humans.
X-Factor Investigations, an independent group of private investigators made up in part by members of the old superteam X-Factor, have recently set up shop in Mutant Town, and at times have been the only ones protecting the former mutants and putting down hate-induced riots.