[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 761 Reported in Senate (RS)]
Calendar No. 243
106th CONGRESS
1st Session
S. 761
[Report No. 106-131]
_______________________________________________________________________
A BILL
To regulate interstate commerce by electronic means by permitting and
encouraging the continued expansion of electronic commerce through the
operation of free market forces, and other purposes.
_______________________________________________________________________
July 30, 1999
Reported with an amendment in the nature of a substitute
Calendar No. 243
106th CONGRESS
1st Session
S. 761
[Report No. 106-131]
To regulate interstate commerce by electronic means by permitting and
encouraging the continued expansion of electronic commerce through the
operation of free market forces, and other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 25, 1999
Mr. Abraham (for himself, Mr. McCain, Mr. Wyden, Mr. Burns, Mr. Lott,
Mr. Allard, Mr. Torricelli, Mr. Grams, Mr. Brownback, Mr. Frist, Mr.
Hagel, and Mr. Gorton) introduced the following bill; which was read
twice and referred to the Committee on Commerce, Science, and
Transportation
July 30, 1999
Reported by Mr. McCain, with an amendment in the nature of a substitute
[Strike out all after the enacting clause and insert the part printed
in italic]
_______________________________________________________________________
A BILL
To regulate interstate commerce by electronic means by permitting and
encouraging the continued expansion of electronic commerce through the
operation of free market forces, and other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
<DELETED>SECTION 1. SHORT TITLE.</DELETED>
<DELETED> This Act may be cited as the ``Third Millennium Electronic
Commerce Act''.</DELETED>
<DELETED>SEC. 2. FINDINGS.</DELETED>
<DELETED> The Congress makes the following findings:</DELETED>
<DELETED> (1) The growth of electronic commerce and
electronic government transactions represent a powerful force
for economic growth, consumer choice, improved civic
participation and wealth creation.</DELETED>
<DELETED> (2) The promotion of growth in private sector
electronic commerce through Federal legislation is in the
national interest because that market is globally important to
the United States.</DELETED>
<DELETED> (3) A consistent legal foundation, across multiple
jurisdictions, for electronic commerce will promote the growth
of such transactions, and that such a foundation should be
based upon a simple, technology neutral, non-regulatory, and
market-based approach.</DELETED>
<DELETED> (4) The Nation and the world stand at the
beginning of a large scale transition to an information society
which will require innovative legal and policy approaches, and
therefore, States can serve the national interest by continuing
their proven role as laboratories of innovation for quickly
evolving areas of public policy, provided that States also
adopt a consistent, minimalist national baseline to eliminate
obsolete barriers to electronic commerce such as undue paper
and pen requirements, and further, that any such innovation
should not unduly burden inter-jurisdictional
commerce.</DELETED>
<DELETED> (5) To the extent State laws or regulations in
fact create an undue burden to interstate commerce in the
important burgeoning area of electronic commerce, the national
interest is best served by Federal preemption to the extent
necessary to eliminate said burden, but that absent such
burdens, the best legal system for electronic commerce will
result from continuing experimentation by individual
jurisdictions.</DELETED>
<DELETED> (6) With due regard to the fundamental need for
adequate consistency, each jurisdiction that enacts such laws
should have the right to determine the need for any exceptions
to protect consumers and maintain consistency with existing
related bodies of law within a particular
jurisdiction.</DELETED>
<DELETED> (7) Industry has developed several electronic
signature technologies for use in electronic transactions, and
the public policies of the United States should serve to
promote a dynamic marketplace within which these technologies
can compete. Consistent with this Act, States should permit the
use and development of any authentication technologies that are
appropriate as practicable as between private parties and in
use with State agencies.</DELETED>
<DELETED>SEC. 3. PURPOSES.</DELETED>
<DELETED> The purposes of this Act are--</DELETED>
<DELETED> (1) to permit and encourage the continued
expansion of electronic commerce through the operation of free
market forces rather than proscriptive governmental mandates
and regulations;</DELETED>
<DELETED> (2) to promote public confidence in the validity,
integrity and reliability of electronic commerce and online
government under Federal law;</DELETED>
<DELETED> (3) to facilitate and promote electronic commerce
by clarifying the legal status of electronic records and
electronic signatures in the context of writing and signing
requirements imposed by law; and</DELETED>
<DELETED> (4) to promote the development of a consistent
national legal infrastructure necessary to support of
electronic commerce at the Federal and State levels within
existing areas of jurisdiction.</DELETED>
<DELETED>SEC. 4. DEFINITIONS.</DELETED>
<DELETED> In this Act:</DELETED>
<DELETED> (1) Electronic.--The term ``electronic'' means of
or relating to technology having electrical, digital, magnetic,
wireless, optical, electromagnetic, or similar
capabilities.</DELETED>
<DELETED> (2) Electronic record.--The term ``electronic
record'' means a record created, stored, generated, received,
or communicated by electronic means.</DELETED>
<DELETED> (3) Electronic signature.--The term ``electronic
signature'' means a signature in electronic form, attached to
or logically associated with an electronic record.</DELETED>
<DELETED> (4) Governmental agency.--The term ``governmental
agency'' means an executive, legislative, or judicial agency,
department, board, commission, authority, institution, or
instrumentality of the Federal Government or of a State or of
any county, municipality, or other political subdivision of a
State.</DELETED>
<DELETED> (5) Record.--The term ``record'' means information
that is inscribed on a tangible medium or that is stored in an
electronic or other medium and is retrievable in perceivable
form.</DELETED>
<DELETED> (6) Sign.--The term ``sign'' means to execute or
adopt a signature.</DELETED>
<DELETED> (7) Signature.--The term ``signature'' means any
symbol, sound, or process executed or adopted by a person with
intent to authenticate a record.</DELETED>
<DELETED> (8) Transaction.--The term ``transaction'' means
an action or set of actions occurring between 2 or more persons
relating to the conduct of commerce.</DELETED>
<DELETED>SEC. 5. PRINCIPLES GOVERNING THE USE OF ELECTRONIC SIGNATURES
IN INTERNATIONAL TRANSACTIONS.</DELETED>
<DELETED> (a) In General.--To the extent practicable, the Federal
Government shall observe the following principles in an international
context to enable commercial electronic transaction:</DELETED>
<DELETED> (1) Remove paper-based obstacles to electronic
transactions by adopting relevant principles from the Model Law
on Electronic Commerce adopted in 1996 by the United Nations
Commission on International Trade Law (UNCITRAL).</DELETED>
<DELETED> (2) Permit parties to a transaction to determine
the appropriate authentication technologies and implementation
models for their transactions, with assurance that those
technologies and implementation models will be recognized and
enforced.</DELETED>
<DELETED> (3) Permit parties to a transaction to have the
opportunity to prove in court or other proceedings that their
authentication approaches and their transactions are
valid.</DELETED>
<DELETED> (4) Take a non-discriminatory approach to
electronic signatures and authentication methods from other
jurisdictions.</DELETED>
<DELETED>SEC. 6. INTERSTATE CONTRACT CERTAINTY.</DELETED>
<DELETED> (a) Interstate Commercial Contracts.--A contract relating
to an interstate transaction shall not be denied legal effect solely
because an electronic signature or electronic record was used in its
formation.</DELETED>
<DELETED> (b) Methods.--Notwithstanding any rule of law that
specifies one or more acceptable or required technologies or business
models, including legal or other procedures, necessary to create, use,
receive, validate, or invalidate electronic signatures or electronic
records, the parties to an interstate transaction may establish by
contract, electronically or otherwise, such technologies or business
models, including legal or other procedures to create, use, receive,
validate, or invalidate electronic signatures and electronic
records.</DELETED>
<DELETED> (c) Not Preempt State Law.-- Nothing in this section shall
be construed to preempt the law of a State that enacts legislation
governing electronic transactions which is substantially similar to,
and not inconsistent with, subsections (a) and (b). A State that enacts
uniform electronic transactions legislation substantially as reported
to State legislatures by the National Conference of Commissioners on
Uniform State Law shall be deemed to have satisfied this
criterion.</DELETED>
<DELETED> (d) Intent.--The intent of a person to execute or adopt an
electronic signature shall be determined from the context and
surrounding circumstances, which may include accepted commercial
practices.</DELETED>
<DELETED>SEC. 7. ADVISORY COMMISSION ON ELECTRONIC
AUTHENTICATION.</DELETED>
<DELETED> (a) Establishment of Commission.--There is established a
commission to be known as the Advisory Commission on Electronic
Authentication (in this section referred to as the ``Commission''). The
Commission shall--</DELETED>
<DELETED> (1) be composed of 17 members appointed in
accordance with subsection (b), including the chairperson who
shall be selected by the members of the Commission from among
themselves; and</DELETED>
<DELETED> (2) conduct its business in accordance with the
provisions of this section.</DELETED>
<DELETED> (b) Membership.--</DELETED>
<DELETED> (1) In general.--The Commissioners shall serve for
the life of the Commission. The membership of the Commission
shall be as follows:</DELETED>
<DELETED> (A) 3 representatives from the Federal
Government, comprised of the Secretary of Commerce, the
Secretary of the Treasury, and the United States Trade
Representative (or their respective
delegates).</DELETED>
<DELETED> (B) 4 representatives from State and local
governments.</DELETED>
<DELETED> (C) 10 representatives of the electronic
commerce industry (including small business), banks and
other financial service companies, and consumer groups,
comprised of--</DELETED>
<DELETED> (i) 3 individuals appointed by the
Majority Leader of the Senate;</DELETED>
<DELETED> (ii) 2 individuals appointed by
the Minority Leader of the Senate;</DELETED>
<DELETED> (iii) 3 individuals appointed by
the Speaker of the House of Representatives;
and</DELETED>
<DELETED> (iv) 2 individuals appointed by
the Minority Leader of the House of
Representatives.</DELETED>
<DELETED> (2) Appointments.--Appointments to the Commission
shall be made not later than 45 days after the date of the
enactment of this Act. The chairperson shall be selected not
later than 60 days after the date of the enactment of this
Act.</DELETED>
<DELETED> (3) Vacancies.--Any vacancy in the Commission
shall not affect its powers, but shall be filled in the same
manner as the original appointment.</DELETED>
<DELETED> (c) Other Resources.--The Commission shall have reasonable
access to materials, resources, data, and other information from the
Department of Justice, the Department of Commerce, the Department of
State, the Department of the Treasury, and the Office of the United
States Trade Representative. The Commission shall also have reasonable
access to use the facilities of any such Department or Office for
purposes of conducting meetings.</DELETED>
<DELETED> (d) Sunset.--The Commission shall terminate 12 months
after the date of the enactment of this Act.</DELETED>
<DELETED> (e) Duties of the Commission.--The Commission shall
conduct a thorough study of electronic authentication systems,
including third-party verification systems, in the transacting of
contractual agreements, the use of such systems in electronic commerce
today, and the role of the electronic commerce industry, the Federal
Government, and the States in such a system.</DELETED>
<DELETED>SEC. 8. STUDY OF LEGAL AND REGULATORY BARRIERS TO ELECTRONIC
COMMERCE.</DELETED>
<DELETED> (a) Barriers.--Each Federal agency shall, not later than 6
months after the date of enactment of this Act, provide a report to the
Director of the Office of Management and Budget and the Secretary of
Commerce identifying any provision of law administered by such agency,
or any regulations issued by such agency and in effect on the date of
enactment of this Act, that may impose a barrier to electronic
transactions, or otherwise to the conduct of commerce online or be
electronic means. Such barriers include, but are not limited to,
barriers imposed by a law or regulation directly or indirectly
requiring that signatures, or records of transactions, be accomplished
or retained in other than electronic form. In its report, each agency
shall identify the barriers among those identified whose removal would
require legislative action, and shall indicate agency plans to
undertake regulatory action to remove such barriers among those
identified as are caused by regulations issued by the agency.</DELETED>
<DELETED> (b) Report to Congress.--The Secretary of Commerce, in
consultation with the Director of the Office of Management and Budget,
shall, within 18 months after the date of enactment of this Act, and
after the consultation required by subsection (c) of this section,
report to the Congress concerning--</DELETED>
<DELETED> (1) legislation needed to remove barriers to
electronic transactions or otherwise to the conduct of commerce
online or by electronic means; and</DELETED>
<DELETED> (2) actions being taken by the Executive Branch
and individual Federal agencies to remove such barriers as are
caused by agency regulations or policies.</DELETED>
<DELETED> (c) Consultation.--In preparing the report required by
this section, the Secretary of Commerce shall consult with the General
Services Administration, the National Archives and Records
Administration, and the Attorney General concerning matters involving
the authenticity of records, their storage and retention, and their
usability for law enforcement purposes.</DELETED>
<DELETED> (d) Include Findings If No Recommendations.--If the report
required by this section omits recommendations for actions needed to
fully remove identified barriers to electronic transactions or to
online or electronic commerce, it shall include a finding or findings,
including substantial reasons therefor, that such removal is
impracticable or would be inconsistent with the implementation or
enforcement of applicable laws</DELETED>
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Third Millennium Digital Commerce
Act''.
SEC. 2. FINDINGS.
The Congress makes the following findings:
(1) The growth of electronic commerce and electronic
government transactions represent a powerful force for economic
growth, consumer choice, improved civic participation and
wealth creation.
(2) The promotion of growth in private sector electronic
commerce through Federal legislation is in the national
interest because that market is globally important to the
United States.
(3) A consistent legal foundation, across multiple
jurisdictions, for electronic commerce will promote the growth
of such transactions, and that such a foundation should be
based upon a simple, technology neutral, non-regulatory, and
market-based approach.
(4) The Nation and the world stand at the beginning of a
large scale transition to an information society which will
require innovative legal and policy approaches, and therefore,
States can serve the national interest by continuing their
proven role as laboratories of innovation for quickly evolving
areas of public policy, provided that States also adopt a
consistent, reasonable national baseline to eliminate obsolete
barriers to electronic commerce such as undue paper and pen
requirements, and further, that any such innovation should not
unduly burden inter-jurisdictional commerce.
(5) To the extent State laws or regulations do not provide
a consistent, reasonable national baseline or in fact create an
undue burden to interstate commerce in the important burgeoning
area of electronic commerce, the national interest is best
served by Federal preemption to the extent necessary to provide
such consistent, reasonable national baseline eliminate said
burden, but that absent such lack of consistent, reasonable
national baseline or such undue burdens, the best legal system
for electronic commerce will result from continuing
experimentation by individual jurisdictions.
(6) With due regard to the fundamental need for a
consistent national baseline, each jurisdiction that enacts
such laws should have the right to determine the need for any
exceptions to protect consumers and maintain consistency with
existing related bodies of law within a particular
jurisdiction.
(7) Industry has developed several electronic signature
technologies for use in electronic transactions, and the public
policies of the United States should serve to promote a dynamic
marketplace within which these technologies can compete.
Consistent with this Act, States should permit the use and
development of any authentication technologies that are
appropriate as practicable as between private parties and in
use with State agencies.
SEC. 3. PURPOSES.
The purposes of this Act are--
(1) to permit and encourage the continued expansion of
electronic commerce through the operation of free market forces
rather than proscriptive governmental mandates and regulations;
(2) to promote public confidence in the validity, integrity
and reliability of electronic commerce and online government
under Federal law;
(3) to facilitate and promote electronic commerce by
clarifying the legal status of electronic records and
electronic signatures in the context of writing and signing
requirements imposed by law;
(4) to facilitate the ability of private parties engaged in
interstate transactions to agree among themselves on the terms
and conditions on which they use and accept electronic
signatures and electronic records; and
(5) to promote the development of a consistent national
legal infrastructure necessary to support of electronic
commerce at the Federal and State levels within existing areas
of jurisdiction.
SEC. 4. DEFINITIONS.
In this Act:
(1) Electronic.--The term ``electronic'' means relating to
technology having electrical, digital, magnetic, wireless,
optical, electromagnetic, or similar capabilities.
(2) Electronic agent.--The term ``electronic agent'' means
a computer program or an electronic or other automated means
used to initiate an action or respond to electronic records or
performances in whole or in part without review by an
individual at the time of the action or response.
(3) Electronic record.--The term ``electronic record''
means a record created, generated, sent, communicated,
received, or stored by electronic means.
(4) Electronic signature.--The term ``electronic
signature'' means an electronic sound, symbol, or process
attached to or logically associated with an electronic record
and executed or adopted by a person with the intent to sign the
electronic record.
(5) Governmental agency.--The term ``governmental agency''
means an executive, legislative, or judicial agency,
department, board, commission, authority, institution, or
instrumentality of the Federal Government or of a State or of
any county, municipality, or other political subdivision of a
State.
(6) Record.--The term ``record'' means information that is
inscribed on a tangible medium or that is stored in an
electronic or other medium and is retrievable in perceivable
form.
(7) Transaction.--The term ``transaction'' means an action
or set of actions relating to the conduct of commerce between 2
or more persons, neither of which is the United States
Government, a State, or an agency, department, board,
commission, authority, institution, or instrumentality of the
United States Government or of a State.
(8) Uniform electronic transactions act.--The term
``Uniform Electronic Transactions Act'' means the Uniform
Electronic Transactions Act as reported to State legislatures
by the National Conference of Commissioners on Uniform State
Law in the form or any variation thereof that is authorized or
provided for in such report.
SEC. 5. PRINCIPLES GOVERNING THE USE OF ELECTRONIC SIGNATURES IN
INTERNATIONAL TRANSACTIONS.
To the extent practicable, the Federal Government shall observe the
following principles in an international context to enable commercial
electronic transaction:
(1) Remove paper-based obstacles to electronic transactions
by adopting relevant principles from the Model Law on
Electronic Commerce adopted in 1996 by the United Nations
Commission on International Trade Law (UNCITRAL).
(2) Permit parties to a transaction to determine the
appropriate authentication technologies and implementation
models for their transactions, with assurance that those
technologies and implementation models will be recognized and
enforced.
(3) Permit parties to a transaction to have the opportunity
to prove in court or other proceedings that their
authentication approaches and their transactions are valid.
(4) Take a non-discriminatory approach to electronic
signatures and authentication methods from other jurisdictions.
SEC. 6. INTERSTATE CONTRACT CERTAINTY.
(a) In General.--The following rules apply to any commercial
transaction affecting interstate commerce:
(1) A record or signature may not be denied legal effect or
enforceability solely because it is in electronic form.
(2) A contract may not be denied legal effect or
enforceability solely because an electronic record was used in
its formation.
(3) If a law requires a record to be in writing, or
provides consequences if it is not, an electronic record
satisfies the law.
(4) If a law requires a signature, or provides consequences
in the absence of a signature, the law is satisfied with
respect to an electronic record if the electronic record
includes an electronic signature.
(b) Methods.--The parties to a contract may agree on the terms and
conditions on which they will use and accept electronic signatures and
electronic records, including the methods therefor, in commercial
transactions affecting interstate commerce. Nothing in this subsection
requires that any party enter into such a contract.
(c) Intent.--The following rules apply to any commercial
transaction affecting interstate commerce:
(1) An electronic record or electronic signature is
attributable to a person if it was the act of the person. The
act of the person may be established in any manner, including a
showing of the efficacy of any security procedures applied to
determine the person to which the electronic record or
electronic signature was attributable.
(2) The effect of an electronic record or electronic
signature attributed to a person under paragraph (1) is
determined from the context and surrounding circumstances at
the time of its creation, execution, or adoption, including the
parties' agreement, if any, and otherwise as provided by law.
(d) Formation of Contract.--A contract relating to a commercial
transaction affecting interstate commerce may not be denied legal
effect solely because its formation involved--
(1) the interaction of electronic agents of the parties; or
(2) the interaction of an electronic agent of a party and
an individual who acts on that individual's own behalf or for
another person.
(e) Application in UETA States.--This section does not apply in any
State in which the Uniform Electronic Transactions Act is in effect.
SEC. 7. STUDY OF LEGAL AND REGULATORY BARRIERS TO ELECTRONIC COMMERCE.
(a) Barriers.--Each Federal agency shall, not later than 6 months
after the date of enactment of this Act, provide a report to the
Director of the Office of Management and Budget and the Secretary of
Commerce identifying any provision of law administered by such agency,
or any regulations issued by such agency and in effect on the date of
enactment of this Act, that may impose a barrier to electronic
transactions, or otherwise to the conduct of commerce online or be
electronic means. Such barriers include, but are not limited to,
barriers imposed by a law or regulation directly or indirectly
requiring that signatures, or records of transactions, be accomplished
or retained in other than electronic form. In its report, each agency
shall identify the barriers among those identified whose removal would
require legislative action, and shall indicate agency plans to
undertake regulatory action to remove such barriers among those
identified as are caused by regulations issued by the agency.
(b) Report to Congress.--The Secretary of Commerce, in consultation
with the Director of the Office of Management and Budget, shall, within
18 months after the date of enactment of this Act, and after the
consultation required by subsection (c) of this section, report to the
Congress concerning--
(1) legislation needed to remove barriers to electronic
transactions or otherwise to the conduct of commerce online or
by electronic means; and
(2) actions being taken by the Executive Branch and
individual Federal agencies to remove such barriers as are
caused by agency regulations or policies.
(c) Consultation.--In preparing the report required by this
section, the Secretary of Commerce shall consult with the General
Services Administration, the National Archives and Records
Administration, and the Attorney General concerning matters involving
the authenticity of records, their storage and retention, and their
usability for law enforcement purposes.
(d) Include Findings If No Recommendations.--If the report required
by this section omits recommendations for actions needed to fully
remove identified barriers to electronic transactions or to online or
electronic commerce, it shall include a finding or findings, including
substantial reasons therefor, that such removal is impracticable or
would be inconsistent with the implementation or enforcement of
applicable laws