[Congressional Record Volume 145, Number 165 (Friday, November 19, 1999)]
[Senate]
[Pages S14881-S14889]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                THIRD MILLENNIUM ELECTRONIC COMMERCE ACT

  Ms. COLLINS. Mr. President, I now ask unanimous consent that the 
Senate proceed to the consideration of Calendar No. 243, S. 761.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 761) 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.

  There being no objection, the Senate proceeded to consider the 
bill which had been reported from the Committee on Commerce, Science, 
and Transportation, with an amendment to strike all after the enacting 
clause and inserting in lieu thereof the following:

     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

[[Page S14882]]

     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.


                           Amendment No. 2787

  Ms. COLLINS. Mr. President, Senators Abraham, Wyden, and Leahy have 
an amendment at the desk, and I ask for its consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Maine [Ms. Collins] for Mr. Abraham, for 
     himself, Mr. Wyden, and Mr. Leahy, proposes an amendment 
     numbered 2787.

  The amendment is as follows:
  The amendment is printed in today's Record under ``Amendments 
Submitted.''
  Ms. COLLINS. I ask unanimous consent that the amendment be agreed to.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 2787) was agreed to.
  Ms. COLLINS. It is my understanding the Senator from Michigan, 
Senator Abraham, has a statement to make on this important legislation.
  I yield to the Senator from Michigan.
  Mr. ABRAHAM. Mr. President, I will briefly comment on this 
legislation. First, I thank the cosponsors of this legislation, the 
Millennium Digital Commerce Act, and Senator Wyden, the lead cosponsor 
of the legislation, and Senators McCain, Burns, and Lott, who joined as 
cosponsors. I also thank Senator Leahy, Senator Sarbanes, Senator 
Hollings, Senator McCain and others who have worked with Senator Wyden 
and me in moving this through the legislative process. I express my 
appreciation to all my colleagues.
  As we move into the era of e-commerce it is important that people who 
wish to engage in commercial transactions online over the Internet be 
able to do so as effectively and efficiently as possible. Part of the 
challenge we confront is when people are entering into contracts in 
this nonwritten context, the potential exists for questions to be 
raised as to the validity of the contractual arrangements. Without 
getting into all the details, the goal of the Millennium Digital 
Commerce Act is to address this issue. Approximately 42 States have 
already passed what in effect are digital signature authentication laws 
which address contracts entered into online or which address the 
validity of contracts entered into through the web. The problem is 
those 42 bills are all different. It is possible for people to argue 
that a contract is valid in one State and not valid in the State of the 
other contracting party and, thus, is an invalid document.
  The purpose of our legislation is to try to make all such agreements 
valid if they fit or meet some parameters, identical to the ones the 
States are moving toward; a uniform system. In short, we believe this 
will be an interim approach until the States have passed a model 
uniform act. If we don't do this, impediments will exist between 
parties who wish to contract via the Internet and through electronic 
commerce. We believe the passage of this bill will relieve those 
impediments and allow for e-commerce to continue to expand and grow and 
strengthen our economy.
  I am very pleased at the passage of the bill today, and look forward 
to working with our counterparts in the House, they have passed a 
slightly different bill, to pound out a final consensus through the 
conferencing process and bring back to the Senate the output of that 
process. I hope to do this very early in the next session, so we can 
enact this legislation and move it to the President for his signature, 
and, as I said at the outset, improve the efficiency with which we 
engage in an expanded e-commerce universe.
  I yield the floor.
  Mr. LOTT. Mr. President, I want to acknowledge the significant 
efforts of Senator Abraham to author and pass legislation aimed at 
facilitating the growth of electronic commerce. Commerce that everyone 
agrees is a significant driving force behind our nation's robust and 
expanding economy.
  Today, the Senate passed by unanimous consent an Abraham substitute 
for S. 761, the Millennium Digital Commerce Act. This measure is 
important because it would ensure the legal certainty of electronic 
signatures in interstate commerce.
  Mr. President, right now, there are over forty different state 
electronic authentication regimes in play. This patchwork of 
inconsistent and often conflicting state laws makes it difficult to 
conduct business-to-business and business-to-consumer transactions over 
the Internet. Those involved in electronic transactions want assurance 
that their contractual arrangements are legally binding.
  Senator Abraham took the lead on this issue and crafted a bill to 
ensure that a national framework would govern the use of electronic 
signatures. It is a rational, coherent, and minimalist approach. An 
approach supported by America Online, American Bankers Association, 
American Council of Life Insurance, the American Electronics 
Association, American Financial Services Association, American 
Insurance Association, Apple, Business Software Alliance, Charles 
Schwab, the Coalition for Electronic Authentication, Consumer Mortgage 
Coalition, DLJ Direct, the Electronic Industry Alliance, FORD, 
Gateway2000, General Electric Company, GTE, Hewlett-Packard, IBM, 
Intel, Intuit, the Information Technology Association of America, the 
Information Technology Industry Council, Microsoft, NCR, the National 
Association of Manufacturers, National Retail Federation, and the U.S. 
Chamber of Commerce, among others.
  Mr. President, in drafting his legislation, Senator Abraham included 
key concepts and provisions developed by the National Conference of 
Commissioners on Uniform State Law (NCCUSL). A NCCUSL working group, 
which included legal scholars, experts on electronic commerce, state 
officials and other interested stakeholders, spent the better part of 
two years drafting the Uniform Electronic Transactions Act (UETA). This 
model legislation was formally approved in August and is expected to be 
enacted on a state-by-state basis, much like the process followed in 
approving the Uniform Commercial Code, over the next three to five 
years.
  Senator Abraham's electronic signatures measure is timely in that it 
serves as an interim solution needed to fill the void until states 
approve the model UETA package.
  I applaud the junior Senator from Michigan for his continuing 
leadership on technology issues and commend the Senate's action today. 
This is definitely a significant step in the right direction.
  Mr. President, Senator Abraham, my colleagues on this side of the 
aisle, and I agree that the measure passed today, while a significant 
accomplishment, only gets consumers to the 50-yard line when it comes 
to e-commerce. In order to get to the end-zone, Congress still needs to 
address the issue of electronic records.

[[Page S14883]]

  The Millennium Digital Commerce Act that was unanimously approved by 
the Senate Commerce Committee in July would have also provided legal 
certainty to electronic records. However, eleventh hour objections from 
the minority, some of which were completely unrelated to this bill, 
thwarted repeated efforts to bring this crucial measure to the floor.
  Mr. President, I would point out that the reported bill, with its 
electronic records provisions, had bipartisan support and was strongly 
endorsed by the Administration, not once, but twice. In fact the Office 
of Management and Budget's Statement of Administration Policy noted 
``the Administration supports the passage of S. 761 . . . [Its] 
provisions strike the appropriate balance between the needs of each 
State to develop its own laws in relation to commercial transactions 
and the needs of the Federal government to ensure that electronic 
commerce will not be impeded by the lack of consistency in the 
treatment of electronic authentication.''
  The Commerce Committee reported measure did not, as some contend, 
alter federal or state consumer protection laws. Instead, Senator 
Abraham's bill simply held that records could not be denied legal 
effect solely, and the key word is ``solely,'' because such records 
were in electronic form.
  Mr. President, consumers stand the most to gain from electronic 
records and the most to lose if such records are not clearly granted 
legal effect, validity, and enforceability. In order to further assuage 
concerns, Senator Abraham, in earnest, offered a substitute version 
that largely incorporated key provisions of UETA, verbatim. Even so, 
and as perplexing as it would seem, his UETA substitute was opposed by 
the minority. Remember, these are the words developed and agreed to by 
an esteemed panel of national and state legal experts, and these are 
the same words that will go into effect as states adopt UETA during the 
next few years.
  I would point out that the Department of Commerce, in its June 22, 
1999 position letter supporting the Abraham substitute bill that passed 
the Commerce Committee, noted that ``In the view of the Administration, 
the current UETA draft adheres to the minimalist `enabling' framework 
advocated by the Administration, and we believe that UETA will provide 
an excellent domestic legal model for electronic transactions, as well 
as a strong model for the rest of the world.''
  With these glowing endorsements of both the Commerce Committee 
reported measure and UETA, both of which provide legal certainty to 
electronic records, I was surprised and dismayed that the 
Administration flip-flopped on the records issue at the last moment. 
One has to wonder what motivated this 180-degree change in position and 
why the Administration went to great lengths to stall and eventually 
oppose electronic transactions legislation that included digital 
records.
  Consumers want and need electronic records, not only because 
digitized records are the equivalent of paper-notices, records, and 
disclosures, but also because such information is often easier to 
access, read, store and maintain. Electronic records will save 
consumers time, money, and the hassle of waiting for paper notices and 
disclosures. Used in conjunction with an electronic signature, 
electronic records, with appropriate and effective electronic 
disclosures, allow anyone, with a hook-up to the borderless World Wide 
Web, to transact business at any time and at any place.
  Mr. President, it is the seamless nature of the Internet that makes 
it such a phenomenal communications and business medium. To ensure that 
no one is left out of this new millennium paradigm, the legal certainty 
of electronic records must be codified in federal statute--at least 
until UETA is adopted nationally. It is my sincere hope that Congress 
will address the legality of electronic records in the near term so 
consumers will experience the full benefits and to reap the rewards of 
the Internet.
  Again, I want to applaud the efforts of the Senate in passing S. 761, 
Senator Abraham's electronic signatures bill. This action is good for 
America's consumers, good for America's businesses, and good for our 
nation's economy and prosperity.
  Mr. President, Senator Abraham has once again proven that he is a 
champion of technology, a guardian of the consumer, and an extremely 
effective legislator.
  Mr. LEAHY. Mr. President, I am pleased that the Senate today is 
passing the Abraham-Leahy substitute amendment to S.761, the Millennium 
Digital Commerce Act. This bill seeks to permit and encourage the 
continued expansion of electronic commerce, and to promote public 
confidence in its integrity and reliability. These are worthy goals--
goals that I have long sought to advance. In the last Congress, many of 
us worked together to pass the Government Paperwork Elimination Act, 
which established a framework for the federal government's use of 
electronic forms and electronic signatures. Today's legislation is part 
of our continuing efforts to ease the burdens of conducting business 
electronically.
  This is an important bill on an issue of paramount concern to 
American businesses that engage in electronic commerce. It has had a 
long journey since it was reported by the Commerce Committee in June. 
As reported, the bill took a sweeping approach, preempting untold 
numbers of federal, state and local laws that require contracts, 
records and signatures to be in traditional written form. I was 
concerned that such a sweeping approach would radically undermine 
legislation that is currently in place to protect consumers.
  For example, the Committee-passed bill would have enabled businesses 
to use their superior bargaining power to compel or confuse consumers 
into waiving their rights to insist on paper disclosures and 
communications, even when they do not have the technological capacity 
to receive, retain, and print electronic records. Could a borrower be 
compelled to receive delinquency or foreclosure notices by electronic 
mail, even if she did not have a computer, or her computer could not 
read the notices in the electronic format in which they were sent? 
Would she be entitled to revert to paper communications if her computer 
broke or became obsolete? Could a company require customers to check 
its Web site for important safety information regarding its products, 
or for recall notices?
  Under S.761 as reported, the company would not have been required to 
provide any information on paper, even if a state consumer protection 
law so required. Crucial information about the consumer's rights and 
obligations would not be received. It was federal preemption beyond 
need, to the detriment of American consumers.
  The problem did not stop there. When information is provided 
electronically, for it to be useful at a later time to prove its 
contents, the electronic file must be tamperproof. Otherwise, a 
consumer could inadvertently change a single byte on the file and thus 
make it technically different from the original, and useless to prove 
its contents. The consumer would be left without any means of proving 
critical terms of the contract, including the terms of the warranty.
  I have been working with Senator Abraham and others since August to 
address these and other concerns I had with the bill. We crafted a 
bipartisan compromise several weeks ago, but it fell apart after 
certain industry representatives complained that it did not go far 
enough to relieve them of federal and state regulatory authority. 
Fortunately, other industry representatives recognized that this was 
not the primary or even an intended purpose of this legislation, and 
worked to get the legislative process back on track. I am pleased that 
we were able to do this and that we were able to reach agreement, for 
the second time, on an Abraham-Leahy substitute that encourages the 
continued expansion of electronic commerce, while leaving in place 
essential safeguards protecting the nation's consumers.
  In a letter dated November 5, 1999, the National Conference of State 
Legislatures identified what it believed were four essential criteria 
for any federal legislation related to electronic signatures:

       (1) Any preemption of state law and authority must be 
     limited in duration. The idea should be to ensure the 
     validity of most electronic signatures for a period of time, 
     thus giving the states time to act. (2) States

[[Page S14884]]

     must be allowed to adopt the Uniform Electronic Transactions 
     Act or some similar legislation. (3) Essential state consumer 
     protections must be preserved, along with the capacity of 
     states to enact consumer protection measures in the future. 
     (4) Any federal legislation must be limited to the topic of 
     electronic signatures. It must not embrace any preemption of 
     state regulatory and record keeping authority.

  The Abraham-Leahy substitute meets these criteria.
  Most importantly, the scope of the bill has been limited to address 
the principal concern of industry. When Senator Abraham introduced 
S.761 earlier this year, he said it was designed to eliminate 
uncertainty about the legality of electronic contracts signed with 
electronic signatures. Consistent with this design, the Abraham-Leahy 
substitute ensures that contracts will not be denied legal effect that 
they otherwise have under state law solely because they are in 
electronic form or because they were signed electronically. However, as 
section 4(4) of the bill makes clear, an electronic signature is valid 
only if executed by a person who intended to sign the contract.
  The purpose of this legislation is to facilitate electronic commerce 
over the Internet. It is not intended that this legislation be the 
basis for unfair or deceptive attempts by some to avoid providing 
mandated information, disclosures, notices or content. For example, 
when the parties have conducted a transaction entirely in person, the 
fine print of a form contract cannot include an agreement that the 
contract can be provided electronically rather than on paper. The basic 
rules of good faith and fair dealing apply to electronic commerce, and 
this legislation is not intended to be a basis upon which consumers can 
be asked to agree to terms and conditions for using electronic 
signatures and electronic records which are unreasonable based on the 
circumstances surrounding the transaction.
  Further, accurate copies of contracts must be delivered to consumers. 
The Abraham-Leahy substitute amendment therefore provides that if a law 
requires a contract to be in writing, an electronic record of the 
contract will not satisfy such law unless it is delivered to all 
parties in a form that can be retained for later reference and used to 
prove the terms of the agreement. This important provision is intended 
to protect consumers who execute contracts online, by ensuring that 
contracts are provided in a tamperproof, or ``read-only'' format. The 
delivery of any other type of electronic record would make it useless 
to prove its terms in court.

  The new legislation also improves on the Committee-passed version by 
eliminating its ``intent'' section, which established interpretive 
rules regarding the intent of the parties to an electronic transaction. 
These rules inappropriately allowed businesses to put the risk of 
forgery, unauthorized use, and identity theft on consumers, by making 
it easier for the proponent of an electronic record or electronic 
signature to prove its authenticity. By eliminating these rules, we 
have ensured that current contract and evidence laws remain in place. A 
person is always entitled to assert that an electronic signature is a 
forgery, was used without authority, or otherwise is invalid for 
reasons that would invalidate the effect of a signature in written 
form.
  Having just last year worked with Senator Kyl on passage of the Kyl-
Leahy substitute to S.512, the Identity Theft and Assumption Deterrence 
Act, to combat identity theft, we should be careful to avoid taking 
actions that could have the unintended consequence of making such 
crimes easier to commit.
  In his introductory floor statement, Senator Abraham stressed that 
S.761 was an interim measure, which would provide a national baseline 
for the use of electronic signatures only until the states enacted 
their own e-signature legislation. To ensure the temporary nature of 
the federal preemption, the Abraham-Leahy substitute which passes the 
Senate today includes a significant change from earlier versions of 
S.761, including the version reported by the Commerce Committee. The 
Committee bill preempted a state's laws until the state enacted the 
Uniform Electronic Transactions Act (``UETA'') as reported by the 
National Conference of Commissioners on Uniform State Law, or any 
variation that was ``authorized or provided for in such report.'' The 
full Senate votes today on language that gives states more leeway on 
the version of the UETA that they choose to pass--including more leeway 
to adopt strong consumer protections. The revised definition is meant 
to cover the electronic transactions legislation passed earlier this 
year by the State of California, and will preserve the capacity of 
states to perform their traditional role in protecting the health and 
safety of their citizens.
  Nothing in this bill would allow any of the notices that may 
accompany an electronic contract to be provided electronically. This is 
especially important to ensure that consumers are apprised of all their 
rights under federal and state laws. It was the records language of 
S.761 that held the greatest potential to harm consumers, with its 
across-the-board invalidation of hard-won consumer protections embodied 
in such laws as the Truth in Lending Act, the Fair Credit Reporting 
Act, the Real Estate Settlement Procedures Act, and others. I am 
pleased that the sponsors of this legislation agreed to remove the 
electronic records language so that we can allow the critical 
provisions regarding contracts and signatures to move forward. There 
will be time in the coming months to revisit the broader issue of 
electronic records, and to craft legislation that will not place 
consumers at risk.
  In the meantime, contrary to some of the rhetoric that has been heard 
of late, nothing prevents companies from providing notices and 
disclosures to consumers electronically, so long as they also provide 
paper notices and disclosures in the limited set of circumstances in 
which a law so requires. Requirements that certain information be 
provided in a particular format, or by a particular method of delivery, 
are often adopted to serve consumers' interests by providing them with 
information critical to making informed choices in the marketplace, 
understanding their rights and obligations during commercial 
transactions, and enforcing their rights when transactions go sour. 
Such laws should not be swept away without adequate assurance that 
consumers will be able to receive and retain the information 
electronically.
  The AARP made this point in a letter to all Senators dated November 
15, 1999, with respect to the more sweepingly preemptive H.R. 1714: 
``The time to investigate the implications of such a pivotal change in 
established consumer protections . . . is before, not after, 
legislation is enacted. Measures to take advantage of electronic market 
efficiencies must be tempered by a concern for legal and technological 
responsibilities that are being shifted to the consumer.''
  The benefits of electronic commerce should not, and need not, come at 
the expense of increased risk to consumers. I commend the Department of 
Commerce for its help in crafting a substitute amendment that is more 
carefully tailored to protect the interests of America's consumers. I 
also thank Senators Sarbanes, who shared many of my concerns about the 
original bill's impact on consumers, and Senators Abraham and Wyden, 
for agreeing to address our concerns.
  This bill shows what can be achieved by bipartisan cooperation and 
compromise. It enjoys broad support from the Administration, the 
states, consumer representatives, and responsible companies and trade 
associations that care about their customers. I urge its speedy 
enactment into law.
  I ask unanimous consent to include in the Record a Statement of 
Administration Policy dated November 8, 1999, in support of the 
Abraham-Leahy substitute amendment; a letter dated November 8, 1999, 
from the National Automobile Dealers Association, and a letter dated 
November 5, 1999, from the National Conference of State Legislatures.

     Statement of Administration Policy, November 8, 1999 (Senate)

    (This statement has been coordinated by OMB with the concerned 
                               agencies.)


 S. 761--Millennium Digital Commerce Act (Abraham (R) Michigan and 11 
                              cosponsors)

       Electronic commerce can provide consumers and businesses 
     with significant benefits in terms of costs, choice, and 
     convenience. The Administration strongly supports the 
     development of this marketplace and supports legislation that 
     will advance that development, while providing appropriate 
     consumer protection. Many businesses and

[[Page S14885]]

     consumers are still wary of conducting extensive business 
     over the Internet because of the lack of a predictable legal 
     environment governing transactions. Both the Congress and the 
     Administration have been working to address this important 
     potential impediment to commerce.
       S. 761 addresses important concerns associated with 
     electronic commerce and the rise of the Internet as a 
     worldwide commercial forum and marketplace. The 
     Administration supports Senate passage of the amendment in 
     the nature of a substitute to S. 761 expected to be offered 
     by Senator Abraham, based on an agreement with Senators Leahy 
     and Wyden. The Administration supports this version of S. 761 
     because the bill, as proposed to be amended, would: Ensure 
     the legal validity of contracts between private parties that 
     are made and signed electronically; preserve the ability of 
     States to establish safeguards, such as consumer protection 
     laws, to promote the public interest in electronic commerce 
     among private parties just as they can now establish 
     safeguards for paper-based commerce; cover only commercial 
     transactions between private parties that affect interstate 
     commerce; not affect Federal laws or regulations, but instead 
     would give Federal agencies six months to conduct a careful 
     study of barriers to electronic transactions under Federal 
     laws or regulations and to develop plans to remove such 
     barriers, where appropriate; and sunset completely as to the 
     law of any State that enacts the Uniform Electronic 
     Transactions Act.
                                  ____

         National Automobile Dealers Association, Office of 
           Legislative Affairs,
                                 Washington, DC, November 8, 1999.
     Hon. Patrick J. Leahy,
     Ranking Member, Committee on the Judiciary, Dirksen Senate 
         Office Building, Washington, DC.
       Dear Senator Leahy: On behalf of the National Automobile 
     Dealers Association (NADA), I am writing to express our views 
     on S. 761, the Millennium Digital Commerce Act.
       Like many entrepreneurs throughout the country, America's 
     new car and truck dealers are using today's technological 
     advances to better serve customers, and at NADA we understand 
     the desire to accelerate the role of electronic commerce. 
     Even so, we share your desire to preserve the state's role in 
     this process.
       The automobile is one of the single biggest purchases that 
     a consumer makes. As a result, state legislatures throughout 
     the country have enacted various requirements and disclosures 
     governing the purchase and sale of motor vehicles. In light 
     of this extensive body of existing state law, an overly 
     preemptive federal statute would deny the states the ability 
     to protect their citizens in the manner they deem appropriate 
     in these types of transactions.
       NADA does not oppose a temporary federal rule to ensure 
     that contracts can not be invalidated solely because they are 
     in electronic form or because they are signed electronically. 
     We believe, however, that any federal legislation should only 
     be an interim measure to provide stability while the states 
     consider the Uniform Electronic Transactions Act (UETA). Once 
     a state adopts the UETA, the temporary federal rule should 
     sunset.
       We understand that some drafts of the legislation that have 
     been put forward would allow the federal rule to preempt the 
     UETA in effect in a state, thus denying the states the 
     opportunity to be more protective of consumers should they so 
     desire. If that provision is retained, we believe that motor 
     vehicle transactions should not be covered by the federal 
     rule. This exception would be necessary to ensure that the 
     states could still perform their traditional role of 
     establishing the legal framework for major purchases.
       We appreciate the opportunity to bring our concerns to your 
     attention, and we appreciate all your efforts in addressing 
     these matters before the legislation moves forward in the 
     Senate.
           Sincerely,
                                                 H. Thomas Greene,
     Chief Operating Officer, Legislative Affairs.
                                  ____

                                            national Conference of


                                           State Legislatures,

                                 Washington, DC, November 5, 1999.
     Hon. Patrick J. Leahy
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Leahy: The National Conference of State 
     Legislatures understands the need to revise federal and state 
     laws as a means of encouraging electronic commerce. In 
     particular, NCSL understands that legislation is needed to 
     allow the more widespread use of electronic signatures as a 
     means of encouraging such commerce.
       Over 40 state legislatures have addressed various state law 
     issues related to the validity of electronic signatures. 
     Nevertheless, NCSL has in principle no objection to federal 
     legislation on this same topic, provided that it is tightly 
     focused on removing barriers to legitimate electronic 
     commerce and does not broadly preempt essential elements of 
     state consumer protection and contract law.
       NCSL believes that federal legislation related to 
     electronic signatures must meet four criteria: (1) Any 
     preemption of state law and authority must be limited in 
     duration. The idea should be to ensure the validity of most 
     electronic signatures for a period of time, thus giving the 
     states time to act. (2) States must be allowed to adopt the 
     Uniform Electronic Transactions Act or some similar 
     legislation. (3) Essential state consumer protections must be 
     preserved, along with the capacity of states to enact 
     consumer protection measures in the future. (4) Any federal 
     legislation must be limited to the topic of electronic 
     signatures. It must not embrace any preemption of state 
     regulatory and record keeping authority.
       The version of S. 761 that is now being presented comes 
     closer to meeting NCSL's criteria than earlier versions of 
     the bill. In general, this ``compromise'' version is taking 
     the right approach to the issue. NCSL looks forward to 
     working with the sponsors and others to resolve any remaining 
     issues of preemption and consumer protection. NCSL much 
     prefers the new compromise to other earlier versions of 
     electronic signatures legislation which we vigorously opposed 
     because of its unnecessary preemption of state consumer 
     protection and contract law.
       For additional information about NCSL's position, please 
     call Neal Osten (202-624-8660) or Michael Bird (202-624-
     8686).
           Sincerely,
         Joanne G. Emmons, Michigan State Senate, Chair, NCSL 
           Commerce and Communications Committee.

  Mr. ABRAHAM. Mr. President, the Senate is soon expected to pass the 
Millennium Digital Commerce Act--a bill introduced by Senators Wyden, 
McCain, Burns, Lott and myself which is designed to promote electronic 
commerce. I rise today to speak in support of this legislation and to 
thank the cosponsors for their tireless efforts to pass this 
legislation. I believe it will have a profound impact on the way 
commerce is conducted on the Internet.
  By now, all of us have heard the prophetic pronouncements: ``The 
Internet will change of all of our lives.'' ``The Computer Age is 
reshaping the world.'' And so on. These words are true, and a review of 
the indicators which document the Internet's extraordinary growth bear 
this out. In 1993 about 90,000 Americans had access to these on-line 
resources. By early 1999 that number had grown to about 81 million, an 
increase of about 900 percent. The Computer Industry Almanac predicts 
320 million Internet users world-wide by the end of the year 2000.
  And now the figures are coming in on how electronic commerce is 
transforming the way we do business. They are equally impressive. E-
commerce between businesses has grown to an estimate $64.8 billion for 
1999. 10 million customers shopped for some product using the Internet 
in 1998 alone. And 5.3 million households had access to financial 
transactions like electronic banking and stock trading by the end of 
1999.
  While the Internet has experienced almost exponential growth since 
its inception, there is still room to expand. Today, new technologies 
enable the Internet to serve as an efficient new tool for companies to 
transact business as never before. This capability is provided by the 
development of secure electronic authentication methods. These 
technologies permit an individual to positively identify the person 
with whom they are transacting business and to ensure that information 
being shared by the parties has not been tampered with or modified 
without the knowledge of both parties. While such technologies are 
seeing limited use today, the growth of this application has out-paced 
government's ability to appropriately modify the legal framework 
governing the use of electronic signatures and other authentication 
methods.
  The growth of electronic signature technologies will increasingly 
allow organizations to enter into contractual arrangements without ever 
having to drive across town or fly thousands of miles to personally 
meet with a client or potential business partner. The Internet is 
prepared to go far beyond the ability to buy a book or order apparel 
on-line. It is ready to lead a revolution in the execution of business 
transactions which may involve thousands or millions of dollars in 
products or services; transactions so important they require that both 
parties enter into a legally binding contract.
  Mr. President, the Millennium Digital Commerce Act is designed to 
promote the use of electronic signatures in business transactions and 
contracts. At present, the greatest barrier to such transactions is the 
lack of a consistent and predictable national framework of rules 
governing the use of electronic signatures. Over forty States have 
enacted electronic authentication laws, and no two laws are the same. 
This inconsistency deters businesses from

[[Page S14886]]

fully utilizing electronic signature technologies for contracts and 
other business transactions. The differences in our State laws create 
uncertainty about the effectiveness or legality of an electronic 
contract signed with an electronic signature. This legal uncertainty 
limits the potential of electronic commerce, and, thus, our nation's 
economic growth.
  Fortunately, the need for uniformity in electronic authentication 
rules was recognized early by the States. For the past two years, the 
National Conference of Commissioners on Uniform State Law, an 
organization comprised of e-commerce experts from the States, has been 
working to develop a uniform system for the use of electronic 
signatures for all fifty States. Their product, the Uniform Electronic 
Transactions Act, or UETA, was finished in July. As was expected, the 
UETA is an excellent piece of work and I look forward to the day when 
this model legislation is enacted by each of the 50 states.
  But agreement on the final language of the UETA proposal is not the 
same as enactment, and despite the hard work of the Commissioners, 
uniformity will not occur until all fifty States actually enact the 
UETA. That will likely take some time. Because some State legislatures 
are not in session next year and other States have more pressing 
legislative items, it could take three to four years for forty-five or 
fifty States to enact the UETA. When you consider the changes that have 
taken place in just the last two years, it is obvious that in the high-
technology sector four years is an eternity.

  The Digital Millennium Commerce Act is therefore designed as an 
interim measure to provide relief until the States adopt the provisions 
of the UETA. It will provide companies the federal framework they need 
until a national baseline governing the use of electronic 
authentication exists at the State level. Once States enact the UETA, 
the Federal preemption is lifted.
  To be specific, this legislation promotes electronic commerce in the 
following manner. First and foremost, the legislation provides that the 
electronic signatures used to agree to a contract shall not be denied 
effect solely because they are electronic in nature. This provision 
assures that a company will be able to rely on an electronic contract 
and that another party will not be able to escape such certainty, this 
bill will reduce the likelihood of dissatisfied parties attempting to 
escape electronic contractual agreements and transactions.
  To ensure a level playing field for all types of authentication, the 
bill grants parties to a transaction the freedom to determine the 
technologies to be used in the execution of an electronic contract. In 
essence, this assures technology neutrality because businesses and 
consumers, not government, will make the decisions as to what type of 
electronic signatures and authentication technologies will be used in 
transactions.
  Since the Internet is inherently an international medium, 
consideration must also be given to the manner in which the U.S. 
conducts business with overseas governments and businesses. This 
legislation therefore sets forth a series of principles for the 
international use of electronic signatures. In the last year, U.S. 
negotiators have been meeting with the European Commissioners to 
discuss electronic signatures in international commerce. In these 
negotiations, the U.S. Department of Commerce and the State Department 
have worked in support of an open system governing the use of 
authentication technologies. Some European nations oppose this concept, 
however. For example, Germany insists that electronic transactions 
involving a German company must utilize a German electronic signature 
application. I applaud the Administration for their steadfast 
opposition to that approach. This bill will bolster and strengthen the 
U.S. position in these international negotiations by establishing the 
following principles as the will of the Congress:
  One, paper-based obstacles to electronic transactions must be 
eliminated.
  Two, parties to an electronic transaction should choose the 
electronic authentication technology.
  Third, parties to a transaction should have the opportunity to prove 
in court that their authentication approach and transactions are valid.
  Fourth, the international approach to electronic signatures should 
take a non-discriminatory approach to electronic signature. This will 
allow the fees market--not a government--to determine the type of 
authentication technologies used in international commerce.
  Mr. President, it is my hope that adoption of these principles will 
increase the likelihood of an open, market-based international 
framework for electronic commerce.
  Finally, the bill directs the Department of Commerce and Office of 
Management and Budget to report on Federal laws and regulations that 
might pose barriers to e-commerce and report back to Congress on the 
impact of such provisions and provide suggestions for reform. Such a 
report will serve as the basis for Congressional action, or inaction, 
in the future.
  Mr. President, Senator Wyden, Senator McCain, Senator Burns, the 
Majority Leader and I worked very hard to address the multiple of 
issues and concerns raised by those most affected by this legislation, 
namely the high-tech industry, the states and the consumer. I also want 
to recognize the considerable time and effort dedicated to this 
legislation by Senator Leahy, Senator Hollings and Senator Sarbanes. 
Senators Leahy and Sarbanes worked diligently with the sponsors of this 
bill to address protection issues. In particular, my colleagues were 
concerned about the effects of this legislation on the notification and 
disclosure requirements required by law. I understand very well the 
concerns my colleagues raised and I agree with many, but not all, of 
their conclusions.
  I believe the use of electronic records in electronic transactions is 
crucial to real growth in electronic commerce. And if e-commerce is to 
truly expand the opportunities for individuals, businesses and 
consumers must have the freedom to agree to the types of documents and 
information they receive electronically. This right to choose to 
receive records electronically must be provided by Congress. The best 
way to do that is to pass laws which establish legal certainties for 
the sending, receipt and storage for the broad range of electronic 
records, and in particular, for records associated with loans and 
mortgages. Today, a vacuum exists with respect to these records. 
Aggressive businesses and small banks are filling this vacuum by 
providing loans and mortgages electronically even though there is 
question as to whether such transactions are protected under law. The 
increasing demand for such services demonstrates the popularity for 
electronic loans. By making applications easier and reducing associated 
consumer costs, these businesses are providing a service which is 
becoming increasingly popular with the American public. Rather than 
ignore this new market, or worse, condemn it, Congress should work with 
the industry and the proper regulatory agencies to ensure that these 
increased consumer opportunities are maintained and that relevant 
consumer protection provisions are modernized. I believe my proposal to 
permit individuals to opt-in to the receipt of records and to opt-out 
of receipt at any time represented reasonable middle ground on this 
issue, and am disappointed that my colleagues and I could not agree on 
a framework for records based on this model.

  I intend to continue working toward a resolution which will permit 
individuals to have access to electronic records. It is simply in the 
long-term best interest of both consumers and the economy. And I am 
sure I will not labor on this effort alone. I am pleased to note that, 
among parties familiar with this debate, there is growing support for 
legislation to quickly address this important issue.
  Mr. President, despite our philosophical differences, it was clear 
from the beginning that everyone involved was interested in working 
cooperatively to enact good legislation. And while I wish this bill 
could go further, I am nevertheless pleased with the product that we 
have passed today. So I want to thank Senator Leahy and Senator 
Sarbanes for their cooperation and hard work. I also want to recognize 
the efforts of the Ranking Member of the Commerce Committee, Senator 
Hollings. Senator Hollings made

[[Page S14887]]

it clear very early that he had concerns surrounding the issue of 
preemption. His staff and mine worked quickly and effectively to find 
common ground on this legislation and his spirit of compromise allowed 
us to move forward on a bill that I do not doubt he would have written 
differently. I want to thank him for his contribution.
  Finally, I wish to express my thanks to the Technology Division of 
the State of Massachusetts. Governor Paul Cellucci's staff provided 
indispensable counsel on existing State law governing the use of 
electronic signatures and the manner in which Federal law can bolster 
or hamstring State contract law. I value the Governor's input and will 
continue to work with him to address the extent to which the States are 
impacted by this legislation as it advances. Of course, the business 
and technology sectors have also been crucial in helping to craft this 
bill. Representatives from the Information Technology Association of 
America, Ford, the Coalition for Electronic Authentication, the 
Information Technology Industry Council, Apple, the American 
Electronics Association, NCR, America Online, the Electronic Industry 
Alliance, Microsoft, Hewlett-Packard, IBM and the National Association 
of Manufacturers have each lent their time and expertise to this 
effort. I appreciate their contributions and look forward to continuing 
this effort to ensure that we develop the best approach possible to 
promote use of electronic signatures in business transactions.
  Mr. President, despite the great work that has taken place here in 
the Senate, there is more work to do on this legislation. The House is 
currently working on a companion bill and I look forward to working 
with the Chairman of the Commerce Committee and other Representatives 
to ensure that the legislation sent to the President for his signature 
is the best and most effective approach to expanding electronic 
commerce possible.
  Mr. SARBANES. Mr. President, I rise today to discuss S. 761, the 
Third Millennium Digital Commerce Act. This is an important bill at a 
pivotal time in our nation's history. The rapid growth of the Internet, 
and its transformation from an academic research tool to a truly global 
communications network, is exerting its influence in more and more 
areas of our daily lives.
  One are of enormous change is the way in which Americans buy, sell, 
and trade products and services. Just as the general store gave way to 
the shopping mall and mail order catalogues, these now ``traditional'' 
forms of retailing are being supplanted by electronic commerce over the 
Internet. Electronic retailers are providing consumers with a broad 
range of new choices in goods and services.
  Electronic transactions are also becoming an integral part of 
business-to-business relationships. Ordering, billing, and a host of 
other activities are now being handled by electronic means, cutting 
both costs and transaction times. These techniques will make our 
overall economy more efficient, and the benefits should eventually be 
passed on to consumers.
  The world of electronic commerce is not without its problems, 
however. One of the largest of these is the lack of coherent legal 
framework for the conduct of electronic transactions. The commercial 
world is governed by a patchwork of Federal, state, and local laws. 
Because electronic commerce is such a recent phenomenon, it can be 
difficult to apply existing commercial codes and statutes to these new 
kinds of transactions. Often the laws are simply silent on electronic 
issues, leading to uncertainty for businesses and consumers alike.
  One such area is electronic signatures. Technology now exists that 
can replace written signatures on paper documents with computer code 
that performs the same functions. However, many states have not yet 
enacted laws to ensure that digital signature technologies, when used 
in a reasonable and appropriate manner, will be considered valid. 
According to business groups, this uncertainty has had a dampening 
effect on the growth of electronic commerce.
  Many state legislatures are hard at work to devise a workable, 
consistent legal framework for electronic records and signatures. Until 
their efforts are complete, however, S. 761, the bill introduced by 
Senator Abraham, will serve as a stop-gap measure. It will provide a 
measure of legal certainty, while protecting the rights of consumers 
under existing laws governing many types of transactions.
  I am pleased to have worked closely with Senator Abraham, Senator 
Leahy, Senator Wyden, members of the Commerce Committee, industry, and 
consumer groups to craft a bill that answers the legal need, yet 
provides for continued consumer protections. I would like briefly to 
describe some of these critical consumer protection aspects of the 
bill.
  While electronic commerce can provide consumers with enormous 
benefits, a sad stream of news articles over the past few years show 
clearly that there are unscrupulous operators on the Internet. The 
passage of this Act is intended to serve as a means of protecting 
consumers from deceptive practices.
  To provide businesses with greater legal certainty, the bill 
stipulates that contracts cannot be deemed unenforceable solely because 
they involved the use of an electronic signature. Under this bill, 
companies and consumers should only be able to agree to reasonable and 
appropriate electronic signature technologies that provide adequate 
security to both parties. However, as the definition of the electronic 
signature makes clear, the electronic signature is only valid under 
this Act if the person intended to sign the contract.
  The basic rules of good faith and fair dealing apply to electronic 
commerce, and this Act should not be the basis upon which parties to a 
contract can be asked to agree to terms and conditions for using 
electronic signatures and electronic contracts which are unreasonable 
based on the circumstances surrounding the transaction. For example, 
when the parties have conducted a transaction entirely in person, the 
fine print of a form contract should not include an agreement that the 
contract can be provided electronically rather than on paper. In 
addition, companies must deliver to consumers electronic records of the 
contract in a form they can receive, retain, and use to prove the terms 
of an agreement. Such an electronic record would have to be provided in 
a ``locked,'' or tamper proof, format.
  Regarding new laws on electronic transactions, the states have been 
engaged for some time, through the National Conference of Commissioners 
on Uniform State Laws, in the formulation of a model Uniform Electronic 
Transactions Act (UETA). Versions of the UETA will be enacted by the 
individual states. The bill we are considering today includes a revised 
definition of UETA, changed from the bill reported by the Commerce 
Committee, that gives states more flexibility to pass versions of UETA 
that best meet the needs of their citizens. It is intended that 
California's recently passed version of UETA, for example, meet this 
test.
  I would like once again to thank my colleagues, Senator Abraham, 
Senator Leahy, and Senator Wyden for their hard work on this issue. I 
believe that we have reached an accommodation on this legislation that 
provides industry with the provisional legal certainty they seek, while 
ensuring that existing consumer laws are not diluted by the increasing 
use of electronic commerce. This is an important step toward making our 
commercial laws ready for the twenty-first century.
  Mr. LIEBERMAN. Mr. President, I rise today to express my support for 
the Millennium Digital Commerce Act of 1999. I thank Senators Abraham, 
Leahy, and Wyden for their leadership on this important issue. As a 
cosponsor of this legislation, I am proud of the steps it takes to 
support an important and still emerging technology and industry. The 
Millennium Digital Commerce Act will facilitate the continued growth of 
the Internet and of electronic commerce. With this legislation, the 
Senate recognizes the significant transformations taking place in our 
economy and how we do business today and into the future.
  I think we all recognize that we are witnessing an electronic 
revolution. There is no shortage of statistics to prove what we are 
seeing all around us. According to a recent U.S. Department of Commerce 
report, approximately one third of the U.S. economic growth

[[Page S14888]]

in the past few years has come from information technologies (over $1.1 
trillion). Just this year, venture capitalists have invested more than 
$8 billion in Internet companies--twice the rate of last year.
  According to a University of Texas report, e-commerce is growing at a 
much faster rate than many had expected. The digital economy generated 
more than $300 billion in revenue in 1998 and was responsible for 1.2 
million jobs. Many e-commerce companies in my State of Connecticut, 
like Micro-Warehouse in Norwalk, Coastal Tool & Supply in West 
Hartford, and Sagemaker Inc. of Fairfield, are leading the way in the 
digital economy.
  In the Senate, I have worked to support the growth of e-commerce by 
cosponsoring the Internet Tax Freedom Act which places a three year 
moratorium on new state and local taxes on the Internet in order to 
give the digital economy some breathing room to evolve.
  This legislation takes further steps to continue the growth of e-
commerce and is a powerful follow-on to the Internet Tax Freedom Act. 
With this legislation we will eliminate a major barrier to e-commerce 
by providing for the legal recognition of electronic signatures in 
contracting and by creating a consistent, but temporary, national 
electronic signatures law to preempt a multitude of sometimes 
inconsistent state laws. This bill is technology neutral, allowing 
contracting parties to determine the appropriate electronic signature 
technology for their transaction. Importantly, this legislation is the 
result of thoughtful compromise. It gives electronic signatures more 
legal certainty but also provides for consumer protection. It deals 
with electronic signatures only in creating contracts. It preempts 
state law only until the states enact their own statutes and standards 
as provided for by the Uniform Electronic Transactions Act (UETA).
  Mr. President, I would like to thank those who have worked so 
diligently to create this Act. Through the considerate and 
collaborative approach of several of my colleagues, including Senators 
Abraham, Leahy, and Wyden, we now have legislation with language that 
achieves a broad public purpose. We are now able to continue supporting 
the growth and evolution of electronic commerce and technologies that 
will effectively bring us into the next century.
  Mr. WYDEN. Mr. President, for the past several years, Congress has 
been working in a bipartisan way to write the rules of the digital 
economy. We have made significant progress on Internet taxes, privacy, 
encryption and the Y2K problem. Now is the time to move forward on 
rules for electronic signatures.
  The bill before us today, S. 761, is based on the premise that it's 
better to be online than waiting in line. A growing number of Americans 
who now have to wait in line for things like a driver's license or 
construction permit, could see their business expedited by a few clicks 
of their mouse.
  We live in an increasingly mobile society, where young people get 
recruited for jobs clear across the country. They may need to move in a 
hurry but don't have the time, for example, to pack up a home in 
Virginia and look for another one in Portland, Oregon. With the 
Internet, they can shop for a house in another town. With this 
electronic signatures bill, they can pretty much conclude the whole 
transaction of purchasing the house online.
  The legislation puts electronic and paper contracts and agreements on 
equal footing legally. Like the Internet Tax Freedom Act, the bill 
would establish technological neutrality between electronic and paper 
contracts and agreements. This means consumers will enjoy the same 
legal protections when purchasing a car or home online as when they 
walk into an auto dealership or real estate office and sign all the 
documents in person. We worked long and hard to make sure that the 
system established here benefits consumers who wish to receive 
information electronically without treating those without computers as 
second class citizens.
  This legislation does not address the issue of electronic records 
because this matter deserves more thorough study and discussion. I 
intend to work with all interested parties on this--from consumer 
groups to financial services firms--over the course of the coming 
months to craft legislation that will extend the benefits of this 
measure to electronic records in a way that continues consumer 
protections.
  Commercial transactions have traditionally been governed by State 
laws which are modeled on the Uniform Commercial Code. Forty-two states 
have some law in place relating to digital authentication. But 
differences between and among these laws can create confusion for e-
entrepreneurs. The unstoppable growth of electronic commerce has led 
the States recently to develop a Uniform Electronic Transactions Act, 
or UETA (as part of the Uniform Commercial Code), to serve as a model 
for each State legislature in developing further its own electronic 
signatures law. However, only one State--California--has enacted a 
UETA. The purpose of this legislation is to provide interim Federal 
legal validity for electronic contracts and agreements until each state 
enacts its own UETA. This means e-commerce will not be hamstrung by the 
lack of legal standing.
  I would like to take a minute to run through the highlights of S. 
761:
  Technological neutrality: It allows electronic signatures to replace 
written signatures. In interstate commerce a contract cannot be denied 
legal effect solely because of an electronic signature, electronic 
record or an electronic agent was used in its formation.
  Choice of technology: It does not dictate the type of electronic 
signature technology to be used; it allows the parties to a transaction 
to choose their own authentication technology.
  Consumer protections: It protects consumer rights under State laws; 
it does not preempt State consumer protection laws. It assures that 
consumers without a computer are not treated as second class citizens. 
If a consumer buys a car online, the consumer cannot be forced to use 
the computer to receive important recall or safety notices but retains 
the option to continue to get such notices through the mail.
  No State preemption: Its provisions sunset when a State enacts UETA.
  Excludes matters of family law: It specifically excludes agreements 
relating to marriage, adoption, premarital agreements, divorce, 
residential landlord-tenant matters because these are not commercial 
transactions.
  Report on Federal statutory barriers to electronic transactions: It 
requires OMB to report to Congress 18 months after enactment 
identifying statutory barriers to electronic transactions and 
recommending legislation to remove such barriers.
  In conclusion, M. President, I wish to acknowledge the leadership of 
Sen. Abraham in moving this legislation forward. He and I have teamed 
up successfully on other legislation, and it was a pleasure to work 
with him and his tireless staff on this bill. I also want to recognize 
the contribution of Senator Leahy, particularly with regard to the 
consumer protection provisions, as well as the effort of Senator 
Hollings. It took a bipartisan team to get this bill through the Senate 
today, and I look forward to continuing to work with this team as we go 
to conference with the House on S. 761.
  I ask unanimous consent that my statement be printed in the record 
following Senator Abraham's statement on the passage of S. 761.
  Mr. LIEBERMAN. Mr. President, I rise today to express my support for 
the Millennium Digital Commerce Act of 1999. I thank Senators Abraham, 
Leahy, and Wyden for their leadership on this important issue. As a 
cosponsor of this legislation, I am proud of the steps it takes to 
support an important and still emerging technology and industry. The 
Millennium Digital Commerce Act will facilitate the continued growth of 
the Internet and of electronic commerce. With this legislation, the 
Senate recognizes the significant transformations taking place in our 
economy and how we do business today and into the future.
  I think we all recognize that we are witnessing an electronic 
revolution. There is no shortage of statistics to prove what we are 
seeing all around us. According to a recent U.S. Department of Commerce 
report, approximately one third of the U.S. economic growth in the past 
few years has come from information technologies (over $1.1 trillion). 
Just this year, venture capitalists have invested more than $8 billion

[[Page S14889]]

in Internet companies--twice the rate of last year.
  According to a University of Texas report, e-commerce is growing at a 
much faster rate than many had expected. The digital economy generated 
more than $300 billion in revenue in 1998 and was responsible for 1.2 
million jobs. Many e-commerce companies in my State of Connecticut, 
like Micro-Warehouse in Norwalk, Coastal Tool & Supply in West 
Hartford, and Sagemaker Inc. of Fairfield, are leading the way in the 
digital economy.
  In the Senate, I have worked to support the growth of e-commerce by 
cosponsoring the Internet Tax Freedom Act which places a three year 
moratorium on new state and local taxes on the Internet in order to 
give the digital economy some breathing room to evolve.
  This legislation takes further steps to continue the growth of e-
commerce and is a powerful follow-on to the Internet Tax Freedom Act. 
With this legislation we will eliminate a major barrier to e-commerce 
by providing for the legal recognition of electronic signatures in 
contracting and by creating a consistent, but temporary, national 
electronic signatures law to preempt a multitude of sometimes 
inconsistent state laws. This bill is technology neutral, allowing 
contracting parties to determine the appropriate electronic signature 
technology for their transaction. Importantly, this legislation is the 
result of thoughtful compromise. It gives electronic signatures more 
legal certainty but also provides for consumer protection. It deals 
with electronic signatures only in creating contracts. It preempts 
state law only until the states enact their own statutes and standards 
as provided for by the Uniform Electronic Transactions Act (UETA).
  Mr. President, I thank those who have worked so diligently to create 
this Act. Through the considerate and collaborative approach of several 
of my colleagues, including Senators Abraham, Leahy, and Wyden, we now 
have legislation with language that achieves a broad public purpose. We 
are now able to continue supporting the growth and evolution of 
electronic commerce and technologies that will effectively bring us 
into the next century.
  Ms. COLLINS. Mr. President, I ask unanimous consent the committee 
amendment in the nature of a substitute be agreed to as amended, the 
bill be read the third time and passed, the motion to reconsider laid 
upon the table, and any statements be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The committee amendment in the nature of a substitute was agreed to.
  The bill (S. 761), as amended, was read the third time and passed, as 
follows:
  [The bill was not available for printing. It will appear in a future 
edition of the Record.]

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