[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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