Congressional Record, Volume 146 Issue 74 (Wednesday, June 14, 2000)

[Congressional Record Volume 146, Number 74 (Wednesday, June 14, 2000)]
[House]
[Pages H4346-H4366]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

PROVIDING FOR CONSIDERATION OF S. 761, ELECTRONIC SIGNATURES IN GLOBAL
AND NATIONAL COMMERCE ACT

Mr. SESSIONS. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 523 and ask for its immediate consideration.
The Clerk read the resolution, as follows:

[[Page H4347]]

H. Res. 523

Resolved, That upon adoption of this resolution it shall be
in order to consider the conference report to accompany the
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. All points of order against the
conference report and against its consideration are waived.
The conference report shall be considered as read.

The SPEAKER pro tempore. The gentleman from Texas (Mr. Sessions) is
recognized for 1 hour.
Mr. SESSIONS. Mr. Speaker, for the purpose of debate only, I yield
the customary 30 minutes to my friend, the gentleman from Ohio (Mr.
Hall), pending which I yield myself such time as I may consume. During
consideration of this resolution, all time yielded is for the purpose
of debate only.
(Mr. SESSIONS asked and was given permission to revise and extend his
remarks, and include extraneous material.)
Mr. SESSIONS. Mr. Speaker, the legislation before us today on this
beautiful Flag Day provides for the consideration of S. 761, the
Electronic Signatures in Global and National Commerce Act. The rule
waives all points of order against the conference report and against
its consideration. The rule provides that the conference report shall
be considered as read.
Mr. Speaker, today the House takes a step forward towards promoting
the new economy and facilitating the growth of electronic commerce.
Important legislation to update the laws that govern how business is
transacted will be considered by Congress with the passage of this law.
Furthermore, the underlying legislation will allow all Americans to
benefit from the efficiencies resulting from advances in technology.
Under current law, contracts and agreements among businesses and
individuals are considered binding when the second party indicates
agreement to terms with that signature. This system has worked fine for
many years. However, the widespread use of computers and electronic
means of communication have made this system antiquated and
inefficient. The Electronic Signatures in Global and National Commerce
Act will ensure that the United States will remain the leader in the
21st Century marketplace by giving legal and uniform status to
electronic signatures. Electronic signatures would become binding, just
like a handwritten signature.
Under the legislation, Americans would still be covered by the
existing consumer protection laws should they choose to use this type
of signature. Additionally, the legislation requires consent of the
consumer to use electronic signature. No consumer would be forced into
using electronic signature if they would feel more comfortable using a
handwritten or normal signature.
Electronic signatures will change the way businesses interact with
other businesses, how business works with their customers, and even how
government serves its citizenry. Electronic signatures will make it
easier for people to pay their bills, apply for a loan, trade
securities, purchase goods, and contract services. Electronic
signatures will also give greater protections to consumers through
advanced encryption technologies. Not only is it far more difficult to
fraudulently use an electronic signature than traditional signature,
but electronic signatures leave a trail that would lead to the door of
those who seek to defraud us.
Much has been done by this Congress to encourage the development of
so-called new economy industries. Last summer, this Congress passed
legislation that helped all but eliminate the computer glitch known as
the Y2K bug. A few months later, the Republican majority brought
legislation to the House floor to protect patents for Americans
inventors and innovators. Recently, the House passed a moratorium on
taxation of the Internet.
The legislation we are considering today is yet another effort by the
Republican-led Congress to ensure that our Nation remains at the
forefront of the emerging electronic global marketplace.
I would urge my colleagues to support this rule.
Mr. Speaker, I reserve the balance of my time.
Mr. HALL of Ohio. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I thank the gentleman from Texas (Mr. Sessions) for
yielding me time.
Mr. Speaker, as my colleague from Texas has explained, this rule
waives all points of order against the conference report.
Electronic commerce is growing at an explosive rate. In a recent
survey of top business executives, it indicates that in the next 2
years, many companies expect a seven-fold increase in their Internet
sales. By the year 2002, on-line sales could make up 25 percent of
total sales. That is a revolution in the way Americans do business.
However, our laws are still written for the pen and paper days. We
must adopt our legal system to keep pace with the digital age.
The measure before us would give legal validity to electronic
signatures on business transactions, and this will help e-commerce by
providing a uniform standard among the states. I am pleased that this
conference agreement includes protections aimed at reducing consumer
fraud.
This conference agreement represents a bipartisan consensus with
broad support among high-tech companies, State Attorneys General and
consumer groups. My understanding is that the President will sign it.
It looks like a good bill and a good rule. I support the rule and the
conference report.
Mr. Speaker, I reserve the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, a lot of the work that has been done on this, not only
the bill but also the conference report, is directly as a result of
those Members who serve on the Committee on Commerce. Today I am
pleased to be with the gentleman from Louisiana (Mr. Tauzin), who is a
part of not only this negotiation, but also the ongoing effort to make
this bill and further bills that may be in our future better for
consumers of America.
Mr. Speaker, I yield such time as he may consume to the gentleman
from Louisiana (Mr. Tauzin).
(Mr. TAUZIN asked and was given permission to revise and extend his
remarks.)
Mr. TAUZIN. Mr. Speaker, I rise in support of this rule and encourage
Members not only to support the rule, but to adopt this conference
report. This is the culmination of several attempts in this Congress
and other Congresses to find a compromise with the other body and with
Members of this body that would properly and legally make valid
signatures of Americans, and, in fact, signatures of citizens of the
world, in the electronic commerce age, and also to make the records,
electronic records behind the documents and agreements we reach
electronically, legally binding records upon the parties who sign those
agreements and enter into those contracts in the electronic age.
Americans tell us that privacy and security are the two biggest
concerns as we enter this new e-commerce age, making sure in effect
that as we enter this age, that citizens who take advantage of
electronic commerce, both to sell their products and services, or to
purchase them, will have the knowledge that, number one, they are
dealing in a secure system, so this bill is written in a way that is
technologically neutral and calls upon the genius and creativity of
this amazing new marketplace to develop the highly encrypted products
that are going to make commerce in the electronic age even more secure
than commerce in the paper age.
Secondly, I want to commend this House and this Congress for the
activities we have already undertaken to protect privacy in the key
areas that are most of concern to Americans, the areas of medical
information privacy, the area of children's information privacy, and,
most recently, in the financial services bill, in protecting people's
privacy as they deal with their financial records, with mortgages and
bank accounts and security transactions in the Internet age.
I also want to point out that there are some people that are afraid
of this age. I suppose every time there were major changes in the way
Americans did business, in the way we interacted with one another,
there was fear.

[[Page H4348]]

When the telegraph first came upon the scene, I can assure you there
were the similar fears that the telegraph was somehow going to create a
world that people would live in fear of. In fact, there is a wonderful
book called ``The Victorian Internet'' which traces the history of the
telegraph and speaks of the same concerns that people in the world had
about the telegraph that we hear about the Internet today.
But what was true with the telegraph is also true with the Internet
and electronic commerce: It is upon us, it is an age which is arriving
rapidly, and more and more Americans are finding that they can have
more efficient businesses and more efficient transactions when they in
fact become conversant with the Internet and conversant with the
possibilities of the Internet in learning and trading and in long
distance medicine, in amazing new opportunities it will make for the
people of the world.
This bill is a major step forward in making sure that that world is
secure; that there are legally binding, responsible actions taken as a
result of interacting on the Internet; that when I sell my products to
you and you sign up, it is as valid a deal as if you came to my store
and purchased my products.

{time} 1115

I can count on them to honestly keep their contract, and they can
honestly count on me to live up to my agreement to sell them those
products and services according to the terms of our agreement.
Like many bills, this is a compromise. This bill contains in my
opinion a little overreach. It contains a little too much bureaucracy,
a little too much in the way in which we insist that people consent
first to join this Internet world. It may need some work in the future
for us to improve it.
I am the first to tell Members it is not perfect in that regard. It
literally goes overboard to make sure that when people consent to be
part of the electronic age, that they really consent. It even has
language in it that says that we have to prove that we are capable of
receiving all the documents and notices and information that we are
consenting to be part of in the electronic age; not just giving our e-
mail address as we would give our phone number and address in the paper
age, but actually proving that our computer is capable of handling all
the information that is going to be faxed or e-mailed to us as part of
the electronic transaction.
Let me also say that nothing in this bill requires one to be part of
this electronic commerce age if they do not want to be, no more than
one is required to own a credit card if they do not want to. My father,
whom I lost 9 years ago and miss dearly, and will this summer when we
always celebrate his birthday, I do not think he ever owned a credit
card. He never made a credit purchase. I have made up for it, believe
me. I use a lot of credit.
But the bottom line is that nothing requires an American to use the
services of the Internet or to use this bill to sign electronically for
purchases and sales. This is purely voluntary. It is an opt-in system.
We have to consent to it. We have to know what we are consenting to. We
have to prove we are capable of literally giving the consent, prove we
have the equipment and means by which to engage in electronic business
in this new age. It is a pretty extensive consent agreement provision.
It also contains language making sure that the consumer protection
laws of every State are incorporated, that they are maintained. Nothing
takes away from the protections that consumers now enjoy from those who
would like to defraud us.
The beautiful thing about this new age is that electronic signatures
can be more precise, much more precisely identified, than the signature
we write on a paper that can be copied by some people. Electronic
signatures with heavy encryption can be much more secure than the world
of paper we now live in.
Secondly, it can be much more efficient. I want to invite all
Americans to think of this. When we used to have a business in the old
brick and mortar age before the Internet that depended upon citizens
being able to come into the store, get to the store in a car, by bike,
by foot, we had a limited marketplace.
Today with the Internet the marketplace is global. Today, with a
little store in Chack Bay, Louisiana, selling tobasco or other great
seasonings, we can enjoy now a worldwide market on the Internet and
sell to a whole community of people that is global.
Making that system work efficiently and creating legally binding
agreements in that system is what this bill is all about, literally to
facilitate global commerce. The bill contains features that insist that
our government negotiate with other countries, to insist that they have
similar legally binding provisions in their laws so when our citizens
interact and sell products to their citizens or vice versa, when we buy
products from them, we both have legally binding agreements, just as
much as we do here in the good old U.S.A. on this great Flag Day.
This is again not a perfect bill, it may need refinements in the
future. I think it is a little too bureaucratic than I would like, but
it is a great step forward. I endorse it fully. This rule ought to be
adopted. We need to pass this bill.
Mr. Speaker, I would urge my colleagues not only to pay this bill
some attention, but also to do what they can to inform the citizens on
their own websites about this new capability that Congress is enacting
today to further advance the security of transaction in the e-commerce
age and to further advance the ability of Americans to be part of this
incredible new opportunity age that the Internet and e-commerce is
going to make for all of our citizens.
Mr. SESSIONS. Mr. Speaker, I yield such time as he may consume to the
gentleman from California (Mr. Dreier), who has been an active
participant in ensuring that not only e-commerce but the financial
services of this country are not only market-based and leading edge,
but also consumer-friendly.
(Mr. DREIER asked and was given permission to revise and extend his
remarks.)
Mr. DREIER. Mr. Speaker, I thank my friend for yielding time to me. I
congratulate him on the fine work that he has done on this extremely
important issue.
Mr. Speaker, I rise in strong support of this rule because it
provides for the consideration of a conference report that is
critically important to businesses and consumers in the 21st century
information economy.
Senate Bill 761 will empower consumers of financial products and
other goods and services, and establish the framework for competition
in the emerging electronic marketplace. For this, I want to applaud the
gentleman from Virginia (Chairman Bliley) for his strong efforts and
the great work he has done in moving this legislation forward.
I know I saw my friend, the gentleman from Louisiana (Mr. Tauzin)
someplace. There he is, and I want to congratulate him, too, for all
the effort he has put into this.
Enactment of this e-sign conference report will transform the way we
work, the way we are educated, the way we contract for goods and
services, and the way we are governed. The next great transition in the
21st century economy is likely to result in many large corporations
moving the bulk of their inventory, production, and supply operations
to an online environment.
Establishment of a clear, uniform national framework governing both
digital signatures and records will allow American businesses to become
significantly more efficient and productive through business-to-
business use of the Internet.
Mr. Speaker, as important as this measure is to our high-tech
economy, it is not just about the way business will do business. Our
actions today will impact people. We all know how the quality of life
of so many hard-working American families is tied directly to the
amount of quality time away from the work and chores of daily life.
This landmark legislation will make it easier for people using just a
computer and a modem to pay their bills, apply for mortgages, trade
securities, and purchase goods and services wherever and whenever they
choose. That will be a win-win clearly for millions of American working
families.
As important as this bill is to today's global electronic
marketplace, we need to be prepared to deal with the reality that the
pace of innovation and change in the new Internet economy has a direct
impact on the pace of legislative innovation required here in the
Congress.

[[Page H4349]]

It is not a criticism of this very strong legislation to recognize
that when the U.S. computer industry operates with a 3-month innovation
cycle, the new economy may render some of its provisions obsolete
unless we move quickly on follow-up legislation.
There is a need, for example, to clarify the legality and reliability
of electronic authentication applications. There is also concern that
S. 761 will impose unnecessary burdens on businesses and consumers, and
the ambiguities in the conference report may actually create new
avenues for class action litigation.
For example, under the conference report, consumers who initially
consent in paper and ink to receive electronic records will need to
either reconsent or reconfirm or confirm their consent by electronic
means. Then each time there are changes in any of the hardware or
software requirements for accessing a record that consumers have
consented to receive electronically, the provider must obtain new
consents from all of the affected consumers.
In addition, it must be possible to ``reasonably demonstrate'' that a
consumer will be able to access the various forms of electronic records
that the consumer has consented to receive. This is a requirement that
has no parallel in the paper world. To ensure that consumers can get
the full benefits of these electronic records provisions, consumers
should only need to consent once either on paper or electronically,
with the ability to withdraw their consent if changes create a problem
for them.
There is concern that S. 761 may actually create a new basis for
denying legal effect to electronic records if they are not in a form
that could be retained and accurately reproduced for later reference by
any parties who are entitled to retain them. It is my hope, Mr.
Speaker, that Congress will be able to respond effectively to these and
other challenges that would be brought on by the rapidly changing
nature of the Internet economy.
In the meantime, as I have said, this is a bill that deserves
overwhelmingly strong bipartisan support. I join again in
congratulating my colleagues, who have worked long and hard on this. I
am proud to have been a strong supporter of this effort for the past
several years, and I urge adoption of the rule and the conference
report.
Mr. HALL of Ohio. Mr. Speaker, I yield 3 minutes to the gentleman
from Massachusetts (Mr. Markey).
Mr. MARKEY. Mr. Speaker, I thank the gentleman from Ohio for yielding
time to me.
Mr. Speaker, I rise to support the conference report on the e-sign
bill. I want to congratulate the gentleman from Virginia (Chairman
Bliley) for his excellent leadership on this bill, along with the
gentleman from Michigan (Mr. Dingell), the gentleman from Louisiana
(Mr. Tauzin), the gentleman from Ohio (Mr. Oxley). This is an historic
day on the floor of the House.
The legislation will create a legal framework for electronic commerce
in the new economy, but the new economy must have old values. That is
the formula that we are constructing here on the floor today. It will
grow, electronic commerce, as an increasingly important part of our
economy, and increasingly it will be important for us to be able to
authenticate and to validate electronic transaction.
This is important for both ends of the transaction. For both the
buyer and the seller there has to be a way in which there is
authentication. There has to be a way in which there is validation.
As we come here today, we begin the new era of a digital John Hancock
which can ensure that an electronic signature is valid and that records
are established that guarantee that both ends of the transaction are in
fact valid.
Today many secure electronic technologies such as cryptographic
digital signatures allow consumers and businesses to send a file across
the Internet embodying a contract, a signed contract, that can be
authenticated on the other end of the transmission. The increased
comfort people will have with the technology and their legal rights
will serve to enhance electronic commerce and continue to drive
electronic growth.
Think of this: In 1999, there was $3.4 trillion worth of electronic
commerce in the United States, $3.4 trillion. How much of that was
online? Pick a number in your own minds of the $3.4 trillion; $20
billion, that is all, about 7/10ths of 1 percent. As each year goes by
there is going to be a dramatic increase.
In order to make people feel comfortable to move their transactions
from the real world to the virtual world, we must give them the same
kinds of guarantees. This legislation strikes the right balance by
clarifying that electronic contracts or agreements that are otherwise
required to be in writing must accurately reflect the information set
forth in the contract after it was first generated, and must remain
accessible for later reference, transmission, and printing.
So Mr. Speaker, this is a great day. I think a new era is dawning. I
want to congratulate the gentleman from Virginia (Mr. Bliley) once
again for his great leadership, and the gentleman from Michigan (Mr.
Dingell), the gentleman from Louisiana (Mr. Tauzin), and the gentleman
from Ohio (Mr. Oxley).
Mr. Speaker, I rise to support the conference report on the ESIGN
bill and I want to congratulate Chairman Bliley for his fine work in
the conference and commend Mr. Dingell, Mr. Tauzin, and Mr. Oxley for
their excellent work as well.
We return to the House today with a conference report that advances
the needs of the Digital Age without compromising fundamental consumer
protections.
This legislation provides a legal framework for electronic commerce
in the new economy. It's clear that as electronic commerce grows it
will become increasingly important to authenticate and validate
electronic transactions. This is important for both ends of any
transaction, for both the buyer and the seller. Effective
authentication of electronic signatures will help to reduce fraud and
financial losses.
Technology exists today that permits an electronic signature--a
`digital John Hancock'--to be affixed to computer files in a manner
that is difficult to reproduce. Today, many secure electronic
technologies such as cryptographic digital signatures, allow consumers
and businesses to send a file across the Internet embodying a contract,
a signed contract, that can be authenticated on the other end of the
transmission. The increased comfort that people will have with the
technology and their legal rights will serve to enhance electronic
commerce and continue to drive economic growth.
Many current laws, however, do not legally recognize the validity of
electronic signatures, contracts, or records. Many laws, regulations
and procedures require ``written,'' real world signatures on documents,
or the provision of ``paper'' records, both for commercial
transactions.
Without question many existing requirements for written records are
antiquated whose provision or availability in an electronic version of
the same information can suffice to meet any legal requirements or
policy goals.
However, there are many other existing requirements for written
records which are not antiquated and whose provision or availability in
written form serves clear consumer protection goals. As we progress
into the digital future, this conference report is careful not to
jettison prematurely many important consumer protection provisions
simply to demonstrate our enthusiasm for all things digital.
The legislation strikes the right balance by clarifying that
electronic contracts or agreements that are otherwise required to be in
writing must accurately reflect the information set forth in the
contract after it was first generated and must remain accessible for
later reference, transmission, and printing. The conference report also
preserves a consumers right to receive records in writing. If a
consumer wants a record that is required to be in writing to be
provided in writing, a consumer still has that right while allowing
other consumers, who may prefer to receive records in electronic form,
to elect to do so.
This conference report also fixes and vastly improves the process by
which consumers may ``opt-in'' to receiving electronic records. A
consumer wishing to receive specific records in electronic form must
separately and affirmatively consent to the provision of such records
in electronic form in order for a vendor to provide electronic records.

In addition this legislation also safeguards the consumer protection
policies that have historically served to adequately inform consumers
of potentially life-changing events or safety issues. The conference
report wisely requires written notices for any notice dealing with
court orders and official court documents--including legal briefs and
court pleadings, any notice concerning the cancellation of utility
services such as water, heat or power service, for foreclosure or
eviction notices. It also would require the continuation of written

[[Page H4350]]

notices for the cancellation or termination of health insurance or
benefits or life insurance benefits.
We are still a long way from the day when computers will be as
ubiquitous as the telephone, but this conference report helps set the
legal framework for that day. The ``ESIGN'' bill takes that important
step into the Digital Age.
I again, want to commend Chairman Bliley on this landmark bill and
commend Mr. Dingell, Chairman Tauzin, and Mr. Oxley for their fine
bipartisan work.
Mr. Speaker, I also want to mention of few items related to the
financial implications of the conference report. As many members may
recall, H.R. 1714, the House version of the Conference Report,
initially contained a separate securities law title. Although the
Conference Report does not include separate securities title, it
contains language intended to resolve satisfactorily the various issues
that were addressed by the House securities title and which were the
subject of SEC Chairman Levitt's April 21, 2000 letter to the
conferees.
For example, Section 104(a) of the Conference Report protects
standards and formats developed by the SEC for electronic filing
systems such as EDGAR and the IARD, as well as for systems are
developed by securities industry self-regulatory organization filing
systems such as the CRD, which the NASD and the states use for
registering securities firms and their personnel.
Section 101(d) recognizes the importance of accuracy and
accessibility in electronic records, which is of utmost importance for
investor protection and prevention of fraud. Section 104(b)(3)
recognizes the need for agencies, such as the SEC, to provide
performance standards relating to accuracy, document integrity, and
accessibility in their electronic recordkeeping and retention rules.
This is intended to preserve requirements such as the SEC's existing
electronic recordkeeping rule, Rule 17a-4(f), which specifies that
electronic recordkeeping systems must preserve records in a non-
rewriteable and non-erasable manner. The Conferees also expect the SEC
to work with the securities SROs to the extent necessary to ensure that
accuracy, accessibility, and integrity standards also cover SRO
recordkeeping requirements in an electronic environment.
Section 104 of the Conference Report specifically permits federal
regulatory agencies, such as the SEC, to interpret the law to require
retention of written records in paper form if there is a compelling
governmental interest in law enforcement for imposing such requirement,
and if, imposing such requirement is essential to attaining such
interest. For example, we specifically expect the SEC would be able to
use this provision to require brokers to keep written records of all
disclosures and agreements required to be obtained by the SEC's penny
stock rules.
Finally, the Conference Report's consent provisions similar to much
of the SECs guidance in the electronic delivery area. Section 104(d)(1)
permits agencies such as the SEC to continue to provide flexibility in
interpreting consent provisions anticipated by the Conference Report.
In addition, a specific provision contained in Section 104(d)(2)
anticipates that the SEC will act to clarify that documents, such as
sales literature, that appear on the same website as, or which are
hyperlinked to, the final prospectus required to be delivered under the
federal securities laws, can continue to be accessed on a website as
they are today under SEC guidance for electronic delivery.
Mr. HALL of Ohio. Mr. Speaker, I yield myself the balance of my time,
although I really do not have much to add. The rule and resolution
looks in very good shape. Many of us really support it.
Mr. Speaker, I have no further requests for time, and I yield back
the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, it would be wonderful if we all agreed on all points of
legislation like we are agreeing today on this conference report. What
we have heard today described is an agreement that we have made between
the parties, the Democrats and the Republicans, about a new way of
doing business.

{time} 1130

In fact, the agreement that we believe that this conference report
represents is not exactly leading edge but it is a beginning. It is a
start of an opportunity for consumers, for retailers, for people who
are engaged in financial transaction and financial services to
encourage a new world that is there.
We have heard the gentleman from Louisiana (Mr. Tauzin) describe his
view and vision, along with the chairman of the Committee on Rules,
that they felt like that there were too many roadblocks that are put in
the way of consumers and too many things that were required, answers
back and forth and limitations being placed upon consumers.
This is a good start and it does not take a complete agreement to
have a deal. What we have today is a deal. What we have today is a rule
that has been agreed to, where both sides have come to the table, have
openly agreed; and so we are going to support this conference report.
I would submit an article of some writing that has been in the paper
today about how we are going to have to continue in our endeavor to
make sure that in the future that we come back and readdress this issue
so that consumers and people engaged in financial services have fewer
roadblocks in order to get their job done. I support this rule.

[From the Financial Times, June 12, 2000]

Caveat Surfer Should Be the E-Commerce Motto

(By Amity Shlaes)

Perhaps the most exciting thing about the new internet
world is that it undermines the assumptions of the old one.
In the internet world, we get along without many things we
were long assured had to be: centralised authority,
standardised addresses and so on. Technologies that would
have been dismissed as chaotic a few years ago turn out to
function very well without extra regulation, thank you.
The new world has already found its own muse--the writer
Virginia Postrel. She calls for the combating of what she
dubs an ideology of stasis--``the notion that the good
society is one of stability, predictability and control, and
government's responsibility is to curb, direct or end
unpredictable market evolution''.
But chaos, even functioning chaos, is not to everyone's
liking. Governments these days are desperate to claim the new
e-territory, even to dominate it. On the level of instinct,
this strikes most people as laughable. Nothing, not even
fund-raising controversy, has subjected Al Gore to more
ridicule than his statement that he fathered the internet.
This naturally does not stop governments from trying. Fear
is their main weapon. Without new protections, they suggest,
the internet will give rise to Hollywood-type nightmares--
abuses of consumers, online perverts who prey on eight-year-
olds, global financial crashes and so on. Some concerns are
legitimate--the most serious being Napster--style raids on
intellectual property. But governments also raise these
issues as a political device.
In this context, the humdrum push-and-pull about bits of
technology legislation making their way through the various
Western legislatures takes on new meaning. Consider a
skirmish in Washington this week about legislation on
internet contracts. Like a new British law, it would allow
firms and customers to conclude paper-free transactions. The
fact that Congress has made the digital signatures bill the
centrepiece of new internet legislation should come as good
news to freedom-loving types. For contract law is by its
nature private: contracts require only two parties, and
diminish, even obviate, the need for nosy government.
But the e-signature bill also caught the interest of the
centralisers. Lawmakers led by Tom Bliley, a Republican
Congressman from Virginia, insisted that the old culture of
contracts cannot protect consumers from the fresh dangers of
the internet. So they inserted requirements so onerous as to
deter online consumers, not a crowd noted for its patience in
the first place.
Under the bill as it stood late last week, internet users
would have been required to send any number of repeated e-
mails reconfirming their consent to the contract at every
stage of a transaction, as well as demonstrating that they
had absorbed every bit of legal boilerplate. Predictably,
this provoked the concern of the Charles Schwabs, Dreyfuses
and banks of this world. The financial community has the most
to lose if the new law deters customers.
But the extra consumer measures also gave pause to Phil
Gramm, chairman of the Senate banking committee. Mr. Gramm is
less worried by brokerages than by principle--the principle
that the online frontier not be colonised by the old
regulatory culture. He points out that the new bill goes
beyond anything that already applies in contract law.
``What happened to `Let the buyer beware?' '' he asks.
``Common law and a thousand years of paper contracts
established duties and responsibilities for people
participating in commerce. You don't want to change that
relationship so that e-commerce undermines contracts and
commerce.'' On Friday, enough of the obstacles were stripped
out to win Mr. Gramm's grudging support, but others remained.
``We have gone from having two different versions of a bill
that would have been an A or an A minus, to a low B at
best,'' says James Lucier of Prudential Securities. Henry
Judy, a lawyer with the Washington office of Kirkpatrick &
Lockhart, has compared US and UK legislation. He says the
latter ``is broader, but some of the precise consumer issues
dealt with by the US legislation are left in the UK bill to
later administrative decisions''. The British e-consumer is
not safe from government fiat--as another bill allowing e-
mail surveillance shows.

[[Page H4351]]

Nor are e-signatures the only area where the control
question is a matter of legislative controversy. During the
spring the US media have made internet privacy for shoppers a
huge issue. The finance editor of Consumer Reports has
demanded that websites create ``in your face'' privacy
warnings. The Federal Trade Commission is now pushing
Congress to regulate websites.
On the tax front, the freedom types have been victorious--
but only for now. Lawmakers led by Congressman Chris Cox of
California recently succeeded in extending a moratorium on
new taxes on the internet. But this expires in five years and
many states are lobbying hard for a nationally co-ordinated
sales tax regime.
Across the Atlantic, the European Commission has been
lobbying so strongly for new taxing authority that it has
stirred the ire of the US Treasury. Of course, it is easier
to bash someone else's tax arrangements than to stand firm on
taxes at home. Globally, the tax issue remains in play; the
internet may end up bringing more taxation, rather than less.
Particularly troubling here is the assumption that the
internet is inherently more treacherous than the telegraph,
the telephone or any other new medium that went before. That
is questionable. A few years into the internet era, we have
yet to see the electronic world wreak huge damage. Five
months and a few days later, concerns about the Year 2000 bug
already seem an irrelevance.
Why not proceed with optimism? After all, we were wise
enough to let the internet happen. Now the challenge is to be
wise enough to let it grow.

Mr. Speaker, I yield back the balance of my time, and I move the
previous question on the resolution.
The previous question was ordered.
The resolution was agreed to.
A motion to reconsider was laid on the table.
Mr. BLILEY. Mr. Speaker, pursuant to House Resolution 523, I call up
the conference report on the Senate 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 for other purposes.
The Clerk read the title of the Senate bill.
The SPEAKER pro tempore (Mr. Gibbons). Pursuant to the rule, the
conference report is considered as having been read.
(For conference report and statement, see proceedings of the House of
June 8, 2000, at page H4115).
The SPEAKER pro tempore. The gentleman from Virginia (Mr. Bliley) and
the gentleman from Michigan (Mr. Dingell) each will control 30 minutes.
The Chair recognizes the gentleman from Virginia (Mr. Bliley).

General Leave

Mr. BLILEY. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
and to insert extraneous material on the conference report on S. 761.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Virginia?
There was no objection.
Mr. BLILEY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, for thousands of years dating back to the ancient
Egyptians, pen and paper has been the medium by which so much of
everyday life has been conducted. Paper has been the lifeblood of
commerce for centuries, but that is changing. Now with the Internet age
upon us, paper does not have the hold that it once had on so many of
us. More and more Americans are getting their news from the Internet
rather than a newspaper. E-mail is replacing handwritten letters.
Consumers are using e-tickets instead of paper airline tickets. In less
than 6 years, the Internet has revolutionized the way people
communicate and conduct business.
Every day, the line between what has to be done in paper and what can
be done electronically is being moved. The Internet is stretching the
creativity and ingenuity of some of the brightest people in our society
today. It is altering the practices and lives of all of our Nation's
citizens, and much more is to come. It is appropriate that in the first
year of the new millennium, Congress is ready to give final approval to
the legislation before us today that will further move us from the
paper age to the digital age.
I think we are all in agreement that Congress should not do anything
that would stifle the growth of the Internet and electronic commerce.
That is why 2 years ago the Committee on Commerce began an intensive
initiative to better understand the issues surrounding the Internet and
electronic commerce. As a result of those hearings, we saw the need to
provide legal vitality to electronic documents and electronically
signed contracts and agreements if electronic commerce was to grow and
flourish. Rather than seeking to regulate, the committee chose to
remove those legal roadblocks to unfettered growth of electronic
commerce. It has been my mantra that when approaching electronic
commerce issues, Congress' first obligation is to do no harm.
Last November, the House overwhelmingly passed H. 1714, the
Electronic Signatures in Global and National Commerce Act, better known
as E-Sign. The House-passed bill was a very good foundation to get us
to this end product.
Working with our colleagues in the other body, we were able to craft
a bipartisan consensus conference report that will stand the test of
time.
Mr. Speaker, this conference report is founded on a simple premise.
Any requirement in law that a contract be signed or that a document be
in writing can be met by an electronically signed contract or an
electronic document. We are simply giving the electronic medium the
same legal effect and enforceability as the medium of paper.
This conference report will allow consumers to engage in a whole host
of activities on the Internet that today are not possible. For example,
today a consumer can apply for a mortgage or get a quote on a life
insurance policy; but when it comes time to close the deal, a consumer
must physically sign the contract.
E-Sign will allow the entire transaction to be done electronically,
and the transaction will have the same legal effect and enforceability
as a paper contract.
Equally important, the conference report extends the same principle
to electronic records.
Mr. Speaker, I do want to take a moment to discuss the important
consumer provisions in this bill which were the subject of much
discussion throughout the negotiating process. First, under E-Sign,
engaging in electronic transactions is purely voluntary.
No one will be forced into using or accepting an electronic signature
or record. Consumers that do not want to participate in electronic
commerce will not be forced or duped into doing so.
Second, all existing Federal and State consumer protection laws
remain in place.
Third, we have included a strong consumer consent provision whereby
consumers are provided clear disclosure of terms before they consent to
any agreement. We also have included an important provision to ensure
that consumers will be able to access any electronic record that is
sent to them.
Mr. Speaker, E-Sign is about the future. It is about laying the legal
foundation of electronic commerce for many years to come. It is about
promoting the development of new technologies that will enable
consumers and businesses to have a greater certainty and security in
their transactions. It is also about developing new products and new
services that few of us can even imagine today. E-Sign is the most
important high technology vote that this Congress will undertake. If
one supports the U.S. high-tech industry, they will vote yes on this
bill, which has unanimous support among the high-tech community. A vote
in support of S. 761 is a vote in support of providing consumers with
great confidence and certainty in on-line transactions. It is a vote in
support of allowing businesses to provide new and innovative services
on-line.
I urge my colleagues to support the conference report on E-Sign.
Before I conclude, I would like to extend my appreciation to all of
the members of the conference committee for their work and
thoughtfulness. I extend my thanks to my friend, the gentleman from
Michigan (Mr. Dingell), the ranking member of the Committee on
Commerce, for his assistance. In addition, I thank the fine help of the
other House conferees, the gentleman from Louisiana (Mr. Tauzin), the
gentleman from Ohio (Mr. Oxley), and the gentleman from Massachusetts
(Mr. Markey). Each has made a valuable addition to the process.

[[Page H4352]]

Further, I want to thank the members of the other body for their
contributions. Republican and Democrat Senators from the commerce,
banking and judiciary committees were critical to reaching final
support for the conference report. This is truly a remarkable day, and
I thank the participants for helping to bring this overwhelming victory
to the American people.
The following statement is intended to serve as a guide to the
provisions of the conference report accompanying S. 761, the Electronic
Signatures in Global and National Commerce Act. The differences between
the Senate bill, House amendment, and substitute agreed to in
conference are noted below, except for clerical corrections, conforming
changes made necessary by agreements reached by the managers, and minor
drafting and clerical changes.

Short Title

Senate bill
Section 1 establishes the short title of the bill as the
``Millennium Digital Commerce Act.''
House amendment
Section 1 establishes the short title of the bill as the
``Electronic Signature in Global and National Commerce Act''.
Conference substitute
The conference report adopts the House provision.

Electronic Records and Signatures in Commerce

General Rule of Validity

Senate bill
Section 5(a) of the Senate bill sets forth the general
rules that apply to electronic commercial transactions
affecting interstate commerce. This section provides that in
any commercial transaction affecting interstate commerce a
contract may not be denied legal effect or enforceability
solely because an electronic record was used in its
formation.
Section 5(b) authorizes parties to a contract to adopt or
otherwise agree on the terms and conditions on which they
will use and accept electronic signatures and electronic
records in commercial transactions affecting interstate
commerce.
House amendment
Section 101(a) of the House amendment establishes a general
rule that, with respect to any contract or agreement
affecting interstate commerce, notwithstanding any statute,
regulation or other rule of law, the legal effect, validity,
and enforceability of such contract or agreement shall not be
denied on the ground that: (1) the contract or agreement is
not in writing if the contract or agreement is an electronic
record; and (2) the contract or agreement is not signed or
affirmed by written signature if the contract or agreement is
signed or affirmed by an electronic signature.
Section 101(b) provides that with respect to contracts or
agreements affecting interstate commerce, the parties to such
contracts or agreements may establish procedures or
requirements regarding the use and acceptance of electronic
records and electronic signatures acceptable to such parties.
Further, the legal effect, validity, or enforceability for
such contracts or agreements shall not be denied because of
the type or method of electronic record or electronic
signature selected by the parties.
Nothing in section 101(b) requires a party to enter into
any contract or agreement utilizing electronic signatures or
electronic records. Rather, it gives the parties the option
to enter freely into online contracts and agreements.
Conference Substitute
The conference report adopts a substitute provision that
follows the House amendment.
The general rule provides that notwithstanding any statute,
regulation, or other rule of law (other than titles one and
two) with respect to any transaction in or affecting
interstate or foreign commerce: (1) a signature, contract, or
other record relating to such transaction may not be denied
legal effect, validity, or enforceability solely because it
is in electronic form, and (2) a contract relating to such
transaction may not be denied legal effect, validity, or
enforceability solely because an electronic signature or
electronic record was used in its formation.
The conference report makes clear that title I of the
conference substitute does not (1) limit, alter, or otherwise
affect any requirements imposed by a statute, regulation, or
rule of law relating to the rights and obligations of persons
under such statute, regulation, or rule of law other than
requirements that contracts or other records be written,
signed, or in non-electronic form; or (2) require any person,
with respect to a record other than a contract, to agree to
use or accept electronic records or electronic signatures.
The conference report includes an opt-in provision allowing
consumers to consent to receive electronic records as
described below. If a statute, regulation, or other rule of
law requires that a record relating to a transaction in or
affecting interstate or foreign commerce be provided or made
available to a consumer in writing, an electronic record may
be substituted if (1) the consumer affirmatively consents to
receive an electronic record and has not withdrawn such
consent, (2) the consumer, prior to consenting, is provided
with a clear and conspicuous statement informing the consumer
of rights or options to have the record provided or made
available on paper, and the right of the consumer to withdraw
the consent to electronic records and of any conditions,
consequences (which may include termination of the parties'
relationships), or fees in the event of withdrawal of
consent. Further, the consumer is informed of whether the
consent applies only to the initial transaction or to
identified categories of records that follow the initial
transaction. Disclosure must also be made describing the
procedures the consumer must use to withdraw consent and to
update information needed to contact the consumer
electronically. The consumer must also be informed of how
after the consent, the consumer may, upon request, obtain a
paper copy of electronic records, and whether any fee will be
charged for such copy.
Pursuant to subsection (c)(1)(C)(i), the consumer must be
provided, prior to consenting, with a clear and conspicuous
statement describing the hardware and software requirements
to access and retain electronic records.
Subsection (c)(1)(C)(ii) requires that the consumer's
consent be electronic or that it be confirmed electronically,
in a manner that reasonably demonstrates that the consumer
will be able to access the various forms of electronic
records to which the consent applies. The requirement of a
reasonable demonstration is not intended to be burdensome on
consumers or the person providing the electronic record, and
could be accomplished in many ways. For example, the
``reasonable demonstration'' requirement is satisfied if the
provider of the electronic records sent the consumer an e-
mail with attachments in the formats to be used in providing
the records, asked the consumer to open the attachments in
order to confirm that he could access the documents, and
requested the consumer to indicate in an e-mailed response to
the provider of the electronic records that he or she can
access information in the attachments. Similarly, the
``reasonable demonstration'' requirement is satisfied if it
is shown that in response to such an e-mail the consumer
actually accesses records in the relevant electronic format.
The purpose of the reasonable demonstration provision is to
provide consumers with a simple and efficient mechanism to
substantiate their ability to access the electronic
information that will be provided to them.
Subsection (c)(1)(D) requires that after the consent of a
consumer if a change in the hardware or software requirements
needed to access or retain electronic records creates a
material risk that the consumer will not be able to access or
retain a subsequent electronic record that was the subject of
the consent, the person providing the electronic record must
provide the consumer with a statement of the revised hardware
and software requirements for access to and retention of the
electronic records, and the right to withdraw consent without
the imposition of any fees for such withdrawal and without
the imposition of any condition or consequence that was not
disclosed. Further, the provider must, pursuant to
subparagraph (C)(ii) perform the consumer access test again.
Subsection (c)(2) includes a savings clause making clear
that nothing in this title affects the content or timing of
any disclosure or other record required to be provided or
made available to any consumer under any statute, regulation,
or other rule of law. Further, subsection (c)(2) provides
that if a law that was enacted prior to this Act expressly
requires a record to be provided or made available by a
specified method that requires verification or acknowledgment
of receipt, the record may be provided or made available
electronically only if the method used provides verification
or acknowledgment of receipt (whichever is required).
Section 101(c)(3) makes clear that an electronic contract
or electronic signature cannot be deemed ineffective,
invalid, or unenforceable merely because the party
contracting with a consumer failed to meet the requirements
of the consent to electronic records provision. Compliance
with the consent provisions of section 101(c) is intended to
address the effectiveness of the provision of information
in electronic form, not the validity or enforceability of
the underlying contractual relationship or agreement
between the parties. In other words, a technical violation
of the consent provisions cannot in and of itself
invalidate an electronic contract or prevent if from being
legally enforced. Rather, the validity and enforceability
of the electronic contract is evaluated under existing
substantive contract law, that is, by determining whether
the violation of the consent provisions resulted in a
consumer failing to receive information necessary to the
enforcement of the contract or some provision thereof. For
example, if it turns out that the manner in which a
consumer consented did not ``reasonably demonstrate'' that
she could access the electronic form of the information at
a later date, but at the time of executing the contract
she was able to view its terms and conditions before
signing, the contract could still be valid and enforceable
despite the technical violation of the electronic consent
provision.
Subsection (c)(4) provides that withdrawal of consent by a
consumer shall not affect the

[[Page H4353]]

legal effectiveness, validity, or enforceability of
electronic records provided or made available to that
consumer in accordance with paragraph (1) prior to
implementation of the consumer's withdrawal of consent. A
consumer's withdrawal of consent shall be effective within a
reasonable period of time after receipt of the withdrawal by
the provider of the record. Failure to comply with paragraph
(1)(D) may, at the election of the consumer, be treated as a
withdrawal of consent for purposes of this paragraph.
Subsection (c)(5) makes clear that this subsection does not
apply to any records that are provided or made available to a
consumer who has consented prior to the effective date of
this title to receive such records in electronic form as
permitted by any statute, regulation, or other rule of law.
Subsection (c)(6) provides an oral communication or a
recording of an oral communication shall not qualify as an
electronic record for purposes of this subsection except as
otherwise provided under applicable law.
Section 101(d) addresses statutory and regulatory record
retention requirements. It states that when a statute,
regulation, or other rule of law requires that a record,
including a contract, be retained that requirement is
satisfied by the retention of an electronic record, if two
criteria are met. First, the electronic record must
accurately reflect the information set forth in the contract
or record required to be retained. Second, that electronic
record must remain accessible to all parties who by law are
entitled to access the record for the period set out in that
law. Moreover, the electronic record must be in a form
capable of accurate reproduction for later reference. The
reproduction may be by way of transmission, printing or any
other method of reproducing records.
Section 101(e) addresses statutory and regulatory
requirements that certain records, including contracts, be in
writing. The statute of frauds writing requirement
exemplifies one such legal requirement. The section states
that an electronic record or contract may be denied legal
effect and enforceability under section 101(a) of this Act,
if such an electronic record is not in a form that is capable
of being retained and accurately reproduced for later
reference by all parties entitled to retain that contract or
record. This provision is intended to reach two qualities of
``a writing'' in the non-electronic world. The first such
quality of ``a writing'' is that it can be retained, e.g., a
contract can be filed. The second such quality of ``a
writing'' is that it can be reproduced, e.g., a contract can
be copied.
Subsection (f) clarifies that nothing in title I affects
the proximity requirement of any statute, regulation, or
other rule of law with respect to any warning, notice,
disclosure, or other record required to be posted, displayed,
or publicly affixed.
Subsection (g) provides that if a statute, regulation, or
other rule of law requires a signature or record to be
notarized, acknowledged, verified, or made under oath, that
requirement is satisfied if the electronic signature of the
person authorized to perform those acts, together with all
other information required to be included by other applicable
statute, regulation, or rule of law, is attached to or
logically associated with the signature or record. This
subsection permits notaries public and other authorized
officers to perform their functions electronically, provided
that all other requirements of applicable law are satisfied.
This subsection removes any requirement of a stamp, seal, or
similar embossing device as it may apply to the performance
of these functions by electronic means.
Subsection (h) provides legal effect, validity and
enforceability to contracts and record relating to a
transaction in or affecting interstate or foreign commerce
that were formed, created or delivered by one or more
electronic agents.
Subsection (i) makes clear that the provisions of title I
and II cover the business of insurance.
Subsection (j) provides protection from liability for an
insurance agent or broker acting under the direction of a
party that enters into a contract by means of an electronic
record or electronic signature if: (1) the agent or broker
has not engaged in negligent, reckless, or intentional
tortious conduct; (2) the agent or broker was not involved in
the development or establishment of such electronic
procedures; and (3) the agent or broker did not deviate from
such procedures.

authority to alter or supersede general rule

Senate bill
Section 5(g) of the Senate bill provides that section 5
does not apply to any State in which the Uniform Electronic
Transaction Act is in effect.
House amendment
Section 102(a) of the House amendment provides that a State
statute, regulation or other rule of law enacted or adopted
after the date of enactment of H.R. 1714 may modify, limit,
or supersede the provisions of section 101 (except as
provided in section 102(b)) if that State action: (1) is an
adoption or enactment of the UETA as reported by the NCCUSL
or specifies alternative procedures or requirements
recognizing the legal effect, validity and enforceability of
electronic signatures; and (2) for statutes enacted or
adopted after the date of enactment of this Act, makes
specific reference to the provisions of section 101.
Section 102(b) provides that no State statute, regulation,
or rule of law (including those pertaining to insurance),
regardless of date of enactment, that modifies, limits, or
supersedes section 101 shall be effective to the extent that
such statute, regulation, or rule of law: (1) discriminates
in favor of or against a specific technology, method, or
technique; (2) discriminates in favor of or against a
specific type or size of entity engaged in the business of
facilitating the use of electronic signatures and electronic
records; (3) is based on procedures or requirements that are
not specific and that are not publicly available; and (4) is
otherwise inconsistent with the provisions of section 101.
Section 103(c) provides that a State may, by statute,
regulation or rule of law enacted or adopted after the date
of enactment of this Act, require specific notices to be
provided or made available in writing if such notices are
necessary for the protection of the public health or safety
of consumers. A consumer may not, pursuant to section
101(b)(2) consent to the provision or availability of such
notice solely as an electronic record.
Conference substitute
The conference report adopts a substitute provision.
Section 102 of the conference report provides a conditioned
process for States to enact their own statutes, regulations
or other rules of law dealing with the use and acceptance of
electronic signatures and records and thus opt-out of the
federal regime. The preemptive effects of this Act apply to
both existing and future statutes, regulations, or other
rules of law enacted or adopted by a State. Thus, a State
could not argue that section 101 does not preempt its
statutes, regulations, or other rules of law because they
were enacted or adopted prior to the enactment of this Act.
Section 102(a) provides that a State statute, regulation or
other rule of law may modify, limit, or supersede the
provisions of section 101 only if that State action: (1)
constitutes an adoption or enactment of the Uniform
Electronic Transactions Act (UETA) as reported and
recommended for enactment by the National Conference of
Commissioners on Uniform State Laws (NCCUSL) in 1999; or (2)
specifies alternative procedures or requirements (or both)
for the use or acceptance of electronic signatures or
electronic records for establishing the legal effect,
validity and enforceability of contracts or records.
It is intended that any State that enacts or adopts UETA in
its State to remove itself from Federal preemption pursuant
to subsection (a)(1) shall be required to enact or adopt UETA
without amendment. Any variation or derivation from the exact
UETA document reported and recommended for enactment by
NCCUSL shall not qualify under subsection (a)(1). Instead,
such efforts and any other effort may or may not be eligible
under subsection (a)(2). Thus, a State that enacted a
modified version of UETA would not be preempted to the extent
that the enactment or adoption by a State met the conditions
imposed in subsection (a)(2).
Subsection (a)(1) places a significant limitation on a
State that attempts to avoid Federal preemption by enacting
or adopting a clean UETA. Section 3(b)(4) of UETA, as
reported and recommended for enactment by NCCUSL, allows a
State to exclude the application of that State's enactment or
adoption of UETA for any ``other laws, if any, identified by
State.'' This provision provides a potential enormous
loophole for a State to prevent the use or acceptance of
electronic signatures or electronic records in that State.
To remedy this, subsection (a)(1) requires that any
exception utilized by a State under section 3(b)(4) of
UETA shall be preempted if it is inconsistent with title I
or II, or would not be preempted under subsection
(a)(2)(ii) (technology neutrality).
As stated above, subsection (a)(2) is designed to cover any
attempt except a strict enactment or adoption of UETA (which
would be covered by subsection (a)(1)), by a State to escape
Federal preemption by enacting or adopting specific
alternative procedures or requirements for the use or
acceptance of electronic signatures or records. This includes
any regulations or State action taken to implement a clean
enactment or adoption of UETA. Thus, a regulation or other
rule of law issued to implement a State's enactment or
adoption of a clean UETA would fall under and be tested
against the standards contained in subsection (a)(2) if it
strays in any manner from the strict, specific text of UETA,
as reported and recommended for enactment by NCCUSL.
Further, some States are enacting or adopting a strict,
unamended version of UETA as well as enacting or adopting a
companion or separate law that contains further provisions
relating to the use or acceptance of electronic signatures or
electronic records. Under this Act, such action by the State
would prompt both subsection (a)(1) (for the strict enactment
or adoption of UETA) and subsection (a)(2) (for the other
companion or separate legislation). Subsection (a)(2) would
also apply for any amendments made by a state in the future
to their statutes, regulations or rules of law pertaining to
the original enactment or adoption of UETA that qualified
under subsection (a)(1).
Subsection (a)(2) contains two important conditions that
limit the extent to which a state could utilize it to opt-out
of the federal regime. Specifically, such alternative
procedures or requirements: (1) must be consistent with this
title and title II; and (2) do not require, or accord greater
legal status or effect

[[Page H4354]]

to, the implementation or application of a specific
technology or technological specification for performing the
functions of creating, storing, generating, receiving,
communicating, or authenticating electronic signatures or
records. It is not intended that the singular use of
technology or technological specification in subsection
(a)(2)(A)(ii) allows a State to set more than one
technologies at the expense of other technologies in order to
meet this standard. Instead, this limitation is intended to
prevent States from setting any specific technology or
technological specification, unless otherwise specifically
permitted. Further, inclusion of the ``or accord greater
legal status or effect to'' is intended to prevent a state
from giving a leg-up or impose an additional burden on one
technology or technical specification that is not applicable
to all others.
In addition, subsection (a)(2)(B) requires that a State
that utilizes subsection (a)(2) to escape federal preemption
must make a specific reference to this Act in any statute,
regulation, or other rule of law enacted or adopted after the
date of enactment of this Act. This provision is intended, in
part, to make it easier to track action by the various States
under this subsection for purposes of research.
Section 102(b) provides a specific exclusion to the
technology neutrality provisions contained in subsection
(a)(2)(A)(ii) for procurement by a state, or any agency or
instrumentality thereof.
Section 102(c) makes clear that subsection (a) cannot be
used by a State to circumvent this title or title II through
the imposition of nonelectronic delivery methods under
section 8(b)(2) of UETA. Any attempt by a State to use
8(b)(2) to violate the spirit of this Act should be treated
as effort to circumvent and thus be void.

specific exclusions

Senate bill
Section 5(d) of the Senate bill excludes from the
application of this section any statute, regulation or other
rule of law governing: (1) the Uniform Commercial Code as in
effect in any state, other than sections 1-107 and 1-206 and
Articles 2 and 2A; (2) premarital agreements, marriage,
adoption, divorce, or other matters of family law; (3)
documents of title which are filed of record with a
governmental unit until such time that a State or subdivision
thereof chooses to accept filings electronically; (4)
residential landlord-tenant relationships; and (5) the
Uniform Health-Care Decisions Act as in effect in a State.
House amendment
Section 103(a) of the House amendment excludes from the
application of section 101 any contract, agreement or record
to the extent that it is covered by: (1) a statute,
regulation or rule of law governing the creation and
execution of wills, codicils, or testamentary trusts; (2) a
statute, regulation or other rule of law governing adoption,
divorce, or other matters of family law; (3) the Uniform
Commercial Code as in effect in any state, other than
sections 1-107 and -206 and Articles 2 and 2A; (4) any
requirement by a Federal regulatory agency or self-
regulatory agency that records be filed or maintained in a
specified standard or standards (except that nothing
relieves any Federal regulatory agency of its obligation
under the Government Paperwork Elimination Act, title XVII
of Public Law 105-277); (5) the Uniform Anatomical Gift
Act; or (6) the Uniform Health-Care Decisions Act.
Section 103(b) excludes from the application of section
101: (1) any contract, agreement or record between a party
and a State agency if the State agency is not acting as a
market participant in or affecting interstate commerce; (2)
court orders or notices or official court documents
(including briefs, pleading and other writings) required to
be executed in connection with court proceedings; or (3) any
notice concerning: (A) the cancellation or termination of
utility services, (B) default, acceleration, repossession,
foreclosure or eviction, or the right to cure under a credit
agreement secured by, or a rental agreement for, a primary
residence of an individual or the cancellation or termination
of health insurance or benefits or life insurance benefits
(excluding annuities).
Conference substitute
The conference report adopts a substitute provision that
follows the House amendment.
Section 103(a) excludes from the application of section 101
any contract, agreement or record to the extent that it is
covered by: (1) a statute, regulation or rule of law
governing the creation and execution of wills, codicils, or
testamentary trusts; (2) a statute, regulation or other rule
of law governing adoption, divorce, or other matters of
family law; (3) the Uniform Commercial Code as in effect in
any state, other than sections 1-107 and 1-206 and Articles 2
and 2A.
Section 103(b) excludes from the application of section
101: (1) court orders or notices or official court documents
(including briefs, pleading and other writings) required to
be executed in connection with court proceedings; or (2) any
notice of: (A) the cancellation or termination of utility
services, (B) default, acceleration, repossession,
foreclosure or eviction, or the right to cure under a credit
agreement secured by, or a rental agreement for, a primary
residence of an individual or the cancellation or termination
of health insurance or benefits or life insurance benefits
(excluding annuities).
The exclusion pertaining to utility services applies to
essential consumer services including water, heat and power.
This provision does not apply to notices for other broadly
used important consumer services, such as telephone, cable
television, and Internet access services, etc. Electronic
cancellation or termination notices may be used in
association with those other services, assuming all of the
other elements of Section 101 are met.
Section 103(c)(1) directs the Secretary of Commerce, acting
through the Assistant Secretary for Communication and
Information, to review the operation of the exclusions in
subsections (a) and (b) over a period of three years to
determine if such exclusions are necessary for the protection
of consumers. The Assistant Secretary shall submit the
findings of this review to Congress within three years of the
date of enactment of this Act.
Section 103(c)(2) provides that a Federal regulatory
agency, with respect to matter within its jurisdiction, may
extend, after proper notice and comment and publishing a
finding that one or more of exceptions in subsections (a) or
(b) are not longer necessary for the protection of consumers
and eliminating such exceptions will not increase the
material risk of harm to consumers, the application of
section 101 to such exceptions.

applicability to federal and state governments

Senate bill
The Senate bill contained no provision affecting the
authority of Federal regulatory agencies.
House amendment
The House amendment provided in Section 103 that the
authority of Federal regulatory agencies would be preserved
over records filed or maintained in a specific standard or
standards.
Conference substitute
The conference report adopts a substitute provision that
follows the House amendment.
Section 104(a) provides that subject to section 104(a)(2),
a Federal regulatory agency, a self-regulatory organization,
or State regulatory agency may specify standards or formats
for the filing of records with that agency or organization,
including requiring paper filings or records. While the
conference report preserves such authority to such agencies
or organizations, it is intended that use of such authority
is rarely exercised. Section 104(b)(1) provides that subject
to section 104(b)(2) and section 104(c), a Federal regulatory
agency or State regulatory agency that is responsible for
rulemaking under any other statute may interpret section 101
with respect to such statute through (1) the issuance of
regulations pursuant to a statute; or (2) to the extent such
agency is authorized by statute to issue orders or guidance,
the issuance of orders or guidance of general applicability
that are publicly available and published (in the Federal
Register in the case of an order or guidance issued by a
Federal regulatory agency). However, this does not grant any
Federal regulatory agency or State regulatory agency
authority to issue regulations, orders, or guidance pursuant
to any statute that does not authorize issuance of orders or
guidance.
Section 104(b)(2) provides for limitations on the
interpretational authority of agencies. Specifically, a
Federal regulatory agency shall not adopt any regulation,
order, or guidance described in section 104(b)(1), and a
State regulatory agency is preempted by section 101 from
adopting any regulation, order, or guidance described above
unless: (1)--(A) such regulation, order, or guidance is
consistent with section 101; (B) such regulation, order, or
guidance does not add to the requirements of such section;
and (C) such agency finds, in connection with the issuance of
such regulation, order, or guidance, that--(i) there is a
substantial justification for the regulation, order, or
guidance; (ii) the methods selected to carry out that
purpose--(I) are substantially equivalent to the requirements
imposed on records that are not electronic records; and (II)
will not impose unreasonable costs on the acceptance and use
of electronic records; and (iii) the methods selected to
carry out that purpose doe not require the implementation or
application of a specific technology or technological
specification for performing the functions of creating,
storing, generating, receiving, communicating, or
authenticating electronic records or electronic signatures.
The conference report provides for more limited Federal and
State interpretative authority over other functions related
to records. This Act grants no additional or new rulemaking
authority to any Federal or State agency. The conference
report provides that if Federal or State regulators possessed
specific rulemaking authority under their organic statutes,
they could use that rulemaking authority to interpret section
101 subject to strict conditions. Those conditions include
determinations that such regulation, order or guidance: (1)
is consistent with section 101; and (2) does not add to the
requirements of the section. Additionally, the conference
report requires that any Federal agency show conclusively
that: (a) there is a substantial justification for the
regulation and the regulation is necessary to protect an
important public interest; (b) the methods used to carry out
that purpose are the least restrictive alternative consistent

[[Page H4355]]

with that purpose; (c) the methods are substantially
equivalent to the requirements imposed or records that are
not electronic records; and (d) such methods will not impose
new costs on the acceptance and use of electronic records.
The conference report requires strict technological
neutrality of any Federal or State regulation, order or
guidance. Absent such technological neutrality, any such
regulation, order or guidance is void.
The conference report is designed to prevent Federal and
State Regulators from undermining the broad purpose of this
Act, to facilitate electronic commerce and electronic record
keeping. To ensure that the purposes of this Act are upheld,
Federal and State regulatory authority is strictly
circumscribed. It is expected that Courts reviewing
administrative actions will be rigorous in seeing that the
purpose of this Act, to ensure the widest use and
dissemination of electronic commerce and records are not
undermined.
Subsection (b)(3)(A) provides authority to a Federal or
State regulatory agency to interpret section 101(d) in a
manner to specify specific performance standards to assure
accuracy, record integrity, and accessibility of records that
are required to be retained. Subsection (b)(3) extends this
authority to override the technology neutrality provision
contained in subsection (b)(2)C)(iii) but only if doing so
(1) serves an important governmental objective; and (2) is
substantially related to the achievement of that objective.
Further, subsection (b)(3)(A) does not allow a Federal or
State regulatory agency to require the use of a particular
type of software or hardware in order to comply with 101(d).
Subsection (b)(3)(B) provides authority to a Federal or
State regulatory agency to interpret section 101(d) to
require retention of paper records but only if (1) there is a
compelling government interest relating to law enforcement or
national security for imposing such requirement, and (2)
imposing such requirement is essential to attaining such
interest. It is important to note that the test in
subsection (b)(3)(B) is higher and more stringent than in
subsection (b)(3)(A). This is intentional as it is an
effort to impose an extremely high barrier before a
Federal or State regulatory agency will revert back to
requiring paper records. However, this does not diminish
the test contained subsection (b)(3)(A). It, too, is
intended to be an extremely high barrier for a Federal or
State regulatory agency to meet before the technology
neutrality provision is violated. It is intended that use
of either of these tests will be necessary in only a very,
very few instances. It is expected that Federal and State
agencies take all action and exhaust all other avenues
before exercising authority granted in paragraph (3).
Subsection (b)(4) exempts procurement by a Federal or State
government, or any agency or instrumentality thereof from the
technology neutral requirements of subsection (b)(2)(C)(iii).
Subsection (c)(1) makes clear that nothing in subsection
(b), except subsection (b)(3)(B), allows a Federal or State
regulatory agency to impose or reimpose any requirement that
a record be in paper form.
Subsection (c)(2) makes clear that nothing in subsection
(a) or (b) relieves any Federal regulatory agency of its
obligations under the Government Paperwork Elimination Act.
Subsection (d)(1) provides authority to a Federal or State
regulatory agency to exempt without condition a specified
category or type of record from the consent provisions in
section 101(c) if such exemption is necessary to eliminate a
substantial burden on electronic commerce and will not
increase the material risk of harm to consumers. It is
intended that the test under subsection (d)(1) not be read
too limiting. There are vast numbers of instances when
section 101(c) may not be appropriate or necessary and should
be exempted by the appropriate regulator.
Subsection (d)(2) requires the Securities and Exchange
Commission, within 30 days after date of enactment, to issue
a regulation or order pursuant to subsection (d)(1) exempting
from the consent provision any records that are required to
be provided in order to allow advertising, sales literature,
or other information concerning a security issued by an
investment company that is registered under the Investment
Company Act of 1940, or concerning the issuer thereof, to be
excluded from the definition of a prospectus under section
2(a)(10)(A) of the Securities Act of 1933.
Section 104(e) provides that the Federal Communications
Commission shall not hold any contract for telecommunications
service or letter of agency for a preferred carrier change,
that otherwise complies with the Commission's rules, to be
legally ineffective, invalid or unenforceable solely because
an electronic records or electronic signature was used in its
formation or authorization.
The Federal Communications Commission (FCC) has been very
slow, even reticent, to clearly authorize the use of an
Internet letter of agency for a consumer to conduct a
preferred carrier change. As a result of the Commission's
repeated failure to act on this matter, the conference report
provides specific direction to the Commission to recognize
Internet letters of agency for a preferred carrier change.

studies

Senate bill
Section 7 of the Senate bill directs the Department of
Commerce and Office of Management and Budget (OMB) to report
to Congress within 18 months on Federal laws and regulations
that might pose barriers to electronic commerce, including
suggestions for reform.
House amendment
Section 104 of the House amendment directs the Secretary of
Commerce (the Secretary), acting through the Assistant
Secretary for Communications and Information, to conduct an
inquiry regarding any State statute, regulation, or rule of
law enacted or adopted after enactment on the extent to which
such statute, regulation, or rule of law complies with
section 102(b). Section 104(b) requires the Secretary to
submit the report described in paragraph(a) at the conclusion
of the five year period.
Section 104(c) requires the Secretary, within eighteen
months after the date of enactment, to conduct an inquiry
regarding the effectiveness of the delivery of electronic
records to consumers using electronic mail as compared with
the delivery of written records by the United States Postal
Service and private express mail services. The Secretary
shall submit a report to Congress regarding the results of
such inquiry at the conclusion of the eighteen month period.
Conference substitute
The Senate recedes to the House with an amendment.
Specifically, the conference report retains subsection 104(c)
of the House amendment and redesignates it as section 104(a)
of the conference report. Further, the conference report
includes a new subsection (b) that requires the Secretary of
Commerce and the Federal Trade Commission, within one year
after date of enactment, to submit a report to the Congress
analyzing: (1) the benefits provided to consumers by the
consumer access test of the consent provision (section
101(c)(1)(C)(ii)); (2) any burdens imposed on electronic
commerce by the provision, whether the benefits outweigh the
burdens; (3) whether the absence of such procedure would
increase consumer fraud; and (4) any suggestions for revising
the provision. In conducting the evaluation, the Secretary of
Commerce and FTC shall solicit the comments of the public,
consumer representatives, and electronic commerce businesses.

definitions

Senate bill
Section 4 sets forth the definitions of terms used in the
bill: ``electronic;'' ``electronic agent;'' ``electronic
record;'' ``electronic signature;'' ``governmental agency;''
``record;'' ``transaction;'' and ``Uniform Electronic
Transaction Act.''
House amendment
Section 104 of the House amendment defines the following
terms: ``electronic record;'' ``electronic signature;''
``electronic;'' ``electronic agent;'' ``record;'' ``Federal
regulatory agency;'' and ``self-regulatory agency.''
Conference substitute
The conference report adopts a substitute provision
adopting definitions for the following terms: ``consumer;''
``electronic;'' ``electronic agent;'' ``electronic record;''
``electronic signature;'' ``Federal regulatory agency;''
``information;'' ``person;'' ``record;'' and ``transaction.''

effective dates

Senate bill
The Senate bill contained no provision.
House amendment
The House amendment contained no provision.
Conference substitute
The conference report creates a general delayed effective
date for the bill, and creates specific delayed effective
dates for certain provisions of the bill. Subsection (a)
establishes that, except as provided in subsections (b), the
provisions of the bill are effective October 1, 2000.
Subsection (b) delays the effective date of the records
retention provision until March 1, 2001 unless an agency has
initiated, announced, proposed but not completed an action
under subsection 104(b)(3), in which case it would be
extended until June 1, 2001. Subsection (b)(2) delays the
effective date of this Act by one year with regards to any
transaction involving a loan guarantee or loan guarantee
commitment made by the United States Government. The one year
delay was granted to permit the federal government time to
institute safeguards necessary to protect taxpayers from risk
of default on loans guaranteed by the federal government.
Subsection (d) delays the effective date of section 101(c)
for any records provided or made available to a consumer
pursuant to title IV of the High Education Act of 1965 until
the Secretary of Education publishes revised promissory notes
under section 432(m) of such Act or one year after the date
of enactment, whichever is earlier.

Transferable Records

transferable records

Senate bill
The Senate bill contained no provision.
House amendment
The House amendment contained no provision.
Conference substitute
The conference report adopts a new provision in recognition
of the need to establish a uniform national standard for the
creation, recognition, and enforcement of electronic
negotiable instruments. The development of

[[Page H4356]]

a fully-electronic system of negotiable instruments such as
promissory notes is one that will produce significant
reductions in transaction costs. This provision, which is
based in part on Section 16 of the Uniform Electronic
Transactions Act, sets forth a criteria-based approach to the
recognition of electronic negotiable instruments, referred to
as ``transferable records'' in this section and in UETA. It
is intended that this approach create a legal framework
within which companies can develop new technologies that
fulfill all of the essential requirements of negotiability in
an electronic environment, and in a manner that protects the
interests of consumers.
The conference report notes that the official Comments to
section 16 of UETA, as adopted by the National Conference of
Commissioners on Uniform State Laws, provide a valuable
explanation of the origins and purposes of this section, as
well as the meaning of particular provisions.
The conference report notes that, pursuant to sections 3(c)
and 7(d) of the UETA, an electronic signature satisfies any
signature requirement under Section 16 of the UETA. It is
intended that an electronic signature shall satisfy any
signature requirement under this provision, as well. The
conference report further notes that the reference in section
201(a)(1)(C) to loans``secured by real property'' includes
all forms of real property, including single-family and
multi-family housing.
Development and Adoption of Electronic Signature Products

Treatment of Electronic Signatures in Interstate and Foreign Commerce

Senate bill
Section 6 of the Senate bill sets out the principles that
the United States Government should follow, to the extent
practicable, in its international negotiations on electronic
commerce as a means to facilitate cross-border electronic
transactions.
Paragraph (1) advocates the removal of paper-based
obstacles to electronic transactions. This can be
accomplished by taking into account the enabling provisions
of the Model Law on Electronic Commerce adopted by the United
Nations Committee on International Trade Law (UNCITRAL) in
1996. Paragraph (2) permits that parties to a transaction
shall have the opportunity to choose the technology of their
choice when entering into an electronic transaction.
Paragraph (3) permits parties to a transaction the
opportunity to prove in a court or other proceeding that
their authentication approach and transactions are valid.
Paragraph (4) adopts a nondiscriminatory approach to
electronic signatures.
House amendment
Section 201(a) of the House amendment directs the Secretary
of Commerce, acting through the Assistant Secretary for
Communications and Information, to conduct an annual inquiry
identifying: (1) any domestic or foreign impediments to
commerce in electronic signature products and services and
the manner and extent to which such impediments inhibit the
development of interstate and foreign commerce; (2)
constraints imposed by foreign nations or international
organizations that constitute barriers to providers of
electronic signature products and services; and (3) the
degree to which other nations and international organizations
are complying with the principles in section 201(b)(2).
Under subsection (a)(2), the Secretary is required to
report to Congress the findings of each inquiry 90 days after
completion of such inquiry.
Section 201(b) directs the Secretary of Commerce, acting
through the Assistant Secretary for Communications and
Information, to promote the acceptance and use of electronic
signatures on an international basis in accordance with
section 101 of the bill and with designated principles. In
addition, the Secretary of Commerce is directed to take all
actions to eliminate or reduce impediments to commerce in
electronic signatures, including those resulting from the
inquiries required pursuant to subsection (a).
The designated principles are as follows: free-markets and
self-regulation, rather than government standard-setting or
rules, should govern the development and use of electronic
signatures and electronic records; neutrality and
nondiscrimination should be observed among providers of and
technologies for electronic records and
electronic signatures; parties to a transaction should be
allowed to establish requirements regarding the use of
electronic records and electronic signatures acceptable to
the parties; parties to a transaction should be permitted
to determine the appropriate authentication technologies
and implementation for their transactions with the
assurance that the technology and implementation will be
recognized and enforced; the parties should have the
opportunity to prove in court that their authentication
approaches and transactions are valid; electronic records
and signatures in a form acceptable to the parties should
not be denied legal effect, validity, or enforceability
because they are not in writing; de jure or de facto
imposition of electronic signature and electronic record
standards on the private sector through foreign adoption
of regulations or policies should be avoided; paper-based
obstacles to electronic transactions should be removed.
Section 201(c) requires the Secretary of Commerce to
consult with users and providers of electronic signatures and
products and other interested parties in carrying out actions
under this section.
Section 201(d) clarifies that nothing requires the
Secretary or Assistant Secretary to take any action that
would adversely affect the privacy of consumers.
Section 201(e) provides that the definitions in section 104
apply to this title.
Conference Substitute
The conference report adopts a substitute provision.
Section 301(a)(1) directs the Secretary of Commerce to
promote the acceptance and use of electronic signatures on an
international basis in accordance with section 101 of the
bill and with the set principles listed in subsection (a)(2).
In addition, the Secretary of Commerce is directed to take
all actions to eliminate or reduce impediments to commerce in
electronic signatures.
Section 301(a)(2) lists the principles as follows: (1)
Removal of paper-based obstacles to electronic transactions.
This can be accomplished by taking into account the enabling
provisions of the Model Law on Electronic Commerce adopted by
the United Nations Committee on International Trade Law
(UNCITRAL) in 1996; (2) Parties to a transaction shall have
the opportunity to choose the technology of their choice when
entering into an electronic transaction. Parties to a
commercial transaction should be able to chose the
appropriate authentication technologies and implementation
models for their transactions. Unnecessary regulation of
commercial transactions distorts the development and
efficient operation of markets, including electronic markets.
Moreover, the rapid development of the electronic marketplace
is resulting in new business models and technological
innovations. This is an evolving process. Therefore,
government attempts to regulate may impede the development of
newer alternative technologies; (3) Parties to a transaction
the opportunity to prove in a court or other proceeding that
their authentication approach and transactions are valid.
Parties should have the opportunity to prove in court that
the authentication methods that they select are valid and
reliable; and (4) Adoption of a nondiscriminatory approach to
electronic signatures and authentication methods from other
jurisdictions.
Section 301(c) directs the Secretary to consult with users
and providers of electronic signature products and services
and other interested parties. Section 301(d) applies the
definitions of ``electronic signature'' and ``electronic
record'' in section 107 to this title.
Increasingly, online transactions are not just interstate
but international in nature and this creates a clear need for
international recognition of electronic signatures and
records that will not create barriers to international trade.
Title III directs the Secretary of Commerce to take an active
role in bilateral and multilateral talks to promote the use
and acceptance of electronic signatures and electronic
records worldwide. It is intended that the Secretary promote
the principles contained in this Act internationally.
However, it is possible that some foreign nations may choose
to adopt their own approach to the use and acceptance of
electronic signatures and electronic records. In such cases,
the Secretary should encourage those nations to provide legal
recognition to contracts and transactions that may fall
outside of the scope of the national law and encourage those
nations to recognize the rights of parties to establish their
own terms and conditions for the use and acceptance of
electronic signatures and electronic records.
There is particular concern about international
developments that seek to favor specific technologies of
processes for generating electronic signatures and electronic
records. Failure to recognize multiple technologies may
create potential barriers to trade and stunt the development
of new and innovative technologies.
Unfortunately, international developments on recognizing
electronic signatures are troubling. The German Digital
Signature Law of July 1997 runs counter to many of the widely
accepted principles of electronic signature law in the United
States. For example, the German law provides legal
recognition only to signatures generated using digital
signature technology, establishes licensing for
certificate authorities, and sets a substantial role for
the government in establishing technical standards.
Further, a position paper on international recognition of
electronic signatures released by the German government
(International Legal Recognition of Digital Signatures,
August 28, 1998) seeks to apply these principles
internationally. This policy statement reemphasizes the
principle that uniform security standards are necessary
for all uses of digital signatures regardless of their
use, supports mutual recognition of digital signatures
only to those nations which have a similar regulatory
structure for certification authority, and fails to
provide legal effect to electronic signatures generated by
other technologies.
The European Community is considering a framework for the
use and acceptance of electronic signatures for its member
countries. ``Directive 1999/93/EC of the European Parliament
and of the Council of 13 December 1999 on a Community
Framework for electronic signatures'' lays out the European
Community's approach to electronic signature legislation. Of
particular interest is Article 7, International Aspects,
which recognizes the legal validity of digital certificates
issued in a non-European Community country. While
international recognition of electronic signatures is
important, there is concern that this approach will not
recognize

[[Page H4357]]

non-certificate based electronic signatures, such as those
based on biometric technologies. The conference report notes
that negotiations with the European Union on electronic
signatures is a top priority.

Commission on Child Online Protection

authority to accept gifts

Senate bill
The Senate bill contains no similar provision.
House amendment
The House amendment contains no similar provision.
Conference substitute
The conference report adopts a provision to amend section
1405 of the Child Online Protection Act by adding a new
subsection (h), which allows the Commission on Online Child
Protection to accept, use and dispose of gifts, bequests or
devises of services or property for the purpose of aiding or
facilitating the work of the Commission.

Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield myself 3 minutes.
(Mr. DINGELL asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. Mr. Speaker, I rise in support of this conference report
and urge its adoption by the House.
I want to begin by paying tribute to my good friend, the chairman of
the committee, the gentleman from Virginia (Mr. Bliley), for his
leadership in this matter.
Pieces of legislation which would not have met the test of the public
interest have been reformed in the conference, and his leadership has
played a significant part in those events, for which I salute him and
thank him.
The conference report confers legal validity on electronic signatures
and contracts involving transactions in interstate commerce and allows
required consumer disclosures and other records to be transmitted and
retained by businesses electronically rather than on paper.
This is the most far-reaching e-commerce legislation to be considered
by this Congress. No one could be more pleased nor indeed more
surprised than I am at the successful outcome of this conference.
As I mentioned, we started with a version that was anti-consumer and
opposed by the Democratic conferees, by the administration, by all the
States and by consumer groups. The Department of Justice and the State
attorneys general submitted letters to the conference committee,
pointing out how the draft would have undermined the government's
ability to enforce civil and criminal laws against waste, fraud and
abuse and would have destroyed many popular laws protecting consumers.
What then happened? Under the leadership of our friend and colleague,
the gentleman from Virginia (Mr. Bliley), chairman of the Committee on
Commerce and the chairman of the conference, and Senator John McCain,
chairman of the Committee on Commerce in the other body, a majority of
the Republican conferees agreed to address these concerns. They
recognized that this legislation must have adequate consumer
protections or consumers would never have the necessary confidence to
make e-commerce work.
I also want to commend Senators Hollings, Sarbanes, Wyden, and Leahy
for their outstanding work on these issues. Without their assistance,
certainly this matter would have been concluded differently and
probably unsuccessfully.
These joint efforts led to the adoption of strong consumer consent
provisions. These provisions require that consumers affirmatively
consent to receive information in electronic form. Furthermore, these
provisions require that the consumer actually demonstrate its ability
to be open and to gain access to the information in the format that it
will be transmitted. Other consumer protections contained in the
conference report include requirements relating to integrity of records
and security to guard against tampering. Federal regulatory agencies
may grant exemptions from the consent requirements under certain
limited circumstances. Businesses may be required to maintain paper
copies of contracts or records, if there is a compelling law
enforcement or national security interest.
Moreover, many critical documents continue to be provided and
retained on papers, such as wills, adoption, divorce matters, court
orders, utility termination notices, foreclosure and eviction notices,
insurance cancellation, product recalls, and warnings required to
accompany transportation of hazardous materials.
I am happy to report that all Democratic conferees and a majority of
our Republican conferees have agreed to the conference report which we
are considering today.
The conference report is also supported by the administration, the
States, and consumer groups.
This bipartisan conference agreement is balanced, and it is fair to
businesses, fair to consumers. It should become law.
Let me discuss a few of the details of the agreement.
I want to draw my colleagues attention to some important provisions
to which the Conferees agreed during the conference.
Scope of Requirement.--Section 101(a). In recommending that the House
vote to pass this conference report, I would like to clarify for
members the kind of transactions that are covered by the bill. You will
note that the definition of ``transaction'' includes business,
commercial, or consumer affairs. The Conferees specifically rejected
including ``governmental'' transactions. Members should understand that
this bill will not in any way affect most governmental transactions,
such as law enforcement actions, court actions, issuance of Government
grants, applications for or disbursement of Government benefits, or
other activities that the Government conducts that private actors would
not conduct. Even though some aspects of such governmental transactions
(for example, the Government's issuance of a check reflecting a
Government benefit) are commercial in nature, they are not covered by
this bill because they are part of a uniquely governmental operation.
Likewise, activities conducted by private parties principally for
governmental purposes are not covered by this bill. Thus, for example,
the act of collecting signatures to place a nomination on a ballot
would not be covered, even though it might have some nexus with
commerce (such as the signature collectors' contract of employment).
General Rule of Validity.--Section 101(a)(1) and (2). The Conferees
added the word ``solely'' in both sections 101(a)(1) and (2) to ensure
that electronic contracts and signatures are not inadvertently
immunized by this Act from challenge on grounds other than the absence
of a physical writing or signature.
Preservation of Rights and Obligations.--Section 101(b)(1). The
Conferees added a new Section 101(b)(1) which provides that this Title
I does not ``limit, alter, or otherwise affect any requirement imposed
by a statute, regulation, or rule of law relating to the rights and
obligations of persons under such statute, regulation, or rule of law
other than a requirement that contracts or other records be written,
signed, or in nonelectronic form.'' This savings clause makes clear
that existing legal requirements that do not involve the writing,
signature, or paper form of a contract or other record are not affected
by Title I. Thus, for example, a transaction into which a consumer
enters electronically is still subject to scrutiny under applicable
State and Federal laws that prohibit unfair and deceptive acts and
practices. So, if a consumer were deceived or unfairly convinced in
some way to enter into the electronic transaction, State and Federal
unfair and deceptive practices laws might still apply even though the
consumer was properly notified of their rights under Section 101(c) and
consent to the electronic notices and contracts was properly obtained.
In other words, compliance with the Act's consumer consent requirements
does not make it unnecessary for the transaction and parties to the
transaction to comply with other applicable statutes, regulations or
rules of law.
Preservation of Rights and Obligations.--Section 101(b)(2). The Act
specifically avoids forcing any contracting party--whether the
Government or a private party--to use or accept electronic records and
electronic signatures in their contracts. Thus, for example, where the
Government makes a direct loan, the bill would not require the use or
acceptance of electronic records or signatures in the loan transaction,
because the Government would be a party to the loan contract. The
Conferees recognized that, in some instances, parties to a contract
might have valid reasons for choosing not to use electronic signatures
and records, and it is best to allow contracting parties the freedom to
make that decision for themselves.
Protections Against Waste, Fraud and Abuse.--Sections 101(b)(2),
102(b) and 104(b)(4). Members should note that several provisions of
the conference report are designed to address concern about protecting
taxpayers from waste, fraud and abuse in connection with government
contracting or other instances in which the Government is a market
participant. For example, Sections 101(b)(2) 102(b) and 104(b)(4)
and others

[[Page H4358]]

give agencies significant latitude to accept, reject, or place
conditions on the use of electronic signatures and records when the
Government is acting like a market participant.

Consent to Electronic Record.--Section 101(c)(1). The House bill
included an amendment that required that consumers affirmatively
consent before they can receive records (including required notices and
disclosures and statements) electronically that are legally required to
be provided or made available in writing. Among other changes to this
section made in conference, the Conferees added an important new
element: Section 101(c)(1)(C) of the conference report requires that
the consumer ``consents electronically, or confirms his or her consent
electronically, in a manner that reasonably demonstrates that the
consumer can access information in the electronic form that will be
used to provide the information that is the subject of the consent.''
The purpose of this provision is to ensure that, when consumers agree
to receive notices electronically, they are able to make an informed
decision and that they can actually open, read, and retain the records
that they will be sent electronically.
Today, many different technologies can be used to deliver
information--each with its own hardware and software requirements. An
individual may not know whether the hardware and software on his or her
computer will allow a particular technology to operate. (All of us have
had the experience of being unable to open an e-mail attachment.) Most
individuals lack the technological sophistication to know the exact
technical specifications of their computer equipment and software,
especially if they are not at home when consent is sought. For these
reasons, it is appropriate to require companies to establish an
``electronic connection'' with their customers in order to provide
assurance that the consumer will be able to access the information in
the electronic form in which it will be sent. This one-time
``electronic check'' can be as simple as an e-mail to the customer
asking the customer to confirm that he was able to open the attachment
(if the company plans to send notices to the customer via e-mail
attachments) and a reply from the customer confirming that he or she
was able to open the attachment. This responsibility is not unduly
burdensome to e-commerce. As a matter of good customer relations, any
legitimate company would want to confirm that it has a working
communications link with its customers.
Preservation of Consumer Protections.--Section 101(c)(2)(A). The
Conferees preserved an important provision from the House bill which
provides that: ``nothing in this title affects the content or timing of
any disclosure or other record required to be provided or made
available to any consumer under any statute, regulation, or other rule
of law.'' So, for example, if a statute requires that a disclosure be
provided within 24 hours of a certain event and that the disclosure
include specific language set forth clearly and conspicuously, that
requirement could be met by an electronic disclosure provided within 24
hours of that event, which disclosure included the specific language,
set forth clearly and conspicuously. However, simply providing a notice
electronically does not obviate the need to satisfy the underlying
statute's requirements for timing and content.
Retention of Contracts and Records.--Section 101(d)(1) and Section
104(b)(3). The Conferees added provisions that state: ``if a statute,
regulation, and other rule requires that a contract or other record
relating to a transaction . . . be retained,'' the requirement is met
by retaining an electronic record of the information that ``accurately
reflects the information'' and ``remains accessible'' to all who are
entitled to it ``in a form that is capable of being accurately
reproduced for later reference. . . .'' Moreover, Federal or State
regulatory agencies may interpret this requirement to specify
performance standards to ``assure accuracy, record integrity, and
accessibility of records that are required to be retained.'' Moreover,
these performance standards can be specified in a manner that does not
conform to the technology neutrality provisions, provided that the
requirement serves, and is substantially related to the achievement of,
an important governmental objective. These record retention provisions
are essential to the capacity of federal and State regulatory and law
enforcement agencies to ensure compliance with laws. For example, the
only way in which a Government agency can determine if participants in
large Government programs are complying with financial and other
requirements of those programs may be to require that records be
retained in a form that can be readily accessible to government
auditors. Similarly, agencies must be able to require that companies
implement anti-tampering protections to ensure that electronic records
cannot be altered easily by money launderers or embezzlers or others
seeking to hide their illegal activity. Without the ability of these
agencies to ascertain program compliance through electronic record
retention, taxpayers could be exposed to far greater risk of fraud and
abuse. Similarly, bank and other financial regulators need to require
that records be retained in order that their examiners can insure the
safety and soundness of the institutions and their compliance with all
relevant regulatory requirements. The standards set forth in the SEC's
existing electronic recordkeeping rule, Rule 17a-4(f), such as the
requirement that an electronic recordkeeping system preserve records in
a non-rewritable and non-erasable manner, are essential to the SEC's
investor protection mission and are consistent with the provisions of
the conference report. The Conferees also expect the SEC to work with
the securities self-regulatory organizations (SROs) to the extent
necessary to ensure that accuracy, accessibility, and integrity
standards also cover SRO recordkeeping requirements in an electronic
environment.

Section 104(b)(3)(B) of the conference report permits Federal
regulatory agencies to interpret the law to require retention of
written records in paper form, if there is a compelling governmental
interest in law enforcement for imposing such requirement, and if
imposing such requirement is essential to attaining such interest. The
Conferees expect the SEC would be able to use this provision to require
brokers to keep written records of agreements required to be obtained
by the SEC's penny stock rules.
Exemptions to Preemption.--Section 102(a). This subsection expressly
gives the States the authority to modify, limit or supersede provisions
of Section 101 in certain ways if the State enacts the provisions of
the Uniform Electronic Transactions Act as approved and recommended for
enactment by the National Conference of Commissioners on Uniform State
Laws in 1999 (UETA).
Prevention of Circumvention.--Section 102(c). Under Section 102(a),
States may supersede this Act if they adopt UETA, subject to certain
limitations section forth in Section 102(a). Section 8(b)(2) of UETA
allows States to impose delivery requirements. Section 102(c) makes
clear that States retain the authority provided under Section 8(b)(2),
provided that the State does not circumvent Titles I or II of this Act
by imposing nonelectronic delivery methods. Thus, provided that the
delivery methods required are electronic and do not require that
notices and records be delivered in paper form, States retain their
authority under Section 8(b)(2) of UETA to establish delivery
requirements.
Filing and Access Requirements.--Section 104(a) of the conference
report protects standards and formats developed by a Federal regulatory
agency, self-regulatory organization, or State regulatory agency for
records required to be filed with it. Thus standards and formats
developed by the SEC for electronic filings for systems such as EDGAR
and IARD, and similarly, the CRD system, a joint federal-state system
for registering securities firms and their personnel, all would be
covered by Section 104(a). The standards and formats for EDGAR, the
IARD, and the CRD have been developed over many years, and both the SEC
and securities industry have expended significant resources to make
these complex systems work for regulators and investors alike. The
importance of this provision has been intensified by the very real
threat of security breaches by computer hackers.
Preservation of Existing Rulemaking Authority.--Section 104(b). This
Act will affect requirements that are imposed by Federal and state
statutes, regulations, and rules of law. No one agency is charged with
interpreting its provisions; instead, under Section 104(b), regulatory
agencies that have authority to interpret other statutes may interpret
Section 101 with respect to those statutes to the extent of their
existing interpretative authority. This provision provides important
protection to both affected industry and consumers. It is impossible to
envision all of the ways in which this Act will affect existing
statutory requirements. This interpretative authority will allow
regulatory agencies to provide legal certainty about interpretations to
affected parties. Moreover, this authority will allow regulatory
agencies to take steps to address abusive electronic practices that
might arise that are inconsistent with the goals of their underlying
statutes. For example, if a broker were to deceive a person into
pledging equity in their home for a loan based on false representations
about the loan's terms and conditions, the broker's action could be
challenged under any applicable statute that prohibited such deception
and false representations, even if the consumer executed the loan
documents electronically and consented to the use of the electronic
contract and records in compliance with the terms of this Act. Without
this authority, predators might argue that this Act somehow immunizes
the abusive practice, notwithstanding the underlying statutory
requirement, and consumers and competitors would have to wait for
resolution of the issue through litigation.

I would also like to clarify the nature of the responsibility of
Government agencies in interpreting this bill. As the bill makes clear,
each agency will be proceeding under its preexisting rulemaking
authority, so that regulations or guidance interpreting section 101
will

[[Page H4359]]

be entitled to the same deference that the agency's interpretations
would usually receive. This is underlined by the bill's requirements
that regulations be consistent with section 101, and not add to the
requirements of that section, which restate the usual Chevron test that
applies to and limits an agency's interpretation of a law it
administers. Giving each agency authority to apply section 101 to the
laws it administers will ensure that this bill will be read flexibly,
in accordance with the needs of each separate statute to which it
applies.
Any reading under which courts would apply an unusual test in
reviewing an agency's regulations would generate a great deal of
litigation, creating instability and needlessly burdening the courts
with technical determinations. Likewise, because these regulations will
be issued under preexisting legal authority, any challenges to those
regulations will proceed through the methods prescribed under that
preexisting authority, whether pursuant to the Administrative Procedure
Act or some other statute. Again, this will ensure that any challenges
to such regulations are resolved promptly and minimize any resulting
instability and burden. Of course, such regulations must satisfy the
requirements of the Act.
Authority To Exempt From Consent Provision.--Section 104(d)(1) and
(2). It is my understanding that the conference report's consent
provisions are similar to much of the SEC's guidance in the electronic
delivery area. Section 104(d)(1) permits agencies such as the SEC to
continue to provide flexibility in interpreting the consent provisions
anticipated by the conference report. In addition, a specific provision
contained in Section 104(d)(2) anticipates that the SEC will act to
clarify that documents, such as sales literature, that appear on the
same Web site as, or which are hyperlinked to, the final prospectus
required to be delivered under the federal securities laws, can
continue to be accessed on a Web site as they are today under SEC
guidance for electronic delivery.
Mr. Speaker, I reserve the balance of my time.
Mr. BLILEY. Mr. Speaker, I yield 3 minutes to the gentleman from
Virginia (Mr. Davis).
(Mr. DAVIS of Virginia asked and was given permission to revise and
extend his remarks.)
Mr. DAVIS of Virginia. Mr. Speaker, I rise today to express my strong
support for S. 761, the Electronic Signatures in Global and National
Commerce Act. This legislation marks a critical positive step towards
promoting the growth and development of electronic commerce which has
emerged as the driving force in our Nation's economy.
Today there are approximately 17 million households on-line and that
number is expected to almost triple by 2004. Revenue generated from the
Internet increased by 62 percent and totaled $524 billion in 1999. That
figure is likely to reach $850 billion by the end of 2000 and a
staggering $1.6 trillion by 2003.
Now what these figures demonstrate is the seemingly boundless
potential that electronic commerce has to offer our economy in terms of
both economic prosperity and ease of communication. Our computers are
windows to a diverse and limitless electronic venue that mimics the
traditional free market but which is still developing in terms of the
parameters under which consumers and businesses interact with each
other.
The E-Sign bill adopts one of the most critical components of any
successful market economy to the digital environment: The existence of
the rule of law and the enforcement of written agreements and
transactions that follow predetermined rules of notice, disclosure
rights and obligations. All other things being equal, when parties know
that the signatures guarantee accountability, that they gain benefits,
and at the same time undertake certain obligations in return, their
behavior is necessarily shaped by the certainty which results when
parties are contractually bound. Of course, this paradigm which has
been rooted in common law for centuries and dominates contracts course
work during the first year of law school, is the essence of paper-based
contracts and transactions.
Now, as we enter the digital age and the dynamic electronic
marketplace expands, the absence of a uniform legal mechanism for
digital signatures and records threatens to restrain the booming
commerce that is taking place over the Internet.

{time} 1145

With the Internet as the marketplace of the 21st century, increasing
its use depends on developing and retaining consumer and business
confidence in the legal enforcement of digital signatures.
S. 761 creates this necessary legal certainty. By allowing American
businesses and individuals the ability to engage in commerce, knowing
that their transactions are full and legal and valid, I believe we will
see enormous savings to business, greater efficiency in the market, and
faster paperless transactions that will translate into lower costs for
consumers.
Another important objective in passing this legislation is the
assurance that American principles on the use and acceptance of
electronic signatures and records will be emulated overseas, ensuring
that American businesses will not be put at a competitive disadvantage
by restrictive foreign laws.
Let me finish by thanking the gentleman from Virginia (Mr. Bliley),
who has worked very hard to bring this well thought-out and critical
measure to the floor today. S. 761 is an important step in reconciling
our legal system with modern-day technology. It is essential to
fostering the continued growth of electronic commerce that is
propelling America's economic prosperity in the Information Age. I urge
all my colleagues to vote in favor of this conference report.
Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentleman from Virginia (Mr. Moran).
Mr. MORAN of Virginia. Mr. Speaker, I thank the very distinguished
gentleman from Michigan (Mr. Dingell), our senior Democrat in the
Congress, for yielding me this time and for his strong support of this
conference report.
Mr. Speaker, the Internet has become an integral part of our daily
lives at work and at home. Because of the Internet, the American people
have access to services and information that were unheard of 5 or 10
years ago. Approval of this conference report is a step towards
ensuring that American businesses and consumers are able to take the
fullest advantage of the digital revolution by being able to contract
as well as to communicate over the Internet.
This legislation promotes the use of electronic signatures by
providing a consistent and predictable national framework of rules
governing the use of electronic signatures. It will provide consumers
and companies doing business on the Internet legal certainty over
electronic signatures until all 50 States pass their own legislation on
the legality of electronic transactions under the Uniform Electronic
Transaction Act.
It is not an attempt to regulate electronic commerce. It merely
declares the validity of electronically created contracts and records.
But it retains individual choice and personal security. As the
supportive statements of the gentleman from Virginia (Chairman Bliley)
and the gentleman from Michigan (Mr. Dingell), the ranking Democrat,
have underscored, this is balanced, bipartisan legislation that will
allow the American people to utilize the Internet to its fullest
potential. So I urge a unanimous vote on this conference report.
Mr. BLILEY. Mr. Speaker, I yield 3 minutes to the gentleman from
Louisiana (Mr. Tauzin), chairman of the subcommittee.
(Mr. TAUZIN asked and was given permission to revise and extend his
remarks.)
Mr. TAUZIN. Mr. Speaker, let me first thank the gentleman from
Virginia (Mr. Bliley), the chairman of our Committee on Commerce and
the leader of our conference with the Senate, for the production of
this incredibly, I think, historic act today. Let me also thank the
gentleman from Michigan (Mr. Dingell) and the gentleman from
Massachusetts (Mr. Markey), who joined the gentleman from Ohio (Mr.
Oxley) and I as the five Members of the conference committee who duked
it out with 17 Senators on the conference committee in order to produce
this, I think, very good result, and, as I said, which we endorse
today, albeit the fact that we believe at some point we are going to
have to come back and make some repairs in it in order to make sure
this does not become a haven for civil class-action lawsuits.
Having said that, let me also use this moment to pay special homage
and thanks to the gentleman from Richmond, Virginia (Mr. Bliley), the
chairman of the Committee on Commerce,

[[Page H4360]]

who is today adding another star on the chest of this warrior for
telecommunications reform.
The gentleman from Virginia (Mr. Bliley), as my colleagues know, was
our chairman when he produced the historic 1996 Telecommunications Act
that rewrote the 1930s laws on telecommunications, something we have
been trying to do for a decade, and accomplished under his
chairmanship.
The gentleman from Virginia (Mr. Bliley) recently produced for us the
conference report and the final action on the bill to deregulate
satellites in this country and around the world, and that was an
amazing and important accomplishment of his tenure.
I mentioned earlier the on-line privacy acts that are going to
provide Americans with much more security and privacy as they enter
this new world of electronic commerce. Much of it is the work of the
gentleman from Virginia (Chairman Bliley).
The national 911 bill that will provide a national number for people
to call in terms of emergencies on the Nation's highways is a product
of his tenure as chairmanship; now this historic digital signature act
of the year 2000.
But the gentleman from Virginia (Mr. Bliley) is not through. This
afternoon, we take up anti-spam legislation to protect Americans on the
Internet from the avalanche of damaging and very disruptive spam
operations that hurt electronic commerce and damage our capacity to use
the Internet efficiently to communicate with one another.
He is a cosponsor with me of the Truth in Billing Act to do something
about making sure the telephone company bills we get clearly disclose
what all those charges are about so Americans understand what is on
that massive and complicated telephone bill. The gentleman from
Virginia (Mr. Bliley) has been truly a warrior of the
telecommunications reform.
Today, we not only celebrate a historic, I think, beginning of making
sure that electronic commerce is secure and legal and binding into the
future, but I also see the gentlewoman from California (Ms. Eshoo), who
I want to commend for her early work on this issue for many years. But
today we not only celebrate the passage of this act, we celebrate, as
the gentleman from Virginia (Mr. Bliley) is nearing his retirement, an
incredible series of accomplishments on behalf of the chairman of our
Committee on Commerce.
Mr. Speaker, today I rise in support of the Conference Report to
accompany S. 761, the ``Electronic Signatures in Global and National
Commerce Act.'' This historic legislation, I believe, will promote the
growth of electronic commerce and the Internet economy.
For the first time in our nation's history, this legislation mandates
that electronic signatures and records may take the place of
handwritten signatures and hard, or paper, documents. And for the first
time in our history, electronic signatures and records will have full
legal validity.
This bill, once enacted into law, will bring enormous savings to
business through greater efficiency, faster transactions, and reduced
paperwork. Moreover, consumers will save from lower transactions costs.
S. 761, I must also mention, provides for extensive consumer
protection. Not only are existing state and federal consumer protection
laws unaffected, but the provisions regarding consent afford consumers
with the greatest possible safeguards against fraud imaginable.
Consumers must opt-in to electronic transactions, receive full
disclosure of terms and conditions, and ultimately prove that they can
electronically access and retain the information that is the subject of
the consent. I submit that in all my time in Congress, I have never
seen a more involved statutory framework for purposes of manifesting
consent.
In addition, S. 761 does not ignore international developments. It
directs the Secretary of Commerce to examine foreign laws that may be
an impediment to the use and acceptance of electronic signatures and
records. The Secretary must also promote e-signatures overseas and work
to remove the foreign barriers and impediments to commerce in
electronic signatures and records.
Finally, this legislation before us technology neutral. Mr. Speaker,
in developing this legislation, the Conference Committee recognizes
that certain technologies are more secure than others. The Committee
also recognizes that consumers and businesses must as well be free to
select the technology that is most appropriate for their particular
needs, taking into account the importance of a transaction, the special
nature of a transaction, and the corresponding need for assurances. To
this extent, S. 761 is consistent with the ``Government Paperwork
Elimination Act'' that we passed last Congress.
Mr. DINGELL. Mr. Speaker, I yield 3\1/2\ minutes to the distinguished
gentleman from Massachusetts (Mr. Markey).
Mr. MARKEY. Mr. Speaker, I thank the gentleman from Michigan for
yielding me this time. I would like to engage in a colloquy, if I may,
with the gentleman from Virginia (Mr. Bliley) on the consumer consent
provision in the conference report on electronic signatures.
Is it the understanding of the gentleman from Virginia, Mr. Speaker,
that pursuant to subsection 101(c)(1)(C)(ii) of the conference report,
a consumer's affirmative consent to the receipt of electronics records
needs to ``reasonably demonstrate'' that the consumer will be able to
access the various forms of electronic records to which the consent
applies?
Mr. BLILEY. Mr. Speaker, will the gentleman yield?
Mr. MARKEY. I am glad to yield to the gentleman from Virginia.
Mr. BLILEY. Yes, Mr. Speaker. The conference report requires a
``reasonable demonstration'' that the consumer will be able to access
the electronic records to which the consent applies. By means of this
provision, the conferees sought to provide businesses and consumers
with a simple and efficient mechanism to substantiate consumers'
ability to access the electronic information that will be provided to
them.
Mr. MARKEY. Mr. Speaker, I agree. The conferees did not intend that
the ``reasonable demonstration'' requirement would substantially burden
either consumers or the person providing the electronic record. In
fact, the conferees expect that a ``reasonable demonstration'' could be
satisfied in many ways.
Does the gentleman from Virginia agree with me that conferees intend
that the reasonable demonstration requirement is satisfied if the
provider of the electronic records sent the consumer an e-mail with
attachments in the formats to be used in providing the records, asked
the consumer to open the attachments in order to confirm that he could
access the documents, and requested the consumer to indicate in an e-
mail response to the provider of the electronic records that he or she
can access information in the attachments?
Mr. BLILEY. Mr. Speaker, will the gentleman further yield?
Mr. MARKEY. I yield to the gentleman from Virginia.
Mr. BLILEY. Yes, Mr. Speaker. An e-mail response from a consumer that
confirmed that the consumer can access the electronic records in the
formats provided to the consumer as e-mail attachments would satisfy
the reasonable demonstration requirement.
Mr. MARKEY. Mr. Speaker, does the gentleman from Virginia also agree
with me that the reasonable demonstration requirement is satisfied if
it is shown that, in response to such an e-mail, the consumer actually
accesses records in the relevant electronic format?
Mr. Speaker, I yield to the gentleman from Virginia (Mr. Bliley).
Mr. BLILEY. Yes, Mr. Speaker. The requirement is satisfied if it is
shown that, in response to such an e-mail, the consumer actually
accesses the information contained in electronic records in the
relevant format.
Mr. MARKEY. Mr. Speaker, on another matter, with respect to penny
stocks, would the gentleman from Virginia agree that conference reports
preserve the ability of the SEC to require written customer statements
with respect to a purchase of penny stocks, as was required in the
House-passed version of this bill?
Mr. BLILEY. Mr. Speaker, if the gentleman will yield, the gentleman
from Massachusetts is correct. Following enactment of the Penny Stock
Reform Act of 1990, the SEC has developed a cold call rule that
requires brokers to obtain a signed customer statement regarding any
penny stock to be purchased before any transaction takes place.
In addition, customers are provided with important written
disclosures involving risks of investing in penny stocks. Section 104
of the conference report specifically permits Federal regulatory
agencies, such as the SEC, to

[[Page H4361]]

interpret the law to require retention of written records in paper form
if there is a compelling governmental interest in law enforcement for
imposing such a requirement and if imposing such a requirement is
essential to attaining such interest. The conferees expect the SEC
would be able to use this provision to require brokers to keep written
records of all disclosures and agreements required to be obtained by
the SEC's penny stock rule.
Mr. MARKEY. Mr. Speaker, without question, penny stocks are a very
special category of extremely dangerous investments that I think will
require that the SEC needs to be able to ensure additional disclosure
and agreements to continue to be done in writing to help protect
consumers against fraud and facilitate the SEC securities law
enforcement mission. I thank the gentleman from Virginia (Mr. Bliley)
very much for his assistance.
The SPEAKER pro tempore (Mr. Gibbons). The Chair advises the Members
that the gentleman from Virginia (Mr. Bliley) has 18 minutes remaining,
and the gentleman from Michigan (Mr. Dingell) has 22 minutes remaining.
Mr. BLILEY. Mr. Speaker, I yield 3 minutes to the gentleman from Ohio
(Mr. Oxley), chairman of the Subcommittee on Finance and Hazardous
Materials.
(Mr. OXLEY asked and was given permission to revise and extend his
remarks.)
Mr. OXLEY. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, I rise in support of the E-Sign conference report. This
legislation is deceptively simple. It provides that anywhere in law a
written signature or paper record is required, that requirement can be
satisfied by an electronic signature or electronic record. Other than
repealing some of our law school educations, this legislation provides
a real future for electronic commerce.
Its application is clearly sweeping. It will promote legal certainty
in all on-line transactions. In so doing, it will accelerate the growth
of electronic commerce. E-Sign is a rare example of legislation in
which Congress is being proactive rather than reactive.
Because the access to financial information has improved
dramatically, the Internet provides significant opportunities for more
Americans to become directly involved in the capital markets.
Be it trading stocks on-line, assembling a retirement portfolio or
getting a mortgage on-line, E-Sign will allow consumers to do it
faster, cheaper, and better.
Today, millions of Americans trade securities and manage their
investments on-line. The cost savings to investors are enormous. Full-
service brokerage can cost as much as $400 per trade. On-line brokerage
costs less than $10 per trade at some firms.
One goal of E-Sign is to allow consumers to open accounts on-line
without mandating a physical signature or a brokerage agreement and
mailing it back to the broker. E-Sign will lower transaction costs to
firms and improve the audit trail for customers.
E-Sign will also facilitate an increase of the provision of insurance
products on-line and provide for on-line mortgages. It has been
estimated that consumer savings will amount to $5 billion in mortgages
alone.
I want to highlight two other provisions to which I contributed. The
first is the amendment that I sponsored to allow letters of agency, or
LOAs, to be submitted over the Internet for the purpose of changing
telecommunications carriers.
The second provision of which I took special interest is intended to
limit the liability exposure of insurance agents so they are not liable
for deficiencies in electronic procedures.
I want to take this opportunity to commend the gentleman from
Virginia (Chairman Bliley) for his leadership once again on this
important legislation. It is a fitting legacy to his chairmanship,
along with Gramm-Leach-Bliley, Litigation Reform, and the
Telecommunications Act, among many others. Under the gentleman's
leadership, the Committee on Commerce has become the e-commerce
committee.
I also want to thank the gentleman from Michigan (Mr. Dingell), the
gentleman from Massachusetts (Mr. Markey), and the gentleman from
Louisiana (Mr. Tauzin) for their work on the conference.
E-Sign is not just a bill that will benefit companies that develop
new technology. It will also help American businesses, large and small,
use technology to develop their businesses and provide new and
innovative services to consumers.
This a proud day for the Congress, a proud day for the Committee on
Commerce.

{time} 1200

Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the gentleman from
Texas (Mr. Green).
Mr. GREEN of Texas. Mr. Speaker, I thank the gentleman from Michigan
(Mr. Dingell), the ranking member, and also the gentleman from Virginia
(Mr. Bliley), the chairman of the committee, for their yeomen's efforts
on this bill.
Our signature is our word. It binds all agreements. The signatures of
our forefathers freed our country. Today, in many respects, we are
going to free the American consumer. The legislation before us today
will allow an electronic signature to replace a written signature for
many business transactions.
The electronic signature, in many instances, will speed transactions
between consumers and businesses across States and across nations. Not
having to sign and mail important documents does come, however, at a
price. As a member of the Committee on Commerce and the Subcommittee on
Telecommunications, Trade, and Consumer Protection, I supported
ensuring that consumers are protected from the fraudulent use of their
name. To this end, a balanced disclosure policy that allows consumers
the choice of receiving important documents either on paper or
electronically has been incorporated in this legislation.
While there are a great many people in this country that are computer
literate, there are those that are more comfortable in signing their
names to paper. This bill accommodates those people. I also want to
point out that not all documents are eligible for the electronic
signature. Wills, court orders, foreclosures, termination of health
benefits are just examples of the documents that must be delivered and
signed directly by the consumer.
This legislation will continue our progress into the new digital
millennium, and I am pleased the conference committee produced this
solid bipartisan legislation that helps and protects the American
consumers.
Mr. Speaker, this is a good piece of legislation, and again I thank
the chairman of the committee and also our ranking member for their
efforts on this.
Mr. BLILEY. Mr. Speaker, I yield 2 minutes to the gentleman from
Texas (Mr. Armey), the distinguished majority leader.
Mr. ARMEY. Mr. Speaker, I thank the gentleman from Virginia for
yielding me this time, and let me thank the Committee on Commerce for
another very, very good piece of legislative work. Not only was it an
outstanding job in committee, preparing this bill for the floor, but
even in the sometimes more rigorous business of working with the other
body in conference committee we find the dedication of the committee to
be excellent, and we have before us an excellent product.
Mr. Speaker, we live in a world of innovation and invention that
boggles the mind. Each day we use dozens of new technologies that we
would not even have imagined a few short years ago. Today, we are
removing government obstacles that prevent consumers and businesses
from making the most of these wonders of technology. We are checking
off a major item in our e-contract with high-tech America.
Most of us see the advantages of technology in our daily lives as
consumers, but there is a larger, invisible benefit: Increasing
productivity in every business in America. Our modern economy makes it
possible for a business to go on-line and order supplies quickly and
accurately. It is simple and it is paperless, with one little hitch:
Today, no sale is a legal contract without a piece of paper on file
somewhere. The materials are ordered, the products are custom made, the
special delivery instructions are carried out, all with just a few
strokes of the keyboard. But for legal backup that paper must always be
stored in a file cabinet somewhere.

[[Page H4362]]

This bill changes all that. Now, an electronic document will be
considered a contract for legal purposes. A simple change with a
dramatic impact. Just think of all those file cabinets full of purchase
orders and invoices that will be no longer needed.
Consumers will see the benefits in their lives, too. Today, they can
go on-line to buy a car, do all the research, figure out what they want
to buy and find the exact car they want among all the dealerships
nationwide. But when they go to finally settle on the deal, today, they
have got to commit pen to paper and wait on regular mail.
A consumer can go on-line to research and find a mortgage but, again,
that last step must be on paper and delivered by snail mail. We can get
a world of information on mutual funds by searching on-line; but,
again, that last step has to be on paper, delivered by the post office.
This bill changes all that. It eliminates the paper, the delay, the
inconvenience by letting the consumer open that account on-line,
confident that the transaction has the same standing in law as if they
had signed a contract on paper at a bank or investment company. More
importantly, we consumers can choose to have information about our
accounts sent to us electronically rather than on paper. Instead of
storing shoe boxes full of monthly statements, we can receive
statements by e-mail and save them on our computers.
With this bill, Mr. Speaker, each of us will have increased
confidence that an on-line transaction has the same legal standing as
if we had traveled down to the bank, stood in line for an hour, and
signed a bunch of papers. What we get from this bill, Mr. Speaker, is
paperless transactions. What we receive is electronic records. With
this bill, we save our time, we save frustration, and we save trees.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the gentlewoman from
New York (Mrs. Maloney).
Mrs. MALONEY of New York. Mr. Speaker, I thank the ranking member,
who is also the dean of our caucus, for his leadership on this issue
and so many others and, of course, the gentleman from Virginia (Mr.
Bliley).
We are at the beginning of a new century which is more information,
more wired, and technology driven. Our evermore global new economy is
changing the way Americans work and communicate with each other. This
conference committee report is part of that change, and I fully endorse
it.
This legislation knocks down another barrier to a fully incorporated
digital information-based economy. The bill requires that e-signatures
be treated legally, the same as written ones, for commercial contracts,
agreements and records. For consumers, this bill means less paperwork,
major time savings and reduced costs. This will greatly increase the
attractiveness and efficiency of on-line commerce.
An important privacy protection will require consumers to opt in to
receive records electronically. This strikes an important balance,
ensuring that consumers' interests are adequately protected as
transactions are increasingly completed in digital form.
While the information economy is changing the way people live around
the world, it is having an even more profound impact on the
congressional district in New York City, which I represent,
particularly the silicon alley area. The technology industry is
responsible for 100,000 new jobs in New York City alone in the 1990s.
These are highly desirable, professional jobs that are an important
addition to our city. This bill is an important step in keeping this
progress moving forward.
I thank the conferees for their important work on this bipartisan
issue, and I urge its passage.
Mr. BLILEY. Mr. Speaker, I yield 2 minutes to the gentleman from
California (Mr. Cox), a member of the committee and chairman of the
Republican Policy Committee.
Mr. COX. Mr. Speaker, I thank the gentleman for yielding me this
time, and I rise in strong support of this conference report. I would
like to thank the chairman of the full committee for his leadership of
our House effort in the House-Senate conference. It is a very, very
important step for this Congress that we are completing action on this
legislation.
The growing use of the Internet, of course, gave rise to the need for
this legislation. It created questions about whether or not a piece of
paper, pen and ink, would be necessary in order to make a contract that
otherwise was negotiated and agreed to on-line.
We have just started a new millennium. In the last millennium,
several centuries ago, there were similar questions about whether one
could form a contract in some way other than with a stamp and hot wax,
and I am happy to say that with such high-tech inventions as the
ballpoint pen at hand, legislatures all over the world recognized the
efficiency of permitting people to make agreements that were legally
binding without a stamp and hot wax. Now, in the 21st century, we are
asking ourselves again whether the latest technology will be sufficient
to form an agreement. We have agreed that the answer must be yes.
No longer will there be inconsistency among the 50 States over the
question of whether a contract is a contract just because it was made
over the Internet. Now, an electronic signature, that is an
individual's agreement given on-line, will be just as legally valid as
the handwritten signature. And this is a good thing, because they are
not just mere substitutes for one another.
In fact, an electronic signature is more secure. Present-day
technology permits us to ascertain more accurately whether or not the
individual is actually the person making the agreement or whether the
person at the other side of the contract is the contracting party much
more so than signatures, which can more easily be forged. Digital
signatures also permit us to ascertain whether or not the contract
itself is the very contract that we thought we were signing or whether
it has been altered in some way. These are real benefits over paper and
ink.
There is one other thing about this conference report that is worth
mentioning, and that is that it permits the parties themselves to agree
on the specific technologies that they find satisfactory in coming to a
meeting of the minds. When we pass legislation that is going to be
valid not just for a month or for a year; but for the indefinite
future, it is vitally important we permit technology to advance, that
we not impede it with our legislative enactments. And this flexibility,
my colleagues, I think, is a very important aspect of this legislation.
Finally, I am pleased that this legislation directs the Commerce
Department, the executive branch of our government to work with foreign
governments to make sure that this rule, which will now apply in the 50
States, also applies worldwide.
Mr. DINGELL. Mr. Speaker, I yield 2\1/2\ minutes to the gentlewoman
from California (Ms. Eshoo).
Ms. ESHOO. Mr. Speaker, I rise in support of this very important
conference report that is before us today. As so many of my colleagues
have mentioned, we have moved into a new era, from pen and quill, from
wax, from all kinds of imprints that would conclude a contractual
agreement between parties.
Back in 1996, I believe I was the first to establish a virtual
district office, where constituents could go on-line to fill out the
government forms. But I very quickly realized that they could not sign
off on these forms. So it was in that Congress that I brought to my
colleagues the whole issue of digital signatures.
The government now, because of the legislation that I had introduced
in the last Congress, and it became law, now allows for digital
signatures. But today, this legislation, very importantly, recognizes
that electronic commerce is here, here to stay, and that we, too, have
to extend across the States to businesses and to individuals the
allowance of what we now call a digital signature.
I am very proud of the work that we did that is reflected in the
legislation that I introduced, and building on it, of course, what our
chairman and so many others have done. Two very important aspects of
this legislation are that the financial services community is included
in this and, very importantly, that there are consumer protections. Our
chairman accepted the work that some of us did. There was a very
important amendment that the gentleman from Washington (Mr. Inslee),
the gentleman from Virginia (Mr. Moran), myself, and others introduced.
That strengthened the backbone of this

[[Page H4363]]

bill. It has made it better for the consumer. It has made it better for
our Nation. I salute him for his leadership.
Mr. Speaker, I thank those that have worked as conferees and have
held onto this. And I think that as we embark upon this Internet
revolution, this new economy, that there are more challenges upon us.
And I think the first, and one of the major steps, is being taken
today. So I urge my colleagues to accept this conference report. It is
a very important one.
I look to the future of building on the issues of privacy, of cyber
security, of intellectual property, of copyright and also of financial
reporting standards. Please vote for this. This is a step that matches
the new century, and I salute our chairman for his leadership on it.
Mr. BLILEY. Mr. Speaker, I yield 2 minutes to the gentleman from New
York (Mr. Fossella), a member of the committee.
(Mr. FOSSELLA asked and was given permission to revise and extend his
remarks.)

{time} 1215

Mr. FOSSELLA. Mr. Speaker, I thank the chairman of the committee for
yielding me the time and to add to those who have said prior how this
will add, I think, to a wonderful legacy that the gentleman from
Virginia (Chairman Bliley) has earned as chairman of the Committee on
Commerce and the ranking member and others who participated.
Mr. Speaker, I rise today in support of the conference report to S.
761, the Electronic Signatures in Global and National Commerce Act.
The most recent Commerce Department report on the digital economy
released last week was aptly titled Digital Economy 2000.
Interestingly, this is a change from the two previous reports, which
were entitled The Emerging Digital Economy.
The Commerce Department's reasoning for the title change was simple:
the digital economy is no longer emerging but, rather, it has already
arrived.
The Electronic Signatures in Global and National Commerce Act, better
known as E-SIGN, is the most important step that Congress has taken to
date ensuring that not only the benefits of the digital economy are
sustained but, more importantly, that those benefits are grown and
enhanced substantially.
By according electronic records and signatures the same legal effect
and enforceability as those enjoyed by non-electronic records and
signatures, E-SIGN enables more complex transactions to take place
among a wider range of economic participants.
For example, the American consumer no longer will be limited to
purchases of books or CDs on-line. Rather, with the enactment of E-
SIGN, the American consumer can participate in complex on-line
transaction, such as the purchase of a home, a life insurance policy,
or the establishment of an IRA, to name but a few.
Moreover, E-SIGN will empower small businesses to more effectively
compete with large corporations. Those businesses will be empowered to
engage in on-line transactions which are more complex in nature and
greater in value.
Both the American consumer and the small businessman can more fully
harness the efficiencies and the value of the digital economy with E-
SIGN.
America's larger economies will also benefit from the added legal
certainty brought to the digital marketplace with E-SIGN.
With that, and for all those reasons mentioned above, Mr. Speaker, I
urge strong support of this legislation.
Mr. DINGELL. Mr. Speaker, I yield 3 minutes to the distinguished
gentleman from California (Mr. Berman).
Mr. BERMAN. Mr. Speaker, I thank the gentleman for yielding me the
time.
Mr. Speaker, I am very pleased to rise in support of passage of the
conference report.
When the bill first came before the House, I had some very serious
concerns that it might undermine the many consumer laws that we have
fought hard to develop, the laws that are the very basis of
relationships of trust between consumers and merchants.
At that time, many of us warned that a bill unfriendly to consumers
would not be good for the very industries that wanted it, those moving
into the new world of electronic commerce.
Validating electronic signatures and contracts is essential for the
continued growth and security of e-commerce. But this important goal is
expanded by some with the aim of eliminating virtually all paper
requirements; and that expansion, to my way of thinking, was excessive.
For instance, H.R. 1714 as originally passed allowed regulated
industries to eliminate paper records but did not require businesses to
maintain their records in a form that could be accessed by government
regulators.
Our efforts to oppose the worst of this legislation have led to a
very good result. The conference has reshaped the bill to protect
consumers from fraud and to provide assurances that consumers will know
their legal rights before they opt-in in receiving electronic records,
understand what records will be affected, and to be able to get the
records in paper should they need to.
Further, the report preserves State and Federal unfair deceptive
practices laws.
The conference report establishes a principle that the Internet must
be a safe place for consumers. I credit my Democratic colleagues, the
gentleman from Michigan (Mr. Dingell) and his other colleagues on the
conference committee, for defending the need to preserve consumer
protections and the excellent leadership of the gentleman from Virginia
(Chairman Bliley) in achieving an appropriate balance in an excellent
piece of legislation.
I am confident that, in passing this report, we will be passing a
bill that will enable electronic conference to go ahead without
undermining consumer protections or the Government's ability to fulfill
its role in industry oversight. A very good job has been done by the
conference committee.
I urge the passage of the bill.
Mr. BLILEY. Mr. Speaker, I yield 2\1/2\ minutes to the gentlewoman
from Maryland (Mrs. Morella).
Mrs. MORELLA. Mr. Speaker, I thank the gentleman for yielding me the
time. I also thank the gentleman from Virginia (Chairman Bliley) for
the leadership he has shown in bringing this bill to the floor and all
the other achievements in this Congress and previous Congresses. We are
going to miss him. And again, I appreciate seeing him in this real
successful effort.
The gentleman from Michigan (Mr. Dingell), the ranking member, has
been great. A lot of people have worked on this conference report. I
and the American public appreciate that very much.
I certainly am in strong support of the bipartisan conference report
on the Electronic Signatures in Global and National Commerce Act. I am
delighted to see such a comprehensive agreement has been reached.
The fast growth of electronic commerce that has fueled the economic
boom in recent years needs to be fostered, and this bill does that.
By validating electronic contracts, placing them with an equal legal
standing as paper contracts, while assuring essential consumer
protections, this conference report will further ensure that the scope
of private enterprise on the Internet remains limited only by
imagination. All of these elements have been considered.
As the States continue to set up their own regulations, Federal
guidelines need to be in place which establish a framework for handling
electronic signatures. I am encouraged that such a mechanism has been
constructed that does not impede on the State's role of protecting
consumers and the solvency of our Nation's financial institutions.
This legislation in many ways is a recognition of a new era of human
history. For thousands of years, paper has been the foundation of
commerce. All contracts and official records needed to be physically
kept. They had to make their mark in ink.
But every day more shopping, lending, and a myriad of other business
transactions are conducted over the Internet. The concept is simple,
but it signifies a major change. The pen is replaced by the keyboard.
The paper is replaced by disk drives. The result is the promotion of e-
commerce and the high-tech explosion that has so drastically altered
today's society.
This conference report, however, does not take this step lightly.
There is an understanding of the newness of the

[[Page H4364]]

medium. And to balance the concerns of cautious consumers, the
legislation includes provisions meant to protect their interests.
For instance, businesses must receive the consumer's consent before
they conduct their dealings electronically. Also, very sensitive
information still must be transmitted physically. Cancellation or
termination of health insurance cannot be done via e-mail.
As is often the case, society acts and Congress follows. By enacting
this legislation today, we begin to remove some barriers to the
electronic revolution to clear the Internet open for business.
Mr. DINGELL. Mr. Speaker, I yield 2\1/2\ minutes to the distinguished
gentleman from Washington State (Mr. Inslee).
Mr. INSLEE. Mr. Speaker, I rise with a note of personal satisfaction
that the House has been able to succeed in fashioning a true bipartisan
bill. I think that is largely due to the efforts of the gentleman from
Michigan (Mr. Dingell), the ranking member, and the gentleman from
Virginia (Chairman Bliley). Their years in service and experience have
really paid off here in leading this House to be able to find this
consensus.
Sometimes new Members, like myself, need to recognize the ability for
experience to pay off here; and that has happened in this case.
Mr. Speaker, this is a great bill because, simply, it will allow
business to move at the speed of light rather than the speed of paper.
I think in the halls of Congress we have got to recognize that there is
incredible genius out there every minute of every hour creating new
products, new consumer benefits. And we in the House have to make sure
that we help them do that; we remove barriers that are standing in
their way.
I represent an extremely high-tech district, Redmond, Washington,
north of Seattle, where every day there are geniuses coming up with new
technologies. And this is really a single statement, I think, that the
House is going to move ahead and recognize a new fact. And that new
fact is this: there are no just high-tech issues anymore. Everything is
high tech. This is a statement that the House understands that.
Secondly, Mr. Speaker, I want to say that we have achieved a market
success in making sure that consumer rights are protected when this new
technology is used.
Several of us had an amendment when the bill was in the House that
made sure that all consumer protections in the country, all the
substantive notices and consumer protections, in fact those protections
of consumers will remain in under this new law.
In addition, it will make sure that only when consumers want to use
electronic measures will they be used. So it is a great day.
Mr. DINGELL. Mr. Speaker, will the gentleman yield?
Mr. INSLEE. I yield to the gentleman from Michigan.
Mr. DINGELL. Mr. Speaker, I think the gentleman is raising an issue
which is important. I would like to observe that the House and, I
think, the people of the country owe the gentleman from Washington (Mr.
Inslee) a substantial vote of thanks for his leadership on this matter.
He offered the amendment which very significantly improved the
legislation by affording very significant protections to consumers and
to the public who would use this legislation. That amendment remains in
the legislation, and it is going to be very helpful.
I hope the gentleman is proud of what he has done, because the
country owes him a debt for his significant accomplishment in this
matter.
Mr. INSLEE. Mr. Speaker, I thank the gentleman for his comments. I
will always yield to anyone who has comments of that nature. I thank
the gentleman so much. That is high praise from the source.
Mr. Speaker, it is a good day for the House.
Mr. BLILEY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, as we approach the end of this process on this historic
piece of legislation, I do want to take a moment to recognize the hard
work of our respective staffs who were instrumental in getting us here
today.
First let me thank my staff: Paul Scolese; Ramsen Betfarhard; David
Cavicke; Linda Bloss-Baum, by the way who just gave birth to a new baby
girl named Alexandra; and Mike O'Rielly. These guys did an outstanding
job on this bill, and they know more about the substance of this bill
than anyone.
I also want to thank Consuela Washington and Bruce Gwinn on the staff
of the gentleman from Michigan (Mr. Dingell) and Colin Crowell and Jeff
Duncan from the staff of the gentleman from Massachusetts (Mr. Markey).
Further, let me thank the diligent staff from the other body,
especially Maureen McLaughlin from the Senate Commerce Committee.
Maureen was an outstanding asset to the conference committee.
I must also express deep thanks to Andy Pincus of the Department of
Commerce. His willingness to work on this issue in a constructive
manner is one of the reasons we are here today.
All of these people have made this successful day possible, and I
extend my heartfelt gratitude. I thank them for their tireless work and
dedication.
I would also take a moment to read through a sampling of the groups
that support this legislation:
Business Software Alliance, Microsoft, America Online, Information
Technology Association of America, American Express Company, DLJDirect,
American Bankers Association, Citigroup, Information Technology
Industry Council, American Electronics Association, Fannie Mae, Freddie
Mac, National Association of Realtors, Oracle, Cable & Wireless, Sallie
Mae, U.S. Chamber of Commerce, Real Estate Roundtable, Consumer
Mortgage Coalition, Mortgage Bankers Association, Electronic Financial
Services Council, Intuit, Federal Express, National Association of
Manufacturers, Coalition of Electronic Authentication, America's
Community Bankers, and Investment Company Institute.
Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield back the balance of my time.
Mr. BLILEY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I thank the gentleman from Michigan (Mr. Dingell) for
his cooperation and particularly the hard work of his staff, as I said
before. This is a good bill.
I would just like to say in closing a word about process. We have
said about as much as needs to be said about this bill. But I would
like to say to all of my colleagues that I find that, if we sit down at
the table with our colleagues on the other side of the aisle and we
respect their positions, their opinions, they will respect ours; and if
we are sincere about reaching an agreement, we usually can do so.
It is better to do that than to stand on opposite sides of a room and
throw rhetorical grenades at each other. We do too much of that.
The American people sent us up here to do a job. We are doing that in
the finest tradition with this bill.
Mr. CROWLEY. Mr. Speaker, I would like to express my strong support
for the electronic signatures legislation.
As legislators, it is part of our job to help ensure a sound economy.
Supporting the growing high-tech industry helps us accomplish this
important part of our job.
That is why I am proud to support the Electronic Signatures in Global
and National Commerce Act and the Conference Report. This much needed
legislation will provide legal certainty and a national standard for
business-to-business contracts and some consumer contracts that were
agreed to on-line, as well as ensure important consumer protections.
As anyone who has taken out a mortgage knows, courier and other fees
can be a substantial cost to consumers. By allowing for on-line
transactions, we can help bring down the costs associated with
contracts for anything we can purchase on-line.
Mr. Speaker, back in the 80's, pundits were predicting the paperless
office. Well, it's the year 2000 and we're still not there. Part of the
problem is our antiquated system of rules and differing state laws,
which although important, can serve as a hindrance to interstate
commerce over the Internet.
With this legislation, we will be effectively removing one of the
greatest roadblocks to Internet services. I was proud to cast my vote
in support of

[[Page H4365]]

this legislation in November, and I am proud to cast my vote in support
of the conference report today.
I would like to commend the conferees for agreeing to this balanced
report and for all of their hard work. This is an important and
complicated piece of legislation and I believe they deserve a great
deal of credit for preparing this package.
I urge all of my colleagues to support this important legislation.
Mr. SANDLIN. Mr. Speaker, today I voice my support for the conference
report on S. 761, Electronic Signatures in Global and National Commerce
Act. Now, more than ever, business is conducted through the Internet
and the need for a federal standard on electronic contracts, agreements
and records is critical to the integrity of many of these transactions.
This historic piece of legislation will essentially give the
electronic signature the same legal effect as a written signature.
Although 40 states already have enacted laws to provide for the use of
electronic signatures, these laws vary greatly. The new federal law, as
proposed in this conference agreement, would allow states to modify the
law, provided that the modifications are consistent with the federal
standard and technology neutral.
Not only does the proposed national standard give states flexibility
with regards to its implementation, but it also protects the consumer.
Under this agreement, a business must present the consumer with a
statement informing them of their right to have notices and records
provided electronically or in writing. Consumer protections are further
ensured by allowing the consumer to withdraw the original consent
agreement and requiring the business to provide the alternative source
of transmission.
Mr. Speaker, I look forward to the new freedom that this conference
report will provide in interstate and foreign commerce. Consumers will
now have complete confidence that their electronic contracts, agreement
and records carry the full weight of law. The E-signature conference
report is a landmark in that it aligns federal law with the latest
technology without being partial to the technology industry itself. I
commend my colleagues for all of the hard work they have done on this
historic piece of legislation to ensure its swift passage into law.
Mr. LaFALCE. Mr. Speaker, I rise today in strong support of the
conference report. The Congress today takes an important step in
recognizing the importance to our economy of electronic commerce. In so
doing, Congress also ensures that millions of Americans can begin to
enjoy the benefits of a safe, reliable, and consumer-friendly
electronic marketplace. As President Clinton has indicated, the
bipartisan agreement we are adopting today is responsible and balanced,
and includes protections to provide consumers with the confidence that
is essential to conduct on-line transactions in a safe, reliable, and
trustworthy manner. As a result, this legislation comes to the House
floor with strong bipartisan and Administration support. President
Clinton, in fact, has urged the Congress to send the legislation to his
desk for his immediate signature. I am therefore proud to support this
bipartisan agreement.
The legislation achieves the important objective of facilitating the
use of electronic records and signatures in interstate and foreign
commerce. The bill also provides that agreements, records, or contracts
entered into have the same legal effect and recognition as paper
transactions. Both of these objectives are complemented with provisions
to ensure that consumers receive the same level of legal protection
regardless of whether they conduct their transactions on paper or on
line. For example, consumers must affirmatively consent electronically
to receiving electronic records in a manner that reasonably
demonstrates that they can access the information provided. In
addition, the legislation provides that certain notices must be
provided in paper, such as notices critical for the protection of
consumers and public health and safety, notices of cancellation of all
forms of insurance and insurance benefits, notices of default or
actions to collect debts, and others.
When this legislation was initially debated on the House floor last
year, I expressed concerns about its impact on existing consumer and
fair lending laws and regulations. My concern centered on the potential
for consumers to receive one level of protection for in-person, paper
transactions, and another for on-line transactions. I was also
concerned about the potential for unscrupulous and predatory practices.
As a result, Banking Committee Chairman Leach and I, at my behest,
wrote to the Federal Reserve to elicit their views on the legislation.
The Federal Reserve, which administers consumer financial services and
fair lending laws, shared my concerns and agreed that preserving its
regulatory authority was essential to protecting consumers under
existing consumer laws. I am happy to note that the conference report
preserves this important regulatory authority, which has the dual
benefit of protecting consumers from predatory practices, and providing
the legal clarity that spares businesses from unnecessary litigation.
Mr. Speaker, as electronic commerce continues its rapid expansion, I
fully support an approach that facilitates this growth while also
protecting the rights of consumers. This conference report accomplishes
both of these important goals. As our economy moves into the Electronic
Age, this legislation will provide American consumers with the basic
protections that they have come to know and expect from their financial
service providers and from commerce in general.
Mr. WELLER. Mr. Speaker, thank you for this opportunity to support S.
761, the Conference Report on the Electronic Signatures in Global and
National Commerce Act. This effort is groundbreaking, as this
conference report is largest and most significant legislation on
electronic commerce to date.
This bill ensures that electronic signatures and electronic records
transferred via the Internet will have the same legal effect, validity
or enforceability as contracts and other records signed by hand on
paper. The scope of this legislation is broad and will protect
interstate commerce. I am certain that the result of this important
legislation will be greater confidence and security in conducting
business and transactions over the Internet.
In the recent months, we have come far in our efforts to promote and
encourage the growth of Internet use and e-commerce. A few weeks ago,
the House voted to extend the existing moratorium on Internet taxation
for an additional 5 years. I believe that this important step will give
the new e-economy the time it needs to grow and flourish at a time when
the number of new websites and Internet users is doubling every 100
days!
Additionally, the House passed legislation recently to eliminate the
outdated 3 percent excise tax on telephone use. This tax was originally
collected to help pay the Spanish-American War, a war that ended more
than 100 years ago! Today, more than 90% of Internet users access the
Web over telephone lines. I believe it is time to repeal this outdated
tax and make the information highway just that--a freeway not a
tollway.
Mr. Speaker, I am proud to support the Conference Report on S. 761. I
encourage my colleagues to do the same.
Mr. CONYERS. Mr. Speaker, the Internet has the potential to be the
most pro-consumer development in recent history. It can empower
consumers to obtain more useful information about products--such as
price comparisons, safety information, and features--and to help
consumers make more educated purchases.
But the Internet will never reach its full potential if consumers do
not feel secure in the electronic marketplace. If we allow the Internet
to become a lawless ``Wild Wild West'' and a safe-haven for fraudulent
businesses, people will simply refuse to engage in on-line commerce.
Ultimately, this is a bad result both for the Internet and for
consumers.
The electronic signature legislation that the House passed last fall
was deeply flawed. It set up a false choice between consumer protection
and electronic commerce. In fact, the two can--and should--go hand in
hand.
While I supported legislation that validated electronic signatures
and contracts, I opposed H.R. 1714 because it left consumers vulnerable
to fraud, and it undermined numerous federal and state consumer
protection laws.
H.R. 1714 also weakened the ability of federal and state regulators
to enforce important safety regulations and monitor industries such as
the financial services industry, and the insurance industry.
As a result of the hard work of House and Senate Democrats and the
Administration, the Conference Report that is before us today is a
great improvement over the House-passed bill.
The Conference Report contains several new provisions to protect
consumers. Unlike the House bill, the Conference Report requires that
consumers receive a notice of their rights before they consent to
receive documents electronically. Now, there will truly be ``informed
consent'' by the consumer.
Equally important, under the Conference Report, the consumer's
consent must be in the electronic form that will be used to provide the
information. This is a vast improvement over the original bill because
it ensures that a consumer can actually receive and open the electronic
notices that are provided to him or her.
The Conference Report also creates a framework so that federal
regulatory agencies can use their rulemaking authority to create
guidelines for how to properly deliver and manage electronic records.
This way, the government has the flexibility and authority to prevent
abuses and fraud.

[[Page H4366]]

Some Senate Republicans oppose this Conference Report. They say it
gives consumers too many rights and does not do enough to grease the
wheels for the financial services industry. I could not disagree more.
The Conference Report demonstrates that Congress can facilitate
electronic commerce at the same time that we protect consumers. I am
confident that this is what is best for the Internet in the long run.
Mr. BLILEY. Mr. Speaker, I yield back the balance of my time, and I
move the previous question on the conference report.
The previous question was ordered.
The SPEAKER pro tempore (Mr. Foley). The question is on the
conference report.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. BLILEY. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.

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