Congressional Record, Volume 146 Issue 75 (Thursday, June 15, 2000)

[Congressional Record Volume 146, Number 75 (Thursday, June 15, 2000)]
[Senate]
[Pages S5215-S5231]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT--CONFERENCE
REPORT

The PRESIDING OFFICER. Under the previous order, the conference
report will be stated.
The assistant legislative clerk read as follows:

The committee of conference on the disagreeing votes of the
two Houses on the amendments of the House to 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 for other purposes, having met, after full and
free conference, have agreed that to recommend and do
recommend to their respective Houses this report, signed by a
majority of the conferees.

The PRESIDING OFFICER. The Senate will proceed to the consideration
of the conference report.
(The conference report is printed in the House proceedings at pages
H4115-18 of the Record of June 8, 2000.)
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, I yield 2 minutes to the Senator from
Massachusetts.
Mr. KERRY. Mr. President, I promised I would not go in front of
Senator Wyden.
I yield to the Senator from Oregon.
Mr. McCAIN. How long does the Senator from Oregon need?
Mr. WYDEN. I was contemplating speaking about 5 minutes. But, again,
I do not want to inconvenience my colleagues.
Mr. McCAIN. I yield 5 minutes to the Senator from Oregon, followed by
2 minutes to the Senator from Massachusetts, and then those of us on
the beleaguered majority will have our say.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. WYDEN. Mr. President, the conference agreement on digital
signatures that is going to be overwhelmingly approved tomorrow morning
may be the big sleeper of this Congress, but it certainly was not the
``big easy.''
The fact of the matter is, when we started on this in March of 1999,
Senator Abraham and I envisioned a fairly simple interim bill. We were
looking at electronic signatures to make sure that in the online world,
when you sent an electronic signature, it would carry the same legal
weight as a ``John Hancock'' in the offline world.
But as we prepared--after this passed the Commerce Committee--to move
forward with a pretty innocuous bill, the financial services and
insurance industries came to us with what we thought was a very
important and thoughtful concept; and that was to revolutionize e-
commerce, to go beyond establishing the legal validity of e-signatures
to include electronic records, keeping important records
electronically. We were told by industry--and correctly so--that this
would give America a chance to save billions and billions of dollars
and thousands of

[[Page S5216]]

hours, as our companies chose to spend their funds on matters other
than paper recordkeeping.
At the same time, the consumer groups that sought this proposal were
extremely frightened. They saw this as an opportunity for unscrupulous
individuals to come on in and rip off senior citizens, to foreclose on
people's homes, to cut off health insurance, and things of that nature,
by just perhaps an e-mail into cyberspace.
Chairman McCain is here. This is truly a bipartisan effort in every
respect. I had a chance to work with my senior colleagues on this side,
Senator Leahy, Senator Hollings, Senator Sarbanes, and our friend
Senator Kerry, who is here. And let me tell you, it ultimately took
three Senate committees 8 months and thousands of hours to get it done.
We had to bring together key principles of what is known as the old
economy, such as consumer protection and informed consent, and fuse
them together with the principles of the new economy and the online
world, and the chance to save time and money through electronic records
and electronic signatures.
What we tried to say, on this side of the aisle, and what we were
able to get a bipartisan agreement around, is the proposition that
consumer rights are not virtual rights. We have to make sure--and we
have it in this legislation--that the protections that apply offline
would apply online. We were able to do it without enduring all kinds of
unnecessary redtape and bureaucracy. I wanted the bill to unleash the
potential of electronic signatures and records for industry without
shattering a cornerstone of American commerce: the right of individual
consumers to have meaningful and informed consent and to keep accurate
records of their contracts and transactions.

I believe the conference agreement before the Senate has met the
challenge of protecting consumer rights in the new economy.
Consumer rights are not virtual rights. Consumers must enjoy the same
basic rights in the online world as they have in the off-line world.
Through the electronic consumer consent provision in Section 101(c)
that I authored with Senators Leahy, Hollings and Sarbanes, I believe
we have adequately translated offline consumer protections into online
consumer protections.
Let me just spend a minute describing this key provision of the
conference agreement. This provision requires that consumer consent
must be meaningful. We all know of cases where someone said, ``Just e-
mail me that document,'' only to have that person call later, saying
``Gee, I couldn't open the document, can you fax it to me?'' I can't
recall how many times this exact thing happened to our own staff during
the negotiation of this agreement.
Meaningful consumer consent doesn't mean being given a pageful of
hardware and software specification gobbledygook. It means consenting
electronically so that a consumer knows he or she can receive, read and
retain the information in an electronic record.
Section 101(c) provides that if a statute, regulation or other rule
of law requires that information relating to a transaction be provided
or made available to a consumer in writing, the vendor can use
electronic means if the consumer, prior to consenting, has been given a
clear and conspicuous statement of his or her rights. The consumer must
be informed of the option of getting the record on paper, and what the
consequences are if he or she later withdraws the electronic consent in
favor of returning to paper records. Some vendors, for example, may be
able to achieve considerable savings by using electronic records, and
offer customers a much more attractive price for doing business online
rather than through traditional paper and snail mail. But a vendor
might not want to be locked into a lower price if the buyer reverts to
paper later in the life of the contract. This provision will assure a
consumer will be informed up front of any change in the cost if the
consumer withdraws consent to receive records electronically subsequent
to consummation of the contract. This could happen, for instance, if a
consumer finds he cannot access the documents electronically, or the
vendor chooses to upgrade his software and the consumer does not want
to go to the expense of upgrading his system to accommodate the change.
The consumer must also be informed of the hardware and software
necessary to access and retain records electronically, how to withdraw
electronic consent, how to update information needed to contact the
consumer electronically, the categories of records that will be
provided or made available electronically, how a consumer may request a
paper copy of an electronic record and whether a fee will be charged
for such copy. If a vendor changes the electronic system used to obtain
the original consent electronically, the vendor must obtain the consent
electronically again using the new system and the same two-way consent
process.
Most importantly, the consumer must consent electronically or confirm
his or her consent electronically in a manner that reasonably
demonstrates that the consumer can access the information in the
electronic form that will be used to provide the information. This is
critical. ``Reasonably demonstrates'' means just that. It means the
consumer can prove his or her ability to access the electronic
information that will be provided. It means the consumer, in response
to an electronic vendor enquiry, actually opens an attached document
sent electronically by the vendor and confirms that ability in an e-
mail response.
It means there is a two-way street. It is not sufficient for the
vendor to tell the consumer what type of computer or software he or she
needs. It is not sufficient for the consumer merely to tell the vendor
in an e-mail that he or she can access the information in the specified
formats. There must be meaningful two-way communication electronically
between the vendor and consumer.
At the heart of these provisions is the concern--shared by many in
the industry as well--that electronic communication, e-mail, is not as
reliable or as ubiquitous as traditional first class mail. Until
advances in electronic mail technology eliminate such concerns and
until the vast majority of Americans are comfortable using the
technology of the New Economy, consent to use electronic records
requires special care and attention. Because of such concerns, there
are some areas where the use of electronic notice and records are
simply not appropriate today. Section 103 of the conference agreement
recognizes this by continuing to require paper notice. These areas
include shutting off a consumer's utilities, canceling or terminating
health insurance or benefits or life insurance benefits, foreclosing on
someone's primary residence, recall of a product that risks endangering
health or safety and documents required to accompany the transportation
or handling of hazardous materials, pesticides, or other toxic or
dangerous materials. What happens, for example, if a hazmat truck
loaded with toxic waste spills its cargo, endangering a community, and
the only notice about the hazardous cargo was posted on the company's
website? Is it fair to allow a mortgage lender to foreclosure on
someone's home just because their ISP went out of business and they
weren't receiving their payment notices electronically? The exceptions
we fought for in this section of the conference agreement will protect
consumers.
Before paying tribute to those who worked so hard on this bill. I
believe it is important to the legislative history to say a brief word
about the process. This is necessary because, unfortunately, statements
are being made or inserted in the Record and colloquies are being
offered that seek to weaken, undermine and even directly contradict the
actual words of the text of the Conference Agreement. This appears to
come from some quarters that do not share the majority view of those
who signed the Conference documents. As one of the principal sponsors
of the Senate measures, S. 761, I am compelled to point out that the
actual text of the legislation can and should stand on its own.
The negotiations that led to the final legislative document were very
difficult and contentious. Because of this, part of the agreement on
the final language included a commitment--a sort of ``gentleman's
agreement'' if you will--from all the signers of the Conference
Agreement not to prepare the normal Statement of Managers that
accompanies a Conference document. There is no Statement of Managers
for

[[Page S5217]]

S. 761, and no one should pretend there is. As one of the key managers
for the Senate, I can attest that I did not participate in negotiating
such a document, not did I acquiesce to one prepared by another party
or parties or sign one.
The conference agreement is the product of many, many long days and
nights of negotiations. Commerce Committee Chairman McCain, Ranking
Democrat Senator Hollings, Senators Leahy and Sarbanes, and Senator
Abraham all contributed to this product. The efforts of our
distinguished colleagues in the House, Commerce Committee Chairman
Bliley and Ranking Democrat John Dingell, were critical in this
process. I would also like to recognize some of the key staff and
Administration officials who did yeoman work to produce this agreement.
In particular, Senator Hollings' Counsel, Mosses Boyd, and his Commerce
Committee Staff Director, Kevin Kayes, Senator Leahy's outstanding
Judiciary counsel, Julie Katzman, Senator Sarbanes' Banking Staff,
Marty Gruenberg and Jonathan Miller. Chairman McCain's very able and
patient counsel, Maureen McLaughlin, and Senator Abraham's lead staffer
on this bill, Kevin Kolevar. Sarah Rosen-Wartell of the White House
staff and Commerce Department General Counsel Andy Pincus also deserve
praise for their hard work on this bill.
This conference agreement came perilously close on more than one
occasion to running off the rails, but each time the will was found to
resume negotiations and try to bring the conference to a close. This is
also a tribute to the hard work of a handful of consumer and industry
groups who did not want to give up on the process. I urge my colleagues
to vote for this agreement, which lays another important cornerstone
for electronic commerce.
At the end of the day, this is not a perfect bill. I do not think any
of the conferees would argue that it is. But it is a very good bill. It
is a very good bill because, as a result of three Senate committees and
thousands of hours, we took key principles of what was known as the old
economy--consumer protection, informed consent, making sure that the
vulnerable, the elderly, and people for whom the home and health care
are lifeline concerns--we ensured that they will be protected, while at
the same time allowing those in the financial services industry, who
came to us with sensible suggestions for saving time and money--by
taking records from paper to the electronic world--to have their
concerns addressed, while at the same time being true to fundamental
values of consumer protection and the fusing together of the new and
the old economy. That is what I think makes this legislation so
special.
Chairman McCain is here. He and his staff did an extraordinary job,
as did Senator Abraham. I cannot say enough good things about four
senior Democrats--Senator Leahy, Senator Sarbanes, Senator Hollings,
and Senator Kerry--because they helped us champion those consumer
protection principles that were so important and helped us get this
bill done right.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, I join my colleague from Oregon in
expressing support for what we have achieved here. I begin by thanking
Senator McCain, Senator Sarbanes, and Senator Hollings for their
leadership. They helped to create the climate within which we were able
to finally get together with the House leadership.
But also I thank the distinguished Senator from Oregon. He is
extraordinarily knowledgeable in this arena and very creative. And he
works hard at it. He really has helped to shape the outcome of this in
a significant way. I think he has done a very good job of outlining the
tensions that existed here.
Many of us thought, at the outset of this endeavor, that we could
accomplish this quickly. We ran into, as he said, complications along
the road. The key to many of us was that even as we provided the legal
capacity for electronic signatures to take place and certain
recordkeeping to take place, we did not want to diminish the rights of
our citizens to have access to information about them, we did not want
their ability to be able to make corrections to be diminished somehow.
We did not want to diminish their right to know about themselves or
about their own transactions in a way that would diminish their
position in the marketplace. And that is a difficult thing. We worked
through that. I think we are still going to be working through that for
some time.
But the important thing is that this phenomenon, this revolution that
is taking place in America and across the globe in how we do business,
needed to be----
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. KERRY. Will the Senator yield me 30 more seconds?
Mr. McCAIN. I yield the Senator 30 more seconds.
Mr. KERRY. That revolution needed to be able to continue in its most
creative form and, frankly, with the best upside possible for the
people to whom we are all accountable, who are the consumers, the
citizens, and the people who ultimately we want to have benefit from
this. I think this legislation is very positive in that regard.
I thank the chairman of the Commerce Committee, Senator McCain, for
his leadership and his courtesy in letting the usually mostly abused
and beleaguered minority take a dominant position at the outset of the
debate. It is characteristic of him that he allowed us to do that. It
is a very momentary glimpse of freedom we are not used to. We thank him
for that. It is just whetting our appetite and only makes us work
harder to have that dominant position forever.
I thank the Chair.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, I appreciate both my friend from Oregon
and my friend from Massachusetts for their work on this bill. I
appreciate their comments. It is a great pleasure to work with both of
them on the Commerce Committee.
I think sometimes it is worthy of note, in these days of tension,
that on the Commerce Committee we have a great habit of working in a
bipartisan fashion. I would argue that no bill that I know of has been
reported out of our committee that was not a bipartisan effort. No bill
has been reported out, that I know of in the years that I have been the
chairman, that was strictly along party lines.
Mr. President, tonight the Senate considers the conference report for
S. 761, the Electronic Signatures in Global and National Commerce Act.
Before I summarize the bill, I want to note for the Record the
importance of this measure.
The bipartisan legislation would be a significant achievement for
this Congress and the American people. Today in America we are in the
midst of a phenomenal transformation from the industrial age to the
information age.
Even as we speak, Americans are on the Internet, browsing,
researching, and experiencing in ever-greater numbers. They are also
buying. In fact, electronic commerce is one of the principle engines
driving our Nation's unprecedented economic growth. For example,
Forrester Research has estimated that consumer spending online will
total $185 billion by 2003. During this past holiday season alone,
online merchants transacted an estimated $5-7 billion dollars worth of
commerce--a 300% increase in business from 1998.

But one great barrier to the continued growth of Internet commerce is
the lack of consistent, national rules governing the use of electronic
signatures. A majority of States have enacted electronic authentication
laws, but no two of these laws are the same. This inconsistency deters
businesses and consumers from using electronic signature technologies
to authorize contracts or transactions.
This bipartisan legislation can eliminate this unnecessary barrier to
the growth of electronic commerce by providing consistent, fair rules
governing electronic signatures and records.
This bill will do the following:
It would ensure that consistent rules for validating electronic
signatures and transactions apply throughout the country. Thus
providing industry with the legal certainty needed to grow electronic
commerce.
It empowers businesses to replace expensive warehouses full of
awkward and irreplaceable paper records with electronic records that
are easily searched or duplicated. Moreover,

[[Page S5218]]

State and Federal agencies are prohibited from requiring a business to
keep paper records except under extreme circumstances--where they can
show a compelling government interest. To prevent abuses of electronic
recordkeeping, however, the bill also authorizes regulatory agencies to
define document integrity standards that are necessary to insure
against fraud.
It would also ensure that private commercial actors get to choose the
type of electronic signatures that they want to use. This will ensure
that the free market--not government bureaucrats--will determine which
technologies succeed. To that end, the legislation also prohibits
States or Federal agencies from according ``greater legal status or
effect'' to one specific technology.
And this bill recognizes that without consumer confidence, the
Internet can never reach its full potential. Thus, this bill empowers
consumers to conduct transactions or receive records electronically
without foregoing the benefits of State consumer disclosure
requirements.
Specifically, the bill would provide that when consumers choose to
conduct transactions or receive records electronically, electronic
records can satisfy laws requiring a written consumer disclosure if:
consumers have been given a statement explaining what records they are
agreeing to receive electronically, the procedures for withdrawing
consent, and any relevant fees, and consumers consent, or confirm
consent electronically, in a manner that reasonably demonstrates that
they can actually access the information.
The goal of these consumer protection provisions is basic fairness.
To that end, if a business changes hardware or software requirements in
a way that precludes the consumer from accessing or retaining the
records, the consumer can withdraw consent--without a fee.
But the bill also ensures that these consumer protections do not
become unduly burdensome as technology advances. Thus, for example, the
bill provides that a Federal regulatory agency can exempt categories of
records from the consumer consent provisions if this would eliminate a
substantial burden on e-commerce without jeopardizing consumers.
I also note that the bill directs the Secretary of Commerce and the
Federal Trade Commission to report to Congress on the benefits and
burdens of the bill's consumer protection provisions. It also directs
the Secretary of Commerce to report to Congress within 12 months on the
effectiveness of delivering consumer notices via email.
This is important legislation, and my colleague from Michigan,
Senator Abraham, is to be commended for his foresight in introducing
this legislation. He is responsible for the formulation of it. He has
shepherded it through for many months. I commend him for his work on
this legislation. It is safe to say this legislation and conference
report would not be here today if not for the efforts of Senator
Abraham. I also commend Senators Stevens, Burns, Wyden, Leahy, Hollings
and Sarbanes for their commitment to bipartisan agreement on the
critical issues raised by this legislation. And, I thank Chairman
Bliley and ranking member Dingell in the House, for their dedication
and leadership on this issue.
Reaching a bipartisan agreement on the issues raised by this
legislation has not been easy. In fact, the conferees to this bill have
spent months considered the often-conflicting views of various
industries, consumer protection groups, State governments and federal
agencies.
Needless to say, the bill that emerged from this broad and
contentious process had to try to strike a fair balance between the
often-conflicting interests of these groups. As a result, some factions
may have had doubts about the bill because they thought that a narrower
or partisan legislative process might have produced a bill more slanted
towards their narrow interests.
But that sort of thinking is short-sighted and fatally flawed: Where
this legislation is concerned, a narrow or partisan approach would have
jeopardized the growth of electronic commerce. This would have harmed
businesses, consumers and the national economy--including the same
special interests that a narrower approach might have sought to favor.
We must recognize that this bill represents one step in the
continuing--and unfinished--process of integrating electronic
transactions and the Internet into the mainstream of American commerce.
This process of integration must continue if we are to continue to
enjoy the unprecedented economic growth that e-commerce and technology
have helped bring to this country.
But electronic commerce cannot continue to grow and develop without
broad support from consumers, businesses and governments. Consumers
will not support electronic commerce if they discover that electronic
transactions strip them of traditional protections.
Nor will businesses support electronic commerce if they cannot
realize the cost savings it offers. Finally, governments may not enact
laws supporting electronic commerce should such transactions strip
their citizens of rights that they have previously enjoyed.
Electronic signatures legislation must, therefore, balance the
interests of these various groups without unduly favoring any of them:
it must give electronic commerce the certainty it needs to grow while
preserving the consumer protections that States have chosen to apply in
paper-based commercial transactions.
The broad and bipartisan support enjoyed by this legislation is the
surest sign that it has achieved its most important objective: It has
struck a fair balance between competing interests that will ensure
continued broad support for the growth of electronic commerce.
Mr. President, the Electronic Signatures in Global and National
Commerce Act is a positive, confidence-creating tool that will allow
the Internet to continue to develop towards its full potential as a
conduit for information, communication and commerce. It will enable
businesses and consumers alike to rely on digital signatures regardless
of their physical location. Uniform standards for digital signatures
will decrease costs while increasing certainty and consumer confidence.
The value of these public benefits should not be underestimated.
In closing, I want again to thank Chairman Bliley, and Ranking Member
Dingell in the House for all of their work. In the Senate, I note the
hard work of the ranking member of the committee, Mr. Hollings, Senator
Wyden, and others. Without their efforts this bill would not be before
us today. I especially, again, recognize the incredible job done by
Senator Abraham, the original sponsor of the legislation, the original
shepherd, the person who played a key and vital role in the formulation
of these final agreements.
Given the importance of these issues to consumers, businesses and our
global economy, I urge my colleagues to support this legislation.
I ask unanimous consent that a listing of the groups that support S.
761 be printed in the Record.
There being no objection, the list was ordered to be printed in the
Record, as follows:

Groups that support S. 761

1. Business Software Alliance.
2. Microsoft.
3. America Online.
4. Information Technology of America.
5. American Express Company.
6. DLJDirect.
7. American Bankers Association.
8. Citigroup.
9. Information Technology Industry Council.
10. American Electronics Association.
11. Fannie Mae.
12. Freddie Mac.
13. National Association of Realtors.
14. Oracle.
15. Cable & Wireless.
16. Sallie Mae.
17. US Chamber of Commerce.
18. Real Estate Roundtable.
19. Consumer Mortgage Coalition.
20. Mortgage Bankers Association.
21. Electronic Financial Services Council.
22. Intuit.
23. Federal Express.
24. National Association of Manufacturers.
25. Coalition for Electronic Authentication.
26. America's Community Bankers.
27. Investment Company Institute.

Mr. LEAHY. Mr. President, I am pleased that the Senate is finally
going to be considering the conference report on S. 761, the Electronic
Signatures and Global and National Commerce Act.

[[Page S5219]]

I wish to be compassionate this Thursday evening. Tomorrow when the
delayed votes occur, I will be in Vermont. But I am never sorry to be
in Vermont. I will regret missing the final tally. I was honored to
serve as a conferee and to help develop the conference report. I signed
the conference report. I supported final passage. I go back to my
native State secure in the knowledge that this will pass overwhelmingly
with strong bipartisan support.
The legislation is intended to permit and encourage the continued
expansion of electronic commerce and promote public confidence in the
integrity and reliability of online commerce. These are worthy goals--
goals I have long sought to advance. For example, in the last Congress,
many of us worked together to pass the Government Paperwork Elimination
Act. That gave a framework for the Federal Government's use of
electronic forums and also electronic signatures.
Many of us have worked together in a very successful, bipartisan
effort to promote the widespread use of inscription and to relax
outdated export controls in this critical technology for ensuring the
confidentiality and integrity of online communications and storing of
computer information. We have areas as diverse as enhancing copyright,
to patent potential for technology, to addressing the problems of
cybercrime. We have been able to work together in a constructive,
bipartisan way to make real progress to allow electronic commerce to
flourish.
The conference report is a product of such bipartisan cooperation. We
all know there were some bumps along the way. At one point, industry
representatives were warned against even speaking with Democrats.
Fortunately, those warnings were not heeded, and the final product is
bipartisan.
I commend Chairman Bliley from the other body, and Chairman McCain
from this body, for making this a real conference in which all
conferees--Republicans and Democrats--had an opportunity to air their
concerns and contribute to the final report.
All of us might have written some provision differently. But the
conference report is, as conference reports should be, a solid and
reasonable consensus bill that brought in the best of each of us.
It will establish a Federal framework for the use of electronic
signatures for contracts and records to preserve essential safeguards
and protect consumers.
It is geared to the five basic principles articulated by the
Democratic Senators in a letter dated March 28, 2000, which assures
effective consumer consent for the replacement of paper notices with
electronic notices.
It ensures that electronic records are accurate.
It enhances legal certainty for electronic signatures.
It avoids unnecessary litigation.
It avoids unintended consequences in areas outside the scope of the
bill by providing clear Federal regulatory authority.
It avoids facilitating predatory or unlawful practices.
This is not rocket science. But they want to make sure the American
people can trust the electronic world as they trust paperwork. The
American public have enough concern when they go online. They worry
whether their privacy will be protected and whether damage by a
computer virus will hurt their computer, whether a computer hacker will
steal personal information or adopt their identity, wreak havoc with
their good name, or whether their children will meet a sexual predator.
These are all drags on electronic commerce and show the people have to
be concerned.

The AARP found that of consumers over the age of 45, half of them
worry that electronic contracts will give them less protection than
paper contracts. That is what we want to avoid.
The United States has been the incubator of the Internet throughout
its infancy. And the world closely watches whenever we in our country
debate or enact policies that affect the Internet. That is another
reason why we must act carefully and intelligently when we pass
Internet-related laws. The rest of the world watches and follows our
example.
We have produced a charter for the next growth phase of e-commerce.
This bill will be closely watched, widely read, and will be emulated
across the world. Because of that and because most Americans want to
make sure we can take our consumer laws for granted, we are presented
the most significant consumer issues of a decade or longer. We have
improved what the bill almost became considerably, to the benefit of
consumers and in the interests of the smooth and sensible forward
progress of Internet commerce.
This bill does strike a constructive balance. It advances electronic
commerce but doesn't terminate or mangle the basic rights of consumers.
Mr. President, I am pleased that the Senate is finally considering
the conference report on S. 761, ``The Electronic Signatures in Global
and National Commerce Act''. I wish that we could pass it tonight.
Tomorrow, when the delayed vote occurs, I will be in Vermont. While I
am never sorry to be in Vermont, I will regret missing the final tally.
I was honored to serve as a conferee and help develop the conference
report. I signed the conference report and support its final passage. I
go back to my native State secure in the knowledge that it will pass
overwhelmingly.
This legislation is intended to permit and encourage the continued
expansion of electronic commerce and to promote public confidence in
the integrity and reliability of online promises. These are worthy
goals, and they are goals that I have long sought to advance.
For example, in the last Congress, many of us worked together to pass
the Government Paperwork Elimination Act, which established a framework
for the federal government's use of electronic forms and electronic
signatures. Many of us have worked together in a successful bipartisan
effort to promote the widespread use of encryption and relax out-dated
export controls on this critical technology for ensuring the
confidentiality and integrity of online communications and stored
computer information. In areas as diverse as enhancing copyright and
patent protections for new technologies and updating our criminal laws
to address new forms of cybercrime, we have been able to work together
in a constructive, bipartisan way to make real progress on a sound
legal framework for electronic commerce to flourish.
The conference report is the product of such bipartisan cooperation.
I think we all know that there were some bumps along the way. At one
point, industry representatives were warned against even speaking with
any Democrats. But the final product is bipartisan. It is an example of
Congress at work rather than at loggerheads. It is legislators
legislating rather than politicians posturing and unnecessarily
politicizing important matters of public policy.
I commend Chairman Bliley and Chairman McCain for making this a real
conference, in which all conferees, Republican and Democratic, had an
opportunity to air their concerns and contribute to the final report.
We all might have written some provisions differently, but the
conference report is a solid and reasonable consensus bill that will
establish a Federal framework for the use of electronic signatures,
contracts, and records, while preserving essential safeguards
protecting the Nation's consumers.
The conference report adheres to the five basic principles for e-sign
legislation articulated by the Democrat Senators in a letter dated
March 28, 2000.
It ensures effective consumer consent to the replacement of paper
notices with electronic notices.
It ensures that electronic records are accurate, and relevant parties
can retain and access them.
It enhances legal certainty for electronic signatures and records and
avoids unnecessary litigation by authorizing regulators to provide
interpretive guidance.
It avoids unintended consequences in areas outside the scope of the
bill by providing clear federal regulatory authority for records not
covered by the bill's ``consumer'' provisions.
And, it avoids facilitating predatory or unlawful practices.
These principles are not rocket science but are simply intended to
ensure that the electronic world is no less safe for American consumers
than the paper world. The American public has enough concern when they
go online. They worry whether their privacy will

[[Page S5220]]

be protected, whether a damaging computer virus will attack their
computer, whether a computer hacker will steal their personal
information, adopt their identity and wreak havoc with their good
names, or whether their kids will meet a sexual predator. These worries
are all serious drags on electronic commerce.
An AARP survey of computer users over the age of 45 released on March
31st found that almost half of respondents already think that
electronic contracts would give them less protection than paper
contracts, while only one-third believe they would have the same degree
of protection. With this conference report, we have avoided aggravating
consumers' worries. Companies doing business online want to reassure
consumers and potential customers that their interests will be
protected online, not heighten their concern about electronic commerce.
Our conference report should be helpful in this regard.
Mr. President, the United States has been the incubator of the
Internet through its infancy. The world closely watches whenever we
debate or enact policies that affect the Internet, and that is another
reason why we must act carefully and intelligently whenever we pass
Internet-related laws. What we have produced here is the charter for
the next growth phase of e-commerce, and this bill will be closely read
and widely emulated. Because of the potential this bill had for
eviscerating scores of basic state consumer protection laws that most
Americans today take for granted, this bill also has presented us with
perhaps the most significant consumer issues of a decade or longer--not
for what, thank goodness, this bill is in its final form, but for what
this bill nearly became in its earlier stages. To the benefit of
consumers and in the interest of the smooth and sensible forward
progress of Internet commerce, this bill largely strikes a constructive
balance. It advances electronic commerce without terminating or
mangling the basic rights of consumers.
Before I discuss specific provisions of the conference report, I note
that I saw in the Congressional Record of the House proceedings a
statement by Chairman Bliley that is formatted like a managers'
statement of a conference report. I feel I must clarify that those are
Mr. Bliley's views, not a statement of the managers. In fact, I saw it
for the first time today, when I picked up the Congressional Record,
and have not yet had a chance to study it thoroughly.
I will now describe how the conference report gives effect to the
Democratic Senators' five basic principles.
First, the conference report will ensure informed and effective
consumer consent to the replacement of paper notices and disclosures
with electronic notices and disclosures, so that consumers are not
forced or tricked into receiving notices and disclosures in an
electronic form that they cannot access or decipher.
Under the House bill, a business could obtain a consumer's
``consent'' simply by specifying the hardware and software needed to
access the notices and disclosures. This approach would have done
little or nothing to protect technologically unsophisticated consumers,
who may not know whether they have the necessary hardware and software
even if the technical specifications are provided.
I maintained that any standard for affirmative consent must require
consumers to consent electronically to the provision of electronic
notices and disclosures in a manner that verified the consumer's
capacity to access the information in the form in which it would be
sent. Such a mechanism provides a check against coercion, and
additional assurance that the consumer actually has an operating e-mail
address and the other technical means for accessing the information.
Section 101(c) of the conference report requires the use of a
technological check, while leaving companies with ample flexibility to
develop their own procedures. The critical language, which Senator
Wyden and I developed and proposed, provides that a consumer's consent
to the provision of information in electronic form must involve a
demonstration that the consumer can actually receive and read the
information. Section 101(c) also provides that if there is a material
change in the hardware or software requirements needed to access or
retain the information, the company must again verify that the consumer
can receive and read the information, or allow the consumer to withdraw
his or her consent without the imposition of any conditions,
consequences or fees. In addition, prior to any consent, a consumer
must be notified of his or her rights, including the right to receive
notices on paper and any available option for reverting to paper after
an electronic relationship has been established.
Senator Gramm has criticized the conference report on the ground that
its technological check on consumer consent unfairly discriminates
against electronic commerce. But those most familiar with electronic
commerce have never seriously disputed the need for a technological
check. In fact, many high tech firms have acknowledged that it is good
business practice to verify that their customers can open their
electronic records, and many already have implemented some sort of
technological check procedure. I am confident that the benefits of a
one-time technological check far outweigh any possible burden on e-
commerce, and it will greatly increase consumer confidence in the
electronic marketplace.
Let me make special note of section 101(c)(3), a late addition to the
conference report. Without this provision, industry representatives
were concerned that consumers would be able to back out of otherwise
enforceable contracts by refusing to consent, or to confirm their
consent, to the provision of information in an electronic form. At the
same time, however, companies wanted to preserve their autonomy as
contracting parties to condition their own performance on the
consumer's consent. For example companies anticipated that they might
offer special deals for consumers who agreed not to exercise their
right to paper notices. Section 101(c)(3) makes clear that failure to
satisfy the consent requirements of section 101(c)(1) does not
automatically vitiate the underlying contract. Rather, the continued
validity of the contract would turn on the terms of the contract
itself, and the intent of the contracting parties, as determined under
applicable principles of State contract law. Failure to obtain
electronic consent or confirmation of consent would, however, prevent a
company from relying on section 101(a) to validate an electronic record
that was required to be provided or made available to the consumer in
writing.

I should also explain the significance of section 101(c)(6), which
was added at the request of the Democratic conferees. This provision
makes clear that a telephone conversation cannot be substituted for a
written notice to a consumer. For decades, consumer laws have required
that notices be in writing, because that form is one that the consumer
can preserve, to which the consumer can refer, and which is capable of
demonstrating after the fact what information was provided. Under
appropriate conditions, electronic communications can mimic those
characteristics; but oral notice over the telephone will never be
sufficient to protect consumer interests.
Second, the conference report will ensure that electronic contracts
and other electronic records are accurate and that relevant persons can
retain and access them. Consumers must be able to retain electronic
records and must have some assurance that they provide reasonable
guarantees of the accuracy and integrity of the information that they
contain.
Under section 101(e) of the conference report, the legal effect of an
electronic contract or record may be denied if it is not in a form that
can be retained and accurately reproduced for later reference and
settlement of disputes. This means that the parties to a contract may
not satisfy a statute of frauds requirement that the contract be in
writing simply by flashing an electronic version of the contract on a
computer screen. Similarly, product warranties must be provided to
purchasers in a form that they can retain and use to enforce their
rights in the event that the product fails.
Third, the conference report will enhance legal certainty for
electronic signatures and records and avoid unnecessary litigation by
authorizing Federal and State regulators to provide

[[Page S5221]]

interpretive guidance. Even with the representation on this conference
of Members from committees of varied jurisdiction, we could not begin
to think of every circumstance that might arise in the future as to
which this legislation will apply. It was therefore essential to
provide regulatory agencies with sufficient flexibility and
interpretive authority to implement the statutes modified by the
legislation.
Most importantly, the conference report preserves substantial
authority for Federal and State regulators with respect to record-
keeping requirements. In a letter dated May 23, 2000, the Department of
Justice expressed concern that an early draft of the conference report,
produced by certain Republican conferees, would ``seriously undermine
the government's ability to investigate, try and convict criminals who
alter or hide required records in programs such as Medicare, Medicaid,
and federal environmental laws.'' The Department explained:

Record Retention. As presently drafted, the bill leaves the
public at risk for serious waste, fraud, and abuse. For
example, under the current bill, there is nothing to prevent
a Medicare contractor from retaining its financial records on
a spreadsheet (such as Excel or Quattro Pro). However,
because those programs generally contain no security features
to monitor changes to the files they create, anyone could
change one number on a spreadsheet, which would then change
all other numbers affected by the impermissible entry,
reflecting a financial picture different from the reality.
The government could have its hands tied in seeking to
establish rules to ensure that such records could not be
altered.

The Department's concerns regarding the Federal Government were
shared by the States, whose regulators need and deserve the same
flexibility as Federal regulators. This is particularly true in areas
where the States are the primary regulators, as they are with respect
to insurance and State-chartered banks. Having pressed this point
throughout the conference, I am pleased that the final report treats
Federal and State regulators with equal respect, and that it has won
the support of the National Conference of State Legislatures.
Under earlier drafts of this conference report, as in H.R. 1714 as
passed by the House, a requirement that a record be retained could be
met by retaining an electronic record that accurately reflected the
information set forth in the record ``after it was first generated in
its final form as an electronic record.'' By striking that final
phrase, we made clear that agencies, through their interpretive
authority, can ensure that electronic records remain accurate
throughout the period that they are required by law to be retained. For
additional certainty, we expressly authorized agencies to set
performance standards to assure the accuracy, integrity, and
accessibility of records that are required to be retained and, if
necessary, to require retention of a record in paper form. We also
delayed the effective date of the Act with respect to record retention
requirements, to give agencies time to put in place appropriate
regulations designed to assure effective and sustainable record
retention, and to prevent companies from retaining materials in any
easily alterable form that they chose until regulations are
forthcoming. Together, these changes will avoid facilitating lax
record-keeping practices that could impede the enforcement of program
requirements, anti-fraud statutes, environmental laws, and many other
laws and regulations.
Fourth, the conference report will avoid unintended consequences for
laws and regulations governing ``records'' outside its intended focus
on business-to-consumer and business-to-business transactions. I was
seriously concerned that the sweeping legislation passed by the House
would allow hazardous materials transporters to provide truckers with
the required description of the materials via electronic mail, so that
key information might not be available to clean-up crews in the event
an accident disabled the driver. Similarly, I worried that the House
bill would allow employers to provide OSHA-required warnings on a Web
site rather than on a dangerous machine.

The conference report raises no such concerns. For one thing, it
specifically excludes from its scope any documents required to
accompany the transportation or handling of hazardous materials,
pesticides, and other toxic or dangerous materials. For another thing,
it expressly preserves all Federal and State requirements that
information be posted, displayed or publicly affixed. In addition to
allaying concerns about OSHA-warnings, this provision ensures that the
bill will not inadvertently undermine Federal and State labeling
requirements, such as requirements that poisonous products be labeled
with the skull and crossbones symbol.
Perhaps more importantly, the scope of the legislation has been
narrowed. As reported by the conference committee, the bill covers
signatures, contracts and records relating to a ``transaction'' in or
affecting interstate or foreign commerce, with the critical term--
``transaction''--defined to mean ``an action or set of actions relating
to the conduct of business, consumer, or commercial affairs between two
or more persons.'' The conferees specifically rejected including
``governmental'' affairs in this definition. Thus, for example, the
bill would not cover records generated purely for governmental
purposes, such as regular monitoring reports on air or water quality
that an agency may require pursuant to the Clean Air Act, Clean Water
Act, Safe Drinking Act, or similar Federal or State environmental laws.
Fifth and finally, the conference report avoids the problem created
by many earlier drafts, including the House bill, of potentially
facilitating unfair and deceptive practices. It does this through a
broad savings clause which clarifies that the bill does not limit any
legal requirement or prohibition other than those involving the
writing, signature, or paper form of a contract. Laws--including common
law rules--that prohibit fraud, unfair or deceptive trade practices, or
unconscionable contracts are not affected by this Act. A wrongdoer may
not argue that fraudulent conduct that complies with the technical
requirements of section 101(c) is beyond the reach of anti-fraud laws.
By the same token, a consumer is always entitled to assert that an
electronic signature is a forgery, was used without authority, or
otherwise is invalid for reasons that would invalidate the effect of a
signature in written form.
This legislation has come a long way in conference. It is far from
the reckless bill it was in danger of becoming. Still, it is far from
perfect. As a general matter, I believe it may still be unduly
preemptive of State regulatory and record-keeping authority. It is
ironic that the same Members who claim to be vigilant guardians of
States' rights are so quick to impose broad Federal mandates on the
States when it suits their political interests. The majority has failed
to explain why the expansion of the Internet justifies jettisoning the
federalist principles that have governed our Republic for more than two
centuries. I have worked hard, in connection with this bill and others,
to preserve State authority in areas traditionally reserved to the
States, particularly where there is no conflict between the Federal
goals and State jurisdiction. We should preempt State authority only
when there is a demonstrated need to establish a national standard, and
even then, only for as long as is necessary.

That being said, the conference report appropriately rejects the
massively preemptive approach taken by earlier versions of this
legislation, including the House-passed bill. As the National
Governors' Association observed in a letter to Congress dated March 14,
2000, ``H.R. 1714's ambiguity with respect to preemption [was] very
troubling''. It authorized States to ``modify, limit, or supersede''
the Federal statute by adopting the Uniform Electronic Transactions Act
(UETA), but then rendered this authorization irrelevant by stating that
no State law (including UETA) was effective to the extent that it was
inconsistent with the Federal statute or technology specific.
By contrast, the conference report does not preempt the laws of those
States that adopt UETA, so long as UETA is adopted in a uniform manner.
Such exceptions to UETA as a State may adopt are preempted, but only to
the extent that they violate the principle of technological neutrality
or are otherwise inconsistent with the Federal statute. This affords
States considerable flexibility; for example, a

[[Page S5222]]

State may enact UETA to incorporate the consumer consent procedures set
forth in section 101(c).
In addition, section 104(a) of the conference report expressly
preserves governmental filing requirements. Federal agencies are
already working toward full acceptance of electronic filings, pursuant
to the schedule established by the Government Paperwork Elimination
Act. I am confident that State agencies will follow our lead. Until
they are technologically equipped to do so, however, they have an
unqualified right under section 104(a) to continue to require records
to be filed in a tangible printed or paper form.
I have a number of other concerns about the conference report. In
particular, I am troubled that the conference report fails to provide a
clear Federal rule--or, indeed, any rule at all--concerning how it is
intended to affect requirements that information be sent, provided, or
otherwise delivered. The absence of a delivery provision is
particularly conspicuous given the fact that the prototype for this
legislation does include such a provision. Section 8(a) of UETA
provides that if a law requires information to be sent in writing to
another person (but does not specify a particular method of delivery),
the requirement is satisfied if the information is sent in an
electronic record that the recipient can retain. Under section 8(b), if
a law requires information to be sent by a specified method--whether by
regular U.S. Mail, express mail, registered mail, certified mail, or
another method--then the information must be sent by the method
specified in the other law, except that parties may contract out of
regular mail requirements to the extent permitted by the other law.
UETA also contains a detailed rule for determining when an electronic
record is sent, and when it is received.
The conference report touches upon the issue of delivery in section
101(c)(2)(B), but only with respect to specified methods that require
verification or acknowledgment of receipt, such as registered or
certified mail. What happens to State law requirements that a notice be
sent by first-class mail or personal delivery? How about a law that
requires information to be provided, sent, or delivered in writing, but
does not specify a particular method of delivery? I raised these
questions during the conference, but the conference report provides few
answers.

The conference report does provide some guidance in the case of
States that enact UETA. In such States, section 8(a) of UETA will
govern with respect to general delivery requirements, and section
8(b)(2) of UETA will govern with respect to requirements that
information be delivered by a specified method, subject to section
102(c) of the federal legislation. Section 102(c) prevents States that
enact UETA from circumventing the federal legislation through the
imposition of new nonelectronic delivery methods. Thus, States enacting
UETA may continue to prescribe specific delivery methods, so long as
there is an electronic alternative for any nonelectronic delivery
methods.
This leaves the question of how the Federal legislation will affect
Federal delivery requirements and State delivery requirements in non-
UETA States. Because our bill is silent on this question, and because
repeal and preemption by implication are disfavored, a court or agency
interpreting the legislation could reasonably conclude that these
Federal and State delivery requirements remain in full force and
effect. Indeed, this interpretation is practically compelled by the
plain language of the legislative text. It does, however, have the
potential to undermine one of our key legislative objectives--that is,
the elimination of unintended and unwarranted barriers to electronic
commerce. For this reason, it will be tempting to discern in this
legislation some sort of plan to permit electronic delivery of
information whenever delivery is required by law, even when the law
specifies a particular method by which delivery must be made. Let me
assure the courts and regulators that have occasion to read these words
that this legislator had no such plan.
Had we in fact addressed this issue in conference, my goal would have
been to ensure that any specific requirement that information be sent
or delivered not be relaxed or weakened through this Act. I believe an
electronic method of delivery should be at least as reliable, secure,
and effective as the method it replaces. Thus, a law that requires
information to be delivered to a person by first class mail should not
be satisfied simply by posting the information on a Web site; at a
minimum, the person must also be notified of the location and
availability of the information. Nor is information delivered, in my
view, if it is electronically posted for an unreasonably short period
of time, or sent electronically in a manner that inhibits the ability
of the recipient to store or print the information.
Having failed to address the issue of delivery, we may be compelled
to revisit the issue at a later date. We will, by then, have the
benefit of the Commerce Department's study under section 105(a) of the
conference report, regarding the effectiveness and reliability of
electronic mail as compared with more traditional methods of delivery.
Another troubling provision in the conference report appears at the
end of section 101, and concerns the liability of insurance agents and
insurance brokers. This provision appeared for the first time in a
conference draft produced by the Republican conferees on May 15th. In
its original incarnation, this provision gave insurance agents and
brokers absolute immunity from liability if something went wrong as a
result of the use of electronic procedures. This was not just a shield
from vicarious liability, or even from negligence; rather, it was an
absolute shield, which would protect insurance agents and brokers from
their own reckless or even wilful conduct. No matter that insurance
agents and brokers are perfectly capable of protecting themselves
through their contracts with insurance companies and their customers.
Senator Hollings and I opposed the provision as unnecessary and
indefensible as a matter of policy, and we succeeded in transforming it
into a clarification that insurance agents and brokers cannot be held
vicariously liable for deficiencies in electronic procedures over which
they had no control. In this form, the provision remains in the bill as
a stark reminder of the power of special interests.
Section 104(d)(1) is another political compromise that blemishes this
conference report, although I believe its actual impact will be
negligible. It provides that Federal agencies may exempt a specified
category or type of record from the consumer consent requirements of
section 101(c), but only if such exemption is ``necessary'' to
eliminate a ``substantial'' burden on electronic commerce, and it will
not increase the material risk of harm to consumers. While Chairman
Bliley indicated in his floor statement yesterday that this test should
not be read as too limiting, the opposite is true. The test is, and was
intended to be, demanding. The exemption must be ``necessary,'' and not
merely ``appropriate,'' as Chairman Bliley suggested. It should also be
noted that the conferees considered and specifically rejected language
that would have authorized State agencies to exempt records from the
consent requirements.
Finally, I want to discuss the concept of technology neutrality that
is so central to this bill. This legislation is, appropriately,
technology neutral. It leaves it to the parties to choose the
authentication technology that meets their needs. At the same time, it
is undeniable that some authentication technologies are more secure
than others. Nothing in the conference report prevents or in any way
discourages parties from considering issues of security when deciding
which authentication technology to use for a particular application.
Indeed, such considerations are wholly appropriate.
Pursuant to the Government Paperwork Elimination Act, passed by the
previous Congress, the Office of Management and Budget (OMB) has
adopted regulations to permit individuals to obtain, submit and sign
government forms electronically. These regulations direct Federal
agencies to recognize that different security approaches offer varying
levels of assurance in an electronic environment and that deciding
which to use in an application depends first upon finding a balance
between the risks associated with the loss, misuse or compromise of the
information,

[[Page S5223]]

and the benefits, costs and effort associated with deploying and
managing the increasingly secure methods to mitigate those risks.

The OMB regulations recognize that among the various technical
approaches, in an ascending level of assurance, are ``shared secrets''
methods (e.g., personal identification numbers or passwords), digitized
signatures or biometric means of identification, such as fingerprints,
retinal patterns and voice recognition, and cryptographic digital
signatures, which provide the greatest assurance. Combinations of
approaches (e.g., digital signatures with biometrics) are also possible
and may provide even higher levels of assurance.
In developing this legislation, the conference committee recognized
that certain technologies are more secure than others and that
consumers and businesses should select the technology that is most
appropriate for their particular needs, taking into account the
importance of the transaction and its corresponding need for assurance.
Mr. President, the benefits of electronic commerce should not, and
need not, come at the expense of increased risk to consumers. I am
delighted that we have been able to come together in a bipartisan
effort in which Democrats and Republicans in the Senate and House are
joining in s-sign legislation that will encourage electronic commerce
without sacrificing consumer protections. I want to commend Senator
Hollings, Senator Sarbanes and Representative Dingell, the ranking
Democrats on the other Committees participating in the House-Senate
Conference, for their leadership and steadfast efforts on behalf of our
dual objectives. I thank Chairman Bliley and Chairman McCain for
allowing the conference process to work and to result in a report that
so many of us can support. I also want to praise Senator Wyden for his
dedication to this project and for never losing sight of the need to
create a balanced bill. It has been a privilege to work with all of
these distinguished Members on this landmark legislation.
I am profoundly grateful to the Administration for its work on this
legislation. Andy Pincus, Sarah Rosen Wartell, Michael Beresik, Gary
Gensler, and Gregory Baer, in particular, have devoted countless hours
to ensuring that the conference report will create a reasonable and
responsible framework for electronic commerce.
I would also like to thank the Senate and House staff who worked so
hard to bring this matter to a reasonable conclusion. On my staff,
Julie Katzman and Beryl Howell. In addition, Maureen McLaughlin, Moses
Boyd, Carol Grunberg, Marty Gruenberg, Jonathan Miller, Kevin Kayes,
Steve Harris, David Cavicke, Mike O'Rielly, Paul Scolese, Ramsen
Betfarhad, James Derderian, Bruce Gwinn, Consuela Washington, and Jeff
Duncan--all deserve credit for their role in crafting the consensus
legislation that the Senate passes today. Thanks, too, to House
Legislative Counsel Steve Cope, for his technical assistance and
professionalism throughout this conference.
This conference report enjoys strong bipartisan and bicameral
support. It passed the House of Representatives yesterday by an
overwhelming majority. It has been well received by industry and
consumer representatives alike, by the States as well as by the
Administration. I urge its speedy passage into law.
The PRESIDING OFFICER. The Senator from Michigan is recognized.
Mr. ABRAHAM. Mr. President, I am proud to rise this evening to
discuss legislation that I am very confident we will pass tomorrow--the
conference report to S. 761, the Electronic Signatures and Global
National Commerce Act. This is the culmination of nearly two years'
effort, and I deeply appreciate all of the generous assistance on the
part of my colleagues who helped move this bill through the legislative
process.

I believe that hindsight will prove this to be one of the most
important pieces of legislation to emerge from the 106th Congress. This
legislation will eliminate the single most significant vulnerability of
electronic commerce, which is the fear that everything it revolves
around--electronic signatures, contracts, and other records--could be
rendered invalid solely by virtue of their being in ``electronic''
form, rather than in a tangible, ink and paper format.
This bill will literally supply the pavement for the e-commerce lane
of the information superhighway. What we do today truly changes
tomorrow, and I am certain that this legislation will prove to have a
tremendous positive impact on electronic commerce--and on the general
health of our economy--for decades to come.
Mr. President, thanks to the development of secure electronic
signatures and records, individuals, businesses, and even governments
are increasingly able to enter transactions without ever having to
travel--whether the travel is a short drive across town or a thousand-
mile flight. They are turning on a computer and opening e-mail, rather
than scheduling drop-offs at mailboxes or pick-ups from courier
services.
They are able to transact now, rather than ``tomorrow, before 10AM'',
or over the next few days, depending on mail volume (and, of course,
except for on Sunday). They are paying transactions costs in the
fractions of cents, rather than in 33 cent increments. And as we move
forth into the electronic world, ``they'' will increasingly include
even the smallest businesses and consumers, who will find themselves
able to take advantage of many of the technologies and efficiencies
available only to the largest of firms.
Even now, consumers are realizing the time and cost benefits of
electronic commerce at a rapidly escalating rate. On-line catalogs are
everywhere, all the time, and always in competition to provide the best
service at the lowest price. And for the average family in America, on-
line lending and real estate brokerage services are making the most
significant of all purchases--the purchase of a family home--available
over the Internet. Changes to home-buying over the near term will be
dramatic. Rapid document and service delivery will reduce a transaction
typically measured in days or weeks to minutes or hours, and the
ability of a consumer to quickly assess the rates offered by scores of
lenders will increase competition and lower mortgage costs and rates
for every consumer. Mr. President, Franklin Raines, the Chairman and
CEO of Fannie Mae, told an investor conference in May that ``. . . the
application of electronic commerce to the U.S. mortgage finance
industry should help the U.S. homeownership rate reach 70 percent over
the next decade.'' Mr. President, and Chairman Raines, I look forward
to that future.
But for e-commerce to continue growing, we must have a consistent,
predictable, national framework of rules governing the use of
electronic signatures and records. Current legal inconsistencies are
deterring businesses from fully utilizing electronic signature
technologies. And the ability of one court, in one jurisdiction, to
rule against the validity of a contract solely because of its
electronic form threatens to destabilize the entirety of electronic
commerce--bringing down the whole house of cards.
The National Conference of Commissioners on Uniform State Law has
developed a uniform system for the use of electronic signatures. Their
product, the Uniform Electronic Transactions Act, or UETA, is an
excellent piece of work and I look forward to its enactment in all
fifty states. But as some state legislatures are not in session next
year, and as other states face more immediately pressing issues, it
will likely take three to four years for all the states to enact the
UETA.
That is a long time in the high-technology sector--far too long to
permit, when this Congress possesses the ability to bridge the gap.
With this in mind, Mr. President, in November of 1998--shortly after
the passage of the first electronic signature legislation, the
Government Paperwork Elimination Act, which I also co-authored with my
friend, Senator Wyden--I initiated a series of discussions with both
industry and states for the purpose of developing a plan to foster the
continued growth of electronic signatures and electronic commerce. In
January of 1999, my staff had produced draft legislation which I
invited Chairman Bliley to consider introducing in the House of
Representatives. Over the next several months, Senator Wyden and I
worked with Republicans and Democrats in both chambers to refine this
legislation. On March 25 of 1999,

[[Page S5224]]

Senators Wyden, McCain, Burns, Lott, and I introduced the ``Millennium
Digital Commerce Act'' (S. 761); Representative Anna Eshoo introduced
the House companion later that day. My staff continued to consult with
Chairman Bliley in order to refine our substantive approach to this
issue, and his electronic signature legislation, H.R. 1714, was
introduced on May 6, 1999. As I noted, S. 761 was the first electronic
signature bill introduced in the 106th Congress. Thanks to the gracious
assistance of Chairman McCain, our bill received its first hearing in
the Senate Commerce Committee on May 27 of last year. On June 23 it was
passed out of the Commerce Committee on a unanimous 19-0 vote. I would
note that the version of the bill passed out by the Committee included
provisions regarding both electronic signatures and electronic records.
During the fall of 1999, we made several attempts to pass this bill
by unanimous consent agreement in the Senate, but unfortunately, we
were unable to proceed because several Members had concerns relating to
the inclusion of electronic records in the legislation. Given our need
to accommodate the Senate's schedule, we made a decision to pass a
substitute bill that excluded the records provisions, and the Abraham-
Wyden-Leahy substitute amendment passed the Senate unanimously on
November 19, 1999.
At the time the Senate passed S. 761, Senator Lott and I made clear
our intention to work for inclusion of electronic records provisions in
the final bill. I am pleased to say that with much effort, the bill is
being passed today as conceived nearly two years ago--granting legal
certainty to both electronic records and signatures.
Mr. President, at this point I would like to speak to several of the
key principles of this legislation, which I believe will provide the
legal framework needed for the continued growth of e-commerce.
The general rule of this legislation ensures the legal certainty of
e-commerce in very clear, targeted terms: ``a signature, contract, or
other record
. . . may not be denied legal effect, validity, or enforceability
solely because it is in electronic form''.
Mr. President, the word ``solely'' is pivotal in this context: it
means that electronic writings are not to be discriminated against, but
instead are to be judged according to existing principles of contract
law.
With this language, the ``achilles heel'' of all of e-commerce is
protected--the ``electronic'' nature of a contract will not be used to
attack the validity of a contract.
Mr. President, I view this as my single most important contribution
to the future of electronic commerce, and would like to thank Senators
McCain, Wyden, Gramm, and Hatch for their counsel and support in
writing this section of the legislation.
This section of the legislation was added to ensure that no ambiguity
existed with respect to our treatment of existing contract law.
Although we strongly believe that our General Rule is formulated in the
least onerous incarnation, Section 101(b) clarifies that principles of
contract law, which have been established over a millennium of
commerce, remain in effect and should continue to guide transactions
nationwide. It is the strong belief of the conference that the decision
whether or not to participate in electronic commerce is completely
voluntary, and if the parties decide to do so, the bill grants parties
to a transaction the freedom to determine the technologies and business
methods to employ in the execution of an electronic contract or other
record.

Under the consent provisions, a consumer must affirmatively consent
to the provision of records in electronic form, and there must be a
reasonable demonstration that the consumer can access electronic
records. For the immediate future, the conference envisions this
``electronic consent'' to take the form of either a web-page based
consumer affirmation, or a reply to a business' electronic mailing
which includes an affirmation by the consumer that he or she could open
provided attachments. I eagerly await future technology developments
that render the burdens this section imposes on consumers and
businesses obsolete.
This provision, in combination with the simple fact that the use of
electronic records by a consumer and right to contract generally are
completely voluntary, should ensure that no consumer will be forced by
any business to accept any electronic document that the consumer does
not wish to receive.
It is well worth noting that the term ``consumer'' does not include
business-to-business transactions, which will allow businesses to take
full advantage of the efficiency opportunities presented by this
legislation.
As I have noted, the central purpose of this legislation is to
establish a nation-wide baseline for the legal certainty of electronic
signatures and records. The States themselves have recognized the need
for uniformity in laws governing e-commerce, and in July of last year,
the National Conference of Commissioners on Uniform State Law (NCCUSL)
reported out model legislation designed to unify state law in a market-
oriented, technology-neutral approach. I believe that the eventual
adoption of UETA by all 50 states in a manner consistent with the
version reported by NCCUSL will provide the same national uniformity
which is established in the Federal legislation. For that reason, and
at my insistence, when a state adopts the ``Uniform Electronic
Transactions Act'' (UETA) as reported by NCCUSL, the federal preemption
provided in this bill is superceded. In the meantime, the preemption
contained in the Federal Act will ensure a uniform standard of legal
certainty for both electronic signatures and electronic records.
Mr. President, I would like to address two additional points related
to preemption. First, UETA includes a provision that permits a state to
prescribe ``delivery methods'' for various records. I saw this as a
potential loophole to the bill, which would allow a state to circumvent
the intent of the general rule and require that an electronic document
be delivered via physical methods--most likely ``first class'' mail. It
should be clear to all that the federal legislation would not permit
such a delivery method requirement, and we have specified as much in
the preemption section. Second, I believed that the House version of
the preemption was unnecessarily overbroad, and went so far as to
seriously hamper the ability of a state or local government to perform
those governing functions entrusted to it by the citizens. I am pleased
that the conference agreed with my opinion, and that the language was
changed in response.
The ``consumer protection'' provisions of this legislation specify
that any notice of product recalls or cancellation, or termination of
utility services, among other items, are to be excluded from the scope
of this legislation. This means, of course, that the validity of these
notices may be denied solely because they are in electronic form. I
hope that industry does not shy away from providing these notices
electronically--as well as in paper--as it seems to me that electronic
``anyplace, anytime'' notification of a product recall or utility
shutoff would be extremely valuable. Especially to a resident of
northern Michigan on business or vacation travel, whose furnace was
subject to recall during the dead of winter.
Mr. President, because of the benefits of ``anyplace, anytime''
notice--and especially in light of the strong consent provisions in the
bill--I believe consumers should be free to choose to receive any type
record electronically, even those expressly precluded in this
legislation. I hope the appropriate regulatory agencies will utilize
the authority granted in this bill to allow all records, even those
precluded from electronic transmission by this legislation, to be sent
electronically.
The Legislation does not prevent states from establishing standards
for electronic transactions with their constituents. Just as the
Government Paperwork Elimination Act provided the Federal government
the authority to set standards for electronic regulatory filing and
reporting, so too should the States have the ability to set standards
for electronic submission with a State or political subdivision. And,
like any business, the Federal government and the States also have the
ability to establish procedures and standards for procuring goods and
services online.
The bill directs the Department of Commerce and Office of Management
and Budget to report on Federal laws and regulations that might pose
barriers to e-commerce and report back to

[[Page S5225]]

Congress on the impact of such provisions and provide suggestions for
reform. Such a report will serve as the basis for Congressional action,
or inaction, in the future.
This was one of the final sections of the language to be modified in
response to my concerns. The original proposal by the Administration to
deny legal validity for records required to be retained by Federal or
State law or regulation until October 1, of 2001 was, in my opinion,
needlessly excessive and punitive to those consumers and businesses
prepared to leap now into the electronic age. I maintained that Federal
and State agencies should be provided only six months time to develop
standards to ensure document validity and integrity, so as to not
inappropriately burden the private sector. Objective individuals
outside the process with experience in developing and implementing
regulations at the Federal and State level assured me that six months
was feasible. In the end, however, we effectively agreed upon an eight-
month delayed implementation. And finally, language which House
negotiators insisted upon which would have needlessly created an uneven
playing field for the financial services industry was also dropped at
my request.
Since the Internet is inherently an international medium,
consideration must be given to the manner in which the U.S. will
conduct business with overseas governments and businesses. This
legislation therefore sets forth a series of principles for the
international use of electronic signatures. In the last year, U.S.
negotiators have been meeting with the European Commissioners to
discuss electronic signatures in international commerce. In these
negotiations, the U.S. Department of Commerce and the State Department
have worked in support of an open system governing the use of
authentication technologies. Some European nations oppose this concept,
however. For example, Germany insists that electronic transactions
involving a German company must utilize a German electronic signature
application. I applaud the Administration for their steadfast
opposition to that approach. This bill will bolster and strengthen the
U.S. position in these international negotiations by establishing the
following principles as the will of the Congress:

One, paper-based obstacles to electronic transactions must be
eliminated.
Two, parties to an electronic transaction should choose the
electronic authentication technology.
Three, parties to a transaction should have the opportunity to prove
in court that their authentication approach and transactions are valid.
Four, the international approach to electronic signatures should take
a non-discriminatory approach to electronic signature. This will allow
the free market--not a government--to determine the type of
authentication technologies used in international commerce.
Mr. President, it is my hope that adoption of these principles will
increase the likelihood of an open, market-based international
framework for electronic commerce.
Mr. President, two years ago I believed that if we, as a body, could
maintain a spirit of bipartisanship and a strong commitment to
principles of free commerce, that we were poised to produce the
landmark accomplishment of this Congress. Well we took these
commitments seriously, and I believe our work product will be hailed
for generations to come as the grounds upon which the dream of a
prosperous new economy became a reality--and well beyond our
expectations.
I am pleased to say that we have already begun work on the next
legislative effort to help this nation shift to the electronic world,
addressing the apportionment of liability for violations of duty and
trust, and the protection of information and user confidentiality in
electronic commerce. Mr. President, I welcome the help of my colleagues
who have been with me in the effort to protect electronic signatures
and records, I look forward to again working closely with the states
and industry, and I hope to deliver to the American public
corresponding legislation that is as well-contemplated and effective as
S. 761 in the next Congress.
Before I close, there are a number of individuals whom I would like
to thank for their hard work, and without exception, for their
endurance. First, I would like to recognize Chairman McCain for his
assistance and dedication to this effort. The Chairman was one of the
original cosponsors of this legislation, and lent a great deal of
support well before any of the current attention was being paid to the
issue of the legal certainty of electronic commerce. Senator McCain's
constant momentum eliminated many obstacles over the past 18 months and
kept this process moving forward.
Without his efforts and those of Mark Buse and Maureen McLaughlin of
the Senate Commerce Committee staff, I certainly wouldn't be making
this statement today.
I would also like to sincerely thank my friend, Senator Phil Gramm,
Chairman of our Banking Committee, whose dedication to those important
principles of economic freedom was a key ingredient in guiding our
legislation through the past year and a half.
The expertise which he and his staffers Geoff Gray and Wayne
Abernathy brought to the table was absolutely indispensable. Senator
Gramm ensured that this legislation's propound impact on the financial
services industry will be a positive one.
I also want to acknowledge our Judiciary chairman, Senator Hatch, who
I understand will not be participating in the final vote on this
legislation tomorrow due to another commitment, but he and his staff
likewise worked very closely with us throughout this effort.
The support and counsel of Senator Wyden, my partner in introducing
this bipartisan bill last year, has also been essential to bridging the
conceptual differences between colleagues on both sides of the aisle.
Despite the different approaches we occasionally endorsed, I could
always count on his sincere efforts to find common ground on this
legislation. Senator Wyden and his legislative director, Carole
Grunberg did yeoman's work on this bill, and for that I wish to express
my true appreciation.
I also commend Senator Pat Leahy and his counsel, Julie Katzman for
their contributions to this bill. Indeed, we worked hard in putting
together the ingredients that made up the Senate version of this
legislation, the final amendment which was adopted by the Senate when
we passed this last year. Senator Leahy's continuing interest,
involvement, and support were very important to our success.
I must also express my gratitude to the Senate leadership for their
patience as well as their persistence in moving this legislation. I
truly appreciate the assistance of Dave Hoppe, Jack Howard, Jim
Sartucci, and Rene Bennett of the Senate Majority Leader's staff.
I would also like to give thanks to Massachusetts Governor Paul
Cellucci for his assistance and support through the process of drafting
this legislation. Massachusetts should be proud of the work done by
their Governor and his staff on this bill, especially the Governor's
Special Counsel for e-commerce, Daniel Greenwood, to assure that state
and federal law governing e-commerce are complimentary.
Finally, I would like to recognize the efforts of three members of my
own staff who are here tonight. My legislative assistant, Kevin
Kolevar, my Judiciary Committee Counsel, Chase Hutto, and my
Administrative Assistant Cesar Conda.
I thank them for their tireless efforts and loyalty, and recognize
they possess both the tremendous vision necessary to conceive of this
legislation back in November of 1998, and the dedication to bring it to
the point of final passage today.
I would just indicate that without these three gentleman and their
hard work, numerous impasses that seemed to have doomed this
legislation would not have been surmounted. Their willingness to
creatively examine the problems we were confronting and come up with
new approaches that offered all the participants an opportunity to work
together to find a common ground were absolutely indispensable to this
success. I certainly can attest to the long hours that were put in by
these individuals to make sure that we completed this project and that
we are in a position to pass this legislation.
As people look back on this effort, and I think they will with a
sense that

[[Page S5226]]

this was an important achievement, all three of these individuals will
be accorded the praise they deserve for their efforts.
In closing, let me urge my colleagues to support final passage of the
conference report tomorrow morning. I believe that we are passing a
very important, landmark piece of legislation that will provide a
stimulus to the new economy the likes of which we have not previously
seen. I believe it is one of the most important steps we can take as a
Congress to remove some of the barriers and impediments that might
prevent us from fully enjoying the benefits of the new technologies,
and I believe that as it becomes the law of the land, and subsequently
as it is used as a basis for the entering into of transactions through
e-commerce, we will look back on these achievements with great pride. I
am happy to have been part of it. I thank all of my colleagues who made
this possible.
Mr. ROBB. Mr. President, I rise today in strong support of the
conference report on the Millennium Digital Commerce Act, a bill which
I believe will help us remove one of the most imposing barriers to the
growth of electronic commerce--the lack of a way to verify the validity
of contracts entered into over the web.
As the Internet becomes more ubiquitous in society and the lines
between paper and electronic worlds blur, it is crucial that we find
ways to adapt older regulatory structures such as contract law to the
new world of Internet commerce. By providing a framework for digital
signatures, the Millenium Digital Commerce Act will do just that, and
I'm pleased that we're about to send it to the President's desk for
signature.
I'm particularly pleased that the conferees were able to work through
some of the complicated consumer protection issues on this bill.
Throughout the conference negotiations, there were those who suggested
that we should use this bill to relax some of our most important
consumer protection laws. I appreciate the efforts of Senators Leahy,
McCain, Abraham and others in working to temper these efforts, and
believe that the final product is much better for it.
While I strongly support this legislation, I regret that a prior
commitment will prevent me from being here tomorrow to vote in favor of
it. In my absence, I urge each of my colleagues to support this
landmark agreement, which will help the Internet realize its full
potential.
Mrs. BOXER. Mr. President, last night the other body overwhelmingly
approved the conference report accompanying S. 761, the Electronic
Signatures in Global and National Commerce Act, by a vote of 426-4. The
Senate is expected to take the report up soon.
I support the conference report on S. 761 because paper-less
transactions will give our Information Age economy a boost, and allow
persons to shop for goods and services once unavailable on the
Internet.
The ability to make binding contracts online, that reach across state
borders, will drive down transaction costs. The financial industry
alone expects to save millions of dollars a year due to efficiencies
derived from electronic signatures.
Consumers will save money and time, also. With electronic signatures
persons will no longer need to sign certain contracts in person or
communicate via mail. Now, persons will be able to enter into contracts
and purchase items, like care loans, from the comfort of their own
homes. Certainly, consumers will save money with this new level of
competition, and save time conducting their daily affairs.
As people are able to conduct more and more business transactions
online, I think we'll look back one day and try to remember what it was
like without electronic signatures.
Mr. President, I look forward to this bill becoming law.
Mr. GRAMM, Mr. President, I rise today in support of the conference
report on S. 761, the Electronic Signatures in Global and National
Commerce Act, also known as the E-SIGN bill. The bill establishes a
uniform national standard for treating electronic signatures, contracts
and disclosures are legally binding in the same way that physical
signatures, paper contracts and paper disclosures are legally binding.
The bill will allow American businesses to become more efficient and
productive through use of the Internet and other forms of electronic
commerce, rather than being forced to use paper for all binding
agreements. Further, it will expand for consumers everywhere the
availability of products and services as well as permit tremendous time
savings. With consumers no longer bound by expensive and time-absorbing
requirements to complete transactions through the mail or in person,
consumer costs will decline and choices will grow. Working from home
computers, people will increasingly be able to pay bills, apply for
mortgages, trade securities, and purchase goods and services wherever
and whenever they choose. The reach of the consumer will extend around
the globe.
Mr. President, Senator Spencer Abraham deserves the lion's share of
the credit for this legislation. He began this process back in 1998,
fathering not only the Senate bill, but subsequently generating
interest on the House side. He continued providing technical and
drafting assistance throughout the process. Without Senator Abraham's
persistence, and his clear, constant vision of what we need to
accomplish, there would be no bill.
This legislation will have a profound impact on the financial
services industries. ``Electronic records'' is the term in the
legislation that would encompass the disclosures that banks and other
financial services companies must provide to consumers. Unlike the
Senate bill, the House-passed bill included references to ``electronic
records'' throughout the provisions of the bill. By including
electronic records along with electronic signatures, the House bill
extended the scope of the bill to cover disclosures required under
various laws and regulations.

Far more than other industries, financial services companies such as
banks, insurance companies and securities firms are impacted by these
disclosure laws. Not only these industries, but these disclosure laws
themselves fall under the jurisdiction of the Banking Committee. I am
pleased that members of the Banking Committee were able to serve on the
conference committee to ensure that these provisions were drafted in an
appropriate and workable fashion.
There remain some problems with the bill, but I do not believe them
to be overwhelming. There are those who are fearful of the electronic
market place, and that fear found its expression in the debates in the
conference committee. It found its expression in provisions in this
bill that apply standards to electronic commerce that are not applied
to paper commerce. That is not unusual. Every major technological
advance has met with fear before its full benefits were embraced. It
may seem odd, but not over one hundred years ago there was a very
spirited congressional debate about whether it was safe to buy an
automobile for transporting the President. Voices were loudly raised in
Congress that automobile transportation was not safe, that it was too
risky to let the President be transported in anything other than a
horse-drawn carriage. Governments passed restrictions on automobile use
that should silly to us today.
I believe that many of the fears that have been raised about
electronic commerce will very soon sound silly. In fact, many of them
do not make much sense today. That is why I am pleased that this
legislation will allow the regulators to remove many of these onerous
restrictions if the fears prove unfounded, as I expect that they will.
And as I expect the fear to prove unfounded, I expect the regulators to
act vigorously to remove unnecessary restrictions and requirements.
Electronic commerce should labor under no greater regulatory
restrictions than does the quill pen, if this is to be a system for the
twenty-first century.
We will watch very closely the development of electronic commerce. If
this legislation proves to put an unnecessary burden on electronic
commerce, and if the regulators fail to act, or if legislation is
needed, we will then take vigorous action in the Congress to correct
the situation and make the purposes of this legislation a reality.
Mr. LAUTENBERG. Mr. President, this bill includes a critical measure
to make .08 the national drunk driving standard.
Chairman Shelby and I both care deeply about improving transportation

[[Page S5227]]

across this country, but we also share a commitment to making sure our
transportation systems are as safe as possible. One of the most
important things we can do to keep our families safe on our nation's
roads is to keep drunk drivers off those roads.
Mr. President, the Senate already voted in favor of the .08 standard
in 1998. The Senate overwhelming passed the Lautenberg-DeWine .08
amendment to TEA-21 by a vote of 62-32.
But, ultimately, the American public did not get the safety
legislation that they deserved when a national .08 standard was not
included in the final TEA-21 conference report that was sent to the
President.
The TEA-21 conference report removed the Senate-passed .08 standard
and replaced it with an incentive grant program, that, while well
intentioned, frankly is not working. Only two states have passed .08
BAC since TEA-21 was enacted two years ago and it seems very unlikely
that any other state will be motivated by the incentive grants over the
next few years.
Mr. President, we have learned with other effective drunk driving
legislation such as the minimum 21 drinking age and zero tolerance that
weak incentive programs do not work--but national standards do.
I would assure my colleagues that the .08 provisions in this bill
today do not alter the TEA-21 incentive grant program. So if your state
is receiving incentive grant funds, you will continue to receive every
cent you are entitled to under the current program.
For over a decade--in both Republican and Democratic Administrations,
the National Highway Traffic Safety Administration has been telling
Congress that the .08 standard is the best way to ensure safety on our
roads and lower the number of fatalities which result from drunk
driving.
In fact, the National Highway Traffic Safety Administration (NHTSA)
estimates that a national .08 standard will save approximately 500
lives per year.
Make no mistake--drivers at .08 are drunk and should not be on the
road. According to NHTSA, at .08, drivers are impaired in their ability
to steer, brake, change lanes, use good judgment and focus their
attention.
Their ability to perform these critical tasks may decrease by as much
as 60 percent.
We must keep these drivers off the road in order to keep our families
safe.
I am grateful to my colleagues for including the .08 provisions in
this bill today. Now we look to the House of Representatives to follow
our lead and work with us to produce a conference report that retains
this critical safety legislation.
I yield the floor.
Mr. HOLLINGS. Mr. President, I rise to speak in favor of the passage
of the conference report on S. 761, the electronic signatures bill.
This legislation was originally considered and reported by the Commerce
Committee. The initial purpose of the legislation was to legalize the
use of digital signatures for contracting electronically, mostly via
the internet. The States for several years had been working on adopting
a model law--the Uniform Electronic Transaction Act (UETA)--which was
to be adopted by the States for the purpose of creating uniformity.
This process was to be akin to the adoption of the Uniform Commercial
Code (UCC). However, a number of industries, most notably those in the
high-tech field, felt that it could take years for all States to adopt
the model law. Thus, they sought Federal preemption. Bills eventually
were introduced in both Chambers. Senator Abraham introduced the
legislation in the Senate, and Congressman Bliley introduced
legislation in the House (H.R. 1714).
As noted, the Senate bill--introduced on March 25, 1999--was referred
to and considered by the Commerce Committee. After holding a hearing on
May 27, 1999, the committee reported the bill on June 23, 1999. At that
time, we were advised that the general purpose of the bill was to
establish a Federal temporary and backup law, so as to ensure the
national use of electronic signatures until the model law was adopted
by the States.
During the committee's consideration of S. 761, I indicated that I
did not have a problem with establishing uniformity; however, because
the legislation ultimately affects State contract law, I was concerned
about preserving the right of States to adopt their own laws, given
that States already were working on the adoption of a model law. In the
field of commercial law, the States had a similar experience with the
UCC. Thus, I saw no reason to prevent the States from adhering to the
same process with respect to digital signatures. I made it clear to
Senator Abraham that I would not support the bill--in fact, that I
would seek to block its passage--if the legislation did not preserve
the autonomy of States to adopt the model law that they were
considering. I also sought to make sure States were able to adopt the
model law in a manner consistent with their consumer protection laws.
Senator Abraham and I were able to come to an agreement so as to ensure
that the legislation, as reported by the committee, was consistent with
these principles. The legislation was unanimously reported by the
committee on June 23, 1999.
Once reported, Senator Leahy worked to procure a number of changes
designed to ensure the non-applicability of the bill to certain
agreements, including marital and landlord tenant relationships. The
legislation was passed by the Senate on November 19, 1999.
I should note that before final passage of the bill, I objected to
its passage by unanimous consent because of the inclusion of language
providing that the legislation applied to the business of insurance. I
objected because that language was not in the Senate bill as reported
by the Commerce Committee, but more significantly, I objected because
insurance companies are regulated by the States. Because the matter had
not been addressed by the Commerce Committee, and because insurance is
under the jurisdiction of the Commerce Committee, I wanted some
clarification on the issue, and assurance that the issue of State
insurance regulation would be addressed in the legislative conference
on the bill. Senator Abraham, through a colloquy, agreed that the issue
would be addressed during conference discussions.
The House bill--H.R. 1714--was passed last November as well. It,
however, was more extensive, and severe, than the Senate bill. It did
not provide regulatory flexibility to the States to allow them to adopt
the model law in conformance with their consumer protection laws; it
included provisions regarding Government electronic filing and record
keeping--which was beyond the original purpose of the legislation; and
provisions specifying the manner in which consumers' consent could be
obtained for the use of electronic signatures. Reservations and
opposition to the bill were heard from state officials and the consumer
community.
These groups had a right to be concerned about the bill. The
legislation, pursuant to its ``consent provisions'' would have allowed
consumers to be easily induced into giving their consent to contract
electronically, even if they didn't own or have access to a computer.
In other words, pursuant to certain inducements by a commercial
entity--i.e., through an offer that the consumer could get the product
cheaper if he or she agreed to a transaction electronically--consumers
could have been placed in positions whereby they walked away from a
commercial agreement in person without any paper or documentation and
potentially no means of accessing the actual contents of the agreement
later, including any additional notices or disclosures they're required
to receive with consumer purchases. With respect to the record
retention requirements that states impose on commercial entities, such
as insurance companies, the legislation, would have substantially
undermined the ability of States to ensure that businesses retained
important documents, such as financial statements and records, and that
States retained access to those documents.
The conference discussions on the bill began between the Senate and
House immediately after the Senate conferees were appointed in March of
this year. Subsequently, however, the majority staff of the Senate and
House began to convene among themselves. On May 15, the majority
presented a draft conference agreement to the Democratic Members. After
reviewing the document, I made it clear that not only would I not
support the proposal, but if offered up, I would do all I could to kill
the measure. I should note, however, that every other Democratic

[[Page S5228]]

Member of the conference--Senators Leahy, Sarbanes, Wyden, Kerry,
Inouye, and Rockefeller as well as Congressman Dingell and Congressman
Markey--in addition to the administration, opposed the measure. In
light of this opposition, the majority Members, and the high-tech
industry, knew they would not achieve passage of the proposal.
The problems with the draft include the following:
Similar to the House bill, it would have allowed businesses to induce
consumers into signing and consummating contracts electronically even
in face to face transactions. Consequently, a person could walk away
from a major agreement without any paperwork. The actual agreement
would have been e-mailed to the purchaser. In that situation, however,
the consumer would have no way of proving that the document that he or
she received by e-mail is the deal that he or she actually agreed to.
Moreover, there would be no paperwork on warranties and no guarantee
that a person could access the documents if that person doesn't own a
computer or doesn't have the proper computer software of hardware.

Additionally, the draft provided that after a consumer consented, in
the event a company changed the hardware or software that prevented the
consumer from receiving or reviewing the document, the burden would
have been on the consumer, not the company to purchase the correct
hardware and software.
The draft also included the onerous record retention provisions of
the House bill.
After the draft was rejected by the Democratic Members, I suggested
to my friend, Tom Bliley, the chairman of the Conference, that the only
way a bill was going to pass this year was that it had to be an
agreement of a bipartisan nature. Given that Congressman Bliley's bill
was so far different from where most Democrats were, I knew that if we
could come to an agreement, we could achieve a bipartisan measure. He
agreed. I suggested that he meet with a group of Democratic Members and
the representatives of the administration to develop a bipartisan draft
to present to the conference. He agreed to this recommendation as well.
Subsequently, his staff met with Democratic staff members and
representatives of the administration and eventually constructed a
bipartisan Conference draft. That document included major revisions of
the consumer consent, preemption and record retention provisions. Those
provisions provided significantly more protections to consumers and
protections of state regulatory authority.
When the draft was first presented to the conference, there were
objections. However, it led to a second bipartisan discussion between
the Democratic Members, along with the Administration and the two
Republican principals, Congressman Bliley and Senator McCain--who also
recognized the need for a bipartisan consensus. Through the efforts of
Senator McCain, we eventually were able to agree on a final draft of
the bipartisan measure.
I am proud to say that the final conference report includes major
protections for consumers and the States. Does it include all I would
have liked for it to? Of course not. However, it does represent a
commendable effort by Republican and Democratic conferees to put forth
a law that accomplishes the original goal of establishing a legal
framework for the new digital world, while maintaining important
protections for American consumers. I have joined with Senators
Sarbanes and Wyden introducing an explanatory statement of the
legislation, which details how the bill affects consumers and State
governments. I would, however, like to highlight a few important
provisions:

(1) The agreement ensures that consumers, when giving consent to do a
transaction electronically, before their consent can be valid, must be
informed of their right to receive records in paper, and of the right
to withdraw their consent once given, and that there be some
demonstration that the consumer can actually access and retain the
document.
(2) It ensures that consumers are able to withdraw consent to receive
their required notices under the contract in the event the provider
changes the hardware or software in a manner which prevents the
consumer from accessing and retaining the document, without costs and
fees.
(3) It preserves state unfair and deceptive trade practices laws, so
as to ensure that the use of electronic signatures and electronic
transactions cannot be used to evade the requirements and prohibitions
of these laws.
(4) It preserves important aspects of Federal and State record
retention laws and requirements, and gives States some reasonable time
to conform their regulations in light of the legislation's affirmation
of electronic record retention by regulated industries.
Mr. President, I would like to commend Congressman Bliley, and
Senator McCain for their efforts to forge an agreement on the
legislation. I also want to commend all my Democratic colleagues and
their staff, and the representatives of the administration for their
admirable work on this legislation.
Mr. SARBANES. Mr. President, I am very pleased to be able to bring to
the floor of the Senate this conference report of S. 761, the
Electronic Signatures in Global and National Commerce Act, along with
my colleagues from the Commerce and Judiciary Committees.
First and foremost, the success of this effort is the result of the
leadership of Chairman Bliley and Chairman McCain. Their commitment to
working in a bipartisan manner ultimately carried the day.
I also want to thank Senator Hollings, Senator Leahy, Senator Wyden,
and Representative Dingell. Without the leadership exhibited by these 4
members, and the long hours, hard work, and dedication of their key
staff (Moses Boyd, Kevin Kayes, Julie Katzman, Carol Grunberg, Consuela
Washington, and Bruce Gwinn) we would never have reached this
agreement.
Finally, the Administration, through its representatives from the
Commerce and Treasury Departments (Andy Pincus and Gary Gensler), as
well as the White House (Sarah Rosen-Wartell), played a crucial and
constructive role in putting together the package we have before us.
Mr. President, I support this bipartisan conference report. This new
law creates a solid legal foundation upon which electronic commerce can
grow and prosper, with benefits for many consumers and businesses.
It is apparent to all of us that more and more business will be done
on-line in the future, and that this will be true both for business-to-
business commerce and for consumer transactions.
We need to be mindful, however, that while this trend will likely
continue, many Americans do not today participate in the electronic
world. Indeed, they cannot participate in this world in any meaningful
way.
To make this point, I want to share with my colleagues the findings
of a July, 1999 Commerce Department report entitled ``Falling Through
the Net: Defining the Digital Divide.''
First, about 70 percent of Americans do not yet have access to the
internet;
Urban households with incomes of $75,000 and higher are more than
twenty times more likely to have access to the internet than rural
households at the lowest income levels and they are more than nine
times more likely to have a computer at home;
Whites are more likely to have access to the internet from home than
Blacks or Hispanics have from any location;
Regardless of income level, Americans living in rural areas lag on
internet access. At the lowest income levels, those in urban areas are
more than twice as likely to have access than rural families with the
same income.
These facts are alarming. More distressing, is the fact that, as bad
as these numbers are, the trends are moving in the wrong direction. The
Commerce Department reports that the digital divide is actually
growing.
For example, the gap between white and minority households has grown
5 percentage points in just one year, from 1997 to 1998.
The gap, based both on education and income increased by 25 and 29
percent in the past year, respectively.
These dramatic and disturbing findings underline the importance of
ensuring that, as we move to an electronic world, we make sure that
longstanding consumer protections survive the transition. Many of us
made clear from the

[[Page S5229]]

beginning that our goal was to ensure equivalent consumer protections
for transactions conducted in the paper and electronic worlds. We have
largely achieved that goal.
First among these protections is the common sense provision
incorporated in the report that consumer consent to engage in
electronic commerce be given electronically. This is a protection
against unscrupulous and abusive practices as well as inadvertent
mistakes by well meaning vendors.
Electronic consent will greatly enhance the consumer confidence to do
business on-line, without resulting in additional burden on
businesses--they are, after all, already committed to communicating
with the consumer electronically.
The best demonstration of the importance of electronic consent is the
fact that the initial conference draft that was provided to Conferees
was circulated via e-mail. Yet, despite the fact that our staff is more
technologically sophisticated than the average American consumer, many
of them were unable to download the document and had to have paper
copies hand delivered.
Now, imagine if that was a notice of change in mortgage servicing, or
a notice that health insurance benefits are being cut back, or that
auto insurance is being cancelled. That family could very well find
itself with a sick child on no health insurance.
Electronic consent would have avoided that problem by ensuring that
the consumer is able to read the records provided.
Electronic consent is not, as some people have sought to portray it,
relevant only for a transitional period. Compatibility among systems is
always important to check, given the significance of the records being
transmitted. In addition, the U.S. mail is free to receive and comes to
your door. You do not need a computer to receive the mail. You do not
need to pay for an internet service provider, and you do not need to go
to a public library to fain access to a computer if you don't have one
at home. For all these reasons, electronic consent will be as important
in the future as it is today.
Other concerns I had have also been addressed in this report.
We have provided both federal and state agencies with the authority
to interpret and issue guidance on the proposed law. Providing this
interpretive authority will provide businesses with a cost-effective
way of getting guidance in how to implement the new law. Without this
authority, these questions would have to have been answered by the
courts, after extensive and expensive litigation. We have avoided that
problem.
the conference report gives law enforcement agencies of federal and
state governments the authority they need to detect and combat fraud,
including the ability to require the retention of written records in
paper form if there is a compelling governmental interest in law
enforcement.
Let me raise one specific example, among many, of where this
provision ought to be exercised. The Securities and Exchange Commission
should use this provision to require brokers to keep written records of
agreements required to be obtained by the SEC's penny stock rules.
Investors in the securities markets have been the victims of penny
stock abuse for more than a decade. The SEC must exercise every tool at
its disposal to fight this kind of fraud.
Finally, we narrowed the scope of the legislation to ensure that
certain notices that simply cannot effectively be made electronically,
such as documents carried by vehicles hauling hazardous materials, will
continue to be in paper form.
As many of you know, it was not at all clear that we were going to be
able to deliver this bipartisan, largely consensus product to the
floor. There were many times when negotiations threatened to unravel.
But we stuck to it; we continued to show a willingness to consider
and reconsider many issues that came up, even after agreement on many
of those issues was achieved. Eventually, we were able to close the few
remaining gaps and come to a final compromise.
Mr. President, these changes make this a good piece of legislation
worthy of our support. I urge all my colleagues to do so, and, once
again, commend the leaders who brought this effort to a successful
conclusion.
Finally, I ask unanimous consent to insert for the Record some more
specific observations on a number of provisions of the legislation on
behalf of Senator Hollings, Senator, Wyden, and myself. I think this
will be helpful given the fact that no statement of managers was
included with the final legislation.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Statement of Senators Hollings, Wyden, and Sarbanes Regarding the
Electronic Signatures in Global and National Commerce Act

We want to make a number of points about some of the
important provisions in the Act we are passing today.
1. Scope of Requirement. Section 101 (a). In recommending
that the Senate vote to pass this legislation, we 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
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. Companies and consumers should only be
able to agree to reasonable electronic signature
technologies. As the definition of the electronic signature
makes clear, the electronic signature is only valid under
this Act if the person intended to sign the contract. A
person accepting an electronic signature should have a duty
of care to determine if the signature really was created by
the person to whom it is attributed.
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. As a result, laws or
regulations or common law rules that prohibit fraud or unfair
trade or deceptive practices or unconscionable contracts are
not affected by this Act. The use of the word ``solely''
throughout section 101(a) is intended to ensure a contract,
notice or disclosure which is provided electronically gains
no additional validity or sanctity against challenge just
because it is in electronic form. The validity of a consent
obtained as the result of an unfair or deceptive practice can
be challenged and found to be invalid, in which case any
records which were provided electronically will be deemed to
not have been provided to the consumer. 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 consented to the electronic
notices and contract 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. The basic rules of good faith
and fair dealing apply to electronic commerce.
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

[[Page S5230]]

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 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 Records. Section 101(c)(1). The House
bill included an amendment that required that consumers
affirmatively consent before they can receive records
(included required notices and disclosures and statements)
electronically that are legally required to be provided or
made available in writing. Special rules apply to electronic
transactions entered into by consumers. It is the Congress'
intent that the broadest possible interpretation should be
applied to the concept of ``consumer.'' The definition in
Section 106(1) is intended to include persons obtaining
credit and insurance, even salaries and pensions--because all
of these are ``products or services which are used primarily
for personal, family or household purposes'' as the word is
defined in the Act. Amongst the 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, that they
can actually open, read, and retain the records that they
will be sent electronically. The Act requires that consumers
consent electronically--or confirm their consent
electronically--in either case, in a manner that allows the
consumer to test his capacity to access and retain the
electronic records that will be provided to him. The
consumer's consent to receive electronic records is not valid
unless it is confirmed electronically in a manner meeting the
specific requirements of Section 101(c)(1)(C)(ii).
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. 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 or she 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 do 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.'' State and
federal law requirements on delivering documents have not
been addressed in this Act. The underlying rules on these
issues still prevail. It is our view that records provided
electronically to consumers must be provided in a manner that
has the same expectation for the consumer's actual receipt as
was contemplated when the state law requirement for
``provided'' was passed. 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 if
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.
Section 101(c)(3) is a narrow saving clause to preserve the
integrity of electronic contracts: just because the
consumer's consent to electronic notices and records was not
obtained properly does not mean that the underlying contract
itself is invalid. This provision only affects electronic
records, it simply means that an electronic consent which
fails to meet the requirements of section 101(c) does not
create a new basis for invalidating the electronic contract
itself.
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.
Accuracy and Ability to Retain Contracts and Other Records,
101(e). The Conferees added new language in section (e) of
101 to establish that a contract or record which is required
under other law to be in writing loses its legal validity
unless it is provided electronically to each party in a
manner which allows each party to retain and use it at a
later time to prove the terms of the record.
Exemptions to Preemption. Section 102(a) allows a state to
``modify, limit or supersede section 101'' in one of two
ways: (1) by passing the Uniform Electronic Transactions Act
(``UETA'') as approved and recommended for enactment by the
National Conferences of Commissioners on Uniform State Laws
in 1999, or (2) by passing another law which specifies the
requirements for use or acceptance of electronic records and
electronic signatures which is consistent with this Act.
These choices for states are not mutually exclusive. Of
course, the rules for consumer consent and accuracy and
retainability of electronic records under this Act shall
apply in all states that pass the Uniform Electronic
Transaction Act or another law on electronic records and
signatures in the future, unless the state affirmatively
and expressly displaces the requirements of federal law on
these points. A state which passed UETA before the passage
of this Act could not have intended to displace these
federal law requirements. These states would have to pass
another law to supercede or displace the requirements of
section 101. In a state which enacts UETA after passage of
this Act, without expressly limiting the consent,
integrity and retainability subsections of 101, those
requirements of this Act would remain in effect. The
general provisions of UETA, such as the requirement for
agreement to receive electronic records in UETA are not
inconsistent with and do not displace the more specific
requirements of section 101, such as the requirement for a
consumer's consent and disclosure in section 101(c).
It is important to note that Section 103(b) lists certain
notices which are exempted from the coverage of section 101
(such as notices of cancellation of utility service or
insurance coverage). The legal result is that section 101
simply does not apply to the notices listed in section 103.
Under section 102(a) a state only has the authority to
modify, limit or supercede the coverage of section 101. We
specifically intend that a state may not use its authority
under section 102, to authorize solely electronic records of
those notices listed in section 103.
Prevention of Circumvention. Section
102. Section 8(b)(2) of UETA allows
States to impose delivery requirements for electronic
records. Section 102(c) has the limited purpose of ensuring
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.
We believe that Title II of this Act separately addresses
transferable records by establishing rules for creating,
retaining and providing these records electronically. This
Act places no limitation on a state's right to add consumer
protections to transferable records.
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 that is charged with interpreting its provisions;
instead, under Section

[[Page S5231]]

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 loans 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 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, and 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.
I yield the floor. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. ABRAHAM. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

____________________