[Congressional Record (Bound Edition), Volume 146 (2000), Part 8]
[Extensions of Remarks]
[Pages 11846-11848]
[From the U.S. Government Publishing Office, www.gpo.gov]



CONFERENCE ON THE ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE 
                                  ACT

                                 ______
                                 

                          HON. JOHN D. DINGELL

                              of michigan

                    in the house of representatives

                        Wednesday, June 21, 2000

  Mr. DINGELL. Mr. Speaker, as Ranking Member of the Committee on 
Commerce, and senior House Democrat conferee on the conference 
committee to resolve differences between S. 761, the Electronic 
Signatures in Global and National Commerce Act, and the amendments of 
the House to the bill, I rise to clarify a matter involving the 
legislative history of this legislation. My remarks are an extension of 
remarks that I made during House consideration of the conference report 
to accompany S. 761 (June 14, 2000, Congressional Record at H4357-
H4359). Mr. Markey, the other House Democrat conferee on this matter, 
has authorized me to indicate that he concurs in these remarks.
  Rule XXII, clause 7(d) of the Rules of the House provide that each 
conference report must be accompanied by a joint explanatory statement 
prepared jointly by the managers on the part of the House and the 
managers on the part of the Senate, and further that the joint 
explanatory statement shall be sufficiently detailed and explicit to 
inform the House of the effects of the report on the matters committed 
to conference. This is pivotal in guiding affected parties and the 
courts in interpreting the laws that we enact.
  Late in the conference negotiations, we reluctantly agreed to a 
request from the staff of the chairman of the conference committee that 
we expedite filing and consideration of the conference agreement by not 
extending the negotiations to include drafting and reaching agreement 
on a statement of managers. Accordingly, the conference report did not 
and does not include the required joint explanatory statement of 
managers. It only contains the agreed-upon legislative language. The 
rule by which the conference report was considered by the House waived 
any point of order regarding this deficiency.
  Given this chain of events and what we thought was a binding 
gentlemen's agreement, I was dismayed to discover that material had 
been inserted in both the House and Senate debate (June 14, 2000, 
Congressional Record at H4352-H4357 as an extension of Representative 
Bliley's floor remarks and June 16, 2000, Congressional Record at 
S5283-S5288 as an extension of Senator Abraham's remarks) in the 
fortnat of ajoint

[[Page 11847]]

statement of managers. Our Senate Democratic colleagues also have 
expressed concerns with this language (June 15, 2000, Congressional 
Record at S5216, 3rd column, last para. and carry over on S. 5217 
remarks of Senator Wyden and at S5220, I st column, 3rd para. remarks 
of Senator Leahy).
  While I respect the right of the distinguished Chairman of the 
conference committee and others to have an opinion on such matters and 
to express them in the Record, I want to clarify that this material is 
not the statement of managers for the conference agreement, 
notwithstanding its format. Both Mr. Bliley and Senator Abraham 
indicated in their remarks that the explanatory document had been 
prepared by them and expressed their views, and it should be taken as 
such. In several instances, their guidance does not reflect the intent 
or understanding of all the members of the conference. A number of 
their statements are simply not correct, and some of their views 
conflict with the very words of the statute. There is insufficient time 
to consult with the other conferees and prepare a joint point-by-point 
discussion of each of the statements the Chairman and Senator Abraham 
made that we disagree with. However, without prejudice, there are a few 
things that I would like to have more clearly reflected in the record.
  While agencies should seek to take advantage of the benefits that 
electronic records offer, they also have the obligation to see that 
their programs are properly carried out and that they will be able to 
enforce the law and protect the public, to help avoid waste, fraud and 
abuse in those programs, and to see that the taxpayer funds in their 
care are not squandered. In some circumstances, the bill gives agencies 
authority to set standards or formats; in doing so, they may decide in 
some cases not to adopt an electronic process at all for filings if 
they determine (consistent with the Government Paperwork Elimination 
Act), after careful consideration, that this alternative is not 
practicable.
  For example, section 104(a) preserves the authority of federal 
regulatory agencies, self-regulatory organizations, and state 
regulatory agencies to set standards and formats for the filing of 
records with such agencies or organizations. The authority contained in 
section 104(a) is not subject to the limitations set forth in section 
104(b) or other limitations contained in the Act. The preservation of 
agency authority contained in section 104(a) is subject only to the 
requirements of the Government Paperwork Elimination Act.
  Agencies that seek to promote electronic filings may set standards 
and formats for such filings as they deem appropriate. Standards and 
formats for electronic filings may be appropriate, for example, to 
ensure the integrity of electronic filings from security breaches by 
computer hackers. Likewise, agencies may set standards and formats for 
filings to promote uniform filing systems that will be accessible to 
regulators and the public alike, and to advance the agencies' statutory 
mission.
  Section 104(b) allows agencies to adopt regulations, orders and 
guidance to assist in implementing the legislation, subject to 
standards set forth in section 104(b). Section 104(b) contains criteria 
for agencies to use, but because of the vast numbers of transactions 
that agencies regulate, agencies must necessarily have appropriate 
discretion to apply those criteria to determine when to require 
performance standards or, in some limited circumstances (in a manner 
consistent with the this bill and the Government Paperwork Elimination 
Act), paper records.
  Having recognized in Section 101(d) the importance of accuracy and 
accessibility in electronic records, Section 104(b)(3)(A) recognizes 
the ability of federal regulatory agencies to provide for such 
standards. Section 104(b)(3)(A) gives federal regulatory agencies the 
flexibility to specify performance standards to assure accuracy, record 
integrity, and accessibility of records that are required to be 
retained. Quite often, standards that require electronic records be 
preserved in a non-rewriteable or non-erasable manner are crucial to an 
important government objective.
  Although agencies should seek to implement the goals of the statute, 
the bill also provides federal and state regulatory agencies the 
necessary latitude to prevent waste, fraud and abuse, and to enforce 
the law and to protect the public, by interpreting section 101 in the 
appropriate way for their programs and activities, subject to any 
applicable criteria in the bill. It is my understanding that courts 
reviewing any such agency interpretations or applications of such 
criteria would apply the same deference that they give to other agency 
action. It is not my understanding that the conference report would 
demand unusual scrutiny beyond applying the criteria set forth in the 
statute.
  Consumers are given many protections in this legislation, and among 
those protections is the continued right to receive paper (or other 
non-electronic) notices on certain important occasions. For, example, 
Section 103(b)(2)(A) leaves intact laws that require paper notification 
of the cancellation or termination of utility services. This includes--
but is not limited to--water, heat and power. Other utilities, such as 
telephone service (a utility critical to safety in modem times), would 
also be protected. Obviously, Internet service would also be included 
in this exemption, to avoid the anomalous situation of a consumer 
trying to obtain, understand and respond to a disconnection notice that 
is available only through the very medium that has been disconnected.
  Consumer consent to electronic transactions is, in general, a 
critical safeguard that is maintained in this bill. The Chairman was 
absolutely correct when he began his statement by saying, ``. . . under 
E-Sign, engaging in electronic transactions is purely voluntary. No one 
will be forced into using or accepting an electronic signature or 
record. Consumers that do not want to participate in electronic 
commerce will not be forced or duped into doing so.'' However, the 
conferees recognized that there may be some specific instances in which 
stringent requirements for verifying consent might not actually be 
needed to protect consumers. Therefore, under the bill, agencies have a 
very limited authority to exempt certain transactions from the consent 
verification provisions. In those instances where it is truly necessary 
to eliminate a consent verification requirement--in part because there 
is no other way to eliminate a substantial burden on electronic 
commerce--agencies may sometimes be able to do so. However, even when 
eliminating a consent verification requirement is the only way to avoid 
a substantial burden on electronic commerce, an agency may do so only 
when there will not be any material risk of harm to consumers.
  I would also like to make another point that is very important to 
keep in mind when trying to understand the impact of this legislation. 
Of course, the bill does not force Federal and State government 
agencies to use or accept electronic signatures and electronic records 
in contracts to which they are parties. Therefore, the limitations in 
parts of the conference reports such as sections 102(a), 104(b)(2) and 
104(c)(1) on the ability of Federal and State agencies to interpret 
section 101 do not apply to contracts in which such agencies are 
parties. Just like private commercial parties, government agencies have 
the freedom to choose their methods of contracting, subject to other 
applicable laws. The conference report does not force parties to a 
contract to use any particular method in forming and carrying out the 
contract, and allows them to decide for themselves what specific 
methods to use. When the government is a party to a contract, it 
naturally has the same rights. The restrictions in the sections that I 
cited do not apply in that circumstance and do not diminish those 
rights.
  Also, I note that this legislation was consciously drafted to avoid 
displacing the carefully-crafted provisions of the Government Paperwork 
Elimination Act, Pub. L. No. 105-277 sections 1701-1710 (1998), or 
GPEA. That Act set a timetable for Federal agencies to make available 
electronic alternatives to traditional paperwork processes, and set 
standards for agencies to apply in determining whether and how to adopt 
such alternatives. To the extent that the two bills do overlap, this 
bill is crafted to allow agencies the flexibility to comply with the 
existing standards set forth in GPEA.
  Finally, I would like to raise an important law-enforcement issue. 
Senator Abraham's ``guidance'' states that ``if a customer enters into 
an electronic contract which was capable of being retained or 
reproduced, but the customer chooses to use a device such as a Palm 
Pilot or cellular phone that does not have a printer or a disk drive 
allowing the customer to make a copy of the contract at that particular 
time, this section is not invoked.'' (June 16, 2000, Congressional 
Record at S5284, 3rd column, last para.)
  Section 101(e) addresses more than the application of the statute of 
frauds to contracts entered into electronically. Section 101(e) 
provides that the legal effect of an electronic record may be denied if 
it is not in a form capable of being retained and accurately 
reproduced. As a threshold matter, businesses create the electronic 
systems being used by the consumer. Those designing and implementing 
these systems are obligated to ensure that electronic records are 
accurate, and in a form capable of being retained. Notably, the bill 
also applies to businesses that are obligated to make and keep accurate 
electronic records for examination by government regulators (and, if 
necessary, for enforcement action). The fact that a consumer uses 
particular technology that does not immediately produce an

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electronic record does not excuse the other party's regulatory 
obligation to have accurate and accessible records or otherwise exempt 
the transaction from this provision. To suggest otherwise, flies in the 
face of the plain meaning of the statute and opens up a gaping loophole 
for fraudsters to take advantage of.
  Conferees should be given adequate time to review and reach agreement 
on the statement of managers required under the Rules. This short-cut 
has proven to be a dangerous and unacceptable alternative.

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