[House Report 106-341]
[From the U.S. Government Publishing Office]



106th Congress                                            Rept. 106-341
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

======================================================================



 
       ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT

_______________________________________________________________________


                October 15, 1999.--Ordered to be printed

                                _______
                                

Mr. Coble, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1714]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 1714) to facilitate the use of electronic records 
and signatures in interstate or foreign commerce, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                           TABLE OF CONTENTS

                                                                  

                                                                 Page
The Amendment..............................................           2
Purpose and Summary........................................           7
Background and Need for the Legislation....................           7
Hearings...................................................           8
Committee Consideration....................................           8
Vote of the Committee......................................           8
Committee on Government Reform Findings....................           9
New Budget Authority and Tax Expenditures..................           9
Congressional Budget Office Cost Estimate..................           9
Constitutional Authority Statement.........................          11
Section-by-Section Analysis and Discussion.................          12
Changes in Existing Law Made by the Bill, as Reported......          14
Dissenting Views...........................................          17

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Electronic Signatures in Global and 
National Commerce Act''.

  TITLE I--VALIDITY OF ELECTRONIC RECORDS AND SIGNATURES FOR COMMERCE

SEC. 101. FINDINGS.

    The Congress makes the following findings:
            (1) The growth of electronic commerce and electronic 
        government transactions represents a powerful force for 
        economic growth, consumer choice, improved civic participation, 
        and wealth creation.
            (2) The promotion of growth in private sector electronic 
        commerce through Federal legislation is in the national 
        interest because that market is globally important to the 
        United States.
            (3) A consistent legal foundation, across multiple 
        jurisdictions, for electronic commerce will promote the growth 
        of such transactions, and that such a foundation should be 
        based upon a simple, technology neutral, nonregulatory, and 
        market-based approach.
            (4) The Nation and the world stand at the beginning of a 
        large-scale transition to an information society which will 
        require innovative legal and policy approaches, and therefore, 
        States can serve the national interest by continuing their 
        proven role as laboratories of innovation for quickly evolving 
        areas of public policy, provided that States also adopt a 
        consistent, reasonable national baseline to eliminate obsolete 
        barriers to electronic commerce such as undue paper and pen 
        requirements, and further, that any such innovation should not 
        unduly burden interjurisdictional commerce.
            (5) To the extent State laws or regulations do not provide 
        a consistent, reasonable national baseline or in fact create an 
        undue burden to interstate commerce in the important burgeoning 
        area of electronic commerce, the national interest is best 
        served by Federal preemption to the extent necessary to provide 
        such consistent, reasonable national baseline and eliminate 
        said burden, but that absent such lack of consistent, 
        reasonable national baseline or such undue burdens, the best 
        legal system for electronic commerce will result from 
        continuing experimentation by individual jurisdictions.
            (6) With due regard to the fundamental need for a 
        consistent national baseline, each jurisdiction that enacts 
        such laws should have the right to determine the need for any 
        exceptions to protect consumers and maintain consistency with 
        existing related bodies of law within a particular 
        jurisdiction.
            (7) Industry has developed several electronic signature 
        technologies for use in electronic transactions, and the public 
        policies of the United States should serve to promote a dynamic 
        marketplace within which these technologies can compete. 
        Consistent with this Act, States should permit the use and 
        development of any authentication technologies that are 
        appropriate as practicable as between private parties and in 
        use with State agencies.

SEC. 102. PURPOSES.

    The purposes of this Act are--
            (1) to permit and encourage the continued expansion of 
        electronic commerce through the operation of free market forces 
        rather than proscriptive governmental mandates and regulations;
            (2) to promote public confidence in the validity, 
        integrity, and reliability of electronic commerce and online 
        government under Federal law;
            (3) to facilitate and promote electronic commerce by 
        clarifying the legal status of electronic records and 
        electronic signatures in the context of writing and signing 
        requirements imposed by law;
            (4) to facilitate the ability of private parties engaged in 
        interstate transactions to agree among themselves on the terms 
        and conditions on which they use and accept electronic 
        signatures and electronic records; and
            (5) to promote the development of a consistent national 
        legal infrastructure necessary to support electronic commerce 
        at the Federal and State levels within existing areas of 
        jurisdiction.

SEC. 103. DEFINITIONS.

    In this Act:
            (1) Electronic.--The term ``electronic'' means relating to 
        technology having electrical, digital, magnetic, wireless, 
        optical, electromagnetic, or similar capabilities.
            (2) Electronic agent.--The term ``electronic agent'' means 
        a computer program or an electronic or other automated means 
        used to initiate an action or respond to electronic records or 
        performances in whole or in part without review by an 
        individual at the time of the action or response.
            (3) Electronic record.--The term ``electronic record'' 
        means a record created, generated, sent, communicated, 
        received, or stored by electronic means.
            (4) Electronic signature.--The term ``electronic 
        signature'' means an electronic sound, symbol, or process 
        attached to or logically associated with an electronic record 
        and executed or adopted by a person with the intent to sign the 
        electronic record.
            (5) Record.--The term ``record'' means information that is 
        inscribed on a tangible medium or that is stored in an 
        electronic or other medium and is retrievable in perceivable 
        form.
            (6) Transaction.--The term ``transaction'' means an action 
        or set of actions relating to the conduct of commerce between 2 
        or more persons, neither of which is the United States 
        Government, a State, or an agency, department, board, 
        commission, authority, institution, or instrumentality of the 
        United States Government or of a State.
            (7) Uniform electronic transactions act.--The term 
        ``Uniform Electronic Transactions Act'' means the Uniform 
        Electronic Transactions Act as enacted by a State based on the 
        form provided by the National Conference of Commissioners on 
        Uniform State Law in the form or any substantially similar 
        variation thereof.

SEC. 104. PRINCIPLES GOVERNING THE USE OF ELECTRONIC SIGNATURES IN 
                    INTERNATIONAL TRANSACTIONS.

    To the extent practicable, the Federal Government shall observe the 
following principles in an international context to enable commercial 
electronic transaction:
            (1) Remove paper-based obstacles to electronic transactions 
        by adopting relevant principles from the Model Law on 
        Electronic Commerce adopted in 1996 by the United Nations 
        Commission on International Trade Law (UNCITRAL).
            (2) Permit parties to a transaction to determine the 
        appropriate authentication technologies and implementation 
        models for their transactions, with assurance that those 
        technologies and implementation models will be recognized and 
        enforced.
            (3) Permit parties to a transaction to have the opportunity 
        to prove in court or other proceedings that their 
        authentication approaches and their transactions are valid.
            (4) Take a nondiscriminatory approach to electronic 
        signatures and authentication methods from other jurisdictions.

SEC. 105. INTERSTATE CONTRACT CERTAINTY.

    (a) In General.--In any commercial transaction affecting interstate 
commerce, a contract may not be denied legal effect or enforceability 
solely because an electronic signature or electronic record was used in 
its formation.
    (b) Methods.--In commercial transactions affecting interstate 
commerce, the parties to a contract may agree on the terms and 
conditions on which they will use and accept electronic signatures and 
electronic records, except to the extent a law or regulation governing 
the record provides otherwise.
    (c) Record Retention.--When a law requires that a contract be in 
writing, that requirement is satisfied by an electronic record of the 
information in the record provided to the parties which--
            (1) accurately reflects the information set forth in the 
        record after it was first generated in its final form as an 
        electronic record or otherwise; and
            (2) remains capable of retention in a form that can be 
        accessed for later reference and used to prove the terms of the 
        agreement.
    (d) Formulation of Contract.--A contract relating to a commercial 
transaction affecting interstate commerce may not be denied legal 
effect solely because its formation involved--
            (1) the interaction of electronic agents of the parties; or
            (2) the interaction of an electronic agent of a party and 
        an individual who acts on that individual's own behalf or for 
        another person.
    (e) Application in UETA States.--This section does not apply in any 
State in which the Uniform Electronic Transactions Act is in effect.

SEC. 106. STUDY OF LEGAL AND REGULATORY BARRIERS TO ELECTRONIC 
                    COMMERCE.

    (a) Barriers.--Each Federal agency shall, not later than 6 months 
after the date of enactment of this Act, provide a report to the 
Director of the Office of Management and Budget and the Secretary of 
Commerce identifying any provision of law administered by such agency, 
or any regulations issued by such agency and in effect on the date of 
enactment of this Act, that may impose a barrier to electronic 
transactions, or otherwise to the conduct of commerce online or by 
electronic means. Such barriers include, but are not limited to, 
barriers imposed by a law or regulation directly or indirectly 
requiring that signatures, or records of transactions, be accomplished 
or retained in other than electronic form. In its report, each agency 
shall identify the barriers among those identified whose removal would 
require legislative action, and shall indicate agency plans to 
undertake regulatory action to remove such barriers among those 
identified as are caused by regulations issued by the agency.
    (b) Report to Congress.--The Secretary of Commerce, in consultation 
with the Director of the Office of Management and Budget, shall, within 
18 months after the date of enactment of this Act, and after the 
consultation required by subsection (c) of this section, report to the 
Congress concerning--
            (1) legislation needed to remove barriers to electronic 
        transactions or otherwise to the conduct of commerce online or 
        by electronic means; and
            (2) actions being taken by the executive branch and 
        individual Federal agencies to remove such barriers as are 
        caused by agency regulations or policies.
    (c) Consultation.--In preparing the report required by this 
section, the Secretary of Commerce shall consult with the General 
Services Administration, the National Archives and Records 
Administration, and the Attorney General concerning matters involving 
the authenticity of records, their storage and retention, and their 
usability for law enforcement purposes.
    (d) Include Findings if No Recommendations.--If the report required 
by this section omits recommendations for actions needed to fully 
remove identified barriers to electronic transactions or to online or 
electronic commerce, it shall include a finding or findings, including 
substantial reasons therefor, that such removal is impracticable or 
would be inconsistent with the implementation or enforcement of 
applicable laws.

SEC. 107. STUDY OF EFFECTS OF ELECTRONIC COMMERCE.

    (a) In General.--The Federal Trade Commission and the Secretary of 
Commerce shall conduct a study of electronic commerce issues.
    (b) Responsibility of Each Agency.--
            (1) FTC.--The Federal Trade Commission, in consultation 
        with the Secretary of Commerce, shall conduct a portion of the 
        study to determine the effectiveness of Federal and State 
        consumer protection laws with respect to electronic 
        transactions involving consumers.
            (2) Commerce department.--The Secretary of Commerce, in 
        consultation with the Federal Trade Commission, shall conduct a 
        portion of the study to determine the extent to which a uniform 
        commercial legal framework would facilitate and enforce 
        interstate electronic transactions.
    (c) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Federal Trade Commission and the Secretary of Commerce 
shall transmit a report to Congress containing --
            (1) findings from the study required under subsection (a); 
        and
            (2) such recommendations for legislation or administrative 
        actions as the Federal Trade Commission and the Secretary of 
        Commerce, respectively, deem appropriate.
    (d) Biennial Updates.--The Federal Trade Commission and the 
Secretary of Commerce shall update the report every 2 years thereafter 
and transmit the updated report to the Congress.

TITLE II--DEVELOPMENT AND ADOPTION OF ELECTRONIC SIGNATURE PRODUCTS AND 
                                SERVICES

SEC. 201. TREATMENT OF ELECTRONIC SIGNATURES IN INTERSTATE AND FOREIGN 
                    COMMERCE.

    (a) Inquiry Regarding Impediments to Commerce.--
            (1) Inquiries required.--Within 90 days after the date of 
        the enactment of this Act, and annually thereafter, the 
        Secretary of Commerce, acting through the Assistant Secretary 
        for Communications and Information, shall complete an inquiry 
        to--
                    (A) identify any domestic and foreign impediments 
                to commerce in electronic signature products and 
                services and the manners in which and extent to which 
                such impediments inhibit the development of interstate 
                and foreign commerce;
                    (B) identify constraints imposed by foreign nations 
                or international organizations that constitute barriers 
                to providers of electronic signature products or 
                services; and
                    (C) identify the degree to which other nations and 
                international organizations are complying with the 
                principles in subsection (b)(2).
            (2) Submission.--The Secretary shall submit a report to the 
        Congress regarding the results of each such inquiry within 90 
        days after the conclusion of such inquiry.
    (b) Promotion of Electronic Signatures.--
            (1) Required actions.--The Secretary of Commerce, acting 
        through the Assistant Secretary for Communications and 
        Information, shall promote the acceptance and use, on an 
        international basis, of electronic signatures in accordance 
        with the principles specified in paragraph (2) and in a manner 
        consistent with section 105 of this Act. The Secretary of 
        Commerce shall take all actions necessary in a manner 
        consistent with such principles to eliminate or reduce, to the 
        maximum extent possible, the impediments to commerce in 
        electronic signatures, including those identified in the 
        inquiries under subsection (a) for the purpose of facilitating 
        the development of interstate and foreign commerce.
            (2) Principles.--The principles specified in this paragraph 
        are the following:
                    (A) Free markets and self-regulation, rather than 
                government standard-setting or rules, should govern the 
                development and use of electronic records and 
                electronic signatures.
                    (B) Neutrality and nondiscrimination should be 
                observed among providers of and technologies for 
                electronic records and electronic signatures.
                    (C) Parties to a transaction should be permitted to 
                establish requirements regarding the use of electronic 
                records and electronic signatures acceptable to such 
                parties.
                    (D) Parties to a transaction--
                            (i) should be permitted to determine the 
                        appropriate authentication technologies and 
                        implementation models for their transactions, 
                        with assurance that those technologies and 
                        implementation models will be recognized and 
                        enforced; and
                            (ii) should have the opportunity to prove 
                        in court or other proceedings that their 
                        authentication approaches and their 
                        transactions are valid.
                    (E) Electronic records and electronic signatures in 
                a form acceptable to the parties should not be denied 
                legal effect, validity, or enforceability on the ground 
                that they are not in writing.
                    (F) De jure or de facto imposition of standards on 
                private industry through foreign adoption of 
                regulations or policies with respect to electronic 
                records and electronic signatures should be avoided.
                    (G) Paper-based obstacles to electronic 
                transactions should be removed.
    (c) Followup Study.--Within 5 years after the date of enactment of 
this Act, the Secretary of Commerce, acting through the Assistant 
Secretary for Communications and Information, shall conduct an inquiry 
regarding any State statutes, regulations, or other rules of law 
enacted or adopted after such date of enactment. The Secretary shall 
submit a report to the Congress regarding the results of such inquiry 
by the conclusion of such 5-year period and such report shall identify 
any actions taken by the Secretary pursuant to subsection (b) of this 
section.
    (d) Consultation.--In conducting the activities required by this 
section, the Secretary shall consult with users and providers of 
electronic signature products and services and other interested 
persons.
    (e) Privacy.--Nothing in this section shall be construed to require 
the Secretary or the Assistant Secretary to take any action that would 
adversely affect the privacy of consumers.
    (f) Definitions.--As used in this section, the terms ``electronic 
record'' and ``electronic signature'' have the meanings provided in 
section 103 of the Electronic Signatures in Global and National 
Commerce Act.

   TITLE III--USE OF ELECTRONIC RECORDS AND SIGNATURES UNDER FEDERAL 
                             SECURITIES LAW

SEC. 301. GENERAL VALIDITY OF ELECTRONIC RECORDS AND SIGNATURES.

    Section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c) is 
amended by adding at the end the following new subsection:
    ``(h) References to Written Records and Signatures.--
            ``(1) General validity of electronic records and 
        signatures.--Except as otherwise provided in this subsection--
                    ``(A) if a contract, agreement, or record (as 
                defined in subsection (a)(37)) is required by the 
                securities laws or any rule or regulation thereunder 
                (including a rule or regulation of a self-regulatory 
                organization), and is required by other Federal or 
                State statute, regulation, or other rule of law to be 
                in writing, the legal effect, validity, or 
                enforceability of such contract, agreement, or record 
                shall not be denied on the ground that the contract, 
                agreement, or record is not in writing if the contract, 
                agreement, or record is an electronic record;
                    ``(B) if a contract, agreement, or record is 
                required by the securities laws or any rule or 
                regulation thereunder (including a rule or regulation 
                of a self-regulatory organization), and is required by 
                other Federal or State statute, regulation, or other 
                rule of law to be signed, the legal effect, validity, 
                or enforceability of such contract, agreement, or 
                record shall not be denied on the ground that such 
                contract, agreement, or record is not signed or is not 
                affirmed by a signature if the contract, agreement, or 
                record is signed or affirmed by an electronic 
                signature; and
                    ``(C) if a broker, dealer, transfer agent, 
                investment adviser, or investment company enters into a 
                contract or agreement with, or accepts a record from, a 
                customer or other counterparty, such broker, dealer, 
                transfer agent, investment adviser, or investment 
                company may accept and rely upon an electronic 
                signature on such contract, agreement, or record, and 
                such electronic signature shall not be denied legal 
                effect, validity, or enforceability because it is an 
                electronic signature.
            ``(2) Implementation.--
                    ``(A) Regulations.--The Commission may prescribe 
                such regulations as may be necessary to carry out this 
                subsection consistent with the public interest and the 
                protection of investors.
                    ``(B) Nondiscrimination.--The regulations 
                prescribed by the Commission under subparagraph (A) 
                shall not--
                            ``(i) discriminate in favor of or against a 
                        specific technology, method, or technique of 
                        creating, storing, generating, receiving, 
                        communicating, or authenticating electronic 
                        records or electronic signatures; or
                            ``(ii) discriminate in favor of or against 
                        a specific type or size of entity engaged in 
                        the business of facilitating the use of 
                        electronic records or electronic signatures.
            ``(3) Exceptions.--Notwithstanding any other provision of 
        this subsection--
                    ``(A) the Commission, an appropriate regulatory 
                agency, or a self-regulatory organization may require 
                that records be filed in a specified electronic format 
                or formats if the records are required to be submitted 
                to the Commission, an appropriate regulatory agency, or 
                a self-regulatory organization, respectively; and
                    ``(B) the Commission may require that contracts, 
                agreements, or records relating to purchases and sales, 
                or establishing accounts for conducting purchases and 
                sales, of penny stocks be manually signed, and may 
                require such manual signatures with respect to 
                transactions in similar securities if the Commission 
                determines that such securities are susceptible to 
                fraud and that such fraud would be deterred or 
                prevented by requiring manual signatures.
            ``(4) Relation to other law.--The provisions of this 
        subsection apply in lieu of the provisions of title I of the 
        Electronic Signatures in Global and National Commerce Act to a 
        contract, agreement, or record (as defined in subsection 
        (a)(37)) that is required by the securities laws.
            ``(5) Definitions.--As used in this subsection:
                    ``(A) Electronic record.--The term `electronic 
                record' means a writing, document, or other record 
                created, stored, generated, received, or communicated 
                by electronic means.
                    ``(B) Electronic signature.--The term `electronic 
                signature' means information or data in electronic 
                form, attached to or logically associated with an 
                electronic record, that is intended by a party to 
                signify agreement to a contract or agreement.
                    ``(C) Electronic.--The term `electronic' means of 
                or relating to technology having electrical, digital, 
                magnetic, optical, electromagnetic, or similar 
                capabilities regardless of medium.''.

                          Purpose and Summary

    The purpose of H.R. 1714, the ``Electronic Signatures in 
Global and National Commerce (E-SIGN) Act,'' is to facilitate 
the continued success of electronic commerce by enabling 
parties to agree to use electronic signatures and electronic 
records in commercial transactions affecting interstate 
commerce. This will provide uniformity among State and Federal 
laws and give parties engaged in electronic commerce certainty 
that electronic signatures and electronic contracts will have 
the same legal effect and enforceability as paper signatures 
and contracts.

                Background and Need for the Legislation

    In the past few years, the use of the Internet to conduct 
business, or e-commerce, has exploded beyond prediction. And, 
it is expected that the near future will see even more growth 
in e-commerce as more and more people go online to buy, sell, 
trade, or make other business arrangements. Important to the 
success of e-commerce is the ability to enter into a contract 
online that is legally binding. Therefore, it has become 
necessary to update contract laws which require a physical 
document to be signed by the party to signify an intent to be 
bound by the terms of the contract in order to allow electronic 
signatures to have the same legal effect as a physically signed 
piece of paper.
    In the United States, the law of contracts has 
traditionally been within the province of State law. Many 
States have enacted laws to give legal effect to electronic 
signatures. However, these laws are not identical, and many not 
even similar, posing a problem in a borderless distribution 
system. The differences in legislation among States and an 
absence of legislation in this area poses an impediment to the 
growth of e-commerce because many consumers and businesses are 
unwilling to risk entering into a contract online without 
certainty regarding its legality. This has led many to support 
Federal legislation creating uniform Federal and State laws 
regarding electronic signatures in order to promote e-commerce 
in the United States and to provide a model for other 
countries.
    In 1996, the National Conference of Commissioners on 
Uniform State Laws (NCCUSL) began researching these issues. 
After more than three years of research, input from all 
interested parties, and numerous revisions, the NCCUSL adopted 
a final draft entitled the ``Uniform Electronic Transactions 
Act'' (UETA) in July, 1999, and recommended it to the States 
for adoption. This model law has widespread support and would 
achieve a baseline level of certainty and uniformity in regard 
to laws on electronic signatures and electronic records. 
However, until the UETA is adopted by all fifty States, the 
lack of uniformity and certainty still poses a barrier to the 
growth of e-commerce. To provide for certainty and uniformity 
during the interim, two pieces of legislation were introduced 
in the 106th Congress, S. 761, the ``Millennium Digital 
Commerce Act'' and H.R. 1714, the ``Electronic Signatures in 
Global and National Commerce (E-SIGN) Act''.
    In the 105th Congress, legislation was adopted into law to 
promote the use of electronic signatures and records by the 
Federal Government. Senator Abraham introduced legislation to 
require Federal agencies to use digital signatures, which are 
compatible with standards and technology for electronic 
signatures that are generally used in commerce and industry and 
State Governments. This served as a basis for the Government 
Paperwork Elimination Act (GPEA), title XVII of Public Law 105-
277.

                                Hearings

    The committee's Subcommittee on Courts and Intellectual 
Property held a hearing on H.R. 1714 on September 30, 1999. 
Testimony was received from Andrew Pincus, General Counsel, 
Department of Commerce; Ivan K. Fong, Deputy Associate Attorney 
General, United States Department of Justice; Pamela Meade 
Sargent, National Conference of Commissioners on Uniform State 
Laws; Scott Cooper, Manager, Technology Policy, Hewlett 
Packard; David Peyton, Director, Technology Policy, National 
Association of Manufacturers; and Margot Freeman Saunders, 
Managing Attorney, National Consumer Law Center, Inc.

                        Committee Consideration

    On October 7, 1999, the Subcommittee on Courts and 
Intellectual Property met in open session and ordered favorably 
reported the bill H.R. 1714, as amended, by a voice vote, a 
quorum being present. On October 13, 1999, the committee met in 
open session and ordered favorably reported the bill H.R. 1714, 
with amendment, by a voice vote, a quorum being present.

                         Vote of the Committee

    The vote of the committee was as follows:
    On the Amendment offered by Mr. Berman, Mr. Conyers, Ms. 
Lofgren, and Mr. Delahunt to Title I of the Amendment in the 
Nature of a Substitute to H.R. 1714 as reported by the 
Subcommittee on Courts and Intellectual Property to provide 
that in commercial transactions affecting interstate commerce, 
the parties may agree on the terms and conditions on which they 
will use electronic signatures and records except to the extent 
a law or regulation provides otherwise: The Amendment was 
adopted by a recorded vote of 15 yeas to 14 nays.


----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............  ..............  ..............
Mr. McCollum....................................................  ..............  ..............  ..............
Mr. Gekas.......................................................  ..............              X   ..............
Mr. Coble.......................................................  ..............              X   ..............
Mr. Smith (TX)..................................................  ..............              X   ..............
Mr. Gallegly....................................................  ..............              X   ..............
Mr. Canady......................................................  ..............              X   ..............
Mr. Goodlatte...................................................  ..............              X   ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................              X   ..............  ..............
Mr. Jenkins.....................................................  ..............              X   ..............
Mr. Hutchinson..................................................  ..............              X   ..............
Mr. Pease.......................................................  ..............  ..............  ..............
Mr. Cannon......................................................  ..............  ..............  ..............
Mr. Rogan.......................................................  ..............              X   ..............
Mr. Graham......................................................              X   ..............  ..............
Ms. Bono........................................................  ..............              X   ..............
Mr. Bachus......................................................  ..............  ..............  ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................  ..............              X   ..............
Mr. Conyers.....................................................              X   ..............  ..............
Mr. Frank.......................................................              X   ..............  ..............
Mr. Berman......................................................              X   ..............  ..............
Mr. Boucher.....................................................  ..............              X   ..............
Mr. Nadler......................................................              X   ..............  ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................              X   ..............  ..............
Ms. Lofgren.....................................................              X   ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................  ..............  ..............  ..............
Mr. Delahunt....................................................              X   ..............  ..............
Mr. Wexler......................................................  ..............  ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................              X   ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................  ..............              X   ..............
                                                                 -----------------------------------------------
    Total.......................................................             15              14   ..............
----------------------------------------------------------------------------------------------------------------

                Committee on Government Reform Findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 3(c)(4) of rule XIII of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budget authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the committee sets forth, with 
respect to the bill, H.R. 1761, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 403 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 15, 1999.
Hon. Henry J. Hyde, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1714, the 
Electronic Signatures in Global and National Commerce Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Shelley 
Finlayson (for the State and local impact), who can be reached 
at 225-3220, and Mark Hadley (for Federal costs), who can be 
reached at 226-2860.
            Sincerely,
                                  Dan L. Crippen, Director.
H.R. 1714--Electronic Signatures in Global and National Commerce Act.

                                SUMMARY

    CBO estimates that H.R. 1714 would cost about $2 million 
annually to implement, subject to the availability of 
appropriated funds. The bill would not affect direct spending 
or receipts; therefore, pay-as-you-go procedures would not 
apply. The legislation does contain intergovernmental mandates 
as defined by the Unfunded Mandates Reform Act (UMRA), however 
we estimate that the cost of these mandates would not be 
significant. H.R. 1714 contains no new private-sector mandates 
as defined in UMRA.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    Title I would require Federal agencies to identify laws and 
regulations that impose barriers to electronic commerce. The 
title would require the Office of Management and Budget and the 
Department of Commerce to submit a report within 18 months 
recommending legislation to remove barriers to electronic 
commerce and detailing actions by the Federal Government to 
remove such barriers through regulation. Under title I, the 
Federal Trade Commission and the Department of Commerce would 
submit a biennial report on the impact of electronic signatures 
on consumer protection laws and interstate transactions.
    Title II would require the Department of Commerce to submit 
an annual report detailing foreign and domestic impediments to 
commerce in electronic signature products and services. This 
title also would direct the department to promote the 
international acceptance and use of electronic signatures, and 
to submit a report within three years after enactment regarding 
actions by States to allow electronic signatures in commerce. 
Finally, title III would amend the Securities and Exchange Act 
of 1934 to allow the use of electronic signatures under Federal 
securities law.
    Based on information from the Department of Commerce, the 
Federal Trade Commission, and the Securities and Exchange 
Commission, CBO estimates that implementing the bill would cost 
about $2 million a year, subject to the availability of 
appropriated funds.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 1714 would preempt State laws in two ways, both of 
which would constitute intergovernmental mandates as defined by 
the Unfunded Mandates Reform Act (UMRA). However, CBO estimates 
that the costs of these preemptions would not be significant 
and would not exceed the threshold established by the act ($50 
million in 1996, adjusted annually for inflation). The bill 
contains no new private-sector mandates as defined in UMRA.
    The bill would preempt State laws that regulate interstate 
commercial transactions conducted via electronic means (such as 
contracts with electronic signatures), unless States enact a 
uniform standard specified in the bill. As defined by the bill, 
the term ``transaction'' would specifically exempt any contract 
to which a governmental entity is a party. As a result, CBO 
estimates that this preemption would not significantly affect 
the budgets of State, local, or tribal governments.
    The bill would also preempt State securities laws that 
regulate the signature and storage of contracts to allow the 
use of electronic records and signatures. Based on information 
from the Securities and Exchange Commission and groups 
representing State Governments, CBO estimates that this 
preemption would not impose significant costs on State, local, 
or tribal governments.

                         PREVIOUS CBO ESTIMATES

    On August 20, 1999, CBO transmitted a cost estimate for 
H.R. 1714, as ordered reported by the House Committee on 
Commerce on August 5, 1999. On June 30, 1999, CBO transmitted a 
cost estimate for S. 761, the Third Millennium Digital Commerce 
Act, as ordered reported by the Senate Committee on Commerce, 
Science, and Transportation on June 23, 1999. CBO estimated 
that implementing H.R. 1714 would cost about $1 million a year 
and S. 761 would cost about $500,000 a year. The difference in 
these cost estimates are due to the difference in the scope and 
length of the studies required under the bills.

                         ESTIMATE PREPARED BY:

Federal Costs: Mark Hadley (226-2860)
Impact on State, Local, and Tribal Governments: Shelley 
        Finlayson (225-3220)

                         ESTIMATE APPROVED BY:

Peter H. Fontaine
Deputy Assistant Director for Budget Analysis

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of the rule XIII of the Rules of 
the House of Representatives, the committee finds the authority 
for this legislation in Article I, section 8, clause 3 of the 
Constitution.

               Section-by-Section Analysis and Discussion

    Sec. 1. Short Title. This section states that H.R. 1714 may 
be cited as the ``Electronic Signatures in Global and National 
Commerce (E-SIGN) Act''.
Title I--Validity of Electronic Records and Signatures for Commerce
    Sec. 101. Findings. This section outlines the importance of 
electronic commerce, the benefits of uniformity in electronic 
transactions and the need for the Federal Government and States 
to promote and not hinder this new market.
    Section 102. Purposes. This section sets forth Congress' 
goals that a consistent national baseline for electronic 
commerce, including the clarification of the legal status of 
electronic records and signatures, be established in order to 
increase the public's confidence in, and the reliability of, 
electronic commerce. This section also states that it is 
Congress' desire that the marketplace, and not proscriptive 
Government mandates, should direct the continued expansion of 
electronic commerce growth; and that private parties should be 
able to agree among themselves as to the terms and conditions 
on which they use electronic signatures and electronic records.
    Section 103. Definitions. This section provides definitions 
for terms used in the bill. In referring solely to commercial 
use, the definition of transaction provided in this legislation 
is intentionally narrower than is provided in the UETA, written 
by the NCCUSL.
    Section 104. Principles Governing the Use of Electronic 
Signatures in International Transactions. Section 104 sets out 
the principles that the United States Government should follow, 
to the extent practicable, in its international negotiations on 
electronic commerce as a means to facilitate cross-border 
electronic transactions. The principles in this section are 
consistent with those adopted by the OECD Ministers in a 
Declaration on Authentication for Electronic Commerce, and 
proposals for multilateral and bilateral arrangements that are 
being discussed. These principles are included in order to 
support the efforts of the Departments of State and Commerce in 
advocating a technology neutral, market-based approach to 
electronic transactions and authentication technology. The 
principles are: 1) Remove paper based obstacles to electronic 
transactions by adopting relevant principles from the Model Law 
on Electronic Commerce adopted in 1996 by the United Nations 
Commission on International Trade Law; 2) Permit parties to a 
transaction to determine the appropriate authentication 
technologies and implementation models for their transactions, 
with assurance that they will be recognized and enforced; 3) 
Permit parties to a transaction to have the opportunity to 
prove in court or other proceeding that their authentication 
approaches are transactions are valid; and 4) Take a non-
discriminatory approach to electronic signatures and 
authentication methods from other jurisdictions.
    Section 105. Interstate Contract Certainty. This section 
sets out the rules governing the legality and enforceability of 
electronic signatures and electronic records used in commercial 
transactions affecting interstate commerce in the absence of 
uniform State laws providing for the legality and 
enforceability of such electronic signatures and electronic 
records. It is the intention of the committee that this section 
serve as a ``gap filler'' until the States have enacted the 
UETA. In other words, this section preempts State law until a 
State adopts the UETA based on the form provided by the NCCUSL 
or any substantially similar variation thereof.
    The bill reported by the Committee on Commerce preempted 
State law regardless of a State's adoption of the UETA. 
Further, the bill reported by the Committee on Commerce 
contained a definition of UETA that is narrower than the 
definition contained in the Committee on the Judiciary reported 
bill. The Committee on the Judiciary reported bill's 
definition, combined with section 105 (e), ``Application in 
UETA States,'' clarifies that in any State that adopts the 
UETA, this section shall not apply. It is the committee's view 
that this definition provides States greater deference.
    The rules of good faith and fair dealing apply to 
electronic commerce. This Act should not be interpreted to 
allow for terms and conditions which are unreasonable under 
current law.
    105(a) states that in any commercial transaction affecting 
interstate commerce, a contract may not be denied legal effect 
or enforceability solely because an electronic signature or 
electronic record was used in its formation. A contract cannot 
be denied enforceability that it otherwise has solely because 
an electronic signature or electronic record was used in its 
formation. This section is modified by section 105(c), which 
outlines the rules for electronic contracts when other laws 
require them to be in writing. Pursuant to section 103(4), for 
an electronic signature to be valid under this Act, a person 
must have intended to sign a contract in order for such 
contract to be valid.
    105(b) provides that in commercial transactions affecting 
interstate commerce the parties to a contract may agree on the 
terms and conditions on which they will use and accept 
electronic signatures and electronic records, except to the 
extent a law or regulation governing the record provides 
otherwise. The intent of this Act is to facilitate electronic 
commerce over the Internet. This legislation is not to be the 
basis for unfair or deceptive practices to avoid providing 
mandated information, disclosures, notices or content.
    This section creates legal certainty by establishing a 
default rule in support of the parties' agreement. This default 
rule would not apply, however, when another law or regulation 
applies to the record, such as a law or regulation relating to 
notices, disclosures, mailing or other delivery requirements or 
those promulgated by a Government entity addressing records 
used in the entities oversight, supervisory, or regulatory 
capacity.
    105(c) describes the rules regarding retention of records 
in an electronic format. It states that when a law requires 
that a contract be in writing, that requirement is satisfied by 
an electronic record of the information in the record provided 
to the parties which: 1) accurately reflects the information 
set forth in the record after it was first generated in its 
final form as an electronic record or otherwise; and 2) remains 
capable of retention in a form that can be accessed for later 
reference and used to prove the terms of the agreement. This 
section provides that when a contract may be provided 
electronically, it shall be provided to each party to the 
contract in a manner in which it can be retained and used at a 
later time to prove the terms of the contract.
    105(d) states that a contract relating to a commercial 
transaction may not be denied legal effect solely because its 
formation involved the interaction of electronic agents of the 
parties or the interaction of an electronic agent of a party 
and an individual who acts on that individual's own behalf for 
another person.
    105(e) states that this section does not apply in any State 
in which UETA is in effect. Once a State has adopted the UETA, 
the Federal preemption is lifted.
    Section 106. Study of Legal and Regulatory Barriers to 
Electronic Commerce. This section directs the Department of 
Commerce and Office of Management and Budget (OMB) to report to 
Congress withing 18 months on Federal laws and regulations that 
might pose barriers to electronic commerce, including 
suggestions for reform. It is important to note that in 
conducting this study, the Department of Commerce and the 
Office of Management and Budget must consult with the Attorney 
General concerning matters involving the authenticity of 
records, their storage and retention and their usability for 
law enforcement purposes.
    Section 107. Study of Effects of Electronic Commerce. This 
section directs the Federal Trade Commission and the Secretary 
of Commerce to report to Congress not later than two years and 
every two years after the date of enactment of this Act 
containing findings regarding the effectiveness of Federal and 
State consumer protection laws with respect to electronic 
transactions involving consumers and the extent to which a 
uniform commercial legal framework would facilitate and enforce 
interstate electronic transactions.
    Title II-Development and Adoption of Electronic Signature 
Products and Services. Title II remains unchanged as reported 
from the Committee on Commerce on August 5, 1999. A section-by-
section analysis is contained in Part I of this report. H. Rpt. 
106-341.
    Title III--Use of Electronic Records and Signatures Under 
Federal Securities Law. Title III remains unchanged as reported 
from the Committee on Commerce on August 5, 1999. A section-by-
section analysis is contained in Part I of this report. H. Rpt. 
106-341

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

            SECTION 3 OF THE SECURITIES EXCHANGE ACT OF 1934

                  definitions and application of title

    Sec. 3. (a) * * *

           *       *       *       *       *       *       *

    (h) References to Written Records and Signatures.--
            (1) General validity of electronic records and 
        signatures.--Except as otherwise provided in this 
        subsection--
                    (A) if a contract, agreement, or record (as 
                defined in subsection (a)(37)) is required by 
                the securities laws or any rule or regulation 
                thereunder (including a rule or regulation of a 
                self-regulatory organization), and is required 
                by other Federal or State statute, regulation, 
                or other rule of law to be in writing, the 
                legal effect, validity, or enforceability of 
                such contract, agreement, or record shall not 
                be denied on the ground that the contract, 
                agreement, or record is not in writing if the 
                contract, agreement, or record is an electronic 
                record;
                    (B) if a contract, agreement, or record is 
                required by the securities laws or any rule or 
                regulation thereunder (including a rule or 
                regulation of a self-regulatory organization), 
                and is required by other Federal or State 
                statute, regulation, or other rule of law to be 
                signed, the legal effect, validity, or 
                enforceability of such contract, agreement, or 
                record shall not be denied on the ground that 
                such contract, agreement, or record is not 
                signed or is not affirmed by a signature if the 
                contract, agreement, or record is signed or 
                affirmed by an electronic signature; and
                    (C) if a broker, dealer, transfer agent, 
                investment adviser, or investment company 
                enters into a contract or agreement with, or 
                accepts a record from, a customer or other 
                counterparty, such broker, dealer, transfer 
                agent, investment adviser, or investment 
                company may accept and rely upon an electronic 
                signature on such contract, agreement, or 
                record, and such electronic signature shall not 
                be denied legal effect, validity, or 
                enforceability because it is an electronic 
                signature.
            (2) Implementation.--
                    (A) Regulations.--The Commission may 
                prescribe such regulations as may be necessary 
                to carry out this subsection consistent with 
                the public interest and the protection of 
                investors.
                    (B) Nondiscrimination.--The regulations 
                prescribed by the Commission under subparagraph 
                (A) shall not--
                            (i) discriminate in favor of or 
                        against a specific technology, method, 
                        or technique of creating, storing, 
                        generating, receiving, communicating, 
                        or authenticating electronic records or 
                        electronic signatures; or
                            (ii) discriminate in favor of or 
                        against a specific type or size of 
                        entity engaged in the business of 
                        facilitating the use of electronic 
                        records or electronic signatures.
            (3) Exceptions.--Notwithstanding any other 
        provision of this subsection--
                    (A) the Commission, an appropriate 
                regulatory agency, or a self-regulatory 
                organization may require that records be filed 
                in a specified electronic format or formats if 
                the records are required to be submitted to the 
                Commission, an appropriate regulatory agency, 
                or a self-regulatory organization, 
                respectively; and
                    (B) the Commission may require that 
                contracts, agreements, or records relating to 
                purchases and sales, or establishing accounts 
                for conducting purchases and sales, of penny 
                stocks be manually signed, and may require such 
                manual signatures with respect to transactions 
                in similar securities if the Commission 
                determines that such securities are susceptible 
                to fraud and that such fraud would be deterred 
                or prevented by requiring manual signatures.
            (4) Relation to other law.--The provisions of this 
        subsection apply in lieu of the provisions of title I 
        of the Electronic Signatures in Global and National 
        Commerce Act to a contract, agreement, or record (as 
        defined in subsection (a)(37)) that is required by the 
        securities laws.
            (5) Definitions.--As used in this subsection:
                    (A) Electronic record.--The term 
                ``electronic record'' means a writing, 
                document, or other record created, stored, 
                generated, received, or communicated by 
                electronic means.
                    (B) Electronic signature.--The term 
                ``electronic signature'' means information or 
                data in electronic form, attached to or 
                logically associated with an electronic record, 
                that is intended by a party to signify 
                agreement to a contract or agreement.
                    (C) Electronic.--The term ``electronic'' 
                means of or relating to technology having 
                electrical, digital, magnetic, optical, 
                electromagnetic, or similar capabilities 
                regardless of medium.
                            Dissenting Views

These are the dissenting views of Howard Coble to H.R. 1714, the 
        ``Electronic Signatures in Global and National Commerce (E-
        SIGN) Act,'' as reported by the Committee on the Judiciary:
    Section 105 of Title I of H.R. 1714, the ``Electronic 
Signatures in Global and National Commerce (E-SIGN) Act'' as 
reported by the Committee on the Judiciary leaves the bill 
incapable of accomplishing its purpose which is to facilitate 
the continued success of electronic commerce by enabling 
parties to agree to use electronic signatures and records in 
commercial transactions affecting interstate commerce. The 
success of electronic commerce has exceeded all predictions and 
is positioned to continue to grow. The United States stands 
only to gain by fostering an environment in which e-commerce 
can boom and to be an example for foreign countries. While I 
believe we must carefully balance the interests of the States 
in enacting State law with the need for national uniformity and 
certainty, I believe section 105 of title I places too large a 
road block in front of electronic commerce that threatens to 
stifle its growth.
    First, section 105(a) does nothing. Unlike section 103(a) 
of the Amendment in the Nature of a Substitute as reported by 
the Subcommittee on Courts and Intellectual Property, the 
Berman Amendment in section 105(a) does not make it clear that 
no ``record'' or ``signature'' can be denied legal effect or 
enforceability solely because it is electronic. It says only 
that, if in the course of forming a contract, one or more of 
the parties ``used'' an electronic signature or electronic 
record the ``usage'' is not a ground for denying the legal 
effectiveness of the contract. It does not address the legal 
status of records that are wholly electronic or that are signed 
only by electronic signature. It doesn't change current law. In 
other words, this section does nothing and provides no more 
uniformity or certainty than exists today.
    Second, section 105(b) contains an exception clause which 
assures that the provision does literally nothing. This need 
for a ``methods'' section is to clarify the essential freedom 
of contract notion that parties may agree on the kinds of 
documents they will use or the kinds of contracts they will 
enter into--including the use of electronic signatures and 
electronic records. Uncertainty as to when parties are able to 
use electronic signatures and electronic records is only 
created by laws or regulations that can be understood to 
provide otherwise. If there isn't a law that says parties can't 
make certain agreements or contracts, including the use of 
electronic signatures and electronic records, then parties 
already have the freedom to contract to use and accept them. 
Section 105(b), as amended by the Berman Amendment, says that 
parties can rely on an agreement to use and accept electronic 
signatures and electronic records unless there is some law that 
says they cannot. This ensures that no law is either changed or 
clarified.
    The exception contained in section 105(b) is apparently 
intending to prevent parties' agreements from overriding 
important consumer and other laws. However, the Amendment to 
H.R. 1714 as reported from the Subcommittee on Courts and 
Intellectual Property merely allowed electronic records and 
signatures to substitute for the pen and ink equivalents. All 
other legal requirements--such as that notices or disclosures 
be ``made,'' ``delivered'' or ``actually received,'' that 
consumers be able to ``retain'' those notices or disclosures, 
or that particular statements be ``clear and conspicuous''--
would be retained, unchanged. The obligation of businesses to 
demonstrate that they have satisfied those requirements would 
continue. It also would not change any of the substantive 
requirements of any consumer disclosure statute. These statutes 
require ``reasonable notice.'' This could not be satisfied by 
sending notices and disclosures to a location where the 
consumer is not. A business could not claim that it satisfied 
the law by sending a notice to a physical address where the 
consumer does not reside. Similarly, a business could not 
satisfy ``reasonable notice'' requirements by sending an 
electronic notice to an email address that the consumer does 
not have.
    Third, section 105(c) imposes extreme conditions on 
contracts that do not exist today under current law. It 
requires that when a contract is required to be in writing, the 
requirement that is satisfied by an electronic record of the 
information in the record provided to each party which 
accurately reflects the information and is capable of retention 
in a form that can be accessed for later reference and used to 
prove the terms of the agreement. This is not required under 
current law for written contracts. These requirements could 
result in contracts that are valid initially becoming invalid 
because of some later event. For example, section 105(c) seems 
to require any valid electronic contract to be immutable. If at 
some point in time, the electronic record (or some copy of it) 
no longer accurately reflects the original, the legal 
effectiveness of the contract would be called into question. 
These additional requirements impede, not facilitate, the use 
of electronic records.
    Fourth, section 105(e) provides such broad latitude to the 
States in enacting the UETA that the allowable exceptions will 
result in greater uncertainty and less uniformity than exist 
today. This is because this section states that the Act ``would 
not apply'' in any State in which the UETA is in effect. This, 
coupled with the expansive definition of the UETA in section 
103(7), would give result in the patchwork of State laws that 
H.R. 1714 originally intended to prevent. There is no 
requirement for consistency with the federal rule established 
by the bill. Of course, since there is no new rule established 
here, there is nothing much with which to be inconsistent.
    To the extent that the section has any effect at all, 
States can alter Federal law by adopting the UETA. Because the 
Federal rule would simply cease to apply in a State, even 
federal laws that currently require writings or written 
signatures would be revived in States that adopt the UETA. 
Also, in interstate transactions (which is all that the Act 
would govern), it is difficult to know what it means for a law 
to cease to apply ``in'' a State. Each interstate transaction 
will involve at least two States. If the UETA is law in one, 
but not in another, what is the Federal rule? This seems to 
promote confusion, not uniformity.
    I am including in this dissenting view a copy of title I of 
H.R. 1714 as it would have been reported had the Berman 
Amendment not been adopted. This would have been a fair and 
reasonable approach to balancing the need for uniformity and 
certainty with regard to laws on electronic signatures and 
electronic regards so as to promote e-commerce and the need for 
States to retain the ability to require certain contracts and 
agreements to be in writing. My proposal, which I hope will be 
what is finally enacted into law, is as follows:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Electronic Signatures in Global and 
National Commerce Act''.

  TITLE I--VALIDITY OF ELECTRONIC RECORDS AND SIGNATURES FOR COMMERCE

SEC. 101. DEFINITIONS.

    In this Act:
            (1) Electronic.--The term ``electronic'' means relating to 
        technology having electrical, digital, magnetic, wireless, 
        optical, electromagnetic, or similar capabilities.
            (2) Electronic agent.--The term ``electronic agent'' means 
        a computer program or an electronic or other automated means 
        used to initiate an action or respond to electronic records or 
        performances in whole or in part without review by an 
        individual at the time of the action or response.
            (3) Electronic record.--The term ``electronic record'' 
        means a record created, generated, sent, communicated, 
        received, or stored by electronic means.
            (4) Electronic signature.--The term ``electronic 
        signature'' means an electronic sound, symbol, or process 
        attached to or logically associated with an electronic record 
        and executed or adopted by a person with the intent to sign the 
        electronic record.
            (5) Governmental agency.--The term ``governmental agency'' 
        means an executive, legislative, or judicial agency, 
        department, board, commission, authority, institution, or 
        instrumentality of the Federal Government or of a State or of 
        any county, municipality, or other political subdivision of a 
        State.
            (6) Record.--The term ``record'' means information that is 
        inscribed on a tangible medium or that is stored in an 
        electronic or other medium and is retrievable in perceivable 
        form.
            (7) Transaction.--The term ``transaction'' means an action 
        or set of actions relating to the conduct of commerce, 
        including the business and regulation of insurance, between 2 
        or more persons, neither of which is the United States 
        Government, a State, or an agency, department, board, 
        commission, authority, institution, or instrumentality of the 
        United States Government or of a State.
            (8) Uniform electronic transactions act.--The term 
        ``Uniform Electronic Transactions Act'' means the Uniform 
        Electronic Transactions Act as provided to State legislatures 
        by the National Conference of Commissioners on Uniform State 
        Laws.

SEC. 102. PRINCIPLES GOVERNING THE USE OF ELECTRONIC SIGNATURES IN 
              INTERNATIONAL TRANSACTIONS.

    To the extent practicable, the Federal Government shall observe the 
following principles in an international context to enable commercial 
electronic transaction:
            (1) Remove paper-based obstacles to electronic transactions 
        by adopting relevant principles from the Model Law on 
        Electronic Commerce adopted in 1996 by the United Nations 
        Commission on International Trade Law (UNCITRAL).
            (2) Permit parties to a transaction to determine the 
        appropriate authentication technologies and implementation 
        models for their transactions, with assurance that those 
        technologies and implementation models will be recognized and 
        enforced.
            (3) Permit parties to a transaction to have the opportunity 
        to prove in court or other proceedings that their 
        authentication approaches and their transactions are valid.
            (4) Take a non-discriminatory approach to electronic 
        signatures and authentication methods from other jurisdictions.

SEC. 103. INTERSTATE CONTRACT CERTAINTY.

    (a) Agreements and Records.--The following rules apply to any 
commercial transaction, including an insurance transaction, affecting 
interstate commerce:
            (1) A record or signature may not be denied legal effect or 
        enforceability solely because it is in electronic form.
            (2) A contract may not be denied legal effect or 
        enforceability solely because an electronic record was used in 
        its formation.
            (3) If a law requires a record to be in writing, or 
        provides consequences if it is not, an electronic record 
        satisfies the law.
            (4) If a law requires a signature, or provides consequences 
        in the absence of a signature, the law is satisfied with 
        respect to an electronic record if the electronic record 
        includes an electronic signature.
            (5) If a law requires that certain records be retained, 
        that requirement is met by retaining an electronic record of 
        the information in the record which--
                    (A) accurately reflects the information set forth 
                in the record after it was first generated in its final 
                form as an electronic record or otherwise; and
                    (B) remains accessible for later reference.
            (6) A requirement to retain records in accordance with 
        paragraph (5) does not apply to any information whose sole 
        purpose is to enable the record to be sent, communicated, or 
        received.
            (7) A person satisfies paragraph (5) by using the services 
        of any other person if the requirements of paragraph (5) are 
        met.
            (8) If a law requires a record to be presented or retained 
        in its original form, or provides consequences if the record is 
        not presented or retained in its original form, that law is 
        satisfied by an electronic record retained in accordance with 
        paragraph (5).
            (9) If a law requires retention of a check, that 
        requirement is satisfied by retention of an electronic record 
        of the information on the front and back of the check in 
        accordance with paragraph (5).
            (10) A record retained as an electronic record in 
        accordance with paragraph (5) satisfies a law requiring a 
        person to retain records for evidentiary, audit, or like 
        purposes, unless a law enacted after the effective date of this 
        subsection specifically prohibits the use of an electronic 
        record for a specified purpose.
            (11) This subsection does not preclude a governmental 
        agency of the United States or any State from specifying 
        additional requirements for the retention of records, written 
        or electronic, subject to the agency's jurisdiction.
    (b) Terms and Conditions of Agreements.--The parties to a contract 
may agree on or adopt the terms and conditions on which they will use 
and accept electronic signatures and electronic records, including the 
methods therefor, in commercial transactions affecting interstate 
commerce. Nothing in this subsection requires that any party enter into 
such a contract.
    (c) Electronic Agents.--A contract relating to a commercial 
transaction affecting interstate commerce may not be denied legal 
effect solely because its formation involved--
            (1) the interaction of electronic agents of the parties; or
            (2) the interaction of an electronic agent of a party and 
        an individual who acts on that individual's own behalf or for 
        another person.
    (d) Application in UETA States.--This section does not preempt the 
Uniform Electronic Transactions Act as in effect in a State, so long as 
the Uniform Electronic Transactions Act as in effect in such State is 
not inconsistent, in any significant manner, with the form provided by 
the National Conference of Commissioners on Uniform State Laws.
    (e) Admissibility of Evidence.--In a legal proceeding, evidence of 
an electronic record or electronic signature may not be excluded 
because it is an electronic record or electronic signature or it is not 
an original or is not in its original form.
    (f) Specific Exclusions.--The provisions of this section shall not 
apply to a statute, regulation, or other rule of law governing any of 
the following:
            (1) Private medical records.
            (2) The creation or execution of wills, codicils, or 
        testamentary trusts.
            (3) Divorce, marriage, adoption, or other matters of family 
        law.
            (4) Court orders or notices, or documents used in court 
        proceedings.
            (5) Titles to property.
            (6) Landlord-tenant relationships.
            (7) The Uniform Anatomical Gift Act.
            (8) Premarital agreements.
            (9) The Uniform Health-Care Decisions Act.

SEC. 104. STUDY BY ATTORNEY GENERAL.

    The Attorney General shall, within 18 months after the date of 
enactment of this Act, report to the Congress concerning the effect of 
this Act on the authenticity of records, their storage and retention, 
and their usability for law enforcement purposes, along with any 
legislative recommendations.

                                
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