[Federal Register Volume 67, Number 185 (Tuesday, September 24, 2002)]
[Notices]
[Pages 59828-59830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-24209]


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DEPARTMENT OF COMMERCE

National Telecommunications and Information Administration

Docket No. 010222048-2215-02


Product Recall Exception to the Electronic Signatures in Global 
and National Commerce Act

AGENCY: National Telecommunications and Information Administration 
(NTIA), U.S. Department of Commerce

ACTION: Notice, Request For Comments

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SUMMARY: Section 101 of the Electronic Signatures in Global and 
National Commerce Act, Pub. L. No. 106-229, codified at 15 U.S.C. 7001 
et seq. (``ESIGN'' or ``the Act''), preserves the legal effect, 
validity, and enforceability of signatures and contracts relating to 
electronic transactions and electronic signatures used in the formation 
of electronic contracts. 15 U.S.C. 7001(a). Section 103(a) and (b) of 
the Act, however, provides that the provisions of section 101 do not 
apply to contracts and records governed by statutes and regulations 
regarding court documents; probate and domestic law matters; certain 
provisions of state uniform commercial codes; utility service 
cancellations, real property foreclosure and defaults; insurance 
benefits cancellations; product recall notices; and hazardous materials 
documents. Section 103 of the Act also requires the Secretary of 
Commerce, through the Assistant Secretary for Communications and 
Information, to review the operation of these exceptions to evaluate 
whether they continue to be necessary for consumer protection, and to 
make recommendations to Congress based on this evaluation. 15 U.S.C. 
7003(c)(1). This Notice is intended to solicit comments from interested 
parties for purposes of this evaluation, specifically on the product 
recall notices exception to the ESIGN Act. See 15 U.S.C. 7003(b)(2). 
NTIA will publish separate notices requesting comment on the other 
exceptions listed in section 103 of the ESIGN Act.\1\
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    \1\ Comments submitted in response to Federal Register notices 
requesting comment on other exceptions to ESIGN will be considered 
as part of the same section 103 evaluation and not as a separate 
review of the Act.

DATES: Written comments and papers are requested to be submitted on or 
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before November 25, 2002.

ADDRESSES: Written comments should be submitted to Josephine Scarlett, 
National Telecommunications and Information Administration, 14th Street 
and Constitution Ave., NW., Washington, DC 20230. Paper submissions 
should include a three and one-half inch computer diskette in HTML, 
ASCII, Word, or WordPerfect format (please specify version). Diskettes 
should be labeled with the name and organizational affiliation of the 
filer, and the name of the word processing program used to create the 
document. In the alternative, comments may be submitted electronically 
to the following electronic mail address: [email protected]. Comments submitted via electronic mail also 
should be submitted in one or more of the formats specified above.

FOR FURTHER INFORMATION CONTACT: For questions about this request for 
comment, contact: Josephine Scarlett, Attorney, Office of the Chief 
Counsel, NTIA, 14th Street and Constitution Ave., NW., Washington, DC 
20230, telephone (202) 482-1816 or electronic mail: 
[email protected]. Media inquiries should be directed to the 
Office of Public Affairs, National Telecommunications and Information 
Administration, at (202) 482-7002.

SUPPLEMENTARY INFORMATION:

Background: Electronic Signatures in Global and National Commerce Act

    Congress enacted the Electronic Signatures in Global and National 
Commerce Act, Pub. L. No. 106-229, 114 Stat. 464 (2000), to facilitate 
the use of electronic records and signatures in interstate and foreign 
commerce and to remove uncertainty about the validity of contracts 
entered into electronically. Section 101 requires, among other things, 
that electronic signatures, contracts, and records be given legal 
effect, validity, and enforceability. Sections 103(a) and (b) of the 
Act

[[Page 59829]]

provide that the requirements of section 101 shall not apply to 
contracts and records governed by statutes and regulations regarding: 
probate and domestic law matters; state commercial law; consumer law 
covering utility services, real property purchases, and insurance 
benefits; product recall notices; and hazardous materials documents.
    The statutory language providing for an exception to section 101 of 
ESIGN for product recall notices is found in section 103(b) of the Act:

Sec. 103. [15 U.S.C. 7003] Specific Exceptions.

    * * * *
    (b) Additional Exceptions.-- The provisions of section 101 shall 
not apply to--
    * * * *
    (2) any notice of--
    * * * *
    (D) recall of a product, or material failure of a product, that 
risks endangering health or safety. . .
    * * * *
    The statutory language requiring the Assistant Secretary for 
Communications and Information to submit a report to Congress on the 
results of the evaluation of the section 103 exceptions to the ESIGN 
act is found in section 103(c)(1) of the Act as set forth below.

(c) Review of Exceptions.--

    (1) Evaluation required.-- The Secretary of Commerce, acting 
through the Assistant Secretary for Communications and Information, 
shall review the operation of the exceptions in subsections (a) and (b) 
to evaluate, over a period of 3 years, whether such exceptions continue 
to be necessary for the protection of consumers. Within 3 years after 
the date of enactment of this Act, the Assistant Secretary shall submit 
a report to Congress on the results of such evaluation.

Recall Notices

    A recall is the voluntary or compulsory removal of a product, 
including food, from the stream of commerce because the product 
violates state or federal regulations regarding the product, or because 
the use of the product poses a risk to health or safety. Recall notices 
are typically issued by government agencies, and by manufacturers, 
retailers, and distributors of products and foods using a variety of 
media under the guidance and direction of federal and state regulatory 
and consumer protection agencies. The Department of Agriculture (USDA), 
Environmental Protection Agency (EPA), Food and Drug Administration 
(FDA), National Highway Safety Transportation Administration (NHSTA), 
and U.S. Consumer Product Safety Commission (CPSC) have regulations and 
guidelines that companies follow to recall various manufactured 
products, foods, drugs, and cosmetics.\2\ Numerous recall notices are 
issued by manufacturers each year under the guidance and instruction of 
federal and state agencies; the Consumer Product Safety Commission 
estimates that the CPSC oversees approximately 300 recalls yearly.
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    \2\ See e.g., 9 CFR 417.3, 9 CFR part III, and Food Safety 
Inspection Service (FSIS) Directive 8080.1, Rev. 3, available at 
http://www.fsis.usda.gov/FOIA/dir/8080.htm (USDA recall guidelines; 
42 U.S.C. 7541(c)(1), and 40 CFR 85.1802 through 85.1805, 92.703, 
92.404, 94.404 and 94.703 (EPA recall authority and procedures); 21 
CFR 1115.2(c), 1115.20, and CPSC Recall Guidelines, available at 
http://www.cpsc.gov/businfo/8002 (CPSC recall authority and recall 
guidelines); and 49 U.S.C. 30119, 49 CFR 573.6, 577.5, 577.6, 579, 
NHTSA Motor Vehicle Defects and Recall Campaigns, available at 
http://www.nhtsa.dot.gov/hotline/recallprocess.html and NHTS Safety 
Recall Compendium, Third Release, June 2001, available at http://www.nhtsa.dot.gov/cars/problems/recalls/recall_links.cfm (NHSTA 
recall authority and guidelines).
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    Current federal regulations and policies allow companies to use a 
variety of methods to transmit recall notices. Companies, 
manufacturers, distributors, retailers or recall firms may disseminate 
recall information to the consumer by, among other things, letter, 
signs and posters at points of purchase, press releases and public 
announcements, including video news releases and website notices. The 
method used to notify consumers and the extent of a recall varies in 
each case depending upon a variety of factors, including the severity 
of the risk to health, life, and safety associated with the use of the 
product and the level of product distribution. For example, recalls 
classified as Class I involve a reasonable probability that the use of 
the product is likely to cause serious, adverse health consequences or 
death. A manufacturer of a widely-distributed product that is subject 
to a Class I recall may be required to issue direct notice in the form 
of written letters, to issue press releases, and point of purchase 
posters in order to contact consumers, retail and wholesale 
distributors, and users of the product. See USDA, FSIS Directive 
8080.1, Rev. 3, sections VI(D) and VI(E); CPSC Recall Handbook, and 
CPSC Fax-on-Demand Document no. 8002, at 11-12, 15. For a product that 
presents a less serious risk of injury, for example, a product where 
the risk of serious injury or illness is not likely, but is possible, a 
lesser degree of notice may be required. An agency may request a 
manufacturer of a product that presents a lesser degree of hazard but a 
hazard, nonetheless, to join in a press release, provide point of 
purchase posters, post information on a company world wide web site and 
to issue a notice to distributors, dealers and sellers of the product. 
See e.g., CPSC Recall Handbook and CPSC Fax-on-Demand Document no. 
8002, at 11-12, 15; U.S. Department of Transportation, NHTS Safety 
Recall Compendium, at 10, 12. In cases involving foods or products that 
pose extreme health or safety risks to the public, federal and state 
agencies, as well as companies, issue press releases to inform the 
public of the dangers associated with the use of the food or product 
that is the subject of the recall. See e.g., USDA, FSIS Directive 
8080.1, Rev. 3, section IX, ``Public Notification'' at 3. More 
recently, some federal agencies have instituted procedures that provide 
for recalling companies and firms to send electronic mail notices to 
consumers and postings on the company's world wide website announcing 
the recall of a product. See e.g., CPSC Recall Handbook at 15.

The ESIGN Section 103 Evaluation

    The ESIGN Act directs the Assistant Secretary of Communications and 
Information to conduct an evaluation of the exceptions set out in 
section 103 of the Act to determine whether the product recall notices 
exception continues to be necessary for the protection of consumers, 
and to submit a report to Congress on the results of the evaluation no 
later than June 30, 2003. The Assistant Secretary for Communications 
and Information is the chief administrator of NTIA. As the President's 
principal advisor on telecommunications policies pertaining to the 
Nation's economic and technological advancement, NTIA is the executive 
branch agency responsible for developing and articulating domestic and 
international telecommunications policy.
    The ESIGN section 103 evaluation of the product recall notices 
exception is intended to evaluate the current status of federal and 
state regulations and practices that direct or allow companies to issue 
product recall notices and the manner in which the notices are provided 
to consumers, in preparation for a report to Congress on whether the 
exception of product recall notices remains necessary to protect 
consumers. This evaluation is not a review or analysis of federal and 
state regulations and rules relating to product recall notices for the 
purpose of recommending changes to those regulations but to advise 
Congress of the

[[Page 59830]]

current state of law, practice, and procedure regarding this issue.\3\ 
Comments filed in response to this Notice should not be considered to 
have a connection with or impact on specific ongoing federal and state 
procedures or rulemaking proceedings concerning product recall notices.
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    \3\ The NTIA Request for Comment and the resulting evaluation 
have no legal effect on existing CPSC, EPA, FDA, NHTSA or USDA 
regulations and rules, or pending proceedings affecting recalls.
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Invitation to Comment

    NTIA requests that all interested parties submit written comment on 
any issue of fact, law, or policy that may assist in the evaluation 
required by section 103(c). We invite comment from parties that may be 
affected by the elimination of the product recall notices exception, 
including consumer advocacy groups and organizations, federal agencies, 
and companies and industry associations. The comments submitted will 
assist NTIA in evaluating the narrower issues associated with consumer 
issues and the substantive law related to product recalls. The 
following issues are intended to provide guidance as to the specific 
areas to be examined as a part of the evaluation. Commenters are 
invited to discuss any relevant issue, regardless of whether it is 
identified below.
    1. Describe federal and state regulations and rules that prescribe 
procedures for companies, distributors, retailers, and third party 
recall companies to follow when recalling a product.
    2. Discuss whether federal and state regulations or laws that 
prescribe content, format, and timing of notices allow for electronic 
formats, including facsimile, electronic mail, and web site postings.
    3. Discuss what effect, if any, the removal of the product recall 
notices exception would have on the ability of federal and state 
agencies to perform their mission.
    4. What effect, if any, would the removal of the product recall 
notices exception have on companies and consumers?
    5. Describe any issues encountered by companies that currently 
provide recall notices by electronic means. Discuss the methods 
companies use to transmit recall information to consumers and state 
whether there is a receipt verification process that has proven to be 
reliable.
    6. Discuss issues, if any, that consumers have regarding receiving 
notice of product recalls through electronic means, including but not 
limited to, receipt and delivery, technological compatibility, privacy, 
and security.
    7. State whether the consumer protections of ESIGN section 101(c) 
would be sufficient to protect consumers if the product recall notices 
exception is eliminated.
    8. Discuss any benefits for consumers, companies or both that may 
result if product recall notices are sent by electronic means.
    9. Discuss any other issues (such as state privacy or consumer 
protection laws) that may be affected if product recall notices are 
included under the requirements of section 101 of the ESIGN Act.
    Please provide copies of studies, reports, opinions, research or 
other empirical data referenced in the responses.

    Dated: September 19, 2002.
Kathy D. Smith,
Chief Counsel, National Telecommunications and Information 
Administration.
[FR Doc. 02-24209 Filed 9-23-02; 8:45 am]
BILLING CODE 3510-60-S