[Federal Register Volume 68, Number 18 (Tuesday, January 28, 2003)]
[Notices]
[Pages 4179-4181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1921]


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DEPARTMENT OF COMMERCE

National Telecommunications and Information Administration

Docket No. 010222048-3014-08


The Utility Service Cancellation Notices 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; state 
commercial law; consumer law covering utility services, residential 
property foreclosures and defaults, and insurance benefits; product 
recall notices; and hazardous materials documents. Section 103 of the 
Act also requires the Secretary of Commerce, through the Assistant 
Secretary for Communications, 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 utility cancellation notices exception 
to the ESIGN Act. See 15 U.S.C. 7003(a)(3). NTIA has published 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 the Federal Register 
notices requesting comment on the other exceptions to ESIGN will be 
considered as part of the same section 103 evaluation and not as 
part of a separate review of the Act. Notices have been published on 
the following exceptions to ESIGN: court, family law, and hazardous 
materials documents; wills; product recall, housing default, and 
insurance cancellation notices; and contracts governed by state 
uniform commercial law. See 67 Fed.Reg. 56277, 56279, 59828, 61599, 
63379, 69201, 75849, and 78421.

DATES: Written comments and papers are requested to be submitted on or 
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before March 31, 2003.

ADDRESSES: Written comments should be submitted to Josephine Scarlett, 
National Telecommunications and Information Administration, 14th Street 
and Constitution Ave., N.W., 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 provides that the requirements of 
section 101 shall not apply to contracts and records governed by 
statutes and regulations regarding: court documents; probate and 
domestic law matters; state commercial law; consumer law covering 
utility services, residential default and foreclosure notices, and 
insurance benefits cancellation notices; product recall notices; and 
hazardous materials documents.
    The statutory language providing for an exception to section 101 of 
ESIGN for utility cancellation or disconnection 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--
    (A) the cancellation or termination of utility services (including 
water, heat, and power);
    * * * *
    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.

Utility Service Cancellation Notices

    The rates, terms and conditions of service provided by electric, 
gas, telephone, water and sewer companies are governed by federal and 
state laws and regulations. These federal, state, and municipal 
regulations prescribe methods and procedures that govern how utility 
companies make voluntary and involuntary terminations of service to 
customers, and how notices of

[[Page 4180]]

pending terminations are provided to customers. On the federal level, 
there are regulations that instruct utility companies on the procedure 
for notifying utility customers of pending cancellations of service. 
The Federal Communications Commission's (FCC) regulations, for example, 
contain several provisions that direct long distance telephone service 
providers to give their customers written notice upon discontinuance of 
service. The FCC's rules require that all domestic carriers apply to 
the FCC for authority to discontinue service, and, as part of that 
application, to notify all affected customers of a planned 
discontinuance of service and submit a copy of the application to the 
public utility commission and to the government of the state in which 
the discontinuance is proposed, as well as to the Secretary of Defense. 
47 CFR 63.71(a). Non-dominant international carriers are also required 
to provide written notice to customers at least 60 days prior to 
discontinuance of service. See 47 CFR 63.19. Although the FCC's rules 
require written notice, they do not specifically prohibit the use of 
electronic methods to transmit the notice to customers.
    The FCC's rules allow some transactions and communications to be 
made by electronic means, including electronic posting of the terms and 
conditions of service that describe the procedure for termination of 
service. The FCC allows telephone companies to use electronic methods 
and signatures for letters of agency, and authorizations or 
verification of a subscriber's request to change his or her preferred 
carrier selection. See 47 CFR 64.1130. These rules require that letters 
of agency submitted with an electronic signature include the consumer 
disclosures required by section 101(c) of ESIGN. 47 CFR 64.1130(i). In 
the Domestic Detariffing Order\2\ and the International Detariffing 
Order\3\, the FCC also allowed long distance carriers to provide 
information regarding rates and conditions of service on Internet web 
sites rather than through traditional tariff filings. See 47 CFR Sec.  
42.10, 61.72. As part of the congressional energy conservation policies 
adopted in the early and mid 1990s, Congress enacted special rules and 
standard procedures for utility companies to follow during terminations 
of gas and electric service. See 15 U.S.C. 3204; 16 U.S.C. 2625(g). 
These rules refer to procedures that are to be prescribed by state 
utility and regulatory commissions directing utility service providers 
to provide reasonable prior notice to consumers of pending termination 
or discontinuance of service and to allow consumers an opportunity to 
dispute the reasons for the termination. Id. In general, states and 
municipal governments have adopted regulations to govern disconnection 
notice procedures for utility companies.
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    \2\ Second Report and Order, 11 FCC Rcd 20,730 (1996) (Domestic 
Detariffing Order); stay granted, MCI Telecommunications Corp. v. 
FCC, No. 96-1459 (D.C. Cir. Feb. 13, 1997); Order on 
Reconsideration, 12 FCC Rcd 15,014 (1997)(Domestic Detariffing Order 
on Reconsideration); Second Order on Reconsideration and Erratum, 14 
FCC Rcd 6004 (1999)(Domestic Detariffing Second Order on 
Reconsideration); stay lifted and aff'd, MCI WorldCom, Inc., et al. 
v. FCC, 209 F.3d 760 (D.C. Cir. April 28, 2000), Memorandum Report 
and Order, DA 00-2586 (CCB, rel. Nov. 17, 2000)(Domestic Transition 
Order).
    \3\ In the Matter of 2000 Biennial Regulatory Review, Policy 
Concerning the International, Interexchange Marketplace, Report and 
Order, 16 FCC Rcd 10,647 (2001)(International Detariffing Order).
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    In some cases, these regulations also apply to municipal utilities 
as well as privately-owned companies. For example, Nebraska's 
regulations provide that: ``[n]o municipal utility owned and operated 
by a village furnishing water, natural gas or electricity at retail . . 
. shall discontinue service to any domestic subscriber for nonpayment 
of any past due account unless such utility first gives written notice 
by mail to any subscriber at least seven days prior to termination.'' 
Neb.Rev.Stat.Ann. Sec.  70-1603 (2002). Under this regulation, notice 
must be given to the consumer by first-class mail or in person and 
service must continue for at least seven days after notice has been 
given. Id. at Sec.  70-1605. The amount of time for each notice varies 
among the states; however, most states require written notice of 
utility service disconnection to be given in advance by mail or in 
person.\4\
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    \4\Compare New Hampshire, N.H.Rev. Stat.Ann. Sec.  363.B:1(2002) 
(10days) and New York, N.Y.[Pub.Serv.] Sec.  34.1(2002) (15days).
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    The ESIGN exception for utility cancellation notices means utility 
companies are not allowed to provide notices of cancellation of gas, 
water, telephone, or electric service through electronic means or using 
an electronic signature. Approximately 40 states have adopted Uniform 
Electronic Transactions Act (UETA) laws, which allows the states to be 
removed from the operation of ESIGN by adopting their own electronic 
transactions law in accordance with section 102(a)(1) of ESIGN. See 
National Conference of Commissioners on Uniform State Laws at http://www.nccusl.org/nccusl/LegislativeByState.pdf. The utility cancellation 
notice exception has not been incorporated into all state uniform 
electronic transactions laws, and therefore, electronic notice of 
utility cancellation may be allowed by some states. The absence of an 
exception in a state UETA law for utility cancellation notices does not 
automatically make these documents subject to that law. In some cases, 
the state or municipal utility laws and regulations control the format 
and procedure for providing notice to consumers of cancellation of 
utility services and may authorize formats other than paper writings.
    The ESIGN section 103 evaluation of the utility cancellation 
notices exception is intended to evaluate the current status of the law 
and procedure regarding this issue in preparation for a report to 
Congress on whether this exception remains necessary to protect 
consumers. This evaluation is not a review or analysis of laws relating 
to these documents for the purpose of recommending that Congress draft 
legislation or propose changes to those laws, but to advise Congress of 
the current state of law, practice, and procedure regarding this issue 
since the passage of the ESIGN Act in 2000. Comments filed in response 
to this Notice should not be considered to have a connection with or 
impact on specific, ongoing federal and state court proceedings or 
administrative rulemaking proceedings concerning utility cancellation 
notices.

Invitation to Comment

    NTIA requests that interested parties, including members of the 
bar, courts and consumer representatives, submit written comments on 
any issue of fact, law, or policy that may assist in the evaluation 
required by section 103(c). We invite comments from all parties that 
may be affected by the removal of the utility cancellation notices 
exception from the ESIGN Act including, but not limited to, state 
agencies and organizations, national and state bar associations, 
consumer advocates, and utilities and administrative law practitioners. 
The comments will assist NTIA in evaluating the potential impact of the 
removal of this exception from ESIGN on consumers, utility companies, 
legal professionals, and state electronic transactions laws. The 
following questions are intended to provide guidance as to the specific 
subject 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. What methods, if any, are available to protect utility service 
customers if the utility cancellation notices exception is removed from 
the ESIGN Act?
    2. Discuss state and municipal utility regulation and consumer 
protection

[[Page 4181]]

laws that require written notice to consumers for cancellation of 
telephone, water, gas, or electric utility services.
    3. Discuss state and municipal utility regulations, laws, or 
ordinances that allow utilities to send electronic notices to consumers 
for cancellation or termination of telephone, water, gas or electric 
utility services.
    4. How would the removal of the utility cancellation notices 
exception to ESIGN affect consumers? How would the removal of the 
exception affect the provision of notice by utility companies to their 
customers? Please discuss.
    5. What effect would the removal of the exception have on the 
current municipal, state, and federal policies concerning notice of 
utility service cancellations?
    6. If the ESIGN Act is amended to eliminate the utility 
cancellation notice exception, what other changes, if any, are required 
to maintain consumer protection laws? What changes would be necessary, 
if any, to maintain current state and Federal policies concerning the 
content and timing of utility cancellation notices?
    7. What are the benefits for utility customers, and utility 
companies that may result from electronic notice of cancellation of 
utility services? For example, would electronic notice provide 
customers with additional time to correct conditions or circumstances 
that led to the cancellation?
    8. List any unique issues surrounding the delivery, timing, 
authentication, privacy, of utility cancellation notices that can and 
should be resolved prior to removal of the exception from the Act.
    9. State whether municipalities, states, or utility companies have 
developed electronic notification procedures for the transmission of 
utility service information.
    10. Discuss current electronic methods that are used to provide 
information to consumers regarding utility services (e.g., conditions 
of service or rate information). In these instances, discuss the 
consumer protection mechanisms that are employed by utility companies 
to transmit service or rate information to customers. Also discuss the 
following:
    a. receipt verification procedures;
    b. updated regulations that reflect electronic signature 
technologies; and
    c. regulations that require the retention of paper copies of the 
notice.
    Please provide copies of studies, reports, opinions, research or 
other empirical data referenced in the responses.

    Dated: January 23, 2003.
Kathy D. Smith,
Chief Counsel, National Telecommunications and Information 
Administration.
[FR Doc. 03-1921 Filed 1-27-03; 8:45 am]
BILLING CODE 3510-60-S