106TH CONGRESS

1ST SESSION S. 761

AN ACT

To regulate interstate commerce by electronic means by permitting and encouraging the continued expansion of electronic commerce through the operation of free market

forces, and other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Millennium Digital

5 Commerce Act’’.
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1 SEC. 2. FINDINGS.

2 The Congress makes the following findings:

3 (1) The growth of electronic commerce and

4 electronic government transactions represent a pow5 erful force for economic growth, consumer choice,

6 improved civic participation and wealth creation.

7 (2) The promotion of growth in private sector

8 electronic commerce through Federal legislation is in

9 the national interest because that market is globally

10 important to the United States.

11 (3) A consistent legal foundation, across mul12 tiple jurisdictions, for electronic commerce will pro13 mote the growth of such transactions, and that such

14 a foundation should be based upon a simple, tech15 nology neutral, nonregulatory, and market-based ap16 proach.

17 (4) The Nation and the world stand at the be18 ginning of a large scale transition to an information

19 society which will require innovative legal and policy

20 approaches, and therefore, States can serve the na21 tional interest by continuing their proven role as lab22 oratories of innovation for quickly evolving areas of

23 public policy, provided that States also adopt a con24 sistent, reasonable national baseline to eliminate ob25 solete barriers to electronic commerce such as undue

26 paper and pen requirements, and further, that any
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1 such innovation should not unduly burden inter-ju2 risdictional commerce.

3 (5) To the extent State laws or regulations do

4 not provide a consistent, reasonable national baseline

5 or in fact create an undue burden to interstate com6 merce in the important burgeoning area of electronic

7 commerce, the national interest is best served by

8 Federal preemption to the extent necessary to pro9 vide such consistent, reasonable national baseline or

10 eliminate said burden, but that absent such lack of

11 consistent, reasonable national baseline or such

12 undue burdens, the best legal system for electronic

13 commerce will result from continuing experimen14 tation by individual jurisdictions.

15 (6) With due regard to the fundamental need

16 for a consistent national baseline, each jurisdiction

17 that enacts such laws should have the right to deter18 mine the need for any exceptions to protect con19 sumers and maintain consistency with existing re20 lated bodies of law within a particular jurisdiction.

21 (7) Industry has developed several electronic

22 signature technologies for use in electronic trans23 actions, and the public policies of the United States

24 should serve to promote a dynamic marketplace

25 within which these technologies can compete. Con-
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1 sistent with this Act, States should permit the use

2 and development of any authentication technologies

3 that are appropriate as practicable as between pri4 vate parties and in use with State agencies.

5 SEC. 3. PURPOSES.

6 The purposes of this Act are—

7 (1) to permit and encourage the continued ex8 pansion of electronic commerce through the oper9 ation of free market forces rather than proscriptive

10 governmental mandates and regulations;

11 (2) to promote public confidence in the validity,

12 integrity and reliability of electronic commerce and

13 online government under Federal law;

14 (3) to facilitate and promote electronic com15 merce by clarifying the legal status of electronic

16 records and electronic signatures in the context of

17 contract formation;

18 (4) to facilitate the ability of private parties en19 gaged in interstate transactions to agree among

20 themselves on the appropriate electronic signature

21 technologies for their transactions; and

22 (5) to promote the development of a consistent

23 national legal infrastructure necessary to support

24 electronic commerce at the Federal and State levels

25 within existing areas of jurisdiction.
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1 SEC. 4. DEFINITIONS.

2 In this Act:

3 (1) ELECTRONIC.—The term ‘‘electronic’’

4 means relating to technology having electrical, dig5 ital, magnetic, wireless, optical, electromagnetic, or

6 similar capabilities.

7 (2) ELECTRONIC AGENT.—The term ‘‘electronic

8 agent’’ means a computer program or an electronic

9 or other automated means used to initiate an action

10 or respond to electronic records or performances in

11 whole or in part without review by an individual at

12 the time of the action or response.

13 (3) ELECTRONIC RECORD.—The term ‘‘elec14 tronic record’’ means a record created, generated,

15 sent, communicated, received, or stored by electronic

16 means.

17 (4) ELECTRONIC SIGNATURE.—The term ‘‘elec18 tronic signature’’ means an electronic sound, symbol,

19 or process attached to or logically associated with a

20 record and executed or adopted by a person with the

21 intent to sign the record.

22 (5) GOVERNMENTAL AGENCY.—The term ‘‘gov23 ernmental agency’’ means an executive, legislative,

24 or judicial agency, department, board, commission,

25 authority, or institution of the Federal Government
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1 or of a State or of any county, municipality, or other

2 political subdivision of a State.

3 (6) RECORD.—The term ‘‘record’’ means infor4 mation that is inscribed on a tangible medium or

5 that is stored in an electronic or other medium and

6 is retrievable in perceivable form.

7 (7) TRANSACTION.—The term ‘‘transaction’’

8 means an action or set of actions relating to the con9 duct of commerce, between 2 or more persons, nei10 ther of which is the United States Government, a

11 State, or an agency, department, board, commission,

12 authority, or institution of the United States Gov13 ernment or of a State.

14 (8) UNIFORM ELECTRONIC TRANSACTIONS

15 ACT.—The term ‘‘Uniform Electronic Transactions

16 Act’’ means the Uniform Electronic Transactions

17 Act as provided to State legislatures by the National

18 Conference of Commissioners on Uniform State Law

19 in that form or any substantially similar variation

20 thereof.

21 SEC. 5. INTERSTATE CONTRACT CERTAINTY.

22 (a) IN GENERAL.—In any commercial transaction af23 fecting interstate commerce, a contract may not be denied

24 legal effect or enforceability solely because an electronic

25 signature or electronic record was used in its formation.
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1 (b) METHODS.—Parties to a transaction are per2 mitted to determine the appropriate electronic signature

3 technologies for their transaction, and the means of imple4 menting such technologies.

5 (c) PRESENTATION OF CONTRACTS.—Notwith6 standing subsection (a), if a law requires that a contract

7 be in writing, the legal effect or enforceability of an elec8 tronic record of such contract shall be denied under such

9 law, unless it is delivered to all parties to such contract

10 in a form that—

11 (1) can be retained by the parties for later ref12 erence; and

13 (2) can be used to prove the terms of the agree14 ment.

15 (d) SPECIFIC EXCLUSIONS.—The provisions of this

16 section shall not apply to a statute, regulation, or other

17 rule of law governing any of the following:

18 (1) The Uniform Commercial Code, as in effect

19 in a State, other than sections 1–107 and 1–206,

20 Article 2, and Article 2A.

21 (2) Premarital agreements, marriage, adoption,

22 divorce or other matters of family law.

23 (3) Documents of title which are filed of record

24 with a governmental unit until such time that a
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1 State or subdivision thereof chooses to accept filings

2 electronically.

3 (4) Residential landlord-tenant relationships.

4 (5) The Uniform Health-Care Decisions Act as

5 in effect in a State.

6 (e) ELECTRONIC AGENTS.—A contract relating to a

7 commercial transaction affecting interstate commerce may

8 not be denied legal effect or enforceability solely because

9 its formation involved—

10 (1) the interaction of electronic agents of the

11 parties; or

12 (2) the interaction of an electronic agent of a

13 party and an individual who acts on that individual’s

14 own behalf or as an agent for another person.

15 (f) INSURANCE.—It is the specific intent of the Con16 gress that this section apply to the business of insurance.

17 (g) APPLICATION IN UETA STATES.—This section

18 does not apply in any State in which the Uniform Elec19 tronic Transactions Act is in effect.

20 SEC. 6. PRINCIPLES GOVERNING THE USE OF ELECTRONIC

21 SIGNATURES IN INTERNATIONAL TRANS22 ACTIONS.

23 To the extent practicable, the Federal Government

24 shall observe the following principles in an international

25 context to enable commercial electronic transaction:
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1 (1) Remove paper-based obstacles to electronic

2 transactions by adopting relevant principles from the

3 Model Law on Electronic Commerce adopted in

4 1996 by the United Nations Commission on Inter5 national Trade Law.

6 (2) Permit parties to a transaction to determine

7 the appropriate authentication technologies and im8 plementation models for their transactions, with as9 surance that those technologies and implementation

10 models will be recognized and enforced.

11 (3) Permit parties to a transaction to have the

12 opportunity to prove in court or other proceedings

13 that their authentication approaches and their trans14 actions are valid.

15 (4) Take a nondiscriminatory approach to elec16 tronic signatures and authentication methods from

17 other jurisdictions.

18 SEC. 7. STUDY OF LEGAL AND REGULATORY BARRIERS TO

19 ELECTRONIC COMMERCE.

20 (a) BARRIERS.—Each Federal agency shall, not later

21 than 6 months after the date of enactment of this Act,

22 provide a report to the Director of the Office of Manage23 ment and Budget and the Secretary of Commerce identi24 fying any provision of law administered by such agency,

25 or any regulations issued by such agency and in effect on
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1 the date of enactment of this Act, that may impose a bar2 rier to electronic transactions, or otherwise to the conduct

3 of commerce online or by electronic means, including bar4 riers imposed by a law or regulation directly or indirectly

5 requiring that signatures, or records of transactions, be

6 accomplished or retained in other than electronic form. In

7 its report, each agency shall identify the barriers among

8 those identified whose removal would require legislative

9 action, and shall indicate agency plans to undertake regu10 latory action to remove such barriers among those identi11 fied as are caused by regulations issued by the agency.

12 (b) REPORT TO CONGRESS.—The Secretary of Com13 merce, in consultation with the Director of the Office of

14 Management and Budget, shall, within 18 months after

15 the date of enactment of this Act, and after the consulta16 tion required by subsection (c) of this section, report to

17 the Congress concerning—

18 (1) legislation needed to remove barriers to

19 electronic transactions or otherwise to the conduct of

20 commerce online or by electronic means; and

21 (2) actions being taken by the Executive

22 Branch and individual Federal agencies to remove

23 such barriers as are caused by agency regulations or

24 policies.
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1 (c) CONSULTATION.—In preparing the report re2 quired by this section, the Secretary of Commerce shall

3 consult with the General Services Administration, the Na4 tional Archives and Records Administration, and the At5 torney General concerning matters involving the authen6 ticity of records, their storage and retention, and their

7 usability for law enforcement purposes.

8 (d) INCLUDE FINDINGS IF NO RECOMMENDA9 TIONS.—If the report required by this section omits rec10 ommendations for actions needed to fully remove identi11 fied barriers to electronic transactions or to online or elec12 tronic commerce, it shall include a finding or findings, in13 cluding substantial reasons therefor, that such removal is

14 impracticable or would be inconsistent with the implemen15 tation or enforcement of applicable laws.

Passed the Senate November 19, 1999.

Attest:

Secretary.
106TH CONGRESS

1ST SESSION S. 761

AN ACT

To regulate interstate commerce by electronic

means by permitting and encouraging the continued expansion of electronic commerce throughthe operation of free market forces, and otherpurposes.