I

106TH CONGRESS

1ST SESSION H. R. 1320

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.

IN THE HOUSE OF REPRESENTATIVES

MARCH 25, 1999

Ms. ESHOO introduced the following bill; which was referred to the Committee

on Commerce, and in addition to the Committee on Government Reform,

for a period to be subsequently determined by the Speaker, in each case

for consideration of such provisions as fall within the jurisdiction of the

committee concerned

A BILL

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’’.

6 SEC. 2. FINDINGS.

7 The Congress makes the following findings:
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1 (1) The growth of electronic commerce and

2 electronic government transactions represent a pow3 erful force for economic growth, consumer choice,

4 improved civic participation and wealth creation.

5 (2) The promotion of growth in private sector

6 electronic commerce through Federal legislation is in

7 the national interest because that market is globally

8 important to the United States.

9 (3) A consistent legal foundation, across mul10 tiple jurisdictions, for electronic commerce will pro11 mote the growth of such transactions, and that such

12 a foundation should be based upon a simple, tech13 nology neutral, nonregulatory, and market-based ap14 proach.

15 (4) The nation and the world stand at the be16 ginning of a large scale transition to an information

17 society which will require innovative legal and policy

18 approaches, and therefore, States can serve the na19 tional interest by continuing their proven role as lab20 oratories of innovation for quickly evolving areas of

21 public policy, provided that States also adopt a con22 sistent, reasonable national baseline to eliminate ob23 solete barriers to electronic commerce such as undue

24 paper and pen requirements, and further, that any
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1 such innovation should not unduly burden interjuris2 dictional commerce.

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

4 not currently provide a consistent, reasonable na5 tional baseline or in fact create an undue burden to

6 interstate commerce in the important burgeoning

7 area of electronic commerce, the national interest is

8 best served by Federal preemption to the extent nec9 essary to provide such consistent national baseline

10 and eliminate said burden, but that absent such lack

11 of a 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 writing and signing requirements imposed by law;

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

20 themselves on the terms and conditions on which

21 they use and accept electronic signatures and elec22 tronic records; and

23 (5) to promote the development of a consistent

24 national legal infrastructure necessary to support of
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1 electronic commerce at the Federal and State levels

2 within existing areas of jurisdiction.

3 SEC. 4. DEFINITIONS.

4 In this Act:

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

6 means of or relating to technology having electrical,

7 digital, magnetic, wireless, optical, electromagnetic,

8 or similar capabilities.

9 (2) ELECTRONIC RECORD.—The term ‘‘elec10 tronic record’’ means a record created, stored, gen11 erated, received, or communicated by electronic

12 means.

13 (3) ELECTRONIC SIGNATURE.—The term ‘‘elec14 tronic signature’’ means a signature in electronic

15 form, attached to or logically associated with an

16 electronic record.

17 (4) GOVERNMENTAL AGENCY.—The term ‘‘gov18 ernmental agency’’ means an executive, legislative,

19 or judicial agency, department, board, commission,

20 authority, institution, or instrumentality of the Fed21 eral government or of a State or of any county, mu22 nicipality, or other political subdivision of a State.

23 (5) RECORD.—The term ‘‘record’’ means infor24 mation that is inscribed on a tangible medium or
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1 that is stored in an electronic or other medium and

2 is retrievable in perceivable form.

3 (6) SIGN.—The term ‘‘sign’’ means to execute

4 or adopt a signature.

5 (7) SIGNATURE.—The term ‘‘signature’’ means

6 any symbol, sound, or process executed or adopted

7 by a person or entity, with intent to authenticate or

8 accept a record.

9 (8) TRANSACTION.—The term ‘‘transaction’’

10 means an action or set of actions occurring between

11 2 or more persons relating to the conduct of com12 merce.

13 SEC. 5. PRINCIPLES GOVERNING THE USE OF ELECTRONIC

14 SIGNATURES IN INTERNATIONAL TRANS15 ACTIONS.

16 (a) IN GENERAL.—To the extent practicable, the

17 Federal Government shall observe the following principles

18 in an international context to enable commercial electronic

19 transaction:

20 (1) Remove paper-based obstacles to electronic

21 transactions by adopting relevant principles from the

22 Model Law on Electronic Commerce adopted in

23 1996 by the United Nations Commission on Inter24 national Trade Law (UNCITRAL).
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1 (2) Permit parties to a transaction to determine

2 the appropriate authentication technologies and im3 plementation models for their transactions, with as4 surance that those technologies and implementation

5 models will be recognized and enforced.

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

7 opportunity to prove in court or other proceedings

8 that their authentication approaches and their trans9 actions are valid.

10 (4) Take a nondiscriminatory approach to elec11 tronic signatures and authentication methods from

12 other jurisdictions.

13 SEC. 6. INTERSTATE CONTRACT CERTAINTY.

14 (a) INTERSTATE COMMERCIAL CONTRACTS.—A con15 tract relating to an interstate transaction shall not be de16 nied legal effect solely because an electronic signature or

17 electronic record was used in its formation.

18 (b) METHODS.—Notwithstanding any rule of law

19 that specifies one or more acceptable or required tech20 nologies or business models, including legal or other proce21 dures, necessary to create, use, receive, validate, or invali22 date electronic signatures or electronic records, the parties

23 to an interstate transaction may establish by contract,

24 electronically or otherwise, such technologies or business

25 models, including legal or other procedures, to create, use,
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1 receive, validate, or invalidate electronic signatures and

2 electronic records.

3 (c) NOT PREEMPT STATE LAW.—Nothing in this sec4 tion shall be construed to preempt the law of a State that

5 enacts legislation governing electronic transactions that is

6 consistent with subsections (a) and (b). A State that en7 acts, or has in effect, uniform electronic transactions legis8 lation substantially as reported to State legislatures by the

9 National Conference of Commissioners on Uniform State

10 Law shall be deemed to have satisfied this criterion, pro11 vided such legislation as enacted is not inconsistent with

12 subsections (a) and (b).

13 (d) INTENT.—The intent of a person to execute or

14 adopt an electronic signature shall be determined from the

15 context and surrounding circumstances, which may in16 clude accepted commercial practices.

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

18 ELECTRONIC COMMERCE.

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

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

21 provide a report to the Director of the Office of Manage22 ment and Budget and the Secretary of Commerce identi23 fying any provision of law administered by such agency,

24 or any regulations issued by such agency and in effect on

25 the date of enactment of this Act, that may impose a bar-
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1 rier to electronic transactions, or otherwise to the conduct

2 of commerce online or be electronic means. Such barriers

3 include, but are not limited to, barriers imposed by a law

4 or regulation directly or indirectly requiring that signa5 tures, or records of transactions, be accomplished or re6 tained in other than electronic form. In its report, each

7 agency shall identify the barriers among those identified

8 whose removal would require legislative action, and shall

9 indicate agency plans to undertake regulatory action to

10 remove such barriers among those identified as are caused

11 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 any existing

19 barriers to electronic transactions or otherwise to

20 the conduct of commerce online or by electronic

21 means; and

22 (2) actions being taken by the Executive

23 Branch and individual Federal agencies to remove

24 such barriers as are caused by agency regulations or

25 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.

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