IIB

106TH CONGRESS

1ST SESSION H. R. 1714

IN THE SENATE OF THE UNITED STATES

NOVEMBER 10, 1999

Received

NOVEMBER 19, 1999

Read twice and referred to the Committee on Commerce, Science, and

Transportation

AN ACT

To facilitate the use of electronic records and signatures

in interstate or foreign commerce.

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

2 This Act may be cited as the ‘‘Electronic Signatures

3 in Global and National Commerce Act’’.

4 TITLE I—VALIDITY OF ELEC5 TRONIC RECORDS AND SIG6 NATURES FOR COMMERCE

7 SEC. 101. GENERAL RULE OF VALIDITY.

8 (a) GENERAL RULE.—With respect to any contract,

9 agreement, or record entered into or provided in, or affect10 ing, interstate or foreign commerce, notwithstanding any

11 statute, regulation, or other rule of law, the legal effect,

12 validity, or enforceability of such contract, agreement, or

13 record shall not be denied—

14 (1) on the ground that the contract, agreement,

15 or record is not in writing if the contract, agree16 ment, or record is an electronic record; or

17 (2) on the ground that the contract, agreement,

18 or record is not signed or is not affirmed by a signa19 ture if the contract, agreement, or record is signed

20 or affirmed by an electronic signature.

21 (b) AUTONOMY OF PARTIES IN COMMERCE.—

22 (1) IN GENERAL.—With respect to any con23 tract, agreement, or record entered into or provided

24 in, or affecting, interstate or foreign commerce—

25 (A) the parties to such contract, agree26 ment, or record may establish procedures or re-
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1 quirements regarding the use and acceptance of

2 electronic records and electronic signatures ac3 ceptable to such parties;

4 (B) the legal effect, validity, or enforce5 ability of such contract, agreement, or record

6 shall not be denied because of the type or meth7 od of electronic record or electronic signature

8 selected by the parties in establishing such pro9 cedures or requirements; and

10 (C) nothing in this section requires any

11 party to use or accept electronic records or elec12 tronic signatures.

13 (2) CONSENT TO ELECTRONIC RECORDS.—Not14 withstanding subsection (a) and paragraph (1) of

15 this subsection—

16 (A) if a statute, regulation, or other rule of

17 law requires that a record be provided or made

18 available to a consumer in writing, that require19 ment shall be satisfied by an electronic record

20 if—

21 (i) the consumer has affirmatively

22 consented, by means of a consent that is

23 conspicuous and visually separate from

24 other terms, to the provision or availability

25 (whichever is required) of such record (or
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1 identified groups of records that include

2 such record) as an electronic record, and

3 has not withdrawn such consent;

4 (ii) prior to consenting, the consumer

5 is provided with a statement of the hard6 ware and software requirements for access

7 to and retention of electronic records; and

8 (iii) the consumer affirmatively ac9 knowledges, by means of an acknowledge10 ment that is conspicuous and visually sepa11 rate from other terms, that—

12 (I) the consumer has an obliga13 tion to notify the provider of elec14 tronic records of any change in the

15 consumer’s electronic mail address or

16 other location to which the electronic

17 records may be provided; and

18 (II) if the consumer withdraws

19 consent, the consumer has the obliga20 tion to notify the provider to notify

21 the provider of electronic records of

22 the electronic mail address or other

23 location to which the records may be

24 provided; and
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1 (B) the record is capable of review, reten2 tion, and printing by the recipient if accessed

3 using the hardware and software specified in

4 the statement under subparagraph (A)(ii) at

5 the time of the consumer’s consent; and

6 (C) if such statute, regulation, or other

7 rule of law requires that a record be retained,

8 that requirement shall be satisfied if such

9 record complies with the requirements of sub10 paragraphs (A) and (B) of subsection (c)(1).

11 (c) RETENTION OF CONTRACTS, AGREEMENTS, AND

12 RECORDS.—

13 (1) ACCURACY AND ACCESSIBILITY.—If a stat14 ute, regulation, or other rule of law requires that a

15 contract, agreement, or record be in writing or be

16 retained, that requirement is met by retaining an

17 electronic record of the information in the contract,

18 agreement, or record that—

19 (A) accurately reflects the information set

20 forth in the contract, agreement, or record after

21 it was first generated in its final form as an

22 electronic record; and

23 (B) remains accessible, for the period re24 quired by such statute, regulation, or rule of
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1 law, for later reference, transmission, and print2 ing.

3 (2) EXCEPTION.—A requirement to retain a

4 contract, agreement, or record in accordance with

5 paragraph (1) does not apply to any information

6 whose sole purpose is to enable the contract, agree7 ment, or record to be sent, communicated, or re8 ceived.

9 (3) ORIGINALS.—If a statute, regulation, or

10 other rule of law requires a contract, agreement, or

11 record to be provided, available, or retained in its

12 original form, or provides consequences if the con13 tract, agreement, or record is not provided, avail14 able, or retained in its original form, that statute,

15 regulation, or rule of law is satisfied by an electronic

16 record that complies with paragraph (1).

17 (4) CHECKS.—If a statute, regulation, or other

18 rule of law requires the retention of a check, that re19 quirement is satisfied by retention of an electronic

20 record of all the information on the front and back

21 of the check in accordance with paragraph (1).

22 (d) ABILITY TO CONTEST SIGNATURES AND

23 CHARGES.—Nothing in this section shall be construed to

24 limit or otherwise affect the rights of any person to assert

25 that an electronic signature is a forgery, is used without
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1 authority, or otherwise is invalid for reasons that would

2 invalidate the effect of a signature in written form. The

3 use or acceptance of an electronic record or electronic sig4 nature by a consumer shall not constitute a waiver of any

5 substantive protections afforded consumers under the

6 Consumer Credit Protection Act.

7 (e) SCOPE.—This Act is intended to clarify the legal

8 status of electronic records and electronic signatures in

9 the context of writing and signing requirements imposed

10 by law. Nothing in this Act affects the content or timing

11 of any disclosure required to be provided to any consumer

12 under any statute, regulation, or other rule of law.

13 SEC. 102. AUTHORITY TO ALTER OR SUPERSEDE GENERAL

14 RULE.

15 (a) PROCEDURE TO ALTER OR SUPERSEDE.—Except

16 as provided in subsection (b), a State statute, regulation,

17 or other rule of law may modify, limit, or supersede the

18 provisions of section 101 if such statute, regulation, or

19 rule of law—

20 (1)(A) constitutes an enactment or adoption of

21 the Uniform Electronic Transactions Act as reported

22 to the State legislatures by the National Conference

23 of Commissioners on Uniform State Laws; or

24 (B) specifies the alternative procedures or re25 quirements for the use or acceptance (or both) of
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1 electronic records or electronic signatures to estab2 lish the legal effect, validity, or enforceability of con3 tracts, agreements, or records; and

4 (2) if enacted or adopted after the date of the

5 enactment of this Act, makes specific reference to

6 this Act.

7 (b) LIMITATIONS ON ALTERATION OR SUPERSES8 SION.—A State statute, regulation, or other rule of law

9 (including an insurance statute, regulation, or other rule

10 of law), regardless of its date of the enactment or adop11 tion, that modifies, limits, or supersedes section 101 shall

12 not be effective to the extent that such statute, regulation,

13 or rule—

14 (1) discriminates in favor of or against a spe15 cific technology, process, or technique of creating,

16 storing, generating, receiving, communicating, or au17 thenticating electronic records or electronic signa18 tures;

19 (2) discriminates in favor of or against a spe20 cific type or size of entity engaged in the business

21 of facilitating the use of electronic records or elec22 tronic signatures;

23 (3) is based on procedures or requirements that

24 are not specific or that are not publicly available; or
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1 (4) is otherwise inconsistent with the provisions

2 of this title.

3 (c) EXCEPTION.—Notwithstanding subsection (b), a

4 State may, by statute, regulation, or rule of law enacted

5 or adopted after the date of the enactment of this Act,

6 require specific notices to be provided or made available

7 in writing if such notices are necessary for the protection

8 of the public health or safety of consumers. A consumer

9 may not, pursuant to section 101(b)(2), consent to the

10 provision or availability of such notice solely as an elec11 tronic record.

12 SEC. 103. SPECIFIC EXCLUSIONS.

13 (a) EXCEPTED REQUIREMENTS.—The provisions of

14 section 101 shall not apply to a contract, agreement, or

15 record to the extent it is governed by—

16 (1) a statute, regulation, or other rule of law

17 governing the creation and execution of wills, codi18 cils, or testamentary trusts;

19 (2) a statute, regulation, or other rule of law

20 governing adoption, divorce, or other matters of

21 family law;

22 (3) the Uniform Commercial Code, as in effect

23 in any State, other than sections 1-107 and 1-206

24 and Articles 2 and 2A;
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1 (4) any requirement by a Federal regulatory

2 agency or self-regulatory organization that records

3 be filed or maintained in a specified standard or

4 standards (including a specified format or formats),

5 except that nothing in this paragraph relieves any

6 Federal regulatory agency of its obligations under

7 the Government Paperwork Elimination Act (title

8 XVII of Public Law 105–277);

9 (5) the Uniform Anatomical Gift Act; or

10 (6) the Uniform Health-Care Decisions Act.

11 (b) ADDITIONAL EXCEPTIONS.—The provisions of

12 section 101 shall not apply to—

13 (1) any contract, agreement, or record entered

14 into between a party and a State agency if the State

15 agency is not acting as a market participant in or

16 affecting interstate commerce;

17 (2) court orders or notices, or official court doc18 uments (including briefs, pleadings, and other

19 writings) required to be executed in connection with

20 court proceedings; or

21 (3) any notice concerning—

22 (A) the cancellation or termination of util23 ity services (including water, heat, and power);

24 (B) default, acceleration, repossession,

25 foreclosure, or eviction, or the right to cure,
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1 under a credit agreement secured by, or a rent2 al agreement for, a primary residence of an in3 dividual; or

4 (C) the cancellation or termination of

5 health insurance or benefits or life insurance

6 benefits (excluding annuities).

7 SEC. 104. STUDY.

8 (a) FOLLOWUP STUDY.—Within 5 years after the

9 date of the enactment of this Act, the Secretary of Com10 merce, acting through the Assistant Secretary for Commu11 nications and Information, shall conduct an inquiry re12 garding any State statutes, regulations, or other rules of

13 law enacted or adopted after such date of the enactment

14 pursuant to section 102(a), and the extent to which such

15 statutes, regulations, and rules comply with section

16 102(b).

17 (b) REPORT.—The Secretary shall submit a report to

18 the Congress regarding the results of such inquiry by the

19 conclusion of such 5-year period.

20 (c) ADDITIONAL STUDY OF DELIVERY.—Within 18

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

22 Secretary of Commerce shall conduct an inquiry regarding

23 the effectiveness of the delivery of electronic records to

24 consumers using electronic mail as compared with delivery

25 of written records via the United States Postal Service and
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1 private express mail services. The Secretary shall submit

2 a report to the Congress regarding the results of such in3 quiry by the conclusion of such 18-month period.

4 SEC. 105. DEFINITIONS.

5 For purposes of this title:

6 (1) ELECTRONIC RECORD.—The term ‘‘elec7 tronic record’’ means a writing, document, or other

8 record created, stored, generated, received, or com9 municated by electronic means.

10 (2) ELECTRONIC SIGNATURE.—The term ‘‘elec11 tronic signature’’ means information or data in elec12 tronic form, attached to or logically associated with

13 an electronic record, and executed or adopted by a

14 person or an electronic agent of a person, with the

15 intent to sign a contract, agreement, or record.

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

17 means of or relating to technology having electrical,

18 digital, magnetic, optical, electromagnetic, or similar

19 capabilities regardless of medium.

20 (4) ELECTRONIC AGENT.—The term ‘‘electronic

21 agent’’ means a computer program or an electronic

22 or other automated means used independently to ini23 tiate an action or respond to electronic records in

24 whole or in part without review by an individual at

25 the time of the action or response.
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1 (5) RECORD.—The term ‘‘record’’ means infor2 mation that is inscribed on a tangible medium or

3 that is stored in an electronic or other medium and

4 is retrievable in perceivable form.

5 (6) FEDERAL REGULATORY AGENCY.—The

6 term ‘‘Federal regulatory agency’ means an agency,

7 as that term is defined in section 552(f) of title 5,

8 United States Code, that is authorized by Federal

9 law to impose requirements by rule, regulation,

10 order, or other legal instrument.

11 (7) SELF-REGULATORY ORGANIZATION.—The

12 term ‘‘self-regulatory organization’’ means an orga13 nization or entity that is not a Federal regulatory

14 agency or a State, but that is under the supervision

15 of a Federal regulatory agency and is authorized

16 under Federal law to adopt and administer rules ap17 plicable to its members that are enforced by such or18 ganization or entity, by a Federal regulatory agency,

19 or by another self-regulatory organization.
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1 TITLE II—DEVELOPMENT AND

2 ADOPTION OF ELECTRONIC

3 SIGNATURE PRODUCTS AND

4 SERVICES

5 SEC. 201. TREATMENT OF ELECTRONIC SIGNATURES IN

6 INTERSTATE AND FOREIGN COMMERCE.

7 (a) INQUIRY REGARDING IMPEDIMENTS TO COM8 MERCE.—

9 (1) INQUIRIES REQUIRED.—Within 180 days

10 after the date of the enactment of this Act, and bi11 ennially thereafter, the Secretary of Commerce, act12 ing through the Assistant Secretary for Communica13 tions and Information, shall complete an inquiry

14 to—

15 (A) identify any domestic and foreign im16 pediments to commerce in electronic signature

17 products and services and the manners in which

18 and extent to which such impediments inhibit

19 the development of interstate and foreign com20 merce;

21 (B) identify constraints imposed by foreign

22 nations or international organizations that con23 stitute barriers to providers of electronic signa24 ture products or services; and
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1 (C) identify the degree to which other na2 tions and international organizations are com3 plying with the principles in subsection (b)(2).

4 (2) SUBMISSION.—The Secretary shall submit a

5 report to the Congress regarding the results of each

6 such inquiry within 90 days after the conclusion of

7 such inquiry. Such report shall include a description

8 of the actions taken by the Secretary pursuant to

9 subsection (b) of this section.

10 (b) PROMOTION OF ELECTRONIC SIGNATURES.—

11 (1) REQUIRED ACTIONS.—The Secretary of

12 Commerce, acting through the Assistant Secretary

13 for Communications and Information, shall promote

14 the acceptance and use, on an international basis, of

15 electronic signatures in accordance with the prin16 ciples specified in paragraph (2) and in a manner

17 consistent with section 101 of this Act. The Sec18 retary of Commerce shall take all actions necessary

19 in a manner consistent with such principles to elimi20 nate or reduce, to the maximum extent possible, the

21 impediments to commerce in electronic signatures,

22 including those identified in the inquiries under sub23 section (a) for the purpose of facilitating the devel24 opment of interstate and foreign commerce.
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1 (2) PRINCIPLES.—The principles specified in

2 this paragraph are the following:

3 (A) Free markets and self-regulation, rath4 er than Government standard-setting or rules,

5 should govern the development and use of elec6 tronic records and electronic signatures.

7 (B) Neutrality and nondiscrimination

8 should be observed among providers of and

9 technologies for electronic records and elec10 tronic signatures.

11 (C) Parties to a transaction should be per12 mitted to establish requirements regarding the

13 use of electronic records and electronic signa14 tures acceptable to such parties.

15 (D) Parties to a transaction—

16 (i) should be permitted to determine

17 the appropriate authentication technologies

18 and implementation models for their trans19 actions, with assurance that those tech20 nologies and implementation models will be

21 recognized and enforced; and

22 (ii) should have the opportunity to

23 prove in court or other proceedings that

24 their authentication approaches and their

25 transactions are valid.
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1 (E) Electronic records and electronic sig2 natures in a form acceptable to the parties

3 should not be denied legal effect, validity, or en4 forceability on the ground that they are not in

5 writing.

6 (F) De jure or de facto imposition of

7 standards on private industry through foreign

8 adoption of regulations or policies with respect

9 to electronic records and electronic signatures

10 should be avoided.

11 (G) Paper-based obstacles to electronic

12 transactions should be removed.

13 (c) CONSULTATION.—In conducting the activities re14 quired by this section, the Secretary shall consult with

15 users and providers of electronic signature products and

16 services and other interested persons.

17 (d) PRIVACY.—Nothing in this section shall be con18 strued to require the Secretary or the Assistant Secretary

19 to take any action that would adversely affect the privacy

20 of consumers.

21 (e) DEFINITIONS.—As used in this section, the terms

22 ‘‘electronic record’’ and ‘‘electronic signature’’ have the

23 meanings provided in section 104 of the Electronic Signa24 tures in Global and National Commerce Act.
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1 TITLE III—USE OF ELECTRONIC

2 RECORDS AND SIGNATURES

3 UNDER FEDERAL SECURITIES

4 LAW

5 SEC. 301. GENERAL VALIDITY OF ELECTRONIC RECORDS

6 AND SIGNATURES.

7 Section 3 of the Securities Exchange Act of 1934 (15

8 U.S.C. 78c) is amended by adding at the end the following

9 new subsection:

10 ‘‘(h) REFERENCES TO WRITTEN RECORDS AND SIG11 NATURES.—

12 ‘‘(1) GENERAL VALIDITY OF ELECTRONIC

13 RECORDS AND SIGNATURES.—Except as otherwise

14 provided in this subsection—

15 ‘‘(A) if a contract, agreement, or record

16 (as defined in subsection (a)(37)) is required by

17 the securities laws or any rule or regulation

18 thereunder (including a rule or regulation of a

19 self-regulatory organization), and is required by

20 Federal or State statute, regulation, or other

21 rule of law to be in writing, the legal effect, va22 lidity, or enforceability of such contract, agree23 ment, or record shall not be denied on the

24 ground that the contract, agreement, or record
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1 is not in writing if the contract, agreement, or

2 record is an electronic record;

3 ‘‘(B) if a contract, agreement, or record is

4 required by the securities laws or any rule or

5 regulation thereunder (including a rule or regu6 lation of a self-regulatory organization), and is

7 required by Federal or State statute, regula8 tion, or other rule of law to be signed, the legal

9 effect, validity, or enforceability of such con10 tract, agreement, or record shall not be denied

11 on the ground that such contract, agreement, or

12 record is not signed or is not affirmed by a sig13 nature if the contract, agreement, or record is

14 signed or affirmed by an electronic signature;

15 and

16 ‘‘(C) if a broker, dealer, transfer agent, in17 vestment adviser, or investment company enters

18 into a contract or agreement with, or accepts a

19 record from, a customer or other counterparty,

20 such broker, dealer, transfer agent, investment

21 adviser, or investment company may accept and

22 rely upon an electronic signature on such con23 tract, agreement, or record, and such electronic

24 signature shall not be denied legal effect, valid-
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1 ity, or enforceability because it is an electronic

2 signature.

3 ‘‘(2) IMPLEMENTATION.—

4 ‘‘(A) REGULATIONS.—The Commission

5 may prescribe such regulations as may be nec6 essary to carry out this subsection consistent

7 with the public interest and the protection of

8 investors.

9 ‘‘(B) NONDISCRIMINATION.—The regula10 tions prescribed by the Commission under sub11 paragraph (A) shall not—

12 ‘‘(i) discriminate in favor of or against

13 a specific technology, method, or technique

14 of creating, storing, generating, receiving,

15 communicating, or authenticating elec16 tronic records or electronic signatures; or

17 ‘‘(ii) discriminate in favor of or

18 against a specific type or size of entity en19 gaged in the business of facilitating the

20 use of electronic records or electronic sig21 natures.

22 ‘‘(3) EXCEPTIONS.—Notwithstanding any other

23 provision of this subsection—

24 ‘‘(A) the Commission, an appropriate regu25 latory agency, or a self-regulatory organization
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1 may require that records be filed or maintained

2 in a specified standard or standards (including

3 a specified format or formats) if the records are

4 required to be submitted to the Commission, an

5 appropriate regulatory agency, or a self-regu6 latory organization, respectively, or are required

7 by the Commission, an appropriate regulatory

8 agency, or a self-regulatory organization to be

9 retained; and

10 ‘‘(B) the Commission may require that

11 contracts, agreements, or records relating to

12 purchases and sales, or establishing accounts

13 for conducting purchases and sales, of penny

14 stocks be manually signed, and may require

15 such manual signatures with respect to trans16 actions in similar securities if the Commission

17 determines that such securities are susceptible

18 to fraud and that such fraud would be deterred

19 or prevented by requiring manual signatures.

20 ‘‘(4) RELATION TO OTHER LAW.—The provi21 sions of this subsection apply in lieu of the provi22 sions of title I of the Electronic Signatures in Global

23 and National Commerce Act to a contract, agree24 ment, or record (as defined in subsection (a)(37))

25 that is required by the securities laws.
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1 ‘‘(5) SAVINGS PROVISION.—Nothing in this sub2 section applies to any rule or regulation under the

3 securities laws (including a rule or regulation of a

4 self-regulatory organization) that is in effect on the

5 date of the enactment of the Electronic Signatures

6 in Global and National Commerce Act and that re7 quires a contract, agreement, or record to be in writ8 ing, to be submitted or retained in original form, or

9 to be in a specified standard or standards (including

10 a specified format or formats).

11 ‘‘(6) DEFINITIONS.—As used in this subsection:

12 ‘‘(A) ELECTRONIC RECORD.—The term

13 ‘electronic record’ means a writing, document,

14 or other record created, stored, generated, re15 ceived, or communicated by electronic means.

16 ‘‘(B) ELECTRONIC SIGNATURE.—The term

17 ‘‘electronic signature’’ means information or

18 data in electronic form, attached to or logically

19 associated with an electronic record, and exe20 cuted or adopted by a person or an electronic

21 agent of a person, with the intent to sign a con22 tract, agreement, or record.

23 ‘‘(C) ELECTRONIC.—The term ‘electronic’

24 means of or relating to technology having elec25 trical, digital, magnetic, optical, electro-
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1 magnetic, or similar capabilities regardless of

2 medium.’’.

Passed the House of Representatives November 9,

1999.

Attest: JEFF TRANDAHL,

Clerk.