`[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1714 Referred in Senate (RFS)]







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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Electronic Signatures in Global and 
National Commerce Act''.

  TITLE I--VALIDITY OF ELECTRONIC RECORDS AND SIGNATURES FOR COMMERCE

SEC. 101. GENERAL RULE OF VALIDITY.

    (a) General Rule.--With respect to any contract, agreement, or 
record entered into or provided in, or affecting, interstate or foreign 
commerce, notwithstanding any statute, regulation, or other rule of 
law, the legal effect, validity, or enforceability of such contract, 
agreement, or record shall not be denied--
            (1) on the ground that the contract, agreement, or record 
        is not in writing if the contract, agreement, or record is an 
        electronic record; or
            (2) on the ground that the contract, agreement, or record 
        is not signed or is not affirmed by a signature if the 
        contract, agreement, or record is signed or affirmed by an 
        electronic signature.
    (b) Autonomy of Parties in Commerce.--
            (1) In general.--With respect to any contract, agreement, 
        or record entered into or provided in, or affecting, interstate 
        or foreign commerce--
                    (A) the parties to such contract, agreement, or 
                record may establish procedures or requirements 
                regarding the use and acceptance of electronic records 
                and electronic signatures acceptable to such parties;
                    (B) the legal effect, validity, or enforceability 
                of such contract, agreement, or record shall not be 
                denied because of the type or method of electronic 
                record or electronic signature selected by the parties 
                in establishing such procedures or requirements; and
                    (C) nothing in this section requires any party to 
                use or accept electronic records or electronic 
                signatures.
            (2) Consent to electronic records.--Notwithstanding 
        subsection (a) and paragraph (1) of this subsection--
                    (A) if a statute, regulation, or other rule of law 
                requires that a record be provided or made available to 
                a consumer in writing, that requirement shall be 
                satisfied by an electronic record if--
                            (i) the consumer has affirmatively 
                        consented, by means of a consent that is 
                        conspicuous and visually separate from other 
                        terms, to the provision or availability 
                        (whichever is required) of such record (or 
                        identified groups of records that include such 
                        record) as an electronic record, and has not 
                        withdrawn such consent;
                            (ii) prior to consenting, the consumer is 
                        provided with a statement of the hardware and 
                        software requirements for access to and 
                        retention of electronic records; and
                            (iii) the consumer affirmatively 
                        acknowledges, by means of an acknowledgement 
                        that is conspicuous and visually separate from 
                        other terms, that--
                                    (I) the consumer has an obligation 
                                to notify the provider of electronic 
                                records of any change in the consumer's 
                                electronic mail address or other 
                                location to which the electronic 
                                records may be provided; and
                                    (II) if the consumer withdraws 
                                consent, the consumer has the 
                                obligation to notify the provider to 
                                notify the provider of electronic 
                                records of the electronic mail address 
                                or other location to which the records 
                                may be provided; and
                    (B) the record is capable of review, retention, and 
                printing by the recipient if accessed using the 
                hardware and software specified in the statement under 
                subparagraph (A)(ii) at the time of the consumer's 
                consent; and
                    (C) if such statute, regulation, or other rule of 
                law requires that a record be retained, that 
                requirement shall be satisfied if such record complies 
                with the requirements of subparagraphs (A) and (B) of 
                subsection (c)(1).
    (c) Retention of Contracts, Agreements, and Records.--
            (1) Accuracy and accessibility.--If a statute, regulation, 
        or other rule of law requires that a contract, agreement, or 
        record be in writing or be retained, that requirement is met by 
        retaining an electronic record of the information in the 
        contract, agreement, or record that--
                    (A) accurately reflects the information set forth 
                in the contract, agreement, or record after it was 
                first generated in its final form as an electronic 
                record; and
                    (B) remains accessible, for the period required by 
                such statute, regulation, or rule of law, for later 
                reference, transmission, and printing.
            (2) Exception.--A requirement to retain a contract, 
        agreement, or record in accordance with paragraph (1) does not 
        apply to any information whose sole purpose is to enable the 
        contract, agreement, or record to be sent, communicated, or 
        received.
            (3) Originals.--If a statute, regulation, or other rule of 
        law requires a contract, agreement, or record to be provided, 
        available, or retained in its original form, or provides 
        consequences if the contract, agreement, or record is not 
        provided, available, or retained in its original form, that 
        statute, regulation, or rule of law is satisfied by an 
        electronic record that complies with paragraph (1).
            (4) Checks.--If a statute, regulation, or other rule of law 
        requires the retention of a check, that requirement is 
        satisfied by retention of an electronic record of all the 
        information on the front and back of the check in accordance 
        with paragraph (1).
    (d) Ability to Contest Signatures and Charges.--Nothing in this 
section shall be construed to limit or otherwise affect the rights of 
any person to assert that an electronic signature is a forgery, is used 
without authority, or otherwise is invalid for reasons that would 
invalidate the effect of a signature in written form. The use or 
acceptance of an electronic record or electronic signature by a 
consumer shall not constitute a waiver of any substantive protections 
afforded consumers under the Consumer Credit Protection Act.
    (e) Scope.--This Act is intended to clarify the legal status of 
electronic records and electronic signatures in the context of writing 
and signing requirements imposed by law. Nothing in this Act affects 
the content or timing of any disclosure required to be provided to any 
consumer under any statute, regulation, or other rule of law.

SEC. 102. AUTHORITY TO ALTER OR SUPERSEDE GENERAL RULE.

    (a) Procedure To Alter or Supersede.--Except as provided in 
subsection (b), a State statute, regulation, or other rule of law may 
modify, limit, or supersede the provisions of section 101 if such 
statute, regulation, or rule of law--
            (1)(A) constitutes an enactment or adoption of the Uniform 
        Electronic Transactions Act as reported to the State 
        legislatures by the National Conference of Commissioners on 
        Uniform State Laws; or
            (B) specifies the alternative procedures or requirements 
        for the use or acceptance (or both) of electronic records or 
        electronic signatures to establish the legal effect, validity, 
        or enforceability of contracts, agreements, or records; and
            (2) if enacted or adopted after the date of the enactment 
        of this Act, makes specific reference to this Act.
    (b) Limitations on Alteration or Supersession.--A State statute, 
regulation, or other rule of law (including an insurance statute, 
regulation, or other rule of law), regardless of its date of the 
enactment or adoption, that modifies, limits, or supersedes section 101 
shall not be effective to the extent that such statute, regulation, or 
rule--
            (1) discriminates in favor of or against a specific 
        technology, process, or technique of creating, storing, 
        generating, receiving, communicating, or authenticating 
        electronic records or electronic signatures;
            (2) discriminates in favor of or against a specific type or 
        size of entity engaged in the business of facilitating the use 
        of electronic records or electronic signatures;
            (3) is based on procedures or requirements that are not 
        specific or that are not publicly available; or
            (4) is otherwise inconsistent with the provisions of this 
        title.
    (c) Exception.--Notwithstanding subsection (b), a State may, by 
statute, regulation, or rule of law enacted or adopted after the date 
of the enactment of this Act, require specific notices to be provided 
or made available in writing if such notices are necessary for the 
protection of the public health or safety of consumers. A consumer may 
not, pursuant to section 101(b)(2), consent to the provision or 
availability of such notice solely as an electronic record.

SEC. 103. SPECIFIC EXCLUSIONS.

    (a) Excepted Requirements.--The provisions of section 101 shall not 
apply to a contract, agreement, or record to the extent it is governed 
by--
            (1) a statute, regulation, or other rule of law governing 
        the creation and execution of wills, codicils, or testamentary 
        trusts;
            (2) a statute, regulation, or other rule of law governing 
        adoption, divorce, or other matters of family law;
            (3) the Uniform Commercial Code, as in effect in any State, 
        other than sections 1-107 and 1-206 and Articles 2 and 2A;
            (4) any requirement by a Federal regulatory agency or self-
        regulatory organization that records be filed or maintained in 
        a specified standard or standards (including a specified format 
        or formats), except that nothing in this paragraph relieves any 
        Federal regulatory agency of its obligations under the 
        Government Paperwork Elimination Act (title XVII of Public Law 
        105-277);
            (5) the Uniform Anatomical Gift Act; or
            (6) the Uniform Health-Care Decisions Act.
    (b) Additional Exceptions.--The provisions of section 101 shall not 
apply to--
            (1) any contract, agreement, or record entered into between 
        a party and a State agency if the State agency is not acting as 
        a market participant in or affecting interstate commerce;
            (2) court orders or notices, or official court documents 
        (including briefs, pleadings, and other writings) required to 
        be executed in connection with court proceedings; or
            (3) any notice concerning--
                    (A) the cancellation or termination of utility 
                services (including water, heat, and power);
                    (B) default, acceleration, repossession, 
                foreclosure, or eviction, or the right to cure, under a 
                credit agreement secured by, or a rental agreement for, 
                a primary residence of an individual; or
                    (C) the cancellation or termination of health 
                insurance or benefits or life insurance benefits 
                (excluding annuities).

SEC. 104. STUDY.

    (a) Followup Study.--Within 5 years after the date of the enactment 
of this Act, the Secretary of Commerce, acting through the Assistant 
Secretary for Communications and Information, shall conduct an inquiry 
regarding any State statutes, regulations, or other rules of law 
enacted or adopted after such date of the enactment pursuant to section 
102(a), and the extent to which such statutes, regulations, and rules 
comply with section 102(b).
    (b) Report.--The Secretary shall submit a report to the Congress 
regarding the results of such inquiry by the conclusion of such 5-year 
period.
    (c) Additional Study of Delivery.--Within 18 months after the date 
of the enactment of this Act, the Secretary of Commerce shall conduct 
an inquiry regarding the effectiveness of the delivery of electronic 
records to consumers using electronic mail as compared with delivery of 
written records via the United States Postal Service and private 
express mail services. The Secretary shall submit a report to the 
Congress regarding the results of such inquiry by the conclusion of 
such 18-month period.

SEC. 105. DEFINITIONS.

    For purposes of this title:
            (1) Electronic record.--The term ``electronic record'' 
        means a writing, document, or other record created, stored, 
        generated, received, or communicated by electronic means.
            (2) Electronic signature.--The term ``electronic 
        signature'' means information or data in electronic form, 
        attached to or logically associated with an electronic record, 
        and executed or adopted by a person or an electronic agent of a 
        person, with the intent to sign a contract, agreement, or 
        record.
            (3) Electronic.--The term ``electronic'' means of or 
        relating to technology having electrical, digital, magnetic, 
        optical, electromagnetic, or similar capabilities regardless of 
        medium.
            (4) Electronic agent.--The term ``electronic agent'' means 
        a computer program or an electronic or other automated means 
        used independently to initiate an action or respond to 
        electronic records in whole or in part without review by an 
        individual at the time of the action or response.
            (5) Record.--The term ``record'' means information that is 
        inscribed on a tangible medium or that is stored in an 
        electronic or other medium and is retrievable in perceivable 
        form.
            (6) Federal regulatory agency.--The term ``Federal 
        regulatory agency' means an agency, as that term is defined in 
        section 552(f) of title 5, United States Code, that is 
        authorized by Federal law to impose requirements by rule, 
        regulation, order, or other legal instrument.
            (7) Self-regulatory organization.--The term ``self-
        regulatory organization'' means an organization or entity that 
        is not a Federal regulatory agency or a State, but that is 
        under the supervision of a Federal regulatory agency and is 
        authorized under Federal law to adopt and administer rules 
        applicable to its members that are enforced by such 
        organization or entity, by a Federal regulatory agency, or by 
        another self-regulatory organization.

TITLE II--DEVELOPMENT AND ADOPTION OF ELECTRONIC SIGNATURE PRODUCTS AND 
                                SERVICES

SEC. 201. TREATMENT OF ELECTRONIC SIGNATURES IN INTERSTATE AND FOREIGN 
              COMMERCE.

    (a) Inquiry Regarding Impediments to Commerce.--
            (1) Inquiries required.--Within 180 days after the date of 
        the enactment of this Act, and biennially thereafter, the 
        Secretary of Commerce, acting through the Assistant Secretary 
        for Communications and Information, shall complete an inquiry 
        to--
                    (A) identify any domestic and foreign impediments 
                to commerce in electronic signature products and 
                services and the manners in which and extent to which 
                such impediments inhibit the development of interstate 
                and foreign commerce;
                    (B) identify constraints imposed by foreign nations 
                or international organizations that constitute barriers 
                to providers of electronic signature products or 
                services; and
                    (C) identify the degree to which other nations and 
                international organizations are complying with the 
                principles in subsection (b)(2).
            (2) Submission.--The Secretary shall submit a report to the 
        Congress regarding the results of each such inquiry within 90 
        days after the conclusion of such inquiry. Such report shall 
        include a description of the actions taken by the Secretary 
        pursuant to subsection (b) of this section.
    (b) Promotion of Electronic Signatures.--
            (1) Required actions.--The Secretary of Commerce, acting 
        through the Assistant Secretary for Communications and 
        Information, shall promote the acceptance and use, on an 
        international basis, of electronic signatures in accordance 
        with the principles specified in paragraph (2) and in a manner 
        consistent with section 101 of this Act. The Secretary of 
        Commerce shall take all actions necessary in a manner 
        consistent with such principles to eliminate or reduce, to the 
        maximum extent possible, the impediments to commerce in 
        electronic signatures, including those identified in the 
        inquiries under subsection (a) for the purpose of facilitating 
        the development of interstate and foreign commerce.
            (2) Principles.--The principles specified in this paragraph 
        are the following:
                    (A) Free markets and self-regulation, rather than 
                Government standard-setting or rules, should govern the 
                development and use of electronic records and 
                electronic signatures.
                    (B) Neutrality and nondiscrimination should be 
                observed among providers of and technologies for 
                electronic records and electronic signatures.
                    (C) Parties to a transaction should be permitted to 
                establish requirements regarding the use of electronic 
                records and electronic signatures acceptable to such 
                parties.
                    (D) Parties to a transaction--
                            (i) should be permitted to determine the 
                        appropriate authentication technologies and 
                        implementation models for their transactions, 
                        with assurance that those technologies and 
                        implementation models will be recognized and 
                        enforced; and
                            (ii) should have the opportunity to prove 
                        in court or other proceedings that their 
                        authentication approaches and their 
                        transactions are valid.
                    (E) Electronic records and electronic signatures in 
                a form acceptable to the parties should not be denied 
                legal effect, validity, or enforceability on the ground 
                that they are not in writing.
                    (F) De jure or de facto imposition of standards on 
                private industry through foreign adoption of 
                regulations or policies with respect to electronic 
                records and electronic signatures should be avoided.
                    (G) Paper-based obstacles to electronic 
                transactions should be removed.
    (c) Consultation.--In conducting the activities required by this 
section, the Secretary shall consult with users and providers of 
electronic signature products and services and other interested 
persons.
    (d) Privacy.--Nothing in this section shall be construed to require 
the Secretary or the Assistant Secretary to take any action that would 
adversely affect the privacy of consumers.
    (e) Definitions.--As used in this section, the terms ``electronic 
record'' and ``electronic signature'' have the meanings provided in 
section 104 of the Electronic Signatures in Global and National 
Commerce Act.

   TITLE III--USE OF ELECTRONIC RECORDS AND SIGNATURES UNDER FEDERAL 
                             SECURITIES LAW

SEC. 301. GENERAL VALIDITY OF ELECTRONIC RECORDS AND SIGNATURES.

    Section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c) is 
amended by adding at the end the following new subsection:
    ``(h) References to Written Records and Signatures.--
            ``(1) General validity of electronic records and 
        signatures.--Except as otherwise provided in this subsection--
                    ``(A) if a contract, agreement, or record (as 
                defined in subsection (a)(37)) is required by the 
                securities laws or any rule or regulation thereunder 
                (including a rule or regulation of a self-regulatory 
                organization), and is required by Federal or State 
                statute, regulation, or other rule of law to be in 
                writing, the legal effect, validity, or enforceability 
                of such contract, agreement, or record shall not be 
                denied on the ground that the contract, agreement, or 
                record is not in writing if the contract, agreement, or 
                record is an electronic record;
                    ``(B) if a contract, agreement, or record is 
                required by the securities laws or any rule or 
                regulation thereunder (including a rule or regulation 
                of a self-regulatory organization), and is required by 
                Federal or State statute, regulation, or other rule of 
                law to be signed, the legal effect, validity, or 
                enforceability of such contract, agreement, or record 
                shall not be denied on the ground that such contract, 
                agreement, or record is not signed or is not affirmed 
                by a signature if the contract, agreement, or record is 
                signed or affirmed by an electronic signature; and
                    ``(C) if a broker, dealer, transfer agent, 
                investment adviser, or investment company enters into a 
                contract or agreement with, or accepts a record from, a 
                customer or other counterparty, such broker, dealer, 
                transfer agent, investment adviser, or investment 
                company may accept and rely upon an electronic 
                signature on such contract, agreement, or record, and 
                such electronic signature shall not be denied legal 
                effect, validity, or enforceability because it is an 
                electronic signature.
            ``(2) Implementation.--
                    ``(A) Regulations.--The Commission may prescribe 
                such regulations as may be necessary to carry out this 
                subsection consistent with the public interest and the 
                protection of investors.
                    ``(B) Nondiscrimination.--The regulations 
                prescribed by the Commission under subparagraph (A) 
                shall not--
                            ``(i) discriminate in favor of or against a 
                        specific technology, method, or technique of 
                        creating, storing, generating, receiving, 
                        communicating, or authenticating electronic 
                        records or electronic signatures; or
                            ``(ii) discriminate in favor of or against 
                        a specific type or size of entity engaged in 
                        the business of facilitating the use of 
                        electronic records or electronic signatures.
            ``(3) Exceptions.--Notwithstanding any other provision of 
        this subsection--
                    ``(A) the Commission, an appropriate regulatory 
                agency, or a self-regulatory organization may require 
                that records be filed or maintained in a specified 
                standard or standards (including a specified format or 
                formats) if the records are required to be submitted to 
                the Commission, an appropriate regulatory agency, or a 
                self-regulatory organization, respectively, or are 
                required by the Commission, an appropriate regulatory 
                agency, or a self-regulatory organization to be 
                retained; and
                    ``(B) the Commission may require that contracts, 
                agreements, or records relating to purchases and sales, 
                or establishing accounts for conducting purchases and 
                sales, of penny stocks be manually signed, and may 
                require such manual signatures with respect to 
                transactions in similar securities if the Commission 
                determines that such securities are susceptible to 
                fraud and that such fraud would be deterred or 
                prevented by requiring manual signatures.
            ``(4) Relation to other law.--The provisions of this 
        subsection apply in lieu of the provisions of title I of the 
        Electronic Signatures in Global and National Commerce Act to a 
        contract, agreement, or record (as defined in subsection 
        (a)(37)) that is required by the securities laws.
            ``(5) Savings provision.--Nothing in this subsection 
        applies to any rule or regulation under the securities laws 
        (including a rule or regulation of a self-regulatory 
        organization) that is in effect on the date of the enactment of 
        the Electronic Signatures in Global and National Commerce Act 
        and that requires a contract, agreement, or record to be in 
        writing, to be submitted or retained in original form, or to be 
        in a specified standard or standards (including a specified 
        format or formats).
            ``(6) Definitions.--As used in this subsection:
                    ``(A) Electronic record.--The term `electronic 
                record' means a writing, document, or other record 
                created, stored, generated, received, or communicated 
                by electronic means.
                    ``(B) Electronic signature.--The term ``electronic 
                signature'' means information or data in electronic 
                form, attached to or logically associated with an 
                electronic record, and executed or adopted by a person 
                or an electronic agent of a person, with the intent to 
                sign a contract, agreement, or record.
                    ``(C) Electronic.--The term `electronic' means of 
                or relating to technology having electrical, digital, 
                magnetic, optical, electromagnetic, or similar 
                capabilities regardless of medium.''.

            Passed the House of Representatives November 9, 1999.

            Attest:

                                                 JEFF TRANDAHL,

                                                                 Clerk.`