`[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1714 Reported in House (RH)]





                                                 Union Calendar No. 222

106th CONGRESS

  1st Session

                               H. R. 1714

                  [Report No. 106-341, Parts I and II]

_______________________________________________________________________

                                 A BILL

     To facilitate the use of electronic records and signatures in 
                    interstate or foreign commerce.

_______________________________________________________________________

                            October 15, 1999

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed





                                                 Union Calendar No. 222
106th CONGRESS
  1st Session
                                H. R. 1714

                  [Report No. 106-341, Parts I and II]

     To facilitate the use of electronic records and signatures in 
                    interstate or foreign commerce.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 6, 1999

Mr. Bliley (for himself, Mr. Davis of Virginia, Mr. Tauzin, Mr. Oxley, 
 Mr. Towns, and Mr. Fossella) introduced the following bill; which was 
                 referred to the Committee on Commerce

                           September 27, 1999

    Reported with an amendment and referred to the Committee on the 
  Judiciary for a period ending not later than October 15, 1999, for 
  consideration of such provisions of the bill and amendment as fall 
within the jurisdiction of that committee pursuant to clause 1(k), rule 
                                   X
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                            October 15, 1999

   Additional sponsors: Mr. Dreier, Mr. Burr of North Carolina, Mr. 
                 Pickering, Mr. Shadegg, and Mr. Cannon

                            October 15, 1999

    Reported from the Committee on the Judiciary with an amendment, 
committed to the Committee of the Whole House on the State of the Union 
                       and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                           in boldface roman]
  [For text introduced bill, see copy of bill as introduced on May 6, 
                                 1999]

_______________________________________________________________________

                                 A BILL


 
     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 or agreement 
entered into 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 or agreement 
shall not be denied--
            (1) on the ground that the contract or agreement is not in 
        writing if the contract or agreement is an electronic record; 
        or
            (2) on the ground that the contract or agreement is not 
        signed or is not affirmed by a signature if the contract or 
        agreement is signed or affirmed by an electronic signature.
    (b) Autonomy of Parties in Commerce.--With respect to any contract 
or agreement entered into in or affecting interstate or foreign 
commerce--
            (1) the parties to such contract or agreement may establish 
        procedures or requirements regarding the use and acceptance of 
        electronic records and electronic signatures acceptable to such 
        parties; and
            (2) the legal effect, validity, or enforceability of such 
        contract or agreement 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.

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 
enacted or adopted after the date of enactment of this Act 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 of electronic records or electronic 
        signatures to establish the legal effect, validity, or 
        enforceability of contracts or agreements;
            (2) is enacted or adopted within 4 years after the date of 
        enactment of this Act; and
            (3) makes specific reference to the provisions of section 
        101.
    (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 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, method, 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 
        section 101.
    (c) Actions To Enjoin.--Whenever it shall appear to the Secretary 
of Commerce that a State has enacted or adopted a statute, regulation, 
or other rule of law that is prohibited by subsection (b), the 
Secretary may bring an action to enjoin the enforcement of such 
statute, regulation, or rule, and upon a proper showing a permanent or 
temporary injunction or restraining order shall be granted without 
bond.

SEC. 103. SPECIFIC EXCLUSIONS.

    The provisions of section 101 shall not apply to--
            (1) a statute, regulation, or other rule of law governing 
        the creation and execution of wills, codicils, or testamentary 
        trusts; or
            (2) a statute, regulation, or other rule of law governing 
        adoption, divorce, or other matters of family law.

SEC. 104. 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 
        by a person or an electronic agent, that is intended by a party 
        to signify agreement to a contract or agreement.
            (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.

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 90 days after the date of 
        the enactment of this Act, and annually 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.
    (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) Followup Study.--Within 5 years after the date of 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 enactment pursuant to section 
102(a), and the extent to which such statutes, regulations, and rules 
comply with section 102(b). The Secretary shall submit a report to the 
Congress regarding the results of such inquiry by the conclusion of 
such 5-year period and such report shall identify any actions taken by 
the Secretary pursuant to section 102(c) and subsection (b) of this 
section.
    (d) 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.
    (e) 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.
    (f) 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 other 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 
                other 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 in a specified electronic format 
                or formats if the records are required to be submitted 
                to the Commission, an appropriate regulatory agency, or 
                a self-regulatory organization, respectively; 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) 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, that is intended by a party to 
                signify agreement to a contract or agreement.
                    ``(C) Electronic.--The term `electronic' means of 
                or relating to technology having electrical, digital, 
                magnetic, optical, electromagnetic, or similar 
                capabilities regardless of medium.''.

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. FINDINGS.

    The Congress makes the following findings:
            (1) The growth of electronic commerce and electronic 
        government transactions represents a powerful force for 
        economic growth, consumer choice, improved civic participation, 
        and wealth creation.
            (2) The promotion of growth in private sector electronic 
        commerce through Federal legislation is in the national 
        interest because that market is globally important to the 
        United States.
            (3) A consistent legal foundation, across multiple 
        jurisdictions, for electronic commerce will promote the growth 
        of such transactions, and that such a foundation should be 
        based upon a simple, technology neutral, nonregulatory, and 
        market-based approach.
            (4) The Nation and the world stand at the beginning of a 
        large-scale transition to an information society which will 
        require innovative legal and policy approaches, and therefore, 
        States can serve the national interest by continuing their 
        proven role as laboratories of innovation for quickly evolving 
        areas of public policy, provided that States also adopt a 
        consistent, reasonable national baseline to eliminate obsolete 
        barriers to electronic commerce such as undue paper and pen 
        requirements, and further, that any such innovation should not 
        unduly burden interjurisdictional commerce.
            (5) To the extent State laws or regulations do not provide 
        a consistent, reasonable national baseline or in fact create an 
        undue burden to interstate commerce in the important burgeoning 
        area of electronic commerce, the national interest is best 
        served by Federal preemption to the extent necessary to provide 
        such consistent, reasonable national baseline and eliminate 
        said burden, but that absent such lack of consistent, 
        reasonable national baseline or such undue burdens, the best 
        legal system for electronic commerce will result from 
        continuing experimentation by individual jurisdictions.
            (6) With due regard to the fundamental need for a 
        consistent national baseline, each jurisdiction that enacts 
        such laws should have the right to determine the need for any 
        exceptions to protect consumers and maintain consistency with 
        existing related bodies of law within a particular 
        jurisdiction.
            (7) Industry has developed several electronic signature 
        technologies for use in electronic transactions, and the public 
        policies of the United States should serve to promote a dynamic 
        marketplace within which these technologies can compete. 
        Consistent with this Act, States should permit the use and 
        development of any authentication technologies that are 
        appropriate as practicable as between private parties and in 
        use with State agencies.

SEC. 102. PURPOSES.

    The purposes of this Act are--
            (1) to permit and encourage the continued expansion of 
        electronic commerce through the operation of free market forces 
        rather than proscriptive governmental mandates and regulations;
            (2) to promote public confidence in the validity, 
        integrity, and reliability of electronic commerce and online 
        government under Federal law;
            (3) to facilitate and promote electronic commerce by 
        clarifying the legal status of electronic records and 
        electronic signatures in the context of writing and signing 
        requirements imposed by law;
            (4) to facilitate the ability of private parties engaged in 
        interstate transactions to agree among themselves on the terms 
        and conditions on which they use and accept electronic 
        signatures and electronic records; and
            (5) to promote the development of a consistent national 
        legal infrastructure necessary to support electronic commerce 
        at the Federal and State levels within existing areas of 
        jurisdiction.

SEC. 103. DEFINITIONS.

    In this Act:
            (1) Electronic.--The term ``electronic'' means relating to 
        technology having electrical, digital, magnetic, wireless, 
        optical, electromagnetic, or similar capabilities.
            (2) Electronic agent.--The term ``electronic agent'' means 
        a computer program or an electronic or other automated means 
        used to initiate an action or respond to electronic records or 
        performances in whole or in part without review by an 
        individual at the time of the action or response.
            (3) Electronic record.--The term ``electronic record'' 
        means a record created, generated, sent, communicated, 
        received, or stored by electronic means.
            (4) Electronic signature.--The term ``electronic 
        signature'' means an electronic sound, symbol, or process 
        attached to or logically associated with an electronic record 
        and executed or adopted by a person with the intent to sign the 
        electronic record.
            (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) Transaction.--The term ``transaction'' means an action 
        or set of actions relating to the conduct of commerce between 2 
        or more persons, neither of which is the United States 
        Government, a State, or an agency, department, board, 
        commission, authority, institution, or instrumentality of the 
        United States Government or of a State.
            (7) Uniform electronic transactions act.--The term 
        ``Uniform Electronic Transactions Act'' means the Uniform 
        Electronic Transactions Act as enacted by a State based on the 
        form provided by the National Conference of Commissioners on 
        Uniform State Law in the form or any substantially similar 
        variation thereof.

SEC. 104. PRINCIPLES GOVERNING THE USE OF ELECTRONIC SIGNATURES IN 
              INTERNATIONAL TRANSACTIONS.

    To the extent practicable, the Federal Government shall observe the 
following principles in an international context to enable commercial 
electronic transaction:
            (1) Remove paper-based obstacles to electronic transactions 
        by adopting relevant principles from the Model Law on 
        Electronic Commerce adopted in 1996 by the United Nations 
        Commission on International Trade Law (UNCITRAL).
            (2) Permit parties to a transaction 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.
            (3) Permit parties to a transaction to have the opportunity 
        to prove in court or other proceedings that their 
        authentication approaches and their transactions are valid.
            (4) Take a nondiscriminatory approach to electronic 
        signatures and authentication methods from other jurisdictions.

SEC. 105. INTERSTATE CONTRACT CERTAINTY.

    (a) In General.--In any commercial transaction affecting interstate 
commerce, a contract may not be denied legal effect or enforceability 
solely because an electronic signature or electronic record was used in 
its formation.
    (b) Methods.--In commercial transactions affecting interstate 
commerce, the parties to a contract may agree on the terms and 
conditions on which they will use and accept electronic signatures and 
electronic records, except to the extent a law or regulation governing 
the record provides otherwise.
    (c) Record Retention.--When a law requires that a contract be in 
writing, that requirement is satisfied by an electronic record of the 
information in the record provided to the parties which--
            (1) accurately reflects the information set forth in the 
        record after it was first generated in its final form as an 
        electronic record or otherwise; and
            (2) remains capable of retention in a form that can be 
        accessed for later reference and used to prove the terms of the 
        agreement.
    (d) Formulation of Contract.--A contract relating to a commercial 
transaction affecting interstate commerce may not be denied legal 
effect solely because its formation involved--
            (1) the interaction of electronic agents of the parties; or
            (2) the interaction of an electronic agent of a party and 
        an individual who acts on that individual's own behalf or for 
        another person.
    (e) Application in UETA States.--This section does not apply in any 
State in which the Uniform Electronic Transactions Act is in effect.

SEC. 106. STUDY OF LEGAL AND REGULATORY BARRIERS TO ELECTRONIC 
              COMMERCE.

    (a) Barriers.--Each Federal agency shall, not later than 6 months 
after the date of enactment of this Act, provide a report to the 
Director of the Office of Management and Budget and the Secretary of 
Commerce identifying any provision of law administered by such agency, 
or any regulations issued by such agency and in effect on the date of 
enactment of this Act, that may impose a barrier to electronic 
transactions, or otherwise to the conduct of commerce online or by 
electronic means. Such barriers include, but are not limited to, 
barriers imposed by a law or regulation directly or indirectly 
requiring that signatures, or records of transactions, be accomplished 
or retained in other than electronic form. In its report, each agency 
shall identify the barriers among those identified whose removal would 
require legislative action, and shall indicate agency plans to 
undertake regulatory action to remove such barriers among those 
identified as are caused by regulations issued by the agency.
    (b) Report to Congress.--The Secretary of Commerce, in consultation 
with the Director of the Office of Management and Budget, shall, within 
18 months after the date of enactment of this Act, and after the 
consultation required by subsection (c) of this section, report to the 
Congress concerning--
            (1) legislation needed to remove barriers to electronic 
        transactions or otherwise to the conduct of commerce online or 
        by electronic means; and
            (2) actions being taken by the executive branch and 
        individual Federal agencies to remove such barriers as are 
        caused by agency regulations or policies.
    (c) Consultation.--In preparing the report required by this 
section, the Secretary of Commerce shall consult with the General 
Services Administration, the National Archives and Records 
Administration, and the Attorney General concerning matters involving 
the authenticity of records, their storage and retention, and their 
usability for law enforcement purposes.
    (d) Include Findings if No Recommendations.--If the report required 
by this section omits recommendations for actions needed to fully 
remove identified barriers to electronic transactions or to online or 
electronic commerce, it shall include a finding or findings, including 
substantial reasons therefor, that such removal is impracticable or 
would be inconsistent with the implementation or enforcement of 
applicable laws.

SEC. 107. STUDY OF EFFECTS OF ELECTRONIC COMMERCE.

    (a) In General.--The Federal Trade Commission and the Secretary of 
Commerce shall conduct a study of electronic commerce issues.
    (b) Responsibility of Each Agency.--
            (1) FTC.--The Federal Trade Commission, in consultation 
        with the Secretary of Commerce, shall conduct a portion of the 
        study to determine the effectiveness of Federal and State 
        consumer protection laws with respect to electronic 
        transactions involving consumers.
            (2) Commerce department.--The Secretary of Commerce, in 
        consultation with the Federal Trade Commission, shall conduct a 
        portion of the study to determine the extent to which a uniform 
        commercial legal framework would facilitate and enforce 
        interstate electronic transactions.
    (c) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Federal Trade Commission and the Secretary of Commerce 
shall transmit a report to Congress containing --
            (1) findings from the study required under subsection (a); 
        and
            (2) such recommendations for legislation or administrative 
        actions as the Federal Trade Commission and the Secretary of 
        Commerce, respectively, deem appropriate.
    (d) Biennial Updates.--The Federal Trade Commission and the 
Secretary of Commerce shall update the report every 2 years thereafter 
and transmit the updated report to the Congress.

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 90 days after the date of 
        the enactment of this Act, and annually 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.
    (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 105 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) Followup Study.--Within 5 years after the date of 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 enactment. The Secretary shall 
submit a report to the Congress regarding the results of such inquiry 
by the conclusion of such 5-year period and such report shall identify 
any actions taken by the Secretary pursuant to subsection (b) of this 
section.
    (d) 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.
    (e) 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.
    (f) Definitions.--As used in this section, the terms ``electronic 
record'' and ``electronic signature'' have the meanings provided in 
section 103 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 other 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 
                other 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 in a specified electronic format 
                or formats if the records are required to be submitted 
                to the Commission, an appropriate regulatory agency, or 
                a self-regulatory organization, respectively; 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) 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, that is intended by a party to 
                signify agreement to a contract or agreement.
                    ``(C) Electronic.--The term `electronic' means of 
                or relating to technology having electrical, digital, 
                magnetic, optical, electromagnetic, or similar 
                capabilities regardless of medium.''.`