I

106TH CONGRESS

1ST SESSION H. R. 1714

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

A BILL

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,

3 SECTION 1. SHORT TITLE.

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

5 in Global and National Commerce Act’’.
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1 TITLE I—VALIDITY OF ELEC2 TRONIC RECORDS AND SIG3 NATURES FOR COMMERCE

4 SEC. 101. GENERAL RULE OF VALIDITY.

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

6 or agreement entered into in or affecting interstate or for7 eign commerce—

8 (1) no statute, regulation, or other rule of law

9 shall deny the legal effect of such contract or agree10 ment on the ground that the instrument is not in

11 writing if the instrument is an electronic record; and

12 (2) no statute, regulation, or other rule of law

13 shall deny the legal effect of such contract or agree14 ment on the ground that the contract or agreement

15 is not signed or is not affirmed by a signature if the

16 contract or agreement is signed or affirmed by an

17 electronic signature.

18 (b) AUTONOMY OF PARTIES IN COMMERCE.—With

19 respect to any contract or agreement entered into in or

20 affecting interstate or foreign commerce, the parties to

21 such contract or agreement may establish reasonable re22 quirements regarding the types of electronic records and

23 electronic signatures acceptable to such parties.
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1 SEC. 102. AUTHORITY TO ALTER OR SUPERSEDE GENERAL

2 RULE.

3 (a) IN GENERAL.—Except as provided in subsection

4 (b), a Federal or State statute, regulation, or other rule

5 of law enacted or adopted after the date of enactment of

6 this Act may modify, limit, or supersede the provisions of

7 section 101 if—

8 (1) such statute, regulation, or rule makes spe9 cific reference to the provisions of section 101;

10 (2) specifies the alternative procedures or re11 quirements for the use of electronic records or elec12 tronic signatures to establish the legal validity of

13 contracts or agreements; and

14 (3) in the case of a State statute, regulation, or

15 other rule of law, is enacted or adopted within 2

16 years after the date of enactment of this Act.

17 (b) EFFECT ON OTHER LAWS.—A State statute, reg18 ulation, or other rule of law that modifies, limits, or super19 sedes section 101 shall not be effective to the extent that

20 such statute, regulation, or rule—

21 (1) discriminates in favor of or against a spe22 cific technology, method, or technique of creating,

23 storing, generating, receiving, communicating, or au24 thenticating electronic records or electronic signa25 tures;
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1 (2) discriminates in favor of or against a spe2 cific type or size of entity engaged in the business

3 of facilitating the use of electronic records or elec4 tronic signatures;

5 (3) is not based on specific and publicly avail6 able criteria; or

7 (4) is otherwise inconsistent with the provisions

8 of section 101.

9 (c) ACTIONS TO ENJOIN.—Whenever it shall appear

10 to the Secretary of Commerce that a State has enacted

11 or adopted a statute, regulation, or other law that is pro12 hibited by subsection (b), the Secretary may bring an ac13 tion to enjoin the enforcement of such statute, regulation,

14 or rule, and upon a proper showing a permanent or tem15 porary injunction or restraining order shall be granted

16 without bond.

17 SEC. 103. SPECIFIC EXCLUSIONS.

18 The provisions of section 101 shall not apply to—

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

20 governing the creation and execution of wills, codi21 cils, or testamentary trusts; or

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

23 governing adoption, divorce, or other matters of

24 family law.
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1 SEC. 104. DEFINITIONS.

2 For purposes of this title:

3 (1) ELECTRONIC RECORD.—The term ‘‘elec4 tronic record’’ means a writing, document, or other

5 record created, stored, generated, received, or com6 municated by electronic means.

7 (2) ELECTRONIC SIGNATURE.—The term ‘‘elec8 tronic signature’’ means a signature in electronic

9 form, attached to or logically associated with an

10 electronic record, that—

11 (A) is intended by the parties to signify

12 agreement to a contract or agreement;

13 (B) is capable of verifying the identity of

14 the person using the signature; and

15 (C) is linked to the electronic record in a

16 manner that prevents alteration of the record

17 after signature.

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

19 means of or relating to technology having electrical,

20 digital, magnetic, optical, electromagnetic, or similar

21 capabilities regardless of medium.
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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 90 days

10 after the date of the enactment of this Act, and an11 nually thereafter, the Secretary of Commerce, acting

12 through the Assistant Secretary for Communications

13 and Information, shall complete an inquiry to—

14 (A) identify any domestic and foreign im15 pediments to commerce in electronic signature

16 products and services and the manners in which

17 and extent to which such impediments inhibit

18 the development of interstate and foreign com19 merce;

20 (B) identify constraints imposed by foreign

21 nations or international organizations that con22 stitute barriers to providers of electronic signa23 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.

8 (b) PROMOTION OF ELECTRONIC SIGNATURES.—

9 (1) REQUIRED ACTIONS.—The Secretary of

10 Commerce, acting through the Assistant Secretary

11 for Communications and Information, shall promote

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

13 electronic signatures in accordance with the prin14 ciples specified in paragraph (2) and in a manner

15 consistent with section 101 of this Act. The Sec16 retary of Commerce shall take all actions necessary

17 in a manner consistent with such principles to elimi18 nate or reduce, to the maximum extent possible, the

19 impediments to commerce in electronic signatures,

20 including those identified in the inquiries under sub21 section (a) for the purpose of facilitating the devel22 opment of interstate and foreign commerce.

23 (2) PRINCIPLES.—The principles specified in

24 this paragraph are the following:
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1 (A) Free markets and self-regulation, rath2 er than government standard-setting or rules,

3 should govern the development and use of elec4 tronic records and electronic signatures.

5 (B) Neutrality and nondiscrimination

6 should be observed among providers of and

7 technologies for electronic records and elec8 tronic signatures.

9 (C) Parties to a transaction should be per10 mitted to establish reasonable requirements re11 garding the types of electronic records and elec12 tronic signatures acceptable to such parties.

13 (D) Electronic records and electronic sig14 natures in a form acceptable to the parties

15 should not be denied legal validity on the

16 ground that they are not in writing.

17 (E) De jure or de facto imposition of

18 standards on private industry through foreign

19 adoption of regulations or policies with respect

20 to electronic records and electronic signatures

21 should be avoided.

22 (c) FOLLOWUP STUDY.—Within 3 years after the

23 date of enactment of this Act, the Secretary of Commerce,

24 acting through the Assistant Secretary for Communica25 tions and Information, shall conduct an inquiry regarding
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1 any State statutes, regulations, or other rules of law en2 acted or adopted after such date of enactment pursuant

3 to section 102(a), and the extent to which such statutes,

4 regulations, and rules comply with section 102(b). The

5 Secretary shall submit a report to the Congress regarding

6 the results of such inquiry by the conclusion of such 3-

7 year period and such report shall identify any actions

8 taken by the Secretary pursuant to section 102(c) and

9 subsection (b) of this section.

10 (d) CONSULTATION.—In conducting the activities re11 quired by this section, the Secretary shall consult with

12 users and providers of electronic signature products and

13 services and other interested persons.

14 TITLE III—USE OF ELECTRONIC

15 RECORDS AND SIGNATURES

16 UNDER FEDERAL SECURITIES

17 LAW

18 (a) AMENDMENT.—Section 3 of the Securities Ex19 change Act of 1934 (15 U.S.C. 78c) is amended by adding

20 at the end the following:

21 ‘‘(h) REQUIREMENTS RELATING TO WRITTEN DOCU22 MENTS AND SIGNATURES.—

23 ‘‘(1) USE OF ELECTRONIC RECORDS AND SIG24 NATURES.—Notwithstanding any State statute, reg25 ulation, or rule of law, whenever in the securities
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1 laws, or in the rules or regulations thereunder (in2 cluding the rules of any self-regulatory organiza3 tion)—

4 ‘‘(A) a contract, agreement, or record (as

5 defined in subsection (a)(37)) is required to be

6 in writing, or is required to be authenticated by

7 means of an instrument in writing, the legal ef8 fect of such contract, agreement, or record shall

9 not be denied on the ground that the instru10 ment is not in writing if the instrument is an

11 electronic record; and

12 ‘‘(B) a contract, agreement, or record is

13 required to be signed, the legal effect of such

14 contract, agreement, or record shall not be de15 nied on the ground that contract, agreement, or

16 record is not signed or is not affirmed by a sig17 nature if the contract, agreement, or record is

18 signed or affirmed by an electronic signature.

19 ‘‘(2) AUTHORITY OF COMMISSION.—Notwith20 standing any State statute, regulation, or rule of

21 law, the Commission may, consistent with the public

22 interest and the protection of investors, prescribe

23 regulations to carry out this subsection, but such

24 regulations shall not—
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1 ‘‘(A) discriminate in favor of or against a

2 specific technology, method, or technique of cre3 ating, storing, generating, receiving, commu4 nicating, or authenticating electronic records or

5 electronic signatures; or

6 ‘‘(B) discriminate in favor of or against a

7 specific type or size of entity engaged in the

8 business of facilitating the use of electronic

9 records or electronic signatures.

10 ‘‘(3) DEFINITIONS.—The terms ‘electronic

11 record’ and ‘electronic signature’ have the meanings

12 provided such terms by section 104 of the Electronic

13 Signatures In Global and National Commerce Act.’’.

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