I 

108TH CONGRESS 

1ST SESSION H. R. 945

To exercise authority under article I, section 8, clause 3 of the Constitution 

of the United States to clearly establish jurisdictional boundaries over 

the commercial transactions of digital goods and services conducted 

through the Internet, and to foster stability and certainty over the 

treatment of such transactions. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 26, 2003

Mr. STEARNS (for himself, Mr. TOWNS, Mr. BASS, Mr. DEAL of Georgia, and 

Mr. WALDEN of Oregon) introduced the following bill; which was referred 

to the Committee on Energy and Commerce, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by 

the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL

To exercise authority under article I, section 8, clause 3 

of the Constitution of the United States to clearly establish jurisdictional boundaries over the commercial transactions of digital goods and services conducted through 

the Internet, and to foster stability and certainty over 

the treatment of such transactions.

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 ‘‘Jurisdictional Cer3 tainty Over Digital Commerce Act’’. 

4 SEC. 2. CONGRESSIONAL FINDINGS. 

5 The Congress finds that—

6 (1) the Internet is increasingly used to conduct 

7 commercial transactions in digital goods and digital 

8 services wholly deliverable by and on the Internet; 

9 (2) jurisdictional certainty is an important cata10 lyst to further advancement of electronic commerce; 

11 (3) digital commercial transactions in digital 

12 goods and digital services are inherently interstate in 

13 nature; 

14 (4) State regulation of such digital commercial 

15 transactions creates significant and harmful burdens 

16 on interstate commerce; 

17 (5) State regulation of digital commercial trans18 actions in digital goods and digital services will seri19 ously impede the growth of such transactions, de20 creasing the viability of electronic commerce as an 

21 alternative instrument or channel of commerce; and 

22 (6) while other types of transactions may de23 serve similar treatment, digital commercial trans24 actions in digital goods and digital services are the 

25 type of transactions that most clearly deserve protec26 tion from disparate, uncoordinated, and inconsistent 
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1 efforts by the States to regulate Interstate com2 merce. 

3 SEC. 3. FEDERAL AUTHORITY TO REGULATE COMMERCE IN 

4 DIGITAL GOODS AND SERVICES. 

5 (a) IN GENERAL.—Responsibility and authority to 

6 regulate digital commercial transactions is reserved solely 

7 to the Federal Government. 

8 (b) PROHIBITION OF STATE REGULATION.—No 

9 State or political subdivision thereof may enact or enforce 

10 any law, rule, regulation, standard, or other provision hav11 ing the force or effect of law that regulates, or has the 

12 effect of regulating, digital commercial transactions. 

13 (c) PROHIBITION OF DELEGATION TO STATES.—Any 

14 responsibility or authority to regulate digital commercial 

15 transactions that, pursuant to subsection (a), is retained 

16 by the Federal government may not be delegated, by any 

17 Federal agency or officer, to any State or political subdivi18 sion thereof. 

19 (d) INAPPLICABILITY TO NON-DIGITAL COMMERCIAL

20 TRANSACTIONS.—This Act may not be construed—

21 (1) to modify, impair, or supersede, or to au22 thorize the modification, impairment, or superseding 

23 of, any authority that any State or any political sub24 division thereof may have to regulate any commer-
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1 cial transaction that is not a digital commercial 

2 transaction; or 

3 (2) to establish any authority for a State or po4 litical subdivision of a State to regulate any commer5 cial transaction that is not a digital commercial 

6 transaction, in contravention of any limitation on 

7 such authority established under law (including any 

8 statute, regulation, rule, or judicial decision). 

9 (e) INAPPLICABILITY TO STATE COMMERCIAL

10 CODE.—This Act may not be construed to limit, alter, su11 persede, or otherwise affect any requirement under the 

12 Uniform Commercial Code, as in effect in any State. 

13 (f) DEFINITIONS.—For purposes of this section: 

14 (1) DIGITAL GOOD.—The term ‘‘digital good’’ 

15 means any good or product that is transferred or de16 livered by means of the Internet. 

17 (2) DIGITAL COMMERCIAL TRANSACTION.—The 

18 term ‘‘digital commercial transaction’’ means a com19 mercial transaction for a digital good or digital serv20 ice that is carried out in its entirety by means of the 

21 Internet. 

22 (3) DIGITAL SERVICE.—The term ‘‘digital serv23 ice’’ means any service that is conducted or provided 

24 by means of the Internet. Such term does not in25 clude any telecommunications service, as such term 
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1 is defined in section 3 of the Communications Act of 

2 1934 (47 U.S.C. 153), or the business of insurance. 

3 (4) INTERNET.—The term ‘‘Internet’’ means 

4 collectively the myriad of computer and tele5 communications facilities, including equipment and 

6 operating software, which comprise the inter7 connected world-wide network of networks that em8 ploy the Transmission Control Protocol/Internet 

9 Protocol, or any predecessor or successor protocols 

10 to such protocol, to communicate information of all 

11 kinds by wire or radio. 

12 (5) REGULATE.—

13 (A) IN GENERAL.—The term ‘‘regulate’’ 

14 includes, with respect to a digital commercial 

15 transaction, taking any governmental action 

16 that restricts, prohibits, limits, or burdens, or 

17 imposes any obstacle or interference with, such 

18 a transaction. 

19 (B) EXCLUSION.—Notwithstanding sub20 paragraph (A), such term does not include tak21 ing any government action, pursuant only to 

22 specific statutory authority for such action 

23 under the laws of such State and only on an in24 dividual case-by-case basis, in order to protect 
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1 a party to a digital commercial transaction 

2 from—

3 (i) a specific and identified threat to 

4 the health or physical safety of such party; 

5 or 

6 (ii) fraudulent or criminal activity 

7 against such party. 

8 This subparagraph may not be used by a State 

9 or political subdivision thereof to regulate, in a 

10 general manner, the parties to a digital com11 mercial transaction.

Æ