Rep. Tom Bliley's (R-VA) Summary of HR 1714 IH. The "Electronic Signatures in Global and National Commerce Act" (E-SIGN Act). Date: May 6, 1999. Source: House Commerce Committee.

Summary of H.R. 1714

Electronic Signatures in Global and National Commerce Act (E-SIGN)

Title I

Section 101 lays out a general rule that any contract or agreement entered into or affecting interstate or foreign commerce, that is required by any statute or regulation to be in writing or to use a written signature shall not be denied validity solely because it is in electronic format. Furthermore, the parties to the contract or agreement may establish for themselves reasonable requirements regarding the types of electronic signatures or records.

Section 102 allows Federal or State statutes or regulations to supersede the provisions of Section 101 provided that the statute or regulation: specifically references Section 101, specifies alternative procedures or requirements for the use of electronic records or signatures and, in the case of State statutes or regulations, is enacted within two years after the date of enactment of the Act.

A State statute or rule that supersedes Section 101 is considered invalid if the statute: discriminates in favor of or against a particular technology, method or technique of electronic records or signatures, discriminates in favor of against a company facilitating the use of electronic records and signatures based on the size or type of the company, is not based on specific and publicly available criteria or is otherwise inconsistent with Section 101.

In the case of a State statute or rule that is inconsistent with Section 101, the Secretary of Commerce may bring action to enjoin the enforcement of the statute or rule and upon proper showing, a permanent or temporary restraining order.

Section 103 specifically excludes wills, trusts, estates and family law matters from coverage under the Act.

Title II

Section 201(a) requires the Secretary of Commerce, acting through the Assistant Secretary for Communications and Information (NTIA) , to submit a report to Congress within 180 days, and annually thereafter, identifying foreign barriers to commerce in electronic signatures and the degree to which other nations' laws are consistent with the principles in Section 201(b)

Section 201(b) directs the Secretary of Commerce, through NTIA, to promote the acceptance and use internationally of electronic signatures in accordance with the principles below and with Section 101 of the Act. The Secretary shall also take such actions as necessary to eliminate or reduce impediments to commerce in electronic signatures.

Principles:

Free markets and self regulation, rather than government regulation.

Technological neutrality and nondiscrimination should be observed among providers and technologies. This means no particular technology should be favored and no providers should receive better treatment than others.

Private parties should be able to pick the forms of electronic signatures they think best.

Electronic signatures acceptable to the parties should not be denied validity merely because they are not in writing.

Imposition of de facto or de jure standards on private industry by foreign regulations or policies with respect to electronic signatures is to be avoided.

Section 201(c) Within three years after enactment, the Secretary of Commerce, through NTIA, is directed to conduct an inquiry regarding State statutes, regulations or other rules of law enacted or adopted after enactment pursuant to Section 102(a) and the extend to which such statutes, regulations or rules comply with Section 102(b). The report shall also identify any actions taken by the Secretary pursuant to Section 102(c) and Section 201(b).

Title III

Title III of the legislation simply requires that whenever a contract, agreement, or record is required to be in writing or authenticated by a signature under securities laws or rules of a Self-Regulatory Organization (such as the New York Stock Exchange or the National Association of Securities Dealers), an electronic record or signature shall not be deemed invalid simply because it is in electronic format. The Securities and Exchange Commission is granted the authority to promulgate rules, if necessary, to facilitate electronic signatures provided the rules do not discriminate in any way regarding the technology or the entities that provide the technology.