Opening Statement by Rep. Howard Coble (R-NC). Re: House CIP Subcommittee hearing on HR 1714, the E-SIGN Act. Date: September 30, 1999. Source: House Judiciary Committee.

STATEMENT OF
THE HONORABLE HOWARD COBLE, CHAIRMAN
SUBCOMMITTEE ON
COURTS AND INTELLECTUAL PROPERTY
COMMITTEE ON THE JUDICIARY
REGARDING H.R. 1714, THE "ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE (E-SIGN) ACT"

September 30, 1999

Good Morning. The Subcommittee will come to order. Today, we are here to discuss H.R. 1714, the "Electronic Signatures in Global and National Commerce (E-SIGN) Act."

In the past few years, the use of the Internet to conduct business, or e-commerce, has exploded beyond prediction. And, it is expected that the near future will see even more growth in e-commerce as more and more people go online to buy, sell, trade, or make other business arrangements. Important to the success of e-commerce is the ability to enter into a contract online that is legally binding. Therefore, it has become necessary to update contract laws which require a physical document to be signed by the party to allow for electronic signatures to have the same legal effect as a physically signed piece of paper.

Many States have enacted laws to give legal effect to electronic signatures. However, these laws are not identical and some States have not enacted similar legislation. Industry representatives assert that the differences and the lack of legislation between States are an impediment to the growth of e-commerce because parties will be unwilling to risk entering into a contract online without nationwide certainty regarding its legality. This has led to widespread discussion on the need for uniform Federal and State laws regarding electronic signatures in order to promote e-commerce in the United States and to provide a model for other countries.

In order to accomplish this, the National Conference of Commissioners on Uniform State Laws (NCCUSL) drafted the "Uniform Electronic Transactions Act (UETA)." H.R. 1714 also intends to accomplish this objective. However, there are some potential problems with H.R. 1714. There is concern about the dramatic effects H.R. 1714 could have on the Federal Courts and the Department of Justice. It allows an action in federal court for an injunction against enforcement of a State statute that the Secretary of Commerce determines does not comply with the Act. Because H.R. 1714 would forever preempt State law, there is concern that it is overly preemptive.

In addition to H.R. 1714, there is a corresponding proposal that addresses electronic signatures, S. 761, the " Millennium Digital Commerce Act," introduced by Senator Abraham. The bill only preempts laws in States that have not adopted UETA. That approach may have fewer consequences on the Courts and the States because it allows for the exclusions in UETA regarding admissibility and other aspects.

The Subcommittee hearing will focus on the differences in the above three approaches to help determine which approach has the most benign effects on federal-state relations, the Judiciary, the legal effect of contracts, the Department of Justice and Rules of Procedure and Evidence. The Subcommittee should consider all approaches in determining the best method for preserving e-commerce while avoiding unintended consequences on the judicial system.