Summary of Bills Pertaining to
Electronic Signatures and Authentication
in the 106th Congress

This page summarizes the following bills.

Introduction

This page was last updated on July 2, 2000.

The Congress has passed, and the President has signed, an electronic signatures bill. The process began early in 1999 with the introduction of several bills in the House and Senate, and culminated with a bill signing ceremony on June 30, 2000.

Three comprehensive electronic signatures bill were introduced: HR 1714 IH, sponsored by Rep. Tom Bliley (R-VA), HR 1320 IH, sponsored by Rep. Anna Eshoo (D-CA), and S 761 IS, sponsored by Sen. Spencer Abraham (R-MI).

Several other more limited bills were also introduced. S 921 IS (Abraham) is a very narrow bill pertaining only to electronic signatures in securities transactions. HR 1572 IH (Gordon) pertains solely to setting voluntary guidelines for federal agencies to facilitate their ability to accept electronic signatures. No action has been taken on either bill.

All of these bills (except HR 1572) shared the same general goal: to provide for the acceptance of electronic signatures and records in interstate commerce. All shared the same purpose: to promote electronic commerce. All sought to be technology neutral. In the last Congress a bill was passed pertaining to electronic signatures in dealing with the federal government. These bills all extended to private contracts and records. However, they differed in the details.

S 761 IS (Abraham) and HR 1320 IH (Eshoo) were companion bills that provided that contracts affecting interstate commerce would not be denied validity because electronic signatures were used. HR 1714 IH (Bliley) contained similar language. However, HR 1714 IH, the original version of the bill, was different from S 761 and HR 1320, in that it was very restrictive of state legislation, while the other bills allowed the states more leaway. Generally, as HR 1714 progressed to passage by the House it became increasing large; it was amended to allow states more leaway in drafting state laws regulating electronic signatures and contracts; and, it was amended to provide "consumer protection" provisions.

HR 1714 EH is the bill which passed the House on November 9, 1999. S 761 ES was passed by the Senate on November 19, 1999. However, the two bills differed. After lengthy delays and negotiations, the conference committee agreed to a Conference Report on June 8, 2000. The House promptly passed this bill on June 14, 2000. The Senate followed suit on June 16. Most provisions of the bill take effect on October 1, 2000.

S 761, as passed by the House and Senate, and signed by the President.

The version of the bill which was ultimately enacted into law is much longer and detailed than the original versions of the bill. See, full text of S 761 Conference Report.

The act provides that electronic signatures and electronic contracts used in interstate commerce shall not be denied validity because they are in electronic form. The key clause of the act, at Title I, Section 101(a), provides:

"Notwithstanding any statute, regulation, or other rule of law (other than this title and title II), with respect to any transaction in or affecting interstate or foreign commerce (1) a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and (2) a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation."

The act then goes on to place numerous limitations on the use of electronic signatures and contracts, and on the scope of federal preemption of state law.

First, the act provides (at Title I Section 101(b)) that it does not alter or limit any other statute, regulation, or rule of law, other than those that require the contracts or signature be in nonelectronic form. Second, the bill provides that it does not require any person to use electronic contracts or signatures.

The act goes on to provide limitations on the use electronic contracts in transactions involving consumers. If a statute, regulation or rule of law requires information to be provided in writing, the use of an electronic record will suffice only if the consumer has affirmatively consented, the consumer is provided with prior notice regarding his rights to receive a written record and to withdraw consent, and the consumer has the software and hardware necessary to read and save the electronic record. (See, Title II, Section 101(c).)

The act also enumerates several exemptions (at Title I, Section 103). These exemptions include any statute, regulation, or rule of law regarding:

The act preempts state law, to an extend. The act provides (at Title I, Section 102) that

"A State statute, regulation, or other rule of law may modify, limit, or supersede the provisions of section 101 with respect to State law only if such statute, regulation, or rule of law (1) constitutes an enactment or adoption of the Uniform Electronic Transactions Act as approved and recommended for enactment in all the States by the National Conference of Commissioners on Uniform State Laws in 1999 ..." or it specifies alternative procedures for establishing the validity of electronic signatures and contracts that are consistent with this act.

Title II of the act deals with transferable records that are in electronic format.

The act takes effect on October 1, 2000. However, several provisions of the act take effect at a later dates.

The act also imposes several responsibilities upon the Department of Commerce. Title III of the act requires that the "Secretary of Commerce shall promote the acceptance and use, on an international basis". Title I also requires two studies for Congress to be conducted by the Department of Commerce within 12 months. First, it is to compare the U.S. Postal Service to electronic mail. The second, to be conducted jointed with the Federal Trade Commission, is to study electronic signatures and contracts generally. Also, the Commerce Department is to conduct an evaluation of the enumerated exemptions to the act within 3 years.

Title IV of the act includes a provision unrelated to electronic signatures. It amends the Child Online Protection Act by allowing the Child Online Protection Commission to accept gifts for the purpose of funding or facilitating the work of the Commission. The Child Online Protection Act, was enacted in 1998 provided for a Commission to study ways to protect children from online pornography and other materials. The Act did not, however, provide any funding for the Commission. The Commission sought either Congressional funding, or permission to accept funding from private sources.

S 761, the Millennium Digital Commerce Act.

Sponsor. Spencer Abraham (R-MI). Original Cosponsors: John McCain (R-AZ), Ron Wyden (D-OR), Conrad Burns (R-MT). Additional Cosponsors. Trent Lott (R-MS), Wayne Allard (R-CO), Sam Brownback (R-KS), Bill Frist (R-TN), Rod Grams (R-MN), Robert Torricelli (D-NJ), Joe Lieberman (D-CT), Bob Smith (R-NH), Slade Gordon (R-WA), and Chuck Hagel (R-NE).

Summary. S 761 IS (as introduced) provided first that "A contract relating to an interstate transaction shall not be denied legal effect solely because an electronic signature or electronic record was used in its formation." It also provides that:

"Notwithstanding any rule of law that specifies one or more acceptable or required technologies or business models, including legal or other procedures, necessary to create, use, receive, validate, or invalidate electronic signatures or electronic records, the parties to an interstate transaction may establish by contract, electronically or otherwise, such technologies or business models, including legal or other procedures, to create, use, receive, validate, or invalidate electronic signatures and electronic records."

S 761 IS does not preempt state law. It provides that, "Nothing in this section shall be construed to preempt the law of a State that enacts legislation governing electronic transactions that is consistent with subsections (a) and (b). A State that enacts, or has in effect, uniform electronic transactions legislation substantially as reported to State legislatures by the National Conference of Commissioners on Uniform State Law shall be deemed to have satisfied this criterion, provided such legislation as enacted is not inconsistent with subsections (a) and (b)."

The Senate Commerce Committee approved an amended version of S 761 on June 23, 1999. The Senate passed S 761, in the form of a committee substitute bill, on November 19, 1999.

Status. S 761 was introduced on March 25, 1999. The Commerce Committee held a hearing on May 27, 1999. The Commerce Committee passed the bill on June 23. The full Senate passed the bill on November 19, 1999.

Legislative History with Links to Related Materials.

HR 1320, the Millennium Digital Commerce Act.

Sponsor. Rep. Anna Eshoo (D-CA). Cosponsors. Cal Dooley (D-CA), Adam Smith (D-WA), Gene Green (D-TX), Ron Kind (D-WI), Gary Ackerman (D-NY), Eddie Johnson (D-TX), Bart Gordon (D-TX), Robert Underwood (D-Guam), Bill Luther (D-MN).

Summary. HR 1320 IH is the companion bill to S 761 IS. See, summary of S 761 above. This bill ultimately was not the vehicle for passage of an electronic signatures bill in the House. Rather, the House passed HR 1714.

Status. HR 1320 was introduced on May 25, 1999. No action has been taken on it, because the House took up HR 1714 instead.

Legislative History with Links to Related Materials.

HR 1685, Internet Growth and Development Act.

Sponsor. Rep. Rick Boucher (D-VA). Cosponsor. Rep. Bob Goodlatte (R-VA).

Summary. HR 1685 IH is a broad bill pertaining to broadband Internet access, spam, online privacy, and electronic signatures. Only Title I deals with electronic signatures.

Rep. Boucher described his bill as follows: "There are currently a variety of legal requirements for writings as a condition of the enforceability of various kinds of contracts. Accordingly, in certain circumstances under the current law, some contracts could be repudiated by a contracting party if his physical written signature is not provided as a part of the contract. To encourage electronic commerce in the absence of written signatures, the bill provides that if a contracting party’s electronic signature is properly authenticated by a third party through the use of reliable means, that party may not repudiate the contract based upon the absence of his physical written signature."

HR 1685 provides that:

"All electronic signatures that have been authenticated through the use of a means of electronic authentication that complies with subsection (d) shall have standing equal to paper-based, written signatures, so that--(1) any rule of law which requires a record to be in writing shall be deemed satisfied; and (2) any rule of law which requires a signature shall be deemed satisfied."

HR 1685 does not preempt state law. However, it does provide that "Nothing in this section shall be construed to preempt the law of a State that enacts legislation governing electronic transactions that is consistent with [HR 1685]."

Status. HR 1685 (and a related, but not identical bill, HR 1686) were introduced on May 5, 1999. No action has been taken.

Legislative History with Links to Related Materials.

HR 1714, Electronic Signatures in Global and National Commerce (E-SIGN) Act.

Sponsor. Rep. Tom Bliley (R-VA). Original cosponsors. Billy Tauzin (R-LA), Mike Oxley (R-OH), Tom Davis (R-VA), Vito Fossella (R-NY), Edophus Towns (D-NY), David Dreier (R-CA), Richard Burr (R-NC), Chip Pickering (D-MS).

Summary Original Version of HR 1714.

HR 1714 IH (as introduced) was described by Rep. Bliley as follows: "Electronic signatures have been one of the biggest barriers to the growth of electronic commerce. This bill fixes this problem by ensuring electronic signatures carry the same legal protections and guarantees as written signatures." (See, May 6, 1999 press release of Rep. Bliley.)

This bill splits up contracts and other signed records into three categories: those used in estate planning and family law, those used in securities transactions in interstate commerce, and all the rest. Most estate planning and family law records are exempted from the coverage of this bill. Hence, any state law requiring a will to be in writing and signed by hand in the presence of witnesses would remain in effect.

This bill provides that securities transactions may be conducted electronically, but allows the SEC leeway in drafting rules. (See also, substitute amendment for Title III adopted by the Finance Subcommittee on July 21.)

Finally, for all other contracts, electronic signatures would be valid, and the state or federal governments would have only very narrow authority to enact rules. The states would be allowed to enact the Uniform Electronic Transactions Act, or to enact any law within four years. (See, substitute amendment for Titles I and II adopted by Telecom Subcommittee.)

The general rule contained in the bill (as amended by the Telecom Subcommittee) reads as follows:

"a Federal or 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 Transaction 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 of electronic records or electronic signatures to establish the legal validity of contracts or agreements, (2) in the case of a State statute, regulation, or other rule of law, is enacted or adopted within 4 years after the date of enactment of this Act; and ..."

However, a federal and state statute, regulation, and other rule of law affecting the validity of electronic signatures would be not be effective if it "discriminates in favor of or against a specific technology ...", "discriminates in favor of or against a specific type or size of entity ...", "is not based on specific and publicly available criteria", or is not consistent with HR 1714.

Title III of the bill deals specifically with securities transactions. (S 921, Sen. Abraham's bill, likewise also deals solely with securities.) S 1714 provides that whenever securities laws require a contract or record to be in writing, or to be authenticated in writing, "the legal effect of such contract, agreement, or record shall not be denied on the ground that the instrument is not in writing if the instrument is an electronic record." Similarly, S 1714 provides that when securities laws require a contract or record to be signed, the legal effect of the contract or record shall not be denied on the ground that it is not signed or affirmed by a signature, if it is signed or affirmed by an electronic signature.

The Securities and Exchange Commission may prescribe regulations to carry out these provisions, provided such regulations do not discriminate in favor of or against and technology or any type or size of business which is facilitating the use of electronic records or electronic signatures.

HR 1714 contains two major exceptions. It does not apply most estate planning and family law matters. Specifically, it does not apply to "the creation and execution of wills, codicils, or testamentary trusts" or to "adoption, divorce, or other matters of family law."

See also, Rep. Bliley's Summary of HR 1714 IH.

Summary of the Version Passed by the House.

HR 1714 EH is a vastly larger and different bill. It allows the states more leaway in passing state statutes. It also contains numerous federal consumer protection provisions.

Status. HR 1714 was introduced on May 6, 1999. HR 1714 EH was passed by the House on November 9, 1999. Subsequently, S 761 became the vehicle for passage of an electronic signatures bill.

Legislative History with Links to Related Materials.

S 921, Electronic Securities Transactions Act.

Sponsor. Sen. Spencer Abraham (R-MI). Cosponsors. John McCain (R-AZ) and Trent Lott (R-MS).

Summary. S 921 IS is not a general electronic signatures bill. It only deals with electronic signatures used in connection with securities transactions.

S 921 would amend the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940 to provide that brokers, dealers, transfer agents, and investment advisors by "may accept and rely upon an electronic signature" in their documents with customers and other parties, and that "such electronic signature shall not be denied legal effect, validity or enforceability solely because it is an electronic signature ..."

The Securities and Exchange Commission would retain the authority to regulate the use of electronic signatures, and to require the use of written signatures in some circumstances. However, the bill would bar the states from regulating the use of electronic signatures in securities transactions.

Status. S 921 was introduced on April 29, 1999. No action has been taken.

Legislative History with Links to Related Materials.

HR 1572, Digital Signature Act of 1999.

Sponsor. Bart Gordon (D-TN). Cosponsors. James Sensenbrenner (R-WI), George Brown (D-CA), Carolyn Kilpatrick (D-MI), Gene Green (D-TX).

Summary. HR 1572 IH pertains to use of electronic signatures by federal agencies. Rep. Gordon described his bill in a statement in the Congressional Record as follows:

"The purpose of this legislation is to require the National Institute of Standards and Technology (NIST) to develop minimum technical standards and guidelines for Federal agencies to follow when deploying digital signature technologies. In addition, the legislation authorizes the Under Secretary of Commerce for Technology to establish a National Policy Panel for Digital Signatures to explore the factors associated with the development of a National Digital Signature Infrastructure based on uniform standards to enable the widespread utilization of digital signature systems in the private sector."

Status. HR 1572 was introduced on April 27, 1999. Rep. Gordon offered (and then withdrew) a revised version of HR 1572 as an amendment to HR 1714 during the House Telecom Subcommittee mark up of HR 1714. No action has been taken.

Legislative History with Links to Related Materials.