Berman Amendment to Coble Amendment to HR 1714 (E-SIGN Act).
Re: providing for the acceptance of electronic signatures.
Date: October 7, 1999.
This amendment was offered during the House Courts and Intellectual Property Subcommittee mark up of HR 1714, but then withdrawn.

Editor's Notes:
• The Office of Rep. Howard Berman kindly provided Tech Law Journal with a PDF version of this amendment.
• Tech Law Journal converted that document into HTML. Some features were lost in the conversion, including double spacing, and line numbering.
• Copyright Tech Law Journal. All rights reserved.

AMENDMENT TO MR. COBLE’S AMENDMENT IN THE NATURE OF A SUBSTITUTE TO H.R. 1714 OFFERED BY MR. BERMAN, MR. CONYERS, AND MS. LOFGREN

Page 1, line 7, through page 10, line 13, strike section 101 through the end of section 104 and insert the following new sections:

SEC. 101. FINDINGS.

The Congress makes the following findings:

(1) The growth of electronic commerce and electronic government transactions represents a powerful force for economic growth, consumer choice, improved civic participation, and wealth creation.

(2) The promotion of growth in private sector electronic commerce through Federal legislation is in the national interest because that market is globally important to the United States.

(3) A consistent legal foundation, across multiple jurisdictions, for electronic commerce will promote the growth of such transactions, and that such a foundation should be based upon a simple, technology neutral, nonregulatory, and market-based approach.

[begin page 2]

(4) The Nation and the world stand at the beginning of a large-scale transition to an information society which will require innovative legal and policy approaches, and therefore, States can serve the national interest by continuing their proven role as laboratories of innovation for quickly evolving areas of public policy, provided that States also adopt a consistent, reasonable national baseline to eliminate obsolete barriers to electronic commerce such as undue paper and pen requirements, and further, that any such innovation should not unduly burden interjurisdictional commerce.

(5) To the extent State laws or regulations do not provide a consistent, reasonable national baseline or in fact create an undue burden to interstate commerce in the important burgeoning area of electronic commerce, the national interest is best served by Federal preemption to the extent necessary to provide such consistent, reasonable national baseline and eliminate said burden, but that absent such lack of consistent, reasonable national baseline or such undue burdens, the best legal system for electronic commerce will result from continuing experimentation by individual jurisdictions.

[begin page 3]

(6) With due regard to the fundamental need for a consistent national baseline, each jurisdiction that enacts such laws should have the right to determine the need for any exceptions to protect consumers and maintain consistency with existing related bodies of law within a particular jurisdiction.

(7) Industry has developed several electronic signature technologies for use in electronic transactions, and the public policies of the United States should serve to promote a dynamic marketplace within which these technologies can compete. Consistent with this Act, States should permit the use and development of any authentication technologies that are appropriate as practicable as between private parties and in use with State agencies.

SEC. 102. PURPOSES.

The purposes of this Act are—

(1) to permit and encourage the continued expansion of electronic commerce through the operation of free market forces rather than proscriptive governmental mandates and regulations;

(2) to promote public confidence in the validity, integrity, and reliability of electronic commerce and online government under Federal law;

[begin page 4]

(3) to facilitate and promote electronic commerce by clarifying the legal status of electronic records and electronic signatures in the context of writing and signing requirements imposed by law;

(4) to facilitate the ability of private parties engaged in interstate transactions to agree among themselves on the terms and conditions on which they use and accept electronic signatures and electronic records; and

(5) to promote the development of a consistent national legal infrastructure necessary to support electronic commerce at the Federal and State levels within existing areas of jurisdiction.

SEC. 103. DEFINITIONS.

In this Act:

(1) ELECTRONIC.—The term ‘‘electronic’’ means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

(2) ELECTRONIC AGENT.—The term ‘‘electronic agent’’ means a computer program or an electronic or other automated means used to initiate an action or respond to electronic records or performances in whole or in part without review by an individual at the time of the action or response.

[begin page 5]

(3) ELECTRONIC RECORD.—The term ‘‘electronic record’’ means a record created, generated, sent, communicated, received, or stored by electronic means.

(4) ELECTRONIC SIGNATURE.—The term ‘‘electronic signature’’ means an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record.

(5) RECORD.—The term ‘‘record’’ means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(6) TRANSACTION.—The term ‘‘transaction’’ means an action or set of actions relating to the conduct of commerce between 2 or more persons, neither of which is the United States Government, a State, or an agency, department, board, commission, authority, institution, or instrumentality of the United States Government or of a State.

(7) UNIFORM ELECTRONIC TRANSACTIONS ACT.—The term ‘‘Uniform Electronic Transactions Act’’ means the Uniform Electronic Transactions Act as enacted by a State based on the form provided by the National Conference of Commissioners [begin page 6] on Uniform State Law in the form or any substantially similar variation thereof.

SEC. 104. PRINCIPLES GOVERNING THE USE OF ELECTRONIC SIGNATURES IN INTERNATIONAL TRANSACTIONS.

To the extent practicable, the Federal Government shall observe the following principles in an international context to enable commercial electronic transaction:

(1) Remove paper-based obstacles to electronic transactions by adopting relevant principles from the Model Law on Electronic Commerce adopted in 1996 by the United Nations Commission on International Trade Law (UNCITRAL).

(2) Permit parties to a transaction to determine the appropriate authentication technologies and implementation models for their transactions, with assurance that those technologies and implementation models will be recognized and enforced.

(3) Permit parties to a transaction to have the opportunity to prove in court or other proceedings that their authentication approaches and their transactions are valid.

(4) Take a nondiscriminatory approach to electronic signatures and authentication methods from other jurisdictions.

[begin page 7]

SEC. 105. INTERSTATE CONTRACT CERTAINTY.

(a) IN GENERAL.—In any commercial transaction affecting interstate commerce, a contract may not be denied legal effect or enforceability solely because an electronic signature or electronic record was used in its formation.

(b) METHODS.—In commercial transactions affecting interstate commerce, the parties to a contract may agree on the terms and conditions on which they will use and accept electronic signatures and electronic records, except to the extent a law or regulation governing the record provides otherwise.

(c) RECORD RETENTION.—When a law requires that a contract be in writing, that requirement is satisfied by an electronic record of the information in the record provided to the parties which—

(1) accurately reflects the information set forth in the record after it was first generated in its final form as an electronic record or otherwise; and

(2) remains capable of retention in a form that can be accessed for later reference and used to prove the terms of the agreement.

(d) FORMULATION OF CONTRACT.—A contract relating to a commercial transaction affecting interstate commerce may not be denied legal effect solely because its formation involved—

[begin page 8]

(1) the interaction of electronic agents of the parties; or

(2) the interaction of an electronic agent of a party and an individual who acts on that individual’s own behalf or for another person.

(e) APPLICATION IN UETA STATES.—This section does not apply in any State in which the Uniform Electronic Transactions Act is in effect.

SEC. 106. STUDY OF LEGAL AND REGULATORY BARRIERS TO ELECTRONIC COMMERCE.

(a) BARRIERS.—Each Federal agency shall, not later than 6 months after the date of enactment of this Act, provide a report to the Director of the Office of Management and Budget and the Secretary of Commerce identifying any provision of law administered by such agency, or any regulations issued by such agency and in effect on the date of enactment of this Act, that may impose a barrier to electronic transactions, or otherwise to the conduct of commerce online or by electronic means. Such barriers include, but are not limited to, barriers imposed by a law or regulation directly or indirectly requiring that signatures, or records of transactions, be accomplished or retained in other than electronic form. In its report, each agency shall identify the barriers among those identified whose removal would require legislative action, and shall [begin page 9] indicate agency plans to undertake regulatory action to remove such barriers among those identified as are caused by regulations issued by the agency.

(b) REPORT TO CONGRESS.—The Secretary of Commerce, in consultation with the Director of the Office of Management and Budget, shall, within 18 months after the date of enactment of this Act, and after the consultation required by subsection (c) of this section, report to the Congress concerning—

(1) legislation needed to remove barriers to electronic transactions or otherwise to the conduct of commerce online or by electronic means; and

(2) actions being taken by the executive branch and individual Federal agencies to remove such barriers as are caused by agency regulations or policies.

(c) CONSULTATION.—In preparing the report required by this section, the Secretary of Commerce shall consult with the General Services Administration, the National Archives and Records Administration, and the Attorney General concerning matters involving the authenticity of records, their storage and retention, and their usability for law enforcement purposes.

(d) INCLUDE FINDINGS IF NO RECOMMENDATIONS.—If the report required by this section omits recommendations for actions needed to fully remove identified [begin page 10] barriers to electronic transactions or to online or electronic commerce, it shall include a finding or findings, including substantial reasons therefor, that such removal is impracticable or would be inconsistent with the implementation or enforcement of applicable laws.

SEC. 107. STUDY OF EFFECTS OF ELECTRONIC COMMERCE.

(a) IN GENERAL.—The Federal Trade Commission and the Secretary of Commerce shall conduct a study of electronic commerce issues.

(b) RESPONSIBILITY OF EACH AGENCY.—

(1) FTC.—The Federal Trade Commission, in consultation with the Secretary of Commerce, shall conduct a portion of the study to determine the effectiveness of Federal and State consumer protection laws with respect to electronic transactions involving consumers.

(2) COMMERCE DEPARTMENT.—The Secretary of Commerce, in consultation with the Federal Trade Commission, shall conduct a portion of the study to determine the extent to which a uniform commercial legal framework would facilitate and enforce interstate electronic transactions.

(c) REPORT.—Not later than 2 years after the date of the enactment of this Act, the Federal Trade Commission [begin page 11] and the Secretary of Commerce shall transmit a report to Congress containing —

(1) findings from the study required under subsection (a); and

(2) such recommendations for legislation or administrative actions as the Federal Trade Commission and the Secretary of Commerce, respectively, deem appropriate.

(d) BIENNIAL UPDATES.—The Federal Trade Commission and the Secretary of Commerce shall update the report every 2 years thereafter and transmit the updated report to the Congress.

Page 12, line 14, strike ‘‘section 101’’ and insert ‘‘section 103’’.