House Rejects Electronic Signatures Bill

(November 2, 1999) The House of Representatives narrowly rejected HR 1714, a bill providing for the acceptance of electronic signatures in interstate commerce, by a vote of 234 to 122. Since it was considered under a suspension of the rules, a 2/3 majority was required for passage.

Related Pages
HR 1714, 11/1/99 version.
Roll Call Vote on HR 1714, 11/1/99.
Dear Colleague Letter from J.C. Watts, 11/1/99.
Clinton Administration Statement of Opposition to HR 1714.

HR 1714, the Electronic Signatures in Global and National Commerce (E-SIGN) Act, is sponsored by Rep. Tom Bliley (R-VA), the Chairman of the House Commerce Committee.

The bill has gone through many changes since it was first introduced in May. It covers most types of private contracts which affect interstate commerce. The key language provides that "the legal effect, validity, or enforceability of such contract, agreement, or record shall not be denied (1) on the ground that the contract, agreement, or record is not in writing if the contract, agreement, or record is an electronic record; or (2) on the ground that the contract, agreement, or record is not signed or is not affirmed by a signature if the contract, agreement, or record is signed or affirmed by an electronic signature." It is technology neutral.

Rep. Anna Eshoo (D-CA) introduced another electronic signatures bill, HR 1320. The two bills differed of the subject of preemption of state laws affecting electronic signatures. The Bliley bill strictly preempted state laws; the Eshoo bill did not. However, the preemption language of HR 1714 was softened by the Commerce Committee, and Rep. Eshoo then supported it. This bill was adopted by the Telecom Subcommittee in July, and by the full Committee in August.

Related Story: Analysis of Vote on E-Signatures Bill, 11/2/99.

HR 1714 also has a separate title dealing with electronic contracts used in securities trading, which was marked up by Rep. Mike Oxley's (R-OH) Finance Subcommittee. It has not been the subject of public opposition.

HR 1714 ran into trouble in the Judiciary Committee. First, it was amended in the Courts and Intellectual Property Subcommittee, which is chaired by Rep. Howard Coble (R-NC). The Coble version of the bill excluded contracts to which the federal government is a party, and deleted a provision giving the Commerce Department authority to enjoin state statutes not in conformity with the federal law.

Last month, the full Judiciary Committee rejected the Coble-Bliley version of the bill. Instead, the Committee reported out a substitute bill drafted by Rep. Howard Berman (D-CA) which offered the states wide latitude to adopt their own laws affecting electronic signatures. Supporters of the Berman version argued that this would allow state legislatures to protect consumer rights.

In the last few weeks Rep. Bliley negotiated with opponents of the bill, including Rep. Ed Markey (D-MA) and Rep. John Dingell (D-MI), regarding further modifications in the bill to protect consumer rights. The resulting version of HR 1714 was the subject of the vote on November 1.

This version of the bill not allow states to adopt their own consumer protection provisions. Rather, it included a number of new consumer protection provisions in the federal standard.

This version won over the support of some former opponents of the bill. For example, Rep. Zoe Lofgren (D-CA) and Rep. Lindsey Graham (R-SC), who had voted for the Berman bill in the House Judiciary Committee, voted for the Bliley bill in the full House.

However, the Clinton administration announced its opposition to the bill, and Rep. Markey and Rep. Dingell continued in their opposition too. Meanwhile, Rep. J.C. Watts (R-OK), Chairman of the House Republican Conference, circulated a dear colleague letter urging support for the bill.

Floor Debate on HR 1714

The House debated HR 1714 on Monday, November 1, before voting. Rep. Bliley led the supporters of the bill, while Rep. Markey led the opponents.

Rep. Bliley stated that "The purpose of this legislation is to provide a uniform nationwide standard for electronic signatures and electronic records. It creates a minimum Federal standard to promote interstate commerce, but E-SIGN recognizes the efforts of States to enact their own uniform laws."

"The bill we have before us today is the product of extensive research, careful examination of the issues, committee hearings and mark-ups, and extensive negotiations with our colleagues across the aisle and many other interested parties."

Supporters and Opponents of HR 1714
During the floor debate Rep. Bliley listed the following groups as supporters of HR 1714: The Business Software Alliance, the Securities Industry Association, the American Council of Life Insurers, Information Technology Association of America, Information Technology Industry Council, Telecommunications Industry Association, National Retail Federation, National Association of Manufacturers, Charles Schwab and Company, DLJ Direct, Investment Company Institute, America Online, Microsoft, Ford Motor Credit, IBM, EquiFax, and the U.S. Chamber of Commerce.
Rep. Vento listed the following opponents: National Consumer Law Center, the Consumer Federation of America, groups like the United Auto Workers, Consumer Union, Consumer Action, U.S. PIRG, the National Conference of State Legislatures, and the National Center on Poverty Law.

Rep. Oxley spoke regarding the title affecting securities trading. "One goal of this legislation is to allow customers to open accounts on line without mandating a physical signature on a brokerage agreement and mailing it back to the broker. Title III of this legislation modernizes securities laws by providing that requirements for a writing can be satisfied by an electronic signature with just a click of a button."

Rep Bruce Vento (D-MN) spoke against the bill. He argued that it was harmful to consumer rights. "In fact, this legislation would undermine some of the fundamental consumer laws that we have that relate to financial institutions and agreements, such as truth in lending, so an individual knows what his proper amount of interest is, and he would receive detailed information. They could opt for that electronically and, thereafter, that would be sufficient. Provided that that consumer did not make any other choice under this bill, they would never receive this as a paper document, in fact, it would only be an electronic record."

Rep. Vento continued: "There are all sorts of problems that could go down. The assumption here is that someone is going to have a computer and be on the Internet forever; that the format is not going to change; that the printer works; that there is paper in the printer. There are many other assumptions that simply do not fit in terms of what the consequence would be with regards to consumers."

Rep. Tom Davis (R-VA), one of the original cosponsors of the bill, rebutted Rep. Vento's comments. "I have heard that this preempts existing consumer protection laws; I have heard that this legislation will force consumers into electronic transactions; I have heard this will discriminate against consumers that do not have computer access. These claims are false."

"First, consumers are absolutely free to choose or not choose to enter into electronic transactions. This bill clearly states that nothing requires any party to use or accept electronic records or electronic signatures. This bill simply offers consumers the option, by mutual consent, to use electronic transactions should both parties determine that to be their preference."

"If a consumer does choose to conduct an on-line transaction, that consumer is protected by the underlying Federal or State laws governing that transaction. If a State law requires that a notice or disclosure be made in writing, then those traditional writings must continue to be delivered from the consumer. Nothing in this bill will nullify such existing State consumer protection laws," said Rep. Davis.

Rep. Markey spoke in opposition, and submitted for the Congressional Record a statement from the Clinton/Gore administration opposing the bill. Rep. Markey concluded: "I am afraid that the administration is today indicating that they would be likely not to support, even to veto, this legislation in its present form."

Rep. Anna Eshoo (D-CA), Rep. James Moran (D-VA), and Rep. Chris Cannon (R-UT) also spoke in favor of the bill.

Rep. Dingell and Rep. John Conyers (D-MI) also spoke in opposition to the bill.

Rep. Bliley's Statement on the House Floor

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, last year, the Committee on Commerce began an initiative to better understand the issues surrounding the Internet and electronic commerce. As part of this initiative, the committee held 11 hearings, focusing on a variety of electronic commerce issues.

One of the issues that was raised repeatedly at the hearings was the need to provide enforceability to electronic signatures and electronic records. This issue is really quite simple: Does an electronically signed contract formed over the Internet have the same legal validity as a paper contract with a handwritten signature? Do electronic records have the same legal effect as a paper record?

In most cases, the answer is either no or uncertain. The lack of legal certainty for electronic signatures and records has been cited for many in the e-commerce industry as a potential roadblock for the growth of electronic commerce. To address this issue, earlier this year I introduced H.R. 1714, the Electronic Signatures in Global and National Commerce Act, better known as E-SIGN.

The purpose of this legislation is to provide a uniform nationwide standard for electronic signatures and electronic records. It creates a minimum Federal standard to promote interstate commerce, but E-SIGN recognizes the efforts of States to enact their own uniform laws.

The bill we have before us today is the product of extensive research, careful examination of the issues, committee hearings and mark-ups, and extensive negotiations with our colleagues across the aisle and many other interested parties.

Finally, it is a recognition of a positive step that Congress can take to help electronic commerce and the new economy continue to grow.

Mr. Speaker, as many of my colleagues know, H.R. 1714 was first scheduled to be considered on the House floor 2 weeks ago. After discussions with the gentleman from Massachusetts (Mr. Markey), I asked that this bill be withdrawn from consideration so that we could continue negotiations with him and the gentleman from Michigan (Mr. Dingell) over a number of outstanding issues.

The amended version of the bill as before us today is the product of lengthy negotiations with the Committee on Commerce minority and with the Committee on the Judiciary. As of the middle of last week, I believed that we had reached a substantive agreement on the text we are debating today.

Numerous changes were made to the text of the bill on a good-faith effort by me to address the legitimate concerns raised about the bill by some of our colleagues. These changes include adding a new opt-in provision to prevent consumers from being forced to use or accept electronic records. In addition, we added brand-new carve-outs prohibiting use of electronic records where those records are necessary for protection of a consumer's health, safety, and home.

Unfortunately, all of this hard work has fallen victim to partisan politics. The administration, after publicly supporting the need for electronic signature legislation, has decided that they must deny Congressional Republicans a victory on this important technology legislation.

It is my understanding that last week officials from the administration met with Members of the Democrat leadership in the House and persuaded some House Members to withdraw their support from H.R. 1714, despite the agreement we had reached and after many days of negotiations. This is a shame.

Since that time, many false and misleading charges have been made against H.R. 1714. The bill has come under attack by opponents of technology legislation who claim that H.R. 1714 would harm consumers. Mr. Speaker, these claims are absolutely false. The consumer provisions contained in H.R. 1714 keep in place all existing consumer protection laws and fully protect consumers.

Mr. Speaker, it is unfortunate that such an important technology bill has come under attack. If we want the Internet and electronic commerce to continue to grow, we must pass H.R. 1714 providing the much needed legal certainty to electronic signatures and records.

H.R. 1714 is one of the most important high technology votes that this Congress will undertake. If my colleagues support the U.S. high-tech industry, they will vote yes on this bill.

A vote in support of H.R. 1714 is a vote in support of providing consumers with greater security and on-line transactions. It is a vote in support of allowing businesses to provide new and innovative services online.

I urge all of my colleagues to reject baseless charges against the bill and support H.R. 1714.