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S. 762 (es) To direct the Secretary of the Interior to conduct a special resource [Engrossed in Senate] ...

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                                                       Calendar No. 243


  1st Session

                                 S. 761

                          [Report No. 106-131]


                                 A BILL

 To regulate interstate commerce by electronic means by permitting and 
encouraging the continued expansion of electronic commerce through the 
          operation of free market forces, and other purposes.


                             July 30, 1999

        Reported with an amendment in the nature of a substitute
                                                       Calendar No. 243
  1st Session
                                 S. 761

                          [Report No. 106-131]

 To regulate interstate commerce by electronic means by permitting and 
encouraging the continued expansion of electronic commerce through the 
          operation of free market forces, and other purposes.



                             March 25, 1999

 Mr. Abraham (for himself, Mr. McCain, Mr. Wyden, Mr. Burns, Mr. Lott, 
 Mr. Allard, Mr. Torricelli, Mr. Grams, Mr. Brownback, Mr. Frist, Mr. 
 Hagel, and Mr. Gorton) introduced the following bill; which was read 
     twice and referred to the Committee on Commerce, Science, and 

                             July 30, 1999

Reported by Mr. McCain, with an amendment in the nature of a substitute
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]


                                 A BILL

 To regulate interstate commerce by electronic means by permitting and 
encouraging the continued expansion of electronic commerce through the 
          operation of free market forces, and other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,


<DELETED>    This Act may be cited as the ``Third Millennium Electronic 
Commerce Act''.</DELETED>


<DELETED>    The Congress makes the following findings:</DELETED>
        <DELETED>    (1) The growth of electronic commerce and 
        electronic government transactions represent a powerful force 
        for economic growth, consumer choice, improved civic 
        participation and wealth creation.</DELETED>
        <DELETED>    (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.</DELETED>
        <DELETED>    (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, non-regulatory, and 
        market-based approach.</DELETED>
        <DELETED>    (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, minimalist 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 inter-jurisdictional 
        <DELETED>    (5) To the extent State laws or regulations 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 eliminate said burden, but that absent such 
        burdens, the best legal system for electronic commerce will 
        result from continuing experimentation by individual 
        <DELETED>    (6) With due regard to the fundamental need for 
        adequate consistency, 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 
        <DELETED>    (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.</DELETED>


<DELETED>    The purposes of this Act are--</DELETED>
        <DELETED>    (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;</DELETED>
        <DELETED>    (2) to promote public confidence in the validity, 
        integrity and reliability of electronic commerce and online 
        government under Federal law;</DELETED>
        <DELETED>    (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; and</DELETED>
        <DELETED>    (4) to promote the development of a consistent 
        national legal infrastructure necessary to support of 
        electronic commerce at the Federal and State levels within 
        existing areas of jurisdiction.</DELETED>


<DELETED>    In this Act:</DELETED>
        <DELETED>    (1) Electronic.--The term ``electronic'' means of 
        or relating to technology having electrical, digital, magnetic, 
        wireless, optical, electromagnetic, or similar 
        <DELETED>    (2) Electronic record.--The term ``electronic 
        record'' means a record created, stored, generated, received, 
        or communicated by electronic means.</DELETED>
        <DELETED>    (3) Electronic signature.--The term ``electronic 
        signature'' means a signature in electronic form, attached to 
        or logically associated with an electronic record.</DELETED>
        <DELETED>    (4) Governmental agency.--The term ``governmental 
        agency'' means an executive, legislative, or judicial agency, 
        department, board, commission, authority, institution, or 
        instrumentality of the Federal Government or of a State or of 
        any county, municipality, or other political subdivision of a 
        <DELETED>    (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 
        <DELETED>    (6) Sign.--The term ``sign'' means to execute or 
        adopt a signature.</DELETED>
        <DELETED>    (7) Signature.--The term ``signature'' means any 
        symbol, sound, or process executed or adopted by a person with 
        intent to authenticate a record.</DELETED>
        <DELETED>    (8) Transaction.--The term ``transaction'' means 
        an action or set of actions occurring between 2 or more persons 
        relating to the conduct of commerce.</DELETED>


<DELETED>    (a) In General.--To the extent practicable, the Federal 
Government shall observe the following principles in an international 
context to enable commercial electronic transaction:</DELETED>
        <DELETED>    (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).</DELETED>
        <DELETED>    (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 
        <DELETED>    (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 
        <DELETED>    (4) Take a non-discriminatory approach to 
        electronic signatures and authentication methods from other 


<DELETED>    (a) Interstate Commercial Contracts.--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 
<DELETED>    (b) Methods.--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 
<DELETED>    (c) Not Preempt State Law.-- Nothing in this section shall 
be construed to preempt the law of a State that enacts legislation 
governing electronic transactions which is substantially similar to, 
and not inconsistent with, subsections (a) and (b). A State that enacts 
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 
<DELETED>    (d) Intent.--The intent of a person to execute or adopt an 
electronic signature shall be determined from the context and 
surrounding circumstances, which may include accepted commercial 


<DELETED>    (a) Establishment of Commission.--There is established a 
commission to be known as the Advisory Commission on Electronic 
Authentication (in this section referred to as the ``Commission''). The 
Commission shall--</DELETED>
        <DELETED>    (1) be composed of 17 members appointed in 
        accordance with subsection (b), including the chairperson who 
        shall be selected by the members of the Commission from among 
        themselves; and</DELETED>
        <DELETED>    (2) conduct its business in accordance with the 
        provisions of this section.</DELETED>
<DELETED>    (b) Membership.--</DELETED>
        <DELETED>    (1) In general.--The Commissioners shall serve for 
        the life of the Commission. The membership of the Commission 
        shall be as follows:</DELETED>
                <DELETED>    (A) 3 representatives from the Federal 
                Government, comprised of the Secretary of Commerce, the 
                Secretary of the Treasury, and the United States Trade 
                Representative (or their respective 
                <DELETED>    (B) 4 representatives from State and local 
                <DELETED>    (C) 10 representatives of the electronic 
                commerce industry (including small business), banks and 
                other financial service companies, and consumer groups, 
                comprised of--</DELETED>
                        <DELETED>    (i) 3 individuals appointed by the 
                        Majority Leader of the Senate;</DELETED>
                        <DELETED>    (ii) 2 individuals appointed by 
                        the Minority Leader of the Senate;</DELETED>
                        <DELETED>    (iii) 3 individuals appointed by 
                        the Speaker of the House of Representatives; 
                        <DELETED>    (iv) 2 individuals appointed by 
                        the Minority Leader of the House of 
        <DELETED>    (2) Appointments.--Appointments to the Commission 
        shall be made not later than 45 days after the date of the 
        enactment of this Act. The chairperson shall be selected not 
        later than 60 days after the date of the enactment of this 
        <DELETED>    (3) Vacancies.--Any vacancy in the Commission 
        shall not affect its powers, but shall be filled in the same 
        manner as the original appointment.</DELETED>
<DELETED>    (c) Other Resources.--The Commission shall have reasonable 
access to materials, resources, data, and other information from the 
Department of Justice, the Department of Commerce, the Department of 
State, the Department of the Treasury, and the Office of the United 
States Trade Representative. The Commission shall also have reasonable 
access to use the facilities of any such Department or Office for 
purposes of conducting meetings.</DELETED>
<DELETED>    (d) Sunset.--The Commission shall terminate 12 months 
after the date of the enactment of this Act.</DELETED>
<DELETED>    (e) Duties of the Commission.--The Commission shall 
conduct a thorough study of electronic authentication systems, 
including third-party verification systems, in the transacting of 
contractual agreements, the use of such systems in electronic commerce 
today, and the role of the electronic commerce industry, the Federal 
Government, and the States in such a system.</DELETED>


<DELETED>    (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 

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