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S. 799 (is) To amend the Internal Revenue Code of 1986 to modify the tax brackets, [Introduced in Senate] ...
Calendar No. 263 106th CONGRESS 1st Session S. 798 [Report No. 106-142] _______________________________________________________________________ A BILL To promote electronic commerce by encouraging and facilitating the use of encryption in interstate commerce consistent with the protection of national security, and for other purposes. _______________________________________________________________________ August 5, 1999 Reported without amendment Calendar No. 263 106th CONGRESS 1st Session S. 798 [Report No. 106-142] To promote electronic commerce by encouraging and facilitating the use of encryption in interstate commerce consistent with the protection of national security, and for other purposes. _______________________________________________________________________ IN THE SENATE OF THE UNITED STATES April 14, 1999 Mr. McCain (for himself, Mr. Burns, Mr. Wyden, Mr. Leahy, Mr. Abraham, Mr. Kerry, Mrs. Hutchison, and Mr. Feingold) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation August 5, 1999 Reported by Mr. McCain, without amendment _______________________________________________________________________ A BILL To promote electronic commerce by encouraging and facilitating the use of encryption in interstate commerce consistent with the protection of national security, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Promote Reliable On-Line Transactions to Encourage Commerce and Trade (PROTECT) Act of 1999''. SEC. 2. PURPOSES. The purposes of this Act are-- (1) to promote electronic growth foster electronic commerce; (2) create consumer confidence in electronic commerce; (3) meet the needs of businesses and individuals using electronic networks; (4) prevent crime; and (5) improve national security by facilitating the widespread use of encryption and assisting the United States Government in developing the capability to respond to the challenges posed by new technological developments. SEC. 3. FINDINGS. Congress finds the following: (1) The ability to digitize information makes carrying out tremendous amounts of commerce and personal communication electronically possible. (2) Miniaturization, distributed computing, and reduced transmission costs make communication via electronic networks a reality. (3) The explosive growth in the Internet and other computer networks reflects the potential growth of electronic commerce and personal communication. (4) The Internet and the global information infrastructure have the potential to revolutionize the way individuals and businesses conduct business. (5) The full potential of the Internet for the conduct of business cannot be realized as long as it is an insecure medium in which confidential business information and sensitive personal information remain at risk of unauthorized viewing, alteration, and use. (6) The United States' critical infrastructures increasingly rely on vulnerable commercial information systems and electronic networks and represent a growing risk to national security and public safety because the security and privacy of those systems and networks is not assured. (7) Encryption of information enables businesses and individuals to protect themselves, their commercial information and networks, and the United States' critical infrastructures against unauthorized viewing, alteration, and abuse ensuring the security, confidentiality, authenticity, and integrity of information. (8) American computer software and hardware, communications, and electronics businesses are leading the world technology revolution, and the American information technology industry is a vital sector of the United States economy. These businesses have developed in the commercial marketplace, and are prepared to offer immediately to computer users worldwide, a variety of communications and computer hardware and software that provide strong, robust, and easy-to- use encryption. (9) Notwithstanding American preeminence in information technology, many foreign companies currently manufacture products and services that are comparable in quality and capabilities to United States products and frequently provide stronger encryption. These foreign companies are competing fiercely with United States companies for sales not only of the encryption product or service, but also for the ultimate product that uses the encryption capability, including applications ranging from online banking to electronic mail to banking. (10) The leading survey of available encryption products reports that, as of December, 1997, there were 656 foreign encryption products (out of 1619 encryption products produced worldwide) available from 474 vendors in 29 different foreign countries. (11) To promote economic growth, foster electronic commerce, meet the needs of businesses and individuals using electronic networks, prevent crime, and improve national security, Americans should be free to continue using lawfully any encryption products and programs, and American companies should be free to sell, license, or otherwise distribute such encryption products and programs worldwide so long as national security is not put at risk. (12) The United States government should promote the use of the United States encryption products and expedite its work with the industry to update the United States Data Encryption Standard (DES). (13) NIST has proposed requirements and established procedures for adopting a new, stronger, private sector-- developed Advanced Encryption Standard (AES). (14) Similar to DES, it is anticipated that AES will become an international encryption standard adopted by individuals and companies worldwide. (15) NIST has requested candidate algorithms, evaluated candidate algorithms, and encouraged public comment at each step of the process. NIST's open and public process for developing and testing the new AES should be applauded and supported. (16) Further demonstrating the worldwide availability, use, and sophistication of encryption abroad, only 5 of the 15 AES candidate algorithms submitted to NIST for evaluation that complied with all requirements and procedures for submission were proposed by companies and individuals in the United States. The remaining 10 candidate algorithms were proposed by individuals and companies from 11 different countries (Australia's LOKI97; Belgium's RIJNDAEL; Canada's CAST-256 and DEAL; Costa Rica's FROG; France's DFC; Germany's MAGENTA; Japan's E2; Korea's CRYPTON; and the United Kingdom, Israel, and Norway's SERPENT algorithms). (17) NIST's efforts to create the AES to replace DES are important to the development of adequate global information security to a degree that Congress should explicitly authorize and support NIST's efforts and establish a deadline of January 1, 2002, for finalizing the new standard. (18) Once NIST finalizes AES, the Federal Government should permit all United States products meeting the new AES standards or its equivalent to be exported worldwide to ensure global security and to permit United States companies to compete effectively with their foreign competitors consistent with the national security requirements of the United States. (19) The United States Government has legitimate law enforcement and national security objectives, which can be met by permitting American companies to compete globally, while at the same time recognizing the challenges to law enforcement and national security posed by quickly advancing technological developments and providing for research, development, and adoption of new technology to respond to these challenges. (20) As part of its efforts to fight crime with technology and ensure the safety of commercial networks, the United States government should establish a mechanism for facilitating communications with experts in information security industries, including cryptographers, engineers, software publishers, and others involved in the design and development of information security products and should ensure that such sums as necessary are appropriated to ensure and enhance national security and law enforcement. (21) The United Government also should expand and expedite its computer security research activities at NIST and the Federal laboratories, work with industry to recommend priority activities at university research facilities, and fund scholarships in information security. SEC. 4. DEFINITIONS. In this Act: (1) Computer hardware.--The term ``computer hardware'' includes computer systems, equipment, application-specific assemblies, smart cards, modules, integrated circuits, printed circuit board assemblies, and devices that incorporate 1 or more microprocessor-based central processing units that are capable of accepting, storing, processing, or providing output of data. (2) Encrypt and encryption.--The term ``encrypt'' and ``encryption'' means the scrambling (and descrambling) of wire communications, electronic communications, or electronically stored information, using mathematical formulas or algorithms to preserve the confidentiality, integrity, or authenticity of, and prevent unauthorized recipients from accessing or altering, such communications or information. (3) Encryption product.--The term ``encryption product''-- (A) means computer hardware, computer software, or technology with encryption capabilities; and (B) includes any subsequent version of or update to an encryption product, if the encryption capabilities are not changed. (4) Exportable.--The term ``exportable'' means the ability to transfer, ship, or transmit to foreign users. (5) Generally available or general availability.--The terms ``generally available'' or ``general availability'' mean-- (A) in the case of computer hardware or computer software (including encryption products), computer hardware, or computer software that is-- (i) distributed via the Internet; (ii) widely offered for sale, license, or transfer (without regard to whether it is offered for consideration), including over-the- counter retail sales, mail order transactions, telephone order transactions, electronic distribution, or sale on approval; (iii) preloaded on computer hardware that is widely available; or (iv) assembled from computer hardware or computer software components that are generally available; (B) not designed, developed, or tailored by the manufacturer for specific purchasers, except that the purchaser or user may-- (i) supply certain installation parameters needed by the computer hardware or computer software to function properly with the computer system of the user or purchaser; or (ii) select from among options contained in the computer hardware or computer software; and (C) are available in more than 1 country through a means described in subparagraph (A). (6) Key.--The term ``key'' means the variable information used in a mathematical formula, code, or algorithm, or any component thereof, used to decrypt wire communications, electronic communications, or electronically stored information, that has been encrypted. (7) License exception.--The term ``license exception'' means an authorization by the Bureau of Export Administration of the Department of Commerce that allows the export or re- export, under stated conditions, of items subject to the Export Administration Regulations that otherwise would require a license. (8) NIST.--The term ``NIST'' means the National Institute of Standards and Technology in the Department of Commerce. (9) On-line merchant.--The term ``on-line merchant'' means either a person or a company or other entity engaged in commerce that, as part of its business, uses electronic means to conduct commercial transactions in goods (including, but not limited to, software and all other forms of digital content) or services, whether delivered in tangible or electronic form. (10) Person.--The term ``person'' has the meaning given the term in section 2510(1) of title 1, United States Code. (11) Publicly available or public availability.--The terms ``publicly available'' or ``public availability'' mean-- (A) information that is generally accessible to the interested public in any form; or (B) technology and software that are already published or will be published, arise during, or result from fundamental research, are educational, or are included in certain patent applications. (12) Recoverable product.--The term ``recoverable product'' means an encryption product that-- (A) incorporates an operator-controlled management interface enabling real-time access to specified network traffic prior to encryption, or after decryption, at a designated access point under the control of the network owner or operator (utilizing a
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