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14 April 1999
Source: http://www.access.gpo.gov/su_docs/aces/fr-cont.html


[Congressional Record: April 12, 1999 (Senate)]
[Page S3584-S3586]
>From the Congressional Record Online via GPO Access
[wais.access.gpo.gov] [DOCID:cr12ap99-135]


  Statements on the bill, S. 761, introduced on March 25, 1999, did
appear in the Record. The material follows:
      By Mr. ABRAHAM (for himself, Mr. McCain, Mr. Wyden, and Mr.
  S. 761. A bill to regulate interstate commerce by electronic means
permitting and encouraging the continued expansion of electronic
commerce through the operation of free market forces, and for other
purposes; to the Committee on Commerce, Science, and Transportation.

                    millennium digital commerce act

<bullet> Mr. ABRAHAM. Mr. President, I rise to introduce the
Millennium Digital Commerce Act, a bill to promote the use of
electronic authentication technologies and enhance the Internet's
capacity to serve as a business tool. I am joined in introducing this
bill by Senator John McCain, the chairman of the Senate Commerce
Committee, Senator Ron Wyden, and Senator Conrad Burns. This
legislation builds on the Government Paperwork Elimination Act, a bill
I sponsored to promote the use of electronic signatures by the Federal
Government, which was signed into law by the President as part of the
Omnibus Appropriations Act.
  The Internet has experienced almost exponential growth since its
inception. Where once the Internet was a medium limited to the sharing
of ideas between scientists and educators, it is now a tool which
allows every person with a computer to access more information than is
contained in any single library, communicate with friends for a
fraction of the cost of phone service, or purchase goods from
retailers located all over the world. Electronic commerce is clearly
booming. But in order to realize its full potential, we must enact
Federal and State legislation to enable, enhance, and protect the next
generation of Internet usage.
  The Internet is poised to serve as an efficient new tool for
companies to transact business as never before. The development of
electronic signature technologies now allow organizations to enter
into contractual arrangements without ever having to drive across town
or fly thousands of miles to personally meet with a client or
potential business partner. The Internet is prepared to go far beyond
the ability to buy a book or order apparel on-line. It is ready to
lead a revolution in the execution of business transactions which may
involve thousands or millions of dollars in products or services;
transactions so important they require that both parties enter into a
legally binding contract.
  This capability is provided by the development of secure electronic
authentication methods and technologies. These technologies permit an
individual to positively identify the person with whom they are
transacting business and to ensure that information being shared by
the parties has not been tampered with or modified without the
knowledge of both parties. While such technologies are seeing limited
use today, the growth of the application has out-paced government's
ability to appropriately modify the legal framework governing the use
of electronic signatures and other authentication methods.
  Mr. President, the Millennium Digital Commerce Act is designed to
promote the use of electronic signatures in business transactions and
contracts. At present, the greatest barrier to such transactions is
the lack of a consistent and predictable national framework of rules
governing the use of electronic signatures. Over forty States have
enacted electronic authentication laws, and no two laws are the same.
This inconsistency deters businesses from fully utilizing electronic
signature technologies for contracts and other business transactions.
The differences in our State laws create uncertainty about the
effectiveness or legality of an electronic contract signed with an
electronic signature. Of course, certainty is the basis for commerce,
and contracts provide that certainty. Parties enter into contracts
understanding that they will be bound by the terms of the agreement.
However, the fear is that a business located in a State with different
electronic authentication rules may be able to escape contractual
obligations agreed to through electronic signatures. This legal
uncertainty limits the potential of electronic commerce, and, thus,
our nation's economic growth.
  The needs for uniformity in electronic authentication rules is not
only recognized by the business community,

[[Page S3585]]

but by the States as well. For the past two years, the National
Conference of Commissioners on Uniform State Law, an organization
comprised of e-commerce experts form the States, has been working to
develop a uniform system for the use of electronic signatures for all
fifty States. Their product, the Uniform Electronic Transactions Act,
or UETA, is in the final stages of review and the drafters expect to
have the Act completed by October. Assuming the UETA is finished as
scheduled, and I believe it will be, it will then fall on each State
legislature to enact the legislation and establish the uniformity
necessary for the interstate use of electronic signatures.

  But agreement on the final language of the UETA proposal is not the
same as enactment. Uniformity will not occur until all fifty States
actually enact the UETA. Because some State legislatures are not in
session next year and other States have more pressing legislative
items, it could take three to four years for forty-five or fifty
States to enact the UETA. With the rapid State of development in the
high- technology sector, four years is an eternity.
  The Digital Millennium Commerce Act is an interim measure to provide
relief until the States adopt the provisions of the UETA. It will
provide companies the baseline they need until a national baseline
governing the use of electronic authentication exists at the State
  First, the legislation provides that the electronic records produced
in the execution of a digital contract shall not be denied legal
effect solely because they are electronic in nature. This provision
assures that a company will be able to rely on an electronic contract
and that another party will not be able to escape their contractual
obligations simply because the contract was entered into the Internet
or any other computer network. By granting such certainty, this bill
will reduce the likelihood of dissatisfied parties attempting to
escape electronic contractual agreements and transactions.
  Mr. President, let me stress that this Federal preemption of State
law is designed to be an interim measure. It provides relief until the
States enact uniform standards which are consistent with those
contained in the Uniform Electronic Transactions Act and this
legislation. Simply put, once States enact the UETA or other
legislation governing the use of electronic signatures which is
consistent to the UETA, the Federal preemption is lifted.
  I consider myself a Federalist. I believe strongly in States rights
and view with great caution proposals which call for the preemption of
State law. After considerable study, it is my option that the need for
a national baseline for the use of electronic signatures justifies a
temporary, Federal action until such time as the States can enact a
uniform standard.
  Second, the bill grants parties to a transaction the freedom to
determine the technologies and business methods to be used in the
execution of an electronic contract. In essence, this assures that the
Federal baseline will extend to the various aspects of State law
governing authentication including such matters as registration and
certification requirements, liability allocations, maintenance of
revocation lists, payment of fees and other legal and regulatory
  Third, this legislation sets forth the principles for the
international use of electronic signatures. In the last year, U.S.
negotiators have been meeting with the European Commissioners to
discuss electronic signatures in international commerce. In these
negotiations, the U.S. Department of Commerce and the States
Department have worked in support of an open system governing the use
of authentication technologies. Some European nations oppose this
concept. For example, Germany insists that electronic transactions
involving a German company must utilize a German electronic signature
application. I applaud the Administration for their steadfast
opposition to that approach. In an effort to bolster and strengthen
the U.S. position in these international negotiations, this
legislation lays out a serious of principles to govern the use of
electronic signatures in international transactions. These principles
included the following:
  One, paper-based obstacles to electronic transactions must be
  Two, parties to an electronic transaction should choose the
electronic authentication technology.
  Third, parties to a transaction should have the opportunity to prove
in court that their authentication approach and transactions are
  Fourth, the international approach to electronic signatures should
take a nondiscriminatory approach to electronic signature. This will
allow the free market--not a government--to determine the type of
authentication technologies used in international commerce.

  Mr. President, these principles will bolster the U.S. convention
the Departments of State and Commerce are advocating abroad, and,
hopefully, increase the likelihood of an open, market-based
international framework to electronic commerce.
  Finally, the bill directs the Department of Commerce and Office of
Management and Budget to report on Federal laws and regulations that
might pose barriers to e-commerce and report back to Congress on the
impact of such provisions and provide suggestions for reform.
  Mr. President, as with any legislation seeking to affect both
and State law, drafting this bill has been a challenging balancing
act. During the drafting process, my office has received invaluable
support from the Technology Division of the State of Massachusetts.
Governor Paul Cellucci's staff have provided indispensable counsel on
existing State law governing the use of electronic signatures and the
manner in which Federal law can bolster or hamstring State contract
law. Of course, the business and technology sectors have also been
crucial in helping to craft this bill. Representatives from the
Information Technology Association of America, the U.S. Chamber of
Commerce, Microsoft, Hewlett-Packard and the National Association of
Manufacturers have each lent their time and expertise to this effort.
I appreciate their contributions and look forward to continuing this
effort to ensure that we develop the best approach possible to promote
use of electronic signatures in business transactions.
  I urge my colleagues to support the Millennium Digital Commerce Act.
Mr. President, I ask that the text of this legislation be placed in
the Record.
  The fill follows:


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