BILL ANALYSIS Ó
AB 2296
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Date of Hearing: April 26, 2016
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
AB 2296
(Low) - As Amended April 19, 2016
PROPOSED CONSENT
SUBJECT: Digital signatures
KEY ISSUE: SHOULD THE RULES concerning ELECTRONIC SIGNATURES BE
CLARIFIED SO THAT GOVERNMENT AGENCIES MAY BE ABLE TO MORE
EFFECTIVELY TRANSACT BUSINESS THROUGH ELECTRONIC TRANSACTIONS?
SYNOPSIS
California has taken several steps to enable use of more
electronic transactions in the various branches of government.
Beginning in 1995, the Legislature adopted its first digital
signature statute to allow public entitles to engage in
electronic commerce. (AB 1577 (Bowen), Chap. 594, Stats. 1995.)
Then in 1999, the Legislature enacted the Uniform Electronic
Transactions Act (UETA), regulating the electronic transmission
of documents and signatures more generally. (SB 820, (Sher),
Chap. 428, Stats. 1999.) As a result, there are multiple rules
governing what electronic or digital signatures are acceptable;
and, according to the author, there is confusion about what
rules apply and when. This bill, sponsored by the Secretary of
State, seeks to reduce that confusion by clarifying that a
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digital signature under the Government Code also qualifies as an
electronic signature under the UETA, and that an electronic
signature under the UETA does not need to comply with the
requirements of a digital signature under the Government Code.
This bill is supported by the League of California Cities, the
California Chamber of Commerce, the California Manufacturing and
Technology Association and the Computing Technology Industry
Association, and it has no known opposition.
SUMMARY: Clarifies the types of electronic signatures that are
permissible for public agencies. Specifically, this bill:
1)Provides that a "digital signature," as defined, is considered
a type of "electronic signature" under the Uniform Electronic
Transactions Act.
2)Clarifies that use of a digital signature is discretionary.
3)Clarifies that regulations adopted by the Secretary of State
to implement Government Code Section 16.5 apply only to the
use of a "digital signature" under that statute and not to an
"electronic signature" under the UETA.
4)States various legislative findings.
EXISTING LAW:
1)Establishes, under the UETA, standards for conducting
electronic transactions in this State, permitting but not
requiring a record or signature to be created, generated,
sent, communicated, received, stored, or otherwise processed
or used by electronic means or in electronic form. As part of
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that, defines an "electronic signature" as 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. (Civil Code
Section 1633.1 et seq.)
2)Allows a digital signature to be used in a written
communication with a public entity, but provides that use or
acceptance of a digital signature is at the option of the
parties. Defines "digital signature" as an electronic
identifier, created by computer, intended by the party using
it to have the same force and effect as a manual signature.
(Government Code Section 16.5.)
3)Defines "electronic signature" for the purposes of the Code of
Civil Procedure as 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. (Coe of Civil Procedure Sections 17,
263.1.)
FISCAL EFFECT: As currently in print this bill is keyed
non-fiscal.
COMMENTS: California has taken several steps to enable use of
more electronic transactions in the various branches of
government. Beginning in 1995, the Legislature adopted its
first digital signature statute to allow public entitles to
engage in electronic commerce. (AB 1577 (Bowen), Chap. 594,
Stats. 1995.) Beginning in 1999, the Legislature authorized
courts to adopt local rules of court permitting electronic
filing and service of documents. (SB 367 (Dunn), Chap. 514,
Stats. 1999.) Also in 1999, the Legislature enacted the Uniform
Electronic Transactions Act, regulating the electronic
transmission of documents and signatures. (SB 820, (Sher),
Chap. 428, Stats. 1999.) As a result, there are multiple rules
governing what electronic or digital signatures are acceptable;
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and, according to the author, there is confusion about what
rules apply and when. This bill seeks to reduce that confusion
by clarifying that a digital signature under the Government Code
also qualifies as an electronic signature under the UETA.
Government Code Section 16.5: California enacted Government
Code Section 16.5 in 1995, which authorizes use of a digital
signature in communication with public agencies. (AB 1577
(Bowen), 1995.) For purposes of this bill, the relevant
provision of that statute provides that a digital signature
meeting specified requirements will have the same force and
effect as a manual signature for written communications with a
public entity. The Secretary of State was required to adopt
implementing regulations. Those regulations require that the
digital signature must be created under a technology that the
Secretary of State finds acceptable and has approved. There are
two such technologies today -- Signature Dynamic, which uses a
specialized touchpad to record signatures and, according to the
Secretary of State, is not widely used; and public key
cryptography, which must be issued with a certificate by a
third-party on the Secretary of State's "Approved List of
Certificate Authorities." Those are the only two approved
methods to create a digital signature under Section 16.5. The
rules under Section 16.5 are purely voluntary -- no public
entity is required to use them -- but if the government entity
relies on those rules, the digital signature must be created
through a method approved by the Secretary of State.
Uniform Electronic Transactions Act: Four years later, the
Legislature passed the more comprehensive UETA, which
established uniform standards for conducting electronic
transactions in California. (SB 820 (Sher), 1999.) UETA set
out a voluntary system of rules and procedures for the sending
and receiving of electronic records and signatures, the
formation of contracts using electronic records, the making and
retention of electronic records and signatures, and the
procedures governing changes and errors in electronically
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transmitted records. It also established the validity of
transactions formed, transmitted and recorded electronically,
and it established the admissibility of electronic records in a
legal proceeding. Of particular relevance for this bill, UETA
defines "electronic signature" as "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." (Civil Code Section
1633.2 (h).) Unlike Government Code Section 16.5, UETA does not
dictate any particular method of creation for that electronic
signature.
Confusion in the Marketplace: According to the author this bill
is necessary because there is confusion among the stakeholders
about what types of signatures are required for electronic
transactions:
The definition of "digital signature" in Section 16.5 of the
Government Code, and the definition of "electronic signature"
in the UETA are similar, and neither statute includes any
cross-reference to the other. Although both provisions of law
allow an agency to choose whether or not to convert from using
a wet signature, some agencies interpret the law as allowing
an agency to choose only a "digital signature" solution
subject to Secretary of State regulations, even if an
"electronic signature" technology is preferred.
In addition, some public agencies appear to conclude that they
can contract with a signature solution provider only if that
provider is on the Secretary of State's approved list.
However, . . . a provider would not be on this list, only the
associated certificate authority.
This lack of clarity in the law creates a barrier to public
agencies utilizing fully digital transactions that require a
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signature. The confusion is limiting the signature solutions
agencies adopt, or leading them to retain paper-based
processes to avoid noncompliance. As a result, the benefits
of digital transactions and online services -- efficiency,
cost savings, convenience, and paper reduction - are not being
fully realized.
This bill seeks to eliminate any confusion between the two code
sections in several ways. First, this bill provides relevant
cross-references in the Government Code and the UETA. Second,
it clarifies that a digital signature under Government Code
Section 16.5 qualifies as an electronic signature under the
UETA. Third, it clarifies that a public entity can elect to
transaction business using a digital signature, but is not
compelled to do so. Finally the bill provides that the
Secretary of State's regulations under Government Code Section
16.5, which limit the types of electronic signature allowed
under that code section, do not apply to an electronic signature
under the UETA. These multiple clarifications are designed to
eliminate all confusion and make clear that an electronic
signature under the UETA can be a digital signature under the
Government Code, but does not need to comply with those
requirements.
ARGUMENTS IN SUPPORT: Supporters write that the bill will
"remove a barrier to California public agencies' use of fully
digital transactions by clarifying which electronic signature
technologies are legally permissible. As a result, the bill
would enable government to provide services to the public and
transact business with increased efficiency, cost savings,
convenience, and paper reduction."
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REGISTERED SUPPORT / OPPOSITION:
Support
California Secretary of State Alex Padilla (sponsor)
California Chamber of Commerce
California Manufacturing and Technology Association
Computing Technology Industry Association
League of California Cities
Opposition
None on file
Analysis Prepared by:Leora Gershenzon / JUD. / (916) 319-2334
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