BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
AB 2296 (Low)
Version: April 19, 2016
Hearing Date: June 14, 2016
Fiscal: No
Urgency: No
RD
SUBJECT
Digital signatures
DESCRIPTION
This bill would add to the Uniform Electronic Transactions Act's
(UETA) definition of "electronic signature," that a "digital
signature" under the Government Code (which is defined and
authorized for use by public entities, at the entity's election)
is also a type of electronic signature for purposes of the UETA.
This bill would make corresponding changes to the Government
Code to reflect that a "digital signature" is a type of
"electronic signature" under the UETA. This bill would clarify
that the regulations for "digital signatures" apply only to a
"digital signature" and not to any other type of "electronic
signature" authorized under the UETA. Lastly, this bill would
specify nothing in section regarding "digital signatures" limits
the right of a public entity or government agency to use and
accept an "electronic signature" under the UETA. This bill would
include various findings and declarations.
BACKGROUND
California has taken various steps to utilize more electronic
resources within the various branches of government. In 1995,
AB 1577 (Bowen, Ch. 594, Stats. 1995) was enacted to provide
public entities an option, in any written communication in which
a public entity is a party and a signature is required or used,
to use a "digital signature" that would have the same force and
effect as the use of a manual (or "wet") signature. For those
purposes, "digital signature" was defined to mean an electronic
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identifier, created by computer, intended by the party using it
to have the same force and effect as the use of a manual
signature. At the same time, the digital signature was only to
be given such force and effect if it met certain conditions,
including that it conform to regulations adopted by the
Secretary of State, as specified. (See Gov. Code Sec. 16.5.)
Separately, in 1999, the Legislature enacted the Uniform
Electronic Transactions Act (UETA), regulating the electronic
transmission of documents and signatures. (SB 820 (Sher, Ch.
428, Stats. 1999).) Also in 1999, the Legislature authorized
courts to adopt local rules of court permitting electronic
filing and service of documents, as specified. (SB 367 (Dunn,
Ch. 514, Stats. 1999).) Six years later, in 2004, the
Legislature, recognizing a need for an efficient, cost-effective
means of maintaining and transmitting records by public
agencies, enacted the Electronic Recording Delivery Act of 2004,
regulating the electronic delivery, recording, and return of
instruments affecting right, title, or interest in real
property. (AB 578 (Leno, Ch. 621, Stats. 2004).)
More recently, in 2010, AB 1926 (Evans, Ch. 167, Stats. 2010)
was enacted to provide trial courts with the ability to create,
maintain, and preserve trial court records electronically under
procedures and guidelines to be provided for by the Judicial
Council. That same year, AB 2394 (Brownley, Ch. 680, Stats.
2010) was enacted to establish the Levying Officer Electronic
Transactions Act, whereby a levying officer could use electronic
methods to create, generate, send, receive, store, display,
retrieve, or process information, electronic records, and
documents, as specified. Like SB 820 (which, again, enacted the
UETA), above, AB 2394 defined "electronic signature" for these
purposes to mean 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. (See Civ. Code Sec. 1633.2(h) and Code Civ.
Proc. Sec. 263.1(c), respectively.)
Last year, AB 432 (Chang, Ch. 32, Stats. 2015) was enacted to
bring consistency throughout the California statutes in relation
to the term "electronic signature." To do so, that bill defined
the term "electronic signature" for purposes of the Code of
Civil Procedure to mirror the definition to those of "electronic
signature" enacted under SB 820 and AB 2394, above. That bill
also provided that an electronic signature, as defined under the
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bill, by a court or judicial officer shall be as effective as an
original signature. The bill did not, however, in any way
affect the Government Code section first enacted in 1995
relating to "digital signatures." According to the proponents
of this bill, there is some confusion as to how "digital
signatures" compare to "electronic signatures" under the UETA
and the ability of public entities to use an electronic
signature, as opposed to digital signature.
This bill, sponsored by the Secretary of State's Office, seeks
to clarify within the UETA's definition of "electronic
signature" that a "digital signature," as defined under the
Government Code, is also a type of electronic signature for
purposes of the UETA. This bill would make corresponding
changes to the Government Code to reflect that a digital
signature is a type of "electronic signature" under the UETA,
and would make other clarifying changes.
CHANGES TO EXISTING LAW
Existing law , the Uniform Electronic Transactions Act (UETA),
generally authorizes the transaction of business, commerce, and
contracts by electronic means, and establishes standards for
conducting electronic transactions in this State. (Civ. Code
Sec. 1633.1 et seq.)
Existing law , the UETA, applies only to a transaction between
parties that have agreed to conduct the transaction by
electronic means, as specified. (Civ. Code Sec. 1633.5(b).)
Existing law , the UETA, sets forth certain principles governing
the legal effect of conducting transactions electronically.
Specifically:
a record or signature may not be denied legal effect or
enforceability solely because it is in electronic form;
a contract may not be denied legal effect or enforceability
solely because an electronic record was used in its formation;
if a law requires a record to be in writing, an electronic
record satisfies the law; and
if a law requires a signature, an electronic signature
satisfies the law. (Civ. Code Sec. 1633.7.)
Existing law provides that an electronic record or electronic
signature is attributable to a person if it was the act of the
person, which may be shown in any manner, including a showing of
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the efficacy of any security procedure applied to determine the
person to which the electronic record or electronic signature
was attributable. (Civ. Code Sec. 1633.9(a).) Existing law
provides that the effect of an electronic record or electronic
signature attributed to a person is determined from the context
and surrounding circumstances at the time of its creation,
execution, or adoption, including the parties' agreement, if
any, and otherwise as provided by law. (Civ. Code Sec.
1633.9(b).)
Existing law defines "electronic signature" for purposes of the
UETA, as well as the Levying Officer Transfer Act, California
Franchise Investment Law, Corporate Securities Law, brokerage
agreements, and various purposes under the Financial Code, to
mean 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. (Civ. Code Secs. 1633(f), 1633.2(h); Code Civ. Proc.
Sec. 263.1(c), Corp. Code Secs. 31158(b)(1)(H)(2),
25620(b)(1)(H)(2); Fin. Code Secs. 12201(c)(1)(H)(2),
17201(c)(1)(H)(2), 22101(h)(1)(H)(2).)
Existing law , for the purposes of the Code of Civil Procedure,
similarly 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. (Code Civ. Proc. Secs.
17(b)(3), 263.1(b).)
Existing law authorizes a specified digital signature to be used
in any written communication with a public entity in which a
signature is required or used. Existing law provides that the
use or acceptance of a digital signature is at the option of the
parties, and that nothing in these provisions requires a public
entity to use or permit the use of a "digital signature." (Gov.
Code Sec. 16.5(a), (b).)
Existing law defines "digital signature" for these purposes as
an electronic identifier, created by computer, intended by the
party using it to have the same force and effect as a manual
signature. (Gov. Code Sec. 16.5(d).) Existing law provides that
the use of a digital signature shall have the same force and
effect as the use of a manual signature if and only if it
embodies certain attributes, including that it:
is unique to the person using it;
is capable of verification; and
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conforms to regulations adopted by the Secretary of State, as
specified. (Gov. Code Sec. 16.5 (a).)
This bill would include within the definition of "electronic
signature" under the UETA, that, for purposes of the UETA, a
"digital signature" as defined in subdivision (d) of Section
16.5 of the Government Code is a type of electronic signature.
This bill would include within the definition of "digital
signature" under Section 16.5 of the Government Code, that for
purposes of that section, a digital signature is a type of
"electronic signature" as defined under the UETA, as specified.
This bill would specify that regulations adopted by the
Secretary of State to implement Section 16.5 apply only to a
public entity's use of a "digital signature" and not to the use
of any other type of "electronic signature" authorized in the
UETA.
This bill would also specify that nothing in Section 16.5 of the
Government Code shall limit the right of a public entity or
government agency to use and accept an "electronic signature" as
defined under the UETA, as specified.
This bill would include various findings and declarations
regarding the history of the UETA and Section 16.5 of the
Government Code, above. The findings and declarations would
also state, among other things:
The Internet and digital technologies enable government to
provide services to the public and to transact business more
efficiently than with paper-based processes.
It is the intent of the Legislature to amend current law to
clarify that a "digital signature" authorized by Section 16.5
of the Government Code and subject to regulations adopted by
the Secretary of State is one type of "electronic signature"
that a public agency may choose to adopt under the UETA.
This bill would include other technical, nonsubstantive changes.
COMMENT
1. Stated need for the bill
According to the author, "AB 2296 would remove a barrier to
California public agencies' use of fully digital transactions by
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clarifying which electronic signature technologies are legally
permissible. The bill would thereby enable government to
provide services to the public and transact business with
increased efficiency, cost savings, convenience, and paper
reduction."
In support, the Electronic Signature & Records Association
writes:
California Government Code Section 16.5 was passed in 1995. It
specifies the requirements that digital signatures must meet
in order for them to be used and accepted by California
government agencies. Four years later, California adopted the
Uniform Electronic Transactions Act (UETA) which grants
government agencies the power to accept all forms of
electronic signatures - both digital and simple electronic.
However, many of our members have noted that some California
agencies, cities and counties have continued operating under
the belief that Section 16.5 prevents them from taking
advantage of UETA because they believe Section 16.5 requires
them, rather than permits them, to use digital signatures.
The impact has been that California government agencies and
local governments are not taking advantage of the speed and
efficiency that can be realized by widespread adoption of
electronic signatures and California citizens are burdened
with using slow, paper-based handwritten signatures. In short,
government agencies are not as agile as the private sector
needs them to be.
Assembly Bill 2296 will positively impact government
transactions and California commerce by clarifying that UETA
allows government agencies to accept both digital and
electronic signatures. The changes set forth in the bill will
resolve the conflict between Section 16.5 and UETA.
With these changes in place, businesses will be able to take
advantage of being able to quickly file all types of forms and
documentation online without the need to print out, sign, and
fax or mail the form. Consumers will be able to enjoy a much
greater degree of responsiveness and ease in working with
government agencies. Government agencies will have the ability
to create document workflows and acceptance processes using
all of the technological options available. Section 16.5 was
meant to speed government processes, not slow them. Assembly
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Bill 2296 ensures that original goal is met.
2. Bill updates existing law to reflect that a "digital
signature" can be an "electronic signature" but an "electronic
signature" is not necessarily a "digital signature"
Under existing law, both the Uniform Electronic Transactions Act
(UETA) and Section 16.5 of the Government Code, authorize an
alternative to an original (i.e., wet) or "manual" signature.
Under Section 16.5 of the Government Code, which was enacted in
1995, a "digital signature" is authorized (but not required) for
any written communication with a public entity for which a
signature is required or used. For these purposes, the digital
signature must embody certain enumerated attributes, including
attributes that conform to regulations adopted by the Secretary
of State's office. (See Gov. Code Sec. 16.5(d).) In 1999,
however, just four years after this provision was enacted,
California adopted a model law proposed by the National
Conference of Commissioners on Uniform State Laws to set general
rules by which electronic commerce may be conducted across the
country-namely, the UETA. (SB 820 (Sher, Ch. 428, Stats. 1999).)
One of the critical motivators for enacting a law validating
electronic records (and signatures) was the Statute of Frauds,
which requires that certain contracts be in writing. In
California, the Statute of Frauds is codified at Section 1624 of
the Civil Code, which expressly states that certain contracts
are invalid (i.e. unenforceable) unless they, or some note or
memorandum thereof, are in writing and subscribed by the party
to be charged or by the party's agent. Such contracts include,
for example, an agreement that by its terms is not to be
performed within a year from the making thereof; an agreement
for the leasing for a longer period than one year, or for the
sale of real property, or of an interest therein; or specified
contracts, promises, undertakings, or commitments to loan money
or to grant or extend credit, in an amount greater than
$100,000.
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Today, California's UETA provides that, generally,<1> a record
or signature may not be denied legal effect or enforceability
solely because it is in electronic form, that a contract may not
be denied legal effect or enforceability solely because an
electronic record was used in its formation, and that an
electronic record or signature satisfies a requirement in the
law that a record be in writing or a signature be affixed or if
a law provides consequences if there is no record or signature.
Under the UETA, a "digital signature" is not required; rather,
the UETA provides that an "electronic signature" may be used. An
electronic signature is defined for these purposes more
generally than digital signatures. Specifically, an electronic
signature means 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. (Civ. Code Sec. 1633.2(h).)
The proponents of this bill contend that confusion is caused by
these different terms for what appears to be very similar
purposes-the authorized use of non-wet signatures. As described
by the sponsor of the bill, the Secretary of State's office:
The Secretary of State adopted regulations to implement
Section 16.5 in 1998. The regulations provide that, for a
digital signature to be valid for use by a public entity, it
must be created by a technology the Secretary of State
determines to be acceptable. [ . . . ] In 1999, California
enacted the Uniform Electronic Transactions Act (UETA), which
provides that an "electronic signature" is valid and
enforceable under any law that requires a signature in any
transaction between two or more persons, including a
government agency. The UETA is technology-neutral but requires
that a signature technology an agency uses meet authentication
and security standards. Like Section 16.5, the UETA preserves
an agency's discretion to use an electronic signature or not
--------------------------
<1> The UETA exempts certain kinds of contracts, including
transactions that are subject to a law governing the creation
and execution of wills, codicils, or testamentary trusts;
specified transactions in the Uniform Commercial Code, that were
specifically drafted in consideration of electronic records; and
transactions subject to a law that requires that specifically
identifiable text or disclosures in a record or a portion of a
record be separately signed, including initialed, from the
record (such as real estate transactions), and most home
solicitation contracts
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and applies requirements only if an agency chooses to do so.
The Secretary of State has determined that there is confusion
in the marketplace and among some public agencies as to what
law governs a public agency's choice to use electronic
signatures and when an agency is required to use "digital
signatures" in compliance with Secretary of State regulations.
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. [ . . .
]
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 would now seek to clarify that a digital signature can
be an "electronic signature" under the UETA, while also
recognizing that an "electronic signature" under the UETA may,
but is not necessarily, a "digital signature" under Section 16.5
of the Government Code. Specifically, this bill would add,
within the definition of "electronic signature in the UETA, a
cross-reference to the definition of "digital signatures" under
the Government Code, and expressly state that such a digital
signature is a type of electronic signature for purposes of the
UETA. Additionally, the bill would make corresponding changes
to the Government Code to reflect that a "digital signature" is
a type of "electronic signature" under the UETA. By way of
providing further clarifications of the impact that these terms
have (or do not have) upon one another, this bill would clarify
that the Secretary of State's regulations for "digital
signatures" apply only to a "digital signature" and not to any
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other type of "electronic signature" authorized under the UETA.
Perhaps most importantly, this bill would expressly state that
nothing in the section on "digital signatures" limits the right
of a public entity or government agency to use and accept an
"electronic signature" under the UETA.
3. Technical amendment
The following technical amendment is suggested to correct the
cross-reference to the UETA provision defining "electronic
signature."
Suggested amendment:
On page 5, line 23, strike "1633.1" and insert "1633.2."
Support : California Assessors' Association; California
Association of Realtors; California Chamber of Commerce;
California Manufacturers and Technology Association; Computing
Technology Industry Association; County Recorders' Association
of California; Electronic Signatures and Records Association;
Innovate Your State; League of California Cities
Opposition : None Known
HISTORY
Source : California Secretary of State, Alex Padilla
Related Pending Legislation : None Known
Prior Legislation :
AB 432 (Chang, Ch. 32, Stats. 2015) See Background.
AB 2394 (Brownley, Ch. 680, Stats. 2010) See Background.
AB 1926 (Evans, Ch. 167, Stats. 2010) See Background.
AB 578 (Leno, Ch. 621, Stats. 2004) See Background.
SB 820 (Sher, Ch. 428, Stats. 1999) See Background.
SB 367 (Dunn, Ch. 514, Stats. 1999) See Background.
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AB 1577 (Bowen, Ch. 594, Stats. 1995) See Background.
Prior Vote :
Assembly Floor (Ayes 76, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
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