BILL ANALYSIS Ó AB 2296 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 2296 (Low) As Amended June 21, 2016 Majority vote -------------------------------------------------------------------- |ASSEMBLY: | 76-0 | (May 2, 2016) |SENATE: | 37-0 |(June 30, 2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: JUD. 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 (UETA). 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. AB 2296 Page 2 The Senate amendments are technical, correcting a cross-reference. 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 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. 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. 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. FISCAL EFFECT: None 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), Chapter 594, Statutes of 1995.) Beginning in 1999, the Legislature AB 2296 Page 3 authorized courts to adopt local rules of court permitting electronic filing and service of documents. (SB 367 (Dunn), Chapter 514, Statutes of 1999.) Also in 1999, the Legislature enacted the Uniform Electronic Transactions Act, regulating the electronic transmission of documents and signatures. (SB 820, (Sher), Chapter 428, Statutes of 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 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 AB 2296 Page 4 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 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." 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. This bill seeks to eliminate any confusion between the Government Code and UETA 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. 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 AB 2296 Page 5 provide services to the public and transact business with increased efficiency, cost savings, convenience, and paper reduction." Analysis Prepared by: Leora Gershenzon / JUD. / (916) 319-2334 FN: 0003508