BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2296


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          2296 (Low)


          As Amended  June 21, 2016


          Majority vote


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          |ASSEMBLY:  | 76-0 | (May 2, 2016) |SENATE: | 37-0 |(June 30, 2016)  |
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          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.








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          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  








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          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  








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          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  








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          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