Existing law, the Uniform Electronic Transactions Act, provides that a record or signature may not be denied legal effect or enforceability solely because it is in electronic form and defines an electronic signature for purposes of the act. Existing provisions of the Government Code authorize the use of a digital signature in any written communication with a public entity, and specifies that in those communications, the use of a digital signature has the same force and effect as the use of a manual signature if it complies with specified requirements.

This bill would express the intent of the Legislature to clarify that a digital signature may be used to satisfy the requirements of an electronic signature under the Uniform Electronic Transactions Act. The bill would, for purposes of the Uniform Electronic Transactions Act, provide that an electronic signature includes a digital signature under the above described provisions of the Government Code and that a digital signature under those provisions is a type of an electronic signature as set forth in the Uniform Electronic Transaction Act. The bill would also revise the above-described provisions of the Government Code by specifying that if a public entity elects to use a digital signature, that meets specified requirements, the digital signature has the same force and effect of a manual signature in any communication with the public entity.

Existing law, the Uniform Electronic Transactions Act, provides that a record or signature may not be denied legal effect or enforceability solely because it is in electronic form and defines an electronic signature for purposes of the act. Existing provisions of the Government Code authorize the use of a digital signature in any written communication with a public entity, and specifies that in those communications, the use of a digital signature has the same force and effect as the use of a manual signature if it complies with specified requirements.

This bill would express the intent of the Legislature to clarify that a digital signature may be used to satisfy the requirements of an electronic signature under the Uniform Electronic Transactions Act. The bill would, for purposes of the Uniform Electronic Transactions Act, provide that an electronic signature includes a digital signature under the above described provisions of the Government Code and that a digital signature under those provisions is a type of an electronic signature as set forth in the Uniform Electronic Transaction Act. The bill would also revise the above-described provisions of the Government Code by specifying that if a public entity elects to use a digital signature, that meets specified requirements, the digital signature has the same force and effect of a manual signature in any communication with the public entity.

Existing law, the Uniform Electronic Transactions Act, provides that a record or signature may not be denied legal effect or enforceability solely because it is in electronic form and defines an electronic signature for purposes of the act. Existing provisions of the Government Code authorize the use of a digital signature in any written communication with a public entity, and specifies that in those communications, the use of a digital signature has the same force and effect as the use of a manual signature if it complies with specified requirements.

This bill would express the intent of the Legislature to clarify that a digital signature may be used to satisfy the requirements of an electronic signature under the Uniform Electronic Transactions Act. The bill would, for purposes of the Uniform Electronic Transactions Act, provide that an electronic signature includes a digital signature under the above described provisions of the Government Code and that a digital signature under those provisions is a type of an electronic signature as set forth in the Uniform Electronic Transaction Act. The bill would also revise the above-described provisions of the Government Code by specifying that if a public entity elects to use a digital signature, that meets specified requirements, the digital signature has the same force and effect of a manual signature in any communication with the public entity.

Existing law, the Uniform Electronic Transactions Act, provides that a record or signature may not be denied legal effect or enforceability solely because it is in electronic form and defines an electronic signature for purposes of the act. Existing provisions of the Government Code authorize the use of a digital signature in any written communication with a public entity, and specifies that in those communications, the use of a digital signature has the same force and effect as the use of a manual signature if it complies with specified requirements.

This bill would express the intent of the Legislature to clarify that a digital signature may be used to satisfy the requirements of an electronic signature under the Uniform Electronic Transactions Act. The bill would, for purposes of the Uniform Electronic Transactions Act, provide that an electronic signature includes a digital signature under the above described provisions of the Government Code and that a digital signature under those provisions is a type of an electronic signature as set forth in the Uniform Electronic Transaction Act. The bill would also revise the above-described provisions of the Government Code by specifying that if a public entity elects to use a digital signature, that meets specified requirements, the digital signature has the same force and effect of a manual signature in any communication with the public entity.

Existing law authorizes law, the Uniform Electronic Transactions Act, provides that a record or signature may not be denied legal effect or enforceability solely because it is in electronic form and defines an electronic signature for purposes of the act. Existing provisions of the Government Code authorize the use of a digital signature in any written communication with a public entity, and specifies that in those communications, the use of a digital signature has the same force and effect as the use of a manual signature if it complies with specified requirements.

This bill would express the intent of the Legislature to enact legislation that would clarify that a digital signature may be used to satisfy the requirements of an electronic signature under the Uniform Electronic Transactions Act. The bill would, for purposes of the Uniform Electronic Transactions Act, provide that an electronic signature includes a digital signature under the above described provisions of the Government Code and that a digital signature under those provisions is a type of an electronic signature as set forth in the Uniform Electronic Transaction Act.

Existing law authorizes the use of a digital signature in any written communication with a public entity, and specifies that in those communications, the use of a digital signature has the same force and effect as the use of a manual signature if it complies with specified requirements.

This bill would express the intent of the Legislature to enact legislation that would clarify that a digital signature may be used to satisfy the requirements of an electronic signature under the Uniform Electronic Transactions Act.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2296

Author:(Low)

As Amended Ver:June 21, 2016

Majority vote

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.

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 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 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 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

 CONSENT  

Bill No: AB 2296

Author:

:

Vote:

SENATE JUDICIARY COMMITTEE: 7-0, 6/14/16

AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning, Wieckowski

ASSEMBLY FLOOR: 76-0, 5/2/16 (Consent) - See last page for vote

SUBJECT:

SOURCE: California Secretary of State, Alex Padilla

DIGEST: This bill adds 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 makes corresponding changes to the Government Code to reflect that a “digital signature” is a type of “electronic signature” under the UETA. This bill clarifies 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 specifies 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 includes various findings and declarations.

ANALYSIS:

Existing law:

1. Authorizes, generally, under the UETA, the transaction of business, commerce, and contracts by electronic means, and establishes standards for conducting electronic transactions in this State.
2. Applies the UETA only to a transaction between parties that have agreed to conduct the transaction by electronic means, as specified.
3. Sets forth in the UETA 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.

1. 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 the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable. 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.
2. 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.
3. Similarly defines, for the purposes of the Code of Civil Procedure, “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.
4. Authorizes, under Section 16.5 of the Government Code, that 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.”
5. Defines “digital signature” for the aforementioned 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. 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
• conforms to regulations adopted by the Secretary of State, as specified.

This bill:

1. Includes 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.
2. Includes 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 specifies 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.
3. Specifies 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.
4. Includes various findings and declarations regarding the history of the UETA and Section 16.5 of the Government Code, above. The findings and declarations 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.

1. Includes other technical, nonsubstantive changes.

Background

California has taken various steps to utilize more electronic resources within the various branches of government. In 1995, AB 1577 (Bowen, Chapter 594, Statutes of 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 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 UETA, regulating the electronic transmission of documents and signatures. (SB 820 (Sher, Chapter 428, Statutes of 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, Chapter 514, Statutes of 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, Chapter 621, Statutes of 2004).)

More recently, in 2010, AB 1926 (Evans, Chapter 167, Statutes of 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, Chapter 680, Statutes of 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 Chapter 32, Statutes of 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 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 makes corresponding changes to the Government Code to reflect that a digital signature is a type of “electronic signature” under the UETA, and makes other clarifying changes.

Comments

As stated by the author, “AB 2296 would remove a barrier to California public agencies’ use of fully digital transactions by 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.”

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 6/22/16)

California Secretary of State, Alex Padilla (source)

California Assessors’ Association

California Association of Realtors

California Cable and Telecommunications Association

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: (Verified 6/22/16)

None received

ARGUMENTS IN SUPPORT: 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 Bill 2296 ensures that original goal is met.

ASSEMBLY FLOOR: 76-0, 5/2/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Wood, Rendon

NO VOTE RECORDED: Beth Gaines, Roger Hernández, Ridley-Thomas, Williams

Prepared by:

6/22/16 15:14:52

**** END ****

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2015-2016 Regular Session

Bill No: AB 2296 (Author:Low)

Version: April 19, 2016

Hearing Date: June 14, 2016

Fiscal: No

Urgency: No

Consultant: 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 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 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 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
• 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 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 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.

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 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 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.

AB 1577 (Bowen, Ch. 594, Stats. 1995) See Background.

Prior Vote:

Assembly Floor (Ayes 76, Noes 0)

Assembly Judiciary Committee (Ayes 10, Noes 0)

**************

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 ↑

Date of Hearing: April 26, 2016

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

ABPCA Bill Id:AB 2296

Author:(Low) – As Amended Ver: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 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 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; 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 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 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."

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