ZEM C.S.H.B. 984 75(R)BILL ANALYSIS CIVIL PRACTICES C.S.H.B. 984 By: Hochberg 3-18-97 Committee Report (Substituted) BACKGROUND Currently, state law does not recognize electronic equivalents for handwritten signatures. Electronic data interchange and electronic financial transactions are becoming more common in both the public and private sector, and digital signatures are necessary to authenticate data and verify the identity of participants in these transactions. PURPOSE To allow digital signatures to have the same force that manual signatures currently have under state law; to eliminate any possible challenge to digital signatures in court; to allow the Texas Department of Information Resources to adopt rules dealing with the use of digital signatures in state transactions. RULEMAKING AUTHORITY It is the committee's opinion that this bill grants the Department of Information Resources the authority to adopt rules relating to the use of digital signatures in Section 2 of the substitute which amends Subchapter C, Chapter 2054 of the Government Code by adding Section 2054.060. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter A, Chapter 2 of the Business & Commerce Code by adding Section 2.108 as follows: (a) Validates the use of digital signatures sent from or received in the state for transactions under this chapter if the signature is transmitted with the communication. (b) Provides that other symbols are not precluded as signatures by this section. (c) Provides that digital signatures are subject to criminal laws pertaining to fraud and computer crimes. (d) Defines "digital signature" as an electronic identifier intended by the signer as having the same force as a manual signature. SECTION 2. Amends Subchapter C, Chapter 2054, Government Code by adding Section 2054.060 as follows: (a) Allows digital signatures to be used in state agency transactions, subject to rules adopted by the Department of Information Resources. Sets minimum requirements for the rules. Requires consultation with the state comptroller, state auditor, attorney general, secretary of state, the office of court administration, and with representatives of county and municipal governments in drafting the rules. Specifies factors to be considered when adopting the rules. (b) Provides that a digital signature may be used in transactions with local governments if it complies with rules adopted by the local governing body and specifies that the local governing body should consider rules adopted by DIR when adopting these rules. (c) Provides that the section does not preclude other symbols from being valid as signatures under other law (d) Provides that digital signatures are subject to Chapters 32 and 33 of the Penal Code. (e) Defines "digital signature" and "local government" for this section. SECTION 3. Effective date: September 1, 1997. SECTION 4. Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The committee substitute for H.B. 984 (C.S.H.B. 984) contains similar provisions validating the use of digital signatures to the original bill as filed, however, it amends Chapter 2 of the Business and Commerce Code and Chapter 2054 of the Government Code instead of Chapter 121 of the Civil Practices and Remedies Code. C.S.H.B. 984 also includes the following new provisions: 1) that the use of digital signatures is subject to the Penal Code (Section 2.108(c), Business & Commerce Code and Section 2054.060(e), Government Code); 2) that DIR consult with the office of court administration and with representatives of county and municipal governments in addition to the other entities specified in the original bill when drafting rules regarding digital signatures (Section 2054.060(a), Government Code); 3) that digital signatures are valid in communications with local governments if it complies with local rules and that the governing body of a local government consider the rules adopted by DIR regarding digital signatures and conform their own rules to the extent feasible (Section 2054.060(b), Government Code); and 4) that these sections do not preclude the use of other symbols from being valid as a signature (Section 2.108(b), Business & Commerce Code and Section 2054.060(c), Government Code).