Framework for electronic transactions disapproved

Governor Pedro P. Tenorio rejected House Bill 12-226 or the Commonwealth electronic signature bill due to possible conflict with the E-Sign Act of the United States.

Mr. Tenorio also cited as reason behind the disapproval of the proposed measure the confusion it may cause in the area of electronic commerce and transaction in the Northern Marianas.

“Although I strongly support all efforts to keep the Commonwealth current with technology, particularly when it enables us to offer more to our existing businesses and potential investors, I must return this measure for further review,” the governor said in his transmittal letter to the Legislature.

After conferring with telecommunications’ experts in Washington DC, Mr. Tenorio noted that HB 12-226 could cloud the status of the United States’ own E-Sign Act.

According to the governor, the federal E-Sign Act applies to all territories of the United States, and as such also applies to the Northern Marianas.

Moreover, the governor said the E-Sign Act contained specific language stating that local measures on the legality of electronic signatures can be enacted but laws of those nature should always refer to the federal electronic signature law.

The Commonwealth’s electronic signature bill does not contain language mentioning the federal law.

He also argued that some of the fundamental definitions of the Commonwealth version are not the same as the federal E-Sign Act. The governor said the definitions of HB 12-226 for “electronic record” and “electronic signature” appeared inconsistent with the definitions under the E-Sign Act.

However, the islands’ chief executive did not totally close the door in the enactment of a law that would authorized the use of electronic records and signatures in business transactions.

“If the legislature still desires to pass a measure of this nature to create modifications to the federal E-Sign law, we would be willing to work together with our telecommunications’ legal counsel to assist in anyway,” Governor Tenorio said.

The passage of the Commonwealth Electronic Records and Signatures Act of 2000 could have put the CNMI a step closer to joining a handful of countries who have adopted such a law.

Authored by Representative William Torres, HB 12-226 would have encouraged the propagation of electronic commerce and on-line government by creating a legal framework for transactions made over the realm of cybrespace.