[Congressional Record Volume 145, Number 82 (Thursday, June 10, 1999)]
[Senate]
[Pages S6850-S6855]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Y2K ACT
The Senate continued with the consideration of the bill.
Amendment No. 621, As Further Modified
Mr. GORTON. What is the business before the Senate?
The PRESIDING OFFICER. The pending business is the question on the
amendment by the Senator from California, as further modified.
Mr. GORTON. I move to table the Boxer amendment and ask for the yeas
and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
table amendment No. 621, as further modified. The yeas and nays have
been ordered. The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from Arizona (Mr. McCain)
and the Senator from Wyoming (Mr. Thomas) are necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 66, nays 32, as follows:
[Rollcall Vote No. 163 Leg.]
YEAS--66
Abraham
Allard
Ashcroft
Baucus
Bayh
Bennett
Bingaman
Bond
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Collins
Coverdell
Craig
Crapo
DeWine
Dodd
Domenici
Enzi
Feinstein
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Kerry
Kohl
Kyl
Landrieu
Lieberman
Lincoln
Lott
Lugar
Mack
McConnell
Moynihan
Murkowski
Nickles
Robb
Roberts
Rockefeller
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thompson
Thurmond
Voinovich
Warner
Wyden
NAYS--32
Akaka
Biden
Boxer
Breaux
Bryan
Byrd
Cleland
Conrad
Daschle
Dorgan
Durbin
Edwards
Feingold
Graham
Harkin
Hollings
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Lautenberg
Leahy
Levin
Mikulski
Murray
Reed
Reid
Sarbanes
Schumer
Torricelli
Wellstone
NOT VOTING--2
McCain
Thomas
The motion was agreed to.
Mr. GORTON. I move to reconsider the vote.
Mr. HOLLINGS. I move to table the motion.
The motion to lay on the table was agreed to.
Unanimous Consent Agreement
Mr. GORTON. Mr. President, I ask unanimous consent that the only
remaining amendments in order to S. 96 be those by Senators Sessions,
Gregg, and Inhofe, and that following those amendments the bill be
advanced to third reading.
I further ask consent that all debate must be concluded today on the
Sessions, Gregg, and Inhofe amendments, and if any votes are ordered,
they occur in stacked sequence just prior to the passage vote on
Tuesday, with 2 minutes for explanation prior to the votes if stacked
votes occur.
I further ask that following the reading of the bill for the third
time, the Senate then proceed to the House companion bill, H.R. 775,
and all after the enacting clause be stricken, the text of S. 96 be
inserted, H.R. 775 be read for a third time, and final passage occur at
2:15 p.m. on Tuesday, June 15, or immediately after votes on any of the
above amendments if such votes are ordered, with paragraph 4 of rule
XII being waived.
I further ask that following the third reading of S. 96, the bill be
placed back on the calendar.
Finally, I ask consent that at 11 a.m. on Tuesday, June 15, there be
2 hours equally divided for closing arguments, and following those
remarks the Senate stand in recess until 2:15 p.m. for the weekly party
conferences to meet.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GORTON. I want to make a further announcement by direction of the
majority leader. There will be no further votes today, and there will
be no votes tomorrow. The next vote will take place not earlier than
5:30 p.m. on Monday, and there may, if appropriate at that time, be a
vote on final passage of the energy and water appropriations bill.
Amendment No. 622 to Amendment No. 608
(Purpose: To provide regulatory amnesty for defendants, including
States and local governments, that are unable to comply with a
federally enforceable measurement or reporting requirement because of
factors related to a Y2K system failure)
Mr. GORTON. I send an amendment to the desk on behalf of Senator
Inhofe
[[Page S6851]]
and ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Washington [Mr. Gorton], for Mr. Inhofe,
proposes an amendment numbered 622.
Mr. GORTON. Mr. President, I ask unanimous consent reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 11, between lines 22 and 23, insert the following:
(6) Application to Actions Brought by a Governmental
Entity.--
(1) In general.--To the extent provided in this subsection,
this Act shall apply to an action brought by a governmental
entity described in section 3(1)(C).
(2) Definitions.--In this subsection:
(A) Defendant.--
(i) In general.--The term ``defendant'' includes a State or
local government.
(ii) State.--The term ``State'' means each of the several
States of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands, Guam,
American Samoa, and the Commonwealth of the Northern Mariana
Islands.
(iii) Local government.--The term ``local government''
means--
(I) any county, city, town, township, parish, village, or
other general purpose political subdivision of a State; and
(II) any combination of political subdivisions described in
subclause (I) recognized by the Secretary of Housing and
Urban Development.
(B) Y2k upset.--The term ``Y2K upset''--
(i) means an exceptional incident involving temporary
noncompliance with applicable federally enforceable
measurement or reporting requirements because of factors
related to a Y2K failure that are beyond the reasonable
control of the defendant charged with compliance; and
(ii) does not include--
(I) noncompliance with applicable federally enforceable
requirements that constitutes or would create an imminent
threat to public health, safety, or the environment;
(II) noncompliance with applicable federally enforceable
requirements that provide for the safety and soundness of the
banking or monetary system, including the protection of
depositors;
(III) noncompliance to the extent caused by operational
error or negligence;
(IV) lack of reasonable preventative maintenance; or
(V) lack of preparedness for Y2K.
(3) Conditions necessary for a demonstration of a y2k
upset.--A defendant who wishes to establish the affirmative
defense of Y2K upset shall demonstrate, through properly
signed, contemporaneous operating logs, or other relevant
evidence that--
(A) the defendant previously made a good faith effort to
effectively remediate Y2K problems;
(B) a Y2K upset occurred as a result of a Y2K system
failure or other Y2K emergency;
(C) noncompliance with the applicable federally enforceable
measurement or reporting requirement was unavoidable in the
face of a Y2K emergency or was intended to prevent the
disruption of critical functions or services that could
result in the harm of life or property;
(D) upon identification of noncompliance the defendant
invoking the defense began immediate actions to remediate any
violation of federally enforceable measurement or reporting
requirements; and
(E) the defendant submitted notice to the appropriate
Federal regulatory authority of a Y2K upset within 72 hours
from the time that it became aware of the upset.
(4) Grant of a y2k upset defense.--Subject to the other
provisions of this subsection, the Y2K upset defense shall be
a complete defense to any action brought as a result of
noncompliance with federally enforceable measurement or
reporting requirements for any defendant who establishes by a
preponderance of the evidence that the conditions set forth
in paragraph (3) are met.
(5) Length of y2k upset.--The maximum allowable length of
the Y2K upset shall be not more than 15 days beginning on the
date of the upset unless granted specific relief by the
appropriate regulatory authority.
(6) Violation of a y2k upset.--Fraudulent use of the Y2K
upset defense provided for in this subsection shall be
subject to penalties provided in section 1001 of title 18,
United States Code.
(7) Expiration of defense.--The Y2K upset defense may not
be asserted for a Y2K upset occurring after June 30, 2000.
At the appropriate place, insert the following:
SEC. . CREDIT PROTECTION FROM YEAR 2000 FAILURES.
(a) In General.--No person who transacts business on
matters directly or indirectly affecting mortgage, credit
accounts, banking, or other financial transactions shall
cause or permit a foreclosure, default, or other adverse
action against any other person as a result of the improper
or incorrect transmission or inability to cause transaction
to occur, which is caused directly or indirectly by an actual
or potential Y2K failure that results in an inability to
accurately or timely process any information or data,
including data regarding payments and transfers.
(b) Scope.--The prohibition of such adverse action to
enforce obligations referred to in subsection (a) includes
but is not limited to mortgages, contracts, landlord-tenant
agreements, consumer credit obligations, utilities, and
banking transactions.
(c) Adverse Credit Information.--The prohibition on adverse
action in subsection (a) includes the entry of any negative
credit information to any credit reporting agency, if the
negative credit information is due directly or indirectly by
an actual or potential disruption of the proper processing of
financial responsibilities and information, or the inability
of the consumer to cause payments to be made to creditors
where such inability is due directly or indirectly to an
actual or potential Y2K failure.
(d) Actions May Resume After Problem Is Fixed.--No
enforcement or other adverse action prohibited by subsection
(a) shall resume until the obligor has a reasonable time
after the full restoration of the ability to regularly
receive and dispense data necessary to perform the financial
transaction required to fulfill the obligation.
(e) Section Does Not Apply to Non-Y2K-Related Problems.--
This section shall not affect transactions upon which a
default has occurred prior to a Y2K failure that disrupts
financial or data transfer operations of either party.
(f) Enforcement of Obligations Merely Tolled.--This section
delays but does not prevent the enforcement of financial
obligations.
Mr. GORTON. This is the Inhofe amendment referred to in my unanimous
consent request. It has to do with amnesty for certain regulatory
activities in its first part. The second part was suggested by the
distinguished Senator from South Carolina and is designed to assure
that no one lose a home through a mortgage or any other similar kind of
loss as a result of a Y2K failure or glitch.
The amendment has been cleared on both sides.
Mr. HOLLINGS. I thank the Senator from Washington.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The amendment (No. 622) was agreed to.
Amendment No. 623 to Amendment No. 608
(Purpose: To permit evidence of communications with state and federal
regulators to be admissible in class action lawsuits)
Mr. SESSIONS. Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative assistant read as follows:
The Senator from Alabama [Mr. Sessions] proposes an
amendment numbered 623.
Mr. SESSIONS. Mr. President, I ask unanimous consent reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At an appropriate place, add the following section:
SEC. . ADMISSIBLE EVIDENCE ULTIMATE ISSUE IN STATE COURTS.
Any party to a Y2K action in a State court in a State that
has not adopted a rule of evidence substantially similar to
Rule 704 of the Federal Rules of Evidence may introduce in
such action evidence that would be admissible if Rule 704
applied in that jurisdiction.
Mr. SESSIONS. Mr. President, this amendment simply provides that rule
704 of the Federal Rules of Evidence, which most States have adopted--
as a matter of fact, I think no more than a handful have not adopted
Federal Rules of Evidence, and most of those have adopted 704; it
happens that the State of Alabama did not adopt rule 704. Particularly
with regard to these Y2K cases, I think rule 704 would be an
appropriate rule of evidence.
It allows the introductions of analyses and reports by parties to the
litigation that would indicate whether or not the entity that is
involved had or had not taken adequate steps toward curing the Y2K
problem, whether or not they actually have moved in that direction in a
sufficient way. It could be the defense or, on the other side, assist
the plaintiff.
I think this would be a good amendment and bring Alabama's law and
perhaps a handful of other State laws into compliance, into uniformity
in this Y2K bill.
We worked hard to have support across the aisle. I thank my
colleagues, both Democrats and Republicans, for their courtesy and
interest in dealing with this problem. I think we have developed
language, after a number of changes, that will leave most people happy.
I hope this amendment will be accepted.
[[Page S6852]]
I know some Members will want to review this amendment before next
week when we have a final vote.
Mr. GORTON. The amendment proposed by the Senator from Alabama
certainly seems highly reasonable to me.
He is, however, correct; a number of proponents and opponents have
asked for an opportunity to examine the amendment in a little more
detail. That is why the unanimous consent agreement deferred final
consideration until Monday.
I am reasonably confident it will be accepted by voice vote, and I
certainly hope it will.
Mr. SESSIONS. I thank the Senator from Washington, and I thank him
for his leadership on this important issue dealing with an economic
problem that could place one of America's greatest industries in
jeopardy. I believe this is an important piece of legislation.
I thank Senator Gorton for his leadership.
Mr. GREGG. I ask unanimous consent the pending amendment be set
aside.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 624 to Amendment No. 608
(Purpose: To provide for the suspension of penalties for certain year
2000 failures by small business concerns)
Mr. GREGG. Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative assistant read as follows:
The Senator from New Hampshire [Mr. Gregg], for himself and
Mr. Bond, proposes an amendment numbered 624.
Mr. GREGG. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place, insert the following:
SEC. ____. SUSPENSION OF PENALTIES FOR CERTAIN YEAR 2000
FAILURES BY SMALL BUSINESS CONCERNS.
(a) Definitions.--In this section--
(1) the term ``agency'' means any executive agency, as
defined in section 105 of title 5, United States Code, that
has the authority to impose civil penalties on small business
concerns;
(2) the term ``first-time violation'' means a violation by
a small business concern of a Federal rule or regulation
resulting from a Y2K failure if that Federal rule or
regulation had not been violated by that small business
concern within the preceding 3 years; and
(3) the term ``small business concern'' has the meaning
given such term in section 3 of the Small Business Act (25
U.S.C. 632).
(b) Establishment of Liaisons.--Not later than 30 days
after the date of enactment of this section each agency
shall--
(1) establish a point of contact within the agency to act
as a liaison between the agency and small business concerns
with respect to problems arising out of Y2K failures and
compliance with Federal rules or regulations; and
(2) publish the name and phone number of the point of
contact for the agency in the Federal Register.
(c) General Rule.--Subject to subsections (d) and (e), no
agency shall impose any civil money penalty on a small
business concern for a first-time violation.
(d) Standards for Waiver.--In order to receive a waiver of
civil money penalties from an agency for a first-time
violation, a small business concern shall demonstrate that--
(1) the small business concern previously made a good faith
effort to effectively remediate Y2K problems;
(2) a first-time violation occurred as a result of the Y2K
system failure of the small business concern or other entity,
which affected the small business concern's ability to comply
with a federal rule or regulation;
(3) the first-time violation was unavoidable in the face of
a Y2K system failure or occurred as a result of efforts to
prevent the disruption of critical functions or services that
could result in harm to life or property;
(4) upon identification of a first-time violation, the
small business concern initiated reasonable and timely
measures to remediate the violation; and
(5) the small business concern submitted notice to the
appropriate agency of the first-time violation within a
reasonable time not to exceed 7 business days from the time
that the small business concern became aware that a first-
time violation had occurred.
(e) Exceptions.--An agency may impose civil money penalties
authorized under Federal law on a small business concern for
a first-time violation if the small business concern fails to
correct the violation not later than 6 months after initial
notification to the agency.
Mr. GREGG. I offer an amendment that ensures that small businesses
which are hit with Y2K problems will not be penalized by the Federal
Government for activities they are unable to deal with as a result of
the Y2K problem.
An overzealous Federal Government bearing down on a small business
can be a very serious problem. I know all Members have constituents who
have had small businesses that have found the Federal Government to be
overbearing.
It would therefore be uniquely ironic and inappropriate if the
overzealousness of the Federal Government were to be thrown on top of a
situation which a small business had no control over, which would be
the failure of their computer system as a result of a Y2K problem. This
does not get into the issue of liability, which may be the underlying
question in this bill. It doesn't raise the question of whether or not
the computer company should be exempt from liability, which I know has
been a genuine concern of the Senator from South Carolina. Rather, it
simply addresses the need for equity and fairness when we are dealing
with small businesses which, through no fault of their own, have
suddenly been hit with a Y2K problem and therefore fail to comply with
a Federal requirement or Federal regulation and end up getting hit with
a huge fine, all of which they had no control over.
This amendment is tightly drafted so a small business cannot use it
as an excuse not to meet a Federal obligation or Federal regulation. It
does not allow a small business to take the Y2K issue and use it to
bootstrap into avoiding an obligation which it has in the area of some
Federal regulatory regime. Rather, it is very specific. It says, first
off, this must be an incident of a first-time regulatory violation, so
no small business which has any sort of track record of violating that
Federal regulation could qualify for this exemption. So it has to be a
first-time event.
Second, the small business has to prove it made a good-faith effort
to remedy the Y2K problem before it got hit with it. So it cannot be a
situation where the small business said: I have this Y2K problem coming
at me, I have this Federal regulation problem coming at me, I am going
to let the Y2K problem occur and then I will say that is my reason for
not complying. Small business must have made a good-faith attempt to
remedy the Y2K problem.
Third, the Y2K problem cannot be used if the violation was to avoid
or resulted from efforts to prevent disruption of a critical function
or service.
Fourth, the small business has to demonstrate the actions to
remediate the violation were begun when the violation was discovered.
So the small business has to show it attempted to address the problem
as soon as it realized it had a Y2K problem, and it cannot allow the
fact it has a Y2K problem, again, to go unabated and use that lack of
correction of a problem as an excuse for not meeting the obligations of
the Federal regulation.
Fifth, that notice was submitted to the appropriate agency when the
small business became aware of the violation and therefore knew it had
a Y2K problem.
The practical effect of this will be small businesses throughout this
country, which are inadvertently and beyond their own capacity to
control a hit with a Y2K problem, will not be doubled up with a penalty
for not meeting a Federal regulatory requirement that they could not
meet as a result of the Y2K problem kicking in.
It is a simple amendment. It is a reasonable amendment. It really
does not get into the overall contest that has been generated around
this bill which is: Should there be an exemption of liability for
manufacturers of the product which creates the Y2K problem? Rather, it
is trying to address the innocent bystander who gets hit, that small
businessperson who suddenly wakes up, realizes he has a Y2K problem,
tries to correct the Y2K problem, can't correct the Y2K problem, and as
a result fails to comply with a Federal regulation, and then the
Federal Government comes down and hits him with a big fine and there
was nothing the small business could do. It gets hit with a double
whammy: Its systems go down and they get hit with a fine.
This just goes to civil remedy, to remedies which involve monetary
activity, so it does not address issues where a business would be
required to remedy through action. An example here might be OSHA. If
they had to
[[Page S6853]]
correct a workplace problem, they would still have to correct the
workplace problem whether or not they had the Y2K failure. If they had
an environmental problem which required remedial action, such as a
change in their water discharge activities, again they would have to
meet the remedial action.
All this amendment does, it is very limited in scope, it just goes to
the financial liability the company might incur as a result of failing
to meet a regulation. It is a proposal which is strongly supported by
the small business community. The NFIB is a supporter of this proposal
and will be scoring this vote as one of its primary votes as it puts
together its assessment of Members of Congress, and their support for
small business.
It is a reasonable proposal. I certainly hope it will end up being
accepted. In any event, I understand under the unanimous consent
agreement which has been generated there will be a vote on it Tuesday.
I yield the floor.
Mr. BOND. Mr. President, I rise today to address the amendment to the
Y2K Act sponsored by Senator Gregg and which cosponsored. This is an
important amendment that will waive Federal civil money penalties for
blameless small businesses that have in good faith attempted to correct
their Y2K problems, but find themselves inadvertently in violation of a
Federal regulation or rule despite such efforts. Most experts that have
studied the Y2K problem agree that regardless of how diligent a
business is at fixing its Y2K problems, unknowable difficulties are
still likely to arise that may place the operations of such businesses
at risk. This amendment will ensure that the government does not
further punish small businesses that have attempted to fix their Y2K
problems, but are nevertheless placed in financial peril because of
these problems.
As chairman of the Senate Committee on small Business, I have paid
particular attention to the problems that small businesses are facing
regarding the Y2K problem. Small businesses are trying to become Y2K
complaint, but face many obstacles in doing so. One of the major
obstacles is capital. Small businesses are the most vulnerable sector
of our business community, as many of them do not have a significant
amount of excess cash flow. Yet, a great number of small businesses are
already incurring significant costs to become Y2K compliant. Earlier
this year, Congress passed Y2K legislation that I authored to provide
small businesses with the means to fix their own computer systems. Even
small businesses that take advantage of that program, however, will see
decreased cash flow from their efforts to correct Y2K problems.
The last thing, therefore, this government should do is levy civil
money penalties on small businesses that find themselves inadvertently
confronted with Y2K problems. Many of these businesses will already
have had their operations disrupted and may be in danger of going out
of business entirely. The Federal Government should not push them over
the edge.
This amendment has been carefully crafted so that only those small
businesses that are subject to civil money penalties through no fault
of their own are granted a waiver. Under this amendment, a small
business would only be eligible for a waiver of civil money penalties
if it had not violated the applicable rule or regulation in the last 3
years. This provision will help to ensure that businesses that have
continuing violations or that have a history of violating Federal rules
and regulations will not be let off the hook.
Small businesses must also demonstrate to the government agency
levying the penalties that the business had previously made a good
faith effort to correct its Y2K problems. We must not provide
disincentives to businesses so that they do not fix their Y2K problems
now. This amendment does not provide such a disincentive. In addition,
to receive relief, a small business must show that the violation of the
Federal rule or regulation was unavoidable or occurred as a result of
efforts to prevent the disruption of critical functions or services
that could result in harm to life or property. The amendment also
provides that, upon identification of a violation, the small business
concern must have initiated reasonable and timely efforts to correct
it. Finally, in order to receive the relief provided by this amendment,
a small business must have submitted notice, within seven business
days, to the appropriate Federal agency.
What is clear from these requirements is that the amendment will only
apply to conscientious small businesses that have tried in good faith
to prepare for the Y2K problem and that promptly correct inadvertent
violations of a Federal rule or regulation that nevertheless occur as a
result of such problem. It is critically important that these innocent
victims not be punished by the Federal Government for a problem that
confronts us all.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Mr. President, the Senator from New Hampshire is correct.
He has explained his amendment with great clarity. It may or may not be
seriously contested. We simply are not going to know that until early
next week, so I thank him for his graciousness in waiting for a final
decision until then.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. GORTON. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MURKOWSKI. Mr. President, today there are 204 days left before
the Y2K problem becomes a concrete reality for any entity throughout
the world that has a computer system.
The Y2K issue has been publicized across this nation; sometimes to a
greater degree than necessary. Some Americans have even resorted to
hoarding food and planning for the end of the world. While no one has a
magic answer as to what will happen on the first of the year, enough
effort has been made by the public and private sector to ensure that
Americans are aware of this issue.
However, I am concerned that under the current version of S. 96,
companies may continue sales of non-Y2K compliant products even after
enactment of this act without disclosing non-Y2K compliance to
consumers. While I strongly support this important piece of
legislation, I am concerned that unscrupulous marketers may attempt to
deceive consumers by continuing to sell non-Y2K compliant products. A
computer given for a Christmas gift isn't much of a gift when it stops
working 7 days later.
Thus I planned to offer an amendment to section 5(b)(3) that would
lift the cap on punitive damages for products sold after the date of
enactment of this act if the plaintiff could have established by clear
and convincing evidence that the defendant knowingly sold non-Y2K
compliant products absent a signed waiver from the plaintiff. However,
I have agreed to defer to the chairman so that this issue can be best
addressed in conference.
Mr. McCAIN. If I could inquire of my colleague from Alaska how his
original amendment would have applied if, for example, a company bought
a Y2K-compliant computer server in November 1999, and that server has
to interact with other software and networked hardware manufactured by
other companies that may or may not be Y2K compliant.
Mr. MURKOWSKI. I thank my friend for his question. My amendment would
have imposed liability only if the manufacturer sold a server that was
non-Y2K compliant by itself after the date of enactment of this act. My
amendment would not apply to a Y2K compliant server that failed due to
the non-Y2K compliance of installed software or attached hardware
manufactured by other companies.
Mr. McCAIN. I thank my colleague for his clarification and will be
pleased to address his concerns in conference.
Mr. MURKOWSKI. I thank my friend from Arizona for his attention to
this issue.
Mr. FEINGOLD. Mr. President, I appreciate all the hard work that has
been done on this legislation by my colleagues. I know they are sincere
in their concern about the effect of Y2K computer failures and in their
desire to do something to encourage solutions to those problems in
advance of the end of the year. But this bill is ill-considered
[[Page S6854]]
and ill-advised. As the Justice Department has noted with respect to
original version of this bill, and I think the judgment remains
accurate: this bill would be ``by far the most sweeping litigation
reform measure ever enacted if it were approved in its current form.
The bill makes extraordinarily dramatic changes in both federal
procedural and substantive law and in state procedural and substantive
law.''
For all the heated rhetoric we have heard on this floor over the past
few days, I have not seen evidence that legislation is needed to create
incentives for businesses to correct Y2K problems. More importantly, I
do not agree that this bill actually creates those incentives. Indeed,
I think that in many ways it does just the opposite. It rewards the
worst actors with its damages caps and its prohibition of recovery for
economic loss, and it may even give incentives to delay corrective
action with the cooling off period and the changes in class action
rules.
A major concern that I have about this bill is the breathtakingly
broad and unprecedented preemption of state law that it contains. I
simply do not agree that we should overrule the judgment of state
legislatures and judges who have defined the law in their states for
traditional contract and tort cases. This bill benefits one class of
businesses, those who sell products that may cause Y2K problems, over
another class of business, those who buy such products, and individual
consumers. It completely disregards whether state lawmakers and judges
would reach the same conclusions. I see no reason why Congress should
dictate tort and contract law to the states. Protections for injured
parties that have been developed through decades of experience are
being summarily wiped out by the Congress, on the basis of a very thin
record. Mr. President, that is not right.
Another serious problem with this bill has to do with the elimination
of joint and several liability in the vast majority of Y2K cases. Mr.
Chairman, we all have heard many times the horror story of a poor deep
pocket defendant found to be only 1% liable who ends up on the hook for
the entire judgment in a tort case. Frankly, I am aware of few actual
examples of this phenomenon, but I know it is theoretically possible. A
far more frequent occurrence, however, is a case where two or three
defendants are found equally liable, but one or more of them is
financially insolvent. The real question raised by joint and several
versus proportionate liability is who should bear the risk that the
full share of damages cannot be collected from one defendant. Who
should have the responsibility to identify all potentially liable
parties and bring them into the suit? Who should bear the risk that one
of the defendants has gone bankrupt? Should it be the innocent
plaintiff who the law is supposed to make whole, or a culpable
defendant? Mr. President, to me that question is easy to answer.
Someone who has done wrong should bear that risk. But states have
reached different balances on this question, based on their own
experience of decades and decades of tort cases. How is it that we in
the Congress all of the sudden became experts on this issue? Where do
we get off overriding the judgment of state legislatures on this
crucial question of public policy?
Now I recognize that changes to the bill obtained by Senator Dodd
would limit the effect of the abrogation of joint and several liability
in a narrow set of cases involving egregious conduct by defendants or
particularly poor plaintiffs. But I don't think this change goes far
enough in protecting innocent victims from the harsh reality that
sometimes the worst offenders have the least money. Section 6 of this
bill eliminates joint and several liability in virtually every Y2K
case, and that is wrong.
Let me quote one of the bill's stated purposes from Section 2(b) of
the bill--``to establish uniform legal standards that give all
businesses and users of technology reasonable incentives to solve Y2K
computer date-change problems before they develop.'' But Mr. President,
this bill doesn't establish uniform standards. It preempts state law
only in one direction--always in favor of defendants and against the
interests of the injured party.
As I stated before, I don't agree that uniform standards are needed.
I think our state legislatures and judges are due more respect than
this bill gives them. But if there is truly a compelling interest in
uniformity, then I do not understand why this bill preempts state laws
that offer more protection to injured plaintiffs but not those state
laws that are less generous to the injured party. Yesterday, we even
adopted, without debate, an amendment offered by Senator Allard that
says specifically that any state law that provides more protection for
defendants in Y2K cases than this bill does is not preempted. So
preemption is a one-way street here. If you're in a state where the law
is moving in the same direction as this bill and cutting back on the
damages that can be recovered in a Y2K suit, you're fine, but if your
state is going in the wrong direction, you get run over.
Mr. President, that is not fair. And it certainly is not consistent
with the bill's stated purpose of providing uniform national standards.
Let me give you one example. About 30 states have no caps on punitive
damages. Three other states have caps that are more generous than the
caps in this bill. In Y2K cases involving defendants who are small
businesses as defined in this bill, those state laws would be
preempted. About a dozen states have higher caps on some kind of cases
and lower caps on others. This bill would partially preempt those state
laws, overriding the balance that the duly elected state legislatures
in question decided was fair and just.
Six states do not allow punitive damages in tort cases, and one has
caps that are lower than those permitted under this bill. Those states
would be allowed to continue to apply the judgments of their
legislatures and courts in Y2K cases.
My state of Wisconsin has generally rejected imposing arbitrary caps
on punitive damages, instead trusting judges and juries to determine an
appropriate punishment for defendants who act in a particularly harmful
and intentional or malicious way. The state of Washington, to take an
example, has eliminated punitive damages. Why should the policy
decisions of the state of Washington be respected by this Congress more
than the policy decisions of Wisconsin--or Pennsylvania, or Arizona, or
New York, or the majority of states.
The one-sided tilt of this bill is very troubling. Punitive damages
caps of any kind are bad ideas I believe. Remember that in every state
punitive damages can be awarded only in cases of intentional or
outrageous misconduct. So the protection offered by these caps goes to
the very worst Y2K offenders--those who have acted intentionally or
maliciously to avoid fixing their Y2K problems. Where is the justice
and balance in that?
Mr. President, because I think it's important for the Senate to take
every aspect of legislation into account in our debate here on the
floor, I have a few more facts I'd like to add--facts about how much
money has been donated to the political parties and to candidates by a
couple of powerful groups that have a huge stake in this bill.
Now the dollar figures I'm about to cite, keep in mind, are only for
the last election cycle, 1997 to 1998. First there's the computer and
electronics industry, which gave close to $6 million in PAC and soft
money during the last election cycle--$5,772,146 to be exact. And
there's also the Association of Trial Lawyers of America, which gave
$2,836,350 in PAC and soft money contributions to parties and
candidates in 1997 and 1998.
As I said, I cite these figures so that as my colleagues weigh the
pros and cons of this bill, they, and the public, are aware of the
financial interests that have been brought to bear on the legislation.
The lobbying efforts, as we know, have been significant, and so have
the campaign contributions. And the public can be excused if it wonders
if those contributions have distorted the process by which this bill
was crafted.
Mr. President, I am pleased that the Administration has indicated it
will veto this bill in its current form. I will support that veto as
well as voting against the bill. We need to encourage problem solving
and remediation to avoid a disaster on January 1 in the Year 2000. But
we don't need to enact this bill. Indeed, while trying to address a
supposed litigation explosion,
[[Page S6855]]
we may well have created an explosion of unfairness to people and
businesses who are injured by the negligent or reckless behavior of
those who sell non-Y2K compliant products.
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