Opening Statement of Sen. Patrick Leahy (D-VT).
Re: Senate Judiciary Committee hearing on S 461, the 'Year 2000 Fairness and Responsibility Act.'
Date: March 1, 1999.
Source: Senate Judiciary Committee.

Statement of Senator Patrick Leahy
Ranking Member, Senate Judiciary Committee
Hearing On Y2K Liability Limitation Legislation
March 1, 1999

I hope that the Judiciary Committee will carefully review all of the recent proposals that would restrict the rights of American consumers and small businesses who seek redress for harms caused by Year 2000 computer problems. As we begin this inquiry, I offer the following simple and direct principle: Our goal should be to encourage Y2K compliance.

That is what we were seeking when we worked cooperatively last year with the President, the Vice President and the Administration on “The Year 2000 Information and Readiness Disclosure Act.” That is why I am cosponsoring and looking forward to Senate passage tomorrow of the “Small Business Year 2000 Readiness Act,” S.314, to offer help to small businesses working to remedy their computer systems before the millennium bug hits.

Sweeping liability protection has the potential to do great harm. Such legislation may restrict the rights of consumers, small businesses, family farmers, state and local governments and the federal government from seeking redress for the harm caused by Y2K computer failures. It seeks to restructure the laws of the 50 states through federal preemption. Moreover, it runs the risk of discouraging businesses from taking responsible steps to cure their Y2K problems now before it is too late.

By focusing attention on these liability limiting proposals instead of on the remedial steps that need to be taken now, Congress may be contributing to distraction and delay from what should be our principal focus -- encouraging Y2K compliance and the prompt remedial efforts that are necessary now, in 1999.

These recent legislative proposals by Senator Hatch and by Senator McCain raise many questions that need to be answered before we move forward. If we do not proceed carefully, broad liability limitation legislation could reward the irresponsible at the expense of the responsible and the innocent. That would not be fair or responsible. Removing accountability from the law removes one of the principal incentives to find solutions before the problems develop.

Why would congressional consideration or passage of special immunity legislation make anyone more likely to expend the resources needed to fix its computer systems to be ready for the millennium? Is it not at least as likely to have just the opposite effect? Why should individuals, businesses and governments act comprehensively now if the law is changed to allow you to wait, see what problems develop and then use the 90-day “cooling off” period after receiving detailed written notice of the problem to think about coming into compliance?

Why not wait and see what solutions are developed by others and draw from them later in the three-month grace period, after the harm is done and only if someone complains?

I would rather continue the incentives our civil justice systems allows to encourage compliance and remediation efforts now, in advance of the harm. I would rather reward responsible business owners who are already making the investments necessary to have their computer systems fixed for Y2K.

I sense that some may be seeking to use fear of the Y2K millennium bug to revive failed liability limitation legislation of the past. These controversial proposals may be good politics in some circles, but they are not true solutions to the Y2K problem. Instead, we should be looking to the future and creating incentives in this country and around the world for accelerating our efforts to resolve potential Y2K problems before they cause harm.

The international aspect of this problem is now looming as one of the most important. As Americans work hard to bring our systems into compliance, we encounter a world in which other countries are not as far along in their efforts and foreign suppliers to U.S. companies pose significant risks for all of us. We must therefore also consider whether creating a liability limitation model will serve our interests in the international arena.

Under the bipartisan leadership of Senator Bennett and Senator Dodd the Senate Special Committee on the Year 2000 Technology Problem has done an outstanding job of raising awareness of the consequences that could result from ignoring the Y2K computer bug. I look forward to reviewing the findings and report of the Special Committee.

The Administration is working hard to bring the Federal Government into compliance. President Clinton decided to have the Social Security Administration’s computers overhauled first and then tested and retooled and retested, again. The President was able to announce on December 28 that social security checks will be printed without any glitches in January 2000. That is progress.

Last month, I hosted a Y2K conference in Vermont to help small businesses prepare for 2000. Hundreds of small business owners from across Vermont attended the conference to learn how to minimize or eliminate their Y2K computer problems. Vermonters are working hard to identify their Y2K vulnerabilities and prepare action plans to resolve them.

This is the right approach. We have to fix as many of these problems ahead of time as we can. Ultimately, the best defense against any Y2K-based lawsuit is to be Y2K compliant.

During the last Congress, I joined with Senator Hatch to introduce and pass into law the consensus bill known as “The Year 2000 Information and Readiness Disclosure Act.” We worked on a bipartisan basis with Senator Bennett, Senator Dodd, the Administration, industry representatives and others to reach agreement on a bill to facilitate information sharing to encourage Y2K compliance. The new law, enacted less than five months ago, is working to encourage companies to work together and share Y2K solutions and test results. It promotes company-to-company information sharing while not limiting rights of consumers.

The North American Electric Reliability Council got a great response from its efforts to obtain detailed Y2K information from various industries. We also know that large telephone companies are sharing technical information over websites designed to assist each other in solving year 2000 problems. I understand that Novell, which sent a witness to today’s hearing, uses a website pursuant to our Act to educate its customers about Year 2000 software solutions.

Under a provision I included, that law also established a National Y2K Information Clearinghouse and Website at the General Services Administration. That website is a great place for small businesses to go to get started in their Y2K efforts.

If, after careful study, there are other reasonable efforts that we in Congress can make to encourage more computer preparedness for the millennium, then we should work together to consider them and work together to implement them.

I note that this hearing has been entitled “The Y2K Bill.” I understand that the Chairman introduced his bill, S.461, just last Wednesday. I am just beginning my analysis of his proposal and expect that some of the witnesses may not be fully familiar with it yet, either. In addition to beginning our examination of that bill, I hope that the Chairman will join with me in taking a hard look at S.96, the “Y2K Act,” which was introduced by Senator McCain back on January 19. I understand that on Wednesday, he released a revised working draft of that bill and asked for additional input and discussion. Given the significant impact S.96 might have on state contract and tort law and the legal rights of all Americans, I hope that the Chairman and other members of the Judiciary Committee will join with me and seek sequential referral of S.96 to this Committee for additional discussion and input.

I look forward to hearing from the Department of Justice and our other witnesses today. I want, in particular, to thank Eleanor Acheson from the Justice Department, Mark Yarsike, and Harris Pogust for appearing on such short notice.

Mr. Chairman, I would like to conclude by entering into the record a statement from John Koskinen, who chairs the President’s Council on Year 2000 Conversion. As you know, Mr. Koskinen could not be here today because he is in Manila attending the Global Conference on the Year 2000, where 29 countries are working together to prepare their governments’ computer systems for the millennium. Accordingly, I believe that a second hearing will be advisable on this important issue so that Members from both sides of the aisle may hear from Mr. Koskinen and we can more carefully consider the pending legislative proposals.