Senate approves Y2K bill despite veto threat

With just less than 200 days before the New Year, the Senate approved the Y2K Act, which provides a 90-day cooling-off period for plaintiffs and defendants to resolve Y2K disputes out of court.

The bill would also set some caps on punitive damages for small businesses, protect government entities including municipalities, school, fire, water and sanitation districts from punitive damages, and protect those not directly involved in a year 2000 bug failure.

The passage of the measure brings to an end a lengthy stalemate among senators over how to limit what some consider a potential flood of litigation that could arise from Y2K problems--which by some estimates could cost $1 trillion and cripple the economy.

Representatives from the White House said the President won't budge from his prior veto threat, despite pressure from some Senate Democrats and the technology industry.

"We still have a veto threat for this bill," said Beverly Barnes, a White House spokesperson. "It now goes to conference. We will wait to see what Congress does there."

A compromise was reached last month after Sen. John McCain (R-Arizona), chief-sponsor of the bill, agreed to eliminate caps on punitive damages for big businesses and dropped a provision that would have protected individual corporate officers and directors. McCain could not be reached for comment.

Sen. Chris Dodd (D-Connecticut), vice chairman of the Year 2000 Committee and a co-author of the bill, in a statement today said the vote is a "victory for the entrepreneurial spirit that drives our country. Thanks to a bipartisan effort, we were able to pass legislation which encourages people to fix their Y2K problems, rather than fight them in court."

The Y2K Act is specifically crafted to address Y2K-related litigation only as reflected in its provision to sunset, or end, after three years, he explained. The Y2K Act will not prevent consumers who have been harmed from exercising their right to seek redress in the courts, nor does it preclude legitimate suits from going forward.

Now that the Senate has approved the bill, a similar House version of the measure will be hammered into one bill to be approved or rejected by President Clinton. Though Clinton has clearly signaled his opposition, Senate staffers have said the White House would join in the process to try to ensure presidential approval for the final legislation.

"I look forward to working with my colleagues in the House and with the Administration to pass a final bill which embraces the principles advanced in the Senate today," Dodd added. "I am optimistic we can come together to craft a moderate, Y2K-specific bill to ensure that we begin the next millennium with a celebration, and not with a subpoena."

The Senate's action gained immediate applause from technology industry representatives.

Information Technology Industry Council (ITI) praised the Senate for passing the Y2K Act, calling the action "another major step toward protecting American leadership in technology."

"This legislation will enable businesses of all sizes to focus on fixing problems and continued job creation rather than worrying about frivolous lawsuits," said Rhett Dawson, president of ITI, in a statement. "Sens. McCain, Wyden and Dodd deserve much credit for putting together a fair, balanced, and bipartisan bill that will encourage remediation and allow our companies to continue to develop solutions."

The Year 2000 problem, also known as the millennium bug, stems from an old programming shortcut that used only the last two digits of the year. Many computers now must be modified, or they may mistake the year 2000 for the year 1900 and may not be able to function at all.