Issue/Background
Many computers in use today are unable to recognize dates beyond the year 2000, because they were programmed to recognize only two-digit numbers for any given year, which makes the year 2000 appear to be 1900. The practice of using two-digit programming code had been common practice for decades, with its roots in governmental systems, and readily accepted and adopted by programmers in the computer world sensitive to preserve precious memory when writing code. Although the year 2000 problem is generally software related, it also exists in many hardware components where microprocessor chips and other integrated circuits store and process data. Many of these chips were pre-programmed with non-compliant software provided to the manufacturers by customers to perform specified tasks, and now are embedded in devices not typically considered computers (i.e. industrial machinery, thermostats, medical equipment, building security systems, telephone service, electric power grids, public transit systems, or utility distribution systems).

In October, 1998 the President signed into law the Year 2000 Information Disclosure Act, which will give businesses limited protection from lawsuits if they share information about the Y2K computer problem (P.L.105-271). This legislation is an important step toward Y2K remediation by allowing for a greater exchange of information between companies without fear of frivolous litigation. However, AEA believes additional legislation is necessary.

AEA Member Impact
In a good faith effort to disclose and offer avenues to remedy non-compliant products, many AEA member companies are disclosing to customers and the general public which of their products are not Y2K compliant – often offering simple software patches easily downloaded from websites to fix the problem. Unfortunately, a number of these high-tech companies face the threat of class action lawsuits purporting unwarranted liability in connection with Y2K issues. Resolving the Y2K issues has become a major drain on high-tech companies' resources directly affecting productivity. The Gartner Group has estimated that the cost to fix the Y2K bug is approximately $30 billion for U.S. government agencies and $600 billion worldwide. Without liability legislation, capital resources directed at remediating, or fixing the problem, will be redirected unnecessarily toward litigation – a no win situation for all involved.

AEA Position
AEA believes that remediation of the Y2K problem must include liability protection for legitimate company disclosure and exchange of information, as well as broad education and outreach to the general public informing them of the seriousness of the problem, and the steps necessary to correct it. AEA supports legislative initiatives that seek to address the legitimate Y2K liability and antitrust concerns using the following principles. Legislation should:

• Encourage prompt Y2K remediation by all parties;
• Recognize that theY2K problem is very complex and has its roots in programming practices that were both universal and sensible when introduced and employed;
• Discourage frivolous lawsuits while not impairing rights under existing law;
• Create a uniform national standard.

Status/Outlook
The House passed HR 775, the Year 2000 Readiness and Responsibility Act by a 236-190 margin on May 12. Introduced by Representatives’ Tom Davis (R-VA), David Dreier (R-CA), Christopher Cox (R-CA), Jim Moran (D-VA), Bud Cramer (D-AL), and Cal Dooley (D-CA), creates a legal framework by which Y2K-related disputes will be resolved. It is specifically designed to help consumers by creating incentives for businesses to address the Y2K computing crisis. The Senate passed its version of Y2K legislation (S. 96) by a 62-37 margin on 6/15/99. The Dodd/McCain compromise limited punitive damages for companies with fewer than 50 employees, made directors and companies officers liable for Y2K damages, and allowed state law to apply in determining the "state of mind" of the defendant in a Y2K lawsuit.

The conference following House and Senate passage of Y2K legislation yielded a compromise that kept in tact the main principles supported by AEA: prompt remediation, discouraging frivolous lawsuits, and creation of a uniform national standard. The Conference Report on HR 775 passed the House by a 404-24 and the Senate by a 81-18 margin on July 1. President Clinton signed this bill into public law on July 20.

AEA Staff Contact
Thom Stohler; 202-682-4437, Thom_Stohler@aeanet.org
October 1999