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CONGRESS RUNNING SHORT ON TIME TO ADDRESS Y2K LIABILITY IMMUNITY

Posted On: Aug. 2, 1998 12:00 AM CST

WASHINGTON -- Congress must decide how much liability relief to grant companies grappling with the Year 2000 computer problem.

Lawmakers cannot afford to dawdle in making that decision, said the chairman of the President's Council on Year 2000 Conversion.

"There is obviously a major timing problem," as lawmakers scramble toward their traditional August recess, John Koskinen said during an appearance at the National Press Club last week.

Mr. Koskinen described the Clinton administration's so-called "Good Samaritan" bill -- which arrived on Capitol Hill hours after he spoke -- as a means to encourage the voluntary exchange of information among entities affected by Year 2000 problems by granting them limited immunity from lawsuits under certain circumstances.

But a competing bill, introduced a few days earlier by Rep. David Dreier, R-Calif., would provide much wider immunity. Even before the administration bill reached Capitol Hill, Rep. Dreier dismissed the White House's limited liability proposal as a "pop-gun response to this potentially immense problem."

Mr. Koskinen, who spoke at the National Press Club in Washington last Tuesday to launch the administration's National Campaign for Year 2000 Solutions, said many companies have information about fixing the computer bug but have been advised by their attorneys to keep mum for two reasons.

The first is fear of antitrust law violations, a fear Mr. Koskinen said the Justice Department had pretty much laid to rest. Mr. Koskinen and Jacob J. Lew, acting director of the Office of Management and Budget, told congressional leaders in a July 27 letter accompanying the bill that the Justice Department already has informed the securities industry that "competitors in an industry who merely share information on Y2K solutions are not in violation of antitrust laws." That applies to other industries as well, wrote Messrs. Lew and Koskinen.

The second is fear of liability for good-faith information that fails to produce the desired results. The administration bill attempts to quell that fear by providing liability immunity for statements made in good faith that ultimately turn out to be inaccurate. The bill covers statements made between July 14, 1998, and July 14, 2001. The bill does not deal with liability that arises from actual system or device failures due to Y2K problems.

In contrast, Rep. Dreier's bill would limit the liability of virtually every party involved in the manufacture or use of software or hardware that might be affected by year 2000 problems.

Under Rep. Dreier's bill -- the Y2K Liability and Antitrust Reform Act -- computer hardware and software designers, developers and manufacturers would have to make fixes available to their customers for Year 2000 problems to limit their liability to customers' "consequential business losses and costs of repair." For products introduced after Dec. 31, 1994, the fixes would have to be provided free.

Computer systems users would enjoy similar liability limitations if they made all reasonable efforts to protect their systems against Year 2000 failure, tested the systems by July 1, 1999, and notified customers and the President's Council on Year 2000 Conversion of their efforts. The bill also calls for a limited antitrust exemption for information sharing.

The measure has been referred to the House Judiciary Committee, which did not consider it immediately.

Mr. Koskinen did not discuss the Dreier bill during his appearance at the Press Club. Rather, he spent most of his time outlining the new Year 2000 campaign. The campaign's goal is "basically to promote public and private action" on the Year 2000 problem, he said, adding that the effort cannot require anybody to do anything in particular about it. Instead, the campaign emphasizes collaboration between federal agencies and industries to minimize Y2K disruptions, he said.

As part of the effort, the council is maintaining a World Wide Web site that provides links to Y2K information from various economic sectors and governmental areas. The site's address is http: -www.y2k.gov.