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  Lobbyists Given Key RoleIn Y2K Relief Legislation

By Stephen Barr and Juliet Eilperin
Washington Post Staff Writers
Thursday, April 22, 1999; Page A25

Top lobbyists for corporate America are playing an unusually intimate role in crafting legislation that would protect their clients from a potential avalanche of lawsuits over possible computer failures in the year 2000.

At the behest of congressional Republican leaders, some of the most powerful business lobbying groups in Washington drew up a "wish list" of relief measures, such as limiting the amount of damages plaintiffs can win in Y2K lawsuits. That list has since formed the basis of legislation that is moving swiftly through Congress and could reach the floor of the Senate as early as today.

While lobbyists often have a say on specific provisions within a bill, rarely are they invited by Congress essentially to write important legislation. Their close involvement in the Y2K bill is testimony both to the immense stakes--businesses warn that computer glitches at the beginning of next year could cost them billions of dollars--and the desire by GOP leaders to erode the Democrats' fund-raising advantage in the high-technology community.

The legislation also has offered several Republicans an opportunity to reaffirm their support for traditional business allies by pushing stringent product liability curbs, put pressure on the trial lawyers lobby and show that the GOP can work with high-tech industry officials, who have been generally seen as tilting toward the policies of President Clinton and Vice President Gore.

Rep. Thomas M. Davis III (R-Va.), a former executive at a technology company in Northern Virginia, predicts "this is a vote that is going to be very closely watched by the high-tech community."

The Year 2000 computer problem "has the potential to drag down the market and drag down the economy to a large extent," Davis said. "People who don't understand that can't go out to Silicon Valley and profess they are high-tech."

Sen. Dianne Feinstein (D-Calif.), one of the few Democrats to cosponsor a Y2K bill, said her involvement in the liability debate was prompted by a call from Intel Corp. Chairman Andrew Grove, who "told me that he thought there was deep concern about frivolous litigation that could prove costly to the industry."

The united front by industry has helped speed the legislation through House and Senate hearings. Senate Commerce Committee Chairman John McCain (R-Ariz.), who is running for president, recently got the green light from Senate Majority Leader Trent Lott (R-Miss.) to bring a bill before the Senate.

The swift movement is unusual for legislation that limits lawsuits against private companies. Such bills are typically tied up in Congress for years, often with the assistance of the lobbyists for trial lawyers, heavy contributors to Democratic candidates. Trial lawyers have mobilized against the Y2K legislation, while several Senate Democrats, the Justice Department and consumer groups have also objected to numerous provisions.

"None of these bills contain one single provision that would help a small business, an individual consumer or homeowner injured because of a Y2K problem," said Joan Mulhern, legislative counsel of the advocacy group Public Citizen.

Even so, the immediacy of the Y2K problem has given the legislation a dramatic boost. Computer experts and government analysts agree that numerous companies will face Year 2000-related computer disruptions but stress that there also is no way to predict the severity or length. Relatively few suits--from 50 to 80 nationwide--have been filed so far, industry analysts said.

The Y2K problem stems from the use in many software programs of two-digit dates, leading computers and embedded chips to read "00" not as 2000 but as 1900. That can lead to unpredictable results, ranging from malfunctions to computer shutdowns.

Industry experts believe a substantial number of small businesses and medium-size corporations have either started late or underestimated the challenges they face in fixing and testing computer software, raising the possibility that many companies will not be able to meet the terms of their contracts and provide required services or supplies.

Faced with such a potential catastrophe, business lobbyists set up the Year 2000 Coalition, chaired by the National Association of Manufacturers (NAM) and the U.S. Chamber of Commerce. Members include the Business Software Alliance, the Information Technology Association of America, the National Association of Wholesaler-Distributors, the National Federation of Independent Business, the National Retail Federation and representatives of accounting, bank, insurance, food, farm, chemical and construction companies.

Although the coalition includes groups that have been rivals, they united around the liability limits because companies feared the unpredictability surrounding the Y2K problem. "Nobody really knows exactly what is going to happen," said Mark Behrens of the law firm Crowell & Moring. "In many Y2K cases, businesses are going to find themselves potentially being Y2K plaintiffs and in other cases being the defendant."

The industry's legislative proposal was pulled together during closed-door meetings organized by NAM and the Chamber of Commerce. Various drafts floated around at the meetings, but the Chamber pushed for a wide-ranging proposal that would shield companies from the cost of lawsuits, participants said.

When the industry negotiations ended, the coalition "wish list" included a series of controversial proposals, such as limits on punitive damages, limits on the liability of company boards and the assessment of liability on a proportional basis, so that a company would be held responsible only for its own fault. Those provisions and others appeared in the initial House and Senate bills, and while they have been modified some, they remain the basis for the legislation.

GOP lawmakers also rode herd on the lobbyists to produce a workable bill. In late January, Davis became concerned that the more powerful business groups would end up at loggerheads over some provisions, such as whether to propose a cap on attorney fees.

When he met NAM President Jerry Jasinowski at a dinner party, Davis made it clear the groups would have to come to agreement quickly or risk having no legislation at all. The next day, Jasinowski delivered that same message to 80 industry representatives who had gathered in his downtown office, and they moved swiftly to conclusion.

House Rules Committee Chairman David Dreier (R-Calif.), who joined Davis and Rep. James P. Moran Jr. (D-Va.) in sponsoring the House Y2K bill, said GOP leaders wanted the groups "all singing from the same page. We told them, 'We're not going to be able to successfully address this unless you come to a consensus.' "

Moran, however, firmly denies that industry dictated the terms of the legislation. The business community was consulted, but the bills were written by congressional staff, "not by the lobbyists," he testified at a House Judiciary Committee hearing.

Critics argue that Y2K liability curbs would send the wrong signal. "I have serious doubts that these bills will do anything to enhance readiness and increase the number of systems able to effectively make the century transition," said John A. Koskinen, Clinton's Y2K adviser.

Mark S. Mandell, president of the Association of Trial Lawyers of America, said state laws already provide ample protection against frivolous litigation. "The debate ought to be on fixing the problem, not taking away people's rights," he argued.

Any Senate bill is likely to require 60 votes in order to avoid filibusters, and proponents of Y2K bills are reaching out to Democrats in an attempt to build bipartisan support. Sen. Christopher J. Dodd (D-Conn.), who has introduced a competing Y2K bill, said he thinks a compromise can be reached that avoids opposition by the trial lawyers and the White House.

"My sense is that people would like an answer they can live with," Dodd said.

© Copyright 1999 The Washington Post Company

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