I

106TH CONGRESS

1ST SESSION H. R. 775

To establish certain procedures for civil actions brought for damages relating

to the failure of any device or system to process or otherwise deal

with the transition from the year 1999 to the year 2000, and for

other purposes.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 23, 1999

Mr. DAVIS of Virginia (for himself, Mr. DREIER, Mr. COX, Mr. MORAN of Virginia, Mr. CRAMER, and Mr. DOOLEY of California) introduced the following bill; which was referred to the Committee on the Judiciary, and

in addition to the Committee on Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such

provisions as fall within the jurisdiction of the committee concerned

A BILL

To establish certain procedures for civil actions brought for

damages relating to the failure of any device or system

to process or otherwise deal with the transition from

the year 1999 to the year 2000, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Year 2000 Readiness

5 and Responsibility Act’’.
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1 SEC. 2. FINDINGS.

2 The Congress finds the following:

3 (1) The Congress seeks to encourage businesses

4 to concentrate their attention and resources in the

5 short time remaining before January 1, 2000, on ad6 dressing, assessing, remediating, and testing their

7 Year 2000 problems, and to minimize any possible

8 business disruptions associated with Year 2000

9 issues.

10 (2) It is appropriate for the Congress to enact

11 legislation to assure that Year 2000 problems do not

12 unnecessarily disrupt interstate commerce or create

13 unnecessary case loads in Federal courts and to pro14 vide initiatives to help businesses prepare and be in

15 a position to withstand the potentially devastating

16 economic impact of the Year 2000 problem.

17 (3) Year 2000 issues will affect practically all

18 business enterprises to some degree, giving rise to a

19 large number of disputes.

20 (4) Resorting to the legal system for resolution

21 of Year 2000 problems is not feasible for many busi22 nesses, particularly small businesses, because of its

23 complexity and expense.

24 (5) The delays, expense, uncertainties, loss of

25 control, adverse publicity and animosities that fre26 quently accompany litigation of business disputes
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1 can only exacerbate the difficulties associated with

2 the Year 2000 date change, and work against the

3 successful resolution of those difficulties.

4 (6) The Congress recognizes that every business

5 in the United States should be concerned that wide6 spread and protracted Year 2000 litigation may

7 threaten the network of valued and trusted business

8 relationships that are so important to the effective

9 functioning of the world economy, and which may

10 put unbearable strains on an overburdened judicial

11 system.

12 (7) A proliferation of frivolous Year 2000

13 actions by opportunistic parties may further limit

14 access to courts by straining the resources of the

15 legal system and depriving deserving parties of their

16 legitimate rights to relief.

17 (8) The Congress encourages businesses to ap18 proach their Year 2000 disputes responsibly, and to

19 avoid unnecessary, time-consuming and costly litiga20 tion based on Year 2000 failures. Congress supports

21 good faith negotiations between parties when there

22 is a dispute over a Year 2000 problem, and, if nec23 essary, urges the parties to enter into voluntary,

24 non-binding mediation rather than litigation.
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1 SEC. 3. DEFINITIONS.

2 In this Act:

3 (1) ACTUAL DAMAGES.—The term ‘‘actual dam4 ages’’ means damages for injury to tangible prop5 erty, and the cost of repairing or replacing defective

6 products.

7 (2) CONTRACT.—The term ‘‘contract’’ means a

8 contract, tariff, license, or warranty.

9 (3) DEFENDANT.—The term ‘‘defendant’’

10 means any person against whom a year 2000 claim

11 has been asserted.

12 (4) ECONOMIC LOSS.—The term ‘‘economic

13 loss’’—

14 (A) means any damages other than dam15 ages arising out of personal injury or damage

16 to tangible property;

17 (B) includes, but is not limited to, dam18 ages for lost profits or sales, for business inter19 ruption, for losses indirectly suffered as a result

20 of the defendant’s wrongful act or omission, for

21 losses that arise because of the claims of third

22 parties, for losses that must be pleaded as spe23 cial damages, or for items defined as con24 sequential damages in the Uniform Commercial

25 Code or analogous State commercial law; and
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1 (C) does not include non-economic dam2 ages.

3 (5) MATERIAL DEFECT.—The term ‘‘material

4 defect’’ means a defect in any item, whether tangible

5 or intangible, or in the provision of a service, that

6 substantially prevents the item or service from oper7 ating or functioning as designed or intended. Defects

8 that have an insignificant or de minimis effect on

9 the operation or functioning of an item, or that af10 fect only a component of an item that, as a whole,

11 substantially operates or functions as designed, or

12 that have an insignificant or de minimis effect on

13 the efficacy of the service provided, are not material

14 defects within the meaning of this definition.

15 (6) PERSON.—The term ‘‘person’’ means any

16 natural person and any entity, organization, or en17 terprise, including but not limited to corporations,

18 companies, joint stock companies, associations, part19 nerships, trusts, and governmental entities.

20 (7) PERSONAL INJURY.—The term ‘‘personal

21 injury’’ means any physical injury to a natural per22 son, including death of the person. It does not in23 clude mental suffering, emotional distress, or like

24 elements of injury that do not constitute physical

25 harm to a natural person.
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1 (8) PLAINTIFF.—The term ‘‘plaintiff’’ means

2 any person who asserts a year 2000 claim.

3 (9) PUNITIVE DAMAGES.—The term ‘‘punitive

4 damages’’ means damages that are awarded against

5 any person to punish such person or to deter such

6 person, or others, from engaging in similar behavior

7 in the future.

8 (10) STATE.—The term ‘‘State’’ means any

9 State of the United States, the District of Columbia,

10 the Commonwealth of Puerto Rico, the Northern

11 Mariana Islands, the United States Virgin Islands,

12 Guam, American Samoa, and any other territory or

13 possession of the United States, and any political

14 subdivision thereof.

15 (11) YEAR 2000 ACTION.—The term ‘‘year 2000

16 action’’ means any civil action of any kind brought

17 in any court under Federal or State law, in which—

18 (A) a year 2000 claim is asserted; or

19 (B) any claim or defense, other than a

20 claim or defense based on personal injury, is re21 lated, directly or indirectly, to an actual or po22 tential year 2000 failure.

23 (12) YEAR 2000 CLAIM.—The term ‘‘year 2000

24 claim’’ means any claim or cause of action of any

25 kind, other than a claim based on personal injury,
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1 whether asserted by way of claim, counterclaim,

2 cross-claim, third-party claim, or otherwise, in which

3 the plaintiff’s alleged loss or harm resulted, directly

4 or indirectly, from an actual or potential year 2000

5 failure.

6 (13) YEAR 2000 FAILURE.—The term ‘‘year

7 2000 failure’’ means any failure by any device or

8 system (including, without limitation, any computer

9 system and any microchip or integrated circuit em10 bedded in another device or product), or any soft11 ware, firmware, or other set or collection of process12 ing instructions, however constructed, in processing,

13 calculating, comparing, sequencing, displaying, stor14 ing, transmitting, or receiving date-related data, in15 cluding, without limitation, failure in accurately

16 dealing with or failure in accurately accounting for

17 transitions or comparisons from, into, and between

18 the years 1999 and 2000, failure to recognize or ac19 curately process any specific date, and failure accu20 rately to account for the year 2000’s status as a

21 leap year.

22 SEC. 4. EXCLUSION OF PERSONAL INJURY CLAIMS.

23 None of the provisions of this Act shall apply to any

24 claim based on personal injury.
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1 TITLE I—UNIFORM PRELITI2 GATION PROCEDURES FOR

3 YEAR 2000 ACTIONS

4 SEC. 101. NOTICE PROCEDURES TO AVOID UNNECESSARY

5 YEAR 2000 ACTIONS.

6 (a) NOTIFICATION PERIOD.—Before filing a year

7 2000 action, except an action that seeks only injunctive

8 relief, a prospective plaintiff shall provide to each prospec9 tive defendant a written notice that identifies, with

10 particularity—

11 (1) any symptoms of a material defect alleged

12 to have caused injury;

13 (2) the injury allegedly suffered by the prospec14 tive plaintiff;

15 (3) the facts that lead the prospective plaintiff

16 to hold such person responsible for both the defect

17 and the injury; and

18 (3) the relief or action sought by the prospec19 tive plaintiff.

20 Except as provided in subsection (c), the prospective plain21 tiff shall not commence an action in Federal or State court

22 until the expiration of 90 days after the date on which

23 such notice is provided. Such 90-day period shall be ex24 cluded in the computation of any applicable statute of lim25 itations.
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1 (b) RESPONSE TO NOTICE.—Not later than 30 days

2 after receipt of the notice specified in subsection (a), each

3 prospective defendant shall provide to each prospective

4 plaintiff a written statement acknowledging receipt of the

5 notice and describing the actions it will take or has taken,

6 if any, to address the problem identified by the prospective

7 plaintiff.

8 (c) FAILURE TO RESPOND.—If a prospective defend9 ant fails to respond to a notice provided pursuant to sub10 section (a) within the 30-day period specified in subsection

11 (b) or does not describe the action, if any, that the pro12 spective defendant will take to address the problem identi13 fied by the prospective plaintiff, the 90-day period speci14 fied in subsection (a) shall terminate at the end of that

15 30-day period as to that prospective defendant and the

16 prospective plaintiff may thereafter commence its action

17 against that prospective defendant.

18 (d) FAILURE TO PROVIDE NOTICE.—If a defendant

19 determines that a plaintiff has filed a year 2000 action

20 without providing the notice specified in subsection (a)

21 and without awaiting the expiration of the 90-day period

22 specified in subsection (a), the defendant may treat the

23 plaintiff’s complaint as such a notice by so informing the

24 court and the plaintiff. If any defendant elects to treat

25 the complaint as such a notice—
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1 (1) the court shall stay all discovery and all

2 other proceedings in the action for 90 days after fil3 ing of the complaint; and

4 (2) the time for filing answers and all other

5 pleadings shall be tolled during this 90-day period.

6 (e) EFFECT OF CONTRACTUAL WAITING PERIODS.—

7 In cases where a contract requires notice of nonperform8 ance and provides for a period of delay prior to the initi9 ation of suit for breach or repudiation of contract, the pe10 riod of delay provided in the contract is controlling over

11 the waiting period specified in subsections (a) and (d).

12 (f) SANCTION FOR FRIVOLOUS INVOCATION OF THE

13 STAY PROVISION.—In any action in which a defendant

14 acts pursuant to subsection (d) to stay the action, and

15 the court subsequently finds that the defendant’s assertion

16 that the suit is a year 2000 action was frivolous and made

17 for the purpose of causing unnecessary delay, the court

18 may award sanctions to opposing parties in accordance

19 with the provisions of Rule 11 of the Federal Rules of

20 Civil Procedure.

21 (g) COMPUTATION OF TIME.—For purposes of this

22 section, the rules regarding computation of time shall be

23 governed by the applicable Federal or State rules of civil

24 procedure.
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1 SEC. 102. ALTERNATIVE DISPUTE RESOLUTION TO AVOID

2 UNNECESSARY YEAR 2000 ACTIONS.

3 (a) IN GENERAL.—(1) At any time during the 90-

4 day period specified in section 101(a), either party may

5 request the other to use alternative dispute resolution. If,

6 based upon that request, the parties enter into an agree7 ment to use alternative dispute resolution, they may also

8 agree to an extension of the 90-day period.

9 (2) At any time after expiration of the 90-day period

10 specified in section 101(a), whether before or after the fil11 ing of a complaint, either party may request the other to

12 use alternative dispute resolution.

13 (b) PAYMENT OF MONEYS DUE.—If the parties re14 solve their dispute through alternative dispute resolution

15 as provided in subsection (a), the defendant shall pay all

16 monies due within 30 days, unless another period of time

17 is agreed to by the parties or established by contract be18 tween the parties.

19 SEC. 103. PLEADING REQUIREMENTS.

20 (a) NATURE AND AMOUNT OF DAMAGES.—In any

21 year 2000 action that seeks the award of money damages,

22 the complaint shall state with particularity the nature and

23 amount of each element of damages, and the factual basis

24 for the damages calculation.

25 (b) MATERIAL DEFECTS.—In any year 2000 action

26 in which the plaintiff alleges that a product or service was
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1 defective, the complaint shall identify with particularity

2 the symptoms of the material defects and shall state with

3 particularity the facts supporting the conclusion that the

4 defects were material.

5 (c) REQUIRED STATE OF MIND.—In any year 2000

6 action in which a claim is asserted as to which the plaintiff

7 may prevail only on proof that the defendant acted with

8 a particular state of mind, the complaint shall, with re9 spect to each element of the claim, state with particularity

10 the facts giving rise to a strong inference that the defend11 ant acted with the required state of mind.

12 (d) MOTION TO DISMISS; STAY OF DISCOVERY.—

13 (1) DISMISSAL FOR FAILURE TO MEET PLEAD14 ING REQUIREMENTS.—In any year 2000 action, the

15 court shall, on the motion of any defendant, dismiss

16 the complaint with or without prejudice if the re17 quirements of subsection (a), (b), or (c) are not met

18 with respect to any claim asserted therein.

19 (2) STAY OF DISCOVERY.—In any year 2000

20 action, all discovery shall be stayed during the pend21 ency of any motion to dismiss, unless the court finds

22 upon the motion of any party that particularized dis23 covery is necessary to preserve evidence or prevent

24 undue prejudice to that party.

25 (3) PRESERVATION OF EVIDENCE.—
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1 (A) IN GENERAL.—During the pendency of

2 any stay of discovery entered pursuant to this

3 subsection, unless otherwise ordered by the

4 court, any party to the action with actual notice

5 of the allegations contained in the complaint

6 shall treat all documents, data compilations (in7 cluding electronically stored or recorded data),

8 and tangible objects that are in the custody or

9 control of such person and that are relevant to

10 the allegations, as if they were a subject of a

11 continuing request for production of documents

12 from an opposing party under applicable Fed13 eral or State rules of civil procedure.

14 (B) SANCTION FOR WILLFUL VIOLA15 TION.—A party aggrieved by the willful failure

16 of an opposing party to comply with subpara17 graph (A) may apply to the court for an order

18 awarding appropriate sanctions.

19 SEC. 104. DUTY OF ALL PERSONS TO MITIGATE YEAR 2000

20 COMPUTER FAILURES AND RESULTING DAM21 AGES.

22 There shall be no recovery in any year 2000 action

23 on account of injury that the plaintiff could reasonably

24 have avoided in light of any disclosure or other informa25 tion of which the plaintiff was, or reasonably could have
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1 been, aware, and the damages awarded in any such action

2 shall exclude any amount that the plaintiff reasonably

3 could have avoided in light of any such disclosure or infor4 mation.

5 TITLE II—YEAR 2000 ACTIONS

6 INVOLVING CONTRACTS

7 SEC. 201. CERTAINTY OF CONTRACT TERMS FOR PREVEN8 TION OF YEAR 2000 DAMAGES.

9 Notwithstanding any other provision of Federal or

10 State statutory or common law, in any year 2000 action

11 all written contractual terms, including limitations or ex12 clusions of liability or disclaimers of warranty, shall be

13 fully enforceable, except that—

14 (1) if the contract is silent as to a particular

15 issue, the interpretation of the contract as to that

16 issue shall be determined by applicable law in force

17 at the time that the contract was entered into; and

18 (2) this section does not apply if a court deter19 mines that the contract as a whole is unenforceable

20 due to an infirmity in the formation of the contract

21 under applicable law in force at the time the con22 tract was entered into.

23 SEC. 202. DEFENSES.

24 (a) REASONABLE EFFORTS.—In any year 2000 ac25 tion in which breach of contract is alleged, in addition to
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1 any other rights provided by applicable law, the party

2 against whom the claim of breach is asserted shall be al3 lowed to offer evidence that its implementation of the con4 tract, or its efforts to implement the contract, were rea5 sonable in light of the circumstances for the purpose of

6 limiting or eliminating the defendant’s liability.

7 (b) IMPOSSIBILITY OR COMMERCIAL IMPRACTICABIL8 ITY.—In any year 2000 action in which breach of contract

9 is alleged, applicability of the doctrines of impossibility

10 and commercial impracticability shall be determined by

11 applicable law in existence on January 1, 1999, and noth12 ing in this Act shall be construed as limiting or impairing

13 a party’s right to assert defenses based upon such doc14 trines.

15 SEC. 203. PROTECTION OF PERSONS FROM LIABILITY NOT

16 ANTICIPATED IN YEAR 2000 CONTRACTS.

17 In any year 2000 action involving a breach of con18 tract or a claim related to the contract, the court shall

19 not award any damages unless such damages are provided

20 for by the express terms of the contract, or, if the contract

21 is silent on such damages, then by operation of the appli22 cable Federal or State law that governed interpretation

23 of the contract at the time the contract was entered into.
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1 TITLE III—YEAR 2000 ACTIONS

2 INVOLVING TORT AND OTHER

3 NONCONTRACTUAL CLAIMS

4 SEC. 301. PROPORTIONATE LIABILITY.

5 (a) IN GENERAL.—Except with respect to claims in6 volving personal injury, a person against whom a final

7 judgment is entered in a year 2000 action shall be liable

8 solely for the portion of the judgment that corresponds

9 to the percentage of responsibility of that person, as deter10 mined under subsection (b).

11 (b) DETERMINATION OF RESPONSIBILITY.—

12 (1) IN GENERAL.—In any year 2000 action, the

13 court shall instruct the jury to answer special inter14 rogatories, or if there is no jury, shall make find15 ings, with respect to each defendant and plaintiff,

16 and each of the other persons claimed by any of the

17 parties to have caused or contributed to the loss in18 curred by the plaintiff, including (but not limited to)

19 persons who have entered into settlements with the

20 plaintiff or plaintiffs, concerning the percentage of

21 responsibility of the defendant, the plaintiff, and

22 each such person, measured as a percentage of the

23 total fault of all persons who caused or contributed

24 to the total loss incurred by the plaintiff.
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1 (2) CONTENTS OF SPECIAL INTERROGATORIES

2 OR FINDINGS.—The responses to interrogatories, or

3 findings, as appropriate, under paragraph (1) shall

4 specify the total amount of damages that the plain5 tiff is entitled to recover and the percentage of re6 sponsibility of each person found to have caused or

7 contributed to the loss incurred by the plaintiff or

8 plaintiffs.

9 (3) FACTORS FOR CONSIDERATION.—In deter10 mining the percentage of responsibility under this

11 subsection, the trier of fact shall consider—

12 (A) the nature of the conduct of each per13 son alleged to have caused or contributed to the

14 loss incurred by the plaintiff; and

15 (B) the nature and extent of the causal re16 lationship between the conduct of each such

17 person and the damages incurred by the plain18 tiff or plaintiffs.

19 (4) NONDISCLOSURE TO JURY.—The standard

20 for allocation of damages under paragraph (1) shall

21 not be disclosed to members of the jury.

22 SEC. 302. PROTECTION OF GOOD FAITH EFFORTS TO PRE23 VENT YEAR 2000 DAMAGES.

24 (a) DEFENDANT’S STATE OF MIND AS TO YEAR 2000

25 FAILURE.—With respect to any year 2000 claim for
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1 money damages in which the defendant’s actual or con2 structive awareness of an actual or potential year 2000

3 failure is an element of the claim under applicable law,

4 except for a claim based upon personal injury, the defend5 ant shall not be liable unless the plaintiff, in addition to

6 establishing all other requisite elements of the claim,

7 proves by clear and convincing evidence that the defendant

8 actually knew, or recklessly disregarded a substantial risk,

9 that such failure would occur in the specific facts and cir10 cumstances of such claim.

11 (b) INJURY TO PLAINTIFF.—With respect to any year

12 2000 claim for money damages in which the defendant’s

13 actual or constructive awareness of actual or potential

14 harm to the plaintiff is an element of the claim under ap15 plicable law, except for a claim based upon personal injury,

16 the defendant shall not be liable unless the plaintiff, in

17 addition to establishing all other requisite elements of the

18 claim, proves by clear and convincing evidence that the

19 defendant actually knew, or recklessly disregarded a

20 known and substantial risk, that the plaintiff would suffer

21 such harm.

22 (c) FORESEEABILITY.—With respect to any year

23 2000 claim for money damages, except for a claim based

24 upon personal injury, the defendant shall not be liable un25 less the plaintiff establishes by clear and convincing evi-
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1 dence, in addition to all other requisite elements of the

2 claim, that the defendant knew or reasonably should have

3 known that its actions would cause harm to the plaintiff

4 in the specific facts and circumstances of such claim.

5 (d) PRESERVATION OF EXISTING LAW.—Nothing in

6 subsections (a), (b), or (c) shall be deemed to relieve the

7 plaintiff in any year 2000 action of its obligation to estab8 lish any element of its cause of action under applicable

9 law.

10 SEC. 303. REASONABLE EFFORTS DEFENSE.

11 In any year 2000 action involving a claim for money

12 damages, except with respect to claims asserting breach

13 or repudiation of contract—

14 (1) the fact that a year 2000 failure occurred

15 in an entity, facility, system, product, or component

16 that was within the control of the party against

17 whom the claim is asserted shall not constitute the

18 sole basis for recovery; and

19 (2) the party against whom the claim is as20 serted shall be entitled to establish, as a complete

21 defense to the claim, that it took measures that were

22 reasonable under the circumstances to prevent the

23 year 2000 failure from occurring or from causing

24 the damages upon which the claim is based.
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1 SEC. 304. DAMAGES LIMITATION.

2 (a) YEAR 2000 RECOVERY FUND.—There is estab3 lished in the Treasury a Year 2000 Recovery Fund. In

4 any year 2000 action in which punitive damages are

5 awarded under applicable law, including this Act, the en6 tire amount of such damages shall be paid into the Year

7 2000 Recovery Fund. Amounts in the Fund shall be used

8 for the assistance of small businesses, State and local gov9 ernments, and nonprofit organizations, that are affected

10 by Year 2000 failures.

11 (b) STANDARD FOR AWARDS.—In any year 2000 ac12 tion in which punitive damages may be awarded under ap13 plicable law, the defendant shall not be liable for punitive

14 damages unless the plaintiff proves by clear and convinc15 ing evidence that the defendant specifically intended to

16 cause injury to the plaintiff. This requirement is in addi17 tion to any other requirement in applicable law for the

18 award of such damages.

19 (c) CAPS ON PUNITIVE DAMAGES.—

20 (1) IN GENERAL.—In any year 2000 action, if

21 a defendant is found liable for punitive damages, the

22 amount of punitive damages that may be awarded to

23 a claimant shall not exceed the greater of—

24 (A) 3 times the amount awarded to the

25 claimant for actual damages; or

26 (B) $250,000.
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1 (2) SPECIAL RULE.—

2 (A) IN GENERAL.—Notwithstanding para3 graph (1), in any year 2000 action, if the de4 fendant is found liable for punitive damages

5 and the defendant—

6 (i) is an individual whose net worth

7 does not exceed $500,000,

8 (ii) is an owner of an unincorporated

9 business that has fewer than 25 full-time

10 employees, or

11 (iii) is—

12 (I) a partnership,

13 (II) corporation,

14 (III) association,

15 (IV) unit of local government, or

16 (V) organization,

17 that has fewer than 25 full-time employees,

18 the amount of punitive damages shall not ex19 ceed the lesser of 3 times the amount awarded

20 to the claimant for actual damages, or

21 $250,000.

22 (B) APPLICABILITY.—For purposes of de23 termining the applicability of this paragraph to

24 a corporation, the number of employees of a

25 subsidiary of a wholly owned corporation shall
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1 include all employees of a parent corporation or

2 any subsidiary of that parent corporation.

3 (3) APPLICATION OF LIMITATIONS BY THE

4 COURT.—The limitations contained in paragraphs

5 (1) and (2) shall be applied by the court and shall

6 not be disclosed to the jury.

7 SEC. 305. RECOVERY OF ECONOMIC DAMAGES IN YEAR 2000

8 ACTIONS.

9 (a) LIMITATION ON RECOVERY OF ECONOMIC

10 LOSSES.—Subject to subsection (b), a party to a year

11 2000 action making a tort claim may recover economic

12 losses only upon establishing, in addition to all other ele13 ments of the claim under applicable law, that any one of

14 the following circumstances exists:

15 (1) The recovery of such losses is provided for

16 in a contract to which the party seeking to recover

17 such losses is a party.

18 (2) Such losses are incidental to a claim in the

19 year 2000 action based on personal injury caused by

20 a year 2000 failure.

21 (3) Such losses are incidental to a claim in the

22 year 2000 action based on damage to tangible prop23 erty caused by a year 2000 failure (other than dam24 age to property that is the subject of the contract).
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1 (b) RECOVERY MUST BE PERMITTED UNDER APPLI2 CABLE LAW.—Economic losses shall be recoverable in a

3 year 2000 action only if applicable Federal law, or applica4 ble State law embodied in statute or controlling judicial

5 precedent as of January 1, 1999, permits the recovery of

6 such losses in the action.

7 SEC. 306. LIABILITY OF OFFICERS AND DIRECTORS.

8 (a) IN GENERAL.—A director, officer, or trustee of

9 a business or other organization (including a corporation,

10 unincorporated association, partnership, or non-profit or11 ganization) shall not be personally liable in any year 2000

12 action in his or her capacity as a director or officer of

13 the business or organization for an aggregate amount that

14 exceeds the greater of—

15 (1) $100,000; or

16 (2) the amount of cash compensation received

17 by the director or officer from the business or orga18 nization during the 12-month period immediately

19 preceding the act or omission for which liability was

20 imposed.

21 (b) RULE OF CONSTRUCTION.—Nothing in this sec22 tion shall be deemed to impose, or to permit the imposition

23 of, personal liability on any director, officer, or trustee in

24 excess of the aggregate amount of liability to which such

25 director, officer, or trustee would be subject under applica-
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1 ble State law in existence on January 1, 1999 (including

2 any charter or bylaw authorized by such State law).

3 TITLE IV—YEAR 2000 CLASS

4 ACTIONS

5 SEC. 401. MINIMUM INJURY REQUIREMENT.

6 (a) IN GENERAL.—In any year 2000 action involving

7 a claim that a product or service is defective, the action

8 may be maintained as a class action in Federal or state

9 court as to that claim only if it satisfies all other pre10 requisites established by applicable Federal or State law

11 and the court also finds that the alleged defect in the prod12 uct or service was a material defect as to a majority of

13 the members of the class.

14 (b) DETERMINATION BY COURT.—As soon as prac15 ticable after the commencement of a year 2000 action in16 volving a claim that a product or service is defective and

17 that is brought as a class action, the court shall determine

18 by order whether the requirement set forth in paragraph

19 (1) is satisfied. An order under this subsection may be

20 conditional, and may be altered or amended before the de21 cision on the merits.

22 SEC. 402. NOTIFICATION.

23 (a) NOTICE BY MAIL.—In any year 2000 action that

24 is maintained as a class action, the court, in addition to

25 any other notice required by applicable Federal or State
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1 law, shall direct notice of the action to each member of

2 the class by United States mail, return receipt requested.

3 Persons whose actual receipt of the notice is not verified

4 by the court or by counsel for one of the parties shall be

5 excluded from the class unless those persons inform the

6 court in writing, on a date no later than the commence7 ment of trial or entry of judgment, that they wish to join

8 the class.

9 (b) CONTENTS OF NOTICE.—In addition to any infor10 mation required by applicable Federal or State law, the

11 notice described in this subsection shall—

12 (1) concisely and clearly describe the nature of

13 the action;

14 (2) identify the jurisdiction whose law will gov15 ern the action;

16 (3) identify any potential claims that class

17 counsel chose not to pursue so that the action would

18 satisfy class certification requirements; and

19 (4) describe the fee arrangement of class coun20 sel.

21 SEC. 403. DISMISSAL PRIOR TO CERTIFICATION.

22 Before determining whether to certify a class in a

23 year 2000 action, the court may decide a motion to dis24 miss or for summary judgment made by any party if the

25 court concludes that decision will promote the fair and ef-
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1 ficient adjudication of the controversy and will not cause

2 undue delay.

3 SEC. 404. FEDERAL JURISDICTION IN YEAR 2000 CLASS AC4 TIONS.

5 (a) REFERENCE.—Whenever in this section an

6 amendment or repeal is expressed in terms of an amend7 ment to, or repeal of, a section or other provision, the ref8 erence shall be considered to be made to a section or other

9 provision of title 28, United States Code.

10 (b) DIVERSITY JURISDICTION.—Section 1332 is

11 amended by redesignating subsections (b), (c), and (d) as

12 subsections (c), (d), and (e), respectively, and by inserting

13 after subsection (a) the following:

14 ‘‘(b)(1) The district courts shall have original juris15 diction of any year 2000 action, regardless of the sum or

16 value of the matter in controversy therein, which is

17 brought as a class action and in which—

18 ‘‘(A) any member of a proposed plaintiff class

19 is a citizen of a State different from any defendant;

20 ‘‘(B) any member of a proposed plaintiff class

21 is a foreign state or a citizen or subject of a foreign

22 state and any defendant is a citizen of a State; or

23 ‘‘(C) any member of a proposed plaintiff class

24 is a citizen of a State and any defendant is a citizen

25 or subject of a foreign state.
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1 As used in this paragraph, the term ‘foreign state’ has

2 the meaning given that term in section 1603(a).

3 ‘‘(2)(A) In a year 2000 action described in paragraph

4 (1) in which—

5 ‘‘(i) the substantial majority of the members of

6 all proposed plaintiff classes are citizens of a single

7 State of which the primary defendants are also citi8 zens, and

9 ‘‘(ii) the claims asserted will be governed pri10 marily by the laws of that State,

11 the district court should abstain from hearing such action.

12 ‘‘(B) In a year 2000 action described in paragraph

13 (1) in which—

14 ‘‘(i) all matters in controversy asserted by the

15 individual members of all proposed plaintiff classes

16 in the aggregate do not exceed the sum or value of

17 $1,000,000, exclusive of interest and costs,

18 ‘‘(ii) the number of members of all proposed

19 plaintiff classes in the aggregate is less than 100, or

20 ‘‘(iii) the primary defendants are States, State

21 officials, or other governmental entities against

22 whom the district court may be foreclosed from or23 dering relief,

24 the district court may, in its discretion, abstain from hear25 ing such action.
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1 ‘‘(3)(A) Paragraph (1) and section 1453 shall not

2 apply to any class action that is brought under the Securi3 ties Act of 1933.

4 ‘‘(B) Paragraph (1) and section 1453 shall not apply

5 to a class action described in subparagraph (C) that is

6 based upon the statutory or common law of the State in

7 which the issuer concerned is incorporated (in the case of

8 a corporation) or organized (in the case of any other en9 tity).

10 ‘‘(C) A class action is described in this subparagraph

11 if it involves—

12 ‘‘(i) the purchase or sale of securities by an

13 issuer or an affiliate of an issuer exclusively from or

14 to holders of equity securities of the issuer; or

15 ‘‘(ii) any recommendation, position, or other

16 communication with respect to the sale of securities

17 of an issuer that—

18 ‘‘(I) is made by or on behalf of the issuer

19 or an affiliate of the issuer to holders of equity

20 securities of the issuer; and

21 ‘‘(II) concerns decisions of those equity

22 holders with respect to voting their securities,

23 acting in response to a tender or exchange

24 offer, or exercising dissenters’ or appraisal

25 rights.
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1 ‘‘(D) As used in this paragraph, the terms ‘issuer’,

2 ‘security’, and ‘equity security’ have the meanings given

3 those terms in section 3 of the Securities Exchange Act

4 of 1934.

5 ‘‘(4) As used in this subsection, the term ‘year 2000

6 action’ has the meaning given that term in section 3 of

7 the Year 2000 Readiness Act.’’.

8 (c) CONFORMING AMENDMENT.—Section 1332(c) (as

9 redesignated by this section) is amended by inserting after

10 ‘‘Federal courts’’ the following: ‘‘pursuant to subsection

11 (a) of this section’’.

12 (d) DETERMINATION OF DIVERSITY.—Section 1332,

13 as amended by this section, is further amended by adding

14 at the end the following:

15 ‘‘(f) For purposes of subsection (b), a member of a

16 proposed class shall be deemed to be a citizen of a State

17 different from a defendant corporation only if that mem18 ber is a citizen of a State different from all States of which

19 the defendant corporation is deemed a citizen.’’.

20 (e) REMOVAL OF CLASS ACTIONS.—Chapter 89 is

21 amended by adding after section 1452 the following:

22 ‘‘§ 1453. Removal of class actions

23 ‘‘(a) IN GENERAL.—A year 2000 action which is a

24 class action may be removed to a district court of the
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1 United States in accordance with this chapter, except that

2 such action may be removed—

3 ‘‘(1) by any defendant without the consent of

4 all defendants; or

5 ‘‘(2) by any plaintiff class member who is not

6 a named or representative class member of the ac7 tion for which removal is sought, without the con8 sent of all members of such class.

9 ‘‘(b) WHEN REMOVABLE.—This section shall apply

10 to any year 2000 action before or after the entry of any

11 order certifying a class.

12 ‘‘(c) PROCEDURE FOR REMOVAL.—The provisions of

13 section 1446(a) relating to a defendant removing a case

14 shall apply to a plaintiff removing a case under this sec15 tion. With respect to the application of subsection (b) of

16 such section, the requirement relating to the 30-day filing

17 period shall be met if a plaintiff class member who is not

18 a named or representative class member of the action for

19 which removal is sought files notice of removal within 30

20 days after receipt by such class member, through service

21 or otherwise, of the initial written notice of the class action

22 provided at the trial court’s direction.

23 ‘‘(d) DEFINITION.—As used in this section, the term

24 ‘year 2000 action’ has the meaning given that term in sec25 tion 3 of the Year 2000 Readiness Act.’’.
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1 (f) REMOVAL LIMITATIONS.—Section 1446(b) is

2 amended in the second sentence—

3 (1) by inserting after ‘‘has become removable’’

4 the following: ‘‘, or, in the case of an action remov5 able on the basis of jurisdiction under section

6 1332(b), from which it may first be ascertained, by

7 exercising due diligence, that the case is one which

8 is or has become removable’’; and

9 (2) by inserting ‘‘(a)’’ after ‘‘section 1332’’.

10 (g) TECHNICAL AND CONFORMING AMENDMENTS.—

11 The table of sections for chapter 89 is amended by adding

12 after the item relating to section 1452 the following:

‘‘1453. Removal of class actions.’’.

13 (h) APPLICATION OF SUBSTANTIVE STATE LAW.—

14 Nothing in this section or the amendments made by this

15 section shall alter the substantive law applicable to an ac16 tion to which the amendments made by subsection (b) of

17 this section apply.

18 (i) PROCEDURE AFTER REMOVAL.—Section 1447 is

19 amended by adding at the end the following new sub20 section:

21 ‘‘(f) If, after removal, the court determines that no

22 aspect of an action that is subject to its jurisdiction solely

23 under the provisions of section 1332(b) may be maintained

24 as a class action under Rule 23 of the Federal Rules of

25 Civil Procedure, the court shall strike the class allegations
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1 from the action and remand the action to the State court.

2 Upon remand of the action, the period of limitations for

3 any claim that was asserted in the action on behalf of any

4 named or unnamed member of any proposed class shall

5 be deemed tolled to the full extent provided under Federal

6 law.’’.

7 TITLE V—CLIENT PROTECTION

8 IN CONNECTION WITH YEAR

9 2000 ACTIONS

10 SEC. 501. SCOPE.

11 This title applies to any year 2000 claim or year 2000

12 action asserted or brought in Federal or State court.

13 SEC. 502. DEFINITIONS.

14 In this title:

15 (1) ATTORNEY.—the term ‘‘attorney’’ means

16 any natural person, professional law association, cor17 poration, or partnership authorized under applicable

18 State law to practice law.

19 (2) ATTORNEY’S SERVICES.—The term ‘‘attor20 ney’s services’’ means the professional advice or

21 counseling of or representation by an attorney, but

22 such term shall not include other assistance in23 curred, directly or indirectly, in connection with an

24 attorney’s services, such as administrative or sec25 retarial assistance, overhead, travel expenses, wit-
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1 ness fees, or preparation by a person other than the

2 attorney of any study, analysis, report, or test.

3 (3) CONTINGENT FEE.—The term ‘‘contingent

4 fee’’ means the cost or price of an attorney’s services

5 determined by applying a specified percentage, which

6 may be a firm fixed percentage, a graduated or slid7 ing percentage, or any combination thereof, to the

8 amount of the settlement or judgment obtained.

9 (4) HOURLY FEE.—The term ‘‘hourly fee’’

10 means the cost or price per hour of an attorney’s

11 services.

12 (5) INITIAL MEETING.—The term ‘‘initial meet13 ing’’ means the first conference or discussion be14 tween a client and an attorney, whether by telephone

15 or in person, concerning the details, facts, or basis

16 of the plaintiff’s claim.

17 (6) RETAIN.—The term ‘‘retain’’ means the act

18 of a client in engaging an attorney’s services, wheth19 er by express or implied agreement, by seeking and

20 obtaining the attorney’s services.

21 SEC. 503. CONSUMER’S RIGHT TO ELECT HOURLY OR CON22 TINGENT FEE ARRANGEMENT.

23 (a) ELECTION OF TERMS.—A plaintiff who retains

24 an attorney with respect to a year 2000 claim or a year

25 2000 action may elect whether to compensate the attor-
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1 ney’s services in connection with the year 2000 claim or

2 the year 2000 action on an hourly basis or a contingent

3 fee basis, except that—

4 (1) in no event shall an attorney that has been

5 retained on a contingent fee basis be paid a fee

6 greater than the lesser of the attorney’s hourly rate

7 or rates disclosed under section 505 multiplied by

8 the total number of hours spent by the attorney in

9 connection with the claim or action or an agreed

10 upon percentage of the total recovery which does not

11 exceed one-third of the total recovery; and

12 (2) in no event shall such an attorney be paid

13 a contingent fee based on a percentage of a settle14 ment or judgment obtained for that portion of dam15 ages claimed which the defendant offered prior to, or

16 within 90 days after, the filing of the relevant year

17 2000 action.

18 (b) ADDITIONAL LIMITATION.—In no event shall an

19 attorney representing a client in connection with a year

20 2000 claim or a year 2000 action be paid a fee greater

21 than the attorney’s hourly rate or rates disclosed under

22 section 505 multiplied by the total number of hours spent

23 by the attorney in connection with the claim or action.
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1 SEC. 504. CONSUMER’S RIGHT TO UP-FRONT DISCLOSURE

2 OF INFORMATION REGARDING FEES AND

3 SETTLEMENT PROPOSALS.

4 An attorney retained by a client shall, at the initial

5 meeting (or in the instance of an attorney retained before

6 the effective date of this Act, 30 days after the date of

7 the enactment of this Act), disclose to the client the cli8 ent’s rights under this title and the client’s right to receive

9 a written statement of the information described under

10 sections 505 and 506.

11 SEC. 505. INFORMATION AFTER INITIAL MEETING.

12 (a) WRITTEN DISCLOSURE OF FEES.—Within 30

13 days after the disclosure described under section 504, an

14 attorney retained by a client shall provide a written state15 ment to the client setting forth—

16 (1) the estimated number of hours of the attor17 ney’s services that will be spent—

18 (A) settling or attempting to settle the

19 year 2000 claim or year 2000 action; and

20 (B) handling the year 2000 claim or year

21 2000 action through trial;

22 (2) the attorney’s hourly fee for services in pur23 suing the year 2000 claim or year 2000 action and

24 any conditions, limitations, restrictions, or other

25 qualifications on the fee, including likely expenses

26 and the client’s obligation for those expenses and
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1 stating that in no event shall such hourly fee for

2 services exceed $1,000 per hour; and

3 (3) in the case of an attorney retained on a

4 contingent fee basis, the attorney’s contingent fee

5 for services in pursuing the year 2000 claim or year

6 2000 action and any conditions, limitations, restric7 tions, or other qualifications on the fee, including

8 likely expenses and the client’s obligation for those

9 expenses and stating that in no event shall such con10 tingent fee exceed one third of the total recovery.

11 (b) CONSUMER’S RIGHT TO TIMELY UPDATED IN12 FORMATION ABOUT FEES.—In addition to the require13 ments contained in subsection (a), the attorney shall also

14 render monthly statements to the client containing a de15 scription of hourly charges and expenses incurred in the

16 pursuit of the client’s year 2000 claim or year 2000 action

17 by each attorney assigned to the client’s matter.

18 SEC. 506. CONSUMER’S RIGHT TO TIMELY UPDATED INFOR19 MATION ABOUT SETTLEMENT PROPOSALS

20 AND DETAILED STATEMENT OF HOURS AND

21 FEES.

22 An attorney retained by a client shall immediately

23 transmit all settlement offers to the client with an esti24 mate of the likelihood of achieving a more or less favorable

25 resolution to the year 2000 claim or year 2000 action, the
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1 likely timing of such resolution, and the likely attorney’s

2 fees and expenses required to obtain such a resolution. An

3 attorney retained by a client shall, within a reasonable

4 time not later than 30 days after the date on which the

5 year 2000 claim or year 2000 action is finally settled or

6 adjudicated, provide a written statement to the client

7 containing—

8 (1) the actual number of hours expended by

9 each attorney on behalf of the client in connection

10 with the year 2000 claim or year 2000 action and

11 such attorney’s hourly rate; and

12 (2) the total amount of the hourly fees or total

13 contingent fee for the attorney’s services in connec14 tion with the year 2000 claim or year 2000 action.

15 SEC. 507. CLASS ACTIONS.

16 An attorney representing a class in a year 2000 ac17 tion shall make the disclosures required under this title

18 to the presiding judge. The presiding judge shall, at the

19 outset of the year 2000 action, determine the appropriate

20 hourly rate, which in no event shall exceed $1,000 per

21 hour, and the maximum percentage of the recovery to be

22 paid in attorney’s fees, which in no event shall exceed one

23 third of the recovery. Notwithstanding any other provision

24 of law or agreement to the contrary, the presiding judge

25 shall award attorney’s fees only pursuant to this title.
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1 SEC. 508. ENFORCEMENT OF CONSUMER PROTECTION

2 RULES IN YEAR 2000 CLAIMS AND ACTIONS.

3 A client whose attorney fails to comply with this title

4 may file a civil action for damages in the court in which

5 the year 2000 claim or year 2000 action was filed or could

6 have been filed or other court of competent jurisdiction.

7 The remedy provided by this section is in addition to any

8 other available remedy or penalty.

9 TITLE VI—ASSISTANCE TO

10 SMALL BUSINESSES FOR PRE11 VENTING YEAR 2000 COM12 PUTER FAILURES

13 SECTION 601. SHORT TITLE.

14 This title may be cited as the ‘‘Small Business Year

15 2000 Readiness Act’’.

16 SEC. 602. FINDINGS.

17 Congress finds that—

18 (1) the failure of many computer programs to

19 recognize the year 2000 will have extreme negative

20 financial consequences in the year 2000 and in sub21 sequent years for both large and small businesses;

22 (2) small businesses are behind larger busi23 nesses in implementing corrective changes to their

24 automated systems–85 percent of businesses with

25 200 employees or fewer have not commenced
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1 inventorying the changes they must make to their

2 automated systems to avoid year 2000 problems;

3 (3) many small businesses do not have access to

4 the capital necessary to fix mission critical auto5 mated systems; and

6 (4) the failure of a large number of domestic

7 small businesses will have a highly detrimental effect

8 on the American economy in the year 2000 and sub9 sequent years.

10 SEC. 603. YEAR 2000 COMPUTER FAILURE LOAN GUARAN11 TEE PROGRAM.

12 (a) PROGRAMS ESTABLISHED.—Section 7(a) of the

13 Small Business Act (15 U.S.C. 636(a)) is amended by

14 adding at the end the following:

15 ‘‘(27) YEAR 2000 COMPUTER FAILURE PILOT

16 PROGRAM.—

17 ‘‘(A) DEFINITIONS.—In this paragraph—

18 ‘‘(i) the term ‘eligible lender’ means

19 any lender designated by the Administra20 tion as eligible to participate in—

21 ‘‘(I) the program (commonly re22 ferred to as the ‘Preferred Lenders

23 Program’) authorized by the proviso

24 in section 5(b)(7); or
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1 ‘‘(II) the program (commonly re2 ferred to as the ‘Certified Lenders

3 Program’) authorized in paragraph

4 (19); and

5 ‘‘(ii) the term ‘year 2000 computer

6 failure’ means any failure by any device or

7 system (including, without limitation, any

8 computer system and any microchip or in9 tegrated circuit embedded in another de10 vice or product), or any software,

11 firmware, or other set of collection of proc12 essing instructions, however constructed, in

13 processing, calculating, comparing, se14 quencing, displaying, storing, transmitting,

15 or receiving date-related data, including,

16 without limitation, failure in accurately

17 dealing with or failure in accurately ac18 counting for transitions or comparisons

19 from, into, and between the 20th and the

20 21st centuries, or during the years 1999

21 and 2000, failure to recognize or accu22 rately process any specific date, and failure

23 to accurately account for the year 2000’s

24 leap year status.
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1 ‘‘(B) ESTABLISHMENT OF PROGRAM.—The

2 Administration shall—

3 ‘‘(i) establish a pilot program, under

4 which the Administration shall guarantee

5 loans made by eligible lenders to small

6 business concerns in accordance with this

7 subsection to allow such concerns to ad8 dress year 2000 computer failures; and

9 ‘‘(ii) notify eligible lenders of the es10 tablishment of the program under this

11 paragraph.

12 ‘‘(C) USE OF FUNDS.—A small business

13 concern that receives a loan guaranteed under

14 this paragraph shall use the proceeds of the

15 loan solely to address year 2000 computer fail16 ures, including the repair or acquisition of in17 formation technology systems and other auto18 mated systems.

19 ‘‘(D) MAXIMUM AMOUNT.—The total

20 amount of a loan made to a small business con21 cern and guaranteed under this paragraph shall

22 not exceed $50,000.

23 ‘‘(E) GUARANTEE LIMIT.—The guarantee

24 percentage of a loan guaranteed under this

25 paragraph shall not exceed 50 percent of the
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1 balance of the financing outstanding at the time

2 of disbursement of the loan.

3 ‘‘(F) REPORT.—The Administration shall

4 annually submit to the Committees on Small

5 Business of the House of Representatives and

6 the Senate a report on the program authorized

7 by this paragraph. Such report shall include in8 formation relating to—

9 ‘‘(i) the number and amount of loans

10 guaranteed under this paragraph;

11 ‘‘(ii) whether the loans guaranteed

12 were made to repair or replace information

13 technology and other automated systems;

14 and

15 ‘‘(iii) the number of eligible lenders

16 participating in the program.’’.

17 (b) REGULATIONS.—Not later than 60 days after the

18 date of enactment of this title, the Administrator of the

19 Small Business Administration shall issue final regula20 tions to carry out the program established by section

21 7(a)(27) of the Small Business Act, as added by this sec22 tion.

23 (c) REPEAL.—Effective on October 1, 2001, this

24 section and the amendment made by this section are

25 repealed.
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1 SEC. 604. PILOT PROGRAM REQUIREMENTS.

2 Section 7(a)(25) of the Small Business Act (15

3 U.S.C. 636(a)(25)) is amended by adding at the end the

4 following:

5 ‘‘(D) NOTIFICATION OF CHANGE.—Not

6 later than 30 days before initiating any new

7 pilot program or making any change in a pilot

8 program under this subsection that may affect

9 the subsidy rate estimates for the loan program

10 under this subsection, the Administration shall

11 notify the Committees on Small Business of the

12 House of Representatives and the Senate. Such

13 notification shall include—

14 ‘‘(i) a description of the proposed new

15 program or the change to a program; and

16 ‘‘(ii) an estimation, which shall be de17 veloped by the Administration in consulta18 tion with the Director of the Office of

19 Management and Budget, of the effect

20 that the new program or the change to a

21 program will have on the subsidy rate.

22 ‘‘(E) REPORT ON PILOT PROGRAMS.—The

23 Administration shall annually submit to the

24 Committees on Small Business of the House of

25 Representatives and the Senate a report on
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1 each pilot program under this subsection. Such

2 report shall include information relating to—

3 ‘‘(i) the number and amount of loans

4 made under the pilot program;

5 ‘‘(ii) the number of lenders participat6 ing in the pilot program; and

7 ‘‘(iii) the default rate, delinquency

8 rate, and recovery rate for loans under the

9 pilot program, as compared to those rates

10 for other loan programs under this sub11 section.’’.

12 SEC. 605. SUSPENSION OF PENALTIES FOR CERTAIN YEAR

13 2000 FAILURES BY SMALL BUSINESS CON14 CERNS.

15 (a) DEFINITIONS.—In this section—

16 (1) the term ‘‘agency’’ means any executive

17 agency, as defined in section 105 of title 5, United

18 States Code, that has the authority to impose civil

19 penalties on small business concerns;

20 (2) the term ‘‘first-time violation’’ means any

21 first-time violation, resulting from a year 2000 fail22 ure, of a Federal requirement regarding the collec23 tion of information; and
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1 (3) the term ‘‘small business concern’’ has the

2 meaning given such term in section 3 of the Small

3 Business Act (15 U.S.C. 632).

4 (b) ESTABLISHMENT OF LIAISON.—Not later than

5 30 days after the date of enactment of this title, the Ad6 ministrator of the Small Business Administration shall es7 tablish 1 point of contact in the Administration to act as

8 a liaison between the Administration and small business

9 concerns with respect to problems arising out of year 2000

10 failures and compliance with Federal requirements regard11 ing the collection of information.

12 (c) GENERAL RULE.—Subject to subsection (d), no

13 agency shall impose any civil penalty on a small business

14 concern for a first-time violation.

15 (d) EXCEPTIONS.—An agency may impose civil pen16 alties authorized under Federal law on a small business

17 concern for a first-time violation if—

18 (1) the agency determines that the violation has

19 caused actual serious harm to the public;

20 (2) the agency determines that failure to im21 pose a civil penalty would impede or interfere with

22 the detection of intentional wrongful activity;

23 (3) the violation is a violation of an internal

24 revenue law or a law concerning the assessment or

25 collection of any tax, debt, revenue, or receipt;
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1 (4) the small business concern fails to correct

2 the violation not later than 6 months after receiving

3 written notification of the violation from the agency;

4 or

5 (5) the agency determines that the violation

6 presents an imminent and substantial danger to the

7 public health or safety.

8 (e) DANGER TO PUBLIC HEALTH AND SAFETY.—

9 (1) WAIVER OF PENALTIES.—An agency may

10 waive any civil penalty imposed pursuant to sub11 section (d)(5) if the violation for which the penalty

12 is imposed is corrected not later than 30 days after

13 the agency provides written notice of the violation to

14 the small business concern.

15 (2) STANDARDS FOR WAIVER.—In making a de16 termination whether to waive a civil penalty under

17 paragraph (1) the agency shall take into account all

18 of the facts and circumstances regarding the first19 time violation, including—

20 (A) the nature and seriousness of the vio21 lation, including whether it is technical or inad22 vertent or involves willful criminal conduct;

23 (B) whether the small business concern

24 has made and is making a good faith effort to

25 comply with applicable laws and to remedy the
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1 violation in the shortest practicable period of

2 time; and

3 (C) whether the small business concern has

4 obtained a significant economic benefit from the

5 violation.

6 (3) CONGRESSIONAL NOTIFICATION REQUIRE7 MENT.—If an agency imposes on a small business

8 concern a civil penalty pursuant to subsection (d)(5)

9 without providing the small business concern with

10 the 30 days to correct the violation authorized under

11 paragraph (1), the agency shall notify Congress of

12 the penalty not later than 60 days after it is im13 posed.

14 (f) STATE PENALTIES TO CONFORM.—Notwith15 standing any other provision of law, no State may impose

16 on a small business concern any civil penalty inconsistent

17 with this section.

Æ