Text: H.R.775 — 106th Congress (1999-2000)All Information (Except Text)

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Public Law No: 106-37 (07/20/1999)

 
[106th Congress Public Law 37]
[From the U.S. Government Printing Office]


<DOC>
[DOCID: f:publ037.106]


[[Page 113 STAT. 185]]

Public Law 106-37
106th Congress

                                 An Act


 
 To <<NOTE: July 20, 1999 -  [H.R. 775]>> 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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress <<NOTE: Y2K Act.>> assembled,

SECTION 1. SHORT TITLE; TABLE OF SECTIONS.

    (a) Short <<NOTE: 15 USC 6601 note.>> Title.--This Act may be cited 
as the ``Y2K Act''.

    (b) Table of Sections.--The table of sections for this Act is as 
follows:

Sec.  1. Short title; table of sections.
Sec.  2. Findings and purposes.
Sec.  3. Definitions.
Sec.  4. Application of Act.
Sec.  5. Punitive damages limitations.
Sec.  6. Proportionate liability.
Sec.  7. Prelitigation notice.
Sec.  8. Pleading requirements.
Sec.  9. Duty to mitigate.
Sec. 10. Application of existing impossibility or commercial 
           impracticability 
           doctrines.
Sec. 11. Damages limitation by contract.
Sec. 12. Damages in tort claims.
Sec. 13. State of mind; bystander liability; control.
Sec. 14. Appointment of special masters or magistrate judges for Y2K 
           actions.
Sec. 15. Y2K actions as class actions.
Sec. 16. Applicability of State law.
Sec. 17. Admissible evidence ultimate issue in State courts.
Sec. 18. Suspension of penalties for certain year 2000 failures by small 
           business concerns.

SEC. 2. <<NOTE: 15 USC 6601.>> FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds the following:
            (1)(A) Many information technology systems, devices, and 
        programs are not capable of recognizing certain dates in 1999 
        and after December 31, 1999, and will read dates in the year 
        2000 and thereafter as if those dates represent the year 1900 or 
        thereafter or will fail to process dates after December 31, 
        1999.
             (B) If not corrected, the problem described in subparagraph 
        (A) and resulting failures could incapacitate systems that are 
        essential to the functioning of markets, commerce, consumer 
        products, utilities, Government, and safety and defense systems, 
        in the United States and throughout the world.
            (2) It is in the national interest that producers and users 
        of technology products concentrate their attention and resources 
        in the time remaining before January 1, 2000, on assessing, 
        fixing, testing, and developing contingency plans to address

[[Page 113 STAT. 186]]

        any and all outstanding year 2000 computer date-change problems, 
        so as to minimize possible disruptions associated with computer 
        failures.
            (3)(A) Because year 2000 computer date-change problems may 
        affect virtually all businesses and other users of technology 
        products to some degree, there is a substantial likelihood that 
        actual or potential year 2000 failures will prompt a significant 
        volume of litigation, much of it insubstantial.
            (B) The litigation described in subparagraph (A) would have 
        a range of undesirable effects, including the following:
                    (i) It would threaten to waste technical and 
                financial resources that are better devoted to curing 
                year 2000 computer date-change problems and ensuring 
                that systems remain or become operational.
                    (ii) It could threaten the network of valued and 
                trusted business and customer relationships that are 
                important to the effective functioning of the national 
                economy.
                    (iii) It would strain the Nation's legal system, 
                causing particular problems for the small businesses and 
                individuals who already find that system inaccessible 
                because of its complexity and expense.
                    (iv) The delays, expense, uncertainties, loss of 
                control, adverse publicity, and animosities that 
                frequently accompany litigation of business disputes 
                could exacerbate the difficulties associated with the 
                date change and work against the successful resolution 
                of those difficulties.
            (4) It is appropriate for the Congress to enact legislation 
        to assure that the year 2000 problems described in this section 
        do not unnecessarily disrupt interstate commerce or create 
        unnecessary caseloads in Federal courts and to provide 
        initiatives to help businesses prepare and be in a position to 
        withstand the potentially devastating economic impact of such 
        problems.
            (5) Resorting to the legal system for resolution of year 
        2000 problems described in this section is not feasible for many 
        businesses and individuals who already find the legal system 
        inaccessible, particularly small businesses and individuals who 
        already find the legal system inaccessible, because of its 
        complexity and expense.
            (6) Concern about the potential for liability--in 
        particular, concern about the substantial litigation expense 
        associated with defending against even the most insubstantial 
        lawsuits--is prompting many persons and businesses with 
        technical expertise to avoid projects aimed at curing year 2000 
        computer date-change problems.
            (7) A proliferation of frivolous lawsuits relating to year 
        2000 computer date-change problems by opportunistic parties may 
        further limit access to courts by straining the resources of the 
        legal system and depriving deserving parties of their legitimate 
        rights to relief.
            (8) Congress encourages businesses to approach their 
        disputes relating to year 2000 computer date-change problems 
        responsibly, and to avoid unnecessary, time-consuming, and 
        costly litigation about Y2K failures, particularly those that 
        are not material. Congress supports good faith negotiations 
        between parties when there is such a dispute, and, if necessary,

[[Page 113 STAT. 187]]

        urges the parties to enter into voluntary, nonbinding mediation 
        rather than litigation.

    (b) Purposes.--Based upon the power of the Congress under Article I, 
Section 8, Clause 3 of the Constitution of the United States, the 
purposes of this Act are--
            (1) to establish uniform legal standards that give all 
        businesses and users of technology products reasonable 
        incentives to solve year 2000 computer date-change problems 
        before they develop;
            (2) to encourage continued remediation and testing efforts 
        to solve such problems by providers, suppliers, customers, and 
        other contracting partners;
            (3) to encourage private and public parties alike to resolve 
        disputes relating to year 2000 computer date-change problems by 
        alternative dispute mechanisms in order to avoid costly and 
        time-consuming litigation, to initiate those mechanisms as early 
        as possible, and to encourage the prompt identification and 
        correction of such problems; and
            (4) to lessen the burdens on interstate commerce by 
        discouraging insubstantial lawsuits while preserving the ability 
        of individuals and businesses that have suffered real injury to 
        obtain complete relief.

SEC. 3. <<NOTE: 15 USC 6602.>> DEFINITIONS.

    In this Act:
            (1) Y2K action.--The term ``Y2K action''--
                    (A) means a civil action commenced in any Federal or 
                State court, or an agency board of contract appeal 
                proceeding, in which the plaintiff's alleged harm or 
                injury arises from or is related to an actual or 
                potential Y2K failure, or a claim or defense arises from 
                or is related to an actual or potential Y2K failure;
                    (B) includes a civil action commenced in any Federal 
                or State court by a government entity when acting in a 
                commercial or contracting capacity; but
                    (C) does not include an action brought by a 
                government entity acting in a regulatory, supervisory, 
                or enforcement capacity.
            (2) Y2K failure.--The term ``Y2K failure'' means failure by 
        any device or system (including any computer system and any 
        microchip or integrated circuit embedded in another device or 
        product), or any software, firmware, or other set or collection 
        of processing instructions to process, to calculate, to compare, 
        to sequence, to display, to store, to transmit, or to receive 
        year-2000 date-related data, including failures--
                    (A) to deal with or account for transitions or 
                comparisons from, into, and between the years 1999 and 
                2000 accurately;
                    (B) to recognize or accurately to process any 
                specific date in 1999, 2000, or 2001; or
                    (C) accurately to account for the year 2000's status 
                as a leap year, including recognition and processing of 
                the correct date on February 29, 2000.
            (3) Government entity.--The term ``government entity'' means 
        an agency, instrumentality, or other entity of Federal, State, 
        or local government (including multijurisdictional agencies, 
        instrumentalities, and entities).

[[Page 113 STAT. 188]]

            (4) Material defect.--The term ``material defect'' means a 
        defect in any item, whether tangible or intangible, or in the 
        provision of a service, that substantially prevents the item or 
        service from operating or functioning as designed or according 
        to its specifications. The term ``material defect'' does not 
        include a defect that--
                    (A) has an insignificant or de minimis effect on the 
                operation or functioning of an item or computer program;
                    (B) affects only a component of an item or program 
                that, as a whole, substantially operates or functions as 
                designed; or
                    (C) has an insignificant or de minimis effect on the 
                efficacy of the service provided.
            (5) Personal injury.--The term ``personal injury'' means 
        physical injury to a natural person, including--
                    (A) death as a result of a physical injury; and
                    (B) mental suffering, emotional distress, or similar 
                injuries suffered by that person in connection with a 
                physical injury.
            (6) State.--The term ``State'' means any State of the United 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Northern Mariana Islands, the United States Virgin 
        Islands, Guam, American Samoa, and any other territory or 
        possession of the United States, and any political subdivision 
        thereof.
            (7) Contract.--The term ``contract'' means a contract, 
        tariff, license, or warranty.
            (8) Alternative dispute resolution.--The term ``alternative 
        dispute resolution'' means any process or proceeding, other than 
        adjudication by a court or in an administrative proceeding, to 
        assist in the resolution of issues in controversy, through 
        processes such as early neutral evaluation, mediation, 
        minitrial, and arbitration.

SEC. 4. <<NOTE: 15 USC 6603.>> APPLICATION OF ACT.

    (a) General Rule.--This Act applies to any Y2K action brought after 
January 1, 1999, for a Y2K failure occurring before January 1, 2003, or 
for a potential Y2K failure that could occur or has allegedly caused 
harm or injury before January 1, 2003, including any appeal, remand, 
stay, or other judicial, administrative, or alternative dispute 
resolution proceeding in such an action.
    (b) No New Cause of Action Created.--Nothing in this Act creates a 
new cause of action, and, except as otherwise explicitly provided in 
this Act, nothing in this Act expands any liability otherwise imposed or 
limits any defense otherwise available under Federal or State law.
    (c) Claims for Personal Injury or Wrongful Death Excluded.--This Act 
does not apply to a claim for personal injury or for wrongful death.
    (d) Warranty and Contract Preservation.--
            (1) In general.--Subject to paragraph (2), in any Y2K action 
        any written contractual term, including a limitation or an 
        exclusion of liability, or a disclaimer of warranty, shall be 
        strictly enforced unless the enforcement of that term would 
        manifestly and directly contravene applicable State law embodied 
        in any statute in effect on January 1, 1999, specifically 
        addressing that term.

[[Page 113 STAT. 189]]

            (2) Interpretation of contract.--In any Y2K action in which 
        a contract to which paragraph (1) applies is silent as to a 
        particular issue, the interpretation of the contract as to that 
        issue shall be determined by applicable law in effect at the 
        time the contract was executed.
            (3) Unconscionability.--Nothing in paragraph (1) shall 
        prevent enforcement of State law doctrines of unconscionability, 
        including adhesion, recognized as of January 1, 1999, in 
        controlling judicial precedent by the courts of the State whose 
        law applies to the Y2K action.

    (e) Preemption of State Law.--This Act supersedes State law to the 
extent that it establishes a rule of law applicable to a Y2K action that 
is inconsistent with State law, but nothing in this Act implicates, 
alters, or diminishes the ability of a State to defend itself against 
any claim on the basis of sovereign immunity.
    (f ) Application with Year 2000 Information and Readiness Disclosure 
Act.--Nothing in this Act supersedes any provision of the Year 2000 
Information and Readiness Disclosure Act.
    (g) Application to Actions Brought by a Government Entity.--
            (1) In general.--To the extent provided in this subsection, 
        this Act shall apply to an action brought by a government entity 
        described in section 3(1)(C).
            (2) Definitions.--In this subsection:
                    (A) Defendant.--
                          (i) In general.--The term ``defendant'' 
                      includes a State or local government.
                          (ii) State.--The term ``State'' means each of 
                      the several States of the United States, the 
                      District of Columbia, the Commonwealth of Puerto 
                      Rico, the Virgin Islands, Guam, American Samoa, 
                      and the Commonwealth of the Northern Mariana 
                      Islands.
                          (iii) Local government.--The term ``local 
                      government'' means--
                                    (I) any county, city, town, 
                                township, parish, village, or other 
                                general purpose political subdivision of 
                                a State; and
                                    (II) any combination of political 
                                subdivisions described in subclause (I) 
                                recognized by the Secretary of Housing 
                                and Urban Development.
                    (B) Y2K upset.--The term ``Y2K upset''--
                          (i) means an exceptional temporary 
                      noncompliance with applicable federally 
                      enforceable measurement, monitoring, or reporting 
                      requirements directly related to a Y2K failure 
                      that are beyond the reasonable control of the 
                      defendant charged with compliance; and
                          (ii) does not include--
                                    (I) noncompliance with applicable 
                                federally enforceable measurement, 
                                monitoring, or reporting requirements 
                                that constitutes or would create an 
                                imminent threat to public health, 
                                safety, or the environment;
                                    (II) noncompliance with applicable 
                                federally enforceable measurement, 
                                monitoring, or reporting requirements 
                                that provide for the safety and 
                                soundness of the banking or monetary 
                                system, or

[[Page 113 STAT. 190]]

                                for the integrity of the national 
                                securities markets, including the 
                                protection of depositors and investors;
                                    (III) noncompliance with applicable 
                                federally enforceable measurement, 
                                monitoring, or reporting requirements to 
                                the extent caused by operational error 
                                or negligence;
                                    (IV) lack of reasonable preventative 
                                maintenance;
                                    (V) lack of preparedness for a Y2K 
                                failure; or
                                    (VI) noncompliance with the 
                                underlying federally enforceable 
                                requirements to which the applicable 
                                federally enforceable measurement, 
                                monitoring, or reporting requirement 
                                relates.
            (3) Conditions necessary for a demonstration of a y2k 
        upset.--A defendant who wishes to establish the affirmative 
        defense of Y2K upset shall demonstrate, through properly signed, 
        contemporaneous operating logs, or other relevant evidence 
        that--
                    (A) the defendant previously made a reasonable good 
                faith effort to anticipate, prevent, and effectively 
                remediate a potential Y2K failure;
                    (B) a Y2K upset occurred as a result of a Y2K 
                failure or other emergency directly related to a Y2K 
                failure;
                    (C) noncompliance with the applicable federally 
                enforceable measurement, monitoring, or reporting 
                requirement was unavoidable in the face of an emergency 
                directly related to a Y2K failure and was necessary to 
                prevent the disruption of critical functions or services 
                that could result in harm to life or property;
                    (D) upon identification of noncompliance the 
                defendant invoking the defense began immediate actions 
                to correct any violation of federally enforceable 
                measurement, monitoring, or reporting requirements; and
                    (E) the defendant submitted notice to the 
                appropriate Federal regulatory authority of a Y2K upset 
                within 72 hours from the time that the defendant became 
                aware of the upset.
            (4) Grant of a y2k upset defense.--Subject to the other 
        provisions of this subsection, the Y2K upset defense shall be a 
        complete defense to the imposition of a penalty in any action 
        brought as a result of noncompliance with federally enforceable 
        measurement, monitoring, or reporting requirements for any 
        defendant who establishes by a preponderance of the evidence 
        that the conditions set forth in paragraph (3) are met.
            (5) Length of y2k upset.--The maximum allowable length of 
        the Y2K upset shall be not more than 15 days beginning on the 
        date of the upset unless specific relief by the appropriate 
        regulatory authority is granted.
            (6) Fraudulent invocation of y2k upset defense.--Fraudulent 
        use of the Y2K upset defense provided for in this subsection 
        shall be subject to the sanctions provided in section 1001 of 
        title 18, United States Code.
            (7) Expiration of Defense.--The Y2K upset defense may not be 
        asserted for a Y2K upset occurring after June 30, 2000.

[[Page 113 STAT. 191]]

            (8) Preservation of authority.--Nothing in this subsection 
        shall affect the authority of a government entity to seek 
        injunctive relief or require a defendant to correct a violation 
        of a federally enforceable measurement, monitoring, or reporting 
        requirement.

    (h) Consumer Protection From Y2K Failures.--
            (1) In general.--No person who transacts business on matters 
        directly or indirectly affecting residential mortgages shall 
        cause or permit a foreclosure on any such mortgage against a 
        consumer as a result of an actual Y2K failure that results in an 
        inability to accurately or timely process any mortgage payment 
        transaction.
            (2) Notice.--A consumer who is affected by an inability 
        described in paragraph (1) shall notify the servicer for the 
        mortgage, in writing and within 7 business days from the time 
        that the consumer becomes aware of the Y2K failure and the 
        consumer's inability to accurately or timely fulfill his or her 
        obligation to pay, of such failure and inability and shall 
        provide to the servicer any available documentation with respect 
        to the failure.
            (3) Actions may resume after grace period.--Notwithstanding 
        paragraph (1), an action prohibited under paragraph (1) may be 
        resumed, if the consumer's mortgage obligation has not been paid 
        and the servicer of the mortgage has not expressly and in 
        writing granted the consumer an extension of time during which 
        to pay the consumer's mortgage obligation, but only after the 
        later of--
                    (A) four weeks after January 1, 2000; or
                    (B) four weeks after notification is made as 
                required under paragraph (2), except that any 
                notification made on or after March 15, 2000, shall not 
                be effective for purposes of this subsection.
            (4) Applicability.--This subsection does not apply to 
        transactions upon which a default has occurred before December 
        15, 1999, or with respect to which an imminent default was 
        foreseeable before December 15, 1999.
            (5) Enforcement of obligations merely tolled.--This 
        subsection delays but does not prevent the enforcement of 
        financial obligations, and does not otherwise affect or 
        extinguish the obligation to pay.
            (6) Definition.--In this subsection--
                    (A) The term ``consumer'' means a natural person.
                    (B) The term ``residential mortgage'' has the 
                meaning given the term ``federally related mortgage 
                loan'' under section 3 of the Real Estate Settlement 
                Procedures Act of 1974 (12 U.S.C. 2602).
                    (C) The term ``servicer'' means the person, 
                including any successor, responsible for receiving any 
                scheduled periodic payments from a consumer pursuant to 
                the terms of a residential mortgage, including amounts 
                for any escrow account, and for making the payments of 
                principal and interest and such other payments with 
                respect to the amounts received from the borrower as may 
                be required pursuant to the terms of the mortgage. Such 
                term includes the person, including any successor, who 
                makes or holds a loan if such person also services the 
                loan.

[[Page 113 STAT. 192]]

    (i) Applicability to Securities Litigation.--In any Y2K action in 
which the underlying claim arises under the securities laws (as defined 
in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)), the provisions of this Act, other than section 13(b) of this 
Act, shall not apply.

SEC. 5. <<NOTE: 15 USC 6604.>> PUNITIVE DAMAGES LIMITATIONS.

    (a) In General.--In any Y2K action in which punitive damages are 
permitted by applicable law, the defendant shall not be liable for 
punitive damages unless the plaintiff proves by clear and convincing 
evidence that the applicable standard for awarding damages has been met.
    (b) Caps on Punitive Damages.--
            (1) In general.--Subject to the evidentiary standard 
        established by subsection (a), punitive damages permitted under 
        applicable law against a defendant described in paragraph (2) in 
        a Y2K action may not exceed the lesser of--
                    (A) three times the amount awarded for compensatory 
                damages; or
                    (B) $250,000.
            (2) Defendant described.--A defendant described in this 
        paragraph is a defendant--
                    (A) who--
                          (i) is sued in his or her capacity as an 
                      individual; and
                          (ii) whose net worth does not exceed $500,000; 
                      or
                    (B) that is an unincorporated business, a 
                partnership, corporation, association, or organization, 
                with fewer than 50 full-time employees.
            (3) No cap if injury specifically intended.--Paragraph (1) 
        does not apply if the plaintiff establishes by clear and 
        convincing evidence that the defendant acted with specific 
        intent to injure the plaintiff.

    (c) Government Entities.--Punitive damages in a Y2K action may not 
be awarded against a government entity.

SEC. 6. <<NOTE: 15 USC 6605.>> PROPORTIONATE LIABILITY.

    (a) In General.--Except in a Y2K action that is a contract action, 
and except as provided in subsections (b) through (g), a person against 
whom a final judgment is entered in a Y2K action shall be liable solely 
for the portion of the judgment that corresponds to the relative and 
proportionate responsibility of that person. In determining the 
percentage of responsibility of any defendant, the trier of fact shall 
determine that percentage as a percentage of the total fault of all 
persons, including the plaintiff, who caused or contributed to the total 
loss incurred by the plaintiff.
    (b) Proportionate Liability.--
            (1) Determination <<NOTE: Courts.>> of responsibility.--In 
        any Y2K action that is not a contract action, the court shall 
        instruct the jury to answer special interrogatories, or, if 
        there is no jury, the court shall make findings with respect to 
        each defendant, including defendants who have entered into 
        settlements with the plaintiff or plaintiffs, concerning--
                    (A) the percentage of responsibility, if any, of 
                each defendant, measured as a percentage of the total 
                fault of all persons who caused or contributed to the 
                loss incurred by the plaintiff; and

[[Page 113 STAT. 193]]

                    (B) if alleged by the plaintiff, whether the 
                defendant (other than a defendant who has entered into a 
                settlement agreement with the plaintiff)--
                          (i) acted with specific intent to injure the 
                      plaintiff; or
                          (ii) knowingly committed fraud.
            (2) Contents of special interrogatories or findings.--The 
        responses to interrogatories or findings under paragraph (1) 
        shall specify the total amount of damages that the plaintiff is 
        entitled to recover and the percentage of responsibility of each 
        defendant found to have caused or contributed to the loss 
        incurred by the plaintiff.
            (3) Factors for consideration.--In determining the 
        percentage of responsibility under this subsection, the trier of 
        fact shall consider--
                    (A) the nature of the conduct of each person found 
                to have caused or contributed to the loss incurred by 
                the plaintiff; and
                    (B) the nature and extent of the causal relationship 
                between the conduct of each such person and the damages 
                incurred by the plaintiff.

    (c) Joint Liability for Specific Intent or Fraud.--
            (1) In general.--Notwithstanding subsection (a), the 
        liability of a defendant in a Y2K action that is not a contract 
        action is joint and several if the trier of fact specifically 
        determines that the defendant--
                    (A) acted with specific intent to injure the 
                plaintiff; or
                    (B) knowingly committed fraud.
            (2) Fraud; recklessness.--
                    (A) Knowing commission of fraud described.--For 
                purposes of subsection (b)(1)(B)(ii) and paragraph 
                (1)(B) of this subsection, a defendant knowingly 
                committed fraud if the defendant--
                          (i) made an untrue statement of a material 
                      fact, with actual knowledge that the statement was 
                      false;
                          (ii) omitted a fact necessary to make the 
                      statement not be misleading, with actual knowledge 
                      that, as a result of the omission, the statement 
                      was false; and
                          (iii) knew that the plaintiff was reasonably 
                      likely to rely on the false statement.
                    (B) Recklessness.--For purposes of subsection 
                (b)(1)(B) and paragraph (1) of this subsection, reckless 
                conduct by the defendant does not constitute either a 
                specific intent to injure, or the knowing commission of 
                fraud, by the defendant.
            (3) Right to contribution not affected.--Nothing in this 
        section affects the right, under any other law, of a defendant 
        to contribution with respect to another defendant found under 
        subsection (b)(1)(B), or determined under paragraph (1)(B) of 
        this subsection, to have acted with specific intent to injure 
        the plaintiff or to have knowingly committed fraud.

    (d) Special Rules.--
            (1) Uncollectible share.--
                    (A) In general.--Notwithstanding subsection (a), if, 
                upon motion made not later than 6 months after a final 
                judgment is entered in any Y2K action that is not a 
                contract

[[Page 113 STAT. 194]]

                action, the court determines that all or part of the 
                share of the judgment against a defendant for 
                compensatory damages is not collectible against that 
                defendant, then each other defendant in the action is 
                liable for the uncollectible share as follows:
                          (i) Percentage of net worth.--The other 
                      defendants are jointly and severally liable for 
                      the uncollectible share if the plaintiff 
                      establishes that--
                                    (I) the plaintiff is an individual 
                                whose recoverable damages under the 
                                final judgment are equal to more than 10 
                                percent of the net worth of the 
                                plaintiff; and
                                    (II) the net worth of the plaintiff 
                                is less than $200,000.
                          (ii) Other plaintiffs.--For a plaintiff not 
                      described in clause (i), each of the other 
                      defendants is liable for the uncollectible share 
                      in proportion to the percentage of responsibility 
                      of that defendant.
                          (iii) For a plaintiff not described in clause 
                      (i), in addition to the share identified in clause 
                      (ii), the defendant is liable for an additional 
                      portion of the uncollectible share in an amount 
                      equal to 50 percent of the amount determined under 
                      clause (ii) if the plaintiff demonstrates by a 
                      preponderance of the evidence that the defendant 
                      acted with reckless disregard for the likelihood 
                      that its acts would cause injury of the sort 
                      suffered by the plaintiff.
                    (B) Overall limit.--The total payments required 
                under subparagraph (A) from all defendants may not 
                exceed the amount of the uncollectible share.
                    (C) Subject to contribution.--A defendant against 
                whom judgment is not collectible is subject to 
                contribution and to any continuing liability to the 
                plaintiff on the judgment.
                    (D) Suits by consumers.--
                          (i) Notwithstanding subparagraph (A), the 
                      other defendants are jointly and severally liable 
                      for the uncollectible share if--
                                    (I) the plaintiff is a consumer 
                                whose suit alleges or arises out of a 
                                defect in a consumer product; and
                                    (II) the plaintiff is suing as an 
                                individual and not as part of a class 
                                action.
                          (ii) In this subparagraph:
                                    (I) The term ``class action'' 
                                means--
                                            (aa) a single lawsuit in 
                                        which: (1) damages are sought on 
                                        behalf of more than 10 persons 
                                        or prospective class members; or 
                                        (2) one or more named parties 
                                        seek to recover damages on a 
                                        representative basis on behalf 
                                        of themselves and other unnamed 
                                        parties similarly situated; or
                                            (bb) any group of lawsuits 
                                        filed in or pending in the same 
                                        court in which: (1) damages are 
                                        sought on behalf of more than 10 
                                        persons; and (2) the lawsuits 
                                        are joined,

[[Page 113 STAT. 195]]

                                        consolidated, or otherwise 
                                        proceed as a single action for 
                                        any purpose.
                                    (II) The term ``consumer'' means an 
                                individual who acquires a consumer 
                                product for purposes other than resale.
                                    (III) The term ``consumer product'' 
                                means any personal property or service 
                                which is normally used for personal, 
                                family, or household purposes.
            (2) Special right of contribution.--To the extent that a 
        defendant is required to make an additional payment under 
        paragraph (1), that defendant may recover contribution--
                    (A) from the defendant originally liable to make the 
                payment;
                    (B) from any other defendant that is jointly and 
                severally liable;
                    (C) from any other defendant held proportionately 
                liable who is liable to make the same payment and has 
                paid less than that other defendant's proportionate 
                share of that payment; or
                    (D) from any other person responsible for the 
                conduct giving rise to the payment that would have been 
                liable to make the same payment.
            (3) Nondisclosure to jury.--The standard for allocation of 
        damages under subsection (a) and subsection (b)(1), and the 
        procedure for reallocation of uncollectible shares under 
        paragraph (1) of this subsection, shall not be disclosed to 
        members of the jury.

    (e) Settlement Discharge.--
            (1) In general.--A defendant who settles a Y2K action that 
        is not a contract action at any time before final verdict or 
        judgment shall be discharged from all claims for contribution 
        brought by other persons. <<NOTE: Courts.>> Upon entry of the 
        settlement by the court, the court shall enter an order 
        constituting the final discharge of all obligations to the 
        plaintiff of the settling defendant arising out of the action. 
        The order shall bar all future claims for contribution arising 
        out of the action--
                    (A) by any person against the settling defendant; 
                and
                    (B) by the settling defendant against any person 
                other than a person whose liability has been 
                extinguished by the settlement of the settling 
                defendant.
            (2) Reduction.--If a defendant enters into a settlement with 
        the plaintiff before the final verdict or judgment, the verdict 
        or judgment shall be reduced by the greater of--
                    (A) an amount that corresponds to the percentage of 
                responsibility of that defendant; or
                    (B) the amount paid to the plaintiff by that 
                defendant.

    (f ) General Right of Contribution.--
            (1) In general.--A defendant who is jointly and severally 
        liable for damages in any Y2K action that is not a contract 
        action may recover contribution from any other person who, if 
        joined in the original action, would have been liable for the 
        same damages. A claim for contribution shall be determined based 
        on the percentage of responsibility of the claimant and of each 
        person against whom a claim for contribution is made.
            (2) Statute of limitations for contribution.--An action for 
        contribution in connection with a Y2K action that is not a 
        contract action shall be brought not later than 6 months

[[Page 113 STAT. 196]]

        after the entry of a final, nonappealable judgment in the Y2K 
        action, except that an action for contribution brought by a 
        defendant who was required to make an additional payment under 
        subsection (d)(1) may be brought not later than 6 months after 
        the date on which such payment was made.

    (g) More Protective State Law Not Preempted.--Nothing in this 
section preempts or supersedes any provision of State law that--
            (1) limits the liability of a defendant in a Y2K action to a 
        lesser amount than the amount determined under this section; or
            (2) otherwise affords a greater degree of protection from 
        joint or several liability than is afforded by this section.

SEC. 7. <<NOTE: 15 USC 6606.>> PRELITIGATION NOTICE.

    (a) In General.--Before commencing a Y2K action, except an action 
that seeks only injunctive relief, a prospective plaintiff in a Y2K 
action shall send a written notice by certified mail (with either return 
receipt requested or other means of verification that the notice was 
sent) to each prospective defendant in that action. The notice shall 
provide specific and detailed information about--
            (1) the manifestations of any material defect alleged to 
        have caused harm or loss;
            (2) the harm or loss allegedly suffered by the prospective 
        plaintiff;
            (3) how the prospective plaintiff would like the prospective 
        defendant to remedy the problem;
            (4) the basis upon which the prospective plaintiff seeks 
        that remedy; and
            (5) the name, title, address, and telephone number of any 
        individual who has authority to negotiate a resolution of the 
        dispute on behalf of the prospective plaintiff.

    (b) Person to Whom Notice To Be Sent.--The notice required by 
subsection (a) shall be sent--
            (1) to the registered agent of the prospective defendant for 
        service of legal process;
            (2) if the prospective defendant does not have a registered 
        agent, then to the chief executive officer if the prospective 
        defendant is a corporation, to the managing partner if the 
        prospective defendant is a partnership, to the proprietor if the 
        prospective defendant is a sole proprietorship, or to a 
        similarly-situated person if the prospective defendant is any 
        other enterprise; or
            (3) if the prospective defendant has designated a person to 
        receive prelitigation notices on a Year 2000 Internet Website 
        (as defined in section 3(7) of the Year 2000 Information and 
        Readiness Disclosure Act), to the designated person, if the 
        prospective plaintiff has reasonable access to the Internet.

    (c) Response to Notice.--
            (1) In <<NOTE: Deadline.>> general.--Within 30 days after 
        receipt of the notice specified in subsection (a), each 
        prospective defendant shall send by certified mail with return 
        receipt requested to each prospective plaintiff a written 
        statement acknowledging receipt of the notice, and describing 
        the actions it has taken or will take to address the problem 
        identified by the prospective plaintiff.

[[Page 113 STAT. 197]]

            (2) Willingness to engage in adr.--The written statement 
        shall state whether the prospective defendant is willing to 
        engage in alternative dispute resolution.
            (3) Inadmissibility.--A written statement required by this 
        subsection is not admissible in evidence, under Rule 408 of the 
        Federal Rules of Evidence or any analogous rule of evidence in 
        any State, in any proceeding to prove liability for, or the 
        invalidity of, a claim or its amount, or otherwise as evidence 
        of conduct or statements made in compromise negotiations.
            (4) Presumptive time of receipt.--For purposes of paragraph 
        (1), a notice under subsection (a) is presumed to be received 7 
        days after it was sent.
            (5) Priority.--A prospective defendant receiving more than 
        one notice under this section may give priority to notices with 
        respect to a product or service that involves a health or safety 
        related Y2K failure.

    (d) Failure to Respond.--If a prospective defendant--
            (1) fails to respond to a notice provided pursuant to 
        subsection (a) within the 30 days specified in subsection 
        (c)(1); or
            (2) does not describe the action, if any, the prospective 
        defendant has taken, or will take, to address the problem 
        identified by the prospective plaintiff,

the prospective plaintiff may immediately commence a legal action 
against that prospective defendant.
    (e) Remediation Period.--
            (1) In general.--If the prospective defendant responds and 
        proposes remedial action it will take, or offers to engage in 
        alternative dispute resolution, then the prospective plaintiff 
        shall allow the prospective defendant an additional 60 days from 
        the end of the 30-day notice period to complete the proposed 
        remedial action or alternative dispute resolution before 
        commencing a legal action against that prospective defendant.
            (2) Extension by agreement.--The prospective plaintiff and 
        prospective defendant may change the length of the 60-day 
        remediation period by written agreement.
            (3) Multiple extensions not allowed.--Except as provided in 
        paragraph (2), a defendant in a Y2K action is entitled to no 
        more than one 30-day period and one 60-day remediation period 
        under paragraph (1).
            (4) Statutes of limitation, etc., tolled.--Any applicable 
        statute of limitations or doctrine of laches in a Y2K action to 
        which paragraph (1) applies shall be tolled during the notice 
        and remediation period under that paragraph.

    (f ) Failure to Provide Notice.--If a defendant determines that a 
plaintiff has filed a Y2K action without providing the notice specified 
in subsection (a) or without awaiting the expiration of the appropriate 
waiting period specified in subsection (c), the defendant may treat the 
plaintiff's complaint as such a notice by so informing the court and the 
plaintiff in its initial response to the plaintiff. If any defendant 
elects to treat the complaint as such a notice--
            (1) <<NOTE: Courts.>> the court shall stay all discovery and 
        all other proceedings in the action for the appropriate period 
        after filing of the complaint; and
            (2) the time for filing answers and all other pleadings 
        shall be tolled during the appropriate period.

[[Page 113 STAT. 198]]

    (g) Effect of Contractual or Statutory Waiting Periods.--In cases in 
which a contract, or a statute enacted before January 1, 1999, requires 
notice of nonperformance and provides for a period of delay prior to the 
initiation of suit for breach or repudiation of contract, the period of 
delay provided by contract or the statute is controlling over the 
waiting period specified in subsections (c) and (d).
    (h) State Law Controls Alternative Methods.--Nothing in this section 
supersedes or otherwise preempts any State law or rule of civil 
procedure with respect to the use of alternative dispute resolution for 
Y2K actions.
    (i) Provisional Remedies Unaffected.--Nothing in this section 
interferes with the right of a litigant to provisional remedies 
otherwise available under Rule 65 of the Federal Rules of Civil 
Procedure or any State rule of civil procedure providing extraordinary 
or provisional remedies in any civil action in which the underlying 
complaint seeks both injunctive and monetary relief.
    ( j) Special Rule for Class Actions.--For the purpose of applying 
this section to a Y2K action that is maintained as a class action in 
Federal or State court, the requirements of the preceding subsections of 
this section apply only to named plaintiffs in the class action.

SEC. 8. <<NOTE: 15 USC 6607.>> PLEADING REQUIREMENTS.

    (a) Application with Rules of Civil Procedure.--This section applies 
exclusively to Y2K actions and, except to the extent that this section 
requires additional information to be contained in or attached to 
pleadings, nothing in this section is intended to amend or otherwise 
supersede applicable rules of Federal or State civil procedure.
    (b) Nature and Amount of Damages.--In all Y2K actions in which 
damages are requested, there shall be filed with the complaint a 
statement of specific information as to the nature and amount of each 
element of damages and the factual basis for the damages calculation.
    (c) Material Defects.--In any Y2K action in which the plaintiff 
alleges that there is a material defect in a product or service, there 
shall be filed with the complaint a statement of specific information 
regarding the manifestations of the material defects and the facts 
supporting a conclusion that the defects are material.
    (d) Required State of Mind.--In any Y2K action in which a claim is 
asserted on which the plaintiff may prevail only on proof that the 
defendant acted with a particular state of mind, there shall be filed 
with the complaint, with respect to each element of that claim, a 
statement of the facts giving rise to a strong inference that the 
defendant acted with the required state of mind.

SEC. 9. <<NOTE: 15 USC 6608.>> DUTY TO MITIGATE.

    (a) In General.--Damages awarded in any Y2K action shall exclude 
compensation for damages the plaintiff could reasonably have avoided in 
light of any disclosure or other information of which the plaintiff was, 
or reasonably should have been, aware, including information made 
available by the defendant to purchasers or users of the defendant's 
product or services concerning means of remedying or avoiding the Y2K 
failure involved in the action.

[[Page 113 STAT. 199]]

    (b) Preservation of Existing Law.--The duty imposed by this section 
is in addition to any duty to mitigate imposed by State law.
    (c) Exception for Intentional Fraud.--Subsection (a) does not apply 
to damages suffered by reason of the plaintiff's justifiable reliance 
upon an affirmative material misrepresentation by the defendant, made by 
the defendant with actual knowledge of its falsity, concerning the 
potential for Y2K failure of the device or system used or sold by the 
defendant that experienced the Y2K failure alleged to have caused the 
plaintiff's harm.

SEC. 10. <<NOTE: 15 USC 6609.>> APPLICATION OF EXISTING IMPOSSIBILITY OR 
            COMMERCIAL IMPRACTICABILITY DOCTRINES.

    In any Y2K action for breach or repudiation of contract, the 
applicability of the doctrines of impossibility and commercial 
impracticability shall be determined by the law in existence on January 
1, 1999. Nothing in this Act shall be construed as limiting or impairing 
a party's right to assert defenses based upon such doctrines.

SEC. 11. <<NOTE: 15 USC 6610.>> DAMAGES LIMITATION BY CONTRACT.

    In any Y2K action for breach or repudiation of contract, no party 
may claim, or be awarded, any category of damages unless such damages 
are allowed--
            (1) by the express terms of the contract; or
            (2) if the contract is silent on such damages, by operation 
        of State law at the time the contract was effective or by 
        operation of Federal law.

SEC. 12. <<NOTE: 15 USC 6611.>> DAMAGES IN TORT CLAIMS.

    (a) In General.--A party to a Y2K action making a tort claim, other 
than a claim of intentional tort arising independent of a contract, may 
not recover damages for economic loss unless--
            (1) the recovery of such losses is provided for in a 
        contract to which the party seeking to recover such losses is a 
        party; or
            (2) such losses result directly from damage to tangible 
        personal or real property caused by the Y2K failure involved in 
        the action (other than damage to property that is the subject of 
        the contract between the parties to the Y2K action or, in the 
        event there is no contract between the parties, other than 
        damage caused only to the property that experienced the Y2K 
        failure),

and such damages are permitted under applicable Federal or State law.
    (b) Economic Loss.--For purposes of this section only, and except as 
otherwise specifically provided in a valid and enforceable written 
contract between the plaintiff and the defendant in a Y2K action, the 
term ``economic loss'' means amounts awarded to compensate an injured 
party for any loss, and includes amounts awarded for damages such as--
            (1) lost profits or sales;
            (2) business interruption;
            (3) losses indirectly suffered as a result of the 
        defendant's wrongful act or omission;
            (4) losses that arise because of the claims of third 
        parties;
            (5) losses that must be pled as special damages; and

[[Page 113 STAT. 200]]

            (6) consequential damages (as defined in the Uniform 
        Commercial Code or analogous State commercial law).

    (c) Certain Other Actions.--A person liable for damages, whether by 
settlement or judgment, in a civil action to which this Act does not 
apply because of section 4(c) whose liability, in whole or in part, is 
the result of a Y2K failure may, notwithstanding any other provision of 
this Act, pursue any remedy otherwise available under Federal or State 
law against the person responsible for that Y2K failure to the extent of 
recovering the amount of those damages.

SEC. 13. <<NOTE: 15 USC 6612.>> STATE OF MIND; BYSTANDER LIABILITY; 
            CONTROL.

    (a) Defendant's State of Mind.--In a Y2K action other than a claim 
for breach or repudiation of contract, and in which the defendant's 
actual or constructive awareness of an actual or potential Y2K failure 
is an element of the claim, the defendant is not liable unless the 
plaintiff establishes that element of the claim by the standard of 
evidence under applicable State law in effect on the day before January 
1, 1999.
    (b) Limitation on Bystander Liability for Y2K Failures.--
            (1) In general.--With respect to any Y2K action for money 
        damages in which--
                    (A) the defendant is not the manufacturer, seller, 
                or distributor of a product, or the provider of a 
                service, that suffers or causes the Y2K failure at 
                issue;
                    (B) the plaintiff is not in substantial privity with 
                the defendant; and
                    (C) the defendant's actual or constructive awareness 
                of an actual or potential Y2K failure is an element of 
                the claim under applicable law,
        the defendant shall not be liable unless the plaintiff, in 
        addition to establishing all other requisite elements of the 
        claim, proves, by the standard of evidence under applicable 
        State law in effect on the day before January 1, 1999, that the 
        defendant actually knew, or recklessly disregarded a known and 
        substantial risk, that such failure would occur.
            (2) Substantial privity.--For purposes of paragraph (1)(B), 
        a plaintiff and a defendant are in substantial privity when, in 
        a Y2K action arising out of the performance of professional 
        services, the plaintiff and the defendant either have 
        contractual relations with one another or the plaintiff is a 
        person who, prior to the defendant's performance of such 
        services, was specifically identified to and acknowledged by the 
        defendant as a person for whose special benefit the services 
        were being performed.
            (3) Certain claims excluded.--For purposes of paragraph 
        (1)(C), claims in which the defendant's actual or constructive 
        awareness of an actual or potential Y2K failure is an element of 
        the claim under applicable law do not include claims for 
        negligence but do include claims such as fraud, constructive 
        fraud, breach of fiduciary duty, negligent misrepresentation, 
        and interference with contract or economic advantage.

    (c) Control Not Determinative of Liability.--The fact that a Y2K 
failure occurred in an entity, facility, system, product, or component 
that was sold, leased, rented, or otherwise within the control of the 
party against whom a claim is asserted in a Y2K action shall not 
constitute the sole basis for recovery of damages

[[Page 113 STAT. 201]]

in that action. A claim in a Y2K action for breach or repudiation of 
contract for such a failure is governed by the terms of the contract.
    (d) Protections of the Year 2000 Information and Readiness 
Disclosure Act Apply.--The protections for the exchanges of information 
provided by section 4 of the Year 2000 Information and Readiness 
Disclosure Act (Public Law 105-271) shall apply to any Y2K action.

SEC. 14. <<NOTE: 15 USC 6613.>> APPOINTMENT OF SPECIAL MASTERS OR 
            MAGISTRATE JUDGES FOR Y2K ACTIONS.

    Any district court of the United States in which a Y2K action is 
pending may appoint a special master or a magistrate judge to hear the 
matter and to make findings of fact and conclusions of law in accordance 
with Rule 53 of the Federal Rules of Civil Procedure.

SEC. 15. <<NOTE: 15 USC 6614.>> Y2K ACTIONS AS CLASS ACTIONS.

    (a) Material Defect Requirement.--A Y2K action involving a claim 
that a product or service is defective may be maintained as a class 
action in Federal or State court as to that claim only if--
            (1) it satisfies all other prerequisites established by 
        applicable Federal or State law, including applicable rules of 
        civil procedure; and
            (2) the court finds that the defect in a product or service 
        as alleged would be a material defect for the majority of the 
        members of the class.

    (b) Notification.--In any Y2K action that is maintained as a class 
action, the court, in addition to any other notice required by 
applicable Federal or State law, shall direct notice of the action to 
each member of the class, which shall include--
            (1) a concise and clear description of the nature of the 
        action;
            (2) the jurisdiction where the case is pending; and
            (3) the fee arrangements with class counsel, including the 
        hourly fee being charged, or, if it is a contingency fee, the 
        percentage of the final award which will be paid, including an 
        estimate of the total amount that would be paid if the requested 
        damages were to be granted.

    (c) Forum for Y2K Class Actions.--
            (1) Jurisdiction.--Except as provided in paragraph (2), the 
        district courts of the United States shall have original 
        jurisdiction of any Y2K action that is brought as a class 
        action.
            (2) Exceptions.--The district courts of the United States 
        shall not have original jurisdiction over a Y2K action brought 
        as a class action if--
                    (A)(i) a substantial majority of the members of the 
                proposed plaintiff class are citizens of a single State;
                    (ii) the primary defendants are citizens of that 
                State; and
                    (iii) the claims asserted will be governed primarily 
                by the laws of that State;
                    (B) the primary defendants are States, State 
                officials, or other governmental entities against whom 
                the district courts of the United States may be 
                foreclosed from ordering relief;

[[Page 113 STAT. 202]]

                    (C) the plaintiff class does not seek an award of 
                punitive damages, and the amount in controversy is less 
                than the sum of $10,000,000 (exclusive of interest and 
                costs), computed on the basis of all claims to be 
                determined in the action; or
                    (D) there are less than 100 members of the proposed 
                plaintiff class.
        A party urging that any exception described in subparagraph (A), 
        (B), (C), or (D) applies to an action shall bear the full burden 
        of demonstrating the applicability of the exception.
            (3) Procedure if Requirements Not Met.--
                    (A) Dismissal or remand.--A United States district 
                court shall dismiss, or, if after removal, strike the 
                class allegations and remand, any Y2K action brought or 
                removed under this subsection as a class action if--
                          (i) the action is subject to the jurisdiction 
                      of the court solely under this subsection; and
                          (ii) the court determines the action may not 
                      proceed as a class action based on a failure to 
                      satisfy the conditions of Rule 23 of the Federal 
                      Rules of Civil Procedure.
                    (B) Amendment; removal.--Nothing in paragraph (A) 
                shall prohibit plaintiffs from filing an amended class 
                action in Federal or State court. A defendant shall have 
                the right to remove such an amended class action to a 
                United States district court under this subsection.
                    (C) Period of limitations tolled.--Upon dismissal or 
                remand, the period of limitations for any claim that was 
                asserted in an action on behalf of any named or unnamed 
                member of any proposed class shall be deemed tolled to 
                the full extent provided under Federal law.
                    (D) Dismissal without prejudice.--The dismissal of a 
                Y2K action under subparagraph (A) shall be without 
                prejudice.

    (d) Effect on Rules of Civil Procedure.--Except as otherwise 
provided in this section, nothing in this section supersedes any rule of 
Federal or State civil procedure applicable to class actions.

SEC. 16. <<NOTE: 15 USC 6615.>> APPLICABILITY OF STATE LAW.

    Nothing in this Act shall be construed to affect the applicability 
of any State law that provides stricter limits on damages and 
liabilities, affording greater protection to defendants in Y2K actions, 
than are provided in this Act.

SEC. 17. <<NOTE: 15 USC 6616.>> ADMISSIBLE EVIDENCE ULTIMATE ISSUE IN 
            STATE COURTS.

    Any party to a Y2K action in a State court in a State that has not 
adopted a rule of evidence substantially similar to Rule 704 of the 
Federal Rules of Evidence may introduce in such action evidence that 
would be admissible if Rule 704 applied in that jurisdiction.

SEC. 18. <<NOTE: 15 USC 6617.>> SUSPENSION OF PENALTIES FOR CERTAIN YEAR 
            2000 FAILURES BY SMALL BUSINESS CONCERNS.

    (a) Definitions.--In this section--
            (1) the term ``agency'' means any executive agency, as 
        defined in section 105 of title 5, United States Code, that

[[Page 113 STAT. 203]]

        has the authority to impose civil penalties on small business 
        concerns;
            (2) the term ``first-time violation'' means a violation by a 
        small business concern of a federally enforceable rule or 
        regulation (other than a Federal rule or regulation that relates 
        to the safety and soundness of the banking or monetary system or 
        for the integrity of the National Securities markets, including 
        protection of depositors and investors) caused by a Y2K failure 
        if that Federal rule or regulation had not been violated by that 
        small business concern within the preceding 3 years; and
            (3) the term ``small business concern'' has the same meaning 
        as a defendant described in section 5(b)(2)(B).

    (b) Establishment <<NOTE: Deadline.>> of Liaisons.--Not later than 
30 days after the date of the enactment of this Act, each agency shall--
            (1) establish a point of contact within the agency to act as 
        a liaison between the agency and small business concerns with 
        respect to problems arising out of Y2K failures and compliance 
        with Federal rules or regulations; and
            (2) <<NOTE: Federal Register, publication.>> publish the 
        name and phone number of the point of contact for the agency in 
        the Federal Register.

    (c) General Rule.--Subject to subsections (d) and (e), no agency 
shall impose any civil money penalty on a small business concern for a 
first-time violation.
    (d) Standards for Waiver.--An agency shall provide a waiver of civil 
money penalties for a first-time violation, provided that a small 
business concern demonstrates, and the agency determines, that--
            (1) the small business concern previously made a reasonable 
        good faith effort to anticipate, prevent, and effectively 
        remediate a potential Y2K failure;
            (2) a first-time violation occurred as a result of the Y2K 
        failure of the small business concern or other entity, which 
        significantly affected the small business concern's ability to 
        comply with a Federal rule or regulation;
            (3) the first-time violation was unavoidable in the face of 
        a Y2K failure or occurred as a result of efforts to prevent the 
        disruption of critical functions or services that could result 
        in harm to life or property;
            (4) upon identification of a first-time violation, the small 
        business concern initiated reasonable and prompt measures to 
        correct the violation; and
            (5) the small business concern submitted notice to the 
        appropriate agency of the first-time violation within a 
        reasonable time not to exceed 5 business days from the time that 
        the small business concern became aware that the first-time 
        violation had occurred.

    (e) Exceptions.--An agency may impose civil money penalties 
authorized under Federal law on a small business concern for a first-
time violation if--
            (1) the small business concern's failure to comply with 
        Federal rules or regulations resulted in actual harm, or 
        constitutes or creates an imminent threat to public health, 
        safety, or the environment; or

[[Page 113 STAT. 204]]

            (2) the small business concern fails to correct the 
        violation not later than 1 month after initial notification to 
        the agency.

    (f ) Expiration.--This section shall not apply to first-time 
violations caused by a Y2K failure occurring after December 31, 2000.

    Approved July 20, 1999.

LEGISLATIVE HISTORY--H.R. 775 (S. 96) (S. 461):
---------------------------------------------------------------------------

HOUSE REPORTS: Nos. 106-131, Pt. 1 (Comm. on the Judiciary) and 106-212 
(Comm. of Conference).
SENATE REPORTS: No. 106-10 accompanying S. 96 (Comm. on Commerce, 
Science, and Transportation).
CONGRESSIONAL RECORD, Vol. 145 (1999):
            May 12, considered and passed House.
            June 15, considered and passed Senate, amended, in lieu of 
                S. 96.
            July 1, House and Senate agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 35 (1999):
            July 20, Presidential statement.

                                  <all>