The millennium bug bill battle

The tech industry's Washington lobby tries to play both sides of the aisle. Is it being pragmatic -- or just naive?

Published April 30, 1999 4:00PM (EDT)

High-tech moguls throughout the nation lie awake at night worrying about the Y2K computer glitch. But their representatives in the capital are working overtime to stave off the swarms of trial attorneys they fear will converge upon their industry's coffers when the bug rears its head.

For that reason, at the end of 1998, the high-tech lobby joined a coalition to work with Congress on a bill to protect businesses from these lawsuits -- to limit their legal liability, come what Y2K disaster may.

In its scant years in Washington, the technology lobby has built a credible name for itself; it is respected as both pragmatic and non-partisan. Just last year, the passage of the industry's Information and Readiness Disclosure Act was a model of cross-party accomplishment and good will. So you'd think that its legislative goals on Y2K litigation reform, which were characteristically modest, wouldn't be such a hard sell.

But high tech is a new player in this game, and things didn't work out so well for the industry's leaders and lobbyists -- though they may not know that yet.

As of Thursday afternoon, the bill they'd hitched their wagon to, sponsored by Arizona Republican Senator John McCain, was languishing in parliamentary purgatory. That had little to do with the substance of the bill itself, but rather occurred as a result of a dispute between Majority Leader Trent Lott, R-Miss., and Minority Leader Tom Daschle, D-S.D., on the ability of Democrats to offer non-germane amendments.

But how McCain's bill evolved -- and what went on behind the scenes as it did -- reveals quite a bit about the high-tech lobby's less-than-surefootedness on the playing fields of Capitol Hill. And, more importantly, the behavior of some high-tech lobbyists during the Y2K debate has made more than a few powerful enemies.

"They've been a freakin' pain in the butt," says one Machiavellian lobbyist who worked with the high-tech lobby as a member of the business community's Y2K coalition. "They tried to cut their own deals. When this is over, you'll see: conservative Republicans are going to try to scalp 'em."

The high-tech industry's first problem began when it allied itself on this issue with the U.S. Chamber of Commerce -- a powerhouse business lobby that's deeply conservative. The Chamber led the business community's Y2K coalition, working with dozens of groups and associations, foremost among them the National Federation of Independent Business and the National Association of Manufacturers.

Bill Archey, president of the American Electronics Association, says that "there's one reason and one reason alone" for the alliance: "That's what the Hill told us to do. They told us, 'We're not going to deal with multiple industry bills on Y2K.' They just wanted one comprehensive bill."

Agrees a high-level Senate staffer: "I'm not sure [the high-tech lobby] had any other option."

But from the beginning, the U.S. Chamber had a much more audacious goal for the Y2K litigation reform bill than the narrow legislative issues that matter to the high-tech companies. The Chamber's number one priority is far-reaching tort reform. The group has always wanted to legally limit the amount plaintiffs can be awarded, and it saw Y2K litigation reform as a first step toward fighting what Chamber president Thomas J. Donohue calls "avaricious trial attorneys."

The Chamber's Senate allies clearly agreed. "A panel of experts predicted that the legal costs associated with the Y2K would exceed that of asbestos, breast implants, tobacco and Superfund litigation combined," said Senator Jeff Sessions, R-Ala., on the Senate floor on Tuesday. "We have too much litigation now ... Approximately 500 law firms across the country have put together Y2K litigation teams to capitalize on the event. They can't wait."

Still others working on the bill reportedly -- and not surprisingly -- had agendas other than preparing the world for Y2K. Some House staffers have said that GOP House leaders -- namely Majority Leader Dick Armey and Minority Whip Tom DeLay -- are planning to use the president's opposition to whatever passes as one of the top three issues against the Democrats for the 2000 elections. McCain is said to be taking the lead on this issue at least partially in hopes of making friends in Silicon Valley and Redmond, thus boosting his presidential campaign's fundraising.

Many Democrats -- South Carolina's Ernest "Fritz" Hollings, and Vermont's Patrick Leahy foremost among them -- decided to play the board by fighting the GOP's efforts tooth and nail. Democrats traditionally have opposed "tort reform," viewing such efforts as a violation of the Constitution and a limit on the rights of average citizens to seek redress of grievances -- as well as a good way to garner campaign donations from wealthy attorneys. Thus many viewed Senator McCain's Y2K bill warily. His bill would have been "the first time that any of these provisions would be enshrined into law for any sort of time," says one Senate Democratic staffer. "So it's a step. It's a camel's nose under the tent."

To end Senate debate and then proceed to a vote, a Senate bill needs 60 votes for "cloture." McCain's bill probably would have had all 55 Republican senators, though a handful were wavering, and maybe three or four Democrats, including Oregon Senator Ron Wyden, cosponsor of McCain's bill.

Senators worked on compromise bills in the hopes of finding a middle ground that would appeal to enough Senators to reach cloture. Minority Whip Chris Dodd, D-Conn., seen as a moderate on the issue of litigation reform, worked one up, as did Virginia's Chuck Robb and Massachusetts' John Kerry. Senators Orrin Hatch, R-Utah, and Dianne Feinstein, D-Calif., had a bill very similar to McCain's.

On Monday night, Majority Leader Trent Lott ordered all the major players on this issue into a room under orders to bang out a compromise bill that would achieve the 60 necessary cloture votes. Still, nothing much changed. By Tuesday morning, the bill seemed doomed to never garner more than 59 yeas.

Additionally, the Clinton administration was compounding the problem by suggesting that it might veto McCain's bill. To override a veto, McCain would need 67 votes -- which just wasn't possible without Dodd's support, an impossibility unless McCain was willing to compromise.

Here's where the high-tech lobby came in -- and stumbled.

The lobbyists knew that they were stuck between two diehard enemies, the U.S. Chamber and the Association of Trial Lawyers of America (ATLA). With the engineering mindset of their industry, the tech lobbyists were trying to find a middle ground, a reasonable bill that would pass and achieve some of their objectives.

What they sought was relatively uncontroversial: they wanted a bill that created one consistent Federal law for the entire country, that would make their contracts with their clients the point of legal reference, and that would weed out frivolous litigation by ensuring that plaintiffs were claiming that their software contained a material defect. And they wanted it in the first half of this year.

Priding themselves on their apolitical pragmatism, the high-tech representatives didn't see the point in losing the modest goals they wanted just because the Chamber's bill was so far-reaching. So they reached out to the House and Senate on their own -- without the explicit knowledge of the U.S. Chamber and their other allies in the coalition.

Capitol Hill staffers saw the tech lobbyists' sincerity, their moderation, their willingness to be reasonable -- but they also saw that they weren't really sure of their role in Washington yet. The high-tech lobby wasn't yet powerful enough to cobble together a majority on its own -- certainly not against the wishes and behind the back of the Chamber.

Almost all of the high-tech lawyers and lobbyists I spoke with expressed anger and frustration with the U.S. Chamber of Commerce, which was, according to one Senate staffer, "driving this thing." One said that, when the coalition was working on the Y2K issue, the Chamber was indifferent to anything the high-tech representatives had to say. "It was kind of like, 'Go away, kid, don't bother me,' " the attorney said.

"They want tort reform and they're using us," added another.

"[The high-tech lobbyists] realize now that you can't trust people who say they're your friends," says an ATLA staffer. "Sometimes people who say they're your friends are not really. You gotta watch out who you make deals with."

"Working with the Chamber was not a decision that was mine personally, I assure you. We all know the animosity between this Chamber and this administration," one tech lobbyist says. And a high-tech attorney points out that one industry leader -- American Electronics Association president Archey -- was ousted from leadership of the Chamber in '94 because he expressed a willingness to work with the Clinton Administration on health care reform.

"They're feeling their growing pains right now, getting into the big bad world of Washington lobbying," says Sally Greenberg of the Consumers Union, which opposed the McCain bill.

A few days ago, some of the high-tech lobbyists started working hard behind the scenes to find a middle ground. "We will fall on our sword to get this bill passed," one high-tech lobbyist told me on Monday." If a bill comes up that meets our needs, we will support it -- and if that means breaking from the coalition, we will do that. We are not here to make a point, we are here to get a bill passed. We have the most to lose, and yet we want the least [in a] bill."

But at least one member of the District of Columbia tech lobby was stunned that some of his brethren were attempting to deal behind the Chamber's back -- especially when he heard that one of them had talked to ATLA.

"Some of the behind-the-scenes negotiations that are going on by some members of the tech community are naove," the representative said this week. "Any suggestion that the tech community could pull a deal with the trial lawyers is just stupid. Is there a way for some Democrats to separate themselves from other Democrats and pass a bill? The answer is yes. Has the Chamber handled this well? No -- they've made this partisan from the outset. But the fact is, if you're going to get a bill, and you have 52 Republican votes, in the process of getting eight Democrats you can't lose 20 Republicans. It's just simple math. When you go out and start doing deals with ATLA, you immediately lose votes."

By Wednesday afternoon, members of the world's foremost deliberative body had deliberated, and Dodd, McCain, Wyden, Hatch, Feinstein and Robert Bennett, R-Utah, had hashed out a compromise
which will not only easily garner 60 cloture votes, but may even earn 67, easily overriding any presidential veto. The compromise removes the cap on punitive damages (except for small businesses), strikes the section of the bill that placed a cap on the liability of directors and officers of a company, and defers to each state's law on a case's standard of proof.

The Dodd-McCain compromise should pass the Senate next week. But before high-tech industrialists pop their champagne corks, they should know that all the finagling their lobbyists have been doing behind the scenes has earned their industry a great deal of animosity. The source of the bile isn't ATLA or its friends in the Senate -- it's coming from their own coalition allies.

"They put their own selfish interests ahead of those of business at large," says a high-powered lobbyist who belongs to the Y2K business coalition. In between today and the compromise bill's cloture vote, this lobbyist cautions, "High tech better not go too far. If there's a hint of them trying to cut deals with the Democrats, [the Y2K provisions of the bill] will die. And then you will see a very highly-coordinated campaign against them."

High tech was always suspect, the lobbyist explains -- not only since "most of their money goes to Democrats" but because "every step of the way they were trying to cut these little deals to undercut what we're doing." And they still are, the lobbyist says: He just heard that high-tech lobbyists have been reaching out to House Republicans to urge them to support the Dodd-McCain compromise.

If they don't watch out, the lobbyist says, the Chamber and others might get the high-tech community's provisions dropped from the bill once it reaches the conference committee stage of legislation, when the differences between the House and Senate bills are ironed out.

"After we're done with Y2K, we're going to figure out a way to get them payback," the lobbyist says.

By Jake Tapper

Jake Tapper is the senior White House correspondent for ABC News.

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