Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1320
                                        S.D. 2

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Judiciary, to which was referred S.B. No.
1320, S.D. 1, entitled: 


begs leave to report as follows:

     The purpose of this bill is to provide protection for
persons who make commercially reasonable efforts to identify and
find solutions for potential year 2000 errors in computer systems
and to set standards and provide guidance as to what steps must
be undertaken as part of commercially reasonable efforts.

     Your Committee finds that there is widespread uncertainty
about what claims may be brought based on year 2000 errors, and
about what acts may provide a basis for or a defense to liability
for such errors.  Among businesses seeking to identify and
prevent potential errors before the immovable and fast-
approaching deadline, this uncertainty has diverted personnel and
resources from the actual process of finding and fixing problems
to documentation of the process in anticipation of future
lawsuits.  Your Committee believes that this measure, by
providing guidance as to what steps should be taken as part of a
commercially reasonable approach to identifying and fixing
problems, will help those with potential year 2000 problems to
focus on remediation of the potential problems in the time
remaining, rather than predicting the possible bases for future

                                   STAND. COM. REP. NO. 868
                                   Page 2

     Your Committee notes that this measure's limitation on
consequential damages, which are difficult to resolve quickly but
which may also be the most substantial part of a claim by a
business injured by a year 2000 problem, does not apply when the
claimant's actions were commercially reasonable and the
respondent's actions or inaction were not.  Thus, claimants will
be precluded from seeking consequential damages only when the
respondent had undertaken appropriate efforts to prevent year
2000 errors or when the claimant itself had failed to undertake
appropriate efforts to prevent problems.

     Testimony in support of this measure was submitted by the
Attorney General, the Department of Accounting and General
Services, the Chamber of Commerce of Hawaii, the Hawaii Bankers
Association, the Hawaii Long Term Care Association, Hawaiian
Electric Company, Bank of Hawaii, Queen's Health Systems, Hawaii
Medical Service Association, State Farm Insurance Companies, and
one individual.  The Judiciary submitted comments expressing
concern about the mandatory non-binding arbitration provision in
this measure, and recommending an amendment to permit a variety
of forms of alternative dispute resolution.  Testimony in
opposition to this measure was submitted by one individual.

     Upon further consideration, your Committee has amended this
bill by:

     (1)  Deleting the limitation on the amount of noneconomic
          damages recoverable for a physical injury claim, to be
          consistent with current law which does not limit the
          noneconomic damages recoverable for any other sort of
          physical injury claim;

     (2)  Replacing the mandatory non-binding arbitration
          provision with a provision calling for an early
          alternative dispute resolution status conference before
          the court and explicitly permitting the court to order
          any form of alternative dispute resolution;

     (3)  Clarifying that remediation steps must be implemented
          in a timely fashion to be commercially reasonable, and
          that implementation of remediation steps and compliance
          with any standard data formats are minimum requirements
          for a finding of commercially reasonable efforts;

     (4)  Changing the repeal date to December 31, 2003; and

     (5)  Making technical, non-substantive changes for the
          purposes of clarity and style.

                                   STAND. COM. REP. NO. 868
                                   Page 3

     As affirmed by the record of votes of the members of your
Committee on Judiciary that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
1320, S.D. 1, as amended herein, and recommends that it pass
Third Reading in the form attached hereto as S.B. No. 1320, S.D.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Judiciary,

                                   AVERY B. CHUMBLEY, Co-Chair

                                   MATTHEW M. MATSUNAGA, Co-Chair