Further, our amendment provides that a manufacturer should not be liable for harm resulting from the unreasonable alteration or misuse of the manufacturer's product.

Mr. Chairman, I strongly urge the passage of S. 2760 along with this fault-defense amendment as well as Senator Pressler's amendment to eliminate joint and several liability. Narrow special interests have delayed a solution to this crisis for too long. Congress should act this session on this urgent priority.

Thank you very much.

Senator BROYHILL. The Chair wants to welcome to the committee the chairman of the Judiciary Committee, the most distinguished Senator from South Carolina, Senator Thurmond. Mr. Chairman, this is your gavel and this is your chair and I do not want it to be said that the most junior member is trying to push you out of your chair.

The CHAIRMAN. You have great experience in the House in these matters and I think your advice here would be very helpful to the committee.

Senator BROYHILL. Mr. Chairman, I recognize you at this time. The CHAIRMAN. I would ask unanimous consent, to save time, that my statement be placed in the record near the beginning of the hearing.

Senator BROYHILL. Thank you, and the statement will be put in the record at the beginning of the hearing.

The CHAIRMAN. You are doing well. You keep on.

Senator BROYHILL. I would like to ask Senator Kasten one question. The administration, in their testimony yesterday, had a number of suggestions with respect to amendments to this legislation. One of their criticisms was that S. 2760 does not insure that fault remain central to product liability law. I am reading from the administration's testimony in which they suggest an amendment, that you will be offering, to add what they term is a fault-based liability provision.

I would like for you to expand on that for a few minutes. What are the deficiencies in S. 2760 that concern you and how would your amendment remedy those deficiencies.

Senator KASTEN. The amendment that I intend to offer will also be offered on behalf of the Senator from Indiana, Senator Lugar, who has been a person who has been interested and active in this. Basically, we provide that a manufacturer should not be liable for harm caused by defects which the manufacturer could not have known about at the time of the manufacture due to the scientific or the technical or the medical or the expert knowledge available at that time. And that is the same kind of standard, I would point out, that is available to professionals of other areas and I believe that we need to incorporate that basic fault-based standard into the bill. The fault-based standard was not included as part of the legislation that was passed out of the committee.

Senator BROYHILL. Second, I would

Senator KASTEN. Also, Mr. Chairman, we also in our amendment provide that a manufacturer should not be liable for harm resulting from the change or the alteration, and we say the unreasonable alteration or the misuse of the manufacturer's product. You are going to hear in your testimony numerous examples of misuse of a product, where a product was used for something that it was not intended for, and we believe that a manufacturer should not be

liable for harm resulting from the unreasonable alteration or the misuse. So the question is alteration or know or should have known, and reestablishing the fault-based standard.

Senator BROYHILL. I know that the bill is deficient in that respect and does not cover those points. What about the law as it presently exists in the 50 States, the 50 State laws? You are arguing, I assume, that the law is not predictable in the 50 States, that it is not uniform with respect to a fault-based liability.

Senator KASTEN. We spent a lot of time in this particular area, and the law is not predictable. Although when you dig down—and you have a number of legal experts I see coming-you will find that many of these cases have been in fact decided on fault or negligence, but there is growing an area of either absolute or strict liability and there is kind of a gray area in there and I am not a lawyer, but you have several people that can come before you-a growing area of absolute liability, strict liability which is very, very difficult, very, very troublesome, very, very costly, and something that I think that we need to define or at least to put a brake on the system here.

So we need a fault-based standard that is uniform and our amendment, the Kasten-Lugar amendment would establish that fault-based standard and I believe would establish the predictability and the uniformity that we very much need in this area of the law.

Senator BROYHILL, The second matter that I would like for you to briefly address is the question with respect to the caps that are included in this bill. The caps have been subject to criticism and I would like to have your views with respect to the reasons they are there, and whether or not they would be needed if your strict liability provision were added to the bill.

Senator KASTEN. If our fault-based standard were added-the whole discussion of caps is part of Senator Danforth's effort at some kind of an expedited settlement process. I listened to him with great interest because I too believe we have got to be flexible in this expedited settlement process.

The process itself, the caps themselves, whether they need to be changed or they need to be there at all, and whether that expedited settlement process is the best way that we can reach the goals that he and others in the committee had, that is a difficult and a very complicated and a very contentious part of our legislation.

I would, Mr. Chairman, go back to the 16-to-1 vote that we had on the core package here and say that our job as legislators is going to be to work that expedited settlement process along with those caps, to work that out so that that no longer is as contentious as it is today. So I am flexible on that. I was pleased to see that Senator Danforth was flexible on that, and I think that is the area which we are going to have to address in order to develop a broader base of support.

Senator BROYHILL. I thank you very much.

Are there any other questions of Senator Kasten? The Senator from Alabama.

Senator HEFLIN. Senator Kasten, I was on the Commerce Committee for several years until some of the so-called reform occurred, the reforms of Brother Quayle, and I had to leave that com

mittee. I have not seen all of the great advantages of it. I miss being on the Commerce Committee. I missed being there as you all discussed this particular bill.

Senator McConnell mentioned breaking from the past, and I suppose that is probably about as good a definition as any when we look at federalism, breaking from the past. The Attorney General, whom I quoted yesterday, made a statement in a speech before the Conservative Political Action Committee back in January pleading for a return to federalism, and yet he at the first opportunity he changes his approach on it.

It will be interesting to watch some of the great proponents of States rights from an historical viewpoint, and that position on what we might say is the final bastion of federalism and States rights is left. I suppose breaking from the past, that means that the Republican Party has broken from the past relative to its belief in federalism, and so I suppose that term that Senator McConnell used is quite appropriate.

It gives me a lot of concern that there is no longer going to be any area that is exempt from Federal intrusion. In a way, I want to congratulate you on your ingenious parliamentary maneuvering. I was interested-I had not followed the Commerce Committeebut in order to get a 16-to-1 vote on the core bill, which, as I gather, was to leave the State law alone, to not move toward uniformity. Under the bill that came out of the committee, we would let the States have strict liability or have the manufacturers' negligence approach. We will allow that to be done. That is the way the bill came out of committee, as I read the bill, and now we are going to see maneuvering, with which there is certainly nothing wrong, it is legitimate. We will see an effort made on the floor to substitute something that would eliminate that concept and go back to the original proposal of Federal uniformity.

I see that you agreed here today that you would support the McConnell approach which goes beyond product liability and encompasses the entire field of torts. So we will see then, substitutes on the floor, and this is all legitimate, there is nothing wrong with it, and I congratulate you upon your ingenuity.

I do not know whether some of the proponents of the bill are acquainted with it, but they had well get ready because they have a good fight if they are not ready for it because they are going to get rolled. So I will just say there might be a few opponents of it here, and they had better pay a little attention to it.

I am interested in some of the concepts that have been discussed here. If you do on a fault basis, if you go on this Kasten-Lugar amendment on a fault basis, what does it do to the defenses of the State? Will there be uniformity in regard to defenses, or will it be left up to the States as to their defenses?

Senator KASTEN. My understanding, Senator, would be that we would have a general uniformity across the board and that it would lead toward a general uniformity on the defenses as well. My understanding also—and I want to say, I realize you have been chief justice of your Alabama Supreme Court-I am here as a shoe manufacturer from Fennsville, WI, and I am not a lawyer, and I believe that by establishing the fault-baseds standards that we are working toward, we know or should have known at the time of

manufacture as well as the alteration or change-the used machinery dealer is the example that we normally use there, that alters or changes the products or somehow between the machine being taken out of company A and put into company B, one of the safety devices has been lost or changed or somebody has made a change, that the original manufacturer would not still be liable. I believe that we would be establishing uniformity also on the defense side leading toward that.

Senator HEFLIN. Well, as it is right now under this Commercepassed bill, if a State has strict liability like California, it would allow that under this bill to still be the proven standards there if its defenses would allow that. Alabama does not have strict liabil ity, it has got a manufacturer's liability. It has a defense of contributory negligence which is a pretty strong defense. Some of them have comparative negligence.

I am worried about how this thing is going to turn out and whether or not there will be any uniformity. I gather that it is going to be a mixed breed of whether there is or is not uniformity. I don't know how that language reads-we have not seen it. But there have been so many different times that this bill has been rewritten because of scholarship defectiveness that it worries me that we may have a conglomeration of laws that lead to each State and to each Federal court that might be involved, each with a different interpretation. We might well end up with a situation in which uniformity is not involved but with a real mess where nobody really knows what the law is where.

Has the American Bar Institute ever reviewed any of these bills? Senator KASTEN. I have had an opportunity, Senator, to look at your witness list for the hearing today and a number of these people are people who have appeared before us at the Commerce Committee, the full committee level or at the Consumer Subcommittee level. There will be some experts. There have been experts who have testified that in fact by going in the direction that we are going with S. 2760, that we are not going to be able to solve the problems of the transaction costs, et cetera, and that we are going to make it as complicated or it will be as complicated as it is now. But they generally speaking have not been the majority. They are in the minority. Their voice is strong, but their voice is not the consensus as we have heard it develop over the last 4 or 5 years.

Most people believe, and I believe, that by establishing a uniform law and working toward a fault-based standard, that we are in fact going to make it less complicated, not more complicated, that we will reduce the transaction costs and that we will be working toward a less litigious, if you will, area of commerce. In other words, we will not continue to go on and on and on with these court cases and these expensive kinds of them, but there will be people that will suggest, as you and your questions suggested, that really we are not solving the problem, we are making it worse, it is just going to be a different way. But they are in the minority.

There have been scholars who have testified in that direction. but there have been more scholars that have testified and I believe their point has been more broadly accepted, that this kind of legislation, legislation such as S. 2760, would improve the situation, would establish a base-I would say we are breaking from the past

possibly, but it is not just the Republican administration. Former Attorney General Griffin Bell supports a Federal product liability standard.

There is a great debate going on in this country, and I think the evidence and more and more information is that we need this Federal standard, although there will be people that will testify as you suggested in your question.

Senator HEFLIN. I would not say that Attorney General Griffin Bell, as a justice of the fifth circuit, followed the concept of federalism too frequently in his opinions in the past. I do not believe that his opinion is a break from the past.

Senator KASTEN. OK.

Senator HEFLIN. I have great admiration for Attorney General Griffin Bell——

Senator KASTEN. I was just trying to point out that there is bipartisan support for this approach.

Senator HEFLIN. Let me ask you one other question that we have argued over a long period of time. Any time you have a real problem and you go beyond the States to pass Federal legislation for the so-called purpose of correcting a problem or defects, in the history of Federal cures, have you ever known of one that did not eventually become extremely more liberal than what was originally passed?

Senator KASTEN. I do not know the answer to that question. In testimony before the committee, we have had a number of people, particularly small business people, who think of this problem in the same way that they would talk about the problems with contracts. And we have had testimony before our committee which said that a contract written in Wisconsin has to be understood and the basic level of understanding has to be understood and agreed to in Alaska and in Florida and in Maine and in Texas, thereforethey have testified before our committee-we established a uniform commercial code. It established a standard, a base.

That does not mean there are not problems in contract law. There are. But we have established a uniform commercial code with a base of understanding State by State, and a number of people who have testified before our committee have said that in effect what we need is a uniform product liability code that is worked roughly the same way that the uniform commercial code has worked in contracts.

Now, whether or not the uniform commercial code or contract law has become more liberal over the years, I truthfully do not know. But I do know that we have got a base, a common base of understanding and as a result of that the transaction costs and the problems related to contracts State by State and nationally have not created the kind of explosive problems that we are now seeing in liability, and particularly in product liability law.

So whether or not it has become more liberal or not over the years, I do not know. But the concept of a uniform law State by State by State I believe has great merit and I believe that is the reason why this legislation has such a strong broad base of support. Senator HEFLIN. I would not call the UCČ, the uniform commercial code, a Federal cure. If there has ever been a shining example of the States getting together, approaching the problems, and show