Sorry About That

Republican Representative Joe Barton apologized to BP for the "shakedown" the company has received from the White House. Then he apologized for apologizing and took back the word "shakedown."

What was he thinking? Look, the minimum penalty for causing an environmental catastrophe has to be forcing the company to internalize the cost that it has imposed on the rest of us. We don't know exactly how much it's going to cost to clean everything up and compensate those who have lost income, but something in the billions seems highly likely. I don't know if it'll be more or less than $20 billion, which is the amount of the compensation fund BP has set up, but that seems like it's in the ballpark.

The compensation fund seems right on target. People are calling for criminal penalties, but there's nothing like good old money to motivate profit-seeking corporations. Let's say BP saved a couple of million dollars by taking safety shortcuts when building the well. Socking them up for $20 billion, which is 10,000 times that amount, is a powerful incentive. It would cause a rational company to tell its employess, "don't try to save a couple of million by taking safety shortcuts if there's even a 1 in 10,000 chance that it might go wrong and cost us $20 billion."

If we could force profit-seeking companies to perfectly internalize all the external costs that their operations impose, they'd have exactly the right incentives. Of course, the external costs can never be perfectly measured and in most cases there's a lot of litigation costs and uncertainty. But a $20 billion compensation fund seems like a good start.

And by the way . . .

In reading yesterday's Supreme Court decisions, I noticed that there is still no Bilski. The longer they keep us waiting for that case, the more I'm convinced it's going to make a major change in patentability. What could they have in store for us? A big cutback in patentable subject matter, I'm thinking.

Finally

The Supreme Court is finally getting around to deciding some of the more important cases of the Term (Monday's decisions were too boring to mention), and today it came out with the New Process Steel case and determined the fate of hundreds of NLRB decisions.

The question was, can the National Labor Relations Board operate with just two members? The normal membership of the Board is five members, and a quorom is normally three. So you might think that the Board couldn't operate with just two.

But, the Board's organic statute allows the Board to delegate its powers to a three-member group, and then provides that a quorom of such a group shall be two. Presumably, the idea here was for the Board to be able to authorize itself to meet in panels of three, the way an appellate court with many judges does routinely. So if the Board authorized a panel of three to consider a case, and then one of the members was disqualified, the remaining two could decide the case.

But the Board faced an unusual situation: toward the end of 2007, the Board was down to four members -- and two of their terms were expiring shortly. It would soon be down to two members, below the quorom of three.

So the Board delegated its powers to three of the members, including one whose term was expiring, and then claimed, when it was down to two members, that those two constituted a quorom of the group of three! The remaining two members thereby decided almost 600 cases, while the President and the Senate squabbled about whom to add to the Board as new members.

By a 5-4 vote, the Supreme Court has now squashed this maneuver. While recognizing that the Board's action rested on a "textually permissible" reading of the organic statute, the Court effectively said that it just couldn't believe that Congress intended the Board to be able to operate with just two members on a long-term basis. The statutory provision for a two-member quorom of a three-member group was for unusual circumstances, not for hundreds of cases over a period of years, the Court believed.

I have to give this one to the dissenters. I expect the Court is right that Congress didn't intend the Board to operate routinely with just two members, but it probably didn't intend the Board to cease functioning either. Congress probably didn't anticipate that the full Board membership would fall to just two members.

The question is how the statute Congress wrote applies to this unforeseen circumstance. The statute permits delegation of the Board's power to any three members and permits two of those three to constitute a quorom. That's what the Board did. As the dissenters observed, the Board's action was "a thoughtful and considerate exercise of its reasonable discretion when it was confronted with two imperfect alternatives."

Everyone's Got a Theory

Everyone's got a theory as to why mystery man Alvin Greene won the Democratic primary for U.S. Senate in South Carolina. It is quite mysterious how a man who never gave a speech, had no campaign web site, and has $114 in his campaign account could have won the primary -- and pretty handily, too, by 100,000 votes to 70,000 (see page 9 of the results).

But of all the theories, the one that I find most implausible is that somehow the Republicans engineered the result by planting him in the Democratic primary and having large numbers of Republicans cross over and vote for him to sabotage the Democrats' chances in the general election. I suppose it's theoretically possible, because South Carolina's primaries are "open" -- voters can choose which party's primary to vote in -- but it's not the kind of thing you can engineer secretly. To get 100,000 voters to vote for someone nobody's ever heard of requires some notice and planning. You can't just send a secret e-mail to all of the state's Republicans. Someone would spill it. Back in the 2008 presidential primaries, Rush Limbaugh advised Republicans to cross over and vote for Hilary Clinton to make life more difficult for the Democrats (which turned out to be bad advice -- it ended up helping Obama), but he didn't even try to keep it secret.

It's possible that Greene is somebody's plant -- it is a little hard to understand how a man who's being represented by a public defender in a criminal case came up with over $10,000 for the filing fee -- but that still doesn't explain what moved over 100,000 South Carolinians to vote for him.

So I would check into the voting machines (that's another theory), but I wouldn't blame cross-over Republicans.

Oh, and did anyone check whether Vic Rawl, the apparently more serious Democratic candidate, ran a lame campaign?

The Repealer

Senator Brownback, in his campaign for Governor of Kansas, has proposed creating an office of the "Repealer," whose charter is a bit murky at this point but who would apparently have the task of disposing of silly, obsolete, or excessively burdensome state regulations and laws. The suggestion is part of a trend of states to clean up their law and regulation books to get rid of unnecessary and obsolete material. Michigan, apparently, has repealed the laws against prizefighting and dueling.

Wait a minute -- dueling? Look, the idea of going through the law books and getting rid of outdated and obsolete material is a good one. As Senator Brownback points out, it seems as though regulations just increase endlessly and "nothing is ever subtracted from the system." People are rightly frustrated that there seem to be never-ending incursions on everyday freedom, and it's a good idea to check that government regulations which may have made sense when adopted are still necessary, appropriate, and wise, and to get rid of them if they aren't.

But dueling? It's not as though dueling has become OK over time. There used to be a serious problem of people dueling over alleged points of honor -- and let's not forget that dueling involves a private agreement between two people that it's OK for one of them to kill the other. That was properly suppressed, and if dueling were made legal I could imagine some young hotheads taking it up anew. Kids do crazy things, and if you could get around the laws against murder so long as there was an agreement between the people involved I would expect some people would do it.

Fortunately, the stated reason for repealing the dueling law in Michigan is that other, more modern laws clearly make dueling illegal anyway, so there's no need to maintain a specific law against it. But frankly, I would have kept that one. The news headline is "dueling decriminalized," and that's not a headline you want.

No Reservations

Taking a day off from more serious legal topics, let's consider the trend reported by the New York Times today that an increasing number of restaurants are refusing to take reservations and are seating people on a first come, first served basis.

The Times and some of the restaurateurs involved suggest that the no-reservation system is more "democratic" than taking reservations. That's obviously rubbish. Last time I checked, anyone who was capable of paying for dinner at a restaurant was also capable of making a reservation -- all it takes is a telephone or an Internet connection. Reservations are hardly the preserve of some inaccessible elite.

The message sent by a restaurant that won't take reservations is "we don't give a damn how long you have to wait for a table -- it's no skin off our nose if you have an unpleasant waiting experience." The only thing worse than a restaurant that won't take reservations is a popular restaurant that won't take reservations. A popular pizza restaurant in DC -- I won't mention the name, but it's near the Cathedral -- doesn't take reservations, and while it does have good pizza, if you want to eat that pizza you have to spend at least an hour, usually more, waiting for a table, and that's if you go during the week. I don't go their often.

As the Times points out, taking reservations entails costs, and not taking them also means that customers are likely to spend longer in the restaurant's bar and order more drinks, which are a high markup item. So restaurants are just making money by not taking reservations, at the expense of their customers, who have a less pleasant experience.

If a restaurant usually doesn't have much of a wait for a table, not taking reservations is acceptable. Restaurants that refuse to take reservations and that expect their customers to wait for more than an hour before even sitting down might as well turn themselves into airlines -- the real experts in customer non-appreciation.

Not Nuanced Enough

Another interesting tidbit in yesterday's Supreme Court opinion was Justice Scalia's concurrence in Krupski v. Costa Crociere S.P.A. The case involved the interpretation of Federal Rule of Civil Procedure 15. Passing over the details of what the case was actually about, the interesting part is that Justice Scalia objected to the Court's reliance on the Advisory Committee Notes that accompanied the promulgation of the rule.

Now, one might say that this is only to be expected -- after all, Justice Scalia has waged a long-standing war against reliance on legislative history. But really, the Advisory Committee Notes seem quite different from the kind of legislative history to which Justice Scalia typically objects. Typically, legislative history consists of a report drafted by one committee of one house of Congress, or words spoken in debate by a single legislator on the floor of one house of Congress. Justice Scalia rightly points out that such history might not reflect the views of the full Congress, which is the body that can give the law authoritative force (although, as I have explained at length, the legislative history may be understood as "incorporated by reference" into the resulting laws).

But the Advisory Committee Notes are different. They're more like the "official comments" that accompany sections of the U.C.C. They are prepared by the single, non-bicameral body that prepares the text of the rule. The Supreme Court is aware of them as it puts its official imprimatur on the rule and gives the rule force. The process is quite different from the legislative process. The difference in the processes by which laws become laws and by which the Federal Rules become rules should give rise to different attitudes regarding the value of the history in interpreting the resulting texts. I think Justice Scalia is being inappropriately mechanical in carrying over his legislative history fight into this different arena.