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Negotiating the Gulf Disaster

10/26/2010 Museum
Larry Susskind, '70 MCP, PhD, ,73, Ford Professor of Urban and Environmental Planning

Description: The Gulf Oil spill hurt many individuals and businesses, and there is broad agreement that they deserve compensation. But working out the nuances of damage payment is no simple matter, as Lawrence Susskind describes in conversation with an MIT Museum audience.

The $20 billion Oil Spill Compensation Fund, created by BP at the behest of the president, seemed a beneficial alternative to the endless litigation following the Exxon Valdez disaster. But even with the fund's experienced "paymaster," Ken Feinberg (who managed 9/11 claims), this approach to compensation is a "big experiment," says Susskind. "We're not used to doing it this way, at this scale."

Susskind outlines and then raises several questions about the claims process. Feinberg has solicited documentation from victims that will demonstrate loss of income during the period of the spill. He has promised to write checks as fast as possible. But Susskind wonders if Feinberg, with his staff of 25, can sort through and reasonably assess the mountains of material claimants send in. Does the money go to those most in need, who have lost mortgages on their fishing boats or homes, or to condo developers in Florida who cannot sell their properties? Susskind wants to understand Feinberg's "philosophical stand in regard to fairness."

"Timing matters" as well. Susskind wonders about the tradeoffs between getting money to people quickly, and the need to examine claims with the kind of care required to avoid exploitation of the system. Should Feinberg "lower the standard of proof" to help people in urgent need? Finally, Susskind worries about the wisdom of separating compensation payments "from the issue of fact"finding with regard to fault, long"term environmental restoration, and punitive payments aimed at changing behaviors to avoid future accidents." BP's $20 billion payout does not really punish the corporation, which earns this much money in three months, says Susskind. So if the compensation plan does not help correct BP's "risky behavior," and send a message to the entire industry, what is the best means to avoid another Deepwater Horizon?

Susskind proposes one remedy to prevent continued slipshod practices in the offshore oil and gas industry. He cites the creation of the non"profit Institute for Nuclear Power Operations after the Three Mile Island accident, which the nuclear power industry developed "to police itself, so bad actors became the industry's responsibility, not just the government's." Sloppy or unsafe nuclear plants can lose their insurance, and are "out of business," says Susskind. Why not "take this analogy and apply it to offshore oil and gas," he suggests.

About the Speaker(s): Lawrence Susskind joined the faculty of the MIT Department of Urban Studies and Planning in 1971. He served first as Associate Head and then as Head of that Department from 1974 through 1982. He was appointed full professor in 1986 and Ford Professor of Urban & Environmental Planning in 1995. He is also head of the Environmental Policy Group in the School of Architecture and Planning at MIT.

From 1982"1985, Professor Susskind served as the first Executive Director of the Program on Negotiation at Harvard Law School -- an inter"university consortium for the improvement of theory and practice in the field of dispute resolution. Susskind currently holds an appointment at Harvard as Vice"Chair for Instruction, and Director of the Public Disputes Program at Harvard Law School. He is also founder and senior advisor to The Consensus Building Institute, a not"for"profit organization that provides mediation services to clients worldwide.

Host(s): Office of the Provost, MIT Museum

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