[Senate Hearing 110-243]
[From the U.S. Government Printing Office]



                                                        S. Hrg. 110-243
 
                    REPUBLIC OF THE MARSHALL ISLANDS

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                                   TO

RECEIVE TESTIMONY ON S. 1756, A BILL TO PROVIDE SUPPLEMENTAL EX GRATIA 
COMPENSATION TO THE REPUBLIC OF THE MARSHALL ISLANDS FOR IMPACTS OF THE 
 NUCLEAR TESTING PROGRAM OF THE UNITED STATES, AND FOR OTHER PURPOSES; 
 AND TO RECEIVE TESTIMONY ON THE IMPLEMENTATION OF THE COMPACT OF FREE 
     ASSOCIATION BETWEEN THE UNITED STATES AND THE MARSHALL ISLANDS

                               __________

                           SEPTEMBER 25, 2007


                       Printed for the use of the
               Committee on Energy and Natural Resources



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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

DANIEL K. AKAKA, Hawaii              PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota        LARRY E. CRAIG, Idaho
RON WYDEN, Oregon                    LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana          JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           BOB CORKER, Tennessee
KEN SALAZAR, Colorado                JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey          JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas         GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
JON TESTER, Montana                  MEL MARTINEZ, Florida

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
              Frank Macchiarola, Republican Staff Director
             Judith K. Pensabene, Republican Chief Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Bussanich, Tom, Director of Budget, Office of Insular Affairs, 
  U.S. Department of the Interior,...............................     4
Gootnick, David B., Director, International Affairs and Trade, 
  Government Accountability Office...............................    20
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     2
Philippo, Hon. Witten T., Minister-In-Assistance-To-The-
  President, Republic of the Marshall Islands....................    10
Weisgall, Jonathan, Legal Counsel for the People of Bikini.......    31

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    47

                              Appendix II

Additional material submitted for the record.....................    51


                    REPUBLIC OF THE MARSHALL ISLANDS

                              ----------                              


                      TUESDAY, SEPTEMBER 25, 2007

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:01 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Jeff 
Bingaman, chairman, presiding.

     OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR 
                        FROM NEW MEXICO

    The Chairman. OK, why don't we go ahead and get started. 
I'm told that Senator Murkowski will be here shortly, but asked 
that we go ahead without her, and I'll do that.
    This morning the committee will receive testimony on S. 
1756, which is the Marshall Islands Supplemental Nuclear 
Compensation Act, and on implementation of the Compact of Free 
Association between the United States and the Republic of the 
Marshall Islands.
    Since the 1960s, this committee has worked with the 
Marshall Islands and the executive branch to respond to the 
legacy of the U.S. testing program. This collaboration resulted 
in the legal settlement included in the Compact in 1986 and 
other ex gratia appropriations and programs.
    In 2005, the committee held a hearing on the RMI's Changed 
Circumstances Petition, seeking additional compensation. 
However the committee heard testimony in opposition based on 
several factors, including concerns about the policies and 
methodologies used to calculate damages and awards, the 
differing views over the extent of the test's effects, and also 
whether the request met the legal definition of ``changed 
circumstances.''
    During that hearing, it appeared there may be an 
opportunity to address some of the RMI's specific requests by 
modifying existing Federal programs. Last May, President Note 
asked members of the committee to introduce legislation on a 
few of these proposals. I look forward to their consideration 
today.
    Turning to the Compact implementation--the U.S. and RMI are 
4 years into the 20-year term of Compact assistance. It 
provides about $70 million annually for priorities such as 
health, education, infrastructure, and for capitalizing a trust 
fund to provide support to the RMI after the U.S. annual grants 
end in 2023.
    The new Compact has more rigorous accountability 
requirements than before and these have contributed to more 
effective use of funds. Nevertheless, it's clear that redoubled 
efforts are needed to control payroll, to improve management 
capacity, and to enact key reforms if the Compact and the RMI 
are to achieve their potential.
    I look forward to hearing from our witnesses today and we 
thank the representatives from the State, Energy, and Labor 
Departments for being available to answer questions. Before I 
call on and introduce our witnesses, let me call on Senator 
Murkowski for any comments that she has.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Chairman Bingaman. It's a 
pleasure to be here today to address, really a very broad array 
of issues regarding the legacy of the Nuclear Testing Program 
in the Marshall Islands, including issues such as healthcare 
and radiological monitoring.
    I do appreciate your explanation of S. 1756 and the 
importance of our continued oversight of the Compact between 
the Republic of the Marshall Islands, RMI, and the United 
States.
    It was earlier in this year that I, along with a few of my 
colleagues, wrote the President of RMI, President Note, about 
our shared interest in addressing this nuclear legacy, through 
several different avenues, through the monitoring of Runit Dome 
in Enewetak Atoll, clarifying the eligibility of former trust 
territory workers to participate in the Energy Employees 
Occupational Illness Compensation Program, also the options to 
continue supplemental healthcare assistance to the northern 
atoll communities affected by the testing program, and also 
U.S. Government assessment of the health impacts in the RMI, 
resulting from the test program.
    I'm very pleased that these issues are addressed in the 
legislation that we have before us today. I look forward to the 
testimony of the witnesses regarding their perspective on the 
legislation and what other options might be available to 
address these very important issues.
    With that, Mr. Chairman, I look forward to the testimony 
this morning.
    [The prepared statement of Senator Murkowski follows:]

Prepared Statement of Hon. Lisa Murkowski, U.S. Senator From Alaska, on 
                                S. 1756
    I would like to thank Senator Bingaman for calling this hearing on 
supplemental compensation for the effects of U.S. nuclear testing on 
the people of the Marshall Islands. I am pleased that the Committee is 
revisiting this issue and am grateful to the representatives from the 
RMI for flying such a great distance to be here.
    The people of the Marshall Islands have made enormous sacrifices to 
help this nation's national defense at a critical period of the Cold 
War. As an Alaskan from a State whose workers have been compensated for 
injuries they gained resulting from underground weapons testing at 
Amchitka Island in the Aleutian Chain almost immediately after the 
ending of weapons testing in the atmosphere over the Marshall Islands, 
it is impossible for me not to support aid for the Marshallese.
    Accordingly, two years ago I introduced a bill that would have 
clarified that citizens of the former Trust Territory of the Pacific 
Islands are eligible for coverage and potential compensation under the 
Energy Employees Occupational Illness Compensation Program Act 
(EEOICPA) if those workers developed radiogenic cancers and other 
ailments after working at the Pacific Test Site in the Marshall 
Islands. While the bill was never enacted into law, I am pleased that 
Senator Bingaman has included the provisions of that bill into his 
current bill, S. 1756, the Marshall Islands Supplemental Nuclear 
Compensation Act, which is the subject of our hearing today.
    S. 1756 contains four main provisions to provide supplemental 
compensation for the residents of the RMI.
    Section 2 provides for continued radiological monitoring on Runit 
Island, the island on which a concrete nuclear storage facility was 
built to house 111,000 cubic yards of radioactive soil and debris from 
the nearby atolls. To ensure the safety of the islanders and to ensure 
that the Republic's government is adequately informed, it is imperative 
that the radiological conditions near the dome and the integrity of the 
dome itself continue to be monitored and tested.
    Section 3 would allow Marshall Islander employees affected by the 
nuclear testing who were not US citizens to be compensated under the 
EEOICPA. It is estimated that up to 500 Marshall Islanders and other 
Micronesian workers may have been employed by the Department of Energy 
(or its predecessor agency) or subcontractors prior to 1986, the year 
the Trusteeship was terminated in the RMI. Both Bikini and Enewetak 
atolls were the sites for numerous nuclear and thermonuclear tests. 
Other atolls were affected by fallout from the Bravo hydrogen bomb test 
in March 1954.
    In 2000, Congress approved a compensation program to provide aid 
and pay medical bills for those who suffered radiation-caused illnesses 
because of working on the nuclear weapons program. In 2004, Congress 
amended the act to speed payments of compensation, including funds for 
lost wages to workers or their heirs, to those who worked for the 
Department of Energy and its predecessor agency on nuclear weapons 
programs. The compensation from this program, though, still applies 
only to United States citizens and not to those who were not citizens 
but who lived and worked under United States administration during the 
Marshall Islands nuclear tests. Section 3 of S. 1257 would rectify this 
inequity.
    Section 4 would provide money for the continuation of the Four 
Atoll Health Care program through 2023, but this time the $2 million 
per year will be inflation-adjusted. The Four Atoll Health Care Program 
has been funded at the same level for twenty years without inflation 
adjustment, meaning the value of the funding has effectively been cut 
in half since we began providing it. Congress should make it a priority 
to continue to provide for the health care for a people whose cancer 
rates are far higher than those in the United States due to nuclear 
testing.
    Lastly, Section 5 would provide for a National Academy of Sciences 
assessment of the US nuclear testing program's health impacts on the 
residents of the RMI. The main purpose of this study would be to 
resolve a disagreement between the US government and the RMI and 
Nuclear Claims Tribunal over the extent of the area affected by the 
nuclear testing. The results of this study can provide the basis for 
Congress' decision whether or not to award additional ex gratia 
payments to the people of the RMI.
    While Congress and the Administration continue to weigh additional 
aid to the Republic of the Marshall Islands, passage of this measure 
would be a sign of this nation's continued commitment to aid the 
islanders who in February 1946 followed the advice of Bikinian leader, 
King Juda, and agreed to leave the Bikini Atoll so America could use it 
for weapons testing, saying, ``We will go believing that everything is 
in the hands of God.''
    I appreciate the understanding and the patience shown by the 
Marshalls Government and their citizens as we proceed to review the 
issues raised concerning the effects of the nuclear testing program and 
I hope the introduction of this legislation will be seen as an example 
of our commitment to see that those issues receive a full and fair 
review and discussion.

    The Chairman. All right. Thank you very much.
    Let me just introduce all of our witnesses and then we'll 
hear from them in this order.
    First would be Mr. Tom Bussanich, who is the Director of 
Budget, Office of Insular Affairs, in the Department of 
Interior. He's accompanied by Mr. Steven McGann, Acting Deputy 
Assistant Secretary of State for the Bureau of East Asian and 
Pacific Affairs in the Department of State; Mr. William Donald 
Jackson, who's the Marshall Islands Program Manager with the 
Office of Health, Safety, and Security in the Department of 
Energy; and Mr. Jeffrey Nesvet, who is the Associate Solicitor 
for Federal Employees' and Energy Workers' Compensation in the 
Office of the Solicitor in the Department of Labor.
    We also have three other witnesses here. The Honorable 
Witten T. Philippo, who is the Minister-in-Assistance-to-the-
President from the Republic of the Marshall Islands. Thank you 
very much for being here.
    Mr. David Gootnick, who is Director of International 
Affairs and Trade in the GAO and Mr. Jonathan Weisgall, who is 
the legal counsel for the people of Bikini, testifying on 
behalf of the Peoples of Bikini, Enewetak, Rongelap, and Utrik. 
Are those reasonably accurate pronunciations?
    Thank you very much.
    Mr. Bussanich, why don't you begin?

   STATEMENT OF THOMAS BUSSANICH, ACTING DIRECTOR, OFFICE OF 
                        INSULAR AFFAIRS

    Mr. Bussanich. Mr. Chairman, thank you for the opportunity 
to discuss the implementation of the amended Compact of Free 
Association with the Marshall Islands in S. 1756, dealing with 
Marshall Islands nuclear issues.
    In 2003, the U.S. Government approved the amended Compact, 
providing a total of $1.5 billion in assistance from 2004 
through 2023. The 20 years of grant assistance is intended to 
assist the RMI government to promote its economic advancement 
and budgetary self-reliance.
    Under the Compact, U.S. grant funding that decreases 
annually is pared with increasing contributions to a trust 
fund. Earnings from the trust fund are intended to provide a 
source of revenue for the government of RMI when the grants 
expire in 2023.
    The Compact targets funding to six sectors: education, 
health, the environment, public sector capacity building, 
private sector development, infrastructure, with priority given 
to education and health.
    We believe the amended Compact of Free Association with the 
Republic of the Marshall Islands is a promising work in 
progress. The RMI leadership has made a determined effort to 
adhere both to the letter and spirit of the agreement. Since 
the implementation of the amended Compact in 2004, the RMI has 
focused its Compact resources on the three highest priorities, 
infrastructure, education, and healthcare. Over $52 million, 
approximately 39 percent of all sector grant funding, has been 
dedicated to improved infrastructure. The result is best seen 
in education, where fully one-third of RMI students will be in 
new classrooms at the end of the 2008 school year.
    Since Fiscal Year 2004, the RMI has dedicated 34 percent of 
Compact funds to education and 21 percent to its healthcare 
system. The allocation of Compact funding has been appropriate 
in the short-term, however, the GAO has concluded that capacity 
limitations have affected the RMI's ability to ensure effective 
use of grant funds. The RMI has made strong efforts to 
institutionalize performance management in its government and 
is allocating $300,000 in Fiscal Year 2008 Compact funds to 
public sector capacity-building to effect this purpose.
    The fiscal and economic futures of the RMI are issues of 
concern to the United States members of the Joint Economic 
Management and Financial Accountability Committee. The RMI 
economy is growing, but on a fragile basis of increased public 
sector spending, including a 23 percent increase in national 
government employment in the past 3 years. The increased 
employment, according to the RMI government, has not be 
accompanied by an increase in the effectiveness of government 
services. We hope that the RMI leadership will focus on the 
need to manage the public payroll in a manner that accounts for 
the coming decrements in Compact funding.
    The Compact does not operate in a vacuum and its overall 
success will be greatly enhanced or diminished by the 
circumstances of the RMI economy. The opening of a new tuna 
loining plant in Majuro has the potential to create 600 private 
sector jobs. Japan airlines has begun a series of special 
charter flights.
    Even with these successes, the RMI still has obstacles to 
economic development. It's geographic isolation, inadequate 
infrastructure, lack of a skilled work force, and an outdated 
business climate.
    We believe that there is a need for the RMI to take action 
to improve the business climate, including tax, land, and 
foreign investment reforms. But the decisions to make these 
important changes lie with the Marshall Islands' government.
    An important element of the United States financial 
assistance, under the Compact, is the trust fund established to 
contribute a source of revenue after 2023. As of June 30, 2007, 
the market value of total assets of the trust fund for the 
people of the Republic of the Marshall Islands, was $83.2 
million. The return on assets during the current Fiscal Year is 
10.3 percent. The Trust Fund Committee is also investigating 
whether securitization of future U.S. contributions to the 
trust fund would increase the ultimate 2023 value of the fund 
and has issued a request for proposal for a study of its 
potential benefits and risks.
    The Joint Economic Management and Financial Accountability 
Committee met recently in Honolulu. The meetings were 
productive and resulted in the allocation of Compact funding 
for Fiscal Year 2008. In that year, the RMI will dedicate $11.3 
million to education, $6.5 million to health, $11.8 million to 
infrastructure, $300,000 to public sector capacity building, 
and $5.6 million for assistance to Kwajalein Atoll communities.
    In summary, the Republic of the Marshall Islands faces 
challenges, but we are pleased with the mutual respect and 
cooperative manner in which our countries are working to 
implement the Compact and address those challenges.
    If I may, I'd like to have a few words about S. 1756, which 
deals with several issues that stem from the United States 
nuclear testing. Section 2 of the Bill would require the 
Department of Energy to survey radiological conditions on Runit 
Island every 4 years and report to the House and Senate 
Authorizing Committees.
    The United States and the Republic of the Marshall Islands 
settled all claims related to the nuclear testing program. 
Section 177 of the Compact, relieved the United States of 
responsibility for controlling areas affected by nuclear 
testing program, and placed that responsibility solely with the 
Marshall Islands government. Nevertheless, Runit Dome has 
remained, for many years, a point of friction in the otherwise 
mutually agreeable bilateral relationship.
    At present, the Department of Energy has a plan in place to 
conduct a visual engineering survey of the Runit Dome in May 
2008. Such a survey is expected to become a routine part of 
DOE's field work. The Administration believes that these 
current and future plans for surveying Runit Dome are 
sufficient to monitor safety. The Administration, therefore, 
opposes enactment of Section 2 of S. 1756.
    With regard to Section 3, clarification of eligibility 
under the EEOICPA, this deals with the eligibility of former 
citizens of the trust territory of the Pacific Islands for the 
Energy Employees Occupational Illness Compensation Program Act.
    In the 1950s, the U.S. Government hired citizens of the 
trust territory and the United States to clean up ground-zero 
locations in Bikini and Enewetak Atolls. At present, the former 
trust territory citizens are being denied EEOICPA benefits, 
because the language of the statute does not overcome the 
presumption against extraterritorial application of American 
law.
    Section 3 is intended to place the former trust territory 
citizen workers on an equal footing with the United States 
citizen workers. The Administration is still reviewing Section 
3 of S. 1756 and its implication that compensation would be 
provided to a subset of DOE workers, even though Section 177 
provided for the full and final resolution of all nuclear 
testing claims.
    Section 4 deals with the Four Atoll Healthcare Program. 
Congress established the Four Atoll Healthcare Program for 
people who resided on Enewetak, Bikini, Rongelap, and Utrik. 
When the original Compact came into force in 1986, the program 
was funded for 15 years and ended in 2001 in accordance with 
the terms of that agreement. In both Fiscal Years 2005 and 
2006, Congress added $1 million to the Interior Appropriations 
to continue the Four Atoll Program.
    Section 4 would create a permanent 17-year appropriation 
for the program. It would fund the program annually at $2 
million, inflation adjusted. The Administration does not 
support a permanent appropriation of $2 million for this 
program. The Administration determined in 2005 that there was 
no basis in the Compact, Section 177, subsidiary agreement for 
considering additional claims. Furthermore, the United States 
is committed to spend over $1.5 billion in direct assistance 
and trust fund contributions in the RMI, and the area remains 
eligible for a number of categorical and competitive public 
health grant programs administered by the Department of Health 
and Human Services.
    Section 5 of the bill would mandate that the Secretary of 
Interior commission an assessment and report by the National 
Academy of Sciences of the health impacts of the United States 
nuclear testing conducted in the Marshall Islands. The 
Administration believes that this assessment is not necessary. 
The Administration believes that previous studies have 
adequately answered questions relating to the impacts of 
nuclear testing and does not support the commissioning of 
additional studies at this time.
    Mr. Chairman, and members of the subcommittee, this 
completes my prepared statement. I'll be happy to respond to 
any questions you may have.
    [The prepared statement of Mr. Bussanich follows:]

  Prepared Statement of Thomas Bussanich, Acting Director, Office of 
              Insular Affairs, Department of the Interior
    Mr. Chairman and members of the Committee on Energy and Natural 
Resources, thank you for the opportunity to discuss the implementation 
of the amended Compact of Free Association with the Republic of the 
Marshall Islands (RMI) and S. 1756 dealing with Marshall Islands 
nuclear issues.
         implementation of the rmi compact of free association
    In 2003, the U.S. Government approved the amended Compact with the 
Republic of the Marshall Islands, providing a total of $1.5 billion in 
assistance from 2004 through 2023. The amended Compact's 20 years of 
grant assistance is intended to assist the RMI government promote the 
economic advancement and budgetary self-reliance of its people. Under 
the amended Compact, U.S. grant funding decreases annually, paired with 
increasing contributions to a trust fund established for the RMI; 
earnings from the trust fund are intended to provide a source of 
revenue for the government of the RMI when the grants expire in 2023. 
In addition, the annual grant funding is partially adjusted for 
inflation. The amended Compact requires the RMI to target funding to 
six development sectors--education, health, the environment, public 
sector capacity building, private sector development, and 
infrastructure, with priority given to education and health. The 
amended Compact also provides for a Supplemental Education Grant, which 
takes the place of certain domestic grants once offered through the 
Department of Education, the Department of Health and Human Services 
and the Department of Labor.
    The Office of Insular Affairs is responsible for administering and 
monitoring the grants. The amended Compact's subsidiary fiscal 
procedures agreement requires the RMI government to monitor the day-to-
day operations of sector grants and activities, submit periodic 
performance reports and financial statements, and ensure annual 
financial and compliance audits. In addition, the Compact and fiscal 
procedures agreement require the U.S.-RMI Joint Economic Management and 
Financial Accountability Committee (JEMFAC) to (1) meet at least once 
annually to evaluate the progress of the RMI in achieving the 
objectives specified in their development plans; (2) approve grant 
allocations; (3) review required annual reports; (4) identify problems; 
and (5) recommend ways to increase the effectiveness of Compact grant 
assistance. The RMI is also required to conduct annual audits within 
the meaning of the Single Audit Act for an independent review of its 
financial position.
    We believe that the amended Compact of Free Association with the 
Republic of the Marshall Islands is a promising work in progress. 
Although many challenges remain for the RMI government to grow its 
economy and to get better performance from the government services that 
are supported by the Compact, the RMI has been a solid partner with the 
United States in making the Compact work. The RMI leadership has made a 
determined effort to adhere both to the letter and the spirit of the 
agreement, and is committed to the success of the agreement it 
negotiated.
    Since implementation of the amended Compact in fiscal year 2004, 
the RMI has focused its Compact resources on the three highest 
priorities, infrastructure, education and health care. Over $52.2 
million, approximately 39% of all sector grant funding, has been 
dedicated to improved infrastructure. The result is best seen in 
education, where 82 new classrooms serving over 1,700 students are in 
use, and additional classrooms that will house a total of 4,000 
students will be in use at the end of this year. Fully one third of RMI 
students will be in new classrooms at the end of the 2008 school year. 
In coming years, $5 million will be invested annually in physical 
improvements at the College of the Marshall Islands. These improvements 
will help the college retain its accreditation.
    Since fiscal year 2004, the RMI has dedicated 34% of Compact funds 
to education and 21% to its health care system. The RMI has chosen to 
use only limited amounts of Compact funding for the environment, public 
sector capacity building and private sector development sectors. This 
allocation reflects the priorities of the RMI government and of the 
amended Compact; JEMFAC has concurred with this RMI decision. The 
allocations may change in any future year, although allocations to the 
infrastructure sector must be at least 30% of an annual Compact 
assistance and priority must be given to education and health care.
    The allocation of Compact funding has been appropriate in the short 
term. However, growing gaps in the capacity of the RMI government 
suggest that it might be prudent to shift some Compact resources to 
public sector capacity building. The GAO has concluded that capacity 
limitations have affected the RMI's ability to ensure the effective use 
of grant funds. We agree with this conclusion. The RMI has made strong 
efforts to institutionalize performance management in its government, 
and is allocating $300,000 in fiscal year 2008 Compact funds to Public 
Sector Capacity Building. However, the RMI still lacks the capacity to 
adequately measure progress because education and health sector 
baseline data is not adequate and performance reporting is incomplete. 
Capacity restraints also affect the government's ability to collect and 
analyze economic data and plan for the future of declining Compact 
revenues.
    The fiscal and economic futures of the RMI are issues of concern to 
the United States members of the JEMFAC. The RMI economy is growing, 
but on the fragile basis of increased public sector spending. There has 
been an unsustainable increase in government employment and its 
accompanying wage bill. The RMI reports a 23% increase in national 
government employment in the past three years. Payroll costs jumped 
from $26.4 million in fiscal year 2004 to $30.1 million in fiscal year 
2006. This has taken place at the same time as the RMI has shown annual 
operating deficits in its general fund. The increase in employment, 
again according to the RMI government, has not been accompanied by an 
increase in the effectiveness of government services. The ability to 
make this internal assessment speaks well of the RMI government, but we 
hope that the RMI leadership will focus on the need to manage the 
public payroll in a manner that accounts for the coming decrements in 
Compact funding.
    The Compact does not operate in a vacuum, and its overall success 
will be greatly enhanced or diminished by the circumstances of the RMI 
economy. The opening of a new tuna loining plant in Majuro has the 
potential to create 600 private sector jobs. Japan Air Lines has also 
begun a series of special charter flights that may have long-term 
benefits for the tourism sector. Even with these successes, the RMI 
still has obstacles to economic development: its geographic isolation, 
inadequate infrastructure, lack of a skilled workforce and an out-dated 
business climate. The theory of the Compact is that improvements in 
health and education will create a better workforce at home and more 
remittances from abroad, and that these factors, together with improved 
infrastructure, will provide a foundation for long-term private sector 
economic development. In the short term, we believe that there is a 
need for the RMI to take action to improve the business climate, 
including tax, land and foreign investment reforms. The United States 
intends to enhance our trade dialogue with the Republic of the Marshall 
Islands and other Pacific Island nations. Although the United States 
through its JEMFAC membership may inquire about and promote change, the 
decisions to make these important changes lie with the Marshall Islands 
government.
    An important element of the United States financial assistance 
under the Compact is the trust fund established to contribute a source 
of revenue to the government for the RMI when annual sector grants 
cease after 2023, to be used for the same purposes as the annual sector 
grants were.
    As of June 30, 2007, the market value of total assets of the Trust 
Fund for the People of the Republic of the Marshall Islands was $83.2 
million. Of that amount, $64.3 million represented contributions of 
governments, including $31.8 million from the United States, $30 
million from the RMI and $2.5 million from Taiwan. The return on assets 
during the current fiscal year is 10.3 percent.
    Since Goldman Sachs began managing the Trust Fund assets as 
investment manager on November 14, 2005, the Fund's investments gained 
$12.0 million through June 30, 2007. The assets have been invested in a 
mix of United States public equity and realty funds, international 
equity funds, and fixed income funds.
    The Trust Fund Committee is also investigating whether 
securitization of the future U.S. contributions to the Trust Fund would 
increase the ultimate 2023 value of the fund, and has issued an RFP for 
a study of its potential benefits and risks. Securitization would 
permit the Trust Fund to invest with a longer time horizon by bringing 
forward the United States contributions scheduled for later years. If 
deemed advantageous, a change in the Compact law would be necessary in 
order to permit implementation of a securitization program.
    The Joint Economic Management and Financial Accountability 
Committee met recently in Honolulu. The meetings were productive and 
resulted in the allocation of Compact funding for fiscal year 2008. In 
the next fiscal year, the RMI will dedicate $11.3 million to education, 
$6.5 million to health, $11.8 million to infrastructure, $300 thousand 
to public sector capacity building and $5.6 million for assistance to 
Kwajalein atoll communities.
    In summary, the Republic of the Marshalls Islands faces very 
serious challenges, but we are pleased with the mutual respect and 
cooperative manner is which our two countries are working to implement 
the Compact and address those challenges.
                                s. 1756
    S. 1756 would deal with several issues that stem from United States 
nuclear testing that took place in the 1950s.
Section 2--Continued Monitoring on Runit Islands
    Section 2 would require the Department of Energy to survey 
radiological conditions on Runit Island every four years, and report to 
the House and Senate authorizing committees.
    The partial clean-up of Enewetak Atoll in the late 1970's resulted 
in the creation of an above-ground nuclear waste storage site, a dome, 
at Runit Island. Inside Runit dome are over one 110,000 cubic yards of 
radioactive material scraped from other parts of Enewetak Atoll.
    The United States and the Republic of the Marshall Islands settled 
all claims, past, present and future of the Government, citizens and 
nationals of the Republic of the Marshall Islands which are based upon, 
arise out of, or are in any way related to the Nuclear Testing Program. 
Article VII of the agreement subsidiary to section 177 of the 1986 
Compact of Free Association relieved the United States of all 
responsibility for controlling ``the utilization of areas in the 
Marshall Islands affected by the Nuclear Testing Program'' and placed 
that responsibility solely with the Marshall Islands Government. 
Nevertheless, Runit dome has remained for many years a point of 
friction in the otherwise mutually agreeable, bilateral relationship 
between the governments of the Marshall Islands and United States. 
Representatives of the Marshall Islands have raised questions regarding 
Runit Island including (1) the safety of land, water and marine life, 
(2) the radiological condition of the northern part of the island, and 
(3) the structural integrity of the dome.
    At present, the Department of Energy has a plan in place to conduct 
a visual engineering survey of Runit Dome in May of 2008. Such a survey 
is expected to become a routine part of DOE's field work.
    Under the Compact of Free Association Act, DOE provides technical 
support in environmental measurement to four atolls (Enewetak, Bikini, 
Rongelap and Utrik) within the Republic of the Marshall Islands. The 
Marshallese, with their advisors, set all goals and conduct all 
remedial actions. DOE takes environmental measurements before and after 
remedial actions to see if goals were achieved. DOE may offer 
suggestions for remedial actions at the request of the Republic of the 
Marshall Islands. Current funding limits the scope of DOE work to 
resettlement activities; Runit Island will not be resettled and is off-
limits to residents of the Marshall Islands.
    The Administration believes that current and future plans for 
surveying Runit dome and aiding the Government of the Marshall Islands 
in its assessment of conditions at Runit Island are sufficient to 
monitor safety. The Administration, therefore, opposes enactment of 
section 2 of S. 1756.
Section 3--Clarification of Eligibility under EEOICPA
    Section 3 deals with the eligibility of former citizens of the 
Trust Territory of the Pacific Islands for the Energy Employees 
Occupational Illness Compensation Program Act (EEOICPA). In the 1950s, 
the United States government hired citizens of the Trust Territory, 
which was administered by the United States, to clean up ground-zero 
locations in Bikini and Enewetak Atolls and to collect soil and other 
samples from contaminated areas in the Marshall Islands. These 
individuals cannot receive EEOICPA benefits because the language of the 
statute does not overcome the presumption against extraterritorial 
application of American law.
    The United States used both United States citizens and Trust 
Territory citizens (who were under the aegis of the United States), for 
work that sustained a program that was crucial for national security. 
At present, the former Trust Territory citizen workers are being denied 
EEOICPA benefits because the language of the statute does not overcome 
the presumption against extraterritorial application of American law.
    Section 3 is intended to place the former Trust Territory citizen 
workers on an equal footing with United States citizen workers. The 
Administration is still reviewing section 3 of S. 1756, and its 
implication that compensation would be provided to a subset of DOE 
workers even though section 177 of the Compact and its implementing 
agreement provided for the full and final resolution of all claims 
arising from the Marshall Islands nuclear testing program. In addition, 
the Department of Labor notes that there are some drafting issues, 
particularly with respect to the bill's offset provisions.
Section 4--Four Atoll Health Care Program
    Section 4 would appropriate funds for the Four Atoll Health Care 
Program. The Congress established the Four Atoll Health Care Program in 
the early 1970s to provide health care for people who resided on the 
nuclear-affected atolls of Enewetak, Bikini, Rongelap and Utrik. When 
the original Compact of Free Association came into force in 1986, the 
Four Atoll program was funded for fifteen years under the Compact 
section 177 subsidiary agreement and ended in 2001 in accordance with 
the terms of that agreement. In January of 2005, the State Department 
submitted the Administration's evaluation of RMI's submission of a 
request, among other things, for an enhanced primary, secondary and 
tertiary health care system to serve the entire RMI population for 50 
years under Article IX of the agreement subsidiary to Section 177 on 
the basis of ``changed circumstances.'' The Administration's report 
concluded that there was no legal basis for considering additional 
payments. In both fiscal years 2005 and 2006, Congress added $1 million 
in appropriations for the Four Atoll program.
    Section 4 would create a permanent 17-year appropriation for the 
program (from 2007 through 2023). Additionally, it would fund the 
program annually at $2 million, inflation adjusted.
    The Administration does not support a permanent appropriation of $2 
million for this program. As noted previously, the Administration 
determined in 2005 that there was no basis in the Compact section 177 
subsidiary agreement for considering additional claims. Furthermore, as 
previously noted in this testimony, the United States is currently 
committed to spend over $1.5 billion in direct assistance and trust 
fund contributions in the RMI over the next 20 years, and the area 
remains eligible for a number of categorical and competitive public 
health grant programs administered by the U.S. Department of Health and 
Human Services in the same way as U.S. states and territories.
Section 5--Assessment of Health Care Needs of the Marshall Islands.
    Section 5 would mandate that the Secretary of the Interior 
commission an assessment and report by the National Academy of Sciences 
(NAS) of the health impacts of United States nuclear testing conducted 
in the Marshall Islands.
    The Administration believes that this assessment is not necessary, 
given that on January 4, 2005, the State Department submitted the 
results of an Administration evaluation that carefully and methodically 
reviewed existing scientific studies of the impact of nuclear testing 
in the Marshall Islands. The Administration believes that previous 
studies have adequately answered questions relating to the impacts of 
nuclear testing as they relate to additional claims for damage 
resulting from the nuclear testing program, and does not support the 
commissioning of additional studies at this time.
    Mr. Chairman and members of the subcommittee, this completes my 
prepared statement. I will be happy to respond to any questions you may 
have at this time.

    The Chairman. Thank you very much.
    Mr. Philippo, why don't you go right ahead, please?

STATEMENT OF WITTEN T. PHILIPPO, MINISTER-IN-ASSISTANCE-TO-THE-
          PRESIDENT, REPUBLIC OF THE MARSHALL ISLANDS

    Mr. Philippo. Thank you, Mr. Chairman, distinguished 
members of the committee, ladies and gentlemen. Thank you for 
the opportunity to appear before you today. I bring greetings 
from his Excellency, President Note, who's grateful to you Mr. 
Chairman, and members of the committee for introducing S. 1756.
    There is no question that the U.S. Government's detonation 
of 67 atmospheric nuclear weapons in our country, created 
profound disruptions to human health, the environment, as well 
as our economy, culture, political system, and virtually every 
aspect of life. While the assistance contemplated in S. 1756 is 
a start, there's still extensive work that has to be done.
    With specific regard to S. 1756, the RMI is pleased that 
Congress wants to provide long-term monitoring of the Runit 
Dome. We believe monitoring of the structure, as well as the 
lagoon and ocean sediments, and adjacent land is critical to 
the safety of the community relocated adjacent to the facility.
    The RMI also appreciates the inclusion of trust territory 
citizens to participate in a Department of Labor healthcare and 
compensation program for DOE employees who contract cancer 
after exposure to occupational sources of radiation. The RMI 
believes that the actual number of Marshallese who would be 
eligible to participate in this program is very small.
    S. 1756 also appropriates the sum of $2 million annually, 
as adjusted for inflation in accordance with the Section 218 of 
the Compact for purposes of providing primary healthcare to the 
Four Atoll communities. The RMI welcomes and supports, fully 
supports this measure and wishes to thank the Chairman for 
making this a permanent, rather than discretionary 
appropriation. Applying the medical care CPI in Hawaii, where 
most medical referral cases from the RMI are sent, would have 
resulted in $4.42 million annually, as of 2001.
    Accordingly, the RMI requests that $4.5 million annually 
replace the amount of $2 million as the base amount for 
healthcare costs. As President Note mentioned in his letter of 
August 23, 2007 to you, Mr. Chairman, the RMI also believes 
that it is imperative for the U.S. healthcare programs to 
provide assistance to all Atoll populations, whose health was 
adversely impacted by the U.S. nuclear testing program.
    I think there is not a person left in the world who could 
honestly say that the healthcare burdens and the Marshall 
Islands are geographically confined to the perimeter of the 
Four atolls. This is precisely why Marshallese citizens, 
determined to have radiogenic illnesses, people from Atolls 
throughout the RMI, must continue to eligible to participate in 
the 177 Healthcare Program. These people have nowhere else to 
turn, except the RMI. And the RMI public health system is not 
currently designed to address these illnesses.
    Even if we assume that only the Bravo Event exposed the 
populations in the RMI to radiation, the total population of 
Rongelap and Utrik in 1954 was 226. Bikini and Enewetak had 
been relocated for the Bravo Event. The U.S. National Cancer 
Institute tells us that 532 excess cancers, cancers that would 
not have appeared if it weren't for the U.S. testing program, 
will occur in the RMI and more than half of these have yet to 
manifest.
    If every resident of Rongelap and Utrik contracted cancer, 
NCI numbers tell us there are still 306 people on other Atolls 
that will or have contracted cancer. These people are not 
eligible to receive any healthcare from the United States. 
Furthermore, the September 2004 NCI report, requested by this 
committee, states that 227 of these excess cancers will occur 
in the Atoll populations of Ailuk, Mejit, Likiep, Wotho, Wotje, 
and Ujelang. The RMI government simply does not have the 
capacity to locate and treat these cancers. The RMI believes 
that the United States has an obligation to provide for 
healthcare to everyone in our country, whose health was 
adversely affected by the U.S. testing program.
    S. 1756 makes provisions for the National Academy of 
Sciences to conduct an assessment of the health impacts of the 
nuclear testing program on the residents of the RMI. The RMI 
hopes that this study could consider all data analyses relating 
to those reconstructions, exposure pathways, and potential 
health outcomes. The RMI strongly supports this assessment, as 
it will look at the overall health impacts caused by the 
nuclear testing program and not cancer, the subject of the 
nuclear, or NCI's study.
    The RMI would like to make it clear however, that the NCI 
and other data previously presented to this committee, provides 
the justification for taking action now to establish a cancer 
screening and treatment program, and to address the radiogenic 
healthcare needs of several communities beyond the Four atolls.
    Mr. Chairman, I would also like to note, that absent from 
S. 1756, is any reference to the decisions and awards made by 
the nuclear, the Marshall Islands Nuclear Claims Tribunal. The 
administrative and adjudicative processes of the Tribunal over 
the past 19 years are an important, mutually agreed-to 
component of the Section 177 Agreement. We can not simply 
ignore the Tribunal's work and awards that it has made.
    Understanding that there continues to be concerns in 
Congress, the RMI would support a further study of the 
decisionmaking processes of the Tribunal and its awards, by an 
appropriate organization. The RMI has presented a report on 
this subject, prepared by a former United States Attorney 
General, Richard Thornburgh, in January 2003. If questions or 
concerns exists, the RMI would also support a study by the GAO 
to make recommendations to Congress.
    I would now like to briefly address some issues concerning 
implementation of the Compact, as amended. Overall, we have a 
great deal of progress with respect to implementing the 
Compact, as amended. The procedures we developed regarding the 
Joint Economic Management and Financial Accountability 
Committee, have worked well, through a process of requiring 
consensus between our two governments, on the allocation and 
division of Compact annual sector grant funding.
    Specifically, we would ask that the committee consider the 
following: One, provision for a full inflation adjustment for 
Compact funds, so that the grant assistance and compensation 
provided by the Compact does not lose real value, and fully 
supports the Compact's mutual commitments. This is particularly 
important, given the rapidly rising costs of imported fuel, 
which is causing major problems with the provision of public 
utilities and inter-Island services for our widespread 
communities.
    Rising fuel costs are also creating an overall inflationary 
effect that is putting a damper on our economic growth. We 
encourage that the Compact of Free Association Amendments Act 
of 2007 include an amendment to Section 107(J) of Public Law 
108-188, to provide that full inflation could be made available 
in Fiscal Year 2010, instead of Fiscal Year 2014.
    Two, the RMI is experiencing difficulties as a result of 
delays in receiving supplemental education grants, and a 
substantial shortfall in appropriated funds compared to the 
planned amount the RMI was to receive, a$712,000 shortfall. The 
SEG should be made available as a permanent appropriation, in 
the same manner as other Compact financial assistance under 
Title 2 of the Compact, as amended.
    Finally, the RMI is concerned about a difference in opinion 
about the purpose of the Compact Trust Fund. The RMI believes 
it would be fruitful for our governments to consider what can 
be done between now and Fiscal Year 2024 to maximize Trust Fund 
income, and to make it viable in the future.
    Mr. Chairman, with your permission, I would like to include 
the statement of Dr. Neil A. Palfox in the hearing record.
    The Chairman. We'll be glad to include that.
    [The prepared statement of Dr. Palfox follows:]

  Prepared Statement of Neal A. Palafox, MD MPH, Centers for Disease 
 Control and Prevention, Department of Health and Human Services, and 
        National Cancer Institute, National Institutes of Health
    Mr. Chairman and members of the Committee of Energy and Natural 
Resources: Thank you for allowing my written comments and testimony on 
two issues relevant to this hearing. The testimony is in regards to: 
(1) Proposed National Academy of Science Study (NAS) under S. 1756 and, 
(2) Immediate Assistance for Cancer Services in the Republic of the 
Marshall Islands.
                    proposed nas study under s. 1756
    S. 1756 makes a provision for the National Academy of Sciences to 
conduct an assessment of the health impacts of the nuclear testing 
program on the residents of the RMI. This provision is an important 
step in defining, understanding, and addressing the composite health 
consequences of the US nuclear weapons testing program in the Marshall 
Islands.
    The predominant health focus from 52 years of nuclear testing in 
the RMI has been on health effects caused by ionizing radiation. The 
burden of human illness caused by acute high dose and chronic low dose 
exposure to ionizing radiation has been researched in several venues. 
The biological consequences of ionizing radiation on humans has been or 
is being addressed by research at the National Cancer Institute (NCI), 
Brookhaven Laboratories, and the BEIR VII committee.
    There has been much less attention paid to the non-radiation 
related health consequences of nuclear testing. Non-radiogenic impacts 
include the health consequences of removing Marshallese from their 
ancestral homes (with associated cultural / social upheaval), post 
traumatic stress, and forced dietary changes. There were many lifestyle 
changes that were imposed on particular groups of Marshallese because 
of the US nuclear weapons testing program.
    The NAS study through S. 1756 has been proposed to better 
understand the relationship of the lifestyle, cultural/social, and 
dietary changes associated with the nuclear testing to the adverse 
health outcomes of the affected Marshallese population. Understanding 
these relationships will assist with the development and design of 
specific interventions and programs which will make a positive 
difference in Marshallese health status.
    Utilizing an analytical, qualitative approach to the NAS research 
can provide the information necessary to determine how to best mitigate 
the non-radiogenic health outcomes associated with the nuclear weapons 
testing program. There are existing frameworks for analysis that could 
be utilized by the NAS. One such framework is called the ``socio-
ecological model of health''. The socio-ecological model is well 
described in health care literature and would serve as an appropriate 
tool to begin research.
    The utility of using such an approach is:

          1. No baseline quantitative data is required.
          2. The study will have a qualitative and descriptive research 
        design.
          3. There is no need for a hypothesis driven research design 
        and methodology.
          4. A quantitative comparison of ``before and after'' health 
        status of Marshallese is not necessary.
          5. A feasibility study is not required.
          6. This qualitative research design is less costly than 
        quantitative, hypothesis driven research.
          7. The socio-ecological framework takes comprehensive view of 
        what affects individual health outcomes.
          8. This research will yield what we need to know and will be 
        the foundation for where we need to go.

    A comprehensive description of the socio-ecological model for 
health and its research application is beyond the scope of this 
testimony. The basic concept is: the final outcome of an individual's 
health (physical, mental, social) is related to the specific genetics 
and behaviors of that individual, as well as an individuals social, 
ecological and economic environment. The ecological environment refers 
to the patient's physical environment.
    The socio-ecological framework analysis will help answer the 
following questions:

          1. How has the nuclear weapons testing program in the RMI 
        affected the social, ecological, and economic environments of 
        the Marshallese people at the present time?
          2. What programs could be enhanced/developed/changed which 
        would positively affect individuals who were adversely affected 
        by the nuclear weapons testing program?

    The socio-ecological model of health provides a tool to understand 
and objectively describe how nuclear weapons testing influences the 
parameters described by the socio-ecological model. This model begins 
with the understanding that major events, such as 12 years of nuclear 
testing, likely had an effect on the health of Marshallese people 
socially, ecologically, and economically. The model will allow the NAS, 
and this committee, to understand that relationship better and begin to 
discuss solutions and to design programs that could achieve better 
health outcomes for the Marshallese.
    This framework is not meant to quantify illness burdens due to 
nuclear weapons testing. This framework will analyze and help describe 
the interrelationship of health outcomes of the affected population to 
nuclear testing. Notably, it is not necessary to quantify the illness 
burden caused by the nuclear weapons testing program to develop sound 
strategies and programs for the affected populations.
    The Senate Committee on Energy and Natural Resources, the US, and 
RMI wish to better understand the health impacts of the nuclear weapons 
testing program--and how to affect a positive outcome. The proposed NAS 
research would be invaluable to this end.
    I have included a reference which describes the socio-ecological 
model in greater detail.
                        cancer burden in the rmi
    I am presently the Principal Investigator with several projects, 
for the Center for Disease Control (CDC) and the National Cancer 
Institute (NCI), which were designed to develop comprehensive cancer 
plans in the RMI and the other US Associated Pacific jurisdictions. The 
RMI has just completed a 5-year comprehensive cancer plan and submitted 
this plan to the CDC.
    This 2007 RMI comprehensive cancer plan describes the cancer burden 
in the RMI, finds that cancer is now the second leading cause of death 
in the RMI and that the RMI infrastructure of cancer prevention, 
screening, treatment, cancer data tracking for Marshallese citizens is 
sorely lacking.
    A 2004 NCI study determined that over 200 cancers are developing as 
we speak as result of the US Nuclear Weapons Testing program. The 200 
cancers were generated from all parts of the RMI, albeit in greater 
proportions in the Northern atolls. There are at least 21 types of 
cancers (21 types) which may be caused by ionizing radiation from the 
US nuclear weapons testing. If one of the 21 cancers (e.g. Cancers of 
the mouth, lung, brain, colon, stomach, liver, or leukemia) develops in 
the Marshallese population there is no scientific method available to 
distinguish if that cancer was caused by radiation or not. The 
developing cancers are indistinguishable.
    Many Marshallese continue to die annually from cancers which may be 
preventable and curable if they are screened/treated earlier. The 
health infrastructure of the RMI lacks basic modes of cancer 
prevention, screening, diagnosis, treatment, and cancer data tracking. 
It is imminent that the Marshall Islands' health system receive 
assistance for a cancer center/system from the US government and this 
Committee to address the heavy cancer burden in the RMI.
    Marshallese are dying horrible deaths from cancer, many as a result 
from nuclear testing. US policy makers are trying to devise methods to 
determine how many cancers were really generated by the US nuclear 
weapons testing, and then how to figure out which individuals have 
those cancers. This is an impractical and impossible task. A program 
must be put in place to find and to treat those who may have cancers 
from nuclear testing. Assistance for comprehensive cancer care for the 
RMI must be made now. It is the right thing to do.
    Thank you.

    Mr. Philippo. Thank you, Mr. Chairman. This concludes my 
statement today. I would be most happy to answer any questions 
you may have.
    [The prepared statement of Mr. Philippo follows:]

  Prepared Statement of Witten T. Philippo, Minister-In-Assistance-to-
                       the- President, on S. 1756
    Mr. Chairman, Distinguished Members of the Senate Committee on 
Energy and Natural Resources, Ladies and Gentlemen:
    Thank you for the opportunity to appear before you today. His 
Excellency President Kessai H. Note once again takes this opportunity 
to personally thank you Chairman Bingamon for introducing S. 1756, the 
Republic of the Marshall Islands Supplemental Nuclear Compensation Act 
of 2007, and for convening this hearing so that we may present our 
views on this most important and historic legislation, and on 
implementation of the Compact, as amended.
    I would also like to take this opportunity to recognize other 
members of our delegation present here today, and to thank them for 
their presence and contributions.
     s.1756, republic of the marshall islands supplemental nuclear 
                       compensation act of 2007.
    There is no question that the U.S. Government's detonation of 
sixty-seven atmospheric nuclear weapons in our county created profound 
disruptions to human health, the environment, as well as our economy, 
culture, political system, and virtually every aspect of life. The U.S. 
nuclear weapons testing program was the marking period of our modern 
history; the trajectory of our people, our islands, and our 
institutions reflect the chaos and problems caused by extensive 
contamination, public health crises, and the upheaval and repeated 
relocation of several populations.
    A small country with seventy square miles of land and a population 
one tenth the size of Washington, D.C. does not have the financial, 
human, or institutional capacity to respond to and address the 
magnitude of problems caused by the nuclear weapons testing program--
problems which continue to plague our nation to this day.
    The RMI Government appreciates all the assistance the U.S. 
Government has given to the RMI to date to address some of the needs 
related to the testing program. The health programs, the environmental 
monitoring, and the food support programs for the atolls most impacted 
by the testing program are perhaps the most important programs that the 
U.S. provides to the RMI, particularly from a symbolic perspective as 
they demonstrate a U.S. interest in taking responsibility for the 
damages and injuries caused by U.S. testing. However, the RMI 
Government and the atoll leaders have been telling the U.S. Government 
continuously over many decades and through multiple administrations 
that the needs are much greater than the U.S. is taking responsibility 
for.
    Mr. Chairman, as President Note stated in his letter to you of 23 
August 2007, concerning S. 1756: ``This bill represents the first 
serious and substantive attempt to deal with the consequences of the 
U.S. Nuclear Testing Program in the Marshall Islands since the Section 
177 Agreement went into effect almost twenty-one years ago. We see the 
introduction of this legislation as historic and providing an important 
step in the right direction. S. 1756 will allow us to engage with the 
U.S. Congress in continuing to work on addressing the damages resulting 
from the nuclear testing; damages and injuries far worse than either 
country originally understood. Mr. Chairman, we are most grateful to 
you for this opportunity.''
    Today, I would like to discuss some of the issues addressed in S 
1756, as well as those issues that need to be further considered and 
acted upon by our governments to fully address the consequences of the 
U.S. Nuclear testing program in the Marshall Islands.
Runit Dome
    We are most pleased to note the inclusion of provisions to address 
the monitoring of the Runit Dome at Enewetak Atoll.
    The partial cleanup of Enewetak Atoll in the late 1970's resulted 
in the creation of an above ground nuclear waste storage site on Runit 
Island that has come to be known as the Runit Dome. Inside the Runit 
Dome is over 110,000 cubic yards of radioactive material scraped from 
other parts of Enewetak Atoll. The Runit Dome is of concrete 
construction and the material inside is radioactive for 24,000 years. 
This type of nuclear waste storage facility would not have been 
permitted in the US because it would not have been considered to be 
adequately protective of human health and the environment.
    In addition, there is an area on Runit Island where particles of 
plutonium were dispersed on not cleaned up. The particles remain on the 
island covered by a few inches of dirt.
    We all know that monitoring of Runit Dome and other parts of Runit 
Island needs to be done as part of a long-term stewardship program. 
Neither my government nor the Enewetak people have the expertise or 
resources to conduct such monitoring. The Runit Dome and the 
surrounding contaminated land and marine area should be monitored and 
treated as any nuclear storage site in the US in order to provide the 
same level of protection to the Enewetak people as US citizens receive. 
That means that the monitoring needs to be part of a long-term 
stewardship program under the direction and responsibility of the DOE 
or other appropriate US agency.
    This has always been a major issue of concern for the people of 
Enewetak who live in the immediate area of Runit, and consume fish and 
other seafood from the reef area adjoining Runit. Accordingly, we ask 
the Committee to remain engaged in the oversight of the Department of 
Energy's survey reports regarding the radiological conditions at Runit, 
and to see to it that these surveys are adequately and consistently 
funded to allow the Department of Energy to carry out the surveys in a 
complete and timely manner, and to take immediate action if a problem 
is discovered.
Eligibility for Energy Employees Occupational Illness Compensation 
        Program
    The inclusion of citizens of the Trust Territory of the Pacific 
Islands for coverage under the Energy Employees Occupational Illness 
Compensation Program Act of 2000 is also most welcomed by the RMI. 
Approximately 50 Marshallese worked for the United States or its 
contractors in the Marshall Islands during this period in efforts to 
clean-up or monitor these severely contaminated sites, but unlike their 
U.S. citizen co-workers, have been denied access to health care to 
address the health consequences of their very hazardous work.
Section 177 Healthcare
    S. 1756 also appropriates the sum of $2 million annually, as 
adjusted for inflation in accordance with the Section 218 of the RMI-
U.S. Compact for purposes of providing primary health care to the four 
atoll communities. The RMI welcomes and fully supports this measure and 
wishes to thank the Chairman for making this a permanent rather than 
discretionary appropriation; an issue that has caused significant 
problems in other Compact assistance.
    Section 1(a) of Article II of the Section 177 Agreement provided 
that $2 million annually be made available to address the health 
consequences of the nuclear testing program. This amount was never 
subject to an inflation adjustment, despite the fact that health care 
cost inflation rates have always been substantially higher in the U.S. 
than overall inflation rates. Applying the Medical Care CPI in Hawaii, 
where most medical referral cases from the RMI were sent during the 
period in question, the adjusted rate would have been $4.42 million 
annually as of 2001. An analysis showing the declining value of the 
Section 177 Health Care funds over time; the additional costs to the 
RMI; and what sums should have been provided in order for these funds 
to maintain their value is attached to this statement.
    As stated in the August 23 letter from President Note to Chairman 
Bingaman, the scope of 177 Health Care Program needs to be examined, 
especially in light of the September 2004 NCI report prepared at the 
specific request of the Senate Committee on Energy and Natural 
Resources. In addition to stating that more than half of the estimated 
532 excess cancers had ``yet to develop or be diagnosed'' (page 14), 
the report also indicates that more than half of those excess cancers 
will occur in populations that were at atolls other than the four 
included in the 177 Health Care Program. Table 3 on page 20 of the 
report provides more than adequate justification for including in the 
program the populations of the ``Other Northern Atolls'' of Ailuk, 
Mejit, Likiep, Wotho, Wotje, and Ujelang. That table indicates 227 
estimated excess cancers among the 2005 people who were living at those 
atolls during the testing period, an amount representing more than 11% 
of those populations. It could also be argued that there should be an 
active and ongoing medical diagnostic program carried out across the 
RMI, specifically including the outer islands, in order to diagnose the 
excess cancers so that they can be treated at the earliest possible 
stage.
    The 4 Atoll Health Care Program (formerly the 177 Health Care 
Program) has been operating on borrowed time and resources since its 
beginnings. We have continued to watch medical and pharmaceuticals, 
supplies, and logistical costs increase year after year while our 
financial support stayed flat. After the first 17 years of the Compact, 
with medical costs at an all time high, we faced the challenge of 
trying to continue the program with a 50% cut in our already seriously 
inadequate budget.
    What are the challenges we face?
    We need a commitment for longer term funding.
    We need adequate and reliable water supply systems.
    We need affordable and reliable power supply systems.
    We need reliable transportation services for patients and medical 
supplies.
    Our clinic buildings and equipment are 10-15 years old and have had 
minimal repairs. Although we have upgraded some of the medical 
equipment this year we have barely scratched the surface. We are 
without some very basic equipment and are limited in what equipment can 
be provided because we lack the necessary support systems. Also, we do 
not have a budget that allows for a repair technician or a preventive 
maintenance program.
    We lack autoclaves because these sterilizers require a continuing 
supply of distilled water to operate. Other sterilization supplies such 
as Formalin can only be transported by boat and are difficult to ship 
into the Marshall Islands. This means we do without basic minor surgery 
equipment unless we use cost-prohibitive disposable sets and supplies.
    None of our clinics have basic laboratory setups for simple 
diagnostics and many of the one step lab tests are either too costly or 
require cool storage. We have extremely limited diagnostic equipment 
and much of it has to be shared on a rotating basis. We have no 
proctoscopes, we cannot do PSA's. Both of these would be needed for 
cancer screenings. In addition, we lack reliable cold storage.
    Facing these limits, we have been very lucky to recruit physicians 
from third world countries with strong clinical skills, experience 
relative to our diseases, and a willingness to work under these 
difficult circumstances. These doctors continue to live and work in our 
outer atolls despite limitations in supplies, equipment, and logistical 
support. Hiring these doctors has also been a matter of necessity as 
neither our previous or current budget would have supported hiring 
physicians with greater salary expectations. The recruiting and 
relocation costs for these doctors can be relatively high. This expense 
is compounded as we deal with year to year funding. Lack of secured 
funding prevents us from recruiting and hiring on longer term contracts 
and seriously impacts the program's continuity and the related 
recruiting costs.
NAS Study
    S.1756 makes provision for the National Academy of Sciences to 
conduct an assessment of the health impacts of the nuclear testing 
program on the residents of the RMI. The RMI strongly supports this 
assessment as it will look at the overall health impacts caused by the 
Nuclear Testing Program rather than focusing on just one aspect of 
those impacts. The RMI would like to make it clear, however, that the 
NCI and other data previously presented to this Committee provides the 
justification for taking action now to establish a cancer screening and 
treatment program, and to address the radiogenic healthcare needs of 
several communities beyond the 4 atolls.
    The proposed National Academy of Sciences assessment of the health 
impacts of the nuclear program on the residents of the Marshall Islands 
should consider all data and analyses relating to dose reconstructions, 
exposure pathways, and potential health outcomes. In particular, two 
reports prepared for the Centers for Disease Control by S. Cohen & 
Associates and dated May, 2007, should be reviewed as part of the 
assessment and the authors of the reports should be given an 
opportunity to meet with the NAS experts to discuss their findings. The 
two reports are: ``Historical Dose Estimates to the GI Tract of 
Marshall Islanders Exposed to BRAVO Fallout''(Contract No. 200-2002-
00367, Task Order No. 9) and ``An Assessment of Thyroid Dose Models 
Used for Dose Reconstruction,'' Vols. I and II (Contract No. 200-2002-
00367 ,Task Order No. 10).
Assessment of the Marshall Islands Nuclear Claims Tribunal
    Absent from the S.1756 is any reference to the decisions and awards 
made by the Marshall Islands Nuclear Claims Tribunal. The 
administrative and adjudicative processes of the Tribunal over the past 
19 years are an important mutually agreed to component of the Section 
177 Agreement and its implementation to resolve claims for damage to 
person and property arising as a result of the nuclear testing program. 
We cannot simply ignore the Tribunal's work and awards that it has 
made.
    Understanding that there continues to be concerns in Congress, we 
would support a further study of the decision-making processes of the 
Marshall Islands Nuclear Claims Tribunal and its awards by an 
appropriate organization. The RMI has presented a Report on this 
subject prepared by former United States Attorney General Richard 
Thornburgh in January, 2003, however, issues and concerns apparently 
continue. We should move forward and resolve any remaining issues and 
concerns regarding the Tribunal and its work. We would therefore 
respectfully suggest that the GAO may be appropriate to undertake such 
a study and provide recommendations to the Congress.
                         compact implementation
    Overall, we have made a great deal of progress with respect to 
implementing the Compact, as amended. The procedures we developed 
regarding the Joint Economic Management and Financial Accountability 
Committee (JEMFAC) have worked well through a process of requiring 
consensus between our two governments on the allocation and division of 
Compact annual sector grant funding.
    During the past three years, the RMI Government has invested 
heavily in the Education, Health, and Public Infrastructure sectors in 
terms of allocating available annual grant funding--in fact, the Public 
Infrastructure grant allocations have been mostly for improving 
education and health facilities. The Health and Education sectors are 
identified within the body of the Compact as priority sectors. The RMI 
Government intends to remain fully committed and focused on improving 
our education and health outcomes.
    Our Government has also done much to improve the groundwork for 
more robust private sector development with enactment of further 
changes to our land registration laws, enactment of a secured 
transactions law, and other reforms to create an environment conducive 
to the private sector growth.
    We believe that implementation of the accountability provisions in 
the amended Compact in respect to annual sector grant funding has to 
date, been largely a success for the RMI. We must, however, continue to 
improve on our performance and see positive and measurable results that 
will encourage greater ownership of the new system within our 
government, and to the Marshallese people who are the real 
beneficiaries of better accountability and good governance.
    As we have endeavored to usher in an era of greater accountability, 
we are cognizant that such efforts must start from the top. As we move 
forward and better enforce our own laws, we are aware that problems 
with local capacity remain, and must be resolved if we are to 
institutionalize the changes we are undertaking.
    The RMI has also moved forward over the past three years with 
taking measures to implement the Compact, as amended, and adopting a 
system of performance based budgeting within the government. We started 
this program with the core sectors of Health and Education. We are now 
moving to a performance based budget system within other sectors of the 
government that are not funded from the Compact.
    The reporting obligations of the new Compact are the key to 
monitoring this progress. Our capacity is growing to meet these many 
requirements and the most critical among these is the annual report to 
the President of the United States on the progress of the Compact 
implementation. I think it is true to say that both sides recognize 
that the present timing for the preparation of this report is 
unrealistic and I would suggest that this issue needs to be addressed 
and changed to a more realistic timeframe if we are to best reflect the 
Compact's progress. This is also true of the timing for submission of 
audits under the Fiscal Procedures Agreement.
    We also see the need for the foreseeable future to coordinate 
Compact activities within the Government through a viable framework 
that focuses only on matters related to the Compact. In this respect, I 
am pleased to announce that our Cabinet has recently approved the 
formal creation of an Office of Compact Implementation that will 
oversee all aspects of Compact implementation on behalf of the RMI.
Full Inflation Adjustment
    The issue of full inflation continues to be problematic for the RMI 
in terms of the Government maintaining fiscal stability as annual grant 
assistance declines over the years as was predicted by the RMI four 
years ago. The GAO also dedicated an entire report to dealing with the 
long term effect of declining grant assistance under the amended 
Compact. In the RMI's comments to the GAO Report in November, 2006, we 
noted:
          One of the major challenges regarding social and economic 
        stability remains the size of the annual decrement of the 
        Compact Title Two Section 211 sector grant funding ($500,000) 
        and the only partial inflation adjustment. The resulting 
        significant annual decline in the nominal and real value of 
        this funding will place pressure on providing adequate social 
        services and fiscal stability as well as impact private sector 
        performance. This is despite the changes the RMI is making in 
        focusing amended Compact funding mainly on health, education 
        and infrastructure development and maintenance.
    Recently, this situation has been further exacerbated by rapidly 
rising costs of imported fuel, which is causing major problems with the 
provision of public utilities and inter-island services for our 
widespread communities and creating an overall inflationary effect that 
is putting a damper on our economic growth.
    Although annual decrements of $500,000 are a major improvement over 
the original Compact with decreases of $4 million every four years, 
these decrements over time may result in the same problems that plagued 
the RMI under the original Compact that cannot be overcome through 
reducing essential government services or changing the tax structure. 
Full inflation adjustment to amounts provided under Article II of the 
amended Compact remains an important issue, and one if not addressed in 
the short term, will cause significant fiscal problems in the long 
term.
Supplemental Education Grants
    U.S. Public Law 108-188 provides for a supplemental education grant 
(SEG) of $6.1 million annually, to be adjusted for inflation which was 
to allow the RMI Government to design and implement education programs 
to replace those lost through the termination of certain federal 
programs. These funds were to be made available to the RMI within 60 
days after the date of appropriation.
    Unfortunately, these appropriations have taken place well into the 
fiscal year, and delays in the RMI receiving the funds have been in 
excess of six months as opposed to 60 days as required by law. In 
addition, rather than adjusting the $6.1 million for inflation, the RMI 
has seen this amount decrease over the years as it has been subject to 
across the board budget cuts. For example, over the past two fiscal 
years there has been a $712,000 shortfall between the planned SEG 
amounts, and the actual amounts appropriated. There is now a real 
danger of creating a de facto ceiling for the SEG that is below the 
authorized amount, and does not include inflation.
    These problems arise as a result of the fact that SEG funding is an 
annual discretionary appropriation under the U.S. Compact of Free 
Association Amendments Act 2003. This has caused tremendous problems 
for our Ministry of Education in developing and implementing crucial 
education programs supplementing the Education sector grant in the 
Compact. In addition, the lower amount will impact education sector 
performance by limiting the scope and depth of sector operational, 
development and reform activities.
    This issue is of such great importance to the RMI that on March 8, 
2006, President Note wrote a letter to Secretary Spelling asking that 
the SEG be made available as a permanent appropriation in the same 
manner as other Compact assistance.
    I would now ask the Administration and Congress once again to make 
provision that the SEG be made available to the RMI as a permanent 
appropriation and adjusted for inflation in the same manner as other 
financial assistance under the Compact. This will be crucial for the 
success of efforts to improve the educational outcomes for the 
Marshallese people.
Compact Trust Fund
    The Compact of Free Association, as amended, also includes 
provision for a Trust Fund which will build up until 2023, at which 
time income from the Trust Fund will be made available to the RMI to 
coincide with the end of annual grant assistance.
    As we noted in our comments to the last GAO Report, we agree with 
their findings questioning the adequacy of the Trust Fund in 2023 to 
fulfill its purpose. What became clear in the U.S. agency comments to 
the GAO Report is that there are differences of opinion as to the 
purposes of the Compact Trust Fund.
    References are made to the negotiations history of the Trust Fund 
Agreement (TFA), and in particular to Article 3 of the TFA which states 
that the Fund is to provide an annual source of revenue after 2023.
    This provision and others were hotly debated during the 
negotiations, but Article 3 cannot be viewed as a stand-alone 
provision. Rather, the TFA must be read as a whole, and when one does 
that, it is clear that the goal established in the Agreement is to 
provide for a smooth transition between the end of annual economic 
assistance, and income from the Trust Fund. The TFA also provides that 
starting in FY 2024, the RMI may receive an amount equal to the annual 
grant assistance in 2023 plus full inflation. The Agreement does not 
say ``up to'' that amount or any other amount, and the negotiating 
history will show that the reason the word ``may'' appears rather than 
``shall'' is that the disbursement of the funds would be based on RMI 
compliance with whatever rules are in place at that time governing 
their use. Since this reference is the only reference in the TFA to 
amounts available starting in FY 2024, and thereafter, we believe that 
this is the benchmark that we should be striving to achieve in the 
future.
    We point this out not for the reason of engaging in another 
protracted debate on the purpose of the Trust Fund, but to point out 
that the Fund should have goals other than simply saying that it will 
produce revenues starting in FY 2024. Our discussion should center 
around what can be done between now and then to maximize Trust Fund 
income and to make it viable in the future.
    There are many ways in which future viability of the Trust Fund can 
be achieved. Over the past year, the TFC has considered the possibility 
of securitizing future U.S. contributions to the Trust Fund. This could 
permit investment of larger amounts in the early years allowing the 
corpus and income producing potential of the Fund to substantially 
increase over current projections. The RMI Government looks forward to 
receiving a report on the advisability and risk of securitizing future 
U.S. contributions, but urges that this be done as quickly as possible 
since this is a time sensitive concept. If feasible, we would strongly 
support securitization of future Trust Fund contributions.
    A second way to improve the long-term viability of the Fund would 
be to extend the term of annual grant assistance for at least another 
two years before distributing income from the Trust Fund. This would be 
consistent with the intent of both governments when the Trust Fund was 
originally negotiated, and it was anticipated that the Fund would be 
invested for a full 20 years before it would be expected to produce 
annual income. This did not happen due to the delay in approving and 
implementing the Compact, and the wording of Section 216(b) of the 
amended Compact.
    Another way to improve the Trust Fund's viability would be to 
attract additional subsequent contributors to the Fund. The RMI is most 
pleased that it was able to bring Taiwan in as a subsequent contributor 
to the Fund, and looks forward to participation by other Subsequent 
Contributors. In this respect, we would encourage the U.S. Government 
to actively seek additional contributions from other sources as the RMI 
has done over the past three years.
    Finally, we were anticipating that a technical amendment would be 
included in HR 2705, the Compacts of Free Association Amendments Act of 
2007, which would allow the RMI and U.S. Governments to make certain 
technical amendments to the Trust Fund Agreement regarding the Fund 
custodian and sub-custodian in order to facilitate investments by the 
Investment Advisor, Goldman Sachs, and to streamline the cumbersome 
process noted by the GAO in their report. It is our understanding that 
the Administration had submitted such an amendment, but it does not 
seem to have been included in the current version of HR 2705.
    The good news about problems concerning the future adequacy and 
viability of the Trust Fund is that there is time to take measures to 
address these concerns. The RMI believes, however, that these measures 
need to be taken as quickly as possible. Already there is concern among 
the Marshallese people that the Trust Fund will not be a viable and 
sustainable source of revenue in the future. This belief was further 
supported by the findings of the GAO in their Report. As time passes, 
this will lead to increased migration as people will lack confidence in 
the future of their nation.
    Both Governments have a strong interest in seeing to it that the 
Trust Fund is successful, and fulfills its purpose.
    Mr. Chairman, this concludes my testimony here today regarding S. 
1756, and Compact implementation. I would be most pleased to answer any 
questions at this time.

    The Chairman. Thank you very much.
    Next, let's hear from Mr. David Gootnick, who's with the 
GAO.

STATEMENT OF DAVID B. GOOTNICK, DIRECTOR, INTERNATIONAL AFFAIRS 
          AND TRADE, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Gootnick. Thank you, Mr. Chairman.
    Mr. Chairman, Senator Murkowski, members of the committee, 
I am pleased to discuss GAO's recent work on the Compact of 
Free Association with the RMI.
    As has been stated, the amended compact provides for 
decreasing grant assistance, paired with increasing trust fund 
contributions intended to assist the RMI toward economic 
advancement, and budgetary self-reliance. The amended compact 
also strengthens planning, reporting and accountability over 
grant funds.
    Congress has directed GAO to report on the use and 
effectiveness of U.S. assistance under the amended compact, and 
today, drawing on this work, I will discuss three issues: RMI's 
economic prospects, implementation of the amended Compact, and 
potential trust fund earnings.
    RMI has limited prospects for economic development, and 
progress and policy reforms necessary to stimulate private 
sector growth has been slow. The RMI economy depends heavily on 
foreign assistance. At present, the public sector represents 
roughly 60 percent of GEP, two-thirds of which is U.S. 
assistance.
    The industries with the greatest growth potential--
fisheries and tourism--face significant barriers to expansion, 
including geographic isolation, poor infrastructure, poor 
business environments, and public sector wages that are twice 
the private sector level.
    Although a stated priority for the Government, progress in 
implementing policy reforms on tax, land, foreign investment 
and the public sector has been limited. On taxes, although the 
Government has focused on improved administration and 
collections, fundamental tax reform has not progressed through 
the legislation.
    On land, the RMI has established land registration offices, 
but registration is voluntary, and a very small number of 
parcels are being registered. Continued disputes, and 
uncertainty over ownership and land values, particularly on 
Ebeye, limits the use of land as an asset, and for development.
    On the public sector, after some downsizing in the late 
1990s, as has been said, government payroll nearly doubled 
between 2000 and 2005.
    Regarding the implementation of grants--the RMI has 
allocated funds to prioritize infrastructure, education and 
health. Progress in building classrooms that was alluded to by 
Mr. Bussanich has been demonstrated, in particular. Future 
infrastructure plans call for development in the College of the 
Marshall Islands, and Majuro Hospital.
    Several factors hamper the Compact grant funds used to meet 
long-term development goals. First, continued disputes over 
land rights, particularly on Ebeye, have hampered several 
infrastructure projects, and may significantly delay future 
infrastructure development, a key priority.
    Second, again on Ebeye, an impasse with the landowners over 
the management of Compact special needs grants significantly 
delayed the use of funds there. This has hampered the provision 
of basic services such as power and water.
    Third, capacity limitations constrain the government's 
ability to monitor progress on a day-to-day basis.
    Fourth, we project that per capita grant assistance will 
decline in real terms, from over $600 per person today, to 
roughly $300 in 2023. Full inflation adjustment would have only 
a marginal impact on that decrement.
    Finally, regarding the Trust Fund. As you know, in addition 
to the U.S. and RMI contributions, the Fund will also receive a 
$40 million contribution from Taiwan. However, under different 
projections of market volatility and investment strategy, we 
found increasing probability that in some years, the fund will 
not disburse the maximum level allowed, or over the long-term, 
be able to disburse any income.
    The Trust Fund could be supplemented from several sources, 
but each has limitations. Tax revenue, or remittances, if 
bolstered, could supplement the Fund's income. At present, 
emigrants are not a source of remittances, in fact, according 
to recent data, almost half of the Marshallese living in 
Hawaii, CNMI, and Guam, live in poverty. Also, the option of 
securitization entails risk, it has not yet been fully 
analyzed--although as Mr. Bussanich said, that effort is 
underway.
    We have recommended that the Department of Interior work 
with the RMI Government to ensure that the Compact Management 
Committees address the limited progress in implementing 
economic reforms, develop plans to improve RMI's capacity to 
monitor and proactively manage the decrement, and three, ensure 
that the Trust Fund Committee's report on the Fund's likely 
status as a source of revenue after 2023 is completed.
    Interior generally agrees with our recommendations, and has 
already taken steps to address some of them. Hawaii has been 
active, and committed to the success of the amended Compact, 
and likewise, the RMI is constructively engaged in pursuing its 
health, education and infrastructure goals.
    However, success will require ongoing resources, diligence, 
and some very difficult choices.
    Mr. Chairman, this concludes my statement, I'm happy to 
answer your questions.
    [The prepared statement of Mr. Gootnick follows:]

   Prepared Statement of David B. Gootnick, Director, International 
          Affairs and Trade, Government Accountability Office
                      compact of free association
Implementation Activities Have Progressed, but the Marshall Islands 
        Faces Challenges to Achieving Long-Term Compact Goals
                         why gao did this study
    In 2003, the U.S. government extended its economic assistance to 
the Republic of the Marshall Islands (RMI) through an Amended Compact 
of Free Association. From 2004 to 2023, the United States will provide 
an estimated $1.5 billion to the RMI, with annually decreasing grants 
as well as increasing contributions to a trust fund. The assistance, 
targeting six sectors, is aimed at assisting the country's efforts to 
promote economic advancement and budgetary self-reliance. The trust 
fund is to be invested and provide income for the RMI after compact 
grants end. The Department of the Interior (Interior) administers and 
oversees this assistance. Drawing on prior GAO reports (GAO-05-633, 
GAO-06-590, GAO-07-163, GAO-07-513, GAO-07-514R), this testimony 
discusses (1) the RMI's economic prospects, (2) implementation of the 
amended compact to meet long-term goals, and (3) potential trust fund 
earnings. In conducting its prior work, GAO visited the RMI, reviewed 
reports, interviewed officials and experts, and used a simulation model 
to project the trust fund's income.
    Prior GAO reports recommended, among other things, that Interior 
work with the RMI to address lack of progress in implementing reforms; 
plan for declining grants; reliably measure progress; and ensure timely 
reporting on the fund's likely status as a source of revenue after 
2023. Interior agreed with GAO's recommendations.
            What GAO Found
    The RMI has limited prospects for achieving its long-term 
development goals and has not enacted policy reforms needed to achieve 
economic growth. The RMI economy depends on public sector spending of 
foreign assistance rather than on private sector or remittance income. 
At the same time, the two private sector industries identified as 
having growth potential--fisheries and tourism--face significant 
barriers to expansion because of a costly business environment. RMI 
emigrants also lack marketable skills needed to increase revenue from 
remittances. Despite declining grants under the compact, RMI progress 
in implementing key policy reforms to improve the private sector 
environment, such as tax or land reform, has been slow. In August 2006, 
the RMI's compact management committee began to address the country's 
slow progress in implementing reforms.
    Although the RMI has made progress in implementing compact 
assistance, it faces several challenges in allocating and using this 
assistance to support its long-term development goals. RMI grant 
allocations have reflected compact priorities by targeting health, 
education, and infrastructure. However, political disagreement over 
land use in Kwajalein Atoll, where the United States has a missile 
testing facility, and over management of public entities has negatively 
affected infrastructure projects. The RMI also has not planned for 
long-term sustainability of services that takes into account declining 
compact assistance. Inadequate baseline data and incomplete performance 
reports have further limited the RMI's ability to adequately measure 
progress. Although single-audit reporting has been timely, insufficient 
staff and skills have limited the RMI's ability to monitor day-to-day 
sector grant operations. Interior's Office of Insular Affairs (OIA) has 
conducted administrative oversight of the sector grants but has been 
constrained by competing oversight priorities.
    The RMI trust fund may not provide sustainable income for the 
country after compact grants end. Market volatility and the choice of 
investment strategy could cause the RMI trust fund balance to vary 
widely, and there is increasing probability that in some years the 
trust fund will not reach the maximum disbursement level allowed--an 
amount equal to the inflation-adjusted compact grants in 2023--or be 
able to disburse any income. In addition, although the RMI has 
supplemented its trust fund income with a contribution from Taiwan, 
other sources of income are uncertain or entail risk. Trust fund 
management processes have also been problematic; as of June 2007, the 
RMI trust fund committee had not appointed an independent auditor or a 
money manager to invest the fund according to the proposed investment 
strategy.
    Mr. Chairman and Members of the Committee:
    I am pleased to be here today to discuss GAO's recent work 
regarding the Compact of Free Association between the United States and 
the Republic of the Marshall Islands (RMI). From 1987 through 2003,\1\ 
the United States provided more than $2 billion in economic assistance 
to the Federated States of Micronesia (FSM) and the RMI under a Compact 
of Free Association;\2\ approximately $579 million of this economic 
assistance went to the RMI. In 2003, the U.S. government approved an 
amended compact with the RMI that provides an additional 20 years of 
assistance, totaling about $1.5 billion from 2004 through 2023.\3\ The 
Department of the Interior's Office of Insular Affairs (OIA) is 
responsible for administering and monitoring this U.S. assistance.
---------------------------------------------------------------------------
    \1\ In this testimony, all annual references refer to the fiscal 
year rather than the calendar year.
    \2\ In 2000, we reviewed assistance under the compact and 
determined that the U.S. and RMI governments had provided limited 
accountability over spending and that U.S. assistance had resulted in 
little impact on economic development in the RMI. See GAO, Foreign 
Assistance: U.S. funds to Two Micronesian Nations Had Little Impact on 
Economic Development, GAO/NSIAD-00-216 (Washington, D.C.: Sept. 22, 
2000).
    \3\ This figure is based on a Department of Interior projection as 
of July, 2007.
---------------------------------------------------------------------------
    The amended compact with the RMI identifies the additional 20 years 
of grant assistance as intended to assist the RMI government in its 
efforts to promote the economic advancement and budgetary self-reliance 
of its people. The assistance is provided in the form of annually 
decreasing grants that prioritize health and education, paired with 
annually increasing contributions to trust funds intended as a source 
of revenue for the country after the grants end in 2023. The amended 
compact targets certain funds to address needs in Kwajalein Atoll, 
where the United States maintains a missile testing facility. The 
amended compact also contains several new funding and accountability 
provisions that strengthen reporting and bilateral interaction. These 
provisions include requiring the establishment of a joint economic 
management committee and a trust fund committee to, respectively, among 
other things, review the RMI's progress toward compact objectives and 
to assess the trust fund's effectiveness in contributing to the 
country's long-term economic advancement and budgetary self-reliance. 
In 2003, we testified that these provisions could improve 
accountability over assistance but that successful implementation will 
require appropriate resources and sustained commitment from both the 
United States and the RMI.\4\
---------------------------------------------------------------------------
    \4\ GAO, Compact of Free Association: An Assessment of the Amended 
Compacts and Related Agreements, GAO-03-988T (Washington, D.C.: June 
18, 2003), testimony before the Committee on Resources, House of 
Representatives.
---------------------------------------------------------------------------
    Today, drawing on several reports that we have published since 
2005,\5\ I will discuss the RMI's economic prospects, implementation of 
the amended compact to meet its long-term goals, and potential trust 
fund earnings.
---------------------------------------------------------------------------
    \5\ The amended compacts' implementing legislation instructs GAO to 
report 3 years following the enactment of the legislation and every 5 
years thereafter on the RMI's use and effectiveness of U.S. financial, 
program, and technical assistance as well as the effectiveness of 
administrative oversight by the United States. See GAO, Compacts of 
Free Association: Implementation of New Funding and Accountability 
Requirements is Well Under Way, but Planning Challenges Remain, GAO-05-
633 (Washington, D.C.: July 11, 2005); GAO, Compacts of Free 
Association: Development Prospects Remain Limited for the Micronesia 
and the Marshall Islands, GAO-06-590 (Washington, D.C.: June 27, 2006); 
GAO, Compacts of Free Association: Micronesia and the Marshall Islands 
Face Challenges in Planning for Sustainability, Measuring Progress, and 
Ensuring Accountability, GAO-07-163 (Washington, D.C.: Dec. 15, 2006); 
GAO, Compacts of Free Association: Trust Funds for Micronesia and the 
Marshall Islands May Not Provide Sustainable Income, GAO-07-513 
(Washington, D.C.: July 15, 2007); and GAO, Compact of Free 
Association: Micronesia and the Marshall Island's Use of Sector Grants, 
GAO-07-514R (Washington, D.C.: May 25, 2007).
---------------------------------------------------------------------------
                                summary
    The RMI has limited prospects for achieving its long-term 
development objectives and has not enacted policy reforms needed to 
enable economic growth. The RMI depends on public sector spending of 
foreign assistance rather than on private sector or remittance income; 
public sector expenditure accounts for more than half of its gross 
domestic product (GDP). The RMI government budget largely depends on 
foreign assistance and, despite annual decrements in compact funding to 
support budgetary expenditures, is characterized by a growing wage 
bill. Meanwhile, the two private sector industries identified as having 
growth potential--fisheries and tourism--face significant barriers to 
expansion because of the RMI's remote geographic location, inadequate 
infrastructure, and poor business environment. In addition, RMI 
emigrants lack marketable skills that are needed to increase revenue 
from remittances. Moreover, progress in implementing key policy reforms 
necessary to improve the private sector environment has been slow. For 
example, although economic experts describe the RMI's current tax 
system as complex and regressive, the RMI government has not 
implemented fundamental tax reform. Further, although the RMI has 
established land registration offices, continued uncertainties over 
land ownership and land values hamper the use of land as an asset. 
Foreign investment regulations remain burdensome, and RMI government 
involvement in commercial activities continues to hinder private sector 
development. Moreover, at the time of our 2006 report, the RMI's 
compact management committee had not addressed the country's slow 
progress in implementing reforms.
    The RMI has made progress in implementing compact assistance, but 
it faces several challenges in allocating and using this assistance to 
support its long-term development goals. RMI grant allocations have 
reflected compact priorities by targeting health, education, and 
infrastructure--for example, funding construction of nine new schools. 
However, in the case of Kwajalein Atoll, political disagreement over 
management of public entities and government use of leased land has 
negatively affected the construction of schools and the use of compact 
funds set aside for Ebeye special needs.\6\ The RMI also has not 
planned for long-term sustainability of services that takes into 
account the annual funding decrement. Capacity limitations have further 
affected its ability to ensure the effective use of grant funds. The 
RMI currently lacks the capacity to adequately measure progress, owing 
to inadequate baseline data and incomplete performance reports. 
Moreover, although accountability--as measured by timeliness in single 
audit reporting and corrective action plans to single audit findings--
has improved, insufficient staff and skills have limited the RMI's 
ability to monitor day-to-day sector grant operations as the compacts 
require. Inadequate communication about grant implementation may 
further hinder the U.S. and RMI governments from ensuring the grants' 
effective use. Although Interior's Office of Insular Affairs (OIA) has 
conducted administrative oversight of the sector grants, its oversight 
has similarly been constrained by staffing challenges and the need to 
assist the FSM with its compact implementation activities.
---------------------------------------------------------------------------
    \6\ Kwajalein Atoll is the RMI's second most populated atoll, where 
many residents were displaced to provide space for U.S. missile 
testing. Many of these residents now reside on Ebeye Island.
---------------------------------------------------------------------------
    The RMI trust fund may not provide sustainable income for the 
country after compact grants end, potential sources for supplementing 
trust fund income have limitations, and the trust fund committee has 
experienced management challenges. Market volatility and the choice of 
investment strategy could cause the RMI trust fund balance to vary 
widely, and there is increasing probability that in some years the 
trust fund will not reach the maximum disbursement level allowed--an 
amount equal to the inflation-adjusted compact grants in 2023--or be 
able to disburse any income. The trust fund committee's reporting has 
not analyzed the fund's potential effectiveness in helping the RMI 
achieve its long-term economic goals. Although the RMI has supplemented 
its trust fund income with a contribution from Taiwan, other sources of 
income are uncertain or entail risk. For example, the RMI's limited 
development prospects constrain its ability to raise tax revenues to 
supplement the fund's income, and options such as securitization--
issuing bonds against future U.S. contributions--include the risk of 
lower fund balances and reduced income. Furthermore, according to U.S. 
government officials, trust fund management processes have been 
problematic. As of June 2007, for example, the RMI trust fund committee 
had not appointed an independent auditor or a money manager to invest 
the fund according to the proposed investment strategy.
    Our previous reports on the amended compacts recommended, among 
other things, that Interior's Deputy Assistant Secretary for Insular 
Affairs ensure that the compact management committee address the RMI's 
lack of progress in implementing economic reforms; work with the RMI to 
develop plans for minimizing the impact of the declining grants; work 
with the RMI to fully develop a reliable mechanism for measuring 
progress toward compact goals; and ensure the trust fund committee's 
timely reporting on the fund's likely status as a source of revenue 
after 2023. Interior generally concurred with our recommendations and 
has taken some actions in response to several of them.
                               background
Compact of Free Association: 1986-2003
    In 1986, the United States, the FSM, and the RMI entered into the 
original Compact of Free Association. The compact provided a framework 
for the United States to work toward achieving its three main goals: 
(1) to secure self-government for the FSM and the RMI, (2) to ensure 
certain national security rights for all of the parties, and (3) to 
assist the FSM and the RMI in their efforts to advance economic 
development and self-sufficiency. Under the original compact, the FSM 
and RMI also benefited from numerous U.S. federal programs, while 
citizens of both nations exercised their right under the compact to 
live and work in the United States as ``nonimmigrants'' and to stay for 
long periods of time.
    Although the first and second goals of the original compact were 
met, economic self-sufficiency was not achieved under the first 
compact. The FSM and the RMI became independent nations in 1978 and 
1979, respectively, and the three countries established key defense 
rights, including securing U.S. access to military facilities on 
Kwajalein Atoll in the RMI through 2016. The compact's third goal was 
to be accomplished primarily through U.S. direct financial assistance 
to the FSM and the RMI that totaled $2.1 billion from 1987 through 
2003.\7\ However, estimated FSM and RMI per capita GDP levels at the 
close of the compact did not exceed, in real terms, those in the early 
1990s,\8\ although U.S. assistance had maintained income levels that 
were higher than the two countries could have achieved without support. 
In addition, we found that the U.S., FSM, and RMI governments provided 
little accountability over compact expenditures and that many compact-
funded projects experienced problems because of poor planning and 
management, inadequate construction and maintenance, or misuse of 
funds.\9\
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    \7\ This estimate is based on Interior data and represents total 
nominal outlays. It does not include payments for compact-authorized 
federal services or U.S. military use of Kwajalein Atoll land, nor does 
it include investment development funds provided under section 111 of 
Public Law 99-239.
    \8\ Estimated FSM per capita GDP, in fiscal year 2003 U.S. dollars, 
was $2,151 in 2003 compared with an average of $2,093 from 1990 to 
1995. Estimated RMI per capita GDP, in fiscal year 2003 U.S. dollars, 
was $2,247 in 2003 compared with an average of $2,336 from 1990 to 
1995.
    \9\ GAO/NSIAD-00-216.
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Amended Compacts of Free Association: 2004-2023
    In 2003, the United States approved separate amended compacts with 
the FSM and RMI that (1) continue the defense relationship, including a 
new agreement providing U.S. military access to Kwajalein Atoll in the 
RMI through 2086; (2) strengthen immigration provisions; and (3) 
provide an estimated $3.6 billion in financial assistance to both 
nations from 2004 through 2023, including about $1.5 billion to the RMI 
(see app. I).\10\ The amended compacts identify the additional 20 years 
of grant assistance as intended to assist the FSM and RMI governments 
in their efforts to promote the economic advancement and budgetary 
self-reliance of their people. Financial assistance is provided in the 
form of annual sector grants and contributions to each nation's trust 
fund. The amended compacts and their subsidiary agreements, along with 
the countries' development plans, target the grant assistance to six 
sectors--education, health, public infrastructure, the environment, 
public sector capacity building, and private sector development--
prioritizing two sectors, education and health.\11\ Further, the 
amended compact stipulates that certain funding be made available to 
address the population's needs on Kwajalein Atoll. To provide 
increasing U.S. contributions to the FSM's and the RMI's trust funds, 
grant funding decreases annually and will likely result in falling per 
capita grant assistance over the funding period and relative to the 
original compact (*see fig. 1).\12\ For example, in 2004 U.S. dollar 
terms, FSM per capita grant assistance will fall from around $1,352 in 
1987 to around $562 in 2023, and RMI per capita assistance will fall 
from around $1,170 in 1987 to around $317 in 2023.
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    \10\ The RMI and FSM amended compacts went into effect on May 1, 
2004, and June 25, 2004, respectively. The $1.5 billion in assistance 
to the RMI includes (1) compact grants; (2) trust fund contributions; 
(3) lease payments; and (5) inflation adjustments.
    \11\1AThe RMI compact requires its infrastructure grant to be 30 to 
50 percent of its total annual sector grants. Additionally, the RMI 
must target grant funding to Ebeye and other Marshallese communities 
within Kwajalein Atoll.
    \12\ U.S. contributions to trust funds were conditioned on the FSM 
and the RMI making their own required contribution. The RMI made its 
required initial contribution of $30 million to its trust fund on June 
1, 2004.
    * Figures 1-3, and Appendixes I-III have been retained in committee 
files.
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    Under the amended compacts, annual grant assistance is to be made 
available in accordance with an implementation framework that has 
several components (see app. II). For example, prior to the annual 
awarding of compact funds, the countries must submit development plans 
that identify goals and performance objectives for each sector. The FSM 
and RMI governments are also required to monitor day-to-day operations 
of sector grants and activities, submit periodic financial and 
performance reports for the tracking of progress against goals and 
objectives, and ensure annual financial and compliance audits. In 
addition, the U.S. and FSM Joint Economic Management Committee (JEMCO) 
and the U.S. and RMI Joint Economic Management and Financial 
Accountability Committee (JEMFAC) are to approve annual sector grants 
and evaluate the countries' management of the grants and their progress 
toward compact goals. The amended compacts also provide for the 
formation of FSM and RMI trust fund committees to, among other things, 
hire money managers, oversee the respective funds' operation and 
investment, and provide annual reports on the effectiveness of the 
funds.
Current Development Prospects Remain Limited for the RMI
    The RMI economy shows limited potential for developing sustainable 
income sources other than foreign assistance to offset the annual 
decline in U.S. compact grant assistance. In addition, the RMI has not 
enacted economic policy reforms needed to improve its growth prospects.
    The RMI's economy shows continued dependence on government spending 
of foreign assistance and limited potential for expanded private sector 
and remittance income.

   Since 2000, the estimated public sector share of GDP has 
        grown, with public sector expenditure in 2005--about two-thirds 
        of which is funded by external grants--accounting for about 60 
        percent of GDP.
   The RMI's government budget is characterized by limited tax 
        revenue paired with growing government payrolls. For example, 
        RMI taxes have consistently provided less than 30 percent of 
        total government revenue; however, payroll expenditures have 
        roughly doubled, from around $17 million in 2000 to around $30 
        million in 2005.
   The RMI development plan identifies fishing and tourism as 
        key potential private sector growth industries. However, the 
        two industries combined currently provide less than 5 percent 
        of employment,\13\ and both industries face significant 
        constraints to growth that stem from structural barriers and a 
        costly business environment. According to economic experts, 
        growth in these industries is limited by factors such as 
        geographic isolation, lack of tourism infrastructure, 
        inadequate interisland shipping, a limited pool of skilled 
        labor, and a growing threat of overfishing.
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    \13\ Employment in the RMI fishing industry grew from 2000 to 2004 
with the opening of a tuna processing plant. The commercial viability 
of this plant was never established, however, and the RMI lost around 
600 private sector jobs when the plant closed in 2005. Recent foreign 
investment in a new tuna processing plant is projected to return 
employment levels to those when the original plant closed.
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   Although remittances from emigrants could provide increasing 
        monetary support to the RMI, evidence suggests that RMI 
        emigrants are currently limited in their income-earning 
        opportunities abroad owing to inadequate education and 
        vocational skills. For example, the 2003 U.S. census of RMI 
        migrants in Hawaii, Guam, and the Commonwealth of the Northern 
        Marianas Islands reveals that only 7 percent of those 25 years 
        and older had a college degree and almost half of RMI emigrants 
        lived below the poverty line.\14\
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    \14\ See GAO-06-590. However, a preliminary survey of RMI emigrants 
in Springdale, Arkansas suggests that the emigrant population there has 
higher education levels and lower poverty levels relative to the 
emigrant population in Hawaii, Guam, and the CNMI.

    Although the RMI has undertaken efforts aimed at economic policy 
reform,\15\ it has made limited progress in implementing key tax, land, 
foreign investment, and public sector reforms that are needed to 
improve its growth prospects. For example:
---------------------------------------------------------------------------
    \15\ For example, the Asian Development Bank has recently assisted 
the RMI in holding ``Dialogue for Action'' retreats that enable public 
and private sector representatives to develop a common vision for 
sustainable development through economic reform.

   The RMI government and economic experts have recognized for 
        several years that the RMI tax system is complex and 
        regressive, taxing on a gross rather than net basis and having 
        weak collection and administrative capacity. Although the RMI 
        has focused on improving tax administration and has raised some 
        penalties and tax levels, legislation for income tax reform has 
        failed and needed changes in government import tax exemptions 
        have not been addressed.
   In attempts to modernize a complex land tenure system, the 
        RMI has established land registration offices. However, such 
        offices have lacked a systematic method for registering 
        parcels, instead waiting for landowners to voluntarily initiate 
        the process. For example, only five parcels of land in the RMI 
        had been, or were currently being, registered as of June 2006. 
        Continued uncertainties over land ownership and land values 
        create costly disputes, disincentives for investment, and 
        problems regarding the use of land as an asset.
   Economic experts and private sector representatives describe 
        the overall climate for foreign investment in the RMI as 
        complex and nontransparent. Despite attempts to streamline the 
        process, foreign investment regulations remain relatively 
        burdensome, with reported administrative delays and 
        difficulties in obtaining permits for foreign workers.
   The RMI government has endorsed public sector reform; 
        however, efforts to reduce public sector employment have 
        generally failed, and the government continues to conduct a 
        wide array of commercial enterprises that require subsidies and 
        compete with private enterprises. As of June 2006, the RMI had 
        not prepared a comprehensive policy for public sector 
        enterprise reform.

    Although the RMI development plan includes objectives for economic 
reform, until August 2006--two years into the amended compact--JEMFAC 
did not address the country's slow progress in implementing these 
reforms.
The RMI Faces Challenges to Effectively Implementing Compact Assistance 
        for Its Long-Term Development Goals
    The RMI has allocated funds to priority sectors, although several 
factors have hindered its use of the funds to meet long-term 
development needs. Further, despite actions taken to effectively 
implement compact grants, administrative challenges have limited its 
ability to ensure use of the grants for its long-term goals. In 
addition, although OIA has monitored early compact activities, it has 
also faced capacity constraints.
    The RMI allocated compact funds largely to priority sectors for 
2004-2006. The RMI allocated about 33 percent, 40 percent, and 20 
percent of funds to education, infrastructure, and health, respectively 
(see fig. 2). The education allocation included funding for nine new 
school construction projects, initiated in October 2003 through July 
2006. However, various factors, such as land use issues and inadequate 
needs assessments, have limited the government's use of compact funds 
to meet long-term development needs. For example:

   Management and land use issues in Ebeye.--The RMI government 
        and Kwajalein landowners have been disputing the management of 
        public entities and government use of leased land on the atoll. 
        Such tensions have negatively affected the construction of 
        schools and other community development initiatives.\16\ For 
        example, the government and landowners disagreed about the 
        management of the entity designated to use the compact funds 
        set aside for Ebeye special needs; consequently, about $3.3 
        million of the $5.8 million allocated for this purpose had not 
        been released for the community's benefit until after September 
        2006.\17\ In addition, although the RMI has completed some 
        infrastructure projects where land titles were clear and long-
        term leases were available, continuing uncertainty regarding 
        land titles may delay future projects.
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    \16\ In addition to these examples, land issues remain an issue for 
U.S. access to Kwajalein Atoll through the defense provisions of the 
amended compact. The RMI government is bound by an agreement with the 
U.S. government that allows for U.S. access to Kwajalein Atoll until 
2086. To date, the RMI government has not reached an agreement with 
Kwajalein Atoll landowners (who own the land under use by the U.S. 
government) that allows for this long-term access.
    \17\ The funds were supposed to be allocated to the Kwajalein Atoll 
Development Authority, which experienced problems in effectively and 
efficiently using funds in the past. In early 2005, RMI legislation 
stipulated the authority's restructuring; however, the law was 
subsequently repealed by the RMI government. Kwajalein landowners are 
challenging this decision in court.
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   Lack of planning for declining U.S. assistance.--Despite the 
        goal of budgetary self-reliance, the RMI lacks concrete plans 
        for addressing the annual decrement in compact funding, which 
        could limit its ability to sustain current levels of government 
        services in the future. RMI officials told us that they can 
        compensate for the decrement in various ways, such as through 
        the yearly partial adjustment for inflation provided for in the 
        amended compacts or through improved tax collection. However, 
        the partial nature of the adjustment causes the value of the 
        grant to fall in real terms, independent of the decrement, 
        thereby reducing the government's ability to pay over time for 
        imports, such as energy, pharmaceutical products, and medical 
        equipment. Additionally, the RMI's slow progress in 
        implementing tax reform will limit its ability to augment tax 
        revenues.

    The RMI has taken steps to effectively implement compact 
assistance, but administrative challenges have hindered its ability to 
ensure use of the funds for its long-term development goals. The RMI 
established development plans that include strategic goals and 
objectives for the sectors receiving compact funds.\18\ Further, in 
addition to establishing JEMFAC, the RMI designated the Ministry of 
Foreign Affairs as its official contact point for compact policy and 
grant implementation issues.\19\ However, data deficiencies, report 
shortcomings, capacity constraints, and inadequate communication have 
limited the RMI and U.S. governments' ability to consistently ensure 
the effective use of grant funds to measure progress, and monitor day-
to-day activities.
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    \18\ The RMI's development plan consists of three documents: Vision 
2018, Meto 2000, and the Medium Term Budget and Investment Framework. 
In addition, the annual portfolio submissions include strategic goals 
and indicators for each of the sectors. We refer collectively to all of 
these RMI documents as ``the development plan.''
    \19\ Prior to designating the Ministry of Foreign Affairs as a 
compact implementation unit, the RMI had identified the Office of the 
Chief Secretary as the official point of contact for all communication 
and correspondence with the U.S. government concerning compact sector 
grant assistance. The RMI's Economic Policy, Planning, and Statistics 
Office also works with the ministries receiving grants to prepare the 
annual budget proposals, quarterly reports, and annual monitoring and 
evaluation reports.

   Data deficiencies.--Although the RMI established performance 
        measurement indicators, a lack of complete and reliable data 
        has prevented the use of these indicators to assess progress. 
        For example, the RMI submitted data to JEMFAC for only 15 of 
        the 20 required education performance indicators in 2005, 
        repeating the submission in 2006 without updating the data. 
        Also, in 2005, the RMI government reported difficulty in 
        comparing the health ministry's 2004 and 2005 performance owing 
        to gaps in reported data--for instance, limited data were 
        available in 2004 for the outer island health care system.
   Report shortcomings.--The usefulness of the RMI's quarterly 
        performance reports has also been limited by incomplete and 
        inaccurate information. For example, the RMI Ministry of 
        Health's 2005 fourth-quarter report contained incorrect 
        outpatient numbers for the first three quarters, according to a 
        hospital administrator. Additionally, we found several errors 
        in basic statistics in the RMI quarterly reports for education, 
        and RMI Ministry of Education officials and officials in other 
        sectors told us that they had not been given the opportunity to 
        review the final performance reports compiled by the statistics 
        office prior to submission.
   Capacity constraints.--Staff and skill limitations have 
        constrained the RMI's ability to provide day-to-day monitoring 
        of sector grant operations. However, the RMI has submitted its 
        single audits on time. In addition, although the single audit 
        reports for 2004 and 2005 indicated weaknesses in the RMI's 
        financial statements and compliance with requirements of major 
        federal programs, the government has developed corrective 
        action plans to address the 2005 findings related to such 
        compliance.
   Lack of communication.--Our interviews with U.S. and RMI 
        department officials, private sector representatives, NGOs, and 
        economic experts revealed a lack of communication and 
        dissemination of information by the U.S. and RMI governments on 
        issues such as JEMFAC decisions, departmental budgets, economic 
        reforms, legislative decisions, and fiscal positions of public 
        enterprises. Such lack of information about government 
        activities creates uncertainty for public, private, and 
        community leaders, which can inhibit grant performance and 
        improvement of social and economic conditions.

    As administrator of the amended compact grants, OIA monitored 
sector grant and fiscal performance, assessed RMI compliance with 
compact conditions, and took action to correct persistent shortcomings. 
For example, since 2004, OIA has provided technical advice and 
assistance to help the RMI improve the quality of its financial 
statements and develop controls to resolve audit findings and prevent 
recurrences. However, OIA has been constrained in its oversight role 
owing to staffing challenges and time-consuming demands associated with 
early compact implementation challenges in the FSM.
RMI Trust Fund May Not Provide Sustainable Income After Compact Grants 
        End
    Market volatility and choice of investment strategy could lead to a 
wide range of RMI trust fund balances in 2023 (see app. III) and 
potentially prevent trust fund disbursements in some years. Although 
the RMI has supplemented its trust fund balance with additional 
contributions, other sources of income are uncertain or entail risks. 
Furthermore, the RMI's trust fund committee has faced challenges in 
effectively managing the fund's investment.
    Market volatility and investment strategy could have a considerable 
impact on projected trust fund balances in 2023. Our analysis indicates 
that, under various scenarios, the RMI's trust fund could fall short of 
the maximum allowed disbursement level\20\--an amount equal to the 
inflation-adjusted compact grants in 2023--after compact grants end, 
with the probability of shortfalls increasing over time (see fig. 
3).\21\ For example, under a moderate investment strategy, the fund's 
income is only around 10 percent likely to fall short of the maximum 
distribution by 2031. However, this probability rises to almost 40 
percent by 2050. Additionally, our analysis indicates a positive 
probability that the fund will yield no disbursement in some years; 
under a moderate investment strategy the probability is around 10 
percent by 2050. Despite the impact of market volatility and investment 
strategy, the trust fund committee's reports have not yet assessed the 
fund's potential adequacy for meeting the RMI's longterm economic 
goals.
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    \20\ The trust fund agreements specify that in 2024 and thereafter, 
the RMI trust fund committee may disburse amounts up to the annual 
grant assistance in 2023, fully adjusted for inflation, provided that 
funds are available in the B account to reach such a level.
    \21\ Our methodology for projecting trust fund income is base on a 
technique known as Monte Carlo simulation. We built a Monte Carlo 
simulation model--based on the trust fund agreements, contributions to 
date, and historical returns of the market--to project the trust funds' 
likely income levels given market volatility as well as historical 
returns of various asset classes, including large company stocks, 
treasury bills, and international stocks from 1970 to 2005. See GAO-07-
513.
---------------------------------------------------------------------------
    RMI trust fund income could be supplemented from several sources, 
although this potential is uncertain. For example, the RMI received a 
commitment from Taiwan to contribute $40 million over 20 years to the 
RMI trust fund, which improved the RMI fund's likely capacity for 
disbursements after 2023. However, the RMI's limited development 
prospects constrain its ability to raise tax revenues to supplement the 
fund's income. Securitization--issuing bonds against future U.S. 
contributions--could increase the fund's earning potential by raising 
its balances through bond sales. However, securitization could also 
lead to lower balances and reduced fund income if interest owed on the 
bonds exceeds investment returns.\22\
---------------------------------------------------------------------------
    \22\ According to Interior officials, the trust fund committees are 
reviewing this option but have not initiated an independent study to 
objectively evaluate its potential risks.
---------------------------------------------------------------------------
    The RMI trust fund committee has experienced management challenges 
in establishing the trust fund to maximize earnings. Contributions to 
the trust fund were initially placed in a low-interest savings account 
and were not invested until 16 months after the initial 
contribution.\23\ As of June 2007, the RMI trust fund committee had not 
appointed an independent auditor or a money manager to invest the fund 
according to the proposed investment strategy. U.S. government 
officials suggested that contractual delays and committee processes for 
reaching consensus and obtaining administrative support contributed to 
the time taken to establish and invest funds. As of May 2007, the 
committee had not yet taken steps to improve these processes.
---------------------------------------------------------------------------
    \23\ For the months before the investment of the RMI trust fund's 
approximately $49 million in October 2005, the fund earned a return of 
approximately 3 percent, compared with a stock market return of about 4 
percent. Given the small difference in returns, as well as the fees 
that the fund would have paid if invested in the stock market, we 
estimate that this delay reduced the fund's earnings by approximately 
$51,000.
---------------------------------------------------------------------------
Conclusions
    Since enactment of the amended compacts, the U.S. and RMI 
governments have made efforts to meet new requirements for 
implementation, performance measurement, and oversight. However, the 
RMI faces significant challenges in working toward the compact goals of 
economic advancement and budgetary self-reliance as the compact grants 
decrease. Largely dependent on government spending of foreign aid, the 
RMI has limited potential for private sector growth, and its government 
has made little progress in implementing reforms needed to increase 
investment opportunities and tax income. In addition, JEMFAC did not 
address the pace of reform during the first 2 years of compact 
implementation. Further, both the U.S. and RMI governments have faced 
significant capacity constraints in ensuring effective implementation 
of grant funding. The RMI government and JEMFAC have also shown limited 
commitment to strategically planning for the long-term, effective use 
of grant assistance or for the budgetary pressure the government will 
face as compact grants decline. Because the trust fund's earnings are 
intended as a main source of U.S. assistance to the RMI after compact 
grants end, the fund's potential inadequacy to provide sustainable 
income in some years could impact the RMI's ability to provide 
government services. However, the RMI trust fund committee has not 
assessed the potential status of the fund as an ongoing source of 
revenue after compact grants end in 2023.
Prior Recommendations
    Our prior reports on the amended compacts\24\ include 
recommendations that the Secretary of the Interior direct the Deputy 
Assistant Secretary for Insular Affairs, as chair of the RMI management 
and trust fund committees, to, among other things,
---------------------------------------------------------------------------
    \24\ GAO-05-633, GAO-06-590, GAO-07-163, GAO-07-513, GAO-07-514R.

   ensure that JEMFAC address the lack of RMI progress in 
        implementing reforms to increase investment and tax income;
   coordinate with other U.S. agencies on JEMFAC to work with 
        the the RMI to establish plans to minimize the impact of 
        declining assistance;
   coordinate with other U.S. agencies on JEMFAC to work with 
        the RMI to fully develop a reliable mechanism for measuring 
        progress toward compact goals; and
   ensure the RMI trust fund committee's assessment and timely 
        reporting of the fund's likely status as a source of revenue 
        after 2023.

    Interior generally concurred with our recommendations and has taken 
actions in response to several of them. For example, in August 2006, 
JEMFAC discussed the RMI's slow progress in implementing economic 
reforms. Additionally, the trust fund committee decided in June 2007 to 
create a position for handling the administrative duties of the fund. 
Regarding planning for declining assistance and measuring progress 
toward compact goals, JEMFAC has not held an annual meeting since the 
December 2006 publication of the report containing those 
recommendations.\25\
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    \25\ GAO-07-163, p. 50.
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    Mr. Chairman and members of the subcommittee, this completes my 
prepared statement. I would be happy to respond to any questions you 
may have at this time.

    The Chairman. Thank you very much.
    Mr. Jonathon Weisgall, we're glad to have you here, go 
right ahead.

 STATEMENT OF JONATHAN M. WEISGALL, ESQUIRE, LEGAL COUNSEL FOR 
                      THE PEOPLE OF BIKINI

    Mr. Weisgall. Thank you, Mr. Chairman, I have a longer 
written statement that I'd like to be made part of the record.
    The Chairman. We'll include the entire statement.
    Mr. Weisgall. Thank you.
    Mr. Chairman, Senator Murkowski, I've served as legal 
counsel for the People of Bikini for some 34 years, but to 
facilitate this hearing, I'm testifying on behalf of the four 
nuclear-effected atolls of Bikini, Enewetak, Rongelap, and 
Utrik.
    Let me first raise one issue on behalf of Utrik. As 
explained in more detail in my written statement, they 
requested language be added to S. 1756 directing DOE to 
construct a whole-body counting facility on Utrik Atoll with an 
adequate power supply.
    As to the provisions of S. 1756, the four atoll groups are 
in support. On Runit, the U.S. should certainly monitor that 
dome in the surrounding area, as it would any nuclear test site 
in the United States. My written statement contains a very 
detailed proposal with specific bill or report language on what 
the program should encompass. Just as Mr. Bussanich said, that 
this is on DOE's plan, no reason not to legislate the need to 
make this more permanent, because DOE can change its mind, 
Congress can direct DOE to continue this monitoring.
    Section 3 would permit Marshallese who worked on--as DOE 
contract employees of Bikini and Enewetak--to qualify for 
eligibility under the Energy Employees Occupational Illness 
Compensation Act Program. Just like Section 2 would treat Runit 
like a U.S. nuclear waste site, Section 3 would give 
Marshallese the same benefits that eligible U.S. citizens enjoy 
under that Act. Makes sense.
    The four atolls also support section 4, which authorizes $2 
million annually for the Four Atoll Healthcare Program. That 
program has been stuck at $2 million annually for the last 21 
years, with no increases for inflation. So, with due respect to 
the executive branch, we would urge you to fund this at a 
higher level. The $4 million figure, the one proposed by the 
Marshall Islands government certainly makes sense. That program 
has been run on a shoestring. They do great work, but the 
number of effected people with population alone has obviously 
increased.
    As to Section 5, the National Academy of Sciences 
assessment, we defer to the RMI, this is a national issue. I 
would just observe, there have been numerous studies on this 
question. U.S. Government labs, the IAEA, just 2 years ago, the 
National Cancer Institute--as you heard from Minister 
Philippo--if there's a problem, I'm not sure there's a need to 
study it over and over, I would say one should act on the 
problem. And I think one knows the magnitude of the problem.
    Which leads to what is missing from the bill. The bill 
ignores the skunk at the garden party, and that's the failure 
of the U.S. to provide funding for the Nuclear Claims Tribunal 
to pay the awards that it made to the four atolls.
    When you pass the Compact of Free Association Act in 1986, 
Marshallese plaintiffs had lawsuits pending at the time in the 
U.S. Court of Federal Claims for the takings of their land, and 
for other damages. The Compact states that the U.S. accepts 
responsibility for compensation resulting from the nuclear 
weapons testing program, it established the Nuclear Claims 
Tribunal as an alternative mechanism to determine just 
compensation, so those claims were dismissed--pursuant to the 
Compact--which states also that it constitutes the full 
settlement of all claims, and provides for the dismissal of 
these lawsuits.
    The Marshallese challenged this scheme in U.S. court, 
arguing that this limited funding to the Tribunal, and cutting 
off a full court review is simply unconstitutional, when it 
comes to the question of Fifth Amendment just compensation. 
What did the courts rule? They said, ``We can't decide this 
issue, it's premature to rule on your Constitutional questions. 
You must exhaust your remedies before the Tribunal.'' After 
all, nobody knew in 1986 if there would be just compensation.
    So, for the next 19 years, Marshallese plaintiffs brought 
their claims before the tribunal, it has issued its awards for 
the four atolls of over $2 billion, and it has awarded exactly 
$3.9 million--that is less than two-tenths of 1 percent of the 
awards.
    Bikini and Enewetak, therefore, went back to U.S. court 
last year, to raise the same Constitutional questions from 20 
years ago, which is: Can the Government cut off a just 
compensation claim under the Fifth Amendment?
    Where does the U.S. Government stand on this request for 
additional funding? To be blunt about it, there's a shell game 
going on. Mr. Chairman, you yourself said, more than 7 years 
ago, the Marshall Islands presented your committee with a 
Changed Circumstances Petition, filed under 177 agreement, 
specifically asking for funding to pay for these unpaid 
property claims, based on new EPA, radiation standards. Seven 
years later, no action has occurred on that petition.
    Meanwhile, the RMI Government sought to engage the 
executive branch on this question, during the re-negotiation of 
the Compact. Their answer, ``Can't do it.'' They stated in 
writing, ``This issue is before Congress on a Changed 
Circumstances Petition.'' So, the executive branch simply 
refused to negotiate the question of additional claims, because 
of the Changed Circumstances Petition sent to your committee.
    The Judicial Branch has also failed to act, at least while 
the ball is in your court. On August 2 of this year, Judge 
Miller of the U.S. Court of Federal Claims, ruled that the 
litigation of these constitutional questions is still 
premature, and I'll quote, ``Because Congress has failed to act 
on the Changed Circumstances Request,'' is what she called it. 
She went on, ``Congress has made no final determination on 
plaintiff's petition, and the apparent lack of action cannot 
establish a taking, until plaintiffs can show that Congress is 
no longer considering their petition.'' Continuing the quote, 
``The Court is in no position to find that the Tribunal 
procedure has run its course. Congress must consider the 
Changed Circumstances Request, and take such action as it deems 
appropriate.''
    So, what can you do? The four atolls ask you to break this 
Gordian knot. The requested action would be that you move 
forward on the Changed Circumstances Petition. If you decide 
not to--and you did examine this 2 years ago--if you determine 
that the request falls outside of the criteria of the Changed 
Circumstances Petition, state that in your report language on 
this bill, together with the fact that the issue is now up to 
the courts. That, I think, would break the Gordian knot.
    We ask you to remove, or resolve, this issue, one way or 
the other. This legacy goes back 61 years, to 1946, when the 
U.S. Navy moved the Bikinians off their atoll to facilitate the 
nuclear testing program. One branch of government should honor 
this Constitutional and statutory--and at least, moral--
obligation to the people it damaged, and others who--with no 
real options--gave up their lands to help the United States win 
the cold war.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Weisgall follows:]

   Prepared Statement of Jonathan M. Weisgall, Legal Counsel for the 
                            People of Bikini
    Thank you, Mr. Chairman. I am Jonathan Weisgall, and I have served 
as legal counsel for the people of Bikini for 34 years. In order to 
best use the committee's time this morning, you have asked to hear from 
one representative from the four nuclear affected atolls in the 
Marshall Islands, so I am testifying today on behalf of those four 
atolls: Bikini and Enewetak--which were Ground Zero for the 67 atomic 
and hydrogen bombs tests that the United States conducted in the 
Marshall Islands--as well as Rongelap and Utrik--whose inhabitants and 
islands were showered with fallout from the U.S. nuclear weapons tests, 
most notably the infamous March 1, 1954 Bravo shot, the largest nuclear 
test ever conducted by the United States.
    The four atoll groups support S. 1756. Let me share their specific 
views on the four provisions of the bill and then request a 
modification to address what we believe is missing from it.
    First, though, I want to raise an issue that concerns the people of 
Utrik. In 2003, the Department of Energy established a Whole Body 
Counting (WBC) facility for radiological testing of the people of 
Utrik. Due to insufficient power supply on Utrik Atoll, the Department 
of Energy located the Utrik WBC on Majuro. As a result, the people who 
live on Utrik Atoll must travel to Majuro, which is approximately 250 
miles away, in order to be tested at the WBC facility. The significant 
cost of air transportation and inconvenience to travel to Majuro from 
Utrik has led to infrequent and sporadic WBC testing of the inhabitants 
of Utrik. Congress acknowledged this problem when it passed legislation 
in 2004 to transfer a decommissioned NOAA vessel to Utrik Atoll for the 
purpose of helping to alleviate this transportation issue. While Utrik 
supported and welcomed that Congressional gesture, a professional 
analysis showed that if Utrik took possession of the vessel it would be 
a heavy financial burden, so unfortunately the NOAA vessel was not the 
solution.
    So today, with only a portion of the Utrik community being tested, 
many are left unexamined. This is extremely problematic because recent 
WBC data gathered by Lawrence Livermore Laboratory has demonstrated 
that the people living on Utrik have received the highest body burdens 
of radionuclides of any group in the Marshall Islands. The people of 
Utirk strongly feel that relocating the WBC facility to Utrik is the 
right solution and is long overdue. They therefore request that 
language be added to S. 1756 that grants the Department of Energy the 
authority and funding necessary to construct a WBC facility with an 
adequate power supply on Utrik Atoll. While the people of Utrik do not 
have an exact cost estimate at this time, they believe this can be 
achieved with a relatively modest expenditure.
    Let me now turn to the four provisions in S. 1756. With regard to 
Section 2, the four atolls strongly support a long-term U.S. program to 
monitor the dome at Runit Island, which was created as an above-ground 
nuclear waste storage site during the radiological cleanup of Enewetak 
Atoll in the 1970s and now houses more than 100,000 cubic yards of 
radioactive material, including plutonium, scraped from other parts of 
the atoll. The United States should monitor and treat the Runit dome 
and surrounding area as it would any nuclear waste storage site in the 
United States. We would therefore urge you to specify in report 
language, or in the statute itself, that this monitoring should cover 
the following:

   Monitoring of the land and water around the Runit dome, 
        including soil around the dome.
   Gathering and analysis of the marine life in the proximity 
        to the dome.
   Collection and analysis of groundwater from monitoring wells 
        around the dome.
   A re-suspension study of air and soil samples in the Fig/
        Quince area of Runit Island. This is where plutonium particles 
        were dispersed, left in place, covered with a few inches of 
        dirt in the late 1970s, and never cleaned up.
   Monitoring the dome to assure its structural integrity and 
        to determine the extent of leaching. The radioactive isotopes 
        in that dome will last for thousands of years; the dome won't.
   Placement of signs and fencing to warn of danger and prevent 
        access to contaminated areas.

    The peoples of the four atolls support Section 3, which would close 
the loophole under the Energy Employees Occupational Illness 
Compensation Program Act and thus permit Marshallese citizens who 
worked as Department of Energy contract employees at Bikini and 
Enewetak Atolls to qualify for eligibility under the Department of 
Labor's compensation and medical care program established pursuant to 
the Act. Just as Section 2 would treat Runit like a U.S. nuclear waste 
site, Section 3 would give these eligible Marshallese workers the same 
access and benefits that eligible U.S. citizens and nationals currently 
enjoy.
    The peoples of the four atolls also support Section 4, which 
authorizes the appropriation of $2 million annually through fiscal year 
2023 to fund the four-atoll health care program, which has provided 
health care on a shoestring budget since the Compact first came into 
effect 20 years ago. We would urge you, though, to make the following 
changes in this section:

   Using the committee's logic of adjusting the $2 million for 
        inflation, we urge you to start with a significantly higher 
        number, such as the $4.5 million figure proposed by the 
        Marshall Islands Government, because this program has been 
        stuck at $2 million for 21 years, since the Compact first went 
        into effect in 1987. In light of population growth and 
        inflation over the last two decades, that program cannot 
        accomplish the same goals today that it was intended to 
        accomplish. To put it bluntly, funding for this program is 
        embarrassingly low. A more realistic number will also help 
        ensure that these Marshall Islanders do not become a burden on 
        public health services in the United States.
   We urge you to split these funds evenly among the four atoll 
        communities.
   We urge you to add language that would permit each atoll, at 
        its discretion, to use its funds for tertiary care.

    The last provision of this bill, Section 5, authorizes a National 
Academy of Sciences assessment of the health impacts in the Marshall 
Islands of the U.S. nuclear testing program. The four atolls do not 
oppose this provision, but instead defer to the Marshall Islands 
Government, because this is a national rather than a four-atoll issue. 
We would merely observe that numerous studies have been conducted on 
this question, ranging from a nationwide radiological survey to reports 
prepared by private contractors, U.S. government laboratories, the 
International Atomic Energy Agency, and, most recently, the National 
Cancer Institute, which just prepared a report for this committee in 
September 2004 estimating the number of incremental cancers to be 
expected in the Marshalls as a result of the testing program. If you 
know there is a problem--and everyone knows there is--why study it over 
and over? Why not act on it?
    Which leads me to what is missing from this bill. We commend you 
for addressing part of the nuclear legacy, but this bill ignores the 
skunk at the garden party, which is the failure of the U.S. Government 
to provide the Nuclear Claims Tribunal with the funding needed to pay 
the awards it made to the peoples of the four atolls.
    Let me briefly walk you through the process: At the time Congress 
passed the Compact of Free Association Act in 1986, Marshallese 
plaintiffs had numerous lawsuits pending against the United States in 
what is now the U.S. Court of Federal Claims for the takings of their 
lands and other damages. The Compact states that the United States 
accepts its responsibility for compensating the Marshallese for damages 
resulting from nuclear weapons testing, and its sets up an alternative 
mechanism for adjudicating damages claims, the Nuclear Claims Tribunal. 
The pending claims were dismissed pursuant to the Compact Act--
specifically the Section 177 Agreement--which established a trust fund 
to pay compensation. That agreement also states that it constitutes the 
full settlement of all nuclear claims against the United States and 
further provides for the dismissal of all such claims pending in U.S. 
courts.
    The Marshallese plaintiffs challenged this scheme in U.S. courts, 
arguing that giving limited funding to the Tribunal and cutting off 
federal court review of the adequacy of just compensation was 
unconstitutional. The court, however, ruled that it was premature to 
decide these questions until the plaintiffs had exhausted their 
remedies under the Tribunal.
    The Marshallese plaintiffs spent most of the next 19 years 
litigating their claims before the Nuclear Claims Tribunal, which has 
issued awards for the four atolls totaling more than $2.2 billion. 
However, because of its limited funding, the Tribunal was only able to 
pay out $3.9 million, which represents less than 2/10 of one percent of 
its awards.
    Having exhausted their remedies and having received such small 
awards, the people of Bikini and Enewetak returned to the Court of 
Federal Claims in 2006 raising the same constitutional questions from 
20 years ago.
    Where does the U.S. Government stand on providing the Nuclear 
Claims Tribunal with the funding needed to pay the awards it made to 
the peoples of the four atolls? The Compact says the United States 
accepts its responsibility to pay compensation, and the Fifth Amendment 
on its own requires just compensation. Yet just compensation has not 
been paid. To put it bluntly, all three branches have played a shell 
game on this issue. More than seven years ago, the Marshall Islands 
Government presented this committee with a petition filed under the 
``Changed Circumstances'' provisions of Article IX of the Section 177 
Agreement that specifically requested Congress to appropriate 
additional funds to cover unpaid Nuclear Claims Tribunal property 
claims based on new radiation standards adopted by the U.S. 
Environmental Protection Agency. Seven years later, you have yet to act 
on that petition.
    Meanwhile, as the 15-year Compact expired in 2001, the Marshall 
Islands Government sought to engage the executive branch in 
negotiations over this issue, but that branch also failed to act, using 
as an excuse the fact that the issue was pending before Congress. As 
the U.S. Compact negotiator wrote to the Marshall Islands Government in 
2002: ``We cannot address requests for any additional assistance 
related to the Nuclear Testing Program since this issue is on a 
separate track. It is now before Congress via the [RMI Government's] 
request submitted under the changed circumstances provision'' of the 
Section 177 Agreement.
    The judicial branch has also failed to act--at least while the ball 
is in the legislative branch's court. As part of her ruling on August 
2, 2007, dismissing the Bikini and Enewetak lawsuits without prejudice, 
Judge Miller of the U.S. Court of Federal Claims found that 
``litigation on this issue is still premature because Congress has 
failed to act on the Changed Circumstances Request.'' She went on: 
``Congress has made no final determination on plaintiffs' petition, and 
the apparent lack of action cannot establish a taking until plaintiffs 
can show that Congress no longer is considering their petition.'' In 
finding that ``Congress has not yet exercised its option'' under the 
changed circumstances petition, she ruled that ``the court is in no 
position to find that the [Nuclear Claims Tribunal] procedure as run 
its course. Congress must consider the Changed Circumstances Request 
and take such action as it deems appropriate.'' A more complete excerpt 
from Judge Miller's ruling on this issue is included at the end of this 
statement.
    What can this committee do? The peoples of the four atolls ask you 
to break this Gordian Knot. Of course, they would like you to act on 
the petition and move forward with an authorization to pay these 
claims. However, if you determine that this request falls outside the 
criteria of the changed circumstances provisions, please state this in 
your report language on this bill together with the fact that this 
issue is now up to the courts to resolve.
    It's time for Congress to resolve this issue--one way or the other. 
The Tribunal has completed its review of the largest claims, and the 
true extent of the compensation due can now be determined. This legacy 
goes back 61 years--to 1946, when the U.S. Navy moved the people of 
Bikini off their atoll to facilitate the nuclear testing program. One 
branch of the U.S. Government should honor the constitutional, 
statutory and moral obligations to the people it damaged and the others 
who, with no real options, gave up their lands to help the United 
States win the Cold War. Thank you.
                               __________
excerpt from judge christine odell cook miller's august 2, 2007 ruling 
 in the people of bikini v. the united states docket no. 96-288c (u.s. 
                   court of federal claims) pp. 30-37
    In Count I of their Amended Complaint, plaintiffs allege that 
defendant's ``failure and refusal to fund adequately the award issued'' 
by the NCT constitutes a Fifth Amendment taking of plaintiffs' claims 
before the NCT for public use. Am. Compl. 104. Framed another way, 
plaintiffs allege that the Government took their claims in violation of 
their Fifth Amendment right to just compensation because Congress has 
failed to act on the Changed Circumstances Request. A report to 
Congress does not constitute a governmental action that could be 
considered a taking of any interest. A report merely supplies Congress 
with information that may justify or prompt further action. Congress 
has made no final determination on plaintiffs' petition, and the 
apparent lack of action after two years cannot establish a taking until 
plaintiffs can show that Congress no longer is considering their 
petition. Therefore, the court finds that no government act has taken 
place within the last six-years that relates to the asserted taking of 
plaintiffs' private property interest.
    In Count II of their Amended Complaint, plaintiffs allege that 
``[d]efendant's failure and refusal adequately to fund the award issued 
by the Nuclear Claims Tribunal on March 5, 2001 constitutes a breach of 
the fiduciary obligations imposed upon it in 1946 by the creation of a 
contract implied in fact between defendant and plaintiffs.'' Am. Compl. 
 112. As in Count I, plaintiffs have not alleged any action on the 
part of the United States Government occurring within the last six 
years that could be considered a breach of plaintiffs' claimed implied-
in-fact contract with the United States. While Congress has not yet 
acted on the Changed Circumstances Request, that circumstance does not 
constitute an action on the part of the Government sufficient to meet 
the requirements of the statute of limitations.
    Counts III and IV of the Amended Complaint allege that the United 
States breached the implied duties and covenants of their implied-in-
fact contract and the implied duties and covenants owed to plaintiffs 
as third-party beneficiaries by

          (a) failing or refusing to seek from Congress additional 
        funds for the Nuclear Claims Tribunal sufficient to satisfy the 
        March 5, 2001 award; (b) interfering with plaintiffs' efforts 
        to secure additional funds for the Tribunal to satisfy that 
        award; and (c) failing and refusing to fund adequately the 
        award issued by the Nuclear Claims Tribunal on March 5, 2001.

    Am. Compl.  116; Am Compl.  120 (same). On both counts, 
plaintiffs do not allege government action within the last six years 
that meets the requirements of the six-year statute of limitations. If 
the implied-in-fact contract or duties or covenants under a third-party 
beneficiary theory were breached, that event would have occurred in 
1986 when the Act became effective. Nothing has changed since 1986 when 
all of the events occurred to fix the alleged liability of the 
Government.
    Although, plaintiffs argue that their ``first four causes of action 
are based on the failure of the alternative claims procedure to provide 
adequate compensation for the loss of their lands [and that] [t]his 
failure was unknowable until after March 5, 2001, the date of the NCT 
decision,'' Pls.' Br. filed Dec. 18, 2006, at 36, plaintiffs have not 
shown that the claims differ substantively from the breach of contract 
claims in Juda I and Juda II. The susbstance of plaintiffs' dispute 
with the United States has been the same for the last twenty-one years: 
plaintiffs seek additional compensation for damages caused by the 
Nuclear Testing Program. The amounts specified in the settlement 
agreement also were known to plaintiffs in 1986. The terms and 
conditions of the Changed Circumstances provision were known to 
plaintiffs in 1986. The court cannot find now--twenty-one years after 
the Compact was entered into--that plaintiffs' claims are timely.
    In Count V plaintiffs allege a takings claim for the use and 
occupation of Bikini Atoll by the Government based on the passage of 
the Compact in 1986 and the failure adequately to fund the NCT. In Juda 
II Judge Harkins held open the possibility of future litigation on the 
adequacy of the alternative remedy provided for in Compact Act:

          
    Whether the compensation, in the alternative procedures provided by 
Congress in the Compact Act, is adequate is dependent upon the amount 
and type of compensation that ultimately is provided through those 
procedures. Congress has recognized and protected plaintiffs' right to 
just compensation for takings and for breach of contract. The 
settlement procedure, as effectuated through the Section 177 Agreement, 
provides a ``reasonable'' and ``certain'' means for obtaining 
compensation. Whether the settlement provides ``adequate'' compensation 
cannot be determined at this time.

    Juda II at 689. The Federal Circuit endorsed this analysis in 
People of Enewetak, again acknowledging a possibility of future 
litigation on plaintiffs' Fifth Amendment takings claims. 864 F.2d at 
136 (``[W]e are unpersuaded that judicial intervention is appropriate 
at this time on the mere speculation that the alternative remedy may 
prove to be inadequate.'').
    Plaintiffs maintain that these takings claims are now ripe for 
litigation because they have exhausted the alternative procedure 
mandated in the Compact Act. ``Having obtained the dismissal of the 
Juda case as premature, the government cannot invoke the statute of 
limitations now. Alliance of Texas Land Grants v. United States, 37 
F.3d 1478 (Fed. Cir. 1994) is inapposite, because plaintiffs in that 
case were not told that their claims were premature and to return to 
court after exhausting an alternative remedy.'' Pls.' Br. filed Dec. 
18, 2006, at 36. The court finds that litigation on this issue is still 
premature. The alternative procedure in the Compact Act and in Article 
IX of the Section 177 Agreement included a Changed Circumstances 
provision, which allocated to Congress the option to ``authorize and 
appropriate funds'' in the event that ``loss or damage to property and 
person of the citizens of the Marshall Islands, resulting from the 
nuclear testing program arises or is discovered after the effective 
date'' of the Compact Act and Changed Circumstances provision.
    Congress has not yet exercised its option to ``authorize and 
appropriate funds'' for the Marshall Islands. The court is in no 
position to find that the alternative procedure, as contemplated by the 
Compact Act, has run its course. Congress must consider the Changed 
Circumstances Request and take such action as it deems appropriate. 
That Congress has not acted in the seven years after the Changed 
Circumstances Request was first submitted would not warrant a finding 
of either futility or de facto rejection, given the court's alternate 
ruling on the political question that this matter presents.
    Finally, in Count VI plaintiffs allege that the Compact constituted 
a breach of fiduciary duties created by an implied-in-fact contract. 
``This cause of action did not first accrue, or the applicable statute 
of limitations was equitably tolled, until defendant, on January 24, 
2005, refused to adequately fund the award issued by the Nuclear Claims 
Tribunal on March 5, 2001.'' Am. Compl.  128. Submission of the Report 
from the United States State Department to Congress without further 
action by the Government or Congress is insufficient to trigger the 
statute of limitations. Plaintiffs have not alleged any Government 
action within the last six years that would be actionable as a breach 
of the Government's alleged fiduciary duties.

          1. Equitable estoppel

    Plaintiffs would estop defendant from arguing that the statute of 
limitations bars their claims. They insist that (1) a dismissal based 
on the statute of limitations would be an unconstitutional ``bait and 
switch,'' because the court in Juda II dismissed plaintiffs' claims as 
premature, and (2) the Government cannot invoke the statute of 
limitations now that the alternative procedure has run its course. 
Pls.' Br. filed Dec. 18, 2006, at 36.
    ``Estoppel is an equitable doctrine invoked to avoid injustice in 
particular cases.'' Heckler v. Cmty. Health Servs., 467 U.S. 51, 59 
(1984). To succeed on the grounds of equitable estoppel, generally a 
plaintiff must show that it ``relied on its adversary's conduct `in 
such a manner as to change his position for the worse,' and that 
reliance must have been reasonable in that the party claiming the 
estoppel did not know nor should it have known that its adversary's 
conduct was misleading.'' Id. (footnotes omitted). This general rule, 
however, is not applicable against the Government: ``[I]t is well 
settled that the Government may not be estopped on the same terms as 
any other litigant.'' Id.
    Although the Supreme Court has not adopted a per se rule 
prohibiting the application of equitable estoppel against the 
government under any circumstances,  . . . the Court has suggested that 
if equitable estoppel is available at all against the government some 
form of affirmative misconduct must be shown in addition to the 
traditional requirements of estoppel. While the Supreme Court has not 
squarely held that affirmative misconduct is a prerequisite for 
invoking equitable estoppel against the government, this court has done 
so.
    Zacharin v. United States, 213 F.3d 1366, 1371 (Fed. Cir. 2000) 
(internal citations omitted); see also Frazer v. United States, 288 
F.3d 1347, 1352-53 (Fed. Cir. 2002); Tefel v. Reno, 180 F.3d 1286, 1303 
(11th Cir. 1999); Henry v. United States, 870 F.2d 634, 637 (Fed. Cir. 
1989).
    Plaintiffs contend that ``the government cannot consistent with due 
process argue that it is premature to challenge the adequacy of the 
[NCT's] process and then declare that such a challenge necessarily 
comes too late.'' Pls.' Br. filed Dec. 18, 2006, at 36 (citing Reich v. 
Collins, 513 U.S. 106, 108 (1994)).

                Had plaintiffs done what the government now suggests--
                sue based on the Compact itself and challenge the 
                alternative remedy before the NCT had issued its 
                award--this Court would have found, as did the courts 
                in Juda II, 13 Cl. Ct. at 689, and People of Enewetak, 
                864 F.2d at 136, that the alternative procedure could 
                not be challenged until it had run its course. That is 
                precisely what the Supreme Court concluded in [Dames & 
                Moore v. Regan, 453 U.S. 654 (1981)], when it held out 
                the prospect of later adjudication of takings claims in 
                this Court. Having obtained the dismissal of the Juda 
                case as premature, the government cannot invoke the 
                statute of limitations now. Alliance of Texas Land 
                Grants v. United States, 37 F.3d 1478 (Fed. Cir. 
                1994)is inapposite, because plaintiffs in that case 
                were not told that their claims were premature and to 
                return to court after exhausting an alternative remedy.

    Pls.' Br. filed Dec. 18, 2006, at 36.

    During oral argument and in their first supplemental brief, 
plaintiffs argued that defendant misled plaintiffs, and presumably the 
Federal Circuit, by assuring the Federal Circuit in 1988 during 
argument in People of Enewetak that, ```should changed circumstances 
arise which would prevent the program from functioning as planned, 
Congress would need to consider possible additional funding.''' Pls.' 
Br. filed May 23, 2007, at 16. ``In contrast to its earlier assurances, 
despite evidence of substantial uncompensated and unforeseen harm, the 
government told Congress that `the facts . . .  do not support a 
funding request under the `changed circumstances' provision . . . ''' 
Id. (quoting 2005 Report Evaluating the Request of the Government of 
the Republic of the Marshall Islands Presented to the Congress of the 
United States of America).
    Review of the Consolidated Brief of Appellee the United States, 
People of Enewetak v. United States, Nos. 88-1206, -1207 & -1208 (Fed. 
Cir. June 24, 1988) (the ``Appellee Brief''), shows that, while he 
served as Assistant Attorney General of the Lands and Natural Resources 
Division of the United States Department of Justice, Roger J. Marzulla 
advocated on behalf of the United States that plaintiffs might avail 
themselves of the Changed Circumstances provision in these 
circumstances.\6\
---------------------------------------------------------------------------
    \6\ For example, the Government stated in the Appellee Brief: ``The 
Section 177 Agreement, signed in conjunction with the Compact on June 
25, 1983, has creaed a comprehensive, integraed compensation plan `to 
provide, in perpetuity, a means to address past, present and future 
consequences of the nuclear Testing Program' (App. 332).'' Appellee 
Brief at 9. The Government elaborated upon this argument in Section 
III.A of the Appellee Brief, discussing the limited nature of the 
Changed Circumstances provision of the Section 177 Agreement: ``The 
objective of the Agreement is "to create and maintain in perpetuity, a 
means to address past, present and future consequences of the Nuclear 
Testing Program, including the resolution of resultant claims'' (App. 
331, emphasis supplied). As the cornerstone funding, the United States 
on October 30, 1986, immediately after the Compact took effect, paid 
$150 million to the Marshall Islands government to create the 
compensation Fund established by Article 1 (App. 1241). The Agreement 
requires, however, that the Fund be permanently invested, with an 
investment goal of at least $18 million per year (App. 332), and with 
all distributions for compensation programs and claims adjudication to 
come from the proceeds (App. 332). The Fund's principal may be drawn 
only if proceeds will not meet annual distribution schedules (App. 
336). The Section 177 Agreement's funding structure is thus designed to 
operate as long as necessary until all consequences of the nuclear 
testing program are addressed. The United States and Marshall Islands 
drafted the Agreement to provide continuous funding to resolve, not 
avoid, those consequences. It is, of course, conceivable that the Fund 
could become depleted because of radical long-term investment 
difficulties, or substantial unforeseen damages. The Agreement 
expressly provides as to ``Changed Circumstances,'' however, that (App. 
341-342): If loss or damage to property and person of the citizens of 
the Marshall Islands, resulting from the Nuclear Testing Program, 
arises or is discovered after the effective date of this Agreement, and 
such injuries were not and could not reasonably have been identified as 
of the effective date of this Agreement, and if such injuries render 
the provisions of this Agreement manifestly inadequate, the Government 
of the Marshall Islands may request that the Government of the United 
States provide for such injuries by submitting such a request to the 
Congress of the United States for its consideration. It is understood 
that this Article does not commit the Congress of the United States to 
authorize and appropriate funds. In any case, it was the best judgment 
of the United States and Marshall Islands government that the 
compensation plan as structured in the Agreement will equitably address 
all consequences of the nuclear testing program. The Agreement is 
designed to operate "in perpetuity," is currently operating effectively 
to address long-term needs, and fulfills the intent that complex 
problems stemming from the testing program be resolved on a permanent 
basis. Appellee Brief at 34-35 (emphasis added; footnotes omitted). 
Thus, defendant told the appeals court that long-term investment 
difficulties might occur to render the Agreement's provisions 
``manifestly inadequate,'' but then quotes the language of the 
provision that requires that changed circumstances had to be 
unforeseeable. Note 33 of the Appellee Brief appears to assuage 
concerns regarding the adequacy of funding: As appellants note (Br. 44 
n.47), disbursements were made from the Fund during its initial year in 
light of the recent stock market ``correction'' affecting all 
investors. That disbursement in no way impairs, nor do appellants 
suggest that it impairs, the long-term performance and viability of the 
Fund. Indeed, prior to the stock market disruption, the Fund was 
achieving an annual return of 20 percent. The amounts disbursed have 
since been partially restored, and it is anticipated will be fully 
restored in the near future. The Fund continues to operate as a long-
term investment program, providing ``a perpetual means of addressing 
the special and unique circumstances'' arising from the nuclear testing 
program. (App. 332). Id. at 34 n.33. Among the ``changed 
circumstances'' identified by counsel for plaintiffs in People of 
Bikini, No. 06-288C, was the ambitious, if not unrealistic, assumption 
that the Trust Fund had to generate a return of 12% per year to finance 
the $18 million earmarked for the various programs and specific 
financial commitments for each listed in the Compact, only one of which 
was the NCT. Counsel reasonably speculated that ``[i]t was pretty hard 
when you've got to throw off 12 percent a year to make that corpus 
grow.'' Transcript of Proceedings at 146, People of Bikini v. United 
States, No. 06-288C, and John v. United States, No. 06-289L (Fed. Cl. 
Apr. 23, 2007).
---------------------------------------------------------------------------
    In its brief filed nineteen years ago, defendant argues that the 
financial vagaries in the investment program--arguably including 
mismanagement--could qualify as a separate changed circumstance, apart 
from loss or damage. That is because the Appellee Brief acknowledges 
depletion of the Fund due to ``long-term investment difficulties, or 
substantial unforeseen damages.'' Appellee Brief at 34; see note 6 
supra. Nonetheless, the shift in defendant's position does not merit 
its proscription as affirmative misconduct.
    The argument in the Appellee Brief certainly includes statements 
that could be construed as assurances of the availability of future 
funding should the $150 million trust fund not prove sufficient. Yet, 
defendant did not misrepresent the Compact or the Section 177 
Agreement. References to a ``permanent alternative remedy,'' see 
Appellee Brief at 14, are accompanied by citations, either general or 
specific, to the language of the Section 177 Agreement. The language of 
the Changed Circumstances provision of Section 177 is not a blanket 
guarantee of future funding for the people of the Marshall Islands. The 
Changed Circumstances provision provides relief conditioned upon 1) the 
discovery of loss or damage to property after the effective date of the 
Agreement, 2) an unforeseeable qualifying event and 3) approval of 
Congress. While defendant did not misrepresent the terms of the 
Compact, the Federal Circuit was persuaded by defendant's argument and 
arguably overstated the breadth of the Changed Circumstances provision. 
See People of Enewetak, 864 F.2d at 135-36.
    In any event, this rationale was not the predicate for the appeals 
court's affirmance of the Claims Court. Even if defendant was not 
forthcoming in its argument, invocation of equitable estoppel is not 
warranted. The Compact, in plain language, required a dual showing, not 
an alternative one; defendant quoted the Compact accurately; defendant 
argued that the Trust Fund was structured to be renewable in 
perpetuity. Plaintiffs were well aware of the terms of the Changed 
Circumstances provision and had ample opportunity to argue to the 
Federal Circuit that the clause did not allow recourse to the courts 
should the Claims Tribunal render an award that could not be funded.\7\
---------------------------------------------------------------------------
    \7\ Implicit in plaintiffs' reliance on defendant's advocacy is 
their objection that the RMI did not represent the inhabitants of the 
Marshall Islands, because the RMI had no power or right to accede to 
the Compact until the RMI became a recognized governmental entity. 
Judge Harkins in Juda II ruled that the validity of the espousal in 
Article X did not impact the withdrawal of claims effected by Article 
XII. See Juda II at 686-89; see also People of Entewetak, 864 F.2d at 
137 (adopting Judge Harkins's ``more extensive analysis.'').

    The Chairman. Thank you very much for your testimony.
    Let me ask a few questions, I'm sure Senator Murkowski will 
have questions as well.
    Mr. Bussanich, let me start with you, regarding S. 1756. As 
to Section 2 of that legislation, the monitoring of Runit 
Island, the testimony states, ``Current and future plans for 
surveying Runit Dome, and aiding the government of the Marshall 
Islands in its assessment of conditions at Runit Island are 
sufficient to monitor safety.'' Do you not agree that these 
plans should be codified somewhere? For example, is the 
Department of Energy willing to amend its Memorandum of 
Agreement with the Enewetak government to include these plans?
    Mr. Bussanich. Mr. Chairman, if I may refer that question 
to Mr. Jackson, of the Department of Energy?
    The Chairman. That's fine, Mr. Jackson, please?
    Mr. Jackson. Thank you, Mr. Chairman.
    We had a Memorandum of Understanding with the People of 
Enewetak that allowed us to do a series of work over the years. 
More recently, as that MOU expired, we've been doing annual 
work plans, including work at various atolls in which we study 
these questions. Currently we have a plan in place to do a 
visual engineering survey of Runit Dome in the summer mission 
to Enewetak, along with some other radiological monitoring 
activities, and we can continue to work with the Enewetak 
community, and the government of the Marshall Islands, the 
committee, sister Federal agencies to do such work on this 
annual work plan basis.
    The Chairman. You think it's adequate to just do an annual 
work plan, instead of having something more long-term, agreed 
to in a Memorandum of Agreement with the government?
    Mr. Jackson. Given our existing resources, we have a series 
of commitments, or discussions with the various atolls on a 
work plan for the environmental and radiological monitoring, 
and so in each given year, there are a series of things we can 
do, with the existing resources, anything of a larger 
dimension, more tasking would require us to consult with all 
parties to see what additional resources would be to execute a 
longer-term plan and commitment.
    The Chairman. As I understand, Mr. Bussanich, your position 
was on behalf of the Administration; you were opposed to 
Section 2 of this legislation being included, is that correct?
    Mr. Bussanich. That's correct.
    The Chairman. So, you think it should be deleted entirely?
    Mr. Bussanich. We believe that the Department of Energy's 
plan is sufficient to achieve the purpose of that section.
    The Chairman. Let me ask about Section 3. The testimony 
states the Administration is still reviewing Section 3, 
regarding the eligibility of trust territory citizens for the 
Energy Employees Compensation Program. I take that to mean that 
the Administration is keeping an open mind on that provision. 
U.S. citizens and trust territory citizens worked together 
during the cleanup, and it would seem clear to me that the 
trust territory citizens should be considered for equal 
compensation.
    I guess the question to you, Mr. Bussanich is, would you be 
willing to meet with the Joint Committee staff to resolve 
drafting issues, if that's the problem with this section? Maybe 
that's not the problem with this section, but if it is, maybe 
you could address that?
    Mr. Bussanich. Mr. Chairman, if I may ask for the opinion 
of my colleague from the Department of Labor.
    Mr. Nesvet. The Supreme Court, in cases such Aramco, has 
established a presumption against extraterritorial application 
of American law, unless the affirmative intention of Congress 
is clearly expressed. When the Department of Labor received 
claims from citizens of the Marshall Islands, we found no such 
affirmative intention clearly expressed in the law.
    The Pacific Proving Grounds, which the Marshall Islands is 
part of, is clearly a Department of Energy facility. That 
merely qualifies an otherwise-entitled worker, who worked or 
had exposure at the Pacific Proving Grounds for compensation. 
In fact, the Department of Labor has paid compensation to over 
100 workers or their eligible survivors, who did have 
employment exposure in the Pacific Proving Grounds.
    In terms of the legislative provision, the Department of 
Labor does have some concerns about the drafting, and we'd be 
happy to meet with committee staff to explain our concerns, and 
to try to work out an acceptable language. In terms of the 
Administration position, I defer to Mr. Bussanich, in regard to 
that.
    The Chairman. All right. I think if you would be willing to 
make clear to staff and work with staff on what the specific 
drafting problems are as you see it, that would be useful.
    Mr. Nesvet. We'd be happy to.
    The Chairman. All right.
    Regarding Section 4, the Four Atoll Healthcare Program. The 
testimony states the Administration does not support 
appropriations because ``The Administration's report concluded 
that there was no legal basis for considering additional 
payments.'' The program was established in the 1970s. It was 
reestablished under the Compact in 1986, because of the people, 
these four atolls were at increased risk of radiogenic 
illnesses. Mr. Bussanich, let me ask you again. Isn't it true 
that there is still a medical basis for continuing this 
program?
    Mr. Bussanich. Mr. Chairman, I'm not a doctor or a health 
professional, but as I look at the program and what it attempts 
to achieve, just looking at the purposes for which the 
Department of Interior has given grants for the last couple of 
years. The basic program is for primary healthcare services. It 
provides a variety of services on these atolls, which I believe 
are, certainly meet the needs of the people that live there.
    But, however, that--those programs are also part of the 
Compact of Free Association funding that is provided to the 
Marshall Islands, which also provides different services. So, 
certainly this, that program provides for a higher level of 
services for the people of those four atolls.
    The Chairman. All right. I have some additional questions, 
but let me defer to Senator Murkowski for her questions.
    Senator Murkowski. Thank you, Mr. Chairman. In listening to 
the responses from the Administration, it doesn't sound very 
encouraging to me. I think it's important that we work together 
to advance what is set out in S. 1756, to make good on the 
commitment and make good on the promises to the people of RMI.
    I appreciate, Mr. Weisgall, your testimony I thought was a 
very concise analysis of the situation that we have in front of 
us. And to use your terms, let's talk about the skunk at the 
garden party here, and how we ensure that a level of 
compensation is provided.
    I want to ask you a little bit more, Mr. Weisgall, you've 
kind of suggested that this issue has been punted from the 
Executive to the Judicial to the Congressional branch and now 
it's sitting with us. Your suggestion is that we either need to 
act on it or if we feel that it's not within our domain, to 
make clear that it needs to be resolved to the courts.
    This has been kind of simmering out there for years and 
years now. If we here in Congress should say it goes back to 
the courts, is that the best place for resolve? You know, 
around here things don't move as quickly as either we or those 
constituents that we are serving would like. What's the best 
answer here?
    Mr. Weisgall. The first choice, Senator. First of all, your 
analysis is absolutely correct. A court decision is, it's a 
crap shoot. You don't know what a court's going to say. In 
fact, in oral argument on this case, the judge--a very 
knowledgeable judge--pointed out legalistic differences between 
the Bikini and Enewetak cases. Even she said, ``I mean, if I 
follow some of these rulings, this could be bizarre. I mean, 
Bikini could get funding and Enewetak might not, or it might 
come out the other way.''
    During oral argument, I would say on three separate 
occasions, she said, ``This cries out for a settlement,'' and 
using that literal language. The transcript is available. In 
fact, I'd be delighted to supplement my testimony with some of 
her statements. She was sending as strong a signal as she could 
to the Executive branch, to say, ``Look, wrap this up. We don't 
want to go back talking about vaporized atolls at this point in 
our history.''
    Interestingly enough Senator, the other problems here, it's 
one of judicial restraint. It's avoiding this Constitutional 
question of whether, either the executive branch or Congress 
can say, ``Well, here's the amount of the damage, you know. 
Here's a trust fund, that's it.'' That is a job that is 
exclusively reserved for the courts, determining just 
compensation. That's why the earlier decisions of the U.S. 
courts in the 1980s, talked about this original trust fund as 
an initial sum. That is a direct quote from the--from the Court 
of Appeals for the Federal Circuit, in saying, ``Go exhaust 
your remedies.''
    Because no court wants to rule that something is 
unconstitutional. That's the other skunk here, which is the 
question of whether the executive branch or the legislative 
branch can effectively end-run the 5th Amendment, by saying, 
``OK, here's a problem. We're going to pay x number of dollars 
for it.''
    The ideal solution would be a full airing of the issue 
before Congress with real facts. The original Compact----
    Senator Murkowski. Which is the Changed Circumstances 
Petition?
    Mr. Weisgall. Yes. Yes, exactly, under that. I mean, there 
have been changes in radiation protection standards, there have 
been changes in knowledge of damages. Secretary O'Leary, back 
in 1993, began declassifying documents. There's been a whole 
lot of history since 1986. That would be far the first choice.
    The fall-back position would be, if you, in your wisdom, 
determined that it's something that Congress is not willing to 
go through, then I would simply make that clear, to send a 
clear signal to the Judicial Branch, that says, ``Okay. It is 
in your court, don't you duck the issue.'' Then the crap-shoot 
continues.
    Senator Murkowski. But is it not correct that the Changed 
Circumstance Petition is a petition that is reviewed by the 
Congress?
    Mr. Weisgall. Absolutely. The terms of that say that the 
Marshall Island's government may submit a petition to the 
Congress and that the Congress does not have to act on it, but 
it is a--it is a petition, like the old fashioned days, before 
we had lobbyists and all that, in the early days of the 
Republic. People would bring petitions to Congress and Congress 
would either grant them or deny them.
    Senator Murkowski. Let me ask one more question, before I 
turn it back to the Chairman, here. Several of you, Mr. 
Bussanich, Mr. Philippo, Mr. Gootnick, you've all mentioned the 
capacity limitations that have affected RMI's ability to ensure 
effective use of the grant funds. You know, the Compact 
anticipated that this was going to be a problem, providing for 
grant-building capacity. Are we not using this tool 
effectively? What can we do better to provide more of that 
capacity expansion? I toss it out to any of you gentlemen.
    Mr. Bussanich. Thank you. The issue of capacity building, 
it is true that capacity building is one of the six sectors 
that is eligible for funding under the Compact of Free 
Association. It is not one of the highest priority sectors, 
which are education, health, and infrastructure, but it is 
there to ensure that those sectors can function adequately.
    Looking at the record of the Marshall Islands to date, we 
do think that the Marshall's has acted in a manner that has 
adequately protected our interests. They're certainly managing 
the financial accountability, they're making progress in 
certain areas. But in the long run, what we're concerned about, 
and I didn't know that the Marshall Islands as well, is it's 
own ability with it's limited resources and people, to make 
sure that it does have sufficient expertise and being able to 
analyze its economic and democratic data and be able to 
implement that into, or to integrate that into policy changes.
    One of the things we've done--a couple of things we've done 
this year in concert with the Marshall Islands, because all of 
these agreements are, all these allocations of funds are on a 
consensus basis, is the Marshalls has, is allocating $300,000 
to continue consultancy to improve its performance management 
techniques, so that it sets goals and is able to gather data 
about its performance in health and education, and throughout 
the rest of its government.
    In addition, the government is providing, is performing a 
personnel audit on the--on the use of, on its education sector, 
to make sure that the numbers of people there are represented 
correctly and that there's an appropriate level of parties.
    Senator Murkowski. Mr. Gootnick? Mr. Philippo?
    Mr. Gootnick. Let me add just a couple of quick points. If 
you look at the oversight, the management, and reporting of 
sector grants, I think you see a pretty clear distinction 
between what has happened in the infrastructure sector grant, 
where there has been, I think, real good oversight, program 
monitoring, accountability, and actually progress demonstrated. 
In some of the other sectors, the capacity may be somewhat more 
limited.
    Two issues to mention in that regard. The first is that the 
Office of Compact Implementation--this really goes to the issue 
of accountability and progress monitoring from the top--the 
Office of Compact Implementation in the RMI government has 
moved around a bit, and at this point is a bit in a, in an 
uncertain position, where it reports, in part, through the 
Office of the Chief Secretary and the Office of the Foreign 
Secretary, in a way that's probably not ideal. That needs, I 
think, to be sorted out and resourced as soon as possible.
    The second thing is the GEMFAC process. If you look at the 
annual meetings where the U.S. and the RMI officials convened 
to discuss the allocation of resources and results 
accountability, GEMFAC's functions are multiple, to meet, to 
evaluate progress, to prove grant allocation, to review annual 
reporting, to identify problems, to recommend ways to increase 
effectiveness of Compact Grant Assistance. They've done pretty 
darn well at grant allocation, but a lot of the rest of it, 
which really is more an ongoing process, has not been as fully 
resourced as I think it could be. Those are two areas for 
improvement.
    Mr. Philippo. Thank you, Senator. On the question of the 
capacity building. We approach this issue on a more broader-
based approach. The reason and the purpose, well the reason why 
our government has prioritized education, we see that the 
capacity building is part of the need to educate our people. 
The more educated the people and persons we get in the Marshall 
Islands, I think we will address through this longer-term 
progress, a lot of the issues here.
    On the shorter term, in response to some of the concerns 
raised by Mr. Gootnick, the Compact Implementation Office has 
been squarely placed under the Ministry of Foreign Affairs, to 
report directly to the Secretary of Foreign Affairs. As Mr. 
Bussanich had mentioned, we allocated $300,000 in a Compact 
capacity-building grants for capacity building with the idea 
that the Compact Implementation Office would oversee this 
responsibility to providea more direct approach to the issues 
of capacity building.
    In addition, and aside from, funds that are provided under 
the Compact for capacity building, the Marshall Islands also 
makes a, has access and makes use of funds that are available 
to it for capacity building--for capacity building, such as 
funds that are provided, the technical grants that are provided 
through ADB, for capacity building.
    So yes, it is an issue that is in the forefront of the 
minds of the leadership and we are trying to address that issue 
to the best possible extent that we can.
    Thank you.
    Senator Murkowski. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Let me ask about one other issue. This is on Section 5.
    Mr. Bussanich, Section 5 would direct the Department of 
Interior to commission an assessment by the National Academy of 
Sciences on the health impacts of the testing program. The 
testimony states this is not necessary, given the 
Administration's January 4, 2005 review of all existing 
scientific studies. However, as I understand it, the July 2005 
National Cancer Institute studies were not included in that 
review. Is that accurate, as you understand things?
    Mr. Bussanich. Mr. Chairman, I really do not know the 
answer to that question.
    The Chairman. Could you run that down and maybe get back to 
us with a response?
    Mr. Bussanich. Yes, sir.
    The Chairman. That would be helpful. There are several 
other questions that I will submit for responses in writing.
    Senator Murkowski, did you have additional questions?
    Senator Murkowski. Thank you, Mr. Chairman.
    I just have one more that I would like to ask and then any 
additional ones, I too, will submit for the record.
    But, to you Mr. Philippo, you've heard the testimony from 
the Administration here today. What is your reaction?
    Mr. Philippo. I thank you, Senator, Mr. Chairman.
    The RMI respects the Administration's authority and 
responsibility to adopt a position on S. 1756. We are 
profoundly disappointed by the Administration's positions 
regarding the very humble requests in S. 1756, however.
    The provisions of this bill were meant to modest, first 
steps to address existing programs under the Compact--under the 
Compact related to U.S. nuclear weapons testing. The provisions 
are all ex gratia and require no amendments to the Compact. The 
RMI is asking for realistic measures to sustain critically 
important programs. Given the Administration positions taken 
today, the RMI asks that Congress exerts its authority to--
authority to address the measures in this bill.
    As I said in my statement, the health of our people and our 
lands have been compromised by U.S. activities, and the RMI 
looks to the Congress to take action on the items in S. 1756.
    Thank you.
    Senator Murkowski. Thank you. I appreciate that response.
    Mr. Weisgall, on behalf of the four atolls that you 
represent, would you care to add anything in response to the 
Administration's testimony today?
    Mr. Weisgall. I would merely second, I, profound 
disappointment is a pretty good description. I would add only 
this, and I'm speaking here as a citizen. I'm struck by the 
fact that this is a country, the Marshall Islands, that has got 
soldiers standing shoulder to shoulder with our men and women 
in Iraq and Afghanistan. This is a country that is standing 
shoulder to shoulder with the United States at the United 
Nations. These are pretty significant areas, this means, this 
should mean a lot to our country. Here we are talking about $1 
million or $2 million for a healthcare program.
    This was set up 1 week after the Bravo shot. It was set up 
on March 10, 1954. The Atomic Energy Commission realized that a 
horrible accident had occurred and that over 200 Marshallese 
had been exposed. Then it was expanded under the Congress in 
1978. I think it was Public Law 96206, to have a healthcare 
program for the four atolls. It's been part of the system.
    I guess the only other factor I would add, Senator, is I'm 
not surprised by what I'm hearing, because since the 1970s at 
least, certainly in my 34 years, it has been the Congress, both 
the House and the Senate historically, that have acted on these 
issues. It has rarely been the executive branch that has come 
up to Capitol Hill and has said, ``We've got to do something.'' 
Yes, the Compact was certainly, that was a major exception, but 
one could argue that the Compact was the result of a tremendous 
amount of political pressure, both in the courts and on Capitol 
Hill.
    So, I'm not surprised at what I hear, but I put the 
challenge to you and your colleagues on the other side of 
Capitol Hill to continue handling this legacy. That's why the 
Changed Circumstances Petition was added. There was a 
recognition that Congress sometimes has to pick up the cudgel 
here when it's--when it's either difficult, embarrassing, or 
otherwise conflicting, if you would, for the executive branch 
to come up here and say, ``We've got a, we still have a pretty 
tough legacy on our hands.''
    Senator Murkowski. I appreciate it.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Thank you all. Thanks to all the witnesses. There are a few 
additional questions that we'll submit to you and hope that you 
could get a response back to us in the near future. But I think 
this has been useful and helps give us a good legislative 
record that we can use in moving forward here. So, thank you 
very much.
    The hearing is adjourned.
    [Whereupon, at 11:04 a.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

                              Department of Energy,
           Office of Congressional and Legislative Affairs,
                                  Washington, DC, October 25, 2007.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: On September 25, 2007, the Senate Energy and 
Natural Resources Committee held a hearing regarding Marshall Islands 
Nuclear Testing, Compact of Free Association.
    Enclosed are the answers to four questions submitted by you to 
complete the hearing record.
    If we can be of further assistance, please have your staff contact 
our Congressional Hearing Coordinator, Lillian Owen, at (202586-2031.
            Sincerely,
                                           Lisa E. Epifani,
                                               Assistant Secretary.
[Enclosures]
              Responses to Questions From Senator Bingaman
    Question 1. What would be the estimated cost of establishing and 
operating a whole-body counting facility in Utrik mirroring the 
facility in Enewetak? Please provide a rough breakdown of construction 
and operating costs.
    Answer. The estimated cost to establish and operate a dedicated, 
stand-alone whole body-counting facility on Utrok Atoll that would 
include the capability to conduct urine bioassay analysis, to perform 
sample collections and preparations. and to support radiological field 
monitoring that mirrors the DOE Enewetak Atoll Radiological Laboratory 
is:





Construction:...........................................      $  850,000
Operation (annual):.....................................      $  210,000
Total Cost (first year):................................     $ 1,060,000


    Question 2a. In his testimony regarding Utrik Atoll, Mr. Weisgall 
states that ``recent whole-body counting data gathered by Lawrence 
Livermore Laboratory has demonstrated that the people living on Utrik 
have received the highest body burdens of radionuclides of any group in 
the Marshall Islands.'' Is this correct?
    Answer. Yes. Since DOE's establishment of permanent whole body-
counting facilities on Majuro, Enewetak, and Rongelap, the Utrok Atoll 
resident population group has acquired the highest levels of internally 
deposited cesium-137 in comparison with other population groups in the 
Marshall Islands that DOE has tested. The levels of internally 
deposited plutonium acquired by Utrok Atoll residents are very low and 
are consistent with data developed for other atolls.
    Question 2b. How do these burdens compare with other areas?
    Answer. The population average dose on Utrak in calendar years 
2005-2006 from internally deposited cesium-137 is around 3.5 mrem per 
year. This dose level may be compared with a population average dose of 
0.7 mrem per year for residents of Emewetak Atoll, 1.6 mrem per year 
for resettlement workers living on Rongelap Atoll, and less than 0.1 
and 1.6 mrem per year for people living on the southern (including Maj 
tiro) and other northern atolls, respectively.
    Question 2c. What are the predicted health effects of these body 
burdens?
    Answer. The levels of radiation exposure as documented under the 
DOE Marshall Islands Program are not likely to have any measurable or 
discernible impact on human health. Moreover, individual doses for 
Marshallese volunteers participating in the whole body-counting program 
on Utrok Atoll are all below the cleanup (radiological safety) standard 
of 15 mrem per year as adopted by the Marshall Islands Nuclear Claims 
Tribunal.
    Question 3. Are there cost-effective measures that can be taken to 
reduce the risks of radiogenic illness in Utrik? For example, what are 
the costs and benefits of doing potassium treatments at Utrik?
    Answer. Risks of radiogenic illness from low-level chronic exposure 
to residual litllout contamination on Utrok Atoll are already very low. 
The application of potassium fertilizer on the agricultural areas will 
produce no measurable health benefit to the people Utrok Atoll. 
However, it will provide assurances to the local population that 
actions have been taken to limit radiation exposure on the island.
    The answer is based on extensive scientific experience and 
knowledge of cesium-137 and its behavior in the environment of various 
atolls in the northern Marshall Islands. Our experience indicates that 
adding potassium fertilizer to soils where cesium-137 concentrations 
are already very low produces smaller reductions in cesium levels in 
food crops grown in those soils.
    As such, there appears to be no clear radiological benefit to 
adding potassium fertilizer to agricultural areas on Utrok. The value 
of potassium treatment under these circumstances should he considered 
as addressing people's perception of risk.
    Question 4. Please describe the health risks to the people or 
Enewetak Atoll from contamination in the Fig/Quince area, what 
monitoring is currently done, and what the estimated cost and benefits 
of such monitoring would be?
    Answer. The health risks posed by plutonium contamination in the 
Fig/Quince area for Enewetak Atoll residents arc linked to land-use, on 
the plutonium concentration in--and re-suspension potential of surface 
soils as well as how long a person visits Runit Island. Based on 
available knowledge about the use of Runit Island and measurement data 
on plutonium in soils, the health risks to the people of Enewetak Atoll 
from exposure to plutonium in the Fig/Quince area are likely to be well 
below the risk set in U.S. regulatory guidelines for cleanup of 
radioactively contaminated sites.
    Runit Island is known to contain elevated levels of plutonium 
contamination especially in the vicinity of the Fitt/Quince area. The 
main pathway for human exposure to plutonium on Runit Island is through 
inhalation of re-suspended soil (contaminated dust) particles in the 
air that people breathe when visiting the island.
    Plutonium in air: Scientists from the Lawrence Livermore National 
Laboratory have on numerous occasions conducted plutonium re-suspension 
studies on Runit Island in the vicinity of the Fig/Quince area. These 
data show that the concentration of plutonium in air in the vicinity or 
the Fig/Quince area is below the U.S. Environmental Protection Agency 
(EPA) guidelines for cleanup of radioactively contaminated sites.
    Plutonium in soil: The level of plutonium in surface soils around 
the Fig/Quince area has also been well documented and, although 
detailed knowledge about the depth distribution of plutonium is 
lacking, the frequency distribution of hot particles in surface soils 
is sufficiently low that standard techniques for removing hot particles 
may not he applicable and will not necessarily reduce the risks from 
inhalation exposure to plutonium.
    Plutonium in Enewetak Islanders: Plutonium bioassay tests performed 
on the Enewetak population over the past 5 years clearly demonstrate 
that the level of internally deposited plutonium acquired by Enewetak 
residents, including people who visit to Runit Island, is very low and 
cannot easily be distinguished from backg round levels normally 
attributable to exposure to world-wide fallout contamination in the 
Northern Hemisphere.
    Currently there is no radiological monitoring program for Runit 
Island. A radiological monitoring program would consist of a permanent 
air monitoring system on Runit Island to collect data every 6 to 8 
weeks over the year. The monitoring program would generate a small 
number of samples (20-25 samples) for analyses of plutonium each year.
    A technically feasible and sound scientific approach to directly 
monitor the situation on Runit Island is to install a permanent weather 
station and air monitoring equipment. The air monitoring, system would 
be used to assess the long-term. ambient concentration of plutonium in 
air in the vicinity of the Fig/Quince area in comparison to a control 
station located on Enewetak Island. This recommendation is experience-
based on previous monitoring of plutonium re-suspension in air on Runit 
Island using short-term measurements. Our knowledge of re-suspension is 
limited because previous monitoring was mostly in the dry season; there 
is little data for the rainy season. Re-suspension is different across 
the different seasons.
    Supplemental plutonium bioassay measurements in Enewetak Atoll 
residents would also be performed under the Runit monitoring, program 
every 4 to 5 years to help verify and document plutonium exposure 
conditions on Enewetak Atoll. It should be expected that exposures, in 
general, will remain at or below levels that could potentially impact 
human health. Every effort would be made to identify community 
residents that traveled to Runit Island in the previous 4 years for 
inclusion in the bioassay campaign.

    Estimated Cost: All estimates are in 2007 dollars and include 
logistical support costs.*




First year cost to establish monitoring program for             $150,000
 Runit Island:
Annual recurring monitoring program cost (year two              $100,000
 and beyond) for transportation, labor, and
 laboratory services:
Plutonium bioassay campaign (in addition to the above           $175,000
 monitoring program) every 5th year for 50 volunteer
 Enewetak residents


    *Funding for the activity is not provided for in the 2008 Budget.

    Benefits: The monitoring program would provide added assurances 
that radiological conditions on Runit Island do not pose a significant 
threat to the health of the people of Enewetak Atoll and, perhaps most 
importantly, would provide a more direct, accurate and reliable basis 
for assessing doses to potential ``maximum exposed individuals'' who 
may occasionally visit Runit Island. Maximum exposed individuals are 
those with the highest food consumption, occupancy, and other usage of 
the Fig/Quince area. This reality-based approach would educate people 
about their risk when visiting Runit Island and manage perceptions of 
risk.
                                 ______
                                 
     Responses of Steven McGann to Questions From Senator Bingaman
    Question 1. Economic development is an important goal of the 
Compact relationship with the RMI, but there are also important 
political and security goals. Would you please outline the State 
Department's views on these aspects of the relationship?
    Answer. The U.S. is responsible for defending the RMI from attack 
or threats of attack as the United States defends itself and U.S. 
citizens. The United States has the option to foreclose access to or 
use of the RMI by military personnel or for the military purposes of 
any third country (``strategic denial''). The RMI is also obligated to 
refrain from actions that the United States determines, after 
appropriate consultation, to be incompatible with its authority and 
responsibility for security and defense matters in or relating to the 
RMI (``defense veto''.)
    The RMI maintains its own foreign policy, which is, in nearly all 
cases, consistent with U.S. goals and aims. RMI citizens serve in the 
U.S. armed forces. There are approximately 90 RMI citizens in the U.S. 
Armed Forces, 23 of whom serve in Operation Iraqi Freedom.
    The RMI regularly stands up to the G-77 and other groups, siding 
with the U.S. on major foreign policy issues such as Cuba, the Middle 
East, and most recently the war in Iraq.
    The RMI has worked closely with the U.S. to strengthen its ability 
to detect and combat international crime and terror. The RMI has signed 
and ratified four of the five UN counter-terrorism conventions. The 
current government cancelled the previous RMI government's citizenship-
for-sale program well before 9/11.
    Question 2. The nature of the security threat has changed 
significantly in the past several years. Security is now seen not only 
a DOD responsibility, but also of DHS. Would it be appropriate to 
review the Compact security agreements and procedures in light of the 
changing security environment?
    Answer. We consider security to be a top priority for the region. 
We work with the Department of Homeland Security (DHS) and other 
interested agencies to contribute to this effort. For example, we are 
presently coordinating with DHS on a Top Officials Exercise which will 
be held in Guam in mid-October. The State Department will send a 
representative to this exercise to serve as a regional specialist and 
as a coordinator among government agencies and high-level Pacific 
Island officials, including those from the RMI. This simulated disaster 
response exercise is designed to strengthen capacity to prevent, 
protect against, respond to, and recover from large-scale terrorist 
attacks in the United States and internationally.
                                 ______
                                 
    [Responses to the following questions were not received at 
the time the hearing went to press:]

        Questions for Witten T. Philippo from Senator Murkowski
    Question 1. Minister Philippo, I first want to acknowledge the 
significant progress that you and your Administration have made in 
implementing the requirements of the Compact, particularly in the 
Health and Education sectors. I am also encouraged to hear of the new 
Office of Compact Implementation and expect that this will bring about 
even more positive progress. I am wondering, though, what prospects do 
you see for the RMI to be able to be economically self-sufficient after 
Covenant grants cease in 2023?Given the constraints in terms of natural 
resources and land area, how is your Administration and the private 
sector doing in encouraging and establishing a stable economic base for 
the RMI past 2023?
    Question 2. Minister Philippo and/or Mr. Weisgall, Do you have good 
data on the number of workers who may actually qualify for nuclear 
worker compensation? I had trouble winning approval for the Employee 
Occupational Illness Compensation provision of this bill in 2005 
partially because of differing estimates for how much it would cost.
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

 Supplemental Statement of Jonathan M. Weisgall, Legal Counsel for the 
                            People of Bikini
    During questioning at the September 25 hearing, Senator Murkowski 
asked several questions about what she agreed was ``the skunk at the 
garden party--the failure of the U.S. to provide the Nuclear Claims 
Tribunal with the funding needed to pay the awards it made to the four 
atolls.'' She specifically asked about the advantages and disadvantages 
of seeking to have this question resolved by the courts.
    In response, I explained that at oral argument on April 23, 2007 in 
the Bikini and Enewetak cases, Judge Miller of the U.S. Court of 
Federal Claims raised the prospect that further litigation might lead 
to a recovery by one group of nuclear victims but not another, based 
solely on the legal and factual circumstances of the various cases, 
ignoring the fact that both groups of plaintiffs--one from Bikini and 
one from Enewetak--are Marshallese victims of the U.S. nuclear testing 
program. It was for this reason, I explained, that Judge Miller 
strongly--and repeatedly--urged the parties to discuss settling the 
litigation. In response to further questioning from Senator Murkowski, 
I said that I would supplement my testimony with excerpts of Judge 
Miller's comments from the transcript of the oral argument in these 
cases in which she urged the parties to seek a settlement.
    The following are excerpts from the 182-page transcript of the 
April 23 oral argument on the U.S. Government's motion to dismiss the 
plaintiffs' complaints in Ismael John, et al., v. United States (Docket 
No. 06-289L) and People of Bikini v. United States (Docket No. 06-
299C), with the Honorable Christine Odell Cook Miller presiding. Judge 
Miller had earlier ruled that the U.S. Government's motions to dismiss 
the two cases should be briefed, argued, and decided together.
    Unless otherwise noted, all of the excerpted material quoted below 
was spoken by Judge Miller. In trying to put her remarks in the proper 
context, I have taken the liberty of underlining some of her comments 
to emphasize the point I made to Senator Murkowski--that Judge Miller 
repeatedly urged the parties to discuss settlement because of the 
vagaries and uncertainties of further trial and the potential for 
reversal on appeal:

Page 26:
    [T]he Compact itself provided for what you do in Article 9 with 
changed circumstances, and the remission of the claim is to Congress, 
and that is where the parties are. They went to Congress when they 
received their awards, and Congress to date has done nothing, although 
having been apprised that the awards entered--I shouldn't say entered. 
I mean by the tribunal.
    In 2000 to 2001 respectively, however, there were Senate and House 
hearings in the 2005 timeframe, and nothing has been done since.
Page 28:
    The State Department made a report that it didn't believe in 2005 . 
. . that under the changed circumstances clause that recommended 
against any additional payments, and I know that the representative of 
the State Department is here. It would be very helpful to the Court if 
Congress would give a signal that it is making a final determination.
Pages 78-80:
    One of the things I wanted to do today was to urge caution on both 
sides . . . . My purview is to take the Federal Circuit's decision and 
do what it says, and that's what I'm going to do because, as a trial 
court, that's my job.
    Now what does that mean for both sides? It means that you may be in 
for protracted proceedings, and this always suggests that a resolution 
between yourselves is the way to get around this.
    First you avoid any precedent that's difficult for either side to 
deal with, and second, you get that final resolution that everyone 
wanted to get in the first instance but didn't draft the appropriate 
agreements, and the answer is a settlement . . . 
    But I think that the idea of continuing the litigation on does pose 
a downside for both Plaintiffs and the government . . . 
    This is not a satisfactory approach from either Plaintiffs' 
perspective or the government's. This is a case that cries out for a 
settlement because no one expected it to unwind and have to be replayed 
here (emphasis added).
Page 81:
    Both sides will have to assess the Supreme Court's views because 
this is a case that clearly is headed in that direction. In other 
words, relief is a long time coming, and so the better course, 
especially because I know we have representatives of agencies here, is 
to use this opportunity to perhaps set up a meeting to see what can be 
explored that's within the grounds of reasonableness . . . 
Page 82:
    So I caution the parties that the Court can do what it can do with 
the limited tools that it's given, the first of which at the trial 
level is to follow the directions of the Appellate Court, and then 
secondly is looking at the law as a whole to determine exactly where 
you stand. And that will be the first step if that's the course this 
litigation takes, and that is determining the adequacy of the tribunal.
    And then we would get into the motions practice of the sufficiency 
of your claims or lack thereof, and then we would get into a trial, 
which [from the] point of view of the John Plaintiffs could be 
extremely limited or nonexistent, which brings up the issue of why have 
a lack of symmetry between the treatments of these two groups and that 
instead of arguing to open the door for the John Plaintiffs to me says 
it's in everyone's interest to sit down and work out a settlement. 
Legally, the government is in a stronger case against the John 
Plaintiffs. Why treat them differently? It doesn't make sense, but that 
isn't my job.
Pages 87-88:
    Did Applegate create a sea change? No, it didn't. Am I troubled 
with the lack of similar treatment of the two categories of Plaintiff? 
I am, which is another reason the government should get serious about 
settling these claims, because I've seen this happen before.
Pages 89-90:
    I think that you should approach the government representatives 
with an offer that is appropriately modest in the circumstances while 
the rest of this case plays out. And I think the government is not 
interested in retrying these issues in a judicial forum. It doesn't 
look good no matter how they're resolved.
    The idea that this is leftover business this many years later is 
just not a credit to the U.S. Government, and even if it has to do with 
drafting of agreements, it's not a credit to the U.S. Government. The 
fact that we have Courts look at these things is a credit to the U.S. 
Government, but having to review the consequences of nuclear activities 
that vaporize islands is not. That's the business we don't want to be 
in right now, and when I say appropriately modest, I mean it.
Page 96:
    And most of those contracts were always express. I don't know what 
it means if it's an implied-in-fact contract. It's a risk you don't 
want to run because your best suit of course is the takings for 
monetary reasons. And I see the basis of a settlement, but a settlement 
that is reached that has nothing to do with the ultimate figures that 
were awarded because they're way out of line. They are the best-case 
scenario, and when you get into litigation, you're never aiming for the 
best-case scenario.
Page 97:
    MR. VAN DYKE [lawyer for People of Enewetak]: The figures awarded 
by the Claims Tribunal seem large to some, but they're actually quite 
modest compared to other expenditures that our government has spent.
    THE COURT: Well, you can argue that to somebody else, but that 
isn't appropriate to me. I mean, I know that we're in the midst of a 
war that has more zeros after it than I can imagine in my lifetime, but 
that isn't how these decisions are made. You want to go for it? Fine. 
But I can't tell you that based on all my experience and all the 
reading of the precedents and seeing what happens when these cases get 
up on appeal that you don't run the risk of an ultimate disappointment. 
And I think that now is the time to be reasonable.
    What do you really need? What can this generation use? How can you 
make lives better now with a reasonable sum of money that the 
government might be willing to entertain as the basis for settlement? 
If not, you're in for the long haul, or if the Court dismisses the 
case, you're in for the short haul of an appeal and take your chances 
there. But as you can tell from what I've been saying, I'm not leaning 
towards dismissal.
Pages 98-99:
    So I urge all parties here to understand that a short term final 
resolution is in everyone's interest, and a Court is not suited to 
rectify all the difficulties that have arisen after such many years' 
passage of time.
Pages 175-76:
    That is one of the reasons the government should look seriously at 
settlement. On the other hand, Plaintiffs know that nothing requires me 
to do this. It is absolutely not required. It's something that you do 
if the Judge feels there has really not been a correct decision, and 
it's a problem that arises every time you get a new Judge in the case.
Pages 176-77:
    So, when you're dealing with protracted litigation, which in this 
case is nobody's fault, understand there are real risks. If you think 
you have a victory, it could be very short-lived, and I'm not even 
talking about what could happen on appeal, because if we have misread 
in any material way what the Federal Circuit is telling us, if 
Plaintiffs have read too much into it and I've read too much into it, 
and if it's entitled to the construction that the government has given 
it, then in fact everything will have been a waste, and certainly we 
wasted the government's time, which, as I say, is another reason it 
should be settled.
    But apart from ultimately prevailing, the government has to decide 
whether or not it wants these claims replayed at this time in a Court. 
I don't really know about the difficulties involved, but in terms of 
the repercussions, those are yours to judge. I'm only interested in the 
legal aspects. I don't make these other policy decisions and stay away 
from them.
    Don't give up that ability to talk to each other while this process 
is ongoing. There's significant risks in continuing for both sides. The 
only thing I can do is try to take cognizance of everything you've 
said. And it has been very helpful, and keep an open mind.
Pages 179-82:
    MR. WEISGALL: On the settlement point, I just want to thank you for 
pushing. You're knocking heads here is what you're doing a little bit. 
I mean, you're knocking us and you're knocking them. I think that's 
very helpful. My clients are not getting any younger. They would 
certainly and have always been amenable to settling this.
    Take my head off for what I'm about to say, but I will be 
presumptuous. I think the best way you can force us to talk would be to 
say in your written opinion some of the things you've said here in the 
courtroom. I think it would help the process, and I think it's a good 
process. I apologize if that's----
    THE COURT: Well, I will take that under advisement. One of the 
reasons we have arguments like this is to get out the thoughts as they 
occur, send messages hopefully but not put them into the written domain 
as part of a decision where I'm supposed to be focusing on the narrow 
question and giving a narrow ruling. And I try not to speak ex 
cathedra, but it happens sometimes, and sometimes it's called for.
    Usually I make the remarks that I made today actually off the 
record. I became emboldened to make them on the record because I want 
the parties and everybody who is involved here to understand this is 
potentially a long term proposition. Remember, if we take the most 
efficient route, which is to enter a ruling for the government, have it 
appealed, and a year later be back here on something related thereto, 
that would clear the air.
    But I am not going to rule for the government to clear the air, and 
that means that the government's position is not going to be appealable 
until we enter a final judgment. And if I've been wrong and your 
counsel has fortified me too much and I have not been the logical Judge 
that Professor Van Dyke wants, Plaintiffs will pay the price at the end 
of the day.
    So a lot of what I say should stay in this posture because it's 
understanding the litigation process. It's the best process we've got, 
but it has its pitfalls . . . 
    So the system is the best we can have, but when you see the 
possibility of losing short term gains in the long run, you've got to 
factor that in. So I want the government to be willing to talk to 
Plaintiffs. You can talk to them and say that we won't entertain 
anything unless it's in the range of X or we won't entertain anything 
at all, but let them know where you stand. Do talk to them. Let them 
know where you stand because unless I'm held off, this opinion is 
coming out when I said it would. So thank you very much.