[Senate Hearing 110-243]
[From the U.S. Government Publishing 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
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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.
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\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.
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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\
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\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.
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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.
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\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).
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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.
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\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:
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\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.
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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\
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\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.
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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.
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\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.
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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,
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\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.