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The Interior Department is interested in legislatively settling a long-running dispute over the management of its Indian trust funds, in an offer a key litigant described Thursday as "a slap in the face."

At a Senate Indian Affairs Committee hearing, Interior and Justice Department officials laid out details of a proposal for legislation that would drop all current claims against the government regarding its management of Indian land trusts, including the 11-year-old class action case Cobell v. Kempthorne and more than 100 cases brought by tribes. The administration's proposal would also consolidate thousands of fractional land claims into simpler parcels.

Interior Secretary Dirk Kempthorne said the administration is prepared to offer $7 billion over 10 years to resolve all pending and future claims. William Mercer, speaking for the Justice Department as acting associate attorney general, said the offer was not an admission of responsibility, but would avoid huge expenses for both sides in the drawn-out legal battles.

John Bickerman, a mediator brought into the Cobell case by Congress to help the two sides reach agreement, said the proposal was the result of high-level meetings among officials from several agencies and congressional staff members, and presents a rare opening for the parties to resolve the issues. "The time is ripe to solve this problem forever," he said.

In a fact sheet on the proposal, the administration expressed a willingness to address the Cobell case and the tribal lawsuits separately, but said the value of the settlement would be adjusted to reflect that decision. The proposal did not address how the $7 billion payment would be divided among the many litigants, but did note that interest would not be paid during the 10-year period over which payment would be made.

A huge gulf separates the positions of the individual claimants represented by Eloise Cobell and the government. At Thursday's hearing, senators and witnesses cited a 2005 estimate by Attorney General Alberto Gonzales that the government faced a potential $200 billion financial exposure in tribal trust cases.

But the administration's current estimate is that its Cobell exposure is less than $500 million, Bickerman said. Justice's Mercer said the government estimate had dropped sharply based on experience litigating cases in which the plaintiffs received far less than they sought. He cited a case in which a tribe had said it was entitled to recover $100 billion, but the court ultimately awarded no money at all.

Testifying in a separate panel after the federal officials, Cobell rejected the settlement offer as insufficient to settle her case alone. "This is not an offer -- instead, it is a slap in the face for every individual [with] trust fund litigation," she said.

Highlighting a comment by the mediator that Cobell case recoveries could fall in the $7 billion to $9 billion range, Cobell said that was a good statement and she "would want to talk about that more."

Committee chairman Byron Dorgan, D-N.D., who has worked toward a resolution to the trust fund cases and pushed the administration to develop its proposal, asked Cobell what her requirements would be. She said a reasonable settlement offer would address just her case, without tying in the more than 100 tribal cases and issues like fractured land claims, and would also need to acknowledge the historical wrong of inadequate government accounting for Indian trust funds and provide for real trust reform.

Dorgan expressed support for the view that the tribal claims should not be handled together with those brought by individuals.

John Echohawk, executive director of the Boulder, Colo.-based Native American Rights Fund, testified on behalf of some tribal litigants that the administration proposal was unacceptable.

"Based on this morning's hearing, we will live to fight in court," he said following the hearing. "There is not going to be any settlement of tribal claims arising from this settlement proposal of the administration. Congress has heard enough to say 'no.'"