FEDERAL UPDATE
January 2012
The Report on Congressional & Administration Activities
Office of Federal Governmental Relations • 1608 Rhode Island Ave, NW • Washington, DC
IN THIS ISSUE
WASHINGTON UPDATE…………… 1
CONGRESS PASSES TWO MONTH
PHYSICIAN FIX………………………1
FY 2012 APPROPRIATIONS
FINALIZED….…………….….……….2
POLICY AND REGULATORY
UPDATE………………………………..4
For more information on the items in this report
or on federal governmental developments in
regard to UC and the State of California, please
contact the Office of Federal Governmental
Relations at (202) 974-6300.
WASHINGTON UPDATE
December saw a significant amount of Congressional action as Congress
finished working on a number of major pieces of legislation before they
recessed for the end of the year. The primary focus was the completion of
the nine remaining appropriations bills that were signed into law, en
masse (megabus), on December 23rd. The passage of the megabus
completed action on the budget for FY 2012.
After much posturing, the House and Senate agreed to pass a two month
extension of the current Medicare physician payment rates. Also included
in this legislation was a two-month extension of the Social Security (SS)
payroll tax holiday and emergency unemployment insurance (UI)
benefits. The extension currently expires on February 29 and Congress is
expected to consider a yearlong extension in early 2012.
CONGRESS PASSES TWO-MONTH PHYSICIAN FIX
On December 23rd, the House and Senate gave final approval to H.R. 3765, the “Temporary Payroll Tax Cut
Continuation Act of 2011” which includes a two-month extension of the Social Security (SS) payroll tax holiday
and emergency unemployment insurance (UI) benefits, along with a two-month extension of the current Medicare
physician payment rates, thereby preventing a 27.4% cut to Medicare physician payments that was scheduled to
take effect on January 1st. The bill also included a two month extension of the so-called health care “extenders”
which were due to expire at the end of last year.
Upon reaching an 11th-hour agreement, Congress ultimately rejected a number of payment reduction options to
hospitals including those listed below which were included in the original legislation (H.R. 3630) passed by the
House in mid-December. This development means that, while new Medicare payment reductions were avoided in
the short term, Congress will be debating these same issues in early 2012 as the two-month extensions are set to
expire on February 29th.
The following issues of serious concern to UC Health remain in play as the second session of the 112th Congress
convenes:
 Reductions in bad debt payments to hospitals for Medicare beneficiaries
 Reductions in payments for evaluation and management services provided in hospital outpatient
departments
 Extending the current cap on therapy services – and the exceptions process to it – to those services
provided in hospital outpatient departments (this currently applies only to services provided in nursing
homes and other freestanding settings)
 Significantly weakening the prohibition on the establishment of new physician-owned specialty hospitals,
and relaxing the restrictions for growth on those that exist
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Providing the Centers for Medicare & Medicaid Services with new authority to make additional across-theboard cuts to Medicare inpatient hospital rates through the use of retrospective coding adjustments for
fiscal years 2010 and 2011
FY 2012 APPROPRIATIONS FINALIZED
On December 23rd, a megabus package of the final nine FY 2012 appropriations bills was signed into law after
being agreed to by the House and Senate during the previous week. In keeping with the discretionary budget caps
established in August by the Budget Control Act (debt limit agreement), the appropriations bill totals $915 billion
and provides full year funding for numerous federal agencies of interest to UC, including the Departments of
Defense, Energy, Interior, Homeland Security, Education, as well as NIH and EPA. The final package includes a
.189 percent across-the-board cut to all discretionary programs in the Labor-HHS section. (Pell Grants are
exempted from this cut.).
Research
Department of Defense Research and Development
Defense Science and Technology programs fared quite well in the FY 2012 megabus, with sizeable increases for
6.1 basic research and 6.2 applied research programs. Defense 6.1 basic research was funded at $2.117 billion, an
8.7% increase over FY 2011. Defense 6.2 applied research was funded at $4.748 billion, an increase of 6.6% above
FY 2011.
Unfortunately, the final measure eliminated the requested increase of $7 million to fund new extramural Minerva
social science research grants in FY 2012. However, the Pentagon is expected to request new Minerva grants
funding in its FY 2013 budget, which will be released in February.
Department of Energy
The $25.5 billion Department of Energy (DOE) budget for FY 2012 included the following:
Office of Science (OS): $4.889 billion, $43 million more than FY 2011. The DOE OS budget included increases
over FY 2011 for Basic Energy Sciences ($19 million), Fusion Energy Sciences ($27 million), and Nuclear Physics
($10 million). The Advanced Scientific Computing Research, Biological and Environmental Sciences, High Energy
Physics, and Science Laboratories Infrastructure accounts were all funded at the same FY 2011 levels.
Energy Efficiency and Renewable Energy: $1.825 billion, $29 million more than FY 2011.
Advanced Research Projects Agency-Energy (ARPA-E): $275 million, $95 million more than FY2011.
The DOE budget also included $11 billion ($505 million more than FY 2011), including $7.234 billion for the
nuclear weapons stockpile stewardship program ($338 million above FY 2011) and $2.324 billion for nuclear
nonproliferation ($51 million above FY 2011).
Department of Homeland Security (DHS) – Science and Technology programs
DHS Research, Development, Acquisition and Operations programs are funded at $533 million in FY 2012, a $155
million cut (23%) below the FY 2011 funding level. Within that amount, Congress has provided $266 million to
establish a new consolidated “Research, Development and Innovation” account, and included report language
directing the Department to “prioritize this consolidated research budget” and “focus on areas with the greatest
promise for delivering material improvements or tangible contributions to homeland security missions in the near
term.” The bill also provides $36.6 million for University Programs.
Department of Interior
Key highlights include:
U.S. Geological Survey (USGS): $1.069 billion, roughly a 1% cut below FY 2011.
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Washington, DC
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Natural Hazards: $134.7 million, including $55.2 million for Earthquake Hazards and $5.32 million for the Global
Seismographic Network. Each is slightly below its FY 2011 funding level.
Water Resources: $215 million, including $6.5 million for the Water Resources Research Institutes, which is equal
to the FY 2011 funding level.
Environmental Protection Agency (EPA)
The EPA Science and Technology account was funded at $795 million, which is $31 million less than the
President’s request. Although the request was below the FY 2010 and FY 2011 levels, it did include an increase of
$24.7 million for the Science To Achieve Results (STAR) fellowship program, which would have allowed funding
for 105 new fellowships. It is not clear yet how the final FY 2012 number will impact this program.
National Endowment for the Humanities (NEH)
The megabus package funds the NEH at $146.26 million, which is $9 million, or approximately six percent, below
the FY 2011 level. This total essentially splits the House and Senate totals. The legislation urges NEH to provide no
less than 40 percent of program funds “to support critical work of state humanities councils,” encourages NEH to
work more closely with Native American communities, and provides $3 million for the “We the People” initiative.
National Institutes of Health
The legislation appropriates $30.690 billion, an increase of $1.7 million over FY 2011 for NIH. However, as a
result of an across-the-board cut of .189 percent to all discretionary programs in the Labor-HHS section, the NIH
program level for FY 2012 is reduced by approximately $60 million which results in total actual funding for NIH of
$30.64 billion, which is $240 million over FY 2011. The agreement reduces the salary cap on extramural grants
from Executive Level I ($199,700 in 2011) to Executive Level II ($179,700). The NIH appropriation does not
include any transfer of NIH funding to the Global HIV/AIDS fund; all FY 2012 funding for the fund is included in
the State-Foreign Operations portion of the legislation.
The final package also includes language to implement the creation of the National Center for Advancing
Translational Sciences (NCATS) and eliminates the National Center for Research Resources (NCRR), transferring
the various NCCR programs to other institutes and centers. The legislation also provides NCATS with up to $10
million for the Cures Acceleration Network.
The megabus provides $233.7 million for the Title VII health professions programs, $18.9 million (6.9 percent)
below the FY 2011 level. Unlike proposals by both the House and Senate subcommittees to eliminate the Health
Careers Opportunity Program (HCOP), the final legislation provides $15 million for the diversity pipeline program,
$7 million (31.8 percent) less than the previous year. The legislation provides $232.4 million for the Title VIII
nursing education programs, a $10 million (4.1 percent) cut.
Agriculture, National Science Foundation, NASA, National Institute of Standards and Technology,
National Oceanic and Atmospheric Administration
Highlights of the FY 2012 Agriculture, Commerce/Science appropriations legislation that became law on
November 18th were detailed in the December Federal Update. For additional information, please contact Marjorie
Duske at Marjorie.Duske@ucdc.edu or (202) 974-6306.
Education
Department of Education and Pell Grants
The megabus provides $22.8 billion in discretionary funding for Pell Grants in FY 2012, which is a $132 million
decrease from FY 2011, but is still sufficient to maintain the discretionary portion of the maximum grant at
$4,860. Additional mandatory funds will be provided to maintain the total maximum award of $5,550.
The Department of Education has released its final numbers based on the FY 2012 megabus appropriations bill, and
now projects a surplus of $1.5 billion for Pell Grants, after the eligibility changes in the megabus and the additional
mandatory-funding savings from changes in the student loan program take effect.
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Washington, DC
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January 2012
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In order to maintain the maximum award, changes were made to the Pell Grant program in the appropriation
legislation that will reduce eligibility and benefits for some Pell recipients, and temporarily eliminate certain
student loan benefits. Effective, July 1, 2012:
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Pell Grant eligibility will be limited to the equivalent of six years or 12 semesters of full-time enrollment,
down from the current limit of nine years or 18 semesters.
The family income level at which a student automatically receives the maximum Pell Grant award will be
decreased from the current $30,000 to $23,000.
The current “ability-to-benefit” rules, which allow students without a high school diploma or GED to
qualify for Pell Grants will be eliminated. (This will not affect students who are home-schooled.)
Only for loans taken out during school years 2012-2013 and 2013-201, subsidized loan borrowers will be
required to pay interest during the six-month grace period following graduation.
Only students who qualify to receive at least 10 percent of the maximum award will receive a Pell Grant.
The megabus also funds the Supplemental Educational Opportunity Grant program (SEOG), the Federal WorkStudy (FWS), and GEAR UP at the FY 2011 levels, but cuts Title VI International Education program funding by
$1.6 million. The TRIO programs receive an increase of $15 million. Funding for the Graduate Assistance in Areas
of National Need (GAANN) program is set at the FY 2011 level, but the legislation eliminates the Javits graduate
fellowship program, instead of “merging” it into the GAANN program.
POLICY AND REGULATORY UPDATE
Indirect Costs
Throughout the summer and fall, UC FGR worked closely with UC leadership, the campuses and the higher
education community in efforts with the Office of Management and Budget (OMB), the Office of Science and
Technology Policy (OSTP) and federal agencies to achieve much-need reforms to the OMB Circular A-21 rules
and practices governing indirect cost recovery for federally-sponsored university research. Currently, indirect cost
reimbursement rates are inadequate to cover the administrative costs and burdens of university research. University
of California campuses and other public universities are particularly affected.
Based on formal comments submitted in July in response to a Request for Information by an OMB/OSTP-led A-21
task force, UC has focused its advocacy on improving the Facilities and Administration rate-setting process,
requiring fair and consistent implementation of A-21 rules and practices, and the harmonization of regulations and
information systems across federal agencies.
At a Council on Government Relations (COGR) conference in late October, representatives of the task force
discussed their internal review process and the general outlines of their work. Without giving specifics on
forthcoming recommendations, it was clear from the presentation that the A-21 task force had under discussion all
of the issues raised in UC’s recommendations to make A-21 changes to reduce the university’s administrative
burdens and costs.
It is our understanding that the A-21 task force completed its work and reported its recommendations to
OMB/OSTP leadership in late December. Final A-21 recommendations are now expected to be made public in late
January or February.
FGR will continue to monitor A-21 developments closely. For additional information, please contact Marjorie
Duske at Marjorie.Duske@ucdc.edu or (202) 974-6306.
Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR)
Reauthorization
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Washington, DC
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January 2012
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The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs were
reauthorized for six years (2011-2017) in legislation attached to HR 1540, the National Defense Authorization Act
for FY 2012, which was signed into law on December 31st. The legislation increases SBIR set-aside from the
current rate of 2.5% to 3.2%, and the STTR set-aside from 0.3% to .45%, both of which will be phased in over the
six year period. The SBIR and STTR set-asides are increased .1 percent per year for the first 5 years, and increased
.2 percent in the 6th year.
The set-aside increase is slightly less than what was included in the Senate passed SBIR/STTR reauthorization bill
which would have increased the SBIR set-aside by a full 1% over a ten year period. The final legislation includes a
new Proof of Concept Partnership Pilot Program, which authorizes the National Institutes of Health to spend up to
$5 million to establish a pilot program to focus on small business development and on improving the
commercialization of research innovations from institutions, including universities.
If you have any questions, please contact Kamala Lyon at Kamala.Lyon@ucdc.edu or (202) 974-6312.
Grant Reform and New Transparency (GRANT) Act
UC FGR has been closely monitoring developments on H.R. 3433, the Grant Reform and New Transparency
(GRANT) Act of 2011, which was introduced on November 16th and approved by the House Committee on
Oversight and Government Reform on November 17th. The legislation is intended to increase transparency and
accountability in the federal grant making process. However, as approved by the Committee, the bill raises a
number of significant concerns to UC and to the university research community. Among the issues, the legislation
would increase regulatory burdens associated with the federal grant making process for federal agencies as well as
for grant applicants; require the posting online of all completed grant applications; require the posting online of the
names and titles or a unique identifier about peer reviewers; put a focus on awarding grants strictly on a numerical
ranking basis; potentially limit the ability of federal agencies to consider unsolicited proposals, as well as a number
of other concerns.
FGR has been in contact with members of the California delegation to discuss UC’s concerns. In addition, FGR
continues to work with the UCOP Office of Research, as well as with the higher education community and other
Hill offices to coordinate next steps. At this point, the legislation has not been scheduled for a vote in the House of
Representatives, and there is not a Senate companion bill. However, further activity could occur in 2012.
FGR continues to monitor developments on the GRANT Act. If you have questions, please contact Marjorie Duske
at Marjorie.Duske@ucdc.edu or (202) 974-6306, or Kamala Lyon at Kamala.Lyon@ucdc.edu or (202) 974-6312.
DATA Act
The Digital Accountability and Transparency (DATA) Act, HR 2146, was approved by the House Oversight and
Government Reform Committee in June, 2011. The DATA Act would establish new reporting requirements for
federal agencies and recipients of federal funds. As originally drafted, the bill raises a number of concerns to UC
and to the research community at large. A Senate companion bill (S. 1222), introduced by Senator Mark Warner
(D-VA), was referred to the Committee on Homeland Security and Governmental Affairs, but no further action has
occurred in the Senate.
Since the House committee markup in June, potential changes have been the subject of discussions between
Committee staff and the higher education community. A Manager’s Amendment is understood to be in
development and is expected to be offered if the bill advances to consideration by the full House. The bill remains a
priority for Committee Chairman Darrell E. Issa (R-CA), who introduced it. While it is unknown when it may
occur, it is very possible that HR 2146 could see further action in 2012.
FGR has been working with the UCOP Office of Research and the campuses to assess the impact of the DATA Act
on UC. In addition, FGR has been in contact with the California delegation and House and Senate committee staff
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Washington, DC
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January 2012
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to communicate UC’s concerns about the legislation. FGR will continue to work closely with these partners as well
as with the higher education associations to coordinate advocacy and education efforts on the bill.
If you have questions, please contact Marjorie Duske at Marjorie.Duske@ucdc.edu or (202) 974-6306, or Kamala
Lyon at Kamala.Lyon@ucdc.edu or (202) 974-6312.
The Stop Online Piracy Act (SOPA)
FGR is monitoring developments on HR 3261, the Stop Online Piracy Act (SOPA) which was introduced in the
House on October 26th. The House Judiciary Committee began a “mark up” session on the bill in December, but
consideration was halted before a final vote because Committee Members were split over the legislation. The
Committee may resume consideration of the bill after Congress returns later in January.
HR 3261 is designed to assist U.S. intellectual property holders in addressing infringement of their works occurring
through online infringement activities. The bill would impose new criminal penalties for infringement such as for
certain streaming activities, and would give the Attorney General and intellectual property holders new tools to
address infringement occurring on foreign web sites, among other issues. FGR has been working closely with
IMPAC at UCOP to assess the impact of the legislation on UC. In addition, FGR is working with AAU, APLU and
EDUCASE to coordinate on advocacy efforts.
Among the concerns raised about the legislation within the higher education community are whether Fair Use
principles would apply to streaming activities under the bill, and whether the Digital Millennium Copyright Act’s
(DMCA) Safe Harbor provisions for Internet Service Providers (ISPs) would continue. Prior to the mark-up, FGR
contacted several Hill offices to communicate UC’s concerns with the legislation.
While there is no identical Senate companion to HR 3261, the Senate Judiciary Committee has already approved a
similar bill, S.968, which is narrower in scope and raises fewer concerns than HR 3261. It is expected that there
could be further action on HR 3261 and S. 968 in 2012. FGR will continue to closely monitor developments.
If you have any questions, or would like additional information, please contact Kamala Lyon at
Kamala.Lyon@ucdc.edu or (202) 974-6312.
DoD MOU on Tuition Assistance
UC worked with Senator Feinstein and Boxer to gather Senate support for a letter to Secretary of Defense Leon
Panetta asking for a delay in the January 1, 2012 implementation date for higher education institutions to a DoD
Memorandum of Understanding (MOU) in order to participate in the Military Tuition Assistance (TA) program.
The DoD TA program is for active duty and reserve military personnel taking college courses and is not related to
the Post-9/11 GI bill education benefits.
While the TA program is small at UC, it is an important tool in UC’s commitment to provide access to educational
opportunities to military personnel and veterans. However, the MOU contained provisions, primarily related to the
acceptance of transfer credit that would have been contrary to UC practices.
The letter, led by Senators Harkin (D-IA) and Alexander (R-TN), had 52 co-signers from both sides of the aisle,
and in response, Secretary Panetta issued a delay in the effective date till March 30, 2012. This extension will allow
the Department of Defense to work with Congress and other stakeholders to resolve the concerns and ensure that
service members are assured the full range of educational options. UC will weigh in with its recommendations for
modifications to the MOU that will allow UC campuses to sign the agreement.
If you have questions, please contact Carolyn Henrich at Carolyn.Henrich@ucdc.edu (202) 974-6308.
Office of Federal Governmental Relations
Washington, DC
Federal Update
January 2012
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Federal Update
Health…………………………………………………………………………………………………….………David Brown 202 974 6309
Education, Immigration…………………………………………………………………………….…….Carolyn Henrich, 202 974 6308
Research: Agriculture, Commerce, Interior, Defense……………………..……………………..….Marjorie Duske, 202 974 6306
Research: Energy, NSF, Transportation, NASA…………………………………………..………….…..Chris Carter, 202 974 6310
Senior Legislative Analyst........……………………………………………………….…………..….........Kamala Lyon, 202 974 6312
Legislative and Communications Coordinator……………………………………………………...…Charles Melton 202 974 6325
Associate Director………………………………………………………….………………..…….……..Chris Harrington, 202 974 6314
Associate Vice President of Federal Governmental Relations - Gary Falle
Office of Federal Governmental Relations
Washington, DC