Legislative update

Insights & Analysis

federal legislative update

December 23, 2020

Overview

Congress has agreed to a $2.3 trillion omnibus package for fiscal year 2021 that includes $900 billion in pandemic relief funds. On December 21, the House and Senate passed the omnibus package, H.R. 133, which also includes some policy riders, such as tax extenders and Surprise Billing. Because the House passed their 12 appropriations bills with reports for each and the Senate never passed their appropriations bills—though they announced draft bills and reports late in the fall—this left the House with more power to shape the final versions of each section of the omnibus that correlates with the 12 bills. President Trump has threatened to veto due to his sudden insistence on $2,000 per person instead of the $600 per person economic relief included in this package, among other things. G2G was pleased to see many initiatives we worked on included and has provided a summary below of the appropriations funding organized by section and the COVID-specific summary, as well as a synopsis of the state of Congress and new administration as we close out the 2020 year.

Elections

Budget & Appropriations

Commerce-Justice-Science Section

The Commerce-Justice-Science bill funds the Departments of Commerce and Justice, the National Aeronautics and Space Administration (NASA), the National Science Foundation (NSF), and other related agencies. The FY21 bill provides $71.12 billion in discretionary funding.

U.S. Department of Commerce

$8.9 billion is included for the Department of Commerce, an increase of $596.7 million above the President’s request.

U.S. Department of Justice (DOJ)

$33.8 billion is included for the Department of Justice, which is $1.18 billion above the FY20 enacted level.

National Aeronautics and Space Administration (NASA)

$23.27 billion is provided for NASA, an increase of $642.3 million above the FY20 enacted level.

National Science Foundation (NSF)

$8.5 billion, an increase of $208.4 million above the FY20 enacted level and $745.4 million above the President’s budget request is provided to NSF.

Energy & Water Development Section

The Energy and Water Development and Related Agencies bill funds the U.S. Army Corps of Engineers, Department of the Interior programs, the Department of Energy, and other agencies. This bill provides $49.5 billion in funding, which is $1.1 billion above the FY20 enacted level. The Department of Interior/Bureau of Reclamation is funded with $1.69 billion, an increase of $11 million above FY20 level is provided.

Department of Energy

$39.6 billion is provided for the Energy Department, an increase of $1 billion above FY20, which includes:

  • $156 million in funding for efforts to secure the nation’s energy infrastructure against all hazards, reduce the risks of and impacts from cybersecurity events, and assist with restoration activities.
  • $7.026 billion for the Office of Science to fund basic science research in physics, biology, chemistry, and other science disciplines to expand scientific understanding and secure the nation’s global leadership in energy innovation.

Interior-Environment Section

The Interior, Environment, and Related Agencies bill includes funding for programs within the Department of the Interior, the Environmental Protection Agency, the Indian Health Service and other related agencies. In total, the FY21 bill includes $36.107 billion, an increase of $118 million over the FY20 level. The Department of the Interior (DOI) is provided with $13.7 billion in funding for FY21 and the Environmental Protection Agency (EPA) is provided with $9.24 billion, $180 million above the FY20 enacted level and $2.53 billion above the President’s budget request.

Transportation-Housing & Urban Development Section

The bill provides $136.8 billion, $1.2 billion above the FY20 enacted level and $11.4 billion above the President’s budget request for these federal programs. HUD is provided with a total of $49.6 billion for HUD, $561 million more than FY20 enacted level. It includes $25 billion in emergency rental assistance and an extension of the CDC’s federal eviction moratorium through January 31, among other things.

Department of Transportation (DOT)

The bill provides $86.7 billion in total for DOT, $553 million above the FY20 enacted level. Of this amount, the bill includes:

  • $1 billion for National Infrastructure Investments (TIGER/BUILD)
  • $3 million to continue the Highly Automated Systems Safety Center of Excellence
  • $2 billion for Capital Investment Grants
  • $516 million for Transit Infrastructure Grants
  • $2 million for the deployment of magnetic levitation transportation projects, to remain available until expended – far below the $150 million included in the House-passed version

health

Labor-HHS-Education (LHHS-E) Section

The LHHS-E includes $197 billion for FY21, an increase of $2.8 billion over the FY20 enacted level and $19.2 billion over the President’s 2021 budget request.

Department of Labor (DOL)

The bill provides $12.5 billion in discretionary appropriations for DOL, an increase of $122 million above the FY20 enacted level. This includes:

  • $9.4 billion for the Employment and Training Administration
  • $2.8 billion for Workforce Innovation and Opportunity Act Grants
  • $45 million for Strengthening Community College Training Grants
  • $1.7 billion for Job Corps
  • $316 million for Veterans’ Employment and Training Service (VETS)
  • $58 million for the Homeless Veterans Reintegration Program
  • $31 million for the Transition Assistance Program

Department of Health and Human Services (HHS)

The bill includes a total of $97 billion for HHS, an increase of $2.1 billion above the FY20 enacted level. The National Institutes of Health (NIH) received $42.9 billion, an increase of $1.25 billion above the FY20 level, far less than the House sought in its bill but in the end this figure was required by the Budget Control Act and related caps. These caps will not apply next year. The total includes funding for:

  • Alzheimer’s Disease and Related Dementias Research - $3.118 billion
  • BRAIN Initiative - $560 million
  • Universal Flu Vaccine Research - $220 million
  • AIDS/HIV Research - $3.90 billion
  • Office of Research on Women’s Health - $44 million
  • Research on Premature Births - $10 million

Centers for Disease Control and Prevention (CDC)

The bill includes a total of $7.9 billion for CDC, an increase of $125 million above the FY20 enacted level. It increases investments in our public health infrastructure to include:

  • Influenza planning and response - $201 million
  • Public health emergency preparedness cooperative agreements - $695 million
  • Public health workforce and career development - $56 million
  • Suicide Prevention - $12 million
  • Safe motherhood - $63 million

Within the CDC, the Public Health and Social Services Emergency Fund (PHSSEF) receives $2.8 billion, an increase of $110 million above last year. The total funding level includes:

  • $597 million for the Biomedical Advanced Research and Development Authority (BARDA)
  • $770 million for Project BioShield
  • $705 million for the Strategic National Stockpile
  • $287 million for Pandemic Influenza Preparedness, an increase of $27 million

Department of Education

The bill provides a total of $73.5 billion, which is an increase of $785 million above the FY20 enacted level and $7 billion above the President’s budget request. This funds Elementary and Secondary Education (ESEA) programming and some STEM education. It also tackles key higher education issues, including:

  • Expanding the Pell Grant program and making it easier for students to predict their eligibility, which will make hundreds of thousands of students newly eligible for Pell and increase award amounts for millions of current Pell recipients.
  • Making it easier for students to apply – and qualify – for federal student aid by streamlining the Free Application for Federal Student Aid (FAFSA) and expanding outreach and awareness activities to encourage FAFSA completion, with a focus on low-income students and families.
  • Expanding opportunities for justice-involved individuals to get an education and successfully reenter their communities by providing incarcerated students access to Pell Grants.
  • Discharging loans made to Historically Black Colleges and Universities (HBCUs) under the HBCU Capital Financing Loan program, providing $1.34 billion in relief.
  • Eliminating a confusing and punitive restriction that limits eligibility for subsidized federal loans among low-income students.
  • Restoring Pell Grant eligibility for defrauded students, including those who attended shuttered for-profit colleges like ITT Technical Institutes and Corinthian Colleges.

Agriculture-Rural Development-FDA Section

U.S. Department of Agriculture

The FY21 bill provides $23.395 billion in discretionary funding which is $217 million above the FY20 level. Some highlights include:

  • $730 million in the expansion of broadband service
  • $6 billion in funding for Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
  • $25.1 billion for child nutrition programs. This is $1.5 billion above the FY20 enacted level and covers free or reduced-price school lunches and snacks for qualifying children, $552 million for the Summer Food Service Program, $42 million for the Summer EBT program, $30 million for school kitchen equipment grants, and $21 million for the WIC farmers market nutrition program.
  • $114 billion for Supplemental Nutrition Assistance Program (SNAP). This fully funds participation as well as the SNAP enhanced allotments authorized by the Families First Act.

Food and Drug Administration (FDA)

The FDA receives a total of $3.2 billion in funding, $43 million above the FY20 enacted level. Within this total, Congress provides increases for medical product and food safety activities, including new initiatives to advance new influenza vaccine manufacturing technologies and leverage emerging technologies to monitor food and medical product safety. It also increases funding for the safety and cybersecurity of medical devices and appropriates $70 million to accelerate medical product development as authorized in the 21st Century Cures Act.

Defense

The bill provides $696 billion in new, non-emergency discretionary spending authority for the Department of Defense. This is an increase of $2.6 billion above the FY20 enacted level, and $2.1 billion below President Trumps budget request. The bill provides $142.9 billion in total procurement spending, up from $143.7 billion in FY20, and $107.4 billion for research. Highlights include:

  • $3.5 billion for Defense Advanced Research Project Agency (DARPA)
  • $116 million funded above the request for upgrades to childcare facilities.
  • $284 million funded above the request to address public school infrastructure requirements on DoD installations.
  • $57.5 million funded above the request for sexual assault prevention and response programs.
  • $1.5 billion of total funding for environmental restoration programs
  • $60 million above the request for the Defense Community Infrastructure program.
  • $25 million above the request for Defense Manufacturing Communities.
  • $577.5 million funded above the request for cancer research.
  • Fully funds the 3.0 percent military pay raise.

Research, Development, Test and Evaluation (RDTE)

The bill provides $107.4 billion for RDTE, which is slightly higher than FY20 when Congress enacted $104.4 billion. The $107.4 billion includes investments in basic and applied scientific research, development, test and evaluation of new technologies and equipment, and supports research to develop systems and equipment needed in the future.

Defense Health Program (DHP)

DHP is funded with $33.68 billion and includes $542.5 million for cancer research. The total amount is distributed as follows:

  • $150 million for the breast cancer research program
  • $15 million for the pancreatic cancer research program
  • $110 million for the prostate cancer research program
  • $35 million for the ovarian cancer research program
  • $50 million for the kidney cancer research program
  • $20 million for the lung cancer research program
  • $30 million for the melanoma research program
  • $17.5 million for the rare cancer research program and
  • $115 million for the cancer research program

The legislation also adds $175 million for the peer-reviewed psychological health and traumatic brain injury research program, $40 million for spinal cord research, and adds $40 million for the joint warfighter medical research program.

Homeland Security Section

The bill provides $69.02 billion to the Department of Homeland Security (DHS) and agencies related to these functions. Of big interest is the cybersecurity efforts, especially with the recent discovery of the cyberattack back in March that was on-going and succeeded in significant and nefarious infiltration.

Cybersecurity and Infrastructure Security Agency (CISA)

CISA funding level of $2.0 billion includes:

  • $92.8 million to further advance CISA’s Cyber Operations,
  • $43.3 million for the Continuous Diagnostics and Mitigation program; and
  • $21.2 million for the National Cybersecurity Protection System.

Federal Emergency Management Agency (FEMA)

FEMA funding level of $21.67 billion is $604.1 million below the FY20 level and includes:

  • $17.14 billion for disaster response and recovery efforts
  • $610 million for the State Homeland Security Grant Program (SHSGP), including $90 million for the SHSGP Nonprofit Security Grants Program
  • $130 million for the Emergency Food and Shelter Program
  • $340.3 million for the Federal Law Enforcement Training Centers
  • $765.6 million for the Science and Technology Directorate

Military Construction & Veterans Affairs (MilCon-VA) Section

The MilCon-VA section totals $113.1 billion for FY21. The Military Construction receives $8.06 billion, an increase of $250 million above the budget request.

Department of Veterans Affairs (VA)

It provides the VA with $243.2 billion in both discretionary and mandatory funding, an increase of $25.3 billion above the FY20 level. This funding will help address many of the problems within the VA and provide greater access to healthcare for women Veterans, mental health, suicide prevention, claims processing, homeless prevention and care, opioid addiction, rural health, and medical research. It makes more National Guardsmen and their families eligible for some veterans’ benefits and provides $20 million to retrofit VA hospitals with women’s health spaces and makes permanent a program to provide childcare at VA facilities. Women are the fastest-growing demographic in the military, with the number using VA health care almost tripling since 2000, from 160,000 to 475,000, according to VA data. It also contains dozens of measures to aid student veterans, including more protections against for-profit colleges and a restoration of education benefits to students whose colleges closed or were disapproved by the VA. The bill also helps ensure veterans’ education benefits aren’t negatively affected by fallout from the coronavirus pandemic and makes it easier for organizations to work with the VA in serving homeless Veterans. Some health highlights include:

  • VA Medical Care is funded with $90 billion – providing for approximately 7.2 million patients to be treated in FY21, including:
  • $10.3 billion in mental healthcare services
  • $313 million for suicide prevention
  • $661 million for women’s healthcare
  • $1.9 billion for homeless assistance programs
  • $504 million for opioid abuse prevention
  • $300 million in rural healthcare

COVID-19

COVID-19 Relief

H.R. 133 also included $900 billion in COVID-19 spending and relief for unemployment aid, direct payments, and business loans. The FDA was provided an additional $55 million to facilitate the development and review of both pre-market and post-market medical countermeasures, devices, therapies and vaccines to combat COVID-19. With that, HHS was also provided an additional $73 billion to support public health; research, development, manufacturing, procurement, and distribution of vaccines and therapeutics; diagnostic testing and contact tracing; mental health and substance abuse prevention and treatment services; childcare support; and other activities related to coronavirus.

BARDA received an additional $19.695 billion for manufacturing and procurement of vaccines and therapeutics with $1.25 billion also provided to the NIH to support research and clinical trials related to the long-term effects of COVID-19, as well as continued support for Rapid Acceleration of Diagnostics (RADx) for COVID-19.

For education, Congress included $82 billion for the Education Stabilization Fund to provide flexible funding to support the educational needs of states, school districts, and institutions of higher education and the students they serve. In addition, the bill includes $54.3 billion for the Elementary and Secondary School Emergency Relief Fund as formula funding to states and school districts to help schools respond to coronavirus, including:

  • school facilities repairs and improvements, including heating, ventilation, and air conditioning systems projects to improve indoor air quality in school facilities, and
  • addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care.

The legislation also provided for a one-year increase of the Medicare physician fee schedule to support physicians and other medical professionals as well as a three-month delay of the Medicare sequester payment reductions. Significant cuts to certain specialties in the Medicare fee schedule are mitigated, with a $3 billion infusion for physician services in 2021, and a three-year delay in the implementation of a new code for complex office visits.

The packages provided an extension of CARES Act unemployment provisions by extending the Pandemic Unemployment Assistance (PUA) to March 14, 2021 and allows individuals receiving benefits as of March 14, 2021 to continue through April 5, 2021, as long as the individual has not reached the maximum number of weeks. It also increases the number of weeks of benefits an individual may claim from 39 to 50. It also extends, through March 14, 2021, a provision in the CARES Act which amended the Families First Coronavirus Response Act to provide federal support to cover 50% of the costs of unemployment benefits for employees of state and local governments and non-profit organizations. Further, it restores the Federal Pandemic Unemployment Compensation (FPUC) supplement to all state and federal unemployment benefits at $300 per week, starting after December 26 and ending March 14, 2021.

The package also provides the following in unemployment compensation:

  • Extension of Federal Funding of the First Week of Compensable Regular Unemployment for States with No Waiting Week
  • Extension of Emergency State Staffing Flexibility
  • Extension and Benefit Phaseout Rule for Pandemic Emergency Unemployment Compensation
  • Extension of Temporary Financing of Short-Time Compensation Payments in States with Programs in Law
  • Extension of Temporary Financing of Short-Time Compensation Agreements for States Without Programs in Law
  • Extension of Temporary Assistance for States with Advances
  • Extension of Full Federal Funding of Extended Unemployment Compensation
  • Requirement to Substantiate Employment or Self-Employment and Wages Earned or Paid to Confirm Eligibility for Pandemic Unemployment Assistance.
  • Requirement for States to Verify Identity of Applicants for Pandemic Unemployment Assistance

Due to errors in previous assistance packages, this package included a federally funded $100 per week additional benefit to individuals who have at least $5,000 a year in self-employment income but are disqualified from receiving Pandemic Unemployment Assistance because they are eligible for regular state unemployment benefits. The bill also provides a refundable tax credit in the amount of $600 per eligible family member. The credit is $600 per taxpayer ($1,200 for married filing jointly), in addition to $600 per qualifying child. The credit phases out starting at $75,000 of modified adjusted gross income ($112,500 for heads of household and $150,000 for married filing jointly) at a rate of $5 per $100 of additional income.

The Clarification of tax treatment of Paycheck Protection Program (PPP) loans provision clarifies that gross income does not include any amount that would otherwise arise from the forgiveness of a PPP loan. It clarifies that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness. It clarifies that gross income does not include forgiveness of certain loans, emergency EIDL grants, and certain loan repayment assistance provided by the CARES Act. Also, deductions are allowed for otherwise deductible expenses paid with the amounts not included in income by this section and tax basis and other attributes will not be reduced as a result of those amounts being excluded from gross income. Finally, the bill extends the credits for paid sick and family leave that were enacted in the Families First Coronavirus Response Act, through the end of March 2021. It also modifies the tax credits so they apply as if the corresponding employer mandates were extended through the end of March 2021.

Paycheck Protection Program Changes

It re-opens the low-interest, forgivable loans that ended August 8 and guaranteed by the Small Business Administration to keep workers on the payroll during the crisis. The measure would increase the program’s combined lending authority to $806.5 billion, from $659 billion, and extend it to March 31, 2021. The bill expands the eligible expenses allowed for the PPP. It makes the following expenses allowable and forgivable uses for PPP funds:

  • Covered operations expenditures. Payment for any software, cloud computing, and other human resources and accounting needs.
  • Covered property damage costs. Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance.
  • Covered supplier costs. Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made. Supplier costs of perishable goods can be made before or during the life of the loan.
  • Covered worker protection expenditure. Personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to COVID-19 during the period between March 1, 2020, and the end of the national emergency declaration.

Section 311 of the bill creates a second loan from the Paycheck Protection Program, called a “PPP second draw” loan for smaller and harder-hit businesses, with a maximum amount of $2 million. Eligible entities must be businesses, certain non-profit organizations, housing cooperatives, veterans’ organizations, tribal businesses, self-employed individuals, sole proprietors, independent contractors, and small agricultural co-operatives. To receive this PPP loan, eligible entities must:

  • Employ not more than 300 employees
  • Have used or will use the full amount of their first PPP and
  • Demonstrate at least a 25 percent reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter. Provides applicable timelines for businesses that were not in operation in Q1, Q2, and Q3, and Q4 of 2019. Applications submitted on or after January 1, 2021 are eligible to utilize the gross receipts from the fourth quarter of 2020.

In general, borrowers may receive a loan amount of up to 2.5X the average monthly payroll costs in the one year prior to the loan or the calendar year. No loan can be greater than $2 million. Other requirements include:

  • Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning February 15, 2019 through February 15, 2020.
  • New entities may receive loans of up to 2.5X the sum of average monthly payroll costs.
  • Entities in industries assigned to NAICS code 72 (Accommodation and Food Services) may receive loans of up to 3.5X average monthly payroll costs.
  • Businesses with multiple locations that are eligible entities under the initial PPP requirements may employ not more than 300 employees per physical location.
  • Waiver of affiliation rules that applied during initial PPP loans apply to a second loan.
  • An eligible entity may only receive one PPP second draw loan.
  • Fees are waived for both borrowers and lenders to encourage participation.
  • For loans of not more than $150,000, the entity may submit a certification attesting that the entity meets the revenue loss requirements on or before the date the entity submits their loan forgiveness application and non-profit and Veterans organizations may utilize gross receipts to calculate their revenue loss standard.

For loan forgiveness borrowers of a PPP second draw loan would be eligible for loan forgiveness equal to the sum of their payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period. The 60/40 cost allocation between payroll and non-payroll costs in order to receive full forgiveness will continue to apply. The bill extends the covered period for all PPP loans through March 31, 2021. The legislation doubles the authorization for advance funds to $40 billion, from $20 billion, and extend it through Dec. 31, 2021 for the SBA’s Economic Injury Disaster Loan (EIDL) program.

Additional Small Business Provisions

The measure would provide $1.92 billion for the SBA to:

  • Increase its maximum guarantees for 7(a) loans to 90% through Sept. 30, 2021.
  • Temporarily increase 7(a) express loans.
  • Temporarily waive certain fees associated with the 7(a) and 504 loan programs.
  • Allow eligible small businesses to use 504 program funds to refinance existing debt equal to 100% of the cost to expand those businesses.
  • Support as much as $7.5 billion each year in debt refinancing for 504 program projects that don’t involve expanding a small business.

It also would:

  • Exclude live venue grants, advance disaster loans, and certain other types of small business aid under the measure from borrowers’ gross income for tax purposes.
  • Temporarily increase outstanding amounts that can be committed to intermediary lenders under the Microloan Program to $10 million.
  • Authorize the SBA to issue $80 million in microloan technical assistance grants per year from fiscal 2021 through 2025, and $110 million in annual direct loans.
  • Authorize certain Certified Development Companies that participate in the 504 program to approve and guarantee express loans of $500,000 or less.
  • Allow businesses participating in the 8(a) program on or before Sept. 9 to extend their participation by one year.

stem & innovation

Commerce-Justice-Science Section

The Commerce-Justice-Science bill funds the Departments of Commerce and Justice, the National Aeronautics and Space Administration (NASA), the National Science Foundation (NSF), and other related agencies. The FY21 bill provides $71.12 billion in discretionary funding.

U.S. Department of Commerce

$8.9 billion is included for the Department of Commerce, an increase of $596.7 million above the President’s request.

U.S. Department of Justice (DOJ)

$33.8 billion is included for the Department of Justice, which is $1.18 billion above the FY20 enacted level.

National Aeronautics and Space Administration (NASA)

$23.27 billion is provided for NASA, an increase of $642.3 million above the FY20 enacted level.

National Science Foundation (NSF)

$8.5 billion, an increase of $208.4 million above the FY20 enacted level and $745.4 million above the President’s budget request is provided to NSF.

Looking Ahead

With the next Congress having a tighter ratio of Democrats to Republicans and several retirements, committee memberships are shifting. About a dozen members will join the House Appropriations Committee, half a dozen will join the Energy and Commerce Committee and new leaders will helm some key committees. For example, Rep. Rosa DeLauro (D-CT) will chair both the Appropriations Committee and the LHHS-E Subcommittee while in the Senate, the HELP (Health Education Labor Pensions) Committee will be chaired by Senator Richard Burr (R-NC). The Biden Administration has announced several selections for his cabinet and staff in the White House and the transition team has been working hard on the review teams for each major division of government to assess policies and regulations they want to tackle right away following the January 20 swearing-in of Joe Biden to be the 46th president of the United States. G2G will continue to engage, track and report at the top of the new year.

economic development