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Not quite. I am totally breaking my own rule of quoting Wiki (I never do), but believe this is probably true:
No federal law ever did ban stem cell research in the United States, but only placed restrictions on funding and use, under Congress's power to spend.
In February 2001, George W. Bush requested a review of the NIH's guidelines, and after a policy discussion within his circle of supporters, implemented a policy in August of that year to limit the number of embryonic stem cell lines that could be used for research. (While he claimed that 78 lines would qualify for federal funding, only 19 lines were actually available.
In April 2004, 206 members of Congress, including many moderate Republicans, signed a letter urging President Bush to expand federal funding of embryonic stem cell research beyond what Bush had already supported.
In May 2005, the House of Representatives voted 238-194 to loosen the limitations on federally funded embryonic stem-cell research — by allowing government-funded research on surplus frozen embryos from in vitro fertilization clinics to be used for stem cell research with the permission of donors — despite Bush's promise to veto if passed. On July 29, 2005, Senate Majority Leader William H. Frist (R-TN), announced that he too favored loosening restrictions on federal funding of embryonic stem cell research. On July 18, 2006, the Senate passed three different bills concerning stem cell research. The Senate passed the first bill, 63-37, which would have made it legal for the Federal government to spend Federal money on embryonic stem cell research that uses embryos left over from in vitro fertilization procedures. On July 19, 2006 President Bush vetoed this bill. The second bill makes it illegal to create, grow, and abort fetuses for research purposes. The third bill would encourage research that would isolate pluripotent, i.e., embryonic-like, stem cells without the destruction of human embryos.
The National Institutes of Health has hundreds of funding opportunities for researchers interested in hESC. In 2005 the NIH funded $607 million worth of stem cell research, of which $39 million was specifically used for hESC.
During Bush's second term, in July 2006, he used his first Presidential veto on the Stem Cell Research Enhancement Act. The Stem Cell Research Enhancement Act was the name of two similar bills, and both were vetoed by President George W. Bush and were not enacted into law. New Jersey congressman Chris Smith wrote a Stem Cell Therapeutic and Research Act of 2005, which was signed into law by President Bush. It provided $265 million for adult stem cell therapy, umbilical cord blood and bone marrow treatment, and authorized $79 million for the collection of cord blood stem cells.
By executive order on March 9, 2009, President Barack Obama removed certain restrictions on federal funding for research involving new lines of human embryonic stem cells. Prior to President Obama's executive order, federal funding was limited to non-embryonic stem cell research and embryonic stem cell research based upon embryonic stem cell lines in existence prior to August 9, 2001. Federal funding originating from current appropriations to the Department of Health and Human Services (including the National Institutes of Health) under the Omnibus Appropriations Act of 2009, remains prohibited under the Dickey Amendment for (1) the creation of a human embryo for research purposes; or (2) research in which a human embryo or embryos are destroyed, discarded, or knowingly subjected to risk of injury or death greater than that allowed for research on fetuses in utero.
In a speech before signing the executive order, Mr. Obama noted the following:
President Obama lifts federal funding restrictions on stem cell research.
“Today, with the Executive Order I am about to sign, we will bring the change that so many scientists and researchers; doctors and innovators; patients and loved ones have hoped for, and fought for, these past eight years: we will lift the ban on federal funding for promising embryonic stem cell research. We will vigorously support scientists who pursue this research. And we will aim for America to lead the world in the discoveries it one day may yield."
In 2011, a United States District Court "threw out a lawsuit that challenged the use of federal funds for embryonic stem cell research." The decision was a case on remand from the United States Court of Appeals for the District of Columbia Circuit.
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