This document describes progress for the 2012 fiscal year (FY) (October 2011-September 2012). Section topics are quite similar to last year’s report. However, new work in those areas is described, and there is less emphasis on parameterization development and more emphasis on evaluation of the parameterizations and assessment of their impact. Over the remainder of the project, a larger fraction of the work will be devoted to integration and evaluation tasks, emphasizing implementation into the CESM and assessing the impact through hindcast simulations and climate change projections. Some activities within the project appear to be focusing outside of the polar regions, but as shown in a number of our studies, those processes also have an impact at high latitudes.