HAYWARD, Calif. – The financial future of California's $3 billion human embryonic stem cell research institute went on trial Monday as taxpayer groups tried to block the state-funded research.
Two lawsuits seek to invalidate the law that created the California Institute of Regenerative Medicine, which is authorized to hand out an average of $300 million in research grants annually.
The lawsuits claim the agency violates a constitutional mandate that the state control spending of taxpayer dollars.
Robert Taylor, who represents the People's Advocate and National Tax Limitation Foundation, told a judge that the 29 members who oversee the institute and the people they appoint to research committees do not report directly to the state.
"The delegates who were selected from time-to-time were acting as free agents," Taylor told Alameda County Superior Court Judge Bonnie Lewman Sabraw during his opening statement.
Sabraw is hearing the trial without a jury. The second lawsuit was filed by the nonprofit California Family Bioethics Council, which describes itself as a stem cell research watchdog.
Human embryonic stem cells are created in the first days after conception and give rise to organs and specialized tissues in the body.
Scientists hope someday to use stem cells to replace diseased tissue, but many social conservatives, including President Bush, oppose the work because human embryos are destroyed during research.
When voters approved Proposition 71 in November 2004, creating the institute, stem cell scientists anticipated new traction to a field hamstrung by federal limitations on funding.
The Bush administration caps the federal funding at about $25 million annually and has imposed strict research guidelines that scientists say limit advances.
Proposition 71 authorized the institute to dole out an average of $300 million in research grants each year over the next 10 years. But 15 months later, the agency has yet to hand out a dime because of its legal troubles.
David Llewellyn, a lawyer representing the bioethics council, argued that the stem cell agency is rife with conflicts of interest. He said the five University of California officials who sit on the board overseeing the agency could benefit because the school's campuses are in line to receive millions in research funds.
Bob Klein, chairman of the institute's oversight committee, was the first witness called and immediately defended the UC officials.
"They take an oath. They do not come to represent those institutions," he said.
Deputy Attorney General Tamar Pachter said the two lawsuits have "tortured interpretations of the constitution."
In November, the judge refused to toss out the lawsuits but said the taxpayer groups had a high legal hurdle to prove the voter-approved agency was "clearly, positively and unmistakably unconstitutional."
But even some of the institute's harshest critics believe it will prevail. Recent actions, such as ensuring the state will share any potential profits gleaned from state grants, show it's starting to function as a government agency.
"The stem cell institute's recent responsiveness to public input in a number of areas is encouraging," said John Simpson of the Foundation for Taxpayer and Consumer Rights, which is not part of the court case. "The stem cell oversight committee members finally understand they are a state agency and must involve the public."
Meanwhile, the institute has hired staff, opened a San Francisco office and paid its bills with a $3 million loan from the state and a $5 million donation from sound pioneer Ray Dolby and his wife. But the lawsuits have scared off Wall Street lenders, who worry about buying the institute's bonds before the litigation is resolved.