Scientists celebrate as agency is ruled constitutional, but opposition groups promise to appeal decision
Contra Costa Times (California)
California’s $3 billion stem cell program scored a major victory Friday when a superior court judge declared it constitutional.
Taxpayer and other groups had argued that the stem cell agency is illegal because it oversees taxpayer money without sufficient state control.
But Alameda County Superior Court Judge Bonnie Sabraw concluded it functions much like any other state agency.
The constitution does not “preclude the State from expending public funds for legitimate state purposes, or prohibit such expenditures merely because the state entity has some degree of autonomy or is run in an innovative manner,” Sabraw wrote.
The lawsuit has stymied an agency that voters created in 2004 in the hope of finding cures for debilitating diseases.
Stem cell leaders have struggled to keep the program afloat because the lawsuit has hampered their ability to issue bonds. Although an appeal is likely, the ruling elated them.
“We have a victory across the board on every issue presented,” said Robert Klein, who chairs the stem cell agency board, established when voters approved Proposition 71.
“We would call upon the opposition to Prop. 71 to now respect the voters’ mandate and drop the appeal,” Klein said. “Any delay at this point is inexcusable.”
The court battle will continue, however. One of the plaintiffs promised to appeal.
“I don’t even think this thing is going to be settled in the Court of Appeal,” said Ted Costa, who heads the taxpayers group People’s Advocate. “It will probably go to the Supreme Court. We have to get it settled one way or the other.”
Joining Costa in challenging the stem cell program are the National Tax Limitation Foundation and the California Family Bioethics Council.
Sabraw issued a proposed ruling that she will consider finalizing in 10 days, after both sides have a chance to file objections.
Costa and his colleagues will then have 30 days to appeal the decision.
The groups argued that Prop. 71 is unconstitutional because it created an agency outside the direct control of the state to oversee millions of dollars of research funds.
“We have a Legislature, and we have a state controller, and they should have oversight over all taxpayer money,” Costa said. “That’s what the Constitution says.”
But Sabraw rejected such arguments. She noted that the Independent Citizens’ Oversight Committee, which serves as the stem cell agency board, is made up of 29 members, including 22 appointed by such elected officials as the governor, lieutenant governor and treasurer.
Five of the members are executive officers of University of California campuses, appointed by their chancellors.
The stem cell agency must issue an annual public report, commission a yearly independent financial audit, hold public meetings, make its records public in most cases and meet criteria for allocating funds, Sabraw said.
She also rejected arguments that stem cell board members have conflicts of interest because they represent groups that could receive stem cell grants.
Sabraw noted that the members, chosen because of their expertise, must file financial disclosure forms and are banned from voting on grant applications involving their employer or institution.
Stem cell leaders had hoped to issue $300 million in bonds annually to finance groundbreaking research. But no one will buy bonds with legal challenges pending.
To get around that roadblock, earlier this month Klein and other supporters lined up $14 million in funding for the agency’s first grants.
Six philanthropic organizations agreed to purchase bond anticipation notes with the understanding that they will not be repaid if the agency is declared unconstitutional.
The grants will be used to train the next generation of stem cell scientists at 16 research organizations.
All told, the stem cell agency has received approval to issue up to $200 million in bond anticipation notes while the legal challenges are pending. The notes will be issued gradually, as the money is needed and investors are lined up, Klein said.
While the court battle plays out, the stem cell agency should establish strong intellectual property policies, said John Simpson of the Foundation for Taxpayer and Consumer Rights.
“The stem cell committee must use that time to implement rules governing ownership of research discoveries to ensure the full… promises of Proposition 71 are met,” he said.
Susan DeLaurentis, president and CEO of the Alliance for Stem Cell Research, hailed the court decision.
“Patients and families who saw the passing of Proposition 71 as a cause for celebration have been frustrated that research supported by the majority of California voters has been stalled because of the unsubstantiated objections of a vocal minority,” she said.
————
Reach Sandy Kleffman at 925-943-8249 or [email protected]
