Judge rejects challenge to state stem cell research program

The decision by Alameda County Superior Court Judge Bonnie Sabraw does not immediately release the flood of research money state voters approved in 2004 when they passed Proposition 71 -- a pioneering attempt to advance stem cell research despite restrictions on federal funding imposed by the Bush administration.

The funding stream -- as much as $300 million a year for about 10 years -- will come from the sale of state bonds. But the state treasurer's office has delayed the bond sale, because most investors will insist on a final resolution of all appeals in the case before purchasing the securities. And the plaintiffs have vowed in the past to pursue appeals all the way to the state Supreme Court.

However, the agency set up to distribute the research grants may be able to raise as much as $200 million through bond anticipation notes offered to wealthy stem cell research supporters who are willing to take the risk that they will not be repaid. The stem cell institute, the California Institute for Regenerative Medicine, has already funded $12.1 million in research training grants by that route.

The taxpayer organizations and stem cell research critics behind the legal challenges claimed that Proposition 71 had entrusted billions in taxpayer money to an independent grant-making agency riddled with conflicts of interest and free of meaningful control by elected state officials.

Sabraw held that the structure of the California Institute for Regenerative Medicine did not violate state law. Although the governing body of the agency includes representatives of research centers that are likely to apply for the stem cell grants, Sabraw said, the plaintiffs presented no evidence that the institute serves the private interests of those universities and research organizations. It serves the public purpose endorsed by the voters -- fighting disease and stimulating the state's biotech economy, the judge held.

"This is a significant legal victory in a crucial case for the people of this state," said Attorney General Bill Lockyer, whose office represented the stem cell institute, the state controller and state treasurer at a trial of the lawsuits earlier this year. "In passing Proposition 71, voters made a decision to put California in the vanguard of a scientific movement that holds tremendous promise for advancing public health.''

David Llewellyn, an attorney who represented a plaintiff's group, the California Family Bioethics Council, said an appeal is likely. Llewellyn said Sabraw erred by concluding that the stem cell institute's funding decisions are under state control. "While there are plenty of reporting and monitoring elements (by other state offices), there is no state oversight entity -- the Governor, the legislature - that can prevent this," Llewellyn said.