Stanford Report, February 22, 2006

Stem cells on trial: 5 questions for Hank Greely on the Prop. 71 lawsuit

Hank Greely

Fifteen months after voters approved Prop. 71—authorizing the sale of $3 billion in state bonds for stem cell research—the state's stem cell institute has yet to dole out any money. Beset by legal woes, the California Institute of Regenerative Medicine has been unable to float a single bond. Law professor Hank Greely, JD, of the Stanford Center for Biomedical Ethics, discussed how the trial that begins Feb. 27 could affect funding.

1. What's at stake for stem cell work in this case?

Greely: $3 billion. Although a negative outcome wouldn't cripple research, it would slow it down.

2. Is this essentially a move by pro-life advocates who are morally opposed to this research?

Greely: There are two cases that were consolidated in this trial. The plaintiffs in both their cases are not pro-life groups. The plaintiff in one case is an established anti-tax group; the plaintiff in the other is a new group that claims to be largely concerned with conflicts of interest and other problems they see in the proposition.

It is interesting, though, that their legal representation is being provided by the Life Legal Defense Foundation, which is very interested in the moral issues around abortion.

3. What are the arguments on both sides?

Greely: The main argument against the proposition is that it doesn't provide enough state control over the expenditures of state money. The proposition sets up a semi-independent organization with its own defined set of directors, and the state has, by very clear intent of the drafters, limited direct control over that. The California constitution contains a provision that requires the state to have control over the expenditure of state money. That's the core claim made against Prop. 71.

The defendants have two very strong arguments. The first is that Prop. 71 is both a statute and a constitutional amendment. The amendment expressly authorized the CIRM to spend this money. Because it's an amendment to the constitution, it's hard to call it unconstitutional. Also, Prop. 71 was drafted very carefully in light of concerns about Prop. 10 [the 1998 tobacco tax proposition], which also established a semi-independent spending authority. The courts upheld Prop. 10 and outlined a series of criteria; Prop. 71 was written with these criteria in mind. It would be surprising if it was found to violate that constitutional provision.

4. How long could the trial last?

Greely: I'm sort of in a position like that of a doctor being asked to comment on someone else's patient. I'm not involved in this trial. My best guess is that it won't take very long, and we should get resolution shortly after Feb. 27. But there will probably be appeals if the proposition is upheld.

5. How will the trial's outcome impact the institute's ability to sell bonds?

Greely: Really the question here is more one of confidence than anything else. The bond market wants to be very certain that these bonds will be repaid, which means even a trial victory may not be enough for a bond market. It may have to go through appeals and be affirmed on appeals before the bonds can actually be sold. If things break well, the institute may be able to sell the bonds in late 2006 and get some funding.

And there is another possibility. There is a process called the bond anticipation note, where you sell bonds in anticipation that the later, formal bonds will be issued to pay off the first ones you sell. It may be possible for the institute to begin to sell those bond anticipation notes—to borrow money in anticipation of the bonds—after the trial court decision.

CBS's '60 Minutes' on stem cells

Correspondent Ed Bradley will report on the state of stem cell research on the Feb. 26 show at 7 p.m. on CBS. His report is expected to include Stanford scientists he interviewed earlier this year.