CA: Criticism of new $3 billion California stem cell agency mounts

SAN FRANCISCO (AP) - Complaints are mounting that a newly created California stem cell agency has failed to keep the public informed of its actions as it begins doling out $3 billion in taxpayer-provided grants.

Still others complain the agency hasn't developed rules to prevent its managers from unjustly enriching themselves and their employers.

Many of the 29 board members, appointed by the governor and other elected officials to run the agency, represent research universities and the biotechnology industry, both of which are expected to win millions of dollars worth of grants.

The criticism picked up this week as the California Institute for Regenerative Medicine committee prepared for a key meeting in Los Angeles Thursday. The committee is expected to begin creating powerful "working groups," which will control the agency's grant-making process and other financial functions such as choosing where to locate its headquarters.

Proposition 71, which passed in November and created the agency to fund stem cell research, explicitly exempts the working groups from the state's open-meeting law when it comes to discussing patients, intellectual property concerns and sensitive scientific data it wants to keep confidential.

Those special privacy rights trouble a leading First Amendment lawyer and other critics who complain the agency's design makes it likely that taxpayer funds will be mismanaged, especially when it comes to awarding laboratory construction projects.

"The built-in secrecy provisions are a central flaw that may contribute to others," said Terry Francke, general counsel for Californians Aware, a nonprofit organization that promotes open government and the First Amendment. "Prop 71 makes the process of governance almost entirely secret."

Francke called for a committee pledge to ignore the privacy provisions of Proposition 71 and vow to conduct most of its work in public. He and other critics also complained that little advance information about Thursday's meeting is available to the public.

Another prominent critic, Charles Halpern, derailed most of the agency's first meeting last month after he complained to California Attorney General Bill Lockyer that not enough public notice or information was made available in advance. As a result, Lockyer advised the agency to postpone decisions on many of those matters. Now some of those same topics are scheduled to be discussed Thursday at the University of Southern California.

The USC meeting of the Independent Citizen's Oversight Committee, or ICOC, is expected to last more than six hours and address a host of issues vital to the creation of the new agency, including hiring a president and full-time staff. The critics charge the agenda is too long on ambition and too short on information.

Halpern, who was once a public interest lawyer and is now a writer and consultant in Berkeley, alleged the new meeting still runs afoul of state open-meeting laws and charged the "committee is being invited to rush into the core of its work without having laid an appropriate foundation."

Nathan Barankin, a spokesman for Lockyer, said the attorney general continues to "advise his client," but he hasn't decided whether any changes to the agenda should be made.

A spokeswoman for committee chairman Robert Klein was unavailable for comment Wednesday. Committee vice chairman Edward Penhoet didn't return a telephone call.

Other critics, meanwhile, have called on the agency to install strict conflict-of-interest rules to prevent committee members and their employers from deciding funding issues that could directly benefit them.

The Oakland-based Center for Genetics and Society, a pro stem cell research organization that opposed Proposition 71, on Monday called on committee members to "fully disclose the financial interests and board memberships of ICOC members and require that they own no stock in biomedical companies."

Klein, a Palo Alto housing developer who led the campaign to pass the proposition, has pledged to do that. But at least 10 of the 29 committee members represent California universities and nonprofit research foundations, both of which are expected to win many grants and contracts to construct laboratories and conduct research over the agency's 10-year life span. Several other members, including former California First Lady Gayle Wilson have connections to biotechnology, an industry expected to receive grants from the new agency.

"We're seeing growing concern about the stem cell institute from advocates of open government, consumer rights, women's health, responsible business and responsible business," said Center for Genetics program director Jesse Reynolds.

This article has a lot of good detail of this scam. If the proponents weren't allowed to falsely advertise this proposition, and honestly presented its intent and flaws, it never would have passed, IMO.

Prop. 71 details contain surprises, Provo Daily Herald, UT - Jan 3, 2005
Bernadette Tansey SAN FRANCISCO CHRONICLE
The $3 billion stem cell initiative that passed overwhelmingly last month holds surprises for voters who didn't read it -- starting with a provision that the research money doesn't have to be spent on stem cell studies.
It's also not the case, contrary to campaign pitches for Proposition 71, that the $3 billion raised from state bonds won't cost the state anything for the first five years. Interest payments will begin immediately, paid out of the bond money itself -- meaning that tens to hundreds of millions of "research" dollars must be used to pay debt service.
And as lawmakers and critics have learned, if they find fault with the ballot initiative, changing it could be tough. Under the proposition's terms, the state Legislature can't modify the law for three years. Even then, it can do so only by a 70 percent vote of both houses and with the governor's approval.
(snip)
One key detail of the eight-page initiative, included to insure against political or scientific setbacks, escaped scrutiny before the election: The institute has the latitude to use the $3 billion in grants not just for stem cell research but also for "other scientific and medical research and technologies."
Even if Republicans, fortified by their November gains in Congress, took the current federal funding restrictions a step further and made embryonic stem cell research illegal, Prop. 71 funds would continue to flow.
(snip)
The private citizen [Robert Klein] who managed to deliver control of a huge chunk of taxpayer money into the hands of an independent citizens' committee is also the ultimate insider. A Stanford Law School graduate and wealthy state campaign donor who was the author of a major state housing finance law in 1978, Klein co-wrote Prop. 71 with the aid of a who's who of Sacramento law firms on both sides of the political aisle. For arguably the most crucial element of the law -- its bond funding -- he enlisted Orrick Herrington & Sutcliffe of San Francisco, which serves as the state's bond counsel. Robert Feyer, an Orrick partner, said the firm had received permission from the office of state Treasurer Phil Angelides. Angelides endorsed the initiative, as did Republican Gov. Arnold Schwarzenegger and other state officials.
The proposition makes nontraditional use of general-obligation bonds, a mechanism usually used to pay for durable state assets such as highways, schools or bridges, to finance its mission. But Klein argues that health care research, which could reduce state disability and medical costs while stimulating business development, also can be seen as a capital asset.
(snip)

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