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Stem cell panel sets some rules; Regulations don't go as far as other state agencies

by Laura MecoySacramento Bee
July 13th, 2005

IRVINE - Under pressure from lawmakers and open-government advocates, the state's stem cell oversight committee voted Tuesday to open more meetings, disclose more information about its grant awards and tighten its conflict-of-interest rules.

But the new rules stop short of the requirements imposed by other state agencies, a decision that drew mixed reviews from critics.

The board also sparred for the first time in its seven-month history, with members complaining they've had little say in the $2.1 million the agency has spent or its $1.18 million in contracts.

Board member Jeff Sheehy said he was "a little appalled" to learn the agency was spending nearly $30,000 a month on a public relations firm and insisted the panel adopt contracting limits.
"I just can't believe you are going to give (interim President Zach Hall) a blank check," he said. "I trust Zach, but it just doesn't look good."

The panel voted to require board approval for personal service contracts over $100,000, and created a new governance subcommittee to exercise more control over the stem cell agency.

The panel also adopted new rules governing its meetings and conflicts of interest in response to criticism dating back to last year's election and addressed again this year in a constitutional amendment proposed by Sen. Deborah Ortiz, D-Sacramento.

Ortiz set the legislation aside last month after the stem cell oversight committee members agreed to adopt several of the reforms she sought.

On Tuesday, she commended the panel for "moving considerably" toward tougher conflict-of-interest and open-meeting rules.

"They have come a long way," she said. "But we have a ways to go."

The new rules require the stem cell agency's review panels, or working groups, to open their meetings.

But they provide several exemptions from the state's open-meetings law.

The panels, for instance, could close the doors when considering scientific grants and donations.

These panels will recommend who should be awarded the nearly $3 billion in stem cell research funds that the oversight committee is supposed to distribute over the next 10 years.

The board also voted to disclose the nature of grant applications and the diseases each seeks to address but wouldn't require disclosure of the names or institutes that don't get funded.

Hall, the agency's interim president, said the board was "breaking new ground" because other institutes decide grants in private and only disclose the winners.

"We don't have models for decisions to be made about funding grants at public meetings," he said. "We want to balance these two things ... being transparent ... and respecting the confidentiality and sensitivity of our scientists."

Board member Sherry Lansing said she worried that rejected scientists wouldn't seek future grants, and the state might miss valuable research opportunities.

The new conflict-of-interest rules the oversight board approved Tuesday require working group members to file financial disclosure statements.

But the rules stop short of other agencies' requirements because the statements would be available only to the stem cell institute's staff and its auditors - not the public.

Jesse Reynolds, program director at the Center for Genetics and Society, praised the board for responding to calls for more openness.

But he said the new rules are still "inadequate" because the public can't assess when a working group member has a conflict of interest.

"The working groups are essentially decision-making bodies," Reynolds said. "The decisions of the working groups may, in fact, become the final decision."

Jerry Flanagan, a spokesman for the Foundation for Taxpayer and Consumer Rights, issued a statement criticizing the new rules and pointing out that 10 of the 29 oversight committee members have holdings or serve on boards of biotech firms.

"The public health value of stem cell research is jeopardized by weak oversight rules that allow biotech companies to use their political influence and financial power to influence the decision-making process," he said.

He complained that stem cell board members don't have to put their holdings in a blind trust, as do other state officials.

The committee asked its staff to draft a new rule defining which holdings would have to be placed in a blind trust.

The board is set to consider that provision and other changes in its conflict-of-interest rules at its Aug. 5 meeting in San Diego.

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