IN THE UNITED STATES DISTRICT COURT	
	FOR THE DISTRICT OF COLUMBIA
________________________________________________	DRAFT 6-27-01 7pm
)
DR. JAMES THOMSON, et al.,				)
)
Plaintiffs,		)
)
v. 						)	Civil Action No. 01-CV-0973
)	(RCL)
TOMMY G. THOMPSON, et al.,				)
)
Defendants.		)
________________________________________________)

	MEMORANDUM IN SUPPORT OF 
	PLAINTIFFS= MOTION FOR SUMMARY JUDGMENT

During the Clinton Administration, the National Institutes of Health (ANIH@) embarked on a public, deliberate, and comprehensive process to develop substantive rules establishing a legal and ethical framework under which NIH would fund research involving human pluripotent stem cells (AHPSCs@).  This process culminated in the publication of final regulations entitled the National Institutes of Health Guidelines for Research Using Human Pluripotent Stem Cells (hereinafter the AGuidelines@) on August 25, 2000.  See 65 Fed. Reg. 51975 (Exhibit 1).
At the start of the George W. Bush Administration, Department of Health and Human Services (AHHS@) Secretary Tommy Thompson announced that the new Administration would conduct an internal review of the Guidelines but that, during the review, researchers= applications pursuant to the Guidelines would be processed.  See Exhibit 2.  In April 2001, however, HHS reversed course by unilaterally imposing a complete moratorium on implementation of the Guidelines pending the outcome of the Administration=s internal review and canceling the April 25, 2001 meeting that was to evaluate the first set of applications under the Guidelines, including those submitted by plaintiffs Trounson, Pera, and Pederson.  See Exhibit 3.

Plaintiffs, who are seven of the world=s leading HPSC researchers and three patients suffering from devastating conditions that are early therapeutic targets of that research, thereupon filed this case.  Plaintiffs seek declaratory and injunctive relief requiring defendants to implement the Guidelines and to proceed in all other respects with the funding of scientifically meritorious HPSC research.
According to HHS=s own Stem Cell Fact Sheet, A[h]uman pluripotent stem cells are a unique scientific and medical resource. . . .  Because pluripotent stem cells give rise to almost all of the cell types of the body, such as muscle, nerve, heart, blood, they hold great promise for both research and health care.  This advance in human biology continues to generate enthusiasm among scientists, patients suffering from a broad range of diseases, including cancer, heart disease and diabetes, and their families.@  Exhibit 4.  This view is shared throughout the scientific community.  Science magazine declared stem cells the scientific Abreakthrough of the year@ in 1999  (Exhibit 5), and over 100 leading university presidents wrote in January 2001 that A[t]he discovery of pluripotent stem cells may be the single most important scientific and medical breakthrough in the past decade or more@  Exhibit 6.

As the American Association for the Advancement of Science has explained, however, A[f]ederal funding for stem cell research is necessary in order to promote investment in this promising line of research, to encourage sound public policy, and to foster public confidence in the conduct of such research.@  Exhibit 7, p. vi.  This is so because, among other things, A[r]ealizing the potential health benefits of stem cell technology will require a large and sustained investment in research@ and A[t]he federal government is the only realistic source for such an infusion of funds.@  Id.  Absent federal funding, both basic research and the development of useful therapies from HPSCs will be greatly hindered and delayed.  See Declaration of Dr. James Thomson at 7-8 (Exhibit 31); Declaration of Dr. Alan O. Trounson at 6-7 (Exhibit 32); Declaration of Dr. Martin Pera at & 14 (Exhibit 33).  In short, as 80 Nobel laureates recently wrote the Administration, A[f]ederal support for the enormous creativity of the US biomedical community is essential to translate this discovery into novel therapies for a range of serious and currently intractable diseases.@  Exhibit 8.   
Defendants= unilateral moratorium, therefore, is inflicting severe harm on plaintiffs in particular and on medical progress in general.  See, e.g., Declaration of Dr. Dan Kaufman at 4 (Exhibit 34) (describing harm from moratorium).  That moratorium also is patently unlawful for the reasons discussed in this memorandum.  Briefly summarized, first, the moratorium cannot be justified by reference to an appropriations rider that bars funding for research in which embryos are destroyed, since the Guidelines conform to that rider by prohibiting the use of federal funds for the destruction of embryos.  Second, defendants= unilateral suspension of a duly promulgated final regulation (the Guidelines) violates the notice-and-comment requirements of the Administrative Procedure Act (AAPA@), as the D.C. Circuit held in essentially identical cases arising from the transition from the Carter to Reagan Administrations.  Third, defendants= moratorium violates the NIH Revitalization Act of 1993, which prohibits the executive branch of government from barring, or withholding funds for, this kind of research.  Finally, the moratorium constitutes arbitrary and capricious agency action in contravention of the APA, since defendants have not provided, and cannot possibly provide, any reasoned basis for abandoning an area of research that is vital to achieving HHS=s and NIH=s statutory missions.
	STATEMENT OF FACTUAL AND LEGAL CONTEXT

1.	Historical Context.  Since the early 1930s, U.S. biomedical research has utilized ex utero fetal tissue in federally funded research.  For example, the 1954 Nobel Prize for medicine went to an American immunologist who used cell lines obtained from fetal kidney cells to grow polio virus in culture, a key step in the development of the polio vaccine.  See National Bioethics Advisory Comm=n, Ethical Issues in Human Stem Cell Research, at 29 (Sept. 1999) (Exhibit 9).
In the early 1970s, with the Nation split over the morality of abortion and with the airing of certain troubling allegations about experiments on fetuses, research involving fetal tissue became a topic of Congressional interest.  Id.  In 1974, Congress established the National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research, with research using the human fetus at the top of the Commission=s agenda.  88 Stat. 342, 348 (1974).  The 1974 Act banned research involving living fetuses until the Commission issued its report.  The Commission=s recommendations formed the basis for regulations issued by the Department of Health, Education and Welfare (predecessor to defendant HHS) in 1975 for research involving fetuses and human subjects.  See 40 Fed. Reg. 33526 (Aug. 8, 1975).
2.	The Bush I Moratorium.  In the 1980s,  Swedish scientists began transplanting tissue from aborted fetuses into the brains of Parkinson=s patients.  See Exhibit 10.  Scientists then sought NIH funding for similar research in the United States.  This generated a political controversy focusing on fetal tissue as a transplantation medium.  In 1987, the HHS Assistant Secretary of Health -- in response to a request to NIH to fund a research protocol involving experimental implantation of fetal cells to treat Parkinson=s Disease -- imposed a temporary moratorium on funding of fetal tissue transplantation research.  See H.R. Rep. No. 103-28, at 59 (1993) (Exhibit 25).  On November 2, 1989, contrary to the recommendations of an NIH advisory panel, the Secretary of HHS extended the moratorium indefinitely:  
AI am continuing indefinitely the limited moratorium on federal funding of research in which human fetal tissue from induced abortions is transplanted into human recipients.  This action does not affect funding of other research involving fetal tissue.@

Statement by Louis W. Sullivan, Nov. 2, 1989 (Exhibit 11).

This administratively imposed moratorium lasted throughout the Presidency of George H.W. Bush.  Toward the end of his Administration, Congress passed legislation to overturn the ban on funding of research on fetal tissue transplantation, but President Bush vetoed it and his veto was not overridden.  See Exhibit 12.
3.	The 1993 NIH Revitalization Act.  The administrative moratorium was lifted on January 22, 1993, pursuant to an order to HHS from newly inaugurated President Clinton.  See 58 Fed. Reg. 7457 (Feb. 5, 1993) (Exhibit 13).  That order provided:
AThis moratorium has significantly hampered the development of possible treatments for individuals afflicted with serious diseases and disorders, such as Parkinson=s disease, Alzheimer=s disease, diabetes, and leukemia.  Accordingly, I hereby direct that you immediately lift the moratorium.@

Shortly thereafter, Congress enacted the NIH Revitalization Act of 1993, Pub. L. No. 103-43, Title I(A), 107 Stat. 122, 126-33 (1993) (Exhibit 14 hereto), codified at 42 U.S.C. ''  289g, 289g-1, 289g-1 note, 289g-2.  As relevant here, the Revitalization Act created statutory guidelines to ensure that research on fetal tissue transplantation is conducted ethically and appropriately by prescribing informed consent requirements (42 U.S.C. ' 289g-1) and by prohibiting directed donations to specific transplant recipients (42 U.S.C. ' 289g-2).  Section 113 of the Act,  which is entitled ANullification of Moratorium,@ both (1) added statutory force and permanence to President Clinton=s nullification of the first Bush Administration=s moratorium on fetal tissue transplantation research, and (2) affirmatively prohibits the executive branch from interfering with NIH funding of research on the transplantation of human fetal tissue for therapeutic purposes.  
As to the former, ' 113(a) bars the executive branch of government from prohibiting HHS from research on the transplantation of fetal tissue for therapeutic purposes:

A(a)  In General. -- Except as provided in subsection (c), no official of the executive branch may impose a policy that the Department of Health and Human Services is prohibited from conducting or supporting any research on the transplantation of human fetal tissue for therapeutic purposes.  Such research shall be carried out in accordance with [42 U.S.C. ' 289g-1], without regard to any such policy that may have been in effect prior to the date of the enactment of this Act.@

As to the latter, ' 113(b) bars HHS from interfering with the funding of fetal tissue transplantation research projects that the NIH peer-review processes have found meritorious:  
A(b) Prohibition against withholding of funds in cases of technical and scientific merit. --

A(1) In general. -- Subject to [42 U.S.C. ' 289a-1(b)(2)], in the case of any proposal for research on the transplantation of human fetal tissue for therapeutic purposes, the Secretary of Health and Human Services may not withhold funds for the research if --

(A) the research has been approved for purposes of subsection (a) of such section 492A;

(B) the research will be carried out in accordance with section 498A of such Act (as added by section 111 of this Act); and

(C) there are reasonable assurances that the research will not utilize any human fetal tissue that has been obtained in violation of section 498B(a) of such Act (as added by section 112 of this Act).@

The reference in paragraph (A) is to the Department=s normal peer review procedures for identifying scientifically meritorious research; paragraph (B) refers to the Act=s informed consent requirements; and paragraph (C) refers to the Act=s prohibition on the purchase of fetal tissue. Finally, the Act expressly defines Ahuman fetal issue@ to include cells obtained from both fetuses and embryos:  Atissue or cells obtained from a dead human embryo or fetus after a spontaneous or induced abortion, or after a stillbirth.@  Act ' 111(g), codified at 42 U.S.C. ' 289g-1(g).

4.	The Appropriations Rider.  In the wake of the Revitalization Act, NIH convened an Human Embryo Research Panel.  In 1994, the panel proposed allowing federal funding for the creation of the embryos for research purposes and for the derivation of cells from embryos.  See Ethical Issues in Human Stem Cell Research, at 34 (Exhibit 9).
In 1995, Congress reacted to the panel=s recommendations by imposing a ban on the use of appropriated federal funds for
A(1) the creation of a human embryo or embryos for research purposes; or (2) research in which a human embryo or embryos are destroyed, discarded or knowingly subjected to risk of injury or death greater than that allowed for research on fetuses in utero under [applicable law and regulation].@

Pub. L. No. 104-99, ' 128, 110 Stat. 26, 34.  That limitation on federal funding of embryo creation and of research in which embryos are destroyed has been repeated in each annual appropriations act.  The current limitation is found in ' 510 of the Consolidated Appropriations Act - FY 2001, Pub. L. No. 106-554 (Exhibit 15).
5.	The Discovery of Stem Cells and the Development of Ethics and Legal Opinions.  In 1998, plaintiff James Thomson derived HPSCs from embryos in the blastocyst stage and plaintiff John Gearhart derived HPSCs from germ cells found in fetal tissue.  Embryonic stem cells do not exist naturally in embryos; they are derived from laboratory procedures.  Thomson Dec. at 2-3 (Exhibit 31).  Likewise, embryonic germ cells do not naturally exist in fetal tissue; they too are derived, and then stem cells are derived from them.  Declaration of Dr. John Gearhart at __ (Exhibit __).  Neither Dr. Thomson=s nor Dr. Gearhart=s research was supported by federal funding, but these breakthroughs put in play the issue of federal funding for research using HPSCs.

On January 15, 1999, the General Counsel of HHS (Harriet S. Rabb) provided a written opinion concluding that federal funding involving research using stem cells derived from embryos is lawful under the Appropriations Rider, so long as private funds were used to derive the cells from the embryos.  See Exhibit 16.
Meanwhile, in November 1998, President Clinton had asked the National Bioethics Advisory Commission to conduct a thorough review of human stem cell research and the potential ground rules for its public funding.  The Commission considered science, law, and ethics and commissioned reports from religious and ethical experts as well as scientists and lawyers.  As particularly relevant here, the Commission obtained an independent legal opinion from Covington & Burling, which concluded that the HHS General Counsel had correctly concluded that NIH is not barred from funding stem cell research as long as the actual derivation of stem cells from embryos is privately funded.  See Exhibit 17.  The Commission ultimately recommended in its September 1999 Report that federal funding of HPSC research should proceed under two conditions:
AFirst, such research should be limited to using only two of the current sources of such cells; namely, cadaveric fetal material and embryos remaining after infertility treatments.  Second, that such sponsorship be contingent on an appropriate and open system of national oversight and review.@  Exhibit 9 (transmittal letter)..

6.	The NIH Regulations.  The NIH then began a notice and comment procedure to develop regulations for federal funding of stem cell research.  Draft regulations were published in the Federal Register on December 2, 1999.  See 64 Fed. Reg. 67576 (Exhibit 18).  On August 25, 2000, the final regulations, entitled NIH Guidelines for Research Using Human Pluripotent Stem Cells, were published in the Federal Register and made effective upon publication.  See 65 Fed. Reg. 51975, with minor corrections published at 65 Fed. Reg. 69951 (Exhibit 1).  With respect to embryos, the Guidelines provide that NIH funds may be used for research using HPSCs after such cells have been derived from embryos, but that federal funds cannot be used for A[t]he derivation of pluripotent stem cells from human embryos.@  Exhibit 1 at ' III; see also Exhibit 4 (HHS Fact Sheet) at 3.  The Guidelines also require, among other things, that the cells have been derived from excess frozen embryos, that no inducements be given for the donation of the embryos, that the donors have provided informed consent, and that the donation not be directed to any particular recipient.  See Exhibit 1 at ' II.A.2.  With respect to tissue from fetuses, the Guidelines allow funding of research to derive pluripotent stem cells from such tissue, as well as for research using such cells.  See Exhibit 1 at ' II.B.  In a nutshell, the Guidelines establish detailed protocols regarding the acquisition and use of stem cells to ensure that NIH-funded research in this area is conducted in an ethical and legal manner.  
On November 21, 2000, NIH announced the process it would follow to select stem cell research projects for funding in accordance with the Guidelines.  See Exhibit 19.  In essence, the NIH said that its normal processes for reviewing funding applications by a peer-review study section and then by an Advisory Council would apply; but that separate applications showing compliance with the Guidelines also would be reviewed on a parallel track by a special review group (the AHPSCRG@) and then by a review advisory council (the ACSRAC@).  The NIH also established a timetable for these reviews, with the first group of applications to complete the special review process in May 2001./  On January 16, 2001, NIH again issued similar compliance approval processes and timelines for intramural (within NIH) research.  See Exhibit 20.

In response to the draft Guidelines, researchers such as plaintiff Drs. Trounson and Pera began work to develop new cell lines that are compliant with the conditions specified therein.  Trounson Dec. at 7 (Exhibit 32); Pera Dec. at & 11 (Exhibit 33).  Once the final Guidelines were issued, plaintiffs Trounson and Pera submitted their compliance application on March 15, 2001.  See Pera Dec. at & 16 (Exhibit 33).  On _____, 2001, plaintiff Pederson also submitted an application for approval using the Trounson-Pera cell line.  See Declaration of Dr. Pederson at __ (Exhibit __).
7.	The Recent Suspension of the Guidelines.  Despite the lengthy deliberations leading up to publication of the August 25, 2000 final Guidelines and the subsequent promulgation of approval processes, HHS Secretary Tommy G. Thompson announced in February 2001 that the new Administration was launching yet another review of the Guidelines.  At that time, Secretary Thompson said that the funding and compliance applications should still be submitted to NIH and that the Administration=s review would not delay the application process.  See Exhibit 2.
On or about April 20, 2001, however, HHS instructed NIH to cancel the April 25, 2001 inaugural meeting of the NIH committee that had been scheduled to review the first compliance applications for human embryonic stem cell research.  According to a contemporaneous press account:
AThe National Institutes of Health has canceled next week=s inaugural meeting of a committee that was to review the first applications from scientists seeking federal funds for human embryo cell research. It did so, agency officials said, after officials of the Department of Health and Human Services told them to cancel the meeting.@  Exhibit 3.

In addition to canceling the April 25, 2001 meeting, HHS suspended the review and approval process of all funding and compliance applications for human embryonic stem cell research.  This total suspension was confirmed in a stipulated stay filing made with this Court in the related Nightlight Christian Adoptions case, No. 1.01CV00502-RCL (D.D.C.) (Exhibit 21)./
	SUMMARY OF ARGUMENT
1.  Consistency with the Appropriations Rider.  Both the General Counsel of defendant HHS in January 1999, and the law firm of Covington & Burling in its response to the request for an opinion from the National Bioethics Advisory Commission, concluded that the appropriations rider does not bar funding for HPSC research as long as federal funds are not used for deriving the HPSCs from the embryos.  That conclusion is clearly correct as a matter of law.  As quoted above, the rider bars the use of federal funds for Aresearch in which a human embryo or embryos are destroyed, discarded, or knowingly subjected to risk of injury or death . . . .@  Appropriations riders are to be narrowly construed and limited to their unambiguous terms.  Calloway v. District of Columbia, 216 F.3d 1, 9 (D.C. Cir. 2000).  The rider defines the term Aembryo@ to include an Aorganism,@ and the uniform congressional testimony and scientific evidence establishes that HPSCs are not Aembryos@ and are not Aorganisms@ because, unlike an Aorganism,@ they are not, nor will they become, whole, independent entities that can carry out life functions.

Nor is the rider triggered by the fact that some HPSCs were ‑‑ prior to the project to be funded, and using non-federal funds -- derived from embryos.  The rider unambiguously employs the present tense in barring funding only of research Ain which@ human embryos Aare@ destroyed, discarded or subjected to risk, and ACongress= use of a verb tense is significant in construing statutes.@  United States v. Wilson, 503 U.S. 329, 333 (1992); accord Otte v. United States, 419 U.S. 43, 49-50 (1974); In re Arochem Corp., 176 F.3d 610, 623 (2d Cir. 1999).  The Guidelines carefully hew to that distinction by prohibiting funding for Athe derivation of pluripotent stem cells from human embryos@ while authorizing funding of research using stem cells themselves.  
This interpretation of the rider is confirmed by the fact that, after the HHS General Counsel=s opinion was issued, and after Congress held a hearing on that opinion, Congress re-enacted the rider without changing its terms.  See Lorillard v. Pons, 434 U.S. 575, 580 (1978); Public Citizen, Inc. v. FAA, 988 F.2d 186, 194 (D.C. Cir. 1993).  Thus, plaintiffs are entitled to a judgment declaring that the Guidelines are consistent with the appropriations rider.
2.  Violation of the APA=s Notice and Comment Procedures.  Defendants= peremptory suspension of the Guidelines, which are final agency regulations adopted in accordance with the notice and comment requirements of the Administrative Procedure Act, directly violates that Act.  First, the Guidelines are regulations subject to the APA=s notice and comment provisions.  AAny claim of exemption from APA rulemaking requirements will be narrowly construed and only reluctantly countenanced,@ and indeed Astrict scrutiny@ of such a claim is applied if the government tries to repeal a document that was adopted through notice and comment rulemaking without going through those procedures.  Environmental Defense Fund, Inc. v. Gorsuch, 713 F.2d 802, 816-17 (1983) (citations omitted).  Given that presumption, and given that the Guidelines impose numerous new substantive eligibility requirements on the funding of HPSC research not found in any law or regulation, they clearly are subject to the APA=s notice and comment processes.  Syncor Int=l Corp. v. Shalala, 127 F.3d 90, 95-96 (D.C. Cir. 1997); Chamber of Commerce of the United States v. DOL, 174 F.3d 206, 211 (D.C. Cir. 1999); World Duty Free Americas, Inc. v. Summers, 94 F. Supp. 2d 61 (D.D.C. 2000).

D.C. Circuit precedent arising from the transition from the Carter to Reagan Administrations conclusively establishes that the APA is violated where, as here, the government suspends duly promulgated final regulations that were adopted pursuant to the APA.  As those cases hold, Aan agency decision which effectively suspends the implementation of important and duly promulgated standards . . . constitutes rulemaking subject to notice and comment requirements of 5 U.S.C. ' 553.@  Gorsuch, supra, 713 F.2d at 814-18; accord Environmental Defense Fund, Inc. v. EPA, 716 F.2d 915, 920 (D.C. Cir. 1983); Natural Resources Defense Council, Inc. v. EPA, 683 F.2d 752 (3d Cir. 1982).  Those cases also make it clear that the APA=s Agood cause@ exception to those requirements is Alimited to emergency situations@ (Environmental Defense Fund, Inc., supra, 716 F.2d at 920) and does not apply simply because, as in those cases and here as well, a new Administration wants time to review (or even repeal) a prior Administration=s duly promulgated regulation.  Those cases are directly on point here, and they make it clear that defendants= peremptory suspension of the Guidelines contravenes the procedural requirements of the APA.  Plaintiffs thus are entitled to a judgment declaring that defendants must implement the Guidelines and cannot suspend or change them other than in accordance with the APA=s notice and comment procedures.
3.  Violation of the 1993 NIH Revitalization Act.  In the late 1980s, the first Bush Administration refused, over Congress= objections, to fund research using tissue and cells from fetuses and embryos.  In 1993, when supporters of such research had gained control of the White House as well as Congress, they enacted their views into binding statutory law through a provision in the NIH Revitalization Act that expressly forbids the executive branch of government from imposing a policy barring support for research on fetal tissue transplantation and from withholding funds for such research.  

Defendants= suspension of the Guidelines violates that law.  First, stem cell research falls under the scope of research protected by the Act ‑‑ namely, Aany research on the transplantation of human fetal tissue for therapeutic purposes.@  The Act defines Ahuman fetal tissue@ to include cells obtained from both embryos and fetuses, and thus both HPSCs derived from fetal tissue and HPSCs derived from embryos are Ahuman fetal tissue@ within the meaning of the Act.  Likewise, the plaintiff researchers= work involves working with stem cells to develop specialized, functional cells and tissue that can be used for transplantation into patients with conditions such as Type 1 diabetes, Parkinson=s and spinal cord injury.  Thus, such research constitutes research on transplantation protected by the Act.
Second, it is clear that defendants= conduct contravenes the Act.  By suspending implementation of the Guidelines, defendants have imposed a policy prohibiting HHS from conducting or supporting the research in question.  Likewise, defendants= unilaterally imposed moratorium unquestionably is withholding funding from projects that would be approved on their scientific merits if the defendants had not frozen the grant application process.  Indeed, the 1993 Act was passed to ensure that similar conduct by the first Bush Administration ‑‑ namely, an administratively imposed moratorium on research -- would never be repeated.  Thus, plaintiffs are entitled to a judgment declaring that the suspension of the Guidelines and other aspects of the moratorium imposed by defendants on HPSC research violates the Revitalization Act.

4.  Arbitrary and Capricious Agency Action.  Even if defendants= moratorium did not constitute the unlawful suspension of a final regulation and even if it was not expressly forbidden by the Revitalization Act, it still would be arbitrary and capricious action in violation of the APA.  Under ' 706(2)(A) of the APA, agency action must be set aside A[w]here the agency has failed to provide a reasoned explanation, or where the record belies the agency=s conclusion . . . .@  County of Los Angeles v. Shalala, 192 F.3d 1005, 1021 (D.C. Cir. 1999) (citation omitted).  Those twin grounds for review are applied with particular care where, as here, an agency reverses its position on an issue, because Aan agency=s change in direction from a previously announced intention is a danger signal that triggers scrutiny to ensure that the agency=s change of course is not based on impermissible or irrelevant factors.@  Robbins v. Reagan, 780 F.2d 37, 48 (D.C. Cir. 1985).
As to the first ground for review, defendants= suspension of the Guidelines and the process for funding HPSC research plainly has not been attended by any reasoned explanation.  To the contrary, defendants= unexplained moratorium has been accompanied only by press reports that the suspension is motivated by White House efforts to curry favor with voters of a particular religious faith.
In any event, as to the second ground for review, defendants= outright moratorium on HPSC research is wholly contrary to their statutory mission and wholly without any logical or evidentiary support.  NIH has acknowledged, and others have agreed, that HPSCs constitute a Aunique scientific and medical resource@ and Ahold great promise for both research and health care.@  See page __ supra.  Likewise, it is beyond genuine dispute that federal funding of such research is vital to achieving that promise.  See, e.g., Trounson Dec. at 7-8 (Exhibit 32).  As such, a failure to fund this research would constitute a grave disregard for defendants= statutory duty.  

This is particularly true because the NIH Revitalization Act adopted a federal policy of authorizing the use of tissue obtained from fetal tissue so long as the abortion decision was made independent of the subsequent decision to donate the tissue to scientific research.  The Guidelines adhere to the policy by authorizing the use of HPSCs so long as the embryos were derived from excess frozen embryos that were created for purposes of in vitro fertilization.  Defendants= moratorium, by contrast, strike a different balance ‑‑ forbidding all research ‑‑ that runs contrary to that statute.  Moreover, defendants= refusal to proceed with research funding under the Guidelines, supposedly in order to avoid destroying embryos, is wholly irrational and wholly without evidentiary support.  As explained above, the embryos from which cells can be obtained under the Guidelines are excess frozen embryos left over after in vitro fertilization procedures, and there is no basis in the record to dispute that those embryos will be discarded if they are not used for these scientific purposes.  As such, defendants= refusal to implement the Guidelines is unlawful for this further reason.
	ARGUMENT
I.	The Guidelines Do Not Violate the Appropriations Rider

Both the HHS General Counsel and Covington & Burling were correct in concluding that federal funds may be used for HPSC research, consistent with the appropriations rider, so long as the HPSCs are derived using non-federal funds.  The rider reads as follows:
A(a)  None of the funds made available in this Act may be used for --

(1)  the creation of a human embryo or embryos for research purposes; or

(2)  research in which a human embryo or embryos are destroyed, discarded, or knowingly subjected to risk of injury or death greater than that allowed for research on fetuses in utero under 45 CFR 46.208(a)(2) and section 498(b) of the Public Health Service Act [42 U.S.C. 289g(b)].

(b)  For purposes of this section, the term Ahuman embryo or embryos@ includes any organism, not protected as a human subject under 45 CFR 46 as of the date of the enactment of this Act, that is derived by fertilization, parthenogenesis, cloning, or any other means from one or more human gametes or human diploid cells.@  (Exhibit 15.)

We first demonstrate that, as an appropriations rider that limits NIH=s general statutory authority, the rider must be narrowly construed.  We then explain that HPSCs are not themselves embryos as defined in the rider, and thus the fact that HPSCs may be destroyed in the research does not trigger the rider.  Finally, we show that the fact that some HPSCs were derived (using private funds) from human embryos does not mean that ' 510 bars federal funding of research that then uses those HPSCs.
A.	As An Appropriations Rider, ' 510 Must Be Narrowly Construed.
The D.C. Circuit has recently observed that it is a Awell-settled principle that >while appropriation acts are AActs of Congress@ which can substantively change existing law, there is a very strong presumption that they do not.=@  Calloway v. District of Columbia, 216 F.3d 1, 9 (D.C. Cir. 2000) (quoting Building & Constr. Trades Dep=t v. Martin, 961 F.2d 269, 273 (D.C. Cir. 1992)).  In light of that presumption, A>the established rule [is] that, when appropriations measures arguably conflict with the underlying authorizing legislation, their effect must be construed narrowly.=@  216 F.3d at 9 (quoting Donovan v. Carolina Stalite Co., 734 F.2d 1547, 1558 (D.C. Cir. 1984)); see also 216 F.3d at 12 (Awe must narrowly construe@ an appropriations rider).  Therefore, Calloway explained, the relevant question in a case such as this one is Ahas Congress unambiguously expressed an intent@ to bar funding for the activity in question.  Id. at 9.  In this regard, the rider=s effect will be limited to activities that are unambiguously covered, and the courts are not to consider whether Acommon sense@ suggests that Congress might have desired to bar funding of other activities or whether the resulting narrow construction appears Aincongru[ous].@  Id. at 9-10./

As we now detail, when interpreted under these principles, the rider at issue here plainly does not bar the HPSC research that is authorized under the Guidelines.
B.	Stem Cells Are Not Embryos Within the Meaning of the Rider.
As quoted above, the rider applies to research in which Aa human embryos or embryos are destroyed, discarded, or knowingly subjected to risk of injury or death.@  As the Guidelines observe, A[a]lthough human pluripotent stem cells may be derived from embryos . . ., such stem cells are not themselves embryos.@  Exhibit 1 at ' I.  Instead, as explained in NIH=s Stem Cell Primer, HPSCs are isolated from the inner cell mass of embryos.  See Exhibit 24.  The point that HPSCs are derived from embryos, and are not themselves embryos, is also confirmed by the accompanying researcher declarations.  See Thomson Dec. at 3 (Exhibit 31); Trounson Dec. at 4 (Exhibit 32); Pera Dec. at & 7 (Exhibit 33).  
Subsection (b) of the rider provides that A[f]or purposes of this section, the term >human embryo or embryos= includes any organism, not protected as a human subject under 45 CFR 46 as of the date of the enactment of this Act, that is derived by fertilization, parthenogenesis, cloning, or any other means from one or more human gametes or human diploid cells.@  We now show that HPSCs are not Aorganisms@ either, and that research on HPSCs is therefore not covered by the rider.

1.	Defining the Term AOrganism@.  The statute does not define the term Aorganism.@  Thus, as the HHS General Counsel=s opinion recognizes, the proper course is to review dictionary definitions.  Because the statute involves a scientific context, it is appropriate to employ a scientific dictionary for this purpose./  The HHS General Counsel consulted the McGraw-Hill Dictionary of Science and Technical Terms, which defines an organism as A[a]n individual constituted to carry out all life functions.@/   Likewise, the Academic Press Dictionary of Science and Technology states that an organism is Aa living being; any form in which mutually interdependent parts maintain the various vital processes necessary for life to exist.@/  Scientifically, then, an Aorganism@ is a entire being, one that can itself carry out all the functions necessary to life.  	This conclusion also follows from generalized dictionaries.  Webster=s Third New International Dictionary, which is frequently utilized by both the Supreme Court and the D.C. Circuit for construing statutes,/ defines an organism as Aan individual constituted to carry on the activities of life by means of parts or organs more or less separate in function but mutually dependent: a living being.@/  Thus, both the scientific and non-scientific dictionaries are in agreement that an Aorganism@ constitutes an entire being that can carry out the functions of life on its own.

2.	Applying the Definition.  The conclusion that stem cells are not Aorganisms@ within that definition is supported by overwhelming undisputed evidence.  As the HHS General Counsel opinion observed, at a December 2, 1998 hearing before a subcommittee of the Senate Appropriations Committee, the NIH Director, four other scientists, a bioethicist, and a theologian were asked if stem cells are organisms, and all of them responded that human pluripotent stem cells are not organisms./  Specifically:
!	Dr. Harold Varmus, Director, National Institutes of Health (p. 7):  AThere are many issues to be raised about the cells that we=re talking about today, but one of those questions is whether these cells have the ability to give rise to a complete human being.  The answer to that from a scientific perspective is no.  . . . [C]ells removed from the inner cell mass or grown as cultured pluripotent stem cells if reintroduced into a uterus do not give rise to a new human being.  Hence these pluripotent cells cannot be considered organisms and cannot be considered to be embryos.@/

!	Dr. John Gearhart, Johns Hopkins University School of Medicine (p. 29):  ANo; they are not.  They are not organisms.@

!	Dr. James Thomson, Wisconsin Regional Primate Research Center, University of Wisconsin (p. 29):  AThey are not organisms and they are not embryos.@

!	Dr. Michael West, President and CEO, Advanced Cell Technology (p. 29):  AThe cultured cells I would say are not.  If they are, for instance, grown in a laboratory dish or transplanted into a uterus, they will not form a human being.@

!	Dr. Thomas Okarma, Vice President, Geron Corporation (p. 71):  AMy view is that these cells are clearly not organisms.  They are highly derived by a laboratory process that took years to develop, and, in fact, as we have said, are not the cellular equivalent of an embryo.  Were these cells to be implanted, they would not form a conceptus nor develop.@

!	Dr. Arthur Caplan, Director, Center for Bioethics, University of Pennsylvania (p. 71):  AAbsolutely not an organism.  Stem cells lack the capacity to become viable, independent, interrelated, functioning entities, so they are not organisms.@

!	Mr. Richard Doerflinger, Associate Director for Policy Development, Secretariat of Pro-Life Activities, National Conference of Catholic Bishops (p. 71):  AStem cells are not organisms.@

The Covington & Burling opinion noted that similar scientific evidence was presented to the National Bioethics Advisory Commission.  Exhibit 17 at D-8.  The attached declarations from several of the world=s leading HPSC researchers also confirm that stem cells or cell lines are not organisms:  they are not whole entities, they cannot carry out life=s functions, and they would not implant if placed in a uterus.  See Thomson Dec. at 3 (Exhibit 31); Trounson Dec. at 3 (Exhibit 32); Pera Dec. at & 7 (Exhibit 33).  
The NIH=s own May 2000 document entitled Stem Cells: A Primer, which is published on the NIH website,/ agrees that stem cells Acannot form an organism because they are unable to give rise to the placenta and supporting tissues necessary for development in the human uterus.  These inner cell mass cells are pluripotent -- they can give rise to many types of cells but not all types of cells necessary for fetal development.  Because their potential is not total, they are not totipotent and they are not embryos.@  See Exhibit 24 at 1.
In sum, the HHS General Counsel and the Covington & Burling opinions indisputably were correct in concluding that HPSCs are not Aembryos@ within the meaning of the rider.  As such, the rider on its face does not apply to research involving HPSCs.
C.	The Rider Does Not Apply Simply Because Certain HPSCs Previously Were Derived From Embryos.

Opponents of research funding argue that, although HPSCs are not embryos, the rider applies because the HPSCs on which the research is to be conducted were previously derived directly or indirectly through privately-funded research in which embryos are destroyed./  That argument, however, ignores the specific words employed in the rider.  As quoted above, the rider only forbids funding of Aresearch in which a human embryo or embryos are destroyed, discarded, or knowingly subjected to risk of injury or death . . .@ (emphasis added).  Under those plain words, the rider applies only if embryos Aare@ ‑‑ present tense ‑‑ destroyed Ain@ the federally-funded research.  As NIH Director Varmus correctly explained in Congressional testimony, Aour view is that there is a very clear distinction to be made between research in which stem cells that have been developed in one laboratory by one procedure are then used by other investigators to support other kinds of research that is not research in which an embryo, an organism, is subjected to risks greater than those that are dictated by other statutes.@  Stem Cell Hearing at 147 (Exhibit 23).

The fact that the rider employs the present tense ‑‑ research Ain which@ embryos Aare@ destroyed ‑‑ is dispositive here.  As the Supreme Court has held, ACongress= use of a verb tense is significant in construing statutes.@  United States v. Wilson, 503 U.S. 329, 333 (1992) (relying on use of past tense to construe statute); see also, e.g., In re Arochem Corp., 176 F.3d 610, 623 (2d Cir. 1999) (relying on use of present tense to interpret and apply statute); United States v. Valentine, 63 F.3d 459, 463 (6th Cir. 1995) (same); Otte v. United States, 419 U.S. 43, 49-50 (1974) (noting that statute Aspeaks in the past tense as well as the present@ in construing statute to cover both).  The rider, therefore, must be construed to apply only where embryos Aare@ destroyed Ain@ the federally-funded research itself.
This conclusion is further confirmed by the fact that Congress was well aware of how to write a law that would have applied to cells obtained from embryos, if it had wanted to do so.  Specifically, the 1993 NIH Revitalization Act expressly protects funding of research on transplantation of Acells obtained from a dead human embryo or fetus.@  42 U.S.C. ' 289g-1(g).  As we show later, this provision affirmatively bars NIH from adopting a policy of refusing to fund stem cell research.  But the point for present purposes is this:  when Congress wanted to legislate about the funding of research involving cells that had been obtained from embryos, it knew how to do so.  Because Congress did not employ such language in the rider, the rider cannot be construed as if Congress had done so.  See, e.g., Keene Corp. v. United States, 508 U.S. 200, 208 (1993).
This construction of the rider is also supported by the historical context within which it was enacted.  As explained above, federal law authorizes federally-funded research using cells derived from aborted fetuses (42 U.S.C. ' 289g) while simultaneously (in the Hyde Amendment) barring the use of federal funds to abort fetuses./  Our interpretation of the rider produces the parallel situation for embryos:  federal funds can support research using HPSCs derived from embryos but cannot be used to destroy embryos.  Accordingly, interpreting the rider as limited to the destruction of embryos is consistent with the historical context in which the rider was enacted.

This conclusion, finally, is confirmed by the fact that, after the HHS General Counsel construed the rider in her January 1999 opinion as permitting funding for HPSC research (Exhibit 16), Congress re-enacted the rider without changing its terms.  It is a familiar rule of statutory construction that ACongress is presumed to be aware of an administrative or judicial interpretation of a statute and to adopt that interpretation when it re-enacts a statute without change.@  Amfac Resorts, LLC v. United States DOI, 2001 U.S. Dist. LEXIS 6699, at *58 (D.D.C. May 23, 2001) (Lamberth, J.), quoting Lorillard v. Pons, 434 U.S. 575, 580 (1978); accord Public Citizen, Inc. v. FAA, 988 F.2d 186, 194 (D.C. Cir. 1993) (citation omitted).  Indeed, there is no need in this case to Apresume@ that Congress was aware of the HHS interpretation, because the Congress held a hearing concerning that very interpretation.  See Exhibit 23, hearing of January 26, 1999.
In sum, the D.C. Circuit has instructed that appropriation riders are to be Anarrowly construed@ by limiting them to their unambiguous scope, and that courts are not to seek to expand that scope by speculating as to whether a broader interpretation might make sense or might resolve alleged incongruities.  When the rider is construed in light of that basic principle and in accordance with the other applicable, well-settled rules of statutory construction as discussed above, it is abundantly clear that the rider must be interpreted as only applying where embryos will be destroyed or discarded in the research project itself.
Once the scope of the rider is properly recognized, it is apparent that the Guidelines adhere to the rider by denying federal funding for Athe derivation of pluripotent stem cells from human embryos@ while authorizing funding of research using the stem cells themselves.  See Exhibit 1 at ' III.  As such, plaintiffs are entitled to summary judgment declaring that the Guidelines are consistent with the appropriations rider.
II.	Defendants= Suspension Of The Guidelines Violates The Administrative Procedure Act

As we now show, a line of Court of Appeals decisions holding that the unilateral suspension of various final regulations following the transition from the Carter to Reagan Administrations violated the APA makes it indisputably clear that defendants are violating the APA here.
A.	The APA Applies to the Guidelines.
Section 553 of the APA requires federal agencies to provide advance notice and an opportunity for public comment prior to rulemaking.  See 5 U.S.C. ' 553./  Agency action that is subject to the APA but does not comply with the notice and comment requirements is unlawful and must be set aside.  See, e.g., Utility Solid Waste Activities Group v. EPA, 236 F.3d 749, 755 (D.C. Cir. 2001).

For these purposes, Arulemaking@ includes any agency processes for Aformulating, amending, or repealing@ legislative rules that are substantive -- as opposed to purely interpretative or procedural -- in nature.  See 5 U.S.C. '' 553, 551(5).  The D.C. Circuit has explained that A[a]ny claim of exemption from APA rulemaking requirements will be narrowly construed and only reluctantly countenanced.@  Environmental Defense Fund, Inc. v. Gorsuch, 713 F.2d 802, 816 (D.C. Cir. 1983) (citations omitted).  Cases in this Circuit explain that a rule is substantive, not interpretative, if it Aadds to or modifies a legal norm@ (i.e., a statute or regulation) based on the agency=s own authority.  See Syncor Int=l Corp. v. Shalala, 127 F.3d 90, 95 (D.C. Cir. 1997); World Duty Free Americas, Inc. v. Summers, 94 F. Supp 2d 61 (D.D.C. 2000).  Likewise, courts distinguish substantive rules from procedural rules by examining whether the rule Aalter[s] the rights or interests of [private] parties.@  Chamber of Commerce of the United States v. DOL, 174 F.3d 206, 211 (D.C. Cir. 1999) (citation omitted).  A substantive rule is one that has a Asubstantial impact@ upon private parties and Aputs a stamp of [agency] approval or disapproval on a given type of behavior.@  Id. (citation omitted).
Tested against these standards, it is clear that the Guidelines are substantive regulations that are subject to the APA=s rule-making procedures and that do not fall within the APA exceptions for purely interpretative or procedural rules.  First, the Guidelines contain numerous substantive provisions that are not found in any statute or other regulation.  For example, they prohibit embryo donors from benefitting financially from donations; prohibit donations directed to particular transplant recipients; require assurances that the HPSCs used in NIH-funded research were obtained free or through a reimbursement of reasonable costs in transporting and storing the HPSCs; make certain kinds of research ineligible for NIH funding, including somatic cell nuclear transfer; and impose numerous conditions to separate the decision to have an abortion or to discard a fertilized egg from the subsequent decision to donate cells or tissue to research.  See Exhibit 1./  Thus, the Guidelines go beyond mere construction of existing law to add content to governing legal norms based on NIH=s own authority.

Likewise, the Guidelines will have a substantial impact on the rights of private parties and place NIH=s stamp of approval on certain kinds of research and other conduct.  For example, the Guidelines= substantive provisions (as just described) will enable researchers to use cell lines that were derived in compliance with those rules but will prohibit funding research involving cells that do not satisfy all of those requirements./  Those various substantive provisions also place NIH=s Astamp of approval@ on certain forms of conduct as being ethical and appropriate.  In short, there can be no genuine doubt that the Guidelines constitute substantive rulemaking subject to the APA=s notice and comment requirements.
The conclusion that the Guidelines are subject to the APA=s rule-making procedures is confirmed by the fact that the NIH followed those procedures in developing and approving the Guidelines.  From the beginning of the Guidelines process, NIH carefully adhered to ' 553=s requirements, publishing the draft Guidelines in the Federal Register and soliciting public comments.  See 64 Fed. Reg. 67576 (Dec. 2, 1999) (Exhibit 18).  That process resulted in some 50,000 comments, which NIH took into account in generating the final Guidelines.  See 65 Fed. Reg. 51976 (Aug. 25, 2000); minor corrections at 65 Fed. Reg. 69951 (Nov. 21, 2000) (Exhibit 1)./

This conclusion is strongly supported by the D.C. Circuit=s 1983 decision in Gorsuch, supra, 713 F.2d 802.  In that case, the Carter Administration had published regulations setting standards for granting certain permits, and the Reagan Administration suspended those standards. Rejecting the government=s argument that the rules constituted mere agency procedures exempt from notice-and-comment rulemaking, the D.C. Circuit emphasized that A[s]crutiny of a claimed exemption [from the APA=s notice and comment procedures] should be exacting where an agency seeks, as EPA does here, to undo all it accomplished through its rulemaking without giving all parties an opportunity to comment on the wisdom of repeal.@  Id. at 816-17 (citation omitted).  Applying that Astrict scrutiny,@ the court held that the regulations were subject to notice and comment procedures because they had substantive impacts both on the persons directly needing permits and the general public.  Id. at 817-18./
In short, the Guidelines were and are subject to the APA=s notice and comment requirements.
B.	Defendants= Suspension of the Guidelines Violates the APA.
Given that the Guidelines constitute final agency regulations promulgated in accordance with the APA, defendants have violated the APA by unilaterally suspending the Guidelines rather than enforcing the Guidelines while going through the notice-and-comment rulemaking process to seek their amendment or repeal.  This conclusion, indeed, is mandated by controlling precedent arising from the transition from the Carter to the Reagan Administrations.

In Environmental Defense Fund, Inc. v. EPA, 716 F.2d 915 (D.C. Cir. 1983), the EPA issued final environmental reporting regulations in 1980 and required submission of the first reports in March of 1981.  Id. at 917.  Upon taking office, however, the Reagan Administration suspended the regulation and deferred the date for implementing the rule, determining that Agood cause@ existed for dispensing with the normal notice-and-comment procedures.  Id.  The plaintiffs then filed suit, seeking an order compelling the EPA to put the regulations back into effect.  Prior to any ruling, EPA in fact put the regulations back into effect, but the plaintiffs moved for attorneys= fees and expenses as the prevailing party under the Equal Access to Justice Act, 28 U.S.C. ' 2412(d)(1)(A).
The D.C. Circuit held that plaintiffs were entitled to fees and expenses because the EPA=s position in unilaterally suspending the regulations was not Asubstantially justified.@  The court explained that A[t]he suspension or delayed implementation of a final regulation normally constitutes substantive rulemaking under APA ' 553.@  716 F.2d at 920.  AThus, on its face, the suspension of the [regulation] was subject to APA notice and comment provisions.@  Id.  The court then rejected EPA=s argument that the Agood cause@ exception to the notice-and-comment requirements was met because immediate action was needed to avoid purported harms from regulations that the new Administration intended to eliminate.  The court reiterated that Asuch exceptions to notice and comment procedures will be narrowly construed and only reluctantly countenanced,@ and held that A[t]he justifications for the exception are not >escape clauses= that may be arbitrarily utilized at the agency=s whim@ and that Ause of the exception should be limited to emergency situations.@  Id. (citations omitted).  Gauged against those standards, the court found that the exception did not apply.  Id. at 921.

Indeed, the D.C. Circuit also reached the same conclusion in the Gorsuch case.  As explained above, Gorsuch involved regulations that President Carter=s EPA had issued in January 1981, to take effect six months later, containing performance standards for the issuance of permits for incinerators and storage surface impoundments.  713 F.2d at 807.  Upon taking office, the Reagan Administration unilaterally suspended implementation of the regulations and refused to process any permits under their standards.  Id. at 808.  Rejecting the new Administration=s position, the court held that Aan agency decision which effectively suspends the implementation of important and duly promulgated standards . . . constitutes rulemaking subject to notice and comment requirements of 5 U.S.C. ' 553.@  Id. at 814-18.  And the court approvingly discussed the Third Circuit=s opinion in Natural Resources Defense Council, Inc. v. EPA, 683 F.2d 752, 761 (3d Cir. 1982), which held that any agency=s Aaction in indefinitely postponing the effective date of [certain amendments to regulations] fit the definition of >rule= in the APA, and, as such, was subject to the APA=s rulemaking requirements.@/  See also National Family Planning & Reproductive Health Ass=n v. Sullivan, 1992 U.S. Dist. LEXIS 9421, at *7-9 (D.D.C. July 1, 1992) (suspension of published regulations violated APA notice and comment requirements); National Wildlife Fed=n v. Mosbacher, 1989 U.S. Dist. LEXIS 9748 (D.D.C. Aug. 11, 1989) (same).

In short, the D.C. Circuit has definitively ruled that a new Administration cannot simply suspend a final rule that was promulgated through notice and comment rulemaking ‑‑ and, indeed, that such a course lacks any substantial legal justification and will subject the government to an award of attorney=s fees under the EAJA.  That principle is dispositive here.  The Guidelines were published in final form following completion of notice and comment rule-making procedures under the APA.  Rather than implementing the Guidelines, however, the defendants unilaterally suspended all activity under the Guidelines, canceling the scheduled meeting at which the first set of applications were to be reviewed and refusing to undertake any other steps to process applications.  Because the Guidelines can be changed or repealed only through the APA notice and comment process, and because that process has not been performed (or even begun), defendants= failure to implement the Guidelines plainly violates the APA./
For these reasons, plaintiffs are entitled to summary judgment declaring that NIH=s suspension of the Guidelines is unlawful under the APA.
III.	Defendants= Imposition Of A Moratorium On HPSC Research Violates the NIH Revitalization Act

As described above, the NIH Revitalization Act of 1993 bars the executive branch from (1) imposing any policy prohibiting support for research on the transplantation of human fetal tissue or (2) withholding funding for any such research that has technical and scientific merit.  As we show in this Part, the current de facto moratorium on HPSC research imposed by defendants violates both aspects of this law.  Thus, under the affirmative commands of the Revitalization Act, plaintiffs are entitled to a judgment that requires the defendants to implement the Guidelines and to proceed with funding of scientifically meritorious HPSC research.
A.	The Origin and Terms of the Revitalization Act.

The current dispute over the Administration=s unilateral refusal to fund HPSC research brings to mind one of Yogi Berra=s aphorisms, Ait=s deja vu all over again.@  As described at pages _-_ above, the NIH Revitalization Act of 1993 was the culmination of a long debate over government funding for research relating to the transplantation of human fetal tissue.  The first Bush Administration had ordered a moratorium on such research.  After President Clinton took office, however, supporters of such research controlled both the White House and the Congress, and they enacted their views of this subject into statutory law.  In doing so, moreover, they contemplated that the day might come when the executive branch would again be directed by a President opposed to such research, and they explicitly addressed that eventuality by prohibiting the executive branch of government from unilaterally (i.e., other than with the consent of Congress by way of a new statute) imposing a new moratorium or withholding funds on such research.
Specifically, ' 113(a) of the Act expressly commands that Ano official of the executive branch may impose a policy that the Department of Health and Human Services is prohibited from conducting or supporting any research on the transplantation of human fetal tissue for therapeutic purposes.  Such research shall be carried out in accordance with [42 U.S.C. ' 289g-1], without regard to any such policy that may have been in effect prior to the date of the enactment of this Act.@  Further, ' 113(b), which is entitled AProhibition against withholding of funds in cases of technical and scientific merit,@ directs that Ain the case of any proposal for research on the transplantation of human fetal tissue for therapeutic purposes, the Secretary of Health and Human Services may not withhold funds for the research if@ the research has been approved by the normal peer-review process and will satisfy the Act=s provisions requiring informed consent and prohibiting the purchase of fetal tissue.  Finally, the Act defines the protected research to include cells derived from both fetuses and embryos.

By enacting these provisions, Congress and the President established an agreed status quo under which (1) the research will be funded as long as it meets the ethical limitations spelled out in the Act, and (2) neither the Congress (because of the President=s veto power) nor the President (because of the ' 113 provisions) can unilaterally change that status quo.  As we now show, HPSC research is protected by the Act, and the defendants= unilaterally-imposed moratorium on that research therefore violates the Act.
B.	HPSC Research Proposed to be Conducted by Plaintiff Researchers is Protected by the Revitalization Act

The HPSC research at issue in this case is covered by the Revitalization Act, as it (1) involves Ahuman fetal tissue@ and (2) is designed to develop and deploy transplantation therapies.
1.	Human Fetal Tissue.  In the Act, Congress defined Ahuman fetal tissue@ as Atissue or cells obtained from a dead human embryo or fetus after a spontaneous or induced abortion, or after a stillbirth.@  42 U.S.C. ' 289g-1(g).  The human pluripotent stem cells at issue in this case fall within that definition.  As noted above, the pluripotent stem cell lines used by the plaintiff researchers are based on either embryonic germ cells or embryonic stem cells, each of which is derived from a different source.  We now address them in turn.
a.	Embryonic germ cells.  Embryonic germ cells are derived from non-living fetuses that result from terminated first trimester pregnancies.  Gearhart Dec. at __ (Exhibit __).  Thus, they are Acells obtained from a . . .  fetus after a spontaneous or induced abortion . . . .@   Id.  The HHS General Counsel specifically concluded that stem cells derived from the primordial germ cells of non-living fetuses -- such as in plaintiff Gearhart=s work -- Awould be considered human fetal tissue@ for purposes of the Revitalization Act.  Exhibit 16 at 4.  Then-NIH Director Varmus testified before Congress in January 1999 that ADr. Gearhart=s work could have been supported with federal funds.@  Exhibit 23 at 121.  The Guidelines agree.  See Exhibit 1 at ' B.2.a.  And the legislative history underlying the 1993 Act looked forward to the derivation of cells from fetal tissue:

AIt is likely that alternative uses of fetal tissue for transplantation will be developed, such as established cell lines, that might obviate the need for tissue obtained directly from the fetus. . . .  It is estimated that the development of these alternatives, if they are indeed possible, would take at least 10 years.@  S. Rep. No. 103-2 at 14 (1993), reprinted in 1993 U.S. Code Cong. & Admin. News 196, 210 (Exhibit 27).

In short, there is no doubt that research on stem cells derived from germ cells obtained by non-living fetuses (such as the stem cells that plaintiff Dr. Gearhart has derived and uses) falls within the Revitalization Act.
b.	Embryonic stem cells.  Embryonic stem cells are derived from cells obtained from excess frozen embryos.  Trounson Dec. at 3 (Exhibit 32).  In showing that the Act covers these cells, we now address two interpretive questions:  (1) whether the Act covers cells obtained from excess frozen embryos or requires that the cells be obtained following an abortion or stillbirth; and (2) whether embryonic stem cells are obtained from a Adead human embryo.@
Because the Act defines Ahuman fetal tissue@ as Atissue or cells obtained from a dead human embryo or fetus after a spontaneous or induced abortion, or after a stillbirth,@ the first question is whether the phrase Aafter a spontaneous or induced abortion, or after a stillbirth@ applies to Aembryo@ as well as Afetus@ ‑‑ and hence implies that only research on cells obtained after an abortion or stillbirth (rather than from excess frozen embryos) are covered by the Act.  As we now show, that phrase only applies to cells obtained from fetuses, not from embryos.

First, when the Revitalization Act was passed (and still today), HHS=s human subject regulations defined Afetus@ as the Aproduct of conception from the time of implantation.@ 45 C.F.R. ' 46.203(c).  When Congress uses a term with an established regulatory meaning in place, it is presumed to intend that meaning (Republic of Argentina v. Weltover, 504 U.S. 607, 612-13 (1992)), and hence the word Afetus@ in the Revitalization Act should be given that same meaning.  And because Afetus@ means everything from the time of implantation onward, it is clear that the word Aembryo@ must -- in order to give it meaning separate from the word Afetus@/ -- be construed to mean the product of conception prior to implantation.  That, in turn, means that the phrase Aafter a spontaneous or induced abortion, or after a stillbirth@ must be read as applying only to the word Afetus,@ because an embryo that has never been implanted cannot be the subject of either an abortion or a stillbirth without distorting the normal meaning of the words./
This interpretation is also supported by the canon of the last antecedent, under which Aa subsequent modifying phrase refers solely to the last antecedent, which consists of the last word, phrase, or clause.@  Murphy Exploration & Prod. Co. v. DOI, 2001 U.S. App. LEXIS 13499, at *22 (D.C. Cir. June 19, 2001).  Under that canon, the subsequent modifying phrase Aafter a spontaneous or induced abortion, or after a stillbirth@ is properly read as applying only to the adjacent word Afetus,@ and not to the distant word Aembryo.@/  For these reasons, the Act should be construed as covering research involving cells obtained from frozen embryos.

The second interpretive question is whether embryonic stem cells are cells obtained from a Adead human embryo.@  The answer is that they are.  First, the Guidelines provide that the embryonic stem cells eligible for use in federally-funded research must have been derived (without federal funds) from an embryo that has been previously determined by the progenitors to be slated for destruction or permanent frozen storage.  Because the embryo=s progenitors have the sole right to determine that it will never be implanted,/ their determination to that effect -- made prior to being asked to consider donation for stem cell research -- means that the statutory definition is satisfied.  A frozen embryo that is not implanted and never will be implanted has no independent viability and therefore is no more alive than an unfertilized egg or sperm or skin cell.   Second, as a technical matter of laboratory procedure, the embryo is dead by the time the cells are obtained.   The process of isolating the stem cells from the inner cell mass of a blastocyst is preceded by the destruction of the blastocyst=s outer shell, which destroys the embryo=s possible viability (even if implanted).  See Trounson Dec. at 3 (Exhibit 32).  

This conclusion that the Revitalization Act protects research involving cells obtained from excess frozen embryos also follows from the overall purposes of the Act.  Given that the Act unambiguously permits research on cells obtained from induced abortions, and given that most Members of Congress and most other people see abortion as much more controversial or problematic than discarding an excess frozen, unimplanted embryo,/ it would be absurd to interpret the Act as protecting only the cells derived from aborted fetuses and not the cells derived from excess unimplanted embryos.  See, e.g., Clinton v. City of New York, 524 U.S. 417, 429 (1998) (rejecting interpretation that Awould produce an absurd and unjust result which Congress could not have intended@) (citation omitted).
2. 	Transplantation for Therapeutic Purposes.  Given that HPSCs therefore qualify as Ahuman fetal tissue@ under the Act, the remaining question is whether HPSC research covered by the Guidelines constitutes Aany research on the transplantation of human fetal tissue for therapeutic purposes.@  The answer plainly is that is does.  The HHS Fact Sheet on the Guidelines explains that Afurther research using human pluripotent stem cells may help [g]enerate cells and tissue for transplantation.@  Exhibit 4 at 1.  Specifically, A[p]luripotent stem cells have the potential to develop into specialized cells that could be used as replacement cells and tissues to treat many diseases and conditions, including Parkinson=s disease, spinal cord injury, stroke, burns, heart disease, diabetes, osteoarthritis, and rheumatoid arthritis.@  Id.  Likewise, the NIH Stem Cell Primer explains that A[p]erhaps the most far-reaching potential application of human pluripotent stem cells is the generation of cells and tissue that could be used for so-called >cell therapies,=@ such as A[t]ransplant of healthy heart muscle@ to treat heart disease and Atransplantation of either the entire pancreas or isolated islet cells@ to treat diabetes.@  Exhibit 24 at 3.  See also, e.g., Thomson Dec. at 4 (Exhibit 31) (describing potential transplantation therapies arising from stem cell research); Kaufman Dec. at 2 (Exhibit 34) (same).  

Stem cell research, therefore, plainly is encompassed by the Revitalization Act=s broad protection for Aany research on the transplantation of human fetal tissue for therapeutic purposes@ (emphasis added).  It makes no difference that scientists are not ready to actually transplant stem cells or their products into patients today, since research Aon transplantation@ certainly includes the preliminary research targeted at developing safe and effective transplantation therapies./  See Kaufman Dec. at 3-4 (Exhibit 34) (explaining why initial embryonic stem cell research is necessary to enable later transplantations).  Of course it would be wholly irrational to interpret the Act as protecting the funding of actual transplantation but not the funding of the preliminary research essential to ensure that the transplants will help, not harm, patients./ 
In sum, HPSC research constitutes Aresearch on the transplantation of human fetal tissue for therapeutic purposes@ subject to the protections of the Revitalization Act.
C.	Defendants Are Violating the Revitalization Act.

Given that HPSC research is protected by the Revitalization Act, it inexorably follows that defendants= suspension of the Guidelines and imposition of a de facto moratorium on stem cell research funding violates the Act in two respects.  First, that suspension and moratorium constitute a Apolicy@ under which HHS and its subordinate agencies are Aprohibited from conducting or supporting@ fetal tissue research ‑‑ which is precisely what ' 113(a) of the Act bars the executive branch from doing.  See page __ above.  Although styled as an open-ended Areview@ of the Guidelines by defendants, there can be no genuine dispute that defendants= current policy is to prohibit funding for HPSC research.  Indeed, in the Stipulated Motion to Stay filed in the case of Nightlight Christian Adoptions v. Thompson, No. 1.01CV00502-RCL in this Court, the defendants in this case explicitly agreed to
Acontinue their present policy of not funding any research involving use of pluripotent stem cells derived from human embryos, including all independent investigator and intramural research.  During the Review period Defendants will not evaluate the scientific merits of any applications for funding of embryo stem cell research.  Similarly, during the period of Review Defendants will continue their present policy of postponing the review of compliance packages under the Guidelines.  Even if the Review results in consideration of funding for pluripotent stem cell research, Defendants will not fund any such research for a period of thirty (30) days following conclusion of the Review.@  

Exhibit 21.  This policy of prohibiting support for stem cell research plainly violates ' 113(a) of the Revitalization Act./
Second, defendants are in violation of ' 113(b) of the Act, which prohibits defendants from withholding funding for fetal tissue research that meets the Act=s requirements.  As noted above, defendants have terminated the entire funding process under the Guidelines.  This is a blanket suspension of funding, without regard to whether the applications evince technical and scientific merit or not.  As such, defendants are unlawfully withholding funds for research subject to the Act on grounds other than those specified in ' 113(b)(1)(A)-(C).
This conclusion, finally, is confirmed by recalling that ' 113 was enacted in direct response to a moratorium on research imposed administratively by the first Bush Administration.  The repetition of that precise conduct by the new Bush Administration thus is unmistakably just what ' 113 was enacted to prohibit.

IV.	Defendants= Refusal To Fund HPSC Research Also Constitutes Unlawful And Arbitrary and Capricious Agency Action In Violation Of the Administrative Procedure Act

Even if defendants= refusal to proceed with HPSC research funding did not constitute the unlawful suspension of a published regulation ‑‑ which it does ‑‑ and even if the Revitalization Act did not flatly bar defendants from withholding funds for such research ‑‑ which it does ‑‑ defendants= refusal to fund HPSC research constitutes unlawful and arbitrary and capricious action in violation of the APA and in derogation of defendants= obligations as stewards of American scientific research in support of the public health.
A.	The Standards For Review Of Defendants= Actions.
Section 706(2)(A) of the Administrative Procedure Act provides that agency action is to be set aside if it is Aarbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.@  5 U.S.C. ' 706(2)(A).  There are two components to review under the Aarbitrary and capricious@ standard of ' 706(2)(A).  
First, the court must determine whether the agency has Aarticulated a satisfactory explanation for its action.@  Motor Vehicles Mfrs. Ass=n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983); County of Los Angeles v. Shalala, 192 F.3d 1005, 1021 (D.C. Cir. 1999) (quoting State Farm); A.L. Pharma, Inc. v. Shalala, 62 F.3d 1484, 1491 (D.C. Cir. 1995) (Aan agency must cogently explain why it has exercised its discretion in a given manner@) (quoting State Farm, 463 U.S. at 48).  More particularly, agencies are required Ato explain the relationship between their action, the decisional standards in their statutes, and the data on which they base their predictions concerning the effects of their action.@  Kenneth Culp Davis & Richard J. Pierce, Administrative Law Treatise 316 (3d ed. 1994).

Second, the court must examine the agency=s reasoning to see if it Aruns counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.@  State Farm, 463 U.S. at 43.  In other words, rules that are not supported by an adequate foundation should be invalidated by a court.  See Robbins v. Reagan, 780 F.2d 37, 48 (D.C. Cir. 1985).
The court=s review of these questions is particularly searching in a case like this one, because the D.C. Circuit Ahas long held that an agency=s change in direction from a previously announced intention is a danger signal that triggers scrutiny to ensure that the agency=s change of course is not based on impermissible or irrelevant factors.@  Robbins, supra, 780 F.2d at 48; National Black Media Coalition v. FCC, 775 F.2d 342 (D.C. Cir. 1985).  NIH, as well as the National Bioethics Advisory Commission, have previously concluded that HPSC research is extraordinarily important and can be conducted in a manner that satisfies all significant ethical concerns.  Defendants= reversal of that course calls for heightened scrutiny here.
In short, A[w]here the agency has failed to provide a reasoned explanation, or where the record belies the agency=s conclusion, we must undo its action.@  County of Los Angeles v. Shalala, 192 F.3d 1005, 1021 (D.C. Cir. 1999) (citation omitted); accord Independent Petroleum Ass=n of America v. Babbitt, 91 F. Supp. 2d 117, 124 (D.D.C. 2000) (Lamberth, J.).  As we now show, and particularly given the close scrutiny applicable here, the moratorium imposed by defendants must be undone for both of those reasons./

B.	The Moratorium Imposed By Defendants Constitutes Arbitrary And Capricious Agency Action In Violation Of The APA.

It is immediately apparent that defendants have not supplied any reasoned explanation for their refusal to implement the Guidelines and otherwise proceed with the funding of HPSC research.  Unlike the Guidelines, which were accompanied by a detailed explanation, the moratorium is unexplained except for widespread press accounts indicating that the White House has ordered the research suspended in an effort to enlist political support from adherents to a particular religious faith.  See Exhibit 27./  It would be difficult to conceive of a more arbitrary or capricious rationale for agency action.

It is also evident, however, that no volume of explanatory reasoning could ever justify a decision by NIH not to fund plaintiffs= HPSC research pursuant to the Guidelines.  A[T]he starting point for this court=s review of the validity of the [agency action] must begin with the relevant governing statutes@ (Independent Petroleum Ass=n, supra, 91 F. Supp. 2d at 124 (Lamberth, J.)), and there are two sets of statutes that govern defendants= actions in funding scientific research.  First, under the HHS and NIH authorizing statutes, defendants= statutory duty is to fund research that, based on scientific considerations, is best designed to understand, treat, and cure disease.  Specifically, federal law provides that the Secretary of HHS and the Director of the NIH 
Ashall conduct in [NIH], and encourage, cooperate with, and render assistance to other appropriate public authorities, scientific institutions, and scientists in the conduct of, and promote the coordination of, research, investigations, experiments, demonstrations, and studies relating to the causes, diagnosis, treatment, control, and prevention of physical and mental diseases and impairments of man . . . .@

42 U.S.C. '' 241 and 282.  In carrying out that mission, the Secretary and Director are authorized to Amake grants-in-aid to universities, hospitals, laboratories, and other public or private institutions, and to individuals for such research projects as are recommended by the advisory council to the entity of the Department supporting such projects . . . .@  Id.

Under this enabling statute, it would be arbitrary and capricious ‑‑ to put it mildly ‑‑ for defendants to refuse to fund HPSC research, given the extraordinary importance and promise of that research to NIH=s mission and the vital need for federal funding to fulfill that promise.  As to the former point, as quoted above, the NIH=s published materials acknowledge that A[h]uman pluripotent stem cells are a unique scientific and medical resource@ and Ahold great promise for both research and health care@; Science magazine called them the scientific Abreakthrough of the year@ in 1999; and over 100 major university presidents recently said that their discovery Amay be the single most important scientific and medical breakthrough in the past decade or more.@  See page __ supra.  See also Thomson Dec. at 3-4 (Exhibit 31) (detailing therapeutic potential of stem cells); Trounson Dec. at 4-5 (Exhibit 32) (same).  And, as to the latter point, the AAAS has explained that A[f]ederal funding for stem cell research is necessary in order to promote investment in this promising line of research, to encourage sound public policy, and to foster public confidence in the conduct of such research@ because A[r]ealizing the potential health benefits of stem cell technology will require a large and sustained investment in research@ and A[t]he federal government is the only realistic source for such an infusion of funds.@  See page __ supra.  Likewise, some 80 Nobel winners recently wrote that A[f]ederal support for the enormous creativity of the US biomedical community is essential to translate this discovery -- into novel therapies for a range of serious and currently intractable diseases,@ and the accompanying declarations from some of the world=s leading HPSC researchers make it clear that federal support is vital to HPSC research.  See page __ supra and Thomson Dec. at 5-7 (Exhibit 31); Trounson Dec. at 6-7 (Exhibit 32); Pera Dec. at && 13-15 (Exhibit 33); Kaufman Dec. at 4 (Exhibit 34).  
This conclusion is further supported by the other relevant statute that should guide  defendants in their actions, which is the NIH Revitalization Act.  As explained above, even putting aside the point that that Act expressly forbids what defendants have done, that Act embodies a statutory policy that balanced, in the context of research using fetal tissue, the goals of promoting scientific research and avoiding incentives for increased abortions.  Under that policy, Congress determined that research using fetal tissue should proceed subject to reasonable safeguards to avoid encouraging further abortions.  See page __ supra.  The Guidelines adopted by NIH comport with that Congressional guidance by authorizing the use of HPSCs while imposing conditions to ensure that the decisions to create, and subsequently to discard, the embryo are not related to the use of the stem cells that might be derived from the embryo.  See page __ supra.  

Defendants= moratorium on HPSC research, by contrast, runs directly contrary to that statutory balance.  Moreover, a moratorium on HPSC research under the Guidelines is wholly irrational because it will not promote the supposed goal of preventing the destruction or discarding of embryos (even assuming arguendo that were a permissible goal under the applicable statutes).  As explained above, the Guidelines expressly require the cells to have been obtained from embryos that were created for purposes of in vitro fertilization and that have been determined to be excess in a decisionmaking process wholly divorced from the decision to donate the embryos to research.  Thus, there is absolutely no evidentiary (or any other) basis upon which defendants could conclude that the embryos are not simply going to be thrown away if these stem cells are not used for research.  Any moratorium based on the purported goal of avoiding the destruction of embryos would therefore be unsupported by any evidence and simply irrational.  Thus, for this additional reason as well, defendants= suspension of the Guidelines should be set aside as arbitrary and capricious under the APA.
	CONCLUSION
Judgment should be entered in favor of plaintiffs.
Respectfully submitted,

________________________________
Marci A. Eisenstein					Jeffrey C. Martin, DC Bar No. 350421
Max G. Brittain, Jr.					Richard M. Wyner, DC Bar No. 376320
Frederick J. Sperling					Donald J. Munro, DC Bar No. 453600
Aphrodite Kokolis					Brian J. Egan (not admitted in DC)
Julie J. Furer						Shea & Gardner
Schiff Hardin & Waite					1800 Massachusetts Avenue, N.W.
6600 Sears Tower					Suite 700
Chicago, Illinois  60606				Washington, D.C.  20036
(312) 258-5500					(202) 828-2000

Clarence T. Kipps, Jr.
DC Bar No. 007088
Miller & Chevalier
1450 G Street, N.W.
9th Floor
Washington, D.C.  20005
(202) 626-5840		
	Attorneys for Plaintiffs
June 26, 2001