Stem Cell Funding Stay Vacated—Uncertainty Remains

03 May 2011 Publication
Author(s): Antoinette F. Konski

Legal News Alert: Life Sciences

On April 29, 2011, the United States Court of Appeals for the District of Columbia Circuit vacated the preliminary injunction in Sherley v. Sibelius, No. 10-5287, slip op. (D.C. Cir. April 29, 2011) (Sherley V). The injunction had halted all federal funding of research using human embryonic stem cells created after August 9, 2001.1 This Court of Appeals decision was not unanimous: Circuit Judges Ginsberg and Griffith found, over Judge Henderson’s lengthy dissent, that the District Court had incorrectly interpreted the statutory language at issue. Under the majority’s correct interpretation, plaintiffs are not likely to prevail; therefore, the preliminary injunction was not properly granted. The Court of Appeals’ ruling allows federal funding of research projects that rely on the use of human embryonic stem cell lines, at least until the District Court issues a decision on the merits of the underlying case. Regardless of how the litigation proceeds, however, it is possible that the process may take several years to play out unless Congress acts in a manner that renders the litigation moot.

Likelihood of Success on the Merits and Irreparable Harm

In vacating the stay, the Court of Appeals first noted that the text of the Dickey Amendment is ambiguous and open to more than one possible reading. As such, it was reasonable for the court to uphold the NIH’s interpretation of the Dickey Amendment.

In discussing the merits of the challenge, the Court of Appeals noted that the relevant text of the Dickey Amendment is the prohibition against funding for research in which a human embryo or embryos are destroyed. In developing the Guidelines, the NIH had determined that the Dickey Amendment did not bar federal funding of a project using human ESCs that were derived before the August 2001 cut-off, because a stem cell is not an embryo and cannot develop into a human being. The Court of Appeals dismissed plaintiffs’ argument that the NIH is not entitled to deference because it never offered an interpretation of the term “research.” The court instead focused on the NIH’s understanding—clearly articulated in the 2009 Guidelines—that research involving ESCs does not necessarily include the antecedent process of deriving the cells (acts that require destroying human embryos). The court also noted that Congress has reenacted the Dickey Amendment unchanged every year with full knowledge that HHS has been funding research since 2001. The court found this to be an indication of congressional intent to permit funding for research using cell lines derived without federal funding, even if it bars funding for the derivation of additional cell lines.

The Court of Appeals also found that researchers who rely on government funding were more likely to suffer irreparable harm from the injunction than the plaintiff researchers who may suffer some incremental handicap in competing for governmental funding. The injunction entered by the District Court would preclude the NIH from funding new ESC projects that have been approved or from continuing to fund multi-year projects before their completion, resulting in loss in the investment in project planning, expenditures for equipment, and jobs for support staff.

Left unanswered are the questions of whether the 2009 NIH Guidelines legally allow the creation of new embryonic stem cell lines and whether the 2009 NIH Guidelines were properly promulgated under the APA. The Court of Appeals did not address these arguments because the District Court had not considered them in rendering its decision entering the preliminary injunction.

Judge Henderson’s Dissent

Judge Karen LeCraft Henderson issued a strong dissent to the majority opinion. She opined that the plaintiff researchers who use adult stem cells only made a strong showing of likelihood of success on the merits and that the District Court did not abuse its discretion in granting the preliminary injunction.

She noted that the government’s brief suggests that Congress did consider human embryonic stem cell research when it first enacted the Dickey Amendment in 1996, because the Act was passed in reaction to a 1994 NIH panel report that advocated federal funding of research to isolate ESCs, among other things,.

She disagreed that the NIH should have been accorded deference in its interpretation of the Amendment, as the language of the amendment is easily grasped. She refused to accept the majority’s temporal delineation of research into acts where cell lines are newly created versus research which utilizes pre-existing cell lines.

She also found fault with the government’s argument that the continued reenactment of the Dickey Amendment was an implicit sanction of funding, citing U.S. Supreme Court precedent that where the law is plain, subsequent reenactment does not constitute an adoption of a previous administrative construction.

Finally, she noted that plaintiffs would suffer irreparable injury due to loss of funding opportunities.


A resolution of the merits of the ESC funding controversy is not likely imminent.

First, it is possible that plaintiffs might seek rehearing en banc from the full Court of Appeals, based on the strength of Judge Henderson’s dissent. A petition for certiorari also may be filed with the Supreme Court. While neither of these options is likely to succeed at this stage in the case, plaintiffs’ decision to pursue these additional courses of review would slow the pace of litigation by several months.

Second, the District Court is likely to take several months to resolve this case on the merits. Although the parties filed cross-motions for summary judgment, supplemental briefing regarding the effect of the Appeals Court opinion is likely. Furthermore, the Appeals Court identified at least two issues that the District Court has not previously decided. Both of these issues are included in plaintiffs’ motion for summary judgment. Once the District Court decides these issues, the losing party is likely to appeal once again.

No matter how the litigation proceeds, it is unlikely that the judicial process will be exhausted in less than a year. It is possible that the process may take several years to play out unless Congress acts in a manner that renders the litigation moot.

Two bills were introduced in last year’s Congress (2009 – 2010) seeking to overturn the Dickey Amendment’s perceived prohibition on research involving human ESCs. Rep. Diana DeGette (D-Colo.) and 137 cosponsors introduced the Stem Cell Advancement Act of 2009 (H.R. 4808),2 and a similar bill was introduced on September 13, 2010 in the Senate by Sen. Arlen Specter (D-Pa.) (S 3766). However, neither was acted on during the judicial calendar and therefore both are inactive until re-introduction in 2011.

The Legal Challenge

This is the Court of Appeals’ second decision in the legal challenge to President Obama’s Executive Order overturning the previous administration’s policy banning the use of federal funds for research using embryonic stem cells (ESCs) created after August 9, 2001.3 Under the 2009 Executive Order, the National Institutes of Health (NIH) issued new Guidelines for Human Stem Cell Research4 (2009 NIH Guidelines) setting forth eligibility requirements for U.S. government research funding. In addition to funding new research activities using ESCs, the 2009 Executive Order and NIH Guidelines also provided scientists whose research was supported by federal funds with access to a greater number of ESCs, including those created after August 9, 2001.

Plaintiffs—including Drs. Sherley and Deisher—challenged the 2009 NIH Guidelines. They argued that legislation known as the Dickey Amendment or the Dickey-Wicker Amendment bans the use of federal funding to support research involving human embryos. Congress originally passed this legislation in 1996,5 and former President Clinton signed it into law. The Dickey Amendment prohibits the Department of Health and Human Services (HHS), which includes the NIH, from funding research where human embryos are destroyed. Congress has included the Dickey Amendment in every subsequent HHS appropriations bill without substantial alteration. In subsequent years, the rider was enacted in Title V (General Provisions) of the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act.

In 2009, a group of plaintiffs filed suit challenging the NIH’s authority to issue the 2009 NIH Guidelines. The plaintiffs included scientists whose research focused on the use of non-embryonic or adult-derived stem cells.

The District Court initially dismissed the entire lawsuit for lack of jurisdiction, holding that none of the plaintiffs had standing to challenge the Guidelines.6 On appeal, this holding was reversed in part and remanded to the District Court for resolution on the merits.7 The Court of Appeals held that Drs. Sherley and Deisher, who perform research using adult stem cells, could challenge the Guidelines because they compete with researchers who use ESCs for a limited pool of federal money supporting stem cell research generally.8 Because the 2009 NIH Guidelines increased the number of projects competing for these limited funds, they directly harm Drs. Sherley and Deisher.9

On remand, the District Court addressed the merits of the case in ruling upon plaintiffs’ motion for a preliminary injunction. Plaintiffs argued that the 2009 NIH Guidelines violated the plain language of the Dickey Amendment and that, in promulgating the 2009 NIH Guidelines, the defendants violated the Administrative Procedure Act (APA). The government countered that the Dickey Amendment is ambiguous because the term “research” in the statute is ambiguous; thus, NIH’s interpretation of the term “research” should be entitled to Chevron deference.10

In granting the preliminary injunction, the District Court disagreed with the government and found that plaintiffs were likely to prevail in their arguments on the merits of the case. In particular, the District Court determined that under Chevron,11 it must first ask whether Congress has “directly spoken to the precise question at issue” and, if Congress has, the Court must “give effect to the unambiguously expressed intent of Congress.”12 If, however, the “the statute is silent or ambiguous with respect to the specific issue,” then the Court must defer to the NIH’s interpretation, provided it is “based on a permissible construction of the statute.”13

The District Court determined that the 2009 NIH Guidelines likely violated the Dickey Amendment14 and granted a preliminary injunction that immediately halted implementation of the Guidelines and distribution of funds to researchers.15 Upon the government’s motion, the Court of Appeals stayed the preliminary injunction pending appeal. In the meantime, proceedings are continuing in the District Court where the parties have cross-moved for summary judgment.

1   Sherley v. Sibelius, No. 1:09-cv-1585, Order (D.D.C. August 23, 2010) (Sherley IV). The preliminary injunction states that: “defendants [the Secretary of Health and Human Services, the Department of Health and Human Services (HHS), the Director of the National Institutes of Health (NIH), and the NIH] and their officers, employees, and agents are enjoined: from implementing, applying, or taking any action whatsoever pursuant to the National Institutes of Health Guidelines for Human Stem Cell Research, 74 Fed. Reg. 32,170 (July 7, 2009), or otherwise funding research involving human embryonic stem cells as contemplated in the Guidelines.

2    The bill was introduced on March 10, 2010.

3   Removing Barriers to Responsible Scientific Research Involving Human Stem Cells, Executive Order 13505, 74 Fed. Reg. 46, 10667 (March 11, 2009).

4   National Institutes of Health Guidelines for Human Stem Cell Research, 74 Fed. Reg. 32,170 (July 7, 2009), NIH Guidelines.

5   Balanced Budget Downpayment Act, Pub. L. No. 104-99, § 128, 110 Stat. 26, 34 (1996).

6   Sherley v. Sebelius, 686 F. Supp. 2d 1 (D.D.C. 2009) (Sherley I).

7   Sherley v. Sibelius, 610 F.3d 69 (D.C. Cir. 2010) (Sherley II).

8   Id. at 75.

9   Id.

10 Sherley IV at 70, citing Chevron U.S.A., Inc., v. Natural Resources DefenseCounsel, Inc., 467 U.S. 837, 843 (1984).

11  Id.

12  Id.

13  Id.

14  Sherley v. Sebelius, 704 F. Supp. 2d 63 (D.D.C. 2010) (Sherley III).

15  Sherley v. Sibelius, No. 1:09-cv-1585, Order (D.D.C. August 23, 2010) (Sherley IV).

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues. If you have any questions about this alert or would like to discuss the topic further, please contact your Foley attorney or the following:

George Best
Silicon Valley

Antoinette F. Konski
Silicon Valley