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Baaaaad Company

Robert Scheer

No Offence: Stephenson Ranch neighbors, like Frans Lanting and Christine Eckstrom, want local government to keep a close eye on the company.

SC Biotechnology wants the county to butt out of its coastal bio-farm, but neighbors say the company is elusive and needs tending

By Michael Mechanic

These could be the goats of Troy," says photographer Frans Lanting of his neighbor's animals. In Lanting's view, if Dr. John Stephenson's antibody-rich nannies slip through the county gates without restrictions, the public may forever lose control over what quasi-agricultural activities bio-ranchers like Stephenson can conduct on coveted county ag land.

John and Brenda Stephenson are the sole owners of Santa Cruz Biotechnology, a local antibody manufacturer headquartered on Delaware Street. The problems began in February when the Stephensons purchased a 200-acre North Coast ranch and brought in 400 goats to raise as living antibody factories.

Perhaps CEO John Stephenson's attitude rubbed his neighbors the wrong way, or maybe they were spooked by a science they didn't understand, but the county received a complaint of illegal construction and, says Santa Cruz County Principal Planner Pete Parkinson, "The complaint alleged a medical lab type of use going on."

The complaint has ignited a controversy that demands an answer to the question: When is a creature livestock and when is it a lab animal? With the growth of technology often several steps ahead of local mindsets, the answer is not so simple. Responding to the complaint, county planners red-tagged Stephenson's ranch. At a June 12 hearing, the county Planning Commission rejected Stephenson's arguments that the ranch should pass unqualified as "commercial agriculture," which includes cultivation of "food, flower and fiber crops and raising of animals including grazing and livestock production."

Voting against the planning staff's recommendation, the commission ruled that the ranch should meet further review. The Stephensons have appealed the decision to the Board of Supervisors. If the supes hears the appeal, they will probably do so in September.

"To me this is absolutely absurd. It's unquestionably a very clear farming use for the goats--grazing livestock is a permitted use," Stephenson fumes. "The neighbors don't want to live next to a farm, that's pretty clear. They're using this as a way to get the public concerned. If I was raising turkeys, they'd have the same problem."

The neighbors argue otherwise. According to Chief Deputy County Counsel Jonathan Wittwer, a neighbor of the ranch who privately supports the Planning Commission's decision, "Every farmer from the city limits to the San Mateo county line has signed a petition saying that this is not agriculture."

Antibodies have been commercially available since the 1950s, and the research market for primary antibodies is now worth roughly $50 million per year, according to one executive's estimate. In terms of public safety, there is little to fear from antibody production. An animal is injected with a purified molecule, or antigen, and its blood soon becomes rich with antibodies that bind only to that particular substance. This remarkable specificity makes the purified antibodies valuable for a wide range of laboratory research.

Benefits to humanity notwithstanding, scientists, farmers and policy makers are sharply divided over whether antibodies should qualify as an agricultural product. "Agriculture has always included food and fiber, and if we're going to redefine it to include products for medical research, you would have to allow cages full of primates or rats out there too," says Jodi Frediani, who raised goats for two decades on the North Coast.

"The argument that we make medical products is ridiculous," counters Stephenson. "Almost all farm animals have products that are used for medical research. For example, insulin is produced from cattle and pigs that are also slaughtered for meat. If people want to attract biotechnology here, then this is a really unfortunate situation," he continues. "Any company coming in is going to be very nervous now unless the Board of Supervisors corrects this promptly."

Farm or Lab?

From a planning perspective, an agricultural zoning is no small blessing--especially in the coastal zone. It allows farmers and ranchers to build structures up to 10,000 square feet or larger without a coastal permit or development permit. A farmer in the coastal zone need only obtain a county building permit before doing construction. Furthermore, no special use permits are needed to bring livestock onto agriculturally zoned property.

"Santa Cruz Biotech claims they are like any old goat farmer and they should be allowed to be treated as agriculture," says Lanting. "If that would be the case, there would be no further review or public input and they wouldn't need any permits for an operation we feel is entirely different from traditional agriculture."

Most immunochemical manufacturers, like Zymed Laboratories in South San Francisco, contract with more traditional livestock operations to produce their goat antibodies. "I've never heard of this [zoning] issue coming up," says Zymed Vice President Dr. Agustin Bella. "It's more than agriculture. It cannot be strictly agriculture. It's kind of sticky."

Wittwer agrees, and says more public input is therefore needed. "Biotech is a field that is expanding by leaps and bounds and [Stephenson] has indicated to us that he will probably do whatever the market leads him to do," he says. "There should be a process where he amends his permit and we get to know about it."

The definition of agriculture becomes ambiguous with the words "grazing and livestock production," especially given that SC Biotech is doing limited breeding and is not producing livestock for sale. "He has the animals in more of a feed-lot situation--it's not a grazing situation," says Frediani. "He says that he plans to grow alfalfa, but my guess is that it's too cool here. I've been buying alfalfa for years and none of it is grown locally."

By government standards, Stephenson's operation clearly differs from a typical goat farm. "If they are producing antibodies, the animals are considered to be being used in research. The USDA has different standards for animals used in research than if they are in food and fiber production," says Dr. Jim Hartwell, of the Office of Animal Care and Use at the National Institutes of Health.

Indeed, Stephenson contends publicly that the county has no need to stick its nose into activities already regulated by the federal government, but his neighbors question the CEO's sincerity. "Santa Cruz Biotech has referred to federal regulations that apply to his type of activity, but when we contacted the USDA, we found out he didn't have a permit. He only applied for a permit after he was red-tagged," says Lanting.

The USDA first inspected the ranch on June 26--two weeks after the Planning Commission hearing--and a final inspection was conducted just last Friday. Although USDA policy dictates that a facility should be inspected before it gears up, this is not a strict legal requirement.

However, the USDA is not so lax on registration. Stephenson says his company applied to the USDA on May 15 and the ranch was officially registered on May 17. If Stephenson immunized any goats prior to May 17, he would have been violating USDA regulations, which require new facilities to register before conducting any research. Stephenson is vague on the first date of immunization, saying he believes it was "about two months ago." He says it was not clear from his initial contacts with the USDA that he would need a license.

But Dr. Bob Gibbens, acting regional director of the agency's animal care division, says there shouldn't have been any ambiguity. "If he called up and told anyone in the office he was producing antibodies by injecting goats and collecting their blood, we would have told him he required registration," he says.

Good Fences Make Bad Neighbors

Stephenson's appeal states that the county's actions are creating a multi-million-dollar hardship for SC Biotech. Indeed, the lucrative nature of the business has raised specific concerns.

Preservationists worry that bio-farmers could one day drive out traditional agriculture by virtue of sheer economics. And because purified antibodies can sell for some $500,000 per liter, the goats are far more valuable than typical farm animals, which creates security issues.

The Stephensons have constructed high fences around the property and erected gates along the dirt road leading to their facilities. They also intend to gate off Back Ranch Road--the only access to Highway 1 for several neighbors.

The neighbors, who hold legal easements to use the road, took Stephenson to court and won an injunction to prevent him from building the gates. The CEO has taken the decision to the Court of Appeals, Wittwer says.

When Stephenson gated off the dirt road leading from Back Ranch Road to Santa Cruz Biotech, he created problems for Swanton Berry Farm, which grows organic produce on 35 acres just north of the Stephenson ranch. The farmers feared they would have to abandon their fields, until lawyers from both parties reached an agreement. Stephenson also cut off Swanton Farm's access to a fresh-water well on his land.

Swanton's owner, Jim Cochran, says he holds no grudges. "It was his water. I really can't complain," he says. "There have been problems, but the attorneys have resolved them. My job is to farm and not to spend time on the legal issues."

Most of the neighbors interviewed say they view the neighborly disputes separately from the agricultural issues. Their main concern is what they perceive as Stephenson's elusiveness with regard to his future intentions.

One neighbor, retired UCSC professor Bob Adams, cites a Massachusetts-based company called Transgenics--which raises genetically altered goats--as a model of company-neighborhood relations. He says the company approached neighbors openly with its intentions, listened to their concerns, and essentially had itself zoned as a veterinary clinic.

"I'm willing to have a biotech firm around if I know it meets safety, biotech and zoning regulations," Adams says. "My feeling is if Santa Cruz Biotech would welcome the review, I don't see any big problem. But if anybody comes in and just says, 'This is my land and I can do whatever I want,' I don't think any neighborhood would be happy."

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From the July 18-24, 1996 issue of Metro Santa Cruz

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