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PALO ALTO _ California's stem cell institute yesterday adopted two controversial but key policies that set ethical standards for research and establish a mechanism for taxpayers to recoup some of their $3 billion investment.

_I think you'll find that (both policies) go above and beyond national and state standards. . . . I believe we are setting a new standard that the rest of the country and the world can follow,_ Zach Hall, president of the institute, told its governing committee at a meeting yesterday.

For example, the ethical standards require that women donating eggs for embryonic stem cell research be informed of possible health risks and of how their donations will be used.

The use of the eggs also must be reviewed and approved by two review boards. Also, the physician performing the egg extraction cannot be a principal investigator in the stem cell research.

Despite attempts to make both policies tougher than existing standards, as well as numerous public meetings to discuss both, opposition from the public and from state legislators remains.

The institute's governing committee has several...