SACRAMENTO — California's $3 billion stem-cell agency began awarding its first research grants yesterday despite legal challenges that put its future in doubt.

"This is really a historic and important occasion for us," said Zach Hall, interim president of the California Institute for Regenerative Medicine.

The recipients of the first 16 grants, totaling $39.7 million over three years, included multimillion-dollar awards to Stanford University, the California Institute of Technology, the University of Southern California and eight campuses of the University of California.

Three nonprofit research labs and Children's Hospital Los Angeles also received grants during the monthly meeting of the 29-member Independent Citizens' Oversight Committee, which runs the stem-cell agency.

But it's unclear when the recipients will get their money. Lawsuits challenging the legality of the agency have prevented it from borrowing the $3 billion in bond money voters authorized in November.

A $5 million donation from sound pioneer Ray Dolby and a $3 million loan from the state have kept the agency afloat and enabled it to hire a staff and open a permanent headquarters in San Francisco. But the agency's accountants warn it will run out of money by May without more cash.

"I don't understand how they can award grants if they don't have money," said Dana Cody, a lawyer with the anti-abortion group Life Legal Defense Foundation, which is suing the committee that oversees the agency.

Human embryonic stem cells are created in the first days after conception and give rise to all the organs and tissues in the body. Scientists hope they can someday use stem cells to replace diseased tissue.

But many social conservatives, including President Bush, oppose the work because embryos are destroyed during research. Bush in 2001 restricted the use of federal money to fund stem-cell work, and some scientists say the policy has hampered the field from advancing.

About 59 percent of the California electorate approved the state's stem-cell agency. Nine other states have similar proposals pending in their legislatures.