Historical Background
Part 1: Genetic Engineering

In the Terran portions of the Federation genetic engineering is a very sensitive topic. The Gene Wars may have been 300 years ago, but the scars they left on the Terran psyche are still very fresh. There are significant portions of Terra itself which are still polluted- either by nuclear fallout or virulent diseases- and remain uninhabitable even today. The Unification Wars, wherein the United Nations of Terra World Government asserted its control over (almost) the whole planet stymied rebuilding efforts by diverting attention and resources, as did the "Sauron problem."

The Sauron are, in fact, the iconic symbol of the Gene Wars, to many people. Anthropomorphic war-beasts may be more dramatic in appearance and more widely recognized, but the fact that they /are/ visible and recognized makes them less frightening: one can see them coming and make preparations. Sauron, by contrast, are the "invisible killer:" they look just like "normal" people; they move freely among the population. You never know who they are until it's too late... and in their wake they leave suffering and devastation that no war-beast could ever hope to equal. Sauron gene-plagues strike with little or no warning, spread rapidly, and are designed to be severely debilitating, with long terminal phases, so nations are forced to expend tremendous resources treating the sick. Moreover, each individual plague is created by randomly blending a large pool of alleles, so each specific outbreak is unique and the treatment developed for one usually won't work on the next. In practice a single "plague" was actually many smaller, overlapping outbreaks, but to the public it /looked/ like one big one. All those factors combine to create a level of despair in victims that hadn't been equaled since the Black Death.

(Side note: yes, it /is/ possible to keep Sauron from entering your country. All you have to do is intercept every single person at the border and hold them while a blood test is performed. Anyone moving between cities, or within boroughs of a large city, also has to be stopped and checked. In other words, if you're willing to bring the entire national economy to a dead stop, and even then some will inevitably slip through the cracks. All it takes is one.)

What everyone remembers is that genetic engineering /created/ this monstrosity that nearly exterminated the Terran species and has hung over it like a pall ever since. Of course, genetic engineering also developed the treatment which neutralized a Sauron's disease producing functions and allowed them to live safely alongside ordinary Terrans. It also produced creatures such as the Chakats, specifically designed to help with the restoration and rebuilding of what had been destroyed by war. Those things don't have the same emotional impact, though.

Net result: /any/ attempt at genetic engineering is viewed with fear and distrust by the general population. Though, as is often the case, public mores are remarkably flexible. Treating diseases and growing replacement organs aren't seen by the general public as genetic engineering, even though they are. Also, the use of mutagens to effect cosmetic changes has also gained public acceptance, even though the technology was originally developed to create war-beasts. Though it is marketed under the polite euphemism of "reconstructive therapy" in place of the more technically accurate "mutative transformation." These days, the amount of change society will tolerate is remarkable. A fellow who becomes a fish-man will be talked about, but for the most part he needn't fear being lynched. People become Morphs all the time; outside the immediate family generally no one notices. Morphs are everywhere, and have been (mostly) accepted as regular people.

It is, however, absolutely illegal to produce a war-beast. That is to say, a new /strain/ of war-beast. During the Unification Wars, UNTWG found it necessary to court the aid of many surviving war-beast populations. It did so by guaranteeing them the right to breed. In some cases, war-beasts that hadn't originally been fertile were modified to be so. (There was, and still is, a lot of dissension about that decision. At the very least, it's unlikely UNTWG would have survived without it, and we /certainly/ wouldn't have the Federation we have today.)

One significant problem with the ban on war-beasts is defining, legally, exactly what a war-beast /is/. It's easy to say it means "any new species at all." But during Reconstruction genetic engineers produced new species all the time: bacteria, plants, animals, birds, fish, and all kinds of other things, modified in various way to survive in the new, polluted world and, in the process, clean it up. So it might seem reasonable to say instead "no new /sentient/ species." But there too a problem arose: regular Terrans, and many surviving war-beasts, needed extensive modification or treatment in order to survive in the Cursed Earth, as the most severely polluted portions of Terra were called. UNTWG simply couldn't afford it. In addition, if UNTWG were seen as favoring any one group over another, its fragile alliance would blow up in a heartbeat. In the end they accepted Charles and Katharine Turner's proposal: the creation of a species which was not a war-beast at all, but what might be called a "peace-beast." The Chakats, as they would come to be called, were designed using war-beast technology but not for the purpose of war: it was just so they could survive and work in the Cursed Earth without expensive medical treatment. The idea wasn't universally accepted, not by any stretch, but UNTWG felt it really didn't have a choice: Reconstruction /had/ to proceed, no matter what. Without it, the world could very easily slide into a Dark Age from which the Terran species might never recover. The Terran species might not even /survive/ it, as things stood.

It is unquestionably true that the use of Chakats made Unification much more difficult. The populations of Australia and New Zealand accepted them because of a clever PR blitz; instead of growing Chakats in artificial wombs, as had been the case with many war-beast strains, the embryos were implanted in volunteer host-mothers. The babies were then raised by their "parents." When people saw the proud parents with their new babies, reservations crumbled with surprising speed. It certainly helped that Chakats were designed to be physically attractive and have gentle, loving dispositions.

The creation and, more important, public acceptance of Chakats brought a great many remnant populations of war-beasts into UNTWG's camp (which itself would have justified the project). But it created an impression among some Terran survivors- most notably those of the Holy Christian Kingdom of North America- that UNTWG intended to replace them with Chakats and other recombinants. As a result the Unification Wars were a lot more difficult than they might have been otherwise; ultimately UNTWG settled with the HCK and its allies rather than expend further resources on the fight. (Which led to the now infamous Ozark Treaty. But it should be remembered that the treaty also guarantees the independence and freedom of the Foxtaur Clans and Wolftaur Packs. That's why the problem has persisted all these years; the HCK and the Wolftaurs and Foxtaurs are as two people balanced at opposite ends of a seesaw: the pintle at the center needs repair, but neither will get off for fear of giving an advantage to the other.)

What's done far and away the most harm to anti-war-beast laws is elective cosmetic modification. A war-beast is defined as a genetically engineered creature that has a "weaponizable" ability, so as to distinguish it from creatures created for the purposes of ecological reconstruction. But the precise meaning of "weaponizable" is a thing that's given generations of lawyers a livelihood. It's safe to say that a person making himself taller, stronger, and handsomer is not creating a war beast. But how /much/ stronger? Can a Terran who remains looking conspicuously Terran be stronger than one who also elects to give himself fur? What if a person wants long teeth and claws? Are those "weaponizable" abilities even though creatures with them have been granted the right to breed? If a Terran transforms into a genetically compatible member of a war-beast species, is that creating a "new" war-beast? Is that person allowed to apply further cosmetic modifications to his new form? Is the species upon which it's modeled allowed to do so? Is it okay to more extreme modifications if they aren't passed on to the individual's offspring? For example, could a Terran elect to become a mermaid if she surrendered the ability to have mermaid babies?

In conclusion: the visceral fear of genetically engineered "monsters" sowing death and destruction is still very present in certain parts of the Federation. Furthermore, the laws meant to prevent such occurrences had been steadily eroded until they've become a convoluted mess of exceptions and conflicting interpretations. All kinds of research /could/ be done, but doing so would invite a storm of public protest and leave the experimenters lost in a hopelessly tangled mess of uncertain legal restrictions.