Legislature(2005 - 2006)CAPITOL 120
06/04/2006 12:00 PM House JUDICIARY
| Audio | Topic |
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| Start | |
| HB2002 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB2002 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
June 4, 2006
12:37 p.m.
MEMBERS PRESENT
Representative Lesil McGuire, Chair
Representative Tom Anderson
Representative John Coghill
Representative Pete Kott
Representative Peggy Wilson
Representative Les Gara
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 2002
"An Act conferring original jurisdiction on the Alaska Supreme
Court for the purpose of providing judicial review of a contract
executed under the Alaska Stranded Gas Development Act, and
setting the time in which a contract developed under that Act,
or a statute of limitations regarding that contract, must be
legally challenged; and providing for an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 2002
SHORT TITLE: GAS PIPELINE CONTRACT: COURT JURISDICTION
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
05/31/06 (H) READ THE FIRST TIME - REFERRALS
05/31/06 (H) JUD
06/02/06 (H) JUD AT 10:00 AM CAPITOL 120
06/02/06 (H) Scheduled But Not Heard
06/03/06 (H) RULES TO CALENDAR PENDING REPORT
06/03/06 (H) IN JUDICIARY
06/03/06 (H) JUD AT 11:15 AM CAPITOL 120
06/03/06 (H) Scheduled But Not Heard
06/04/06 (H) JUD AT 12:00 AM CAPITOL 120
WITNESS REGISTER
JAMES L. BALDWIN, Attorney at Law
Juneau, Alaska
POSITION STATEMENT: As counsel to the Office of the Attorney
General, presented HB 2002 on behalf of the administration.
DOUG WOOLIVER, Administrative Attorney
Administrative Staff
Office of the Administrative Director
Alaska Court System (ACS)
Anchorage, Alaska
POSITION STATEMENT: Provided comments and responded to
questions during discussion of HB 2002.
PHILLIP C. GILDAN, Attorney at Law
Greenberg Traurig, LLP
West Palm Beach, Florida
POSITION STATEMENT: Responded to questions during discussion of
HB 2002.
ACTION NARRATIVE
CHAIR LESIL McGUIRE called the House Judiciary Standing
Committee meeting to order at 12:37:46 PM [stated as 12:35
p.m.]. Representatives McGuire, Wilson, Gruenberg, Gara, Kott,
and Coghill were present at the call to order. Representative
Anderson arrived as the meeting was in progress.
HB 2002 - GAS PIPELINE CONTRACT: COURT JURISDICTION
12:38:01 PM
CHAIR McGUIRE announced that the only order of business would be
HOUSE BILL NO. 2002, "An Act conferring original jurisdiction on
the Alaska Supreme Court for the purpose of providing judicial
review of a contract executed under the Alaska Stranded Gas
Development Act, and setting the time in which a contract
developed under that Act, or a statute of limitations regarding
that contract, must be legally challenged; and providing for an
effective date."
12:38:49 PM
JAMES L. BALDWIN, Attorney at Law, as counsel to the Office of
the Attorney General, presented HB 2002 on behalf of the
administration. He relayed that HB 2002 is intended to provide
for original jurisdiction in the Alaska Supreme Court with
regard to reviewing legal challenges to the Alaska Stranded Gas
Fiscal Contract ("ASGF Contract"). This ties in with some
agreements that were made and that appear in the ASGF Contract
in Article 27, where the parties have agreed that under the
normal terms of the ASGF Contract there can be a suspension of
the obligations in the face of a legal challenge to the
underlying authority for the contract. However, also under that
provision, there would be no right to suspend for a period of 15
months in order to advance planning of the project. That 15-
month period was set as the time frame to determine how long it
would take to get an expedited process through the courts
regarding major issues involved in the Alaska Stranded Gas
Development Act.
MR. BALDWIN noted that HB 2002 also provides for a limited
statute of limitations period of 60 days for bringing "these
kinds of actions"; currently the statute of limitations period
outlined in the Alaska Stranded Gas Development Act is 120 days.
In response to a question, he relayed that the current statute
of limitations applies to bringing an action; again, HB 2002
would change AS 43.82.440 such that it would provide for
original jurisdiction in the Alaska Supreme Court, and would
shorten the statute of limitations period to 60 days. He
indicated that the administration believes that the authority
for the proposed jurisdictional change is found in the Alaska
State Constitution under Article IV, Section 1, which says that
the legislature may establish the jurisdiction of the courts;
additionally, the legislature has the authority to set limits on
the state's statute of limitations periods.
12:42:55 PM
REPRESENTATIVE GRUENBERG asked whether the Alaska Supreme Court
has original jurisdiction in any other kind of case.
MR. BALDWIN relayed that it does in recount appeals, and that
Alaska Rules of Appellate Procedure Rule 404 says that the court
can exercise original jurisdiction in aid of its appellate
jurisdiction.
REPRESENTATIVE GRUENBERG noted that Rule 404(a)(1) says:
An original application for relief may be filed with
the appellate court or a judge or justice thereof in
any matter within its jurisdiction, whenever relief is
not available from any other court and cannot be
obtained through the process of appeal, petition for
review, or petition for hearing. Grant of the
application is not a matter of right but of sound
discretion sparingly exercised.
REPRESENTATIVE GARA said he agrees with the concept of providing
a quick way to resolve "these" cases, but thinks that a better
way to accomplish that goal might be to provide for an expedited
case at the trial court level and an expedited appeal to the
Alaska Supreme Court. He also said there don't appear to be any
procedures in the Alaska Supreme Court to accommodate what's
being proposed via HB 2002.
12:47:43 PM
MR. BALDWIN said:
The way we perceive this as unfolding ..., and what we
intend, is that this be a procedure that's available
for dealing with, basically, questions of
constitutional law or questions of law. In which case
the [Alaska] Supreme Court, in many cases, has
proclaimed that it's the final arbiter of questions of
law and implied that the [Alaska] Superior Court is
sometimes like a speed bump in the way towards that
ultimate decision-making. And so, for those kind of
cases, I think ... the [Alaska] Supreme Court is well
endowed to deal with those cases, but it is possible
that there could be factual disputes that could be
brought forward in the way the cases are pled or the
issues are identified by the parties. In that
instance ..., I believe, ... the court would appoint a
master.
REPRESENTATIVE GARA asked whether there is authority in the
rules for that.
MR. BALDWIN surmised that either the court would make a rule or
the master would establish a procedure for the parties.
REPRESENTATIVE GARA said:
I just don't see the rules that allow that to
automatically happen, and if you're going to say the
[Alaska] Supreme Court shall adopt rules, again,
that's one of the reasons why I'm worried that this is
going to take longer than just an expedited trial and
appeal process, because when the [Alaska] Supreme
Court adopts rules, it takes time - they have to do
notice provisions, publication provisions. So if
you're going to set a process and say "The [Alaska]
Supreme Court has no rules for conducting a trial, no
rules for conducting discovery, no rules for
processing evidence, you shall adopt this by rule,"
and then we have to wait for the [Alaska] Supreme
Court to adopt rules, have you thought about whether
that is going to cause you delay?
MR. BALDWIN replied:
What we've thought about is looking at the [Alaska
Judicial Council (AJC)] statistics for the length of
time it takes for civil actions to move through the
courts. Those statistics basically say that if you've
got a case that involves more than $15,000 at risk,
you're looking at, at least, a year to get it through
the [Alaska] Superior Court. ... That's just the fact
of it. But if you've got a case like this, where
you've got billions of dollars at stake, we could be
involved for years at the lower court level without
any sign of relief. And we have here a situation
where the parties have agreed to perform
notwithstanding judicial challenges and spend over
$100 million (indisc.). So our intent here is to try
to advance the process, and it may be effective or may
fall into the kinds of pitfalls you're describing, but
we think this is probably the most effective and
active thing we can do to advance that cause.
CHAIR McGUIRE referenced a memorandum by Jack Chenoweth,
Legislative Legal and Research Services, regarding the Trans-
Alaska Pipeline Authorization original jurisdiction issue and
timeline, and remarked on the similarity between that mega-
project and the proposed gas line project with regard to certain
issues, dollar amounts involved, time constraints, and concerns
about challenges.
12:52:27 PM
MR. BALDWIN noted that the Trans-Alaska Pipeline Authorization
played out in the federal system, and although he can't recall
the exact timeline that occurred with that project, it was
effective in moving claims through the federal court system, and
was part of the motivation for attempting to proceed in that
same fashion at the state level via HB 2002. He added: "And we
were encouraged by the comments that we heard, on the Senate
side, from the [Alaska Court System (ACS)] indicating that ...
they would, to the extent they can, give comity to such a
statute coming from the legislature conferring that kind of
jurisdiction."
CHAIR McGUIRE asked Doug Wooliver to speak to that issue.
12:53:22 PM
DOUG WOOLIVER, Administrative Attorney, Administrative Staff,
Office of the Administrative Director, Alaska Court System
(ACS), first, with regard to an earlier question, said he is
aware of two statutes conferring original jurisdiction, one
current statute - that being the one that confers original
jurisdiction on the Alaska Supreme Court for challenges to
election recounts - and a statute related to election issues
that is no longer on the books. He said he is aware of five
reported opinions from those two statutes; in three of those
cases, the Alaska Supreme Court resolved the issues without the
appointment of a special master, but in two of those cases the
Alaska Supreme Court did appoint a special master. Typically
the distinction between those two types of cases is whether
there are depositions and discovery, the taking of evidence, and
challenges to evidence - the types of things that would happen
in a trial - and what has happened in the past in the Alaska
Supreme Court when a special master has been appointed in cases
of original jurisdiction is that the court simply appoints a
superior court judge to serve as a special master and then the
trial essentially proceeds much like a superior court trial.
MR. WOOLIVER stated that the ACS is neutral on HB 2002, neither
supporting it nor opposing it. On the issue of timelines, he
mentioned that there are constitutional restrictions on the
legislature's authority to impose timelines with regard to how
long judges have to resolve issues. Nevertheless, when
timelines are imposed, the court has worked very hard and will
continue to work very hard to meet those timelines whether doing
so is constitutionally required or not. "In this case, with or
without timelines, ... the court is very much aware of the
importance of these cases and would give them [the] appropriate
level of priority," he added.
REPRESENTATIVE GARA asked whether the Alaska Supreme Court would
have the authority to appoint a master and conduct a trial and
provide for discovery procedures without having to add language
to the bill.
MR. WOOLIVER indicated that the Alaska Supreme Court does have
that authority already and so will simply exercise its inherent
authority to conduct its proceedings to appoint a master if it
feels that that's the appropriate route to take with a
particular case.
REPRESENTATIVE GARA asked how long it would take for the Alaska
Supreme Court to adopt rules.
MR. WOOLIVER said he is not sure that the Alaska Supreme Court
would adopt rules for the purpose of this proposed legislation,
though it may, and noted that although the rule-making process
varies in length of time, it can be expedited.
REPRESENTATIVE GARA suggested that it might be better to simply
provide that the Alaska Supreme Court can "do this" by order
rather by a cumbersome rule-making process.
12:58:36 PM
REPRESENTATIVE GRUENBERG mentioned that Alaska Rules of
Appellate Procedure Rules 520 and 521 allow the courts to relax
or dispense with the other rules in the interest of justice, and
that the Alaska Rules of Civil Procedure and the Alaska Rules of
Criminal Procedure contain similar rules. He also mentioned a
couple of examples wherein the courts did just that, and
surmised that [in addition] the courts can either promulgate
rules or issue a comprehensive order.
REPRESENTATIVE GARA asked whether a citizen bringing a challenge
under this bill will be provided adequate time to prepare a
case.
MR. WOOLIVER again relayed that the ACS doesn't take a position
on statute of limitations issues.
REPRESENTATIVE GARA asked whether the legislature needs to add
"rules of fair play" into the bill so that a citizen will have
time to prepare a case.
MR. WOOLIVER pointed out that courts grant continuances all the
time, and that continuances are meant to ensure that parties
aren't forced to litigate before they are ready, and this is
typically done without specific direction from the legislature
and is simply left up to the discretion of the judge to manage
the case as he/she thinks is most appropriate. Although the
legislature could add "rules of fair play," he said he is not
sure what they would look like. Again, typically "those
decisions" are simply general case management decisions that the
judge makes.
REPRESENTATIVE GRUENBERG offered his understanding that
"discovery rules and briefing rules" and similar items are
usually found exclusively in the rules of court rather than in
the statutes themselves. He again mentioned one of the examples
he'd referred to previously, and offered his recollection that
the court had been very reasonable and had relaxed the normal
appellate rules.
REPRESENTATIVE GARA mentioned that he is considering offering an
amendment that would say the [Alaska] Supreme Court shall give
the parties adequate time to prepare and present their case.
MR. WOOLIVER, in response to questions, said that although such
language wouldn't hurt, it isn't actually necessary, adding that
he has a fair bit if faith that the court will do the right
thing. He noted that the Alaska Supreme Court is sometimes
considered to be deliberative to a fault and doesn't like to
rush cases. In response to another question, he said the ACS
has no suggestions for change to either HB 2002 or the latest
version of the Senate companion bill.
1:08:54 PM
REPRESENTATIVE COGHILL made a motion to adopt Amendment 1, which
read [original punctuation provided]:
Delete language on Page 1, line 8 through page 2,
line 2:
Insert:
Sec. 42.82.440. Judicial review. (a) The Alaska
Supreme Court has original and exclusive jurisdiction
of any judicial review of a contract developed under
this chapter. Notwithstanding any other provision of
law, a person may not bring an action challenging a
final agency decision of the commissioner of revenue
made under AS 43.82.430(c), the constitutionality of a
law authorizing a contract enacted under AS 43.82.435,
or the enforceability of a contract executed under a
law authorizing a contract enacted under this chapter
until that contract has been executed and unless the
action is commenced within 120 days after the date
that the contract was executed by the state and other
parties to the contract. A "person" in AS 48.82 is a
person as defined in AS 02.25.110
(b) In this section, "person" means an
individual, firm, copartnership, corporation, company,
association, joint stock association, of [sic] body
politic, and includes a trustee, receiver, assignee,
or similar representative.
REPRESENTATIVE KOTT objected.
REPRESENTATIVE COGHILL explained that Amendment 1 somewhat
mirrors language adopted in the Senate including retaining
current law's 120-day statute of limitations period. The items
that can be challenged within that 120 days are the final agency
decision, the constitutionality of a law authorizing a contract
enacted under AS 43.82.435, or the enforceability of a contract
executed.
CHAIR McGUIRE asked Representative Coghill to consider
bifurcating Amendment 1, given that it appears to contain three
separate concepts.
1:11:30 PM
REPRESENTATIVE KOTT expressed favor with bifurcating
Amendment 1, adding that he is not that comfortable with
following the other body. He said he is concerned that 120 days
provides too long a period of time in which to file an action,
particularly given that federal law allowed 60 days for a
challenge regarding the Trans-Alaska Pipeline Authorization, and
then drew attention to the definition of the word, "person".
REPRESENTATIVE COGHILL mentioned that there is another proposed
amendment that would address that latter issue by deleting
reference to the word, "person" and likewise the need to define
it.
REPRESENTATIVE GRUENBERG made a motion to amend Amendment 1
conceptually such that all reference to "person" is deleted.
There being no objection, Amendment 1 was amended.
MR. BALDWIN said the administration does not support Amendment
1, as amended, for a number of reasons, one being that the
administration would prefer a statute of limitations period of
60 days, and another being that the language allowing a
challenge of a final agency decision will be problematic. He
said it is the administration's view that when the legislature
authorizes the governor to sign the ASGF Contract, the issues of
final agency action are all consumed by that action and are not
something that can be litigated within a court - the final
agency action is made moot by the legislature's action. To
raise that issue via the language in Amendment 1, as amended,
may be interpreted to mean that the right of action on that
issue still exists. The fiscal interest finding, the permanent
finding, the final finding, and the preliminary finding are all
exercises of discretion by the commissioner which serve as a
recommendation to the legislature, and when the legislature
takes it up and considers it, it becomes subsumed in the
legislature's lawmaking power.
1:22:19 PM
MR. BALDWIN, in response to a question, said: "The
legislature's consideration leads to final agency determination,
which is, the legislature will tell the governor he can sign the
final contract. When the governor signs the final contract,
that's when it's final, that's when the case is ripe for
adjudication and not before."
REPRESENTATIVE COGHILL said he's heard that until "we" actually
have a final draft, that a challenge is premature. So until the
legislature has given its authority, there isn't a final
determination that can be challenged. Representative Coghill
remarked that it appears as though Mr. Baldwin is saying that
the administration doesn't want a challenge to occur after the
legislature has accepted the findings of the commissioner.
MR. BALDWIN said that he is saying that it is of questionable
validity that it's a challenge to a finding or a determination
of the commissioner which has become subsumed within
legislature's lawmaking power; this is really not a controversy
that the courts could adjudicate.
REPRESENTATIVE COGHILL surmised that Mr. Baldwin is saying that
the fact that the legislature has accepted the findings of the
administration "under these conditions" precludes a challenge to
those findings.
MR. BALDWIN attempted to clarify that the legislature's power to
consider this matter is based on its constitutional power to
make law, and when it takes these matters up and considers them,
it does so, presumably, independently, similar to what it does
with bills submitted by the administration. Such bills
generally don't remain unchanged, and so when the legislature
takes up the ASGF Contract, he is presuming, he remarked, that
the legislature will exercise its independent judgment and make
any changes it feels necessary. Thus by the time the ASGF
Contract is authorized by the legislature, any discussion
regarding the fiscal interest finding should be over with. He
offered his hope that the courts will consider any such matter
as un-judiciable and say they don't want to get involved.
CHAIR McGUIRE offered her understanding, though, that the vote
on the ASGF Contract will be an up or down vote, without any
leeway for modification; regardless of what changes are made to
legislation pertaining to the contract or project, the ASGF
Contract itself will be presented to the legislature in the form
of an ultimatum, and so there isn't really a place for the
deliberative amending process mentioned by Mr. Baldwin.
REPRESENTATIVE COGHILL concurred, and asked when is it not
appropriate to challenge the final action of the administration.
He opined that a person ought to be able to challenge [the ASGF
Contract] on its merit when it is finalized but not before then.
1:29:12 PM
MR. BALDWIN said the concept of "justiciability" deals with
whether a controversy is ripe, and that is usually articulated
as whether something is final; in this case, nothing will be
final until the governor signs [the ASGF Contract]. The problem
with the Alaska Stranded Gas Development Act is that it could be
construed to mean that there would be a final action when the
final fiscal interest finding was presented to the legislature,
and the administration doesn't want that to intervene to prevent
the legislature from being able to consider the ASGF Contract.
So to have the issue raised again via Amendment 1, as amended,
would give more credence to that kind of a cause of action than
is desired by the administration.
REPRESENTATIVE WILSON surmised that although the legislature can
only vote up or down on the ASGF Contract, if the legislature
doesn't approve of aspects of it and thus doesn't approve it,
the governor can simply negotiate for language that the
legislature would approve of. She asked whether deleting from
Amendment 1, as amended, the language regarding a challenge to a
final agency decision of the commissioner of revenue made under
AS 43.82.435 would alleviate the administration's concerns.
CHAIR McGUIRE noted that the current version of HB 2002 doesn't
contain the language that concerns the administration.
MR. BALDWIN concurred, and again expressed a preference for not
including language regarding a final agency decision.
CHAIR McGUIRE surmised that the administration prefers HB 2002
as currently written because it doesn't reference the final
agency decision and it provides for a 60-day statute of
limitations period.
MR. BALDWIN concurred.
CHAIR McGUIRE, in response to comments, surmised that Mr.
Baldwin's point is that once the contract is signed by the
Governor, then it is ripe for consideration by the courts, but
not before.
MR. BALDWIN concurred.
REPRESENTATIVE GRUENBERG remarked that agency determinations are
reviewable on the basis of whether there has been a clear error
or an abuse of discretion, whereas legislative determinations
are not generally reviewable except on the basis of
constitutionality. Having the legislature approve the contract
essentially insulates the commissioner's findings from judicial
review, he surmised.
1:37:11 PM
CHAIR McGUIRE concurred, adding: "In pushing that point of
ripeness and the place where you can challenge it to the signing
of the contract, you are changing the scope of what it is you
can challenge, because it is not an agency decision, but that
... is in keeping with the one other mega-project that we know
of in Alaska, so it's a policy call."
REPRESENTATIVE GRUENBERG noted that the Trans-Alaska Pipeline
Authorization legislation contained language stipulating that
the courts could consider a challenge based on whether an action
was beyond the scope of authority conferred by the title, and
that HB 2002 does not contain similar language.
CHAIR McGUIRE said that issue could be dealt with via an
amendment.
MR. BALDWIN, in response to comments, suggested that the
language, "the enforceability of a contract executed under a law
authorizing a contract entered into under As 43.82.435" already
addresses that issue.
REPRESENTATIVE GRUENBERG pointed out, though, that under AS
43.82.435, the legislature has become part of the process,
whereas nothing similar was provided for in the Trans-Alaska
Pipeline Authorization legislation.
1:42:07 PM
PHILLIP C. GILDAN, Attorney at Law, Greenberg Traurig, LLP, in
response to a question, pointed out that Amendment 1, as
amended, proposes to insert the phrase, "a final agency decision
of the commissioner of the revenue made under AS 43.82.430(c)"
into a statute of limitations provision, and so an unintended
consequence of removing that language might also be to remove
the aforementioned statute of limitations on that particular
issue.
REPRESENTATIVE GARA said that would not be the intention. He
expressed concern that removing such language would also
preclude a person from challenging substantive issues such as
whether the gas is actually stranded, for example, or whether
the best interest finding is permissible.
MR. GILDAN said he does not see anything "in the statute that
was put together" that would preclude a party from raising any
of those issues, though that's not to say that anyone bringing
that action would be able to get past a summary judgment or a
motion to dismiss based upon "the position that the
administration has raised." In response to a question, he
reiterated that the provision the aforementioned language would
be inserted into is a statute of limitations clause rather than
a "preclusion from challenge" clause.
REPRESENTATIVE GARA asked whether - if the goal is to ensure
that all of the aforementioned issues are decided in the same
court within the same timeframe - Amendment 1, as amended,
should be adopted as is, with nothing further removed.
MR. GILDAN said that appears to be the case. In response to
another question, he said he has no opinion regarding whether
the statute of limitations should be 60 days or 120 days, but
does believe that the changes made in the Senate are an
improvement over the original bill.
MR. GILDAN, in response to a further question, said that using
the phrase, "Notwithstanding any other provision of law," is the
safer mechanism by which to ensure that the issue of conflict of
law does not arise, though a further review of how the Alaska
Supreme Court deals with conflict of law cases might reveal
whether such a mechanism is actually necessary with regard to
potential conflicts with other Alaska laws.
MR. BALDWIN offered his belief that Amendment 1, as amended, is
negating the provision in the Alaska Stranded Gas Development
Act that declares "it to be a final agency action when ... the
final finding is fine." In response to another question, he
said that the administration is attempting to address the ASGF
Contract and the state's obligation to the co-parties of that
proposed agreement to expeditiously resolve the "marquee"
constitutional and enforcement issues surrounding the ASGF
Contract.
REPRESENTATIVE GRUENBERG suggested, then, that Amendment 1, as
amended, ought to contain language that defines the term
"contract" as used therein.
CHAIR McGUIRE pointed out that the question of whether to adopt
Amendment 1, as amended, is before the committee.
REPRESENTATIVE WILSON indicated that she still has a concern
regarding the length of the statute of limitations period.
CHAIR McGUIRE noted that that issue could be addressed via
another amendment.
1:54:54 PM
A roll call vote was taken. Representatives Coghill, Gruenberg,
and Gara voted in favor of Amendment 1, as amended.
Representatives Anderson, Wilson, Kott, and McGuire voted
against it. Therefore, Amendment 1, as amended, failed by a
vote of 3-4.
CHAIR McGUIRE indicated that HB 2002 would be held over to allow
members time to draft further proposed amendments.
ADJOURNMENT
The House Judiciary Standing Committee was recessed at 1:55 p.m.
to a call of the chair. [The meeting was never reconvened.]
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