Legislature(2003 - 2004)
03/01/2004 09:05 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 01, 2004
9:05 AM
TAPES
SFC-04 # 24, Side A
SFC 04 # 24, Side B
CALL TO ORDER
Co-Chair Lyda Green convened the meeting at approximately 9:05 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Con Bunde, Vice Chair
Senator Fred Dyson
Senator Ben Stevens
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: JOE BALASH, Staff to Senator Gene Therriault; ZACH
WARWICK, Staff to Senator Gene Therriault; JANE ALBERTS, Staff to
Senator Con Bunde and Aide, Senate Labor and Commerce Committee,
DOUG LETCH, Staff to Senator Gary Stevens; PAM LABOLLE, President,
Alaska State Chamber of Commerce
Attending via Teleconference: From Offnet Sites: DICK MYLIUS,
Deputy Director, Division of Mining, Land and Water, Department of
Natural Resources; JOANNE GRACE, Senior Assistant Attorney,
Opinions, Appeals, & Ethics, Office of the Attorney General,
Department of Law; TINA CUNNING, State-Federal Issues Program
Manager, Office of the Commissioner, and Co-Chair, State Navigable
Waters Team, Department of Fish and Game; RON SOMERVILLE, Resource
Consultant to the House of Representatives and Senate Majority;
JILL JAECKEL, Legal Assistant, Spenard Builders Supply; SCOTT KING,
Cornerstone Credit Services
SUMMARY INFORMATION
SB 305-ASSERTING STATE TITLE TO SUBMERGED LAND
The Committee heard from the bill's sponsor, the Department of
Natural Resources, the Department of Law, the Department of Fish
and Game, and a resource consultant. The bill reported from
Committee.
SB 295-EXTEND NAVIGABLE WATERS COMMISSION
The Committee heard from the sponsor, the Department of Natural
Resources, and a Resources Consultant. The bill reported from
Committee
SB 194-LIQUOR DELIVERED TO HOTELS/CRUISE SHIPS
The Committee heard from the bill's sponsor, adopted a committee
substitute, and reported the bill from Committee.
SB 299-BAD CHECK CHARGE
The Committee heard from the sponsor, took public testimony, and
reported the bill from Committee.
SB 203-ADMINISTRATIVE HEARINGS/OFFICE
This bill was scheduled but not heard.
SENATE BILL NO. 305
"An Act relating to state ownership of submerged land
underlying water that was navigable at the time Alaska
achieved statehood."
This was the first hearing for this bill in the Senate Finance
Committee.
JOE BALASH, Staff to Senator Gene Therriault, the bill's sponsor,
read the Sponsor Statement as follows.
With the exception of withdrawn federal lands, at statehood in
1959, Alaska received title under the equal footing doctrine
to all submerged lands under state navigable waters and marine
waters out to three miles. Unfortunately, the federal
government has been slow to concede any navigability
determinations. Since Alaska entered the Union, the federal
courts have determined fewer than 20 rivers navigable. Unless
the state is pro-active in asserting its claims, it stands to
lose up to 60 million acres of its statehood entitlement.
In some cases, the federal government has used every possible
legal tactic under the Federal Quiet Title Act to impede the
state's assertion of ownership. The Black, Kandig and Nation
Rivers in northeast Alaska are examples. These three Rivers
clearly meet the criteria established by the federal courts
for determining navigability in Alaska
Although no one contested the state's claim that these streams
met the federal criteria, this case took nine years and
millions of state and federal dollars to litigate. Eventually
the state won two of the three cases. The third was resolved
by a Federal Recordable Disclaimer of Interest in 2003.
In addition, prior to 1989 the federal government applied
incorrect standards to determine navigability and may have
mistakenly conveyed state-owned land to Native corporations,
clouding the title to hundreds of thousands, if not millions,
of acres. This is a critical topic as Congress considers a
deadline for completing the land selection and conveyance
processes.
Contributing to the problem is the lack of a reasonable and
efficient way for the state to secure title to its submerged
lands. SB 305 takes three steps to begin the process of
identifying state claims.
First, SB 305 provides to all parties that the state is laying
claim to all submerged lands, except those withdrawn at the
time of statehood, that meet the standards and criteria
established in the Submerged Lands Act and in various federal
court decisions.
Second, it provides authority for state agencies to identify,
in accordance with the appropriate federal and state laws,
which waterbodies the state claims as navigable and non-
navigable. This will help the state clarify criteria for
identifying navigable waters, address conflicts involving
clouded titles due to inaccurate conveyances from the Bureau
of Land Management, and more clearly delineate its title
claims.
Third, the bill directs the Department of Natural Resources to
give notice to all private property owners, including native
corporations created under the Alaska Native Claim Settlement
Act, that may have received title to lands that could have
erroneously included state submerged lands in their
conveyance. This is critical to resolve future problems
regarding mineral development, gravel extraction, access and
other related land uses.
This legislation is only one step for the state to eventually
resolve the title disputes over its submerged lands, and deals
only with the issue of state title to submerged lands. It does
not address conflicts over federal fish and wildlife
management in state navigable waters created by federal
reserved water rights claims.
Mr. Balash concluded that, "this is primarily an issue where
federal agencies have used incorrect definitions and means of
conveying title to primarily the Native corporations." He continued
that, "this is just an assertion of the State's claims and an
effort" to put on record that the State does not "concede any of
our title to anybody."
Co-Chair Green questioned whether conceding title, which has been
incorrectly conveyed, to one group might set a precedent whereby
the State would be required to concede title to other groups.
Mr. Balash responded that "the real question" is establishing that
the water was recognized as being "navigable at the time of
Statehood." He shared that "the knowledge, the files, the criteria
upon which that is all based in order to stake that claim is
getting old." He exampled that "the people who know about
particular bodies of water are soon to be passing," and in that
case, the State "would lose the ability to regain that knowledge
and reclaim that title in a Court or a federal agency." He
furthered that were the State to not pursue the issue now while the
information is still available, the Court might decide that since
the State "didn't care about it for the last 45 years, why do you
care about it now."
Senator Olson asked regarding the State's assertion "that incorrect
standards were being used" by the federal Bureau of Land Management
(BLM), whether there is a definition of what constitutes navigable
waters or whether the contrary opinion is the result of a
difference of opinions as to what navigable waters are.
Mr. Balash reiterated the State's position that the BLM used
incorrect definitions. He informed that "the Courts have delineated
what a navigable waterbody is." Continuing, he pointed out that
some conveyances were granted "prior to 1989, before some of that
case law" was determined, and, he voiced that this "would indicate"
that some of the State's title have been incorrectly conveyed to
Native corporations.
Mr. Balash stated that one component of the Alaska Native Claims
Settlement Act was that each of the Native corporations was awarded
a certain acreage allotment, and he continued, any of the submerged
land acreage that was incorrectly conveyed "counted against that
total acreage." He noted that were the State to reclaim title to
those submerged lands, that acreage would be removed from the
allotment, and the Native corporations would be entitled "to make
additional selections in the uplands or in other parts of the
State."
Senator Olson surmised therefore "that the Native corporations are
not going to be happy with this legislation."
Mr. Balash responded that this might not be the case as a Native
corporation might be able to select more acreage. However, he noted
that conflict might arise were a Native corporation not desire to
relinquish the land. He noted that the Sealaska Native Corporation
has been reviewing this legislation to determine any negative
consequences; however, he noted that no information has, of yet,
been provided.
Senator Hoffman commented on the State's assertion that the federal
government has been "dragging its feet in the conveying of the
State's submerged lands" and that, as a result, the State has had
to resort to taking expensive legal action. He asked whether the
State would be required to continue the litigation process were the
federal government to continue its status quo approach to the
issue.
Mr. Balash replied that there are numerous courses of action. He
noted that the federal Department of the Interior and the BLM are
working with the State to review cases for the Federal Recordable
Disclaimer of Interest process. He stressed that because litigation
is difficult, expensive, and time consuming, other legislation
would be forthcoming to establish a State/federal Navigable Waters
Commission, which would address the issue "in an expedited manner."
He shared that there are options that the State and federal
government could use to try and speed up the process; however, he
reiterated that this legislation is the first step in clarifying
the State's position to future federal Courts and agencies in
regards to the State's claim to submerged lands.
Senator Hoffman noted that the year 2009 has been specified as the
target date to identify all State submerged lands.
Mr. Balash responded that the goal is to identify as much of the
land as possible by that date. He noted, however that the submerged
land issue is not being addressed on the federal Congressional
level at this time. However, he noted that the Navigational Waters
Commission legislation has been previously addressed at the
Congressional level, and he continued, the hope is that that
Commission would be established "sooner rather than later."
DICK MYLIUS, Deputy Director, Division of Mining, Land and Water,
Department of Natural Resources testified via teleconference from
an offnet site and noted that he is available to answer questions.
JOANNE GRACE, Senior Assistant Attorney General, Opinions, Appeals,
& Ethics Section, Office of the Attorney General, Department of
Law, testified via teleconference and clarified, in response to
Senator Hoffman's questions, that while the State was granted the
title to its submerged lands at Statehood, the issue "is to
determine what belongs to the State and what doesn't." She noted
that, before 1989 when the BLM was applying incorrect standards, it
might have conveyed some submerged lands to Native Corporations
"that the United States did not actually have title to convey." She
continued that BLM's position was that the lands being conveyed to
the Native corporations were designated as non-navigable, and that
the Native corporations would be charged acreage for that land. She
clarified, however, that were these lands determined to be
navigable, the Native corporations' concern is that "they were
charged acreage for land that they did not actually receive, and if
the conveyances are all completed by the year 2009, then the Native
corporations would lose the opportunity to go back to BLM and say
you purported to convey this submerged land to us when you were
using incorrect standards, and we would like you to go back and
reconsider using the correct standards so that we can be credited
with the acreage that we should have gotten for those submerged
lands."
Senator Hoffman voiced that numerous Native corporations received
"over-selections" of lands, and therefore, he continued, the
assertion that they would be losing land "may not be exactly true,
as it depends on how large their over-selections are." He shared
that the corporation he is a member of has an over-selection of
approximately ten percent. Therefore, he opined, when the submerged
land identification is completed in 2009, "many of the Corporations
would still get their land."
Co-Chair Green asked whether a wrongful conveyance would place "a
cloud on the title."
Senator Hoffman affirmed that while there would be a cloud on the
title and the land would be withdrawn from the corporation, the
over-selection would compensate for the removed land.
RON SOMERVILLE, Resource Consultant to the House of Representatives
and Senate Majority, testified via teleconference from an offnet
site and noted that during the drafting of SB 305 and SB 295, one
of the issues of discussion was that "only the corporations could
request the clarification from BLM" regarding the navigability
issues. He asserted that the State could not make this request.
Therefore, he continued, the encouragement is to the Native
corporations to get that process going "if the villages want to do
that."
TINA CUNNING, State-Federal Issues Program Manager, Office of the
Commissioner, and Co-Chair, State Navigable Waters Team, Department
of Fish and Game, testified via teleconference from an offnet site
to note that there are some corporations that "are closer to" their
entitlement allotment than others. She shared that one of these
corporations had requested BLM "to review some of the waters"
conveyed to it, and the determination was that the land "was
incorrectly included in the conveyances." She stated, therefore,
that some corporations would benefit from the inclusion of the
upland acreage language.
Co-Chair Green asked whether the time frame of 180 days, as
identified in Sec. 3, line 7, that reads as follows, would be
sufficient.
NOTICE TO NATIVE CORPORATIONS. Within 180 days after the
effective date of this Act, the commissioner of natural
resources shall send a written notice of the state's claim of
ownership of submerged land described in AS 38.04.062(a), as
enacted in sec. 2 of this Act, to each regional corporation
established under 43 U.S.C 1607 (sec. 8, Alaska Native Claims
Settlement Act). The purpose of the notice is to assert the
state's ownership interest in submerged land that may have
been erroneously included in a conveyance or patent to a
regional or village corporation from the federal Bureau of
Land Management.
Mr. Balash stated that, "this is a generic notification to be sent
out to potential landowners who might have been wrongly conveyed
lands." He stated that the "language was developed in consultation
with the State agencies, and therefore, he stated, any concern
about this timeframe would have, at that time, been addressed.
Co-Chair Green asked for confirmation that the notice would be of
generic nature as opposed to being required to delineate each
parcel of land.
Mr. Balash confirmed that is correct. He stated that the 2009 date
is the date targeted by Alaska's Congressional delegation and the
Office of the Governor; however, he noted that the Congressional
legislation regarding this issue has not yet been adopted.
Senator Dyson moved to report the bill from Committee with
individual recommendations and accompanying fiscal note.
There being no objection, SB 305 was REPORTED from Committee with
fiscal note #1 in the amount of $186,500 from the Department of
Natural Resources.
SENATE BILL NO. 295
"An Act extending the termination date of the Navigable Waters
Commission for Alaska; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
ZACH WARWICK, Staff to Senator Gene Therriault, stated that the
Joint Federal and State Navigable Waters Commission for Alaska,
which would consist of seven State and seven federal members, was
established by the Legislature in 2002 "to expedite the process of
acquiring legitimate title to the State's submerged lands; to
determine which bodies of water are navigable or non-navigable; and
to provide recommendations to the State and federal government
concerning ways to improve the process of making navigability
determinations in ways to acquire title to the State's submerged
lands judiciously and expeditiously." He informed the Committee
that while the Alaska Commission members were appointed, the
accompanying federal legislation was not adopted and therefore, no
federal members were appointed. Continuing, he stated that
extending the life of the Commission until September 16, 2006 would
provide an opportunity for Alaska's Congressional delegation to
further the effort for the creation and authorization of the
Commission on the federal level.
Senator Bunde asked the fiscal impact of the legislation.
Mr. Warwick responded that while an indeterminate fiscal note
accompanies the legislation, it is estimated that, were the federal
authorization approved, the fiscal impact would range between
$180,000 and $200,000.
Senator Hoffman asked why this legislation is limited to extending
the years of the Commission rather than including a resolution
requesting Alaska's Congressional delegation to further the federal
legislation efforts.
Mr. Warwick understood that a separate resolution, sponsored by
Senator Ralph Seekins, is currently in the Senate Rules Committee
and would be advanced to the Senate floor session. He stated that
while the State's delegation is discussing the issue, the federal
Commission legislation has not advanced beyond the one hearing that
was conducted in 2002.
Co-Chair Green summarized that this legislation would extend the
termination date.
DICK MYLIUS, Deputy Director, Division of Mining, Land and Water,
Department of Natural Resources, testified via teleconference from
an offnet site regarding the indeterminate fiscal note. He stated
that no expenses would be incurred at the State level until the
Commission is established at the federal level. He noted that the
amount of State funding required at that time would also be
dependent upon the level of federal funding allocated to the
Commission.
RON SOMERVILLE, Resource Consultant to the House of Representatives
and Senate Majority, testified via teleconference from an offnet
site. He agreed that the key to the establishment of the Commission
is dependent on the federal government participation as well as the
Commission's addressing of the issues outlined by Mr. Warwick in
his opening remarks.
Senator Dyson moved to report the bill from Committee with
individual recommendations and accompanying fiscal note.
There being no objection, SB 295 was REPORTED from Committee with
indeterminate fiscal note #1 from the Department of Natural
Resources.
SENATE BILL NO. 194
"An Act authorizing delivery of up to two bottles of
distilled spirits to a cruise ship passenger or hotel
guest."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Green explained that a committee substitute that expands
the original legislation to include the delivery of beer, in
addition to the delivery of spirits, has been provided for
consideration.
DOUG LETCH, Staff to Senator Gary Stevens, the bill's sponsor,
agreed that expanding the bill to address a broader range of
alcoholic beverages would prevent the bill from having to be
brought back before the Legislature "year after year" to address
the issue.
Senator B. Stevens moved to adopt committee substitute, Version 23-
LS1015\D as the working document.
There being no objection, the Version "D" committee substitute was
adopted as the working document.
Mr. Letch shared that the Alcohol Beverage Control Board (ABC) has
determined that the inclusion of the beer language would encompass
other malt beverages such as hard lemonades and iced teas. He also
noted that ABC finds that the 40-ounce specification would be
appropriate; however, he noted that the sponsor would be willing to
discuss changing that limitation were the Committee to so desire.
Senator Hoffman asked whether 40-ounces would equate to three
bottles of beer.
Mr. Letch responded that this would equate to one large bottle of
beer or a few bottles of beer.
Senator Hoffman asked whether a size definition of bottled
distilled spirits has been established.
Mr. Letch stated the ABC Board would be making that determination.
He noted that the Board would also be willing to address the beer
quantity, "within its regulatory powers," were the Committee to
decide to remove the 40-ounce specification.
Senator Dyson informed the Committee that efforts are ongoing by
the Pacific Northwest Economic Region to encourage the cruise ship
industry to utilize a variety of local west coast food products on
their menus, in addition to beers and other spirits.
Senator B. Stevens moved to report the committee substitute from
Committee with individual recommendations and accompanying fiscal
note.
There being no objections, CS SB 194(FIN) was REPORTED from
Committee with a zero fiscal note, dated January 12, 2004, from the
Department of Public Safety.
SENATE BILL NO. 299
"An Act relating to a charge for a bad check."
This was the first hearing for this bill in the Senate Finance
Committee.
Senator Bunde, Chair of the Senate Labor & Commerce (L&C)
Committee, explained that this legislation is an attempt to address
the issue of bounced checks. He noted that current law specifies a
business could collect up to a $25 penalty fee in the case where a
person writes bad checks to a business. Continuing, he shared that,
on occasion, a business has been challenged to provide proof that
its penalty fee is warranted, and he commented that this
legislation has been drafted to address this situation because
bring required to honor the documentation request incurs additional
expenses to a business. Therefore, he summarized that this
legislation would increase the bad check penalty from $25 to $30
and would remove the legal requirement to provide cost
documentation.
Co-Chair Green noted that current statute limits the penalty fee to
$25, and she confirmed that the Court has overturned some of the
penalty fees.
JANE ALBERTS, Staff to Senator Con Bunde and Aide, Senate Labor &
Commerce Committee, noted that this bill would establish a set fee
for "a bounced or insufficient" funds check. She noted that the
bill would also make the collection process "less cumbersome" for
businesses. She mentioned that "15 percent of bad checks that are
written are by innocent customers who are unaware of their fund
level at the time," and who make good on their checks within a day
or two of notification. She pointed out that "42 percent of bad
check writers are chronic bad check writers who often take more
than 90 days" to rectify the problem. She also noted that 45
percent of all bad checks written are unrecoverable. She stated
that this legislation would be "a clear deterrent" to writing a bad
check. In addition, she noted that without relief, some businesses
might decline to accept checks as a form of payment due to the
"hassle" of the collection process. She noted that the legislation
"is widely supported" by Alaskan businesses, as witnessed by the
number of letters received regarding it. She also noted that the
fee for bad checks has not been increased in 18 years.
Co-Chair Green pointed out that a $30 bad check fee would align
with the fees charged in other states, according to the handout
titled "Service Fees for Returned Checks" [copy on file] that
Senator Bunde has provided.
Senator Olson asked whether there is any opposition to this
legislation.
Ms. Alberts responded that no one has voiced opposition.
JILL JAECKEL, Legal Assistant, Spenard Builders Supply, testified
via teleconference from an offnet site in support of the bill. She
declared that businesses suffer losses "when the profit from a cash
sale is dramatically reduced" because of a 90-day delay in payment
or is uncollectible as a result of a bad check.
Co-Chair Green asked Spenard Builders Supply's policy when a person
refuses to make restitution on a bad check.
Ms. Jaeckel shared that Spenard Builders Supply seeks civil
penalties when attempting to collect a large check and resorts to
filing small claims cases. She continued that were the business
"lucky enough to be able to locate" the individual, they seek a
court judgment and collect from the offender's Permanent Fund
Dividend (PFD) check if one is applied for. She stated that this
process "is trickier" than when dealing with someone who has filled
out a credit application because less information is available.
Co-Chair Green asked whether in current law, there is "intent
language" which might be detrimental to the collection process
because the intent language might specify that proof must be
provided to show that the offender knowingly wrote a bad check.
Ms Jaeckel responded that this might be applicable to a fraud issue
in which there is criminal intent.
Co-Chair Green asked whether, in a fraud case, a specific monetary
level must be involved.
Ms. Jaeckel responded that when Spenard Builders Supply has had to
deal with a situation in which a large check "has been clearly
written fraudulently and clearly are a criminal case," its chance
of collection "are so low," that "if there is criminal action and
if there is restitution that is awarded through those court cases,"
the business might collect "ten cents on a dollar eight years from
now."
Senator Hoffman asserted that part of the difficulty in collecting
on bad checks lies with the fact that financial institutions limit
the number of times a bad check could be presented for processing
to two times. He asked whether this is an issue.
Ms. Jaeckel affirmed that a bad check could only be presented for
payment twice. However, she noted that the check could be presented
at the originating bank and a cashier's check for the amount owed
could be gotten were funds in the account. She expressed however
that this increases the collection process expense.
Senator Hoffman asked whether addressing the number of times that a
financial institution would be required to process a check could be
considered.
Ms. Jaeckel replied that this would result in additional expenses
as financial institutes charge up to $30 each time an insufficient
fund check is submitted and the funds are not there.
Senator Hoffman declared that this expense might serve as a
disincentive to individuals to write bad checks.
Ms. Jaeckel responded that this does not seem to be "a big concern"
to individuals who knowingly write bad checks. She stated that it
would serve to get "them further in the hole, and in a worse
situation" and might make it more difficult for a business to be
able to collect. She opined that while it would not deter those who
knowingly write bad checks, it might deter those 15-percent who
unknowingly write a bad check. However, she noted that those are
the ones whose checks normally clear the bank the second time they
are submitted.
Co-Chair Green asked who is responsible for paying the insufficient
funds bank fee.
Ms. Jaeckel clarified that both the bad check writer and the
business submitting the check are charged a fee, although she noted
that the person responsible for writing the bad check is charged a
higher fee than the business.
Co-Chair Green summarized therefore that both the business and the
person writing the bad check would be penalized.
Ms. Jaeckel concurred.
SCOTT KING, Representative, Cornerstone Credit Services, LLC,
testified via teleconference from an offnet site in support of the
bill. He stressed that his company's interest in this legislation
was prompted by a recent District Court decision in Fairbanks that
specified that businesses would be required to "document and
account for all costs incurred" in their efforts to collect on a
bad check.
Mr. King continued that the current $25 fee assists businesses in
covering internal expenses associated with the collection process
including such things as merchants' bank fees, personnel costs,
letters, telephone calls, accounting documentation, and fees paid
to collection agencies. He stated that the District Court's
decision would require a business to document each of these
activities and that only the activities documented could be
included in the collection assessment fee. He communicated that
important changes in the bill include the elimination of the words
"for costs incurred" from State statutes so that a business would
not be required to document the costs incurred from collecting a
bad check and the increase of the maximum fee from $25 to $30 to
bring it more in line with other states' fees and to adjust for at
least 18 years of unadjusted inflation.
Mr. King stated that his company, which provides check verification
and check collection services, represents more than 2,000
businesses in the State who would be negatively affected by the
District Court decision.
SFC 04 # 24, Side B 09:53 AM
Mr. King spoke of the volume of business letters that have been
submitted in support of this legislation, and he urged the
Committee to support the bill.
PAM LABOLLE, President, Alaska State Chamber of Commerce, testified
to the Chamber's support of the bill. She shared that the Chamber's
members in their collection efforts have experienced costs
exceeding the currently allowed $25, and even the proposed $30 fee.
She reiterated that the District Court's ruling has necessitated
the proposed changes in this law, as it would have "great" negative
impact on businesses.
Co-Chair Green asked whether the Chamber's members have any other
bad check issues that should be addressed.
Ms. LaBolle responded in the negative.
AT EASE 9:55 AM / 9:55 AM
Ms. Alberts informed that currently bank fees charged to businesses
for processing bad checks range from $2 to $25 dollars.
Co-Chair Green asked for that information to be provided to
Members.
Senator Bunde moved to report the bill from Committee with
individual recommendations and accompanying fiscal note.
There being no objection, SB 299 was REPORTED from Committee with
zero fiscal note #1 from the Department of Administration.
ADJOURNMENT
Co-Chair Lyda Green adjourned the meeting at 09:57 AM
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