Legislature(2019 - 2020)BUTROVICH 205
01/23/2019 03:30 PM Senate RESOURCES
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ALASKA STATE LEGISLATURE SENATE RESOURCES STANDING COMMITTEE January 23, 2019 3:29 p.m. MEMBERS PRESENT Senator Chris Birch, Chair Senator John Coghill, Vice Chair Senator Cathy Giessel Senator Lora Reinbold Senator Click Bishop Senator Scott Kawasaki Senator Jesse Kiehl MEMBERS ABSENT All members present COMMITTEE CALENDAR CONFIRMATION HEARING: Alaska Department of Natural Resources - Commissioner Corri Feige - Anchorage - CONFIRMATION ADVANCED PREVIOUS COMMITTEE ACTION No previous action to record WITNESS REGISTER CORRI FEIGE, Commissioner Designee Alaska Department of Natural Resources Anchorage, Alaska POSITION STATEMENT: Testified as appointee to the position of commissioner of the Alaska Department of Natural Resources. ACTION NARRATIVE 3:29:53 PM CHAIR CHRIS BIRCH called the Senate Resources Standing Committee meeting to order at 3:29 p.m. Present at the call to order were Senators Kiehl, Reinbold, Bishop, Giessel, Kawasaki, Coghill, and Chair Birch. 3:30:46 PM CHAIR BIRCH asked committee members introduce themselves for the first Senate Resources Committee meeting. He stated that he is a mining engineer and served in the House for a couple of years. He said he has been in Alaska a large part of his life and has been associated with the oil and gas industry for a number of years. He started working on the Trans-Alaska Pipeline System right out of school. 3:31:25 PM SENATOR KIEHL shared that he represents Senate District Q in Southeast Alaska. He introduced his staff members. He disclosed that he is a lifelong Alaskan where he has picked fish in Bristol Bay, worked tourism, and has been involved in public policy. 3:32:10 PM SENATOR REINBOLD said she was born and raised in Alaska. She introduced her staff members. She emphasized that she is a passionate believer in resource development and believes that, "Alaska does it right." She opined that Alaska is very effective in responsible resource development and is the key to the state's future to get out of the current recession. She disclosed that she is married to a petroleum engineer and her two sons are engineers as well. She said she is absolutely convinced that the state needs to be "Open for business." She emphasized that she stands with the governor in this regard. 3:32:59 PM SENATOR BISHOP said he represents Senate District C, which is roughly one-third of Alaska. He noted that Commissioner Designee Feige has been "through the process" and suggested that she relax. 3:33:24 PM SENATOR COGHILL said he represents the Fairbanks-North Pole area. He has served as a Senate Resource Committee member for some years. He emphasized that he is a fierce defender of state's rights. He said he looks forward to what the committee can do with the current administration on protecting the state's access and building on what Alaska already has. 3:33:48 PM SENATOR GIESSEL related that she chaired the Senate Resource Committee for the previous six years. She described herself as a, territorial kid just like Senator Coghill who was born and raised in Fairbanks. She said growing up in the Fairbanks area gave her a mining background because that is how Fairbanks started. She said she is also a nurse practitioner and when she presented at the Resource Development Council, she discussed how the development of the state's resources creates healthy Alaskans. 3:34:31 PM SENATOR KAWASAKI related that he served eight years on the House Resources Committee. He said he represents a Senate district in Fairbanks. He agreed with previous statements that Fairbanks has a mining history. He said he does not have any oil derricks or mines in his district but a lot of the miners and the people who work on the North Slope live there. CHAIR BIRCH introduced his committee aide and committee support staff. ^CONFIRMATION HEARING(S): CONFIRMATION HEARING: Commissioner, Alaska Department of Natural Resources 3:35:49 PM CHAIR BIRCH announced that the purpose of the meeting is to discuss the governor's appointment of Corri Feige as commissioner of the Alaska Department of Natural Resources (DNR). He read the following mission of the department: The mission of the Department of Natural Resources is to develop, conserve, maximize and use the use of Alaska's natural resources consistent with a public purpose or public interest. CHAIR BIRCH explained that DNR's major programmatic areas include agriculture, forestry, geological and geophysical surveys, mining, land and water, oil and gas, and parks and recreation. 3:36:55 PM CORRI FEIGE, Commissioner Designee, Alaska Department of Natural Resources, Anchorage, said it was a great honor to be given the opportunity to serve as commissioner for the department. She was humbled by the level of responsibility that comes with the position and the impact that it can have on the lives of Alaskans. 3:37:35 PM COMMISSIONER DESIGNEE FEIGE reviewed her background information: • Employed in the natural resource industry for over 30 years. • She is a geophysicist and an engineer by education and practice. • She has spent a great deal of time working internationally, an experience that gives a clear understanding of an important and robust, scientifically-based permitting process. • She has worked in mining, oil and gas, and geothermal, and has worked with companies that aim to deploy new technologies for energy generation or the energy-market space. • She has been responsible for global project teams and aligning the varied stakeholder interests associated with the various projects. • She was recently employed in the public sector as the director for the Division of Oil and Gas for 18 months. She said she grew up on a horse ranch in Wyoming and her father was a miner. He was the director of safety and health for a company that had several very large open-pit uranium mines. She added that her mother had a career in real estate and commercial development. She said growing up in Wyoming in her family environment influenced her career path and established her belief about what careful and diligent land and resource management looks like. It gave her an appreciation of what proper management can do to build strong communities. She said that while growing up it was not uncommon to see cattle and antelope grazing adjacent to producing oil wells or active mines. That continues to be true today. That range-mix area now has large windfarms as well. She added the following: It is that careful conservation and management of the land and the water and the resources, using management practices that are focusing on multiple uses that has allowed heavy industry to very successfully coexist with agri-business with hunting, fishing and outdoor recreation. I believe it is that kind of careful stewardship and land management that drives strong economies, it provides the jobs and it builds strong, healthy communities with a good quality of life. 3:40:22 PM COMMISSIONER DESIGNEE FEIGE listed the following priorities as commissioner of DNR: 1. To see that Alaska's land and resources are successfully managed to allow for multiple uses and to support a thriving economy. 2. To secure the remaining four to five million acres of federal land due to Alaskans since statehood. 3. Steward resource development in such a way give Alaskans opportunities today and preserve this very special place for our kids to make sure it is someplace that they want to call home and that they can enjoy the same opportunities that we have. She said that during her short tenure at DNR, she has met many of the DNR team. They are committed, passionate professionals who take their work very seriously. They are proud that their efforts contributed to the generation of over $1.4 billion in state revenue in FY2018. If confirmed, it would be a great honor to continue to lead them. 3:42:01 PM SENATOR GIESSEL noted that she met with Commissioner Designee Feige during a recent tour of the Red Dog Mine and was impressed with her knowledge of the mining industry and geology. She reminded Commissioner Designee Feige that she testified before the Senate Resources Committee in 2016 to discuss her rejection of British Petroleum's (BP) plan of development (POD) for the North Slope related to gas. That rejection was of significant concern and the subject of the meeting because it was the commissioner's job to make that rejection. Senator Giessel asked her talk about how she would receive the required annual plans of development from producers during her tenure as commissioner. 3:43:30 PM COMMISSIONER DESIGNEE FEIGE responded as follows: When we see plans of development or plans of operation come before DNR, it's important that we take a careful look at the due diligence with which the resource is being produced and I believe that was the subject and the question at the heart of the Prudhoe Bay POD that you are talking about. We have to ensure, working with our counterparts at AOGCC [Alaska Oil and Gas Conservation Commission], that the rate of development is appropriate to ensure that we are capturing the full-time value of money on those resources. And then AOGCC, as you know, has the jurisdiction for making sure that those resources are being produced in such a way that we aren't inadvertently producing too fast and leaving resource in the ground. So, I think it's very important as we are reviewing those PODs, to take a very comprehensive look at what's being presented to us. Make sure that the technical development that's ongoing makes sense for where that particular unit or development is in its life cycle; work with our compatriots as I said at AOGCC to make sure that we have diligence in how we are producing that; and don't run the risk of wasting any resource. But at the end of the day, that production is the revenue stream that comes into the state. The state receives the royalties from that particular production. We also need to be sure that we are protecting the state's revenue interest and that revenue stream coming to the state. So it is not something that we can take lightly; we have to consider them very seriously and very comprehensively. 3:45:14 PM SENATOR BISHOP asked if she serves on the Advisory and Development Council at the University of Alaska-Fairbanks (UAF) College of Engineering and Mines. COMMISSIONER DESIGNEE FEIGE answered yes. SENATOR BISHOP asked if she checked to make sure that there was no ethical violation to continue serving on the advisory board. COMMISSIONER DESIGNEE FEIGE confirmed that she looked into that and does not believe there is an ethical conflict. Her role is advisory and is aimed at helping steward programs that will attract engineering students to the state and ensure that those engineering programs are aligned with industry needs. She shared that her role on the council is very near-and-dear to her heart. She emphasized that the Advisory and Development Council is critically important given that Alaska is the only Arctic state and that engineering and resource development means so much to the state. She said "growing our own engineers" that have an Arctic engineering background in their engineering education. She opined that UAF and the University of Alaska-Anchorage (UAA) can offer a considerable amount to achieving that goal. SENATOR KIEHL recalled that former Governor Palin and the legislature at the time set a goal for Alaska's North Slope natural gas project to get to a FERC [Federal Energy Regulatory Commissioner] license. Noting that the state was closer to a FERC license now, he asked if that was still the right goal; if it was being done in the right way; and the changes she would make. 3:47:19 PM COMMISSIONER DESIGNEE FEIGE agreed that the state has a long history of attempts to monetize gas, especially from the North Slope. She noted that the original Prudhoe Bay documents show that the plan was to produce gas within a year or two after production commenced. She conceded that there have been several runs at that but agreed that the state is closer now than previous attempts. She continued as follows: In moving forward, where the current administration is at in looking at that project, we are going through a period of due diligence to understand where the project actually sits; where are we actually in terms of securing the FERC license for this program; how much more engineering work needs to be done; the data that needs to go to FERC; and what that timeline looks like. That due diligence needs to be completed before we can determine what the next best step for the project is. COMMISSIONER DESIGNEE FEIGE emphasized that that North Slope gas absolutely will be monetized. She pointed out that the North Slope barrel of oil equivalent (BOE) for the 36 Trillion Cubic Feet (Tcf) reserves is a little more than 6 billion barrels of oil equivalent. She said the project will have to be economic and must take advantage of the best that technology can provide. Applying the best technology puts the state in a stronger position to develop an economic project to move forward. 3:49:18 PM SENATOR KIEHL asked what the odds are that the North Slope gas will be monetized during her term. COMMISSIONER DESIGNEE FEIGE answered that it will take much longer than four years for the build out of the project and to secure a toe-hold in the market. SENATOR KAWASAKI referenced art. VIII, sec 2, of the Constitution of the State of Alaska. It deals with the legislature's general authority and is similar to what she is doing about utilization development and natural resource conservation, including land and water. He asked what she thinks "conservation" means in terms of both the constitution and the statutes that govern the commissioner of DNR. COMMISSIONER DESIGNEE FEIGE answered that conserving, maximizing and stewarding resource use allows for the monetization or development of one resource without it being a detriment to other resources. She asserted that not pitting one resource against another is important and balance is the key. She emphasized that Alaska must apply the best possible science and the best possible resource development understanding when projects and development programs are considered. She said working with its sister agencies at the Alaska Department of Fish and Game, and the Department of Environmental Conservation, consideration will be given to fish and wildlife habitat, clean water and clean air when projects are being constructed. 3:51:46 PM SENATOR KAWASAKI remarked that DNR deals mostly with the quantity of water, ADF&G deals mostly with habitat, and DEC deals mostly with the quality. He asked how she will work with those departments during the permitting process for an industry. COMMISSIONER DESIGNEE FEIGE explained that ADF&G will inform DNR on the water necessary to protect fish for determining the appropriate level of withdrawal. She added that DNR works with that department as well as DEC to protect habitat by managing discharge coming from any project. She detailed that DNR works with DEC to make sure the disposal path for produced waters and effluent streams are managed appropriately and are not allowed to harm the land. SENATOR KAWASAKI mentioned state parks and asked what value she would place on not developing a particular area of land that Alaskans utilize. 3:53:56 PM COMMISSIONER DESIGNEE FEIGE pointed out that parks are governed by DNR's management plan and each park unit has a series of or one specific characteristic that is particularly important. She said whatever the activity, be it a mine, oil and gas, geothermal, hydro, or any kind of development must fit within the framework of the management plan. SENATOR KAWASAKI asked her to discuss the Division of Agriculture and how she plans to enhance its viability. COMMISSIONER DESIGNEE FEIGE explained that the Division of Agriculture plays an important role developing agribusiness within Alaska. She noted that in the Fairbanks, Interior and Southcentral areas the agribusinesses involve field crops as well as livestock. She remarked that the Division of Agriculture has done a terrific job within the last few years of securing market space for farmers and crop developers within the state and giving them an avenue to get their products within major grocery store chains like Walmart, Carrs and Kroger as well as farmers markets. She opined that enhancing and growing programs that return value to the state's farmers are very important. She said there is interest in growing livestock but there are challenges associated with cost due to the state's climate. She pointed out that the division is squarely focused on addressing food safety and a food security return to Alaskans to ensure that the state has the crop and livestock that is being locally developed. She noted that the recent earthquake in Southcentral highlighted that food security is an issue in the state. 3:57:27 PM SENATOR GIESSEL noted that Commissioner Designee Feige previously was the director of the Division of Oil and Gas. She asked, from the perspective of commissioner, what she saw as the opportunities and challenges to DNR going forward and where she would like to guide the department. COMMISSIONER DESIGNEE FEIGE answered that the challenges facing DNR are to ensure that the department can operate effectively within the current fiscal climate and budget. To achieve that end a near-term challenge is to look at the department's regulations to make sure they make sense, have been modernized, and that the department is able to be responsive and timely in its work. DNR must be sure its internal processes are as efficient and streamlined as possible, the permit and authorizations that are issued are high quality and legally defensible, and that internal due diligence has been done. The opportunities are that the administration firmly believes in driving the state's economy through resource development. She said she looks forward to helping steward and champion that to attract investment back to Alaska. SENATOR COGHILL said he had three questions. The first relates to placer mining and the state and federal rules associated with water quality. He relayed that placer miners feel that they have been continually pushed to the edge on a variety of issues. He noted that work was being done on some regulation changes that push back a little. He said those from the Fairbanks area feel a duty to make sure that placer mining remains a viable part of the economy. He inquired if she had seen anything that would give placer miners reason for optimism. COMMISSIONER DESIGNEE FEIGE replied access and ensuring that placer mining claims are available is key. She opined that DEC and ADF&G do a fine job ensuring that protections are in place for that activity. She apologized that she did not have specific detail on the placer mining regulations, but she would look into it. She encouraged him to reach out to her office to start the process. 4:02:00 PM SENATOR COGHILL agreed to reach out. He pointed out that some large mines and UAF depend on placer mining activity. He raised the question of access to state lands and pointed out that she would be one of the biggest land managers in the world. He noted that he was glad to hear that she has an international perspective because people look at Alaska as an investment place. He noted that she would have to rub shoulders with the federal government because they are a bigger land owner. SENATOR COGHILL said Alaska has several protections on land management: the Alaska Statehood Act, the Alaska Constitution, the ANILCA [Alaska National Interest Lands Conservation Act], and ANCSA [Alaska Native Claims Settlement Act]. He opined that ANILCA is probably the most unique law given to any state on conservation, land management and access to lands. It is probably the least respected in Congress, but the most needed for Alaska to use. He asked if she was knowledgeable and ready to defend the state's land management and how she would use those unique protections. He opined that guidance from BLM [Bureau of Land Management] could overrule Alaska's entire statehood compact and constitution. COMMISSIONER DESIGNEE FEIGE agreed the state needs a full court press on the Department of the Interior and the federal government generally to secure the acreage due to Alaska. Maintaining a constant tension and open lines of communication is important. The first step is to press for the removal of PLOs [public land orders] and the easements that have been in place since statehood for study and classification of lands. She pointed out that a lot those lands have high prospectivity and high potential revenue value to the state as well as value for hunting, fishing, and outdoor recreation. She opined that the state is well positioned for the next 18 months with a federal administration that is willing to work with the state on the acreage it is due. The current congressional delegation will also be very helpful. She added that one thing DNR is doing in terms of state selections is ensuring that the selection of lands, like the Ambler district, have an access corridor attached. 4:06:58 PM SENATOR COGHILL expressed appreciation that she discussed access because rivers and R.S. 2477s [Revised Statute 2477] are the corridors that are used. Air transportation is also heavily used. SENATOR COGHILL addressed the third question related to mapping. He said the Division of Geological & Geophysical Surveys does an excellent job of showing Alaska's bounty, but it relies on the federal government to get accurate coordinates so the EIS [Environmental Impact Statement] process is cleaner. He opined that at the current pace, mapping will take 15 generations to complete. He asked if she has thought about how to enlist with the federal government as a better partner to improve the process. 4:08:22 PM COMMISSIONER DESIGNEE FEIGE answered that the administration has been talking with the Department of Interior about the acquisition of real-time GPS [Global Positioning System] units called CORS [Continuously Operating Reference Station] to complete the survey network of the state. She related that the current GPS network takes several hours on location to get an accurate reading and the new system would take a matter of minutes. She explained that DNR would work with the Department of Interior to receive the CORS units and the state would be responsible for maintaining them. She added that the CORS units would be available to subscribers, such as mines, who would pay a fee to use them. She said it is time to modernize surveying and to work with the Department of Interior to get the project done. SENATOR COGHILL asked what the timeframe is to acquire the CORS units. COMMISSIONER DESIGNEE FEIGE replied, ideally, it would be within the next 6 to 12 months. CHAIR BIRCH requested an explanation of the acronym PLO. COMMISSIONER DESIGNEE FEIGE answered that PLO stands for public land order. CHAIR BIRCH asked if PLOs are primarily used for a federal withdrawal. COMMISSIONER DESIGNEE FEIGE answered correct. 4:11:13 PM SENATOR BISHOP commented on her career accomplishments and extensive experience with the permitting process. He asked if she had ideas to get departments to work together and not in silos to expedite protection of state lands. COMMISSIONER DESIGNEE FEIGE said that for applicants it is important to understand what is expected, which agencies to talk to for authorizations, and the full scope of all the permits and authorizations required. It is also important to receive guidance from a direct point of contact within the various agencies. She explained that in the business world, regulatory risk goes up if there isn't an understanding of the process. Within DNR, the Office of Project Management and Permitting (OPMP) is the entity that ensures that DNR and its sister agencies work in a coordinated fashion. It is the sole point of contact that works with the applicant to coordinate both state and federal permits and authorizations. OPMP is particularly helpful in streamlining the National Environmental Policy Act (NEPA) process for the EIS. She said not all federal agencies have a codified timeline on which to work so having a representative like OPMP can be effective in keeping things from bogging down. COMMISSIONER DESIGNEE FEIGE said her intent is for DNR to create clear, concise and predictable flowcharts or frameworks for what a mining activity or development might look like. OPMP will walk the applicant through the process through frequent communication in order to deliver a project in a clear and cohesive way that the public and various stakeholders understand. SENATOR REINBOLD commented on her background, experience, education, and interagency work. She thanked her for being willing to serve the people of Alaska. 4:15:29 PM SENATOR KIEHL asked her to discuss opportunities for the department to increase in-state timber processing. COMMISSIONER DESIGNEE FEIGE said the Division of Forestry has significant staff retention issues. She emphasized that it is a priority is to secure and grow the timber industry. She relayed that the department is in the process of challenging the validity of the Roadless Rule within the Tongass National Forest. The state's position is that Alaska ought to be exempt from that rule. Pending the outcome of the litigation, which is in abeyance, the state is looking at alternative number six, which gives maximum flexibility for the state and communities. When the State wins, she said, 2.3 million acres will come to the state. While the board footage is assessed, it is critical to continue to work through the existing good neighbor timber sale policy. Several of those have been executed in the last several years and one is being cued up. This will keep the sawyers and timber industry going while the State works through the rulemaking process. She said that at the same time she would like to address the retention issues and bring real talent back into the forestry program. She acknowledged that the division director has been very challenged the last several years. She noted the potential changes to regulations, one of which would streamline the process for standing up a timber sale. All the changes being discussed are dedicated to strengthening commercial forest activities within the state and ensuring that the necessary board footage is available. 4:19:01 PM SENATOR KIEHL asked if the Division of Forestry has the resources needed to make sure the Alaska Forest Practices Act is followed. COMMISSIONER DESIGNEE FEIGE admitted that the department and division is challenged to do the best it can with the resources that it has. She said what is important for forestry and good timber practices is that the division is taking advantage of commercial sale opportunities where "fire breaks" are needed, where there are spruce bark beetle outbreaks in the Susitna area, and making the "fire threat" timber is harvested for commercial revenue. SENATOR KIEHL related that his constituents have observed what they perceive to be a significant shift in where the Division of State Parks is putting its resources. State parks rangers have shifted their focus from multiple missions to a very strong emphasis on their law enforcement function. Their perception is that park users are seeing a loss of some services and the ability to enjoy the park responsibly. He asked her to comment on where part rangers' focus should be. COMMISSIONER DESIGNEE FEIGE explained that state part rangers' primary role is public safety. They educate, protect resources, and enhance the park experience. However, because they are law enforcement officials they may act accordingly if they witness an infraction of the law. She mentioned an earlier meeting and reiterated that if a ranger is shooting radar on an access road into a park, they are probably in the wrong line of work. 4:23:03 PM SENATOR KIEHL asked her to share her insights into the direction of the Mental Health Trust Land Office (MHTLO), which is housed within DNR, because entities within his district have had difficulty interacting with that office. on commercial sales. COMMISSIONER DESIGNEE FEIGE clarified that MHTLO is housed within DNR for continuity and communication purposes, but it is guided by the Mental Health Trust Enabling Act and the settlement of litigation that reconstituted the trust land office and the Land Grant Trust. She said the MHTLO does not report directly to the commissioner of DNR but rather up through the Alaska Mental Health Trust Authority Board of Trustees to the CEO. DNR does work with the trust to communicate areas where there are land swaps, functioning as a conduit to the Department of the Interior. With regard to the commercial sales Senator Kiehl referenced, DNR can assist when there are conflicts or breakdowns in communication. She explained that the trust has a direct mandate to manage only for the benefit of its beneficiaries, which is probably responsible for some of the difficulties associated with the sale and use of trust properties. DNR's commitment is to assist the trust monetize its land, serve as a conduit for communication, and coordinate with other agencies. SENATOR KIEHL noted that in the past when significant questions arise regarding oil and gas the legislature observes the dance between the commissioners of DNR and the Department of Revenue and the attorney general. He asked her philosophy of DNR's role when those issues come up and the three departments work through them while serving their missions and all Alaskans. 4:27:04 PM COMMISSIONER DESIGNEE FEIGE replied DNR wears two distinct hats as a landowner lessor and a regulator agency. She opined that for a healthy DNR and healthy oil and gas industry it is important to have some tension between those roles. As a landowner lessor, DNR wants to see the resources developed and to recoup the royalties and revenues from that development. As a regulatory agency DNR has the responsibility to provide good oversight, due diligence, and provide protection and conservation in a balanced way. Through the Division of Mining, Land and Water, DNR is responsible for access corridors; whereas through the Division of Oil and Gas, DNR is responsible for surface land use, development of exploration programs, or for the development of units. Through the Office of Project Management & Permitting (OPMP), DNR serves the role of coordinating state and federal permits to ensure timely development and standup of programs and new production. A healthy bit of tension within DNR ensures that everyone is fulfilling those roles. With regard to coordinating with other agencies, DNR brings the royalty into the state through the Royalty Accounting Section within the Division of Oil and Gas. The royalties are distributed to the Permanent Fund and the undesignated general fund. The Department of Revenue is responsible for tax collection. CHAIR BIRCH thanked Commissioner Designee Feige for the well- presented background qualification summary. 4:30:52 PM At ease. 4:31:01 PM CHAIR BIRCH called the committee back to order and opened public testimony. 4:31:16 PM CHAIR BIRCH closed public testimony. 4:31:29 PM CHAIR BIRCH stated that in accordance with AS 39.05.080, the Senate Resources Committee reviewed the following and recommends the appointment be forwarded to a joint session for consideration: Commissioner of the Alaska Department of Natural Resources Corri Feige - Anchorage CHAIR BIRCH reminded members that this does not reflect an intent by any of the members to vote for or against the confirmation of the individual during any further sessions. 4:31:56 PM At ease. 4:33:36 PM CHAIR BIRCH called the committee back to order. 4:33:58 PM There being no further business to come before the committee, Chair Birch adjourned the Senate Resources Standing Committee meeting at 4:33 p.m.
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