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Archive for the ‘Energy Policy’ Category

The Obama Administration set records on expansive and expensive new environmental regulations.  In one example, compare the 56 federal implementation plans forced on states during the Obama years to the 5 total imposed by the combined Clinton and Bush presidencies.  Unfortunately, the Obama years also yielded the slowest regulation driven environmental gains in decades, 2% in seven years compared to 2% a year from 1980 to 2009.

The primary force for a better environment turned out to be innovations in natural gas production, a development the administration and environmental groups fought, that was carried out by private industry on private lands. Natural gas prices dropped 80% as producers figured out how to use horizontal drilling and hydraulic fracturing to release tightly held gas from shale formations.  Falling natural gas prices dragged down the price of coal and oil that shows up in lower electricity, gasoline, and heating costs, and is saving families over $1500 a year in lower energy prices!  Fuel switching from coal to cleaner burning natural gas at power plants added almost another 5% improvement in air quality.

Obama era regulations targeted three primary substances; ground level ozone and fine particles the Environmental Protection Agency claimed posed a health hazard, and carbon dioxide the EPA linked to rising global temperatures.  Ozone levels improved by 1% a year up to 2009, but only improved 1% in seven years under Obama.  Fine particles improved 3% a year up to 2009, but only improved 3% over seven years under Obama.  The Obama regulatory effort reduced carbon dioxide emissions by an amount that will lower global temperatures by 0.01°C by 2100, essentially zero impact!  Carbon dioxide reductions from power plants can be attributed 70% to fuel switching for lower prices, and 30% to new regulations.

EPA cost benefit analysis showed new regulations would cost tens of billions of dollars a year to implement.  Free market sources, such as, the US Chamber of Commerce, estimated the cost to more likely be hundreds of billions of dollars.  Either way, a lot of money for marginal air pollution improvements.

The problems don’t end with air pollution regulations.  Voluntary multistate programs to improve water quality in areas such as the Chesapeake Bay brought Water Quality Index improvements of 25-percent from 1986 to 2010. That improvement ended after the voluntary agreement became a regulation in 2010 requiring states to institute mandatory steps, such as, storm water management regulations.  No water quality improvement, but those regulations have managed to increase new home prices by $10,000 each in the Chesapeake watershed.

Aggressive requirements in motor vehicle miles per gallon standards were also mandated.  The latest information shows average MPG for the nations motor vehicle fleet actually dropped from 17.6 MPG in 2009 to 17.5 MPG in 2014.  The mandated MPG standards were unreachable and will likely be scaled back to a more practical level by the Trump Administration.

The Obama Administration, often through procedural short cuts and with support from questionable science, relied on ineffective regulations to “improve” the environment.  Predictably, results were poor.  We look forward to the Trump Administration rolling back bad regulations, and following the rule of law.  We expect a focus on actual improvements to the environment. This could include increasing infrastructure spending on securing drinkable water (remember Flint?), improving sewer systems, and reclaiming brownfields and Superfund sites.  Under the new administration, infrastructure spending could double without increasing the budget by using sources such as multi-billion dollar fines from the Volkswagen settlement for fudging tail pipe emissions, and other large settlements instead of handing them over to the Sierra Club and Greenpeace, favored interest groups of the Obama EPA administration.

For more details on air quality improvements see our study “Sorting Root Causes of Air Quality Improvements 2009 to 2015” at https://criblog.wordpress.com/2017/02/12/sorting-root-causes-of-air-quality-improvements-2009-to-2015/ .

David T. Stevenson, Director, Member Trump Administration EPA Transition Team

E-Mail: David Stevenson@CaesarRodney.org

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Delaware and Maryland utility commissions have one more shot to convince electric grid regulators to lower the cost of the Artificial Island Transmission Line.  Governors Markell and Hogan have joined forces to fight the burdensome cost of this project, but a new approach is needed.  If we want to win this fight we need to negotiate using an alternative approach.  More local power generation could replace the transmission line.  This could lead to lower electric rates instead of higher rates, to a more robust economy, and to improved electric reliability.

 

The Artificial Island project is a technical response to importation of power.  Maryland and Delaware are the second and fifth highest electricity importing states in the country.  In 2015 Maryland imported 41% of its power, and Delaware imported 32%.

 

Importing power lowers electric grid reliability.  It also adds cost.  Regional grid manager, PJM Interconnection, is responsible for maintaining reliability with a combination of pricing mechanisms, and transmission line policy.  There are line charges to compensate for longer power transmission distances, congestion charges to encourage lower peak demand, and capacity charges to encourage more local generation.  See the graph below to see how these premiums can go.  These premium charges roughly equal the added monthly costs of the proposed transmission line, are already added to our electric bills, and most of the cost will continue even if the new transmission line is built!

 

Cost Premiums in Delaware & Maryland for Grid Congestion and Transmission Cost

dave stevenson Artificial Island

Source: PJM Interconnection Real Time Statistics

So, how do we boost local generation?  Start by asking electric generation and distribution companies already invested in the state what state policies would encourage more generation.  State policies led to lower local generation in very real ways and changed policies can help reverse the trend.  Prepare to kill some sacred cows when we hear the answers.

 

Maryland and Delaware are the only two states in the thirteen state PJM region with a tax on carbon dioxide emissions from power plants.  The cost of that tax is passed on as a hidden tax on electric bills.  Our generating facilities burning coal and natural gas have to charge more, and lose bids to supply power.  Consequently, local power plants operate less frequently.  For example, the Indian River power plant in Millsboro, Delaware, is only operating 20% of the time compared to an average of 55% for coal fired plants nationally.

 

The tax was designed to reduce emissions but all it has really done is shifted the emissions out of state, and discouraged power plant construction locally.  The revenue was supposed to be used for energy efficiency and renewable energy projects, but after a decade of work only a quarter of annual tax revenue is being spent on such projects.  Ending the tax would lower electricity prices and would allow more power to be generated locally.

 

In Delaware we only need to build the equivalent of three to four new power plants to become self-sufficient.  Calpine recently completed a new natural gas fired power unit in Dover and has the permits needed for a second unit.  What incentive does Calpine need to build the second unit?

 

Exelon recently acquired Delmarva Power, the state’s largest electric distribution company, and is one of the largest generation companies in the nation.  A decade ago distribution companies owned all the generation facilities as well with a guaranteed rate of return regulated by the Public Service Commission.  Delaware and Maryland joined a handful of other states in deregulating the price of generated power thinking this would increase competition and lower electric cost.  The actual result was the sale of generating facilities and a 70% increase in electric rates in the deregulated states.  Partial reregulation might encourage distribution companies to build at least some new generation capacity.

 

Exelon is one of the largest builders of large scale solar farms in the country.  A little known fact is utility scale solar is now essentially competitive with conventional power plants during high demand daylight hours.  Delaware policy has emphasized building smaller scale systems that actually add cost to our electric bills.  Yes, in this case bigger is better and a policy change is needed.

 

Land acquisition is a barrier to building more solar.  The state could offer marginal state owned open space land for long term lease for solar farms to lower start-up costs.  The revenue could be used for state park operations.

 

No doubt a dialogue to boost local power generation would uncover more opportunities.  The result would not only avoid the added cost of the Artificial Island project but might lower existing electric rates by as much as 15% removing a barrier to job creation, and could lead to up to a billion dollars in new construction projects.   

David T. Stevenson, Director

Center for Energy Competitiveness

                               

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Legislative Hall in Dover, Delaware

This article originally appeared at the Watchdog.org website on January 20, 2015. Read the original at http://watchdog.org/193657/legislative-priorities-2015-delaware-way/

Last week was the first week the state Legislature was in session, but they will soon adjourn for budget and finance hearings before getting back to lawmaking in mid-March. Five new representatives and one new senator took their oaths of office for the first time, but this Legislature looks almost identical to the last one: the Democrats control the governor’s mansion, the House of Representatives 25-16, down from 27-14 last year, and the Senate 12-9, down from 13-8.

Notably absent from the last General Assembly were bills to make Delaware’s economy more free as the state—well-known as the “Switzerland of America” for its easy incorporation process and fair Court of Chancery—faces competition from Nevada and North Dakota for corporate business and from the Sun Belt for jobs. This year the Caesar Rodney Institute hopes to see legislation to address the following issues:

1. Education Savings Accounts: Delaware has “school choice”-IF your idea of school choice is to allow a child to transfer from one public school district to another (provided that district has room).While that’s better than nothing, that’s not really school choice.

CRI supported a bill last year called the “Parent Empowerment Education Savings Account Act” (PEESAA) which would have introduced Education Savings Accounts as an option for low-income and special-needs students who are the most likely to need additional services not being offered by the traditional public schools. This bill was tabled in the House Education Committee but we hope ESA’s and other bills encouraging school choice are brought up this year.

2. Prevailing Wage (PW): Delaware has an insanely wide range of wages a that business who wants a public construction contract has to pay its employees to get the contract.

Every January the state Department of Labor mails out its PW survey to union-friendly contractors and conveniently “forgets” to remind non-union-friendly construction companies to ask for, and return, the survey. This results in wage variance like $14.51 per hour for a bricklayer in Sussex County, but $48.08 per hour for the same job in Kent and New Castle Counties. Not to be outdone, boilermakers get $71.87 an hour in New Castle County, but “only” $30.73 in Kent County.

These high rates prevent many construction projects from being started and make those which are done more expensive for taxpayers. If the PW won’t be eliminated, we hope the state will instead use the U.S. Occupational Employment Statistics survey. This would reduce rates by almost 40 percent on average and free up nearly $63 million of spending from the State’s FY15 capital budget, including almost $18 million for more school capital improvements.

3. Make Delaware the next right-to-work state: Delaware is not a right-to-work (RTW) state and, between that and our inconsistent-as-applied PW law, many businesses outside the state choose not to move here. Incorporating and buying office space in Wilmington for some high-paying executive jobs is one thing. But Moody’s Analytics in late 2013 said Delaware was the only state at immediate risk of falling back into a recession and a lot of this is due to more businesses closing than opening in Delaware. Pass legislation to end forced unionization and support pro-job growth policies instead.

4. Tax and regulatory reform: Only five states have a Gross Receipts Tax, which is a tax on revenue generated before profit and loss is factored in. Three of those states have no further taxes on corporate earnings and the only other state (Virginia) that does has lower tax rates. Between this tax, high personal and corporate income taxes, franchise taxes, and overall over-regulation by state agencies, Delaware is increasingly threatening its “Incorporation Golden Goose” as Nevada and North Dakota work to take business from the state. This needs to be addressed.

5. Work to lower energy prices: Delaware has electric rates 25 percent higher than the states we compete with for jobs like nearby Virginia. We import close to one-third of our electricity from out of state, the highest rate in the nation. Some of this is due to our geography, but a lot of it is due to the state’s failure to build a network of natural gas pipelines from the Marcellus Shale to Delaware.

Coupled with the state’s participation in the Regional Greenhouse Gas Initiative (RGGI) carbon tax scheme and taxpayer subsidizing of “green” companies like Bluewater Wind (gone), Fisker Automotive (didn’t build cars in Delaware), and Bloom Energy (still has not brought the promised 900 high-paying full-time jobs), Delaware cannot grow its economy if energy prices are high. We want the Legislature to pass natural gas pipeline extension and end participation in RGGI and subsidies for “green” companies.

What issues do you think the state Legislature should focus on this year?

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wallpaperput.com

2015 will soon be upon us and for those who are passionate defenders of freedom and liberty our work just goes on when the clock strikes midnight. Here is CRI in review and our goals for 2015:

  • Dave Stevenson’s lawsuit against DNREC and former DNREC Secretary Collin O’Mara is still ongoing. Dave and the other three plaintiffs, including CRI Director John Moore, won standing to continue their lawsuit. We will refrain from making a prediction on a court ruling less we jinx the lawsuit but we are optimistic the Plaintiffs will win. This is because in order to get standing the Plaintiffs had to prove they had a valid reason to sue in the first place, such as being aggrieved by the Defendants actions. Winning means stopping DNREC from changing the rules on how many carbon permits can be sold at carbon auctions, saving Delaware taxpayers over $100 million a year in increases in utility bills.
  • We testified in favor of HB353, the Parent Empowerment Education Savings Account Act (PEESAA). Jim Hosley, our former CEE Director, spoke in favor as did a dozen Wilmington parents and grandparents (and one student!) and the leaders of Tall Oak Classical Academy. The bill was tabled in the House Education Committee, a move we are unfortunately not surprised by. However, we hope 2015 will be a better year as more and more people realize the need to improve Delaware’s education system, and the only effective way to make the changes our students need to be prepared for the future is to provide parents with school choice options to do what’s best for the child. CRI will always maintain the belief that parents and/or legal guardians can make a better choice about their children’s education than politicians and bureaucrats in the state Department of Education.
  • We brought in Dr. Bartley Danielsen, business and economics professor from North Carolina State University to keynote our Sixth Annual Dinner. Dr. Danielsen has proposed a theory tying in environmental benefits to school choice. The basic theory is, parents moved to the suburbs to flee poorly performing public schools which left a lot of people uneducated and unable to find respectable work, and many turned to crime as a result. His theory is if inner city schools were to improve their quality, many families would move back to the cities from the suburbs and the result would be a reduction in traffic and environmental pollution from people driving from the suburbs to the cities. View is presentation here and here

In addition to these challenges, we still have issues Delaware must resolve in order to improve our economy:

  • End to the prevailing wage which makes public construction costs so expensive many end up getting no work at all. See: Rockwood Museum.
  • A Right to Work law for Delaware. Union leaders are pushing the “scab” theory that somehow union members will drop out and reap all the benefits the union “works” to get. We have responded by noting that a) manufacturing businesses have responded by moving factories elsewhere, depriving Delawareans of job opportunities. See: loss of auto industry, Valero plant, Evraz Steel plant, Georgia Pacific plant. b) as a moral issue, should union bosses have the right to take someone’s money just because someone works at a particular location? What if the union bosses don’t serve their member’s needs, such as organizing or donating to political causes or candidates the members don’t support?

We wrote: “While in the short run unionization may force wages up for those involved, in the long run closed shops reduce capital spending and induce the out-migration of jobs and workers.”

Read HERE and HERE and HERE

  • tax reform. Delaware is one of just five states with a gross receipts tax (tax on sales, even before factoring in profit/loss and expenses). Three of the other four don’t have an income tax and the only state with both like Delaware is Virginia who has lower tax rates. Coupled with high corporate and personal income taxes while Nevada and North Dakota compete with us for corporate business, and without reforms we will see money and jobs leave the state at even higher numbers.

Merry Christmas, Happy Hanukkah, Happy Holidays, and a Happy New Year to all. Let’s be thankful for a good 2014 and hope for better things in 2015.

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Today is Giving Tuesday, a day created by the UN and 92nd Street Y nonprofit to encourage people to consider giving to a nonprofit/charitable organization instead of buying more stuff for the holidays.

As someone who currently works at a nonprofit, I can’t emphasize enough how critical donations are to keeping the organization running. I know stories abound about nonprofits where the CEO’s and top executives pull in six or seven figure salaries and very little that’s donated goes to the actual mission. That may be true for a small number of larger nonprofits or shady enterprises, but I can assure you the vast majority of us who work in nonprofits are not rolling in money.

So please find a charity (like the Caesar Rodney Institute, hint hint) and make a contribution today. You can also visit smile.amazon.com and choose a nonprofit you want Amazon to contribute to. For every dollar you spend on Amazon they will make a small contribution to your designated nonprofit. It won’t cost you any money and it’s an easy way to give.

So what are you waiting for? Support #GivingTuesday today!

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Happy Thanksgiving! We hope you have a happy and safe holiday.

For this week’s post we are going to respond to the post of blogger Lyman Stone, a grad student at George Washington University’s Elliott School. In his November 21 blogpost titled “North Dakota, Illinois, and Delaware: A Boom State, a Struggler, and a Winner”, he wrote about Delaware’s migration and why the state has had an overall increase in people from 2000-2010 (source: U.S. Census). His top four points and our response:

1. “Many of the people Delaware loses, as I’ve already shown, are richer people. That is to say, Delaware is exporting its richer people (many of them retirees) to states like Arizona, Florida, Virginia, and Texas. Meanwhile, it is inundated with floods of lower-income, somewhat less-educated individuals. Delaware’s in-migration includes very high rates of retiree migration and migration of the young.”

Delaware lost roughly $480 million in net wealth from 2000-2010, predominately from New Castle County (source irs.gov). Some of that wealth went across the border to Chester/Media, PA; many of the top 1% retired to Florida or Arizona, but many people did stay in Delaware and moved to Kent or Sussex Counties where property is even cheaper and cost of living is lower than New Castle County. Delaware’s low property taxes attract retirees mainly from DC, MD, NJ, and NY. Young people move to New Castle County for the corporate jobs. But Lyman is missing this point: Families with school-age children tend not to stay in Delaware. (see here and here). Unless the parents can afford a private school or get to a good charter school, the parents more often than not leave for PA. A graph within the presentations in the links shows a huge drop-off with parents with at least one child aged 5 or older leaving for places like Valley Forge or Media while parents with children 0-4 stay in Delaware. So it’s like “come when you’re young, leave when you have a family, return when you’re ready to retire”.

2. “Once again, like Illinois, Delaware has lots of high-traffic borders and nearby border metro areas, thus we can fruitfully look to policy variables as one part of the explanation. Delaware has income taxes at a similar rate to most of its regional peers (though much higher than Virginia’s) and is in the minority of states in that it still has an estate tax. In that regard, it is peculiar that so many retirees would choose it.

That is, until we recall Delaware’s three most salient tax features: it has no sales tax (thus reducing cost of living), among the lowest property taxes in the nation (reducing cost of living), and funds its infrastructure through tolls and user fees more than any other state (reducing burdens on people who drive less: young and old). Its taxes overwhelmingly fall on businesses, but it attracts businesses by offering highly favorable legal and regulatory conditions.”

Delaware has a gross-receipts tax, a tax on business revenue BEFORE profit and loss is considered. Only Virginia has both a gross receipts and income tax, both of those rates are lower there than Delaware. The result has been that Delaware has had more businesses closing than opening and we are 51st in the country in jobs created by existing firms (Source: deconfirst.com). This means no state or DC is worse than Delaware at getting businesses already here to hire more people. The state is very good at helping start-ups but not good at helping established businesses, especially medium-sized businesses.

Delaware’s Court of Chancery is known for its fairness, and incorporation laws are lax. This is favorable to larger businesses to want to headquarter here, which is why the Wilmington area has so many corporate offices with high-paying administrative jobs. This is a good thing for the state but again, this benefits larger businesses and not small- or medium- sized businesses.

3. The net result of Delaware’s policy choices is that “New Economy Index” produced by the liberal-leaning Progressive Policy Institute ranks the 2nd best in the nation, the conservative-leaning American Legislative Exchange scores 27th in their “Rich States, Poor States” publication, the business-backed Tax Foundation (disclosure: my former employer) ranks 14th-best, and even the libertarian Mercatus Center identifies as 17th “most free” in their Freedom in the 50 States report. A report by 24/7 Wall Street found Delaware to be the 13th best-run state in the nation, and academic measures of state corruption rank Delaware no worse than middle-of-the-pack. In fact, it is a real challenge to find any organization that scores Delaware poorly on any major policy metric or index.

Corruption in Delaware is not as bad as it is in places like Illinois, Rhode Island, California, or Louisiana. But saying it’s “good” is more on an indicator of how corrupt those states are. Delaware’s small size means “everyone knows everyone” attitude impacts the government but the state is not very forthcoming with state pension data or with how education dollars are being spent. That said, we are better than every other Mid-Atlantic state besides Virginia. We posted on the Tax Foundation’s analysis.

4. Likewise, Delaware has one of the lowest average price levels of any state in the region (except Virginia), and that price level is lowest in southern Delaware, where in-migration is highest.

I’ve repeatedly cast Delaware as a state that’s providing opportunities: for the young, for the less educated, and also for regional retirees who may not have the money for a bigger relocation to Texas or Florida (or who may not want to pay property and sales taxes in those states). That’s because Delaware’s migration record is simply the strongest across the most different categorizations of almost any state, especially among states without major oil and gas reserves. I’d love to hear more from people familiar with Delaware on how the state attracts people: beaches with rising popularity? corporate headquarters? retirement communities? strong university recruitment? sprawl from Philadelphia?

To Lyman’s final point, Delaware IS a very attractive place between Philly and Baltimore/DC. We are a train ride or short drive from all three cities and only three hours from New York City. The Beaches draw in tourists and retirees, and there is some Philly sprawl in the Claymont area. But Delaware is beginning to lose our status is a “tax haven”, now that Nevada and North Dakota are competing with us for our corporate business. The state spends way too much money and like most states will suffer from having to choose between Medicaid and public education once the federal government cuts back on its Obamacare obligations by 2019. Our three casinos are losing money and, barring a change in visitor habits ore legislative policy, will go out of business; 6% of our state’s revenue comes from casino taxes. We have a state carbon tax and cap-and-trade system (Regional Greenhouse Gas Initiative) which is costing so much money CRI’s Energy Policy Director Dave Stevenson and our board member John Moore are suing DNREC to prevent a new carbon tax fee from being imposed on residents and businesses.

Delaware’s population is aging at a faster rate than the nation as a whole; right now half the state receives Medicare or Medicaid. By 2030 that number will be closer to 67% at current migration rates. Sussex County is already 25% senior citizens and that number grows ever year. As much as we at CRI love our seniors, someone has to help pay for Medicare/Social Security/ public housing assistance/public transportation, and other quality-of-life benefits seniors need to enjoy their retirement since we know the Feds won’t meet their future obligations.
Because of its strong migration record in a highly competitive area, other states could benefit from studying Delaware’s experience and determining which policies they can adopt for their own states.

Please don’t pass a gross receipts tax or block natural gas pipeline from reaching your states. We have high electricity prices and a mediocre public education system. Don’t be so aggressive and seizing abandoned property, even down to the Amazon gift cards which went unused. End the prevailing wage and establish a Right-to-Work law if your state doesn’t have one yet.

What do you think about Lyman’s blog post or our response?

Please consider eliminating your state’s sales tax and lowering property taxes, and have a court system which is seen as quick, efficient, and fair.

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 green·wash·ing

noun \ˈgrēn-ˌw-shiŋ, –ˌwä-\

the practice of promoting environmentally friendly programs to deflect attention from an organization’s environmentally unfriendly or less savory activities; a superficial or insincere display of concern for the environment that is shown by an organization (dictionary.com definition)

For those of you who have followed CRI’s activities for the last two-plus years, you will recall how we have publicly opposed the state’s cronyist deal with Bloom Energy to hand a private “green” company $529 million in guaranteed state taxpayer revenue over a period of 21 years EVEN IF THE COMPANY GOES OUT OF BUSINESS OR RENEGES ON ITS OBLIGATIONS OR IF ITS TECHNOLOGY BECOMES OBSOLETE.

On Monday, October 20, 2014 NBC Bay Area ran a six-minute long investigation into Bloom Energy and whether the company was misleading the public about its technology. The video is below.

<script type=”text/javascript” charset=”UTF-8″ src=”http://www.nbcbayarea.com/portableplayer/?cmsID=279873632&videoID=rX70SdgdBmnB&origin=nbcbayarea.com&sec=investigations&subsec=&width=600&height=360″></script&gt;

From the article:

“The NBC Bay Area Investigative Unit analyzed performance data provided to the state of Delaware for Bloom boxes that power 22,000 homes in the state. Delaware is home to the largest installation of Bloom fuel cells in the nation, where the technology has been in operation for more than two years.

According to the most recent data available, Bloom boxes have achieved the 773 emission rate just three months out of a 24 month period. The average emission rate is 823.

The company declined numerous requests to discuss their carbon emission rate in an on-camera interview, but in a conference call Bloom representatives said the 773 figure is achieved when the boxes are brand new, noting that CO2 emissions increase as the boxes age.

“If the thing emits more carbon dioxide than they say it does then this is greenwashing,” Leveen said.”

The bottom line: The only thing “green” about Bloom Energy is the taxpayer money flowing from hardworking Delawareans, and even those who are not working, into the pockets of multibillionare business cronies and their allies.

If you agree please visit us a www.caesarrodney.org and donate today!

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