Legislature(2009 - 2010)BELTZ 105 (TSBldg)

03/12/2010 01:30 PM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Moved SB 92 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
                  SB 284-CAMPAIGN EXPENDITURES                                                                              
2:29:45 PM                                                                                                                    
CHAIR FRENCH announced the consideration  of SB 284 and said that                                                               
today the committee  would work on amendments. He  noted that Mr.                                                               
Ptacin  from  the  Department  of Law  (DOL),  Mr.  Bullard  from                                                               
Legislative  Legal and  Research, and  Ms. Hill  from the  Alaska                                                               
Public  Offices  Commission  (APOC),  were  on  line  to  explain                                                               
aspects of the amendments.                                                                                                      
2:31:02 PM                                                                                                                    
CHAIR  FRENCH  moved  Amendment  1,  labeled  26-LS1448\A.3,  and                                                               
objected for discussion purposes.                                                                                               
                          AMENDMENT 1                                                                                       
     OFFERED IN THE SENATE              BY SENATOR FRENCH                                                                       
          TO:  SB 284                                                                                                           
     Page 2, line 28:                                                                                                           
          Following "an":                                                                                                       
               Insert "independent"                                                                                         
          Following "expenditures":                                                                                             
               Insert "made and contributions received"                                                                     
CHAIR FRENCH  said this is to  make it clear that  the report has                                                               
to include the money you spend and the money you have taken in.                                                                 
SENATOR WIELECHOWSKI  said perhaps he's  missing a nuance  in the                                                               
statute, but it would seem that  if an expenditure is being made,                                                               
regardless  of   whether  it's  independent,  it   would  require                                                               
CHAIR FRENCH asked  Mr. Bullard to summarize the  contents of the                                                               
memorandum he sent regarding this amendment                                                                                     
ALPHEUS  BULLARD,   Attorney,  Legislative  Legal   and  Research                                                               
Services, explained that  right now AS 15.13.040(d)  and (e) that                                                               
address expenditures  both in  the bill and  also in  current law                                                               
are  applied  under  APOC  regulations  to  AAC  50.336  only  to                                                               
independent  expenditures. Responding  to Senator  Wielechowski's                                                               
comment,  he  said  that expenditures  for  candidates,  nongroup                                                               
entities, and  groups have to  be reported under AS  15.13.110 so                                                               
it's  been  the practice  of  APOC  to require  only  independent                                                               
expenditure reports under these statutory subsections.                                                                          
CHAIR  FRENCH recapped  that  in Section  3,  AS 15.13.040(d)  is                                                               
being  amended and  it is  a reporting  requirement that  applies                                                               
only to independent expenditures.                                                                                               
MR. BULLARD  said yes and the  other line of the  amendment is to                                                               
better describe what that section is doing.                                                                                     
CHAIR FRENCH withdrew  his objection to Amendment 1  and asked if                                                               
there was further objection.                                                                                                    
SENATOR COGHILL objected for further  discussion. He related that                                                               
he agrees with the amendment, but  he would like the committee to                                                               
consider an amendment  he prepared that includes  the contents of                                                               
Amendment 1 and also conforming changes on page 6, lines 13-15.                                                                 
CHAIR FRENCH  suggested that the committee  finish with Amendment                                                               
1 and then address his proposal as Amendment 2.                                                                                 
SENATOR COGHILL agreed and removed his objection to Amendment 1.                                                                
CHAIR  FRENCH  found  no further  objection  and  announced  that                                                               
Amendment 1 is adopted.                                                                                                         
2:36:05 PM                                                                                                                    
SENATOR COGHILL moved Amendment 2.  He explained that it consists                                                               
of lines  4-11 of  amendment 26-LS1448\A.7 to  SB 284.  Lines 1-3                                                               
were adopted as Amendment 1.                                                                                                    
                          AMENDMENT 2                                                                                       
     OFFERED IN THE SENATE              BY SENATOR COGHILL                                                                      
          TO:  SB 284                                                                                                           
     Page 6, line 13, following "An":                                                                                           
          Insert "independent"                                                                                                  
     Page 6, line 14, following "an":                                                                                           
          Insert "independent"                                                                                                  
       Page 6, line 15, following the first occurrence of                                                                       
          Insert "independent"                                                                                                  
CHAIR FRENCH objected for discussion purposes.                                                                                  
SENATOR  WIELECHOWSKI asked  Mr. Bullard  if there  was a  reason                                                               
that Amendment 1 didn't insert  the word "independent" on page 6,                                                               
lines 13-15 as Amendment 2 did.                                                                                                 
MR.  BULLARD  replied  the  requests   for  the  amendments  were                                                               
slightly different. The request that  resulted in the drafting of                                                               
26-LS1448\A.7 was only to insert the "independent" language.                                                                    
SENATOR WIELECHOWSKI asked if Amendment 2 tracks Amendment 1.                                                                   
MR. BULLARD said  he would describe the changes as  an aid to the                                                               
reader  rather  than substantive  legal  changes.  The result  of                                                               
Amendment 1 is  that the person turning to  15.13.110(g) now will                                                               
be  reminded  that  the report  is  the  independent  expenditure                                                               
CHAIR  FRENCH removed  his objection  and announced  that without                                                               
further objection, Amendment 2 is adopted.                                                                                      
2:39:43 PM                                                                                                                    
CHAIR  FRENCH  moved  Amendment  3,  labeled  26-LS1448\A.4,  and                                                               
objected  for discussion  purposes.  He explained  that the  idea                                                               
behind the  amendment was  to make  certain that  people (meaning                                                               
individuals, nongroups,  groups, corporations, and  unions making                                                               
independent  expenditures)  create  a separate  bank  account  to                                                               
receive money for  funds that will be expended  in these efforts.                                                               
It's  easier for  everyone to  know  that a  separate account  is                                                               
necessary  so that  no  one is  tempted to  draw  from a  general                                                               
treasury. It also makes it easier  for APOC and others to look at                                                               
the records  of the person  making the expenditures in  the event                                                               
of an alleged violation.                                                                                                        
                          AMENDMENT 3                                                                                       
    OFFERED IN THE SENATE               BY SENATOR FRENCH                                                                       
          TO:  SB 284                                                                                                           
     Page 4, following line 4:                                                                                                  
          Insert a new bill section to read:                                                                                    
         "* Sec. 7. AS 15.13 is amended by adding a new                                                                     
     section to read:                                                                                                           
               Sec. 15.13.052. Independent expenditures;                                                                      
          political activities  accounts. (a)  Before making                                                                  
          an  independent expenditure  in support  of or  in                                                                    
          opposition  to a  candidate  or  before making  an                                                                    
          independent  expenditure  in   support  of  or  in                                                                    
          opposition  to a  ballot proposition  or question,                                                                    
          each person  other than an  individual, candidate,                                                                    
          or  nongroup  entity   with  an  annual  operating                                                                    
          budget  of   $250  or  less,  shall   establish  a                                                                    
          political   activities   account.  The   political                                                                    
          activities account  may be  a separate  account in                                                                    
          the  person's  general   treasury.  The  political                                                                    
          activities  account  must  be  administered  using                                                                    
          generally  accepted   accounting  principles.  All                                                                    
          funds  used  by  the person  to  make  independent                                                                    
          expenditures must be drawn from the person's                                                                          
          political activities account.                                                                                         
               (b)  Records necessary to substantiate the                                                                       
          requirements of (a) of this section must be made                                                                      
          available for inspection by the commission.                                                                           
               (c)  Each person who has established a                                                                           
           political activities  account under  this section                                                                    
           shall   preserve   all   records   necessary   to                                                                    
           substantiate  the person's  compliance  with  the                                                                    
           requirements of this section for  each of the six                                                                    
           preceding years."                                                                                                    
     Renumber the following bill sections accordingly.                                                                          
CHAIR FRENCH asked Mr. Bullard  to convey the suggestions that he                                                               
attached to Amendment 3.                                                                                                        
MR. BULLARD  directed attention to  the language in Section  4 on                                                               
page  3  that  says  that   the  person  making  the  independent                                                               
expenditure has  to include  information about  the contributions                                                               
they have  received in every independent  expenditure report. The                                                               
memo suggests that this section might  be more at home in the new                                                               
bill section  proposed in Amendment  3. Although this  is neither                                                               
legally  nor   constitutionally  required,  it  may   be  a  more                                                               
practical  and workable  solution  for both  APOC  and for  those                                                               
people making independent expenditures, he said.                                                                                
2:42:52 PM                                                                                                                    
CHAIR  FRENCH   summarized  that   he  is  suggesting   that  the                                                               
independent expenditure  report, referenced in Section  4, should                                                               
be incorporated  into the  account of  monies contributed  to and                                                               
spent from the political activities accounts.                                                                                   
MR. BULLARD  said that's right;  they would merely have  the duty                                                               
to report  when funds were  transferred into the account  or when                                                               
funds were leaving the account.  They wouldn't have to separately                                                               
account for contributors  on a report of an  expenditure. He said                                                               
he isn't sure how it would work in practice.                                                                                    
CHAIR FRENCH asked Holly Hill  if she had followed the discussion                                                               
regarding Amendment  3 and  the way it  would integrate  with the                                                               
current reporting requirements as envisioned by the bill.                                                                       
HOLLY HILL, Executive Director,  Alaska Public Offices Commission                                                               
(APOC),  Department of  Administration,  said she  didn't have  a                                                               
copy of the amendments so she would defer to Mr. Ptacin.                                                                        
2:44:39 PM                                                                                                                    
JOHN   PTACIN,  Assistant   Attorney  General,   Civil  Division,                                                               
Department of  Law (DOL), said  it doesn't seem that  Mr. Bullard                                                               
is  suggesting  that a  corporation  cannot  make an  expenditure                                                               
using its own  coffers. Rather, he's suggesting that  to keep the                                                               
reporting as clean as possible,  that they create another account                                                               
for all  the contributions come in,  including contributions from                                                               
a corporation or labor union general treasury.                                                                                  
CHAIR FRENCH  agreed that  it isn't  restricting where  the money                                                               
comes from; it's setting up one  location that APOC or others can                                                               
go to find out the amount  of money a particular entity collected                                                               
and how they spend it.                                                                                                          
MR. PTACIN said he doesn't see  an issue with the suggestion. Any                                                               
law  that burdens  political speech  in this  area is  subject to                                                               
strict  scrutiny  so   there  would  need  to   be  a  compelling                                                               
government  interest and  narrow tailoring.  This appears  on its                                                               
face to be narrowly tailored to  a government interest as long as                                                               
there isn't some outright restriction  that the corporation can't                                                               
spend its money and be the speaker.                                                                                             
2:46:18 PM                                                                                                                    
CHAIR  FRENCH said  he wanted  give  Ms. Hill  an opportunity  to                                                               
consider whether or not there's a  way to integrate Section 4 and                                                               
the  new Section  7 proposed  in  Amendment 3.  He suggested  the                                                               
committee address Amendment 3 and  at some later time address Mr.                                                               
Bullock's suggestion.                                                                                                           
He asked  if there's something  in law that says  that candidates                                                               
have to establish  political activities accounts or  if it's just                                                               
a really good idea that candidates follow.                                                                                      
MS. HILL said she can't cite  the statute or regulation, but APOC                                                               
does advise candidates to keep separate campaign accounts.                                                                      
SENATOR COGHILL added that there  is a requirement for candidates                                                               
to have  an account that registers  the name of the  campaign and                                                               
the treasury. The statute or  regulation specifies what has to be                                                               
included in  the account name  and the particular  APOC reporting                                                               
forms that are used.                                                                                                            
2:48:12 PM                                                                                                                    
SENATOR WIELECHOWSKI referenced the language  on lines 7 and 8 of                                                               
Amendment 3  and questioned whether  the intent was to  say "$250                                                               
or more"  rather than "$250  or less,"  which is the  language in                                                               
the amendment.                                                                                                                  
MR. BULLARD  said this requirement  applies to all  persons other                                                               
than an  individual, a  candidate, or a  nongroup entity  with an                                                               
annual operating budget of $250 or less.                                                                                        
CHAIR FRENCH summarized that if  you're an individual, candidate,                                                               
or nongroup  entity with  an annual operating  budget of  $250 or                                                               
less, you are  not captured under the requirement  to establish a                                                               
political activities account.                                                                                                   
MR. BULLARD said that's correct.                                                                                                
SENATOR WIELECHOWSKI commented that the language is awkward.                                                                    
CHAIR  FRENCH removed  his objection  and announced  that without                                                               
further objection,  Amendment 3  is adopted.  He noted  that this                                                               
section  could see  further  change  when Ms.  Hill  sees how  it                                                               
interacts with Section 4 or if  a committee member finds a better                                                               
way to express to whom this does and does not apply.                                                                            
2:50:07 PM                                                                                                                    
CHAIR  FRENCH said  Amendment 4  and Amendment  5 are  both about                                                               
disclaimers.  This is  putting words  in  the advertisement  that                                                               
helps viewers,  readers, or listeners understand  who is speaking                                                               
with regard to elections.                                                                                                       
CHAIR  FRENCH  moved  Amendment  4,  labeled  26-LS1448\A.6,  and                                                               
objected for discussion purposes.                                                                                               
                          AMENDMENT 4                                                                                       
     OFFERED IN THE SENATE              BY SENATOR FRENCH                                                                       
          TO:  SB 284                                                                                                           
    Page 5, line 27, following "the":                                                                                       
          Insert "name and city and state of residence or                                                                   
    principal place of business, as applicable, of each of the"                                                             
    Page 5, line 29, following "communication":                                                                             
          Delete ", with the words "top five contributors""                                                                 
    Page 6, following line 11:                                                                                                  
          Insert a new bill section to read:                                                                                    
      "* Sec. 12. AS 15.13.090 is amended by adding a new                                                                     
    subsection to read:                                                                                                         
               (c)  To satisfy the requirements of                                                                              
    (a)(2)(C) of this section and, if applicable, (a)(2)(D)                                                                     
    of  this section, the following  statement or statements                                                                    
    must  be  read, in  a manner  that is  easily heard,  or                                                                    
    placed   in  the  communication  so  as   to  be  easily                                                                    
    discernable, or,  in a communication that is transmitted                                                                    
    by   a  method  that  includes  both   audio  and  video                                                                    
    components,  be read  in a manner  that is  easily heard                                                                    
    and  placed  in the  communication  so as  to be  easily                                                                    
                    This communication was paid for by                                                                          
               (person's name and city and state of                                                                             
               principal place of business).                                                                                    
                    The top contributors of (person's name)                                                                     
               are  (the   name  and   city  and   state  of                                                                    
               residence or principal  place of business, as                                                                    
               applicable,  of the  largest contributors  to                                                                    
               the person under AS 15.13.090(a)(2)(D))."                                                                        
    Renumber the following bill sections accordingly.                                                                           
SENATOR WIELECHOWSKI asked what AS 15.13.040(e)(5) says.                                                                        
2:53:15 PM                                                                                                                    
MR.  BULLARD replied  it's  a reference  to  the contributors  in                                                               
Section 4 on page 3, paragraph (5).                                                                                             
SENATOR WIELECHOWSKI asked if this  would apply to a company like                                                               
Exxon or if it's designed for groups.                                                                                           
MR. BULLARD directed  attention to the words "if any"  on page 5,                                                               
line 28,  and explained  that the  concern about  contributors is                                                               
more about  trade organizations  and entities  where a  number of                                                               
persons have  come together to  engage in some advocacy  and less                                                               
about a major corporation like Exxon.                                                                                           
SENATOR  COGHILL  said  his concern  with  requiring  information                                                               
about the  five largest  contributors is that  it could  create a                                                               
situation where there's more information  than people are willing                                                               
to  handle  and  the  intended impact  might  be  diminished.  He                                                               
suggested   instead   that   the  principal   officers   identify                                                               
themselves  and  provide   information  about  the  communication                                                               
because  this looks  like  it  will take  a  full  30 seconds  to                                                               
communicate this information.  Let me know if I'm  wrong on that,                                                               
he said.                                                                                                                        
2:56:35 PM                                                                                                                    
CHAIR FRENCH responded there  may be a need to run  a test with a                                                               
stopwatch to see  what it'll take to get this  information into a                                                               
30 second advertisement.                                                                                                        
SENATOR COGHILL  clarified that he supports  full disclosure, but                                                               
this  is reportable  information that  people will  get in  other                                                               
venues. It may  not be well received in this  venue because it'll                                                               
be ignored, he added.                                                                                                           
CHAIR FRENCH  asked Mr. Bullard how  far you can go  with respect                                                               
to  requiring an  audible disclosure  in a  30 second  television                                                               
advertisement without  infringing on  a corporation's  or union's                                                               
or candidate's First Amendment rights.                                                                                          
MR.  BULLARD replied  disclosure  would be  less burdensome  than                                                               
either  a total  prohibition or  a limitation,  but he  can't say                                                               
with any certainty  where the line is for too  much disclosure in                                                               
this context.                                                                                                                   
2:59:13 PM                                                                                                                    
SENATOR WIELECHOWSKI  stated that he absolutely  believes that it                                                               
is a compelling  state interest to require as  much disclosure as                                                               
possible  and  he   supports  listing  at  least   the  top  five                                                               
contributors  and their  location. "I'm  inclined to  err on  the                                                               
side  of  more disclosure  because  I  think  that big  money  in                                                               
elections is  dangerous to  representative democracy."  I support                                                               
your amendment, he concluded.                                                                                                   
CHAIR  FRENCH thanked  him for  his  comments and  added that  he                                                               
wouldn't be surprised to see his words in a brief some day.                                                                     
MR. PTACIN  said he will  echo that  thought and he  applauds the                                                               
conversation.   The   discussion  about   compelling   government                                                               
interest   certainly  helps   establish  a   record  for   future                                                               
litigation. We are  talking about free speech and  these laws are                                                               
subject to challenge, he said.                                                                                                  
CHAIR  FRENCH  said  he  will   associate  himself  with  Senator                                                               
Wielechowski's  comments  because  he   thinks  he's  right.  The                                                               
federal government has experience in  this area, but the State of                                                               
Alaska has  never allowed corporations  or unions  to participate                                                               
directly in campaigns for or  against candidates. Because this is                                                               
a  whole  new   landscape,  it's  a  good  idea   to  start  with                                                               
restrictions that are  as tight as possible. We can  deal with it                                                               
if a court later orders the  state to loosen the restrictions, he                                                               
CHAIR  FRENCH pointed  out  that in  this  state three  companies                                                               
account for 90  percent of the state's revenue so  they are going                                                               
to  have  a  profound  interest   in  participating  directly  in                                                               
elections for  the very understandable reason  of relieving their                                                               
tax burden. For these reasons  it's very important to have strong                                                               
laws in  place to  let people  know who is  speaking to  them, he                                                               
3:01:59 PM                                                                                                                    
SENATOR COGHILL said he too  is interested in full disclosure and                                                               
he  understands the  need for  tight restrictions.  But if  we're                                                               
going  to  ask for  disclosures  on  each advertisement  then  we                                                               
should   also  ask   candidates  to   disclose  their   top  five                                                               
contributors on a campaign advertisement,  he said. I don't think                                                               
we want  to do that  but there needs to  be equity, and  if we're                                                               
asking  them to  speak not  with a  single voice  but a  combined                                                               
voice of the  top five contributors we might  actually be putting                                                               
more burden on that individual voice than is necessary.                                                                         
CHAIR FRENCH  said it's  a good point,  but very  different rules                                                               
apply   to  candidates   as   opposed   to  corporations   making                                                               
independent  expenditures.   Most  candidates  will   have  20-30                                                               
contributors  at the  maximum  $500 per  calendar  year level  so                                                               
you'd have  to figure out  a way to select  the top three  or top                                                               
five. "I'll leave  that to you if you want  to craft an amendment                                                               
to work that out," he said.                                                                                                     
3:03:53 PM                                                                                                                    
SENATOR   WIELECHOWSKI  opined   that  this   doesn't  stop   any                                                               
individual  corporation  or  union  from  saying  anything.  This                                                               
addresses laundering and unions or  corporations who want to hide                                                               
behind another  group. They have  a legal  right to do  that, but                                                               
this legislation says that the public  has a right to know who is                                                               
behind that  group. Hiding  behind groups is  my big  concern and                                                               
that's what this  is aimed to stop, he said.  There is absolutely                                                               
a compelling state  interest in defining the  top contributors so                                                               
we can curtail trying to skirt disclosure, he said.                                                                             
SENATOR COGHILL said it's a good  debate to have but he continues                                                               
to believe  that the  principals should  speak for  a corporation                                                               
rather than the top five contributors.                                                                                          
CHAIR FRENCH  removed his objection  to Amendment 4 and  asked if                                                               
there was further objection.                                                                                                    
SENATOR COGHILL  objected. "I really  feel very strongly  that we                                                               
need to go in a different direction," he said.                                                                                  
A roll  call vote was  taken.  Amendment 4  was adopted on  a 3:1                                                               
vote with  Senators Wielechowski, McGuire, and  French voting yea                                                               
and Senator Coghill voting nay.                                                                                                 
CHAIR FRENCH  said the  legislation in  the House  identifies the                                                               
top three  contributors but  not their  physical address  so it's                                                               
likely that this section will receive further attention.                                                                        
SENATOR COGHILL said  he wouldn't offer Amendment  5, labeled 26-                                                               
LS1448\A.9, because  it's the argument  he used to try  to defeat                                                               
Amendment 4.                                                                                                                    
3:08:15 PM                                                                                                                    
SENATOR COGHILL moved Amendment 6, labeled 26-LS1448\A.8.                                                                       
                          AMENDMENT 6                                                                                       
    OFFERED IN THE SENATE               BY SENATOR COGHILL                                                                      
          TO:  SB 284                                                                                                           
     Page 4, lines 5 - 14:                                                                                                      
     Delete all material and insert:                                                                                            
        "* Sec. 7. AS 15.13.067 is amended to read:                                                                         
     Sec.  15.13.067.   Who  may  make  expenditures.   Only  the                                                             
     following   may  make   an  expenditure   that  is   not  an                                                           
     independent expenditure  in an  election for  candidates for                                                           
     elective office:                                                                                                           
     (1)  the candidate;                                                                                                        
     (2)  an individual;                                                                                                        
    (3)  a group that has registered under AS 15.13.050; and                                                                    
     (4)  a nongroup entity that has registered under                                                                           
     AS 15.13.050."                                                                                                             
     Page 5, lines 3 - 11:                                                                                                      
          Delete all material.                                                                                                  
     Renumber the following bill sections accordingly.                                                                          
3:09:03 PM                                                                                                                    
RYNNIEVA  MOSS,   Staff  to   Senator  Coghill,   explained  that                                                               
Amendment 6 rewrites  Section 7 to clarify that  the Alaska State                                                               
Legislature is only  changing statutes to deal  with the Citizens                                                               
United decision,  which deals  with corporations  and independent                                                               
expenditures. The  language is  a better  choice with  respect to                                                               
preserving the intent of the decision, she said.                                                                                
CHAIR  FRENCH  summarized  that  Section 7  was  rewritten  in  a                                                               
positive rather than negative manner  and the material on page 5,                                                               
lines 3-11, was  deleted in the belief that it  would be captured                                                               
in the rewritten section.                                                                                                       
MS.  MOSS  agreed. She  added  that  the original  draft  deleted                                                               
material in Section 7 and reinserted it in Section 10.                                                                          
CHAIR FRENCH asked Mr. Bullard to speak to the amendment.                                                                       
MR. BULLARD  said that in  the past corporations and  unions were                                                               
not allowed to make expenditures  on behalf of candidates and all                                                               
this bill  does is allow  them to make  independent expenditures.                                                               
My concern  is that I don't  know if this change  is significant,                                                               
but it  has the  potential to  be so in  the future  depending on                                                               
which direction the statutes go, he said.                                                                                       
3:12:40 PM                                                                                                                    
CHAIR FRENCH  noted, with  some surprise,  that the  AS 15.13.050                                                               
registration requirements  are still in  the bill on lines  9 and                                                               
10 of the amendment.                                                                                                            
CHAIR FRENCH  removed his  objection to  Amendment 6.  Finding no                                                               
further objection, he announced that Amendment 6 is adopted.                                                                    
He asked  the members  to read Mr.  Ptacin's letter  dated 3/9/10                                                               
before the next  hearing because the concerns  he articulated may                                                               
elicit additional amendments.                                                                                                   
CHAIR FRENCH held SB 284 in committee for further work.                                                                         
3:13:47 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair French adjourned the meeting at 3:13 p.m.                                                                                 

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