BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: SB 523
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|Author: |McGuire |
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|Version: |4/6/2015 |Hearing | 4/29/15 |
| | |Date: | |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Rebecca Newhouse |
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SUBJECT: Schoolbus replacement
ANALYSIS:
Existing law:
1. Under the California Global Warming Solutions Act of 2006 (also
known as AB 32), requires the California Air Resources Board
(ARB) to determine the 1990 statewide greenhouse gas (GHG)
emissions level and approve a statewide GHG emissions limit
that is equivalent to that level, to be achieved by 2020, and
to adopt GHG emissions reductions measures by regulation. ARB
is authorized to include the use of market-based mechanisms to
comply with these regulations. (Health and Safety Code §38500
et seq.)
2. Establishes the Greenhouse Gas Reduction Fund (GGRF) in the
State Treasury, requires all moneys, except for fines and
penalties, collected pursuant to a market-based mechanism be
deposited in the fund. (Government Code §16428.8)
3. Prohibits the state from approving allocations for a measure or
program using GGRF monies except after determining that the use
of those moneys furthers the regulatory purposes of AB 32, and
requires moneys from the GGRF be used to facilitate the
achievement of reductions of GHG emissions in California. (HSC
§39712)
4. Under Proposition 1B, which was approved by the voters on
November 7, 2006, enacts the Highway Safety, Traffic Reduction,
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Air Quality, and Port Security Bond Act of 2006. This bond act
authorizes $200 million for replacing and retrofitting
schoolbuses, specifically through ARB's Lower-Emission
Schoolbus Program to fund replacement schoolbuses and retrofit
devices to reduce air pollution to reduce children's exposure
to diesel exhaust.
5. Authorizes local air district boards where federal air
standards are not consistently met (i.e., "nonattainment
areas") to adopt a $6 surcharge on vehicle registration,
subject to certain requirements, to be used to reduce air
pollution from motor vehicles, and requires a portion of that
surcharge be used for the implementation of emission reduction
programs from vehicular sources or off-road engines, including
for projects eligible under the Carl Moyer Program, the
purchase of new, or retrofit of emissions control equipment for
existing, schoolbuses, the replacement of specified natural gas
fuel tanks on schoolbuses, and the enhancement of deteriorating
natural gas fueling dispensers of fueling infrastructure
operated by a school district, and other specified projects,
until January 1, 2024. (Health and Safety Code §§41081 & 44225)
6. Establishes the Carl Moyer Program, administered by ARB, to
fund the incremental cost of cleaner-than-required vehicles,
engines, and equipment and authorizes the funding of projects
reducing NOx, particulate matter (PM) and reactive organic
gasses emissions until January 1, 2024, after which date, only
the reduction of NOx emission reduction projects will be
eligible for funding (HSC §44275)
This bill:
1. Creates the Schoolbus Replacement Program for Small and
Disadvantaged Communities Grant Program (Program), to be
administered by the Department of Education (CDE) in
conjunction with ARB, to fund the purchase of new schoolbuses
to replace existing schoolbuses.
2. Specifies that the Program is funded through a continuous
appropriation of $5 million from the GGRF.
3. Specifies that eligible applicants include:
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A. School districts or county offices of education with an
average daily attendance of less than 2,501 students, with
more than 50% of the pupil population qualifying for free or
reduced price lunch programs, and;
B. The Division of State Special Schools.
4. Requires CDE to develop priority categories for funds based
only on vehicle age and accumulated mileage.
5. Requires an eligible applicant to submit the most recent
inspection report of the Department of California Highway
Patrol, a repair estimate, or any other information requested
by the CDE, as evidence of the vehicle's condition.
6. Requires the CDE to estimate the cost of a replacement
schoolbus of the same capacity as the schoolbus being replaced,
and program funds made available to an applicant are prohibited
from exceeding that amount.
7. Specifies that an applicant may use other funds to purchase a
schoolbus that is more expensive than the model used by the
department to make its cost estimate.
8. Requires that any schoolbuses purchased under this program meet
federal motor vehicle safety standards, as specified.
9. Specifies that schoolbuses that have been "disposed of" are not
eligible for replacement, and specifies that for applicants
with fewer than three schoolbuses, temporary schoolbuses, as
defined, shall be considered "disposed of."
10.Requires the Department of General Services to make schoolbus
purchases with funds made available under the program, to the
extent practicable, and requires that the title of the vehicle
be in the name of the applicant.
11.Requires that funds for the program be available for
schoolbuses used in special education in proportion to the
number of special education schoolbuses as compared to the
total number in the state.
12.Authorizes CDE to adopt regulations to implement the program.
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Background
1. Health Effects of Diesel Exhaust.
In 1998, the California Environmental Protection Agency's
Office of Environmental Health Hazard Assessment (OEHHA)
completed a comprehensive health assessment of diesel exhaust.
This assessment formed the basis for a decision by ARB to
formally identify particles in diesel exhaust as a toxic air
contaminant that may pose a threat to human health.
Diesel exhaust is produced when an engine burns diesel fuel. It
is a complex mixture of thousands of gases and fine particles
(commonly known as soot) that contains more than 40 toxic air
contaminants. These include many known or suspected
cancer-causing substances, such as benzene, arsenic and
formaldehyde. It also contains other harmful pollutants,
including nitrogen oxides (a component of smog).
Diesel engines are a major source of fine-particle pollution
(also called particulate matter or PM). The elderly and people
with emphysema, asthma, and chronic heart and lung disease are
especially sensitive to PM. Numerous studies have linked
elevated particle levels in the air to increased hospital
admissions, emergency room visits, asthma attacks and premature
deaths among those suffering from respiratory problems.
Because children's lungs and respiratory systems are still
developing, they are also more susceptible than healthy adults
to fine particles. Exposure to PM is associated with increased
frequency of childhood illnesses and can also reduce lung
function in children.
Diesel exhaust and many individual substances contained in it
have the potential to contribute to mutations in cells that can
lead to cancer. In fact, long-term exposure to diesel exhaust
particles poses the highest cancer risk of any toxic air
contaminant evaluated by OEHHA.
Due to the harmful effects of diesel PM and children's exposure
to this exhaust from their trips to and from school in older
schoolbuses, much concern has been raised regarding this public
health issue. State and federal funds have been directed to
provide incentives to replace and retrofit diesel buses across
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the state. Additionally, heavy duty diesel trucks and buses
are required to reduce their diesel emissions pursuant to the
state's truck and bus rule, described below.
2. Truck and Bus Rule.
The ARB adopted the On-Road Heavy-Duty Diesel Vehicles
Regulation (also known as the Truck and Bus Rule) in 2008. The
regulation requires diesel trucks and buses that operate in
California to be upgraded to reduce emissions. Newer heavier
trucks and buses must meet PM filter requirements beginning
January 1, 2012. Lighter and older heavier trucks must be
replaced starting January 1, 2015. By January 1, 2023, nearly
all trucks and buses will need to have 2010 model year engines
or equivalent.
The regulation applies to nearly all privately and federally
owned diesel fueled trucks and buses and to privately and
publicly owned schoolbuses with a gross vehicle weight rating
greater than 14,000 pounds.
The regulation provides a variety of flexibility options
tailored to fleets operating low-use vehicles, fleets operating
in selected vocations like agricultural and construction, and
small fleets of three or fewer trucks.
Amendments to the regulation adopted in April 2014 included
more time to comply for rural areas with cleaner air, second
and third vehicles in small fleets, as well as owners that
cannot afford to comply, and adjust compliance timelines for
low-use or vocations trucks, and recognized early actions
already taken by fleets to comply.
3. Incentive Funding.
A. Lower-Emission Schoolbus Program.
According to ARB's website, the primary goal of the
Lower-Emission Schoolbus Program (LESBP) is to reduce school
children's exposure to both cancer-causing and smog-forming
pollution.
The LESBP provides financial incentives to replace
high-emitting pre-1987 model year schoolbuses with
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lower-emitting new buses, and to equip in-use diesel
schoolbuses with ARB-verified diesel retrofit devices to
reduce toxic PM emissions. The LESBP provides up to $20,000
to install diesel particulate filters and up to $140,000 per
bus in financial opportunities to replace an existing
pre-1987 schoolbus. The primary focus has been on replacing
buses manufactured prior to 1977. These buses do not meet
federal motor vehicle safety standards and were not subject
to oxides of nitrogen and PM emission control.
Prior to bond funding, the Program provided over $100
million in State funding for new alternative fuel and diesel
schoolbuses for California's public school districts, and
retrofit devices for existing in-use diesel buses. In its
first seven years, the Lower-Emission Schoolbus Program
replaced about 600 pre-1987 model year public schoolbuses
with new, lower-emitting models and equipped about 3,800
in-use buses with ARB-verified diesel retrofit devices.
Proposition 1B, which was approved by the voters on November
7, 2006, enacts the Highway Safety, Traffic Reduction, Air
Quality, and Port Security Bond Act of 2006. This bond act
authorizes $200 million for replacing and retrofitting
schoolbuses, specifically through the LESBP to fund
replacement schoolbuses and retrofit devices to reduce air
pollution to reduce children's exposure to diesel exhaust.
Although primarily funded through bond funds, air districts
may use local funds, such as motor vehicle registration fee
surcharge money, to replace or retrofit schoolbuses.
The LESBP is generally administered through the local air
district, however, for projects funded under the LESBP by
bond funds, the San Joaquin Valley Air Pollution Control
District (SJVAPCD) has partnered with ARB in acting as the
implementing agency for the 18 air districts.
The replacement portion component of the program prioritizes
the oldest schoolbuses for replacement. However, incentives
provided for the retrofit component are awarded for 1987
buses and newer, through a non-competitive, first-come,
first-served basis, until funds are depleted. ARB notes in
the LESBP, that each "in-use diesel bus that is retrofitted
with a Level 3 diesel particulate filter emits 85 percent
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less toxic PM. This strategy provides the most
cost-effective air quality benefit, since a retrofit costs
about 10 percent of the purchase price of a new bus."
The Proposition 1B monies funded 1,018 schoolbus
replacements and 3,479 retrofits. ARB has received all
installments of bond funds for the Program, which brings the
Program to 100 percent of its projected funding of
approximately $196 million. The program is now funded
through a small amount of federal funds, administered by the
SJVAPCD on behalf of ARB.
B. AB 923 Air District Vehicle Registration Surcharge.
AB 923 (Firebaugh) Chapter 707, Statutes of 2003,
authorizes, until January 1, 2024, local air districts with
jurisdiction over areas not in attainment with federal air
quality standards to increase motor vehicle registration
fees by $2 to implement the Carl Moyer Program Projects, the
new purchase, retrofit, repower or add-on equipment for
previously unregulated agricultural sources, new purchases
pursuant to the Lower-Emission Schoolbus program, and
light-duty scrap or repair programs adopted by the state
board.
C. Carl Moyer Program.
AB 1571 (Villaraigosa), Chapter 923, Statutes of 1999,
established the Carl Moyer Memorial Air Quality Standards
Attainment Program through which ARB provides grants to
offset the incremental costs of purchasing or retrofitting
engines in order to reduce specified air emissions. The
Carl Moyer program originally received General Fund
appropriations.
AB 923 (Firebaugh, Pavley), Chapter 707, Statutes of 2004,
expanded the Carl Moyer Program to cover additional
pollutants and engines and imposed a 75-cent per tire fee on
tire sales to fund the Carl Moyer Program. Its provisions
will sunset on January 1, 2024.
According to the Carl Moyer Program guidelines, public
schoolbuses are eligible for Carl Moyer Program funding if
they meet the program criteria; however, their relatively
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low annual miles usually allow only for minimal grant
amounts.
D. Hybrid Vehicle Incentive Program.
AB 118 (Nunez), Chapter 750, Statutes of 2007, creates the
Air Quality Improvement Program (AQIP), which the ARB
administers in consultation with local air districts to
provide competitive grants to fund projects to reduce
criteria air pollutants, improve air quality, and support
research to improve the air quality impacts of alternative
fuels and vehicles, vessels, and equipment technologies.
The ARB established the Hybrid and Zero-Emission Truck and
Bus Voucher Incentive Project (HVIP), pursuant to their
authority under AQIP.
HVIP provides vouchers to California fleet owners to help
purchase hybrid and zero-emission trucks and buses.
As the LESBP funding does not cover the cost of a typical
hybrid schoolbus, HVIP permits combining funds from the
LESBP and HVIP to finance up to the full cost of a new
hybrid schoolbus.
SB 1204 (Lara), Chapter 524, Statutes of 2014, requires ARB
to develop a new program, the California Clean Truck, Bus,
and Off-Road Vehicle and Equipment Technology Program. This
program, known as Zero-Emission Truck and Bus Pilot
Projects, will fund development, demonstration,
pre-commercial pilot, and early commercial deployment of
zero- and near-zero-emission truck, bus, and off-road
vehicle technologies, with prioritization of projects
located in disadvantaged communities. ARB is currently
holding public workgroup meetings to solicit stakeholder
input.
In the 2014-15 Fiscal Year, the Legislature appropriated
$200 million to ARB from the GGRF to implement a low-carbon
transportation program. ARB is combining that funding with
previous funding for AQIP programs from vehicle registration
fees (usually about $10 million) to augment funding for
programs under AQIP. ARB, in their annual investment plan
for their AQIP and low-carbon incentive programs state that
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of that $5-10 million will be allocated for the HVIP
program, and $20-25 million for the program established
pursuant to SB 1204.
E. CEC Grants for Natural Gas Fueling Infrastructure.
AB 118 (Nunez), Chapter 750, Statutes of 2007, creates the
Alternative and Renewable Fuel and Vehicle Technology
Program, which the California Energy Commission (CEC)
administers to provide grants, revolving loans, loan
guarantees, loans, or other appropriate funding measures to
public agencies, vehicle consortia, businesses, consumers,
recreational boaters, and academic institutions to develop
and deploy innovative technologies that transform California
fuel and vehicle types to help attain the state's climate
change policies.
According to the ARFVTP Investment Plan for 2014-15, "the
investment plan update reserves $1.5 million for natural gas
fueling stations. While many private fleets are able to
incorporate natural gas fueling infrastructure into the
overall costs of their transition to natural gas, some
entities cannot. This $1.5 million allocation of funding is
intended primarily for these entities, such as school
districts and public transit districts."
4. Legislative Analyst Office Report on School Transportation
Programs.
The California Department of Education's Home-To-School
Transportation (HTST) Program receives about $500 million
annually, to support pupil transportation services.
In addition to the HTST program, the state historically funded
a schoolbus purchasing program for districts with fewer than
2,500 students. The program focused on replacing buses that
did not meet federal standards. Most funding was awarded based
on the age, mileage, and condition of the buses to be replaced.
In 2012-13, $4.9 million was appropriated for the program, and
32 out of 170 applicants received grants of up to $155,000 to
replace a single schoolbus.
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Beginning in 2013-14, the state discontinued the bus
replacement program. Any district receiving bus replacement
funds in 2012-13, however, had its regular HTST allocation
permanently increased by that amount. That is, under current
law, any district that received a one-time grant for bus
replacement in 2012-13 will continue receiving this same amount
but may use the freed-up funds for any transportation purpose.
A 2014 report from the Legislative Analyst's Office reviewing
school transportation in California noted that the current
formula for allocating HTST funding is widely recognized as
outdated and irrational, and recommended the Legislature
replace it with one of several alternatives offered, including
creating a broad-based program that reimburses a share of all
transportation costs.
5. Use of Cap and Trade Auction Revenue.
ARB has conducted ten cap-and-trade auctions, generating almost
$1.6 billion in proceeds to the state.
Several bills in 2012, and one in 2014, provide legislative
direction for the expenditure of auction proceeds including SB
535 (De León), Chapter 830, Statutes of 2012, AB 1532 (J.
Pérez), Chapter 807, Statutes of 2012, SB 1018 (Budget
Committee), Chapter 39, Statutes 2012, and SB 862 (Budget
Committee), Chapter 36, Statutes of 2014.
SB 535 (De León), Chapter 830, Statutes of 2012, requires that
25% of auction revenue be used to benefit disadvantaged
communities and requires that 10% of auction revenue be
invested in disadvantaged communities.
AB 1532 (J. Pérez), Chapter 807, Statutes of 2012, directs the
Department of Finance to develop and periodically update a
three-year investment plan that identifies feasible and
cost-effective GHG emission reduction investments to be funded
with cap-and-trade auction revenues. AB 1532 specifies that
reduction of greenhouse gas emissions through strategic
planning and development of sustainable infrastructure
projects, are eligible investments of GGRF.
SB 1018 (Budget Committee), Chapter 39, Statutes of 2012,
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created the GGRF, into which all auction revenue is to be
deposited. The legislation requires that before departments
can spend monies from the GGRF, they must prepare a record
specifying: (1) how the expenditures will be used, (2) how the
expenditures will further the purposes of AB 32 (Núñez, Pavley)
Chapter 488, Statutes of 2006, (3) how the expenditures will
achieve GHG emission reductions, (4) how the department
considered other non-GHG-related objectives, and (5) how the
department will document the results of the expenditures.
SB 862 (Budget Committee), Chapter 36, Statutes of 2014,
requires the ARB to develop guidelines on maximizing benefits
for disadvantaged communities by agencies administering GGRF
funds, and guidance for administering agencies on GHG emission
reduction reporting and quantification methods.
Legal consideration of cap-and-trade auction revenues: The
2012-13 budget analysis of cap-and-trade auction revenue by the
Legislative Analyst's Office noted that, based on an opinion
from the Office of Legislative Counsel, the auction revenues
should be considered mitigation fee revenues, and their use
requires that a clear nexus exist between an activity for which
a mitigation fee is used and the adverse effects related to the
activity on which that fee is levied. Therefore, in order for
their use to be valid as mitigation fees, revenues from the
cap-and-trade auction must be used to mitigate GHG emissions or
the harms caused by GHG emissions.
In 2012, the California Chamber of Commerce filed a lawsuit
against the ARB claiming that cap-and-trade auction revenues
constitute illegal tax revenue. In November 2013, the superior
court ruling declined to hold the auction a tax, concluding
that it is more akin to a regulatory fee.
AB 32 auction revenue investment plan: The first three-year
investment plan for cap-and-trade auction proceeds, submitted
by Department of Finance, in consultation with ARB and other
state agencies in May of 2013, identified sustainable
communities and clean transportation as one of the key sectors
that provide the best opportunities for achieving the
legislative goals and supporting the purposes of AB 32. The
plan recommended the aforementioned sector receive the largest
allocation of funds from the GGRF, but did not specify a
monetary amount.
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Budget allocations: The 2014-15 budget allocates $832 million
in GGRF revenues to a variety of transportation, energy, and
resources programs aimed at reducing GHG emissions. Various
agencies are in the process of implementing this funding. The
budget agreement specifies how the state will allocate most
cap-and-trade auction revenues in 2015-16 and beyond. For all
future revenues, the legislation appropriates 25% for the
state's high-speed rail project, 20% for affordable housing and
sustainable communities grants, 10% to intercity capital rail
projects, and 5% for low-carbon transit operations. The
remaining 40% is available for annual appropriation by the
Legislature.
Comments
1. Purpose of Bill.
The author states that according to the U.S. Environmental
Protection Agency (US EPA), more than half of schoolbuses have
been in service for over a decade and schoolbuses built to meet
US EPA's 2010 standards emit 95% less pollution than pre-2007
buses and are 60 times cleaner than pre-1991 buses. The author
notes that older, more polluting schoolbuses pose significant
health risks to children who typically ride these buses for
one-half to two hours per day and that emissions from older
buses also have a negative impact on the communities in which
they travel. The author further states that unlike many
states, California does not require school districts to take
buses off the road after a set number of years; as a result,
the state has some of the oldest buses in the country. The
author notes that replacing schoolbuses saves $3,000 per year
in fuel costs alone and that this bill makes a modest
investment that will have a significant impact on the state's
air quality.
2. Does This Bill Advance the Goals of AB 32?
Any projects funded through GGRF monies are required to
facilitate the achievement of GHG emission reductions and be
used to advance the regulatory purposes of AB 32.
SB 523 requires $5 million from the GGRF be used to fund the
purchase of new schoolbuses. The bill does not specify what
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type of technology the new schoolbus must use, but does
prohibit the new bus from exceeding the cost estimated for a
replacement schoolbus of the same "capacity" as the schoolbus
being replaced. It is unclear if the requirement for the bus
to be of the same "capacity," limits the type of technology of
the new schoolbus. However, the bill does specify that an
applicant may use other funds to augment their GGRF funds
through the program to purchase a more expensive model
schoolbus. In this way, applicants may be able to purchase
schoolbuses with significantly reduced GHG emissions, such as
hybrids.
However, as the author states that the technology for hybrid or
electric buses is cost-prohibitive for many school districts
and also does not support the long commutes required in most
small, disadvantaged districts, it seems the intent of the bill
is to fund new diesel, and natural gas-fueled vehicles that do
not have the same range constraints.
Although the state and federal government have implemented fuel
efficiency and greenhouse gas emission standards for passenger
vehicles, there have been no such requirements for heavy duty
vehicles. How much more fuel efficient on average are new
diesel schoolbuses as compared to older models? The author's
office points to information from West County Transportation
Agency, which has purchased new schoolbuses, and apparently
seen an improvement in gas mileage from pre- 1994 bus at 7
miles/gallon, to 13 miles/gallon for a new bus.
While new schoolbuses represent a huge gain in terms of
improved air quality and diesel PM reductions, it is unclear
whether purchasing new diesel schoolbuses would provide
significant GHG emissions reductions over older models being
replaced. Therefore, it is unclear whether this bill meets the
requirements in order to be eligible for funding from the GGRF.
3. Some Funding Available.
As noted, the Proposition 1 funds, which were the primary funds
available for the replacement and retrofit of schoolbuses, are
depleted. However, the LESBP is still funded through some
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level of federal funding along with ARB funds. The average per
year for the last three fiscal years was about $560,000.
Although this funding may not go a long way towards the
purchase of new buses, it could retrofit almost 30 buses per
year, reducing diesel PM anywhere from 85 to 90% compared to
older diesel buses. Additionally, limited Carl Moyer Program
funds and AB 923 funds could also be extended through use of
the funds for retrofits, instead of purchases of new vehicles.
4. Reforming the HTST Program.
As noted in the background, the LAO in 2014 recommended that
the current approach to funding school transportation be
reformed and offered several recommendations. Reforming the
HTST program may be a more sustainable and effective mechanism
to address the needs of school districts throughout the state
in retrofitting and replacing their bus fleet.
SOURCE: Author
SUPPORT:
American Academy of Pediatrics, California
California Association of School Transportation Officials
California School Employees Association
Lakeport Unified School District
Rural County Representatives of California
San Diego County Office of Education
School Transportation Coalition
Small School Districts' Association
OPPOSITION:
California Chamber of Commerce
DOUBLE REFERRAL:
This measure was heard in the Senate Transportation and Housing
Committee on April 21, 2015, and passed out of committee with a
vote of 10-0.
-- END --
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