Industrial Relations Commission of New South Wales CITATION : Re: Bluescope Steel (AIS) Pty Ltd - Port Kembla Steelworks Employees Award 2004 and other matters [2004] NSWIRComm 185 APPLICANTS: Bluescope Steel Limited Bluescope Steel (AIS) Pty Ltd PARTIES : RESPONDENTS: The Australian Workers' Union, New South Wales The Electrical Trades Union of Australia, New South Wales Branch The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch FILE NUMBER: IRC400, 2167, 2543 of 2004 CORAM: Walton J Vice-President; Sams DP; Grayson DP; O'Neill C CATCHWORDS : Industrial dispute - enterprise bargaining - highly contested and protracted process - intervention by Commission at early stage - orderly process thereafter - settlement of majority of issues - conciliated outcome leaving residue of matters for arbitration - union claim for trade union training leave - significant difficulty in case as presented - claim withdrawn and placed in leave reserved - critical issue of regulation of disturbances to production and supply - history of dumping hot metal from blast furnace during industrial action - significant movement by steel unions away from historical position - new position adopted whereby hot metal cast into slabs and stored during industrial action - union claim as to when company required to store slabs after commencement of industrial action - union claim as to where slabs required to be stored following industrial action - whether consent arrangements reached in previous enterprise agreements are immutable - industrial climate in steelworks since 2001 - balance between economic interests of companies and basic and reasonable rights and interests of employees and unions - desirability of parties approaching industrial relations in mature and moderate way - union claim regarding commencement time for stacking slabs granted - union claim as to limited location for slab storage refused - new enterprise awards reflecting decision to be filed. LEGISLATION CITED : Industrial Relations Act 1996 CASES CITED : Notification under s130 by Minister for Industrial Relations of an Industrial Dispute between BHP Billiton and the Australian Workers' Union, NSW and Others [2002] NSWIRComm 378 HEARING DATES: 06/22/2004; 06/23/2004; 06/24/2004 DATE OF JUDGMENT: 06/24/2004 APPLICANT: Mr R Goot of senior counsel Mr S Meehan of counsel INSTRUCTED BY: Mr J de Flamingh Blake Dawson Waldron Solicitors LEGAL REPRESENTATIVES: RESPONDENT: Mr A Gillespie The Australian Workers' Union, New South Wales Mr W Tomlins The Electrical Trades Union of Australia, New South Wales Branch Mr W Phillips The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch JUDGMENT: - 16 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: Walton J, Acting President Sams, DP Grayson, DP O'Neill, C 24 June 2004 Matter No. IRC 400 of 2004 BLUESCOPE STEEL (AIS) PTY LTD AND ANOTHER v THE AUSTRALIAN WORKERS' UNION, NEW SOUTH WALES AND OTHERS Notification under section 130 by BlueScope Steel (AIS) Pty Ltd and another of a dispute with The Australian Workers' Union, New South Wales and others re negotiations for a new enterprise agreement. Matter No. IRC 2167 of 2004 BLUESCOPE STEEL PORT KEMBLA OPERATIONS AWARD 2004 Application by BlueScope Steel Limited and another for a new Enterprise Award Matter No. 2543 of 2004 BLUESCOPE STEEL (AIS) PTY LTD AND ANOTHER V THE AUSTRALIAN WORKERS' UNION, NEW SOUTH WALES AND ANOTHER Notification under section 130 by BlueScope Steel (AIS) Pty Ltd and another of a dispute with The Australian Workers' Union, New South Wales and another re enterprise bargaining issues. DECISION EXTEMPORE [2004] NSWIRComm185 1 In a broad sense this decision concerns the culmination of a protracted process of dispute resolution in relation to the steelworks in Port Kembla since 2001. After the expiry of the BHP Steel Port Kembla Operations Enterprise Agreement 2002, the parties engaged in a highly contested enterprise bargaining process which was accompanied by some measure of industrial action. The issues at the centre of that dispute were whether a number of critical provisions of the enterprise agreement should be retained and, in the case of benefits afforded to employees, whether those provisions should be improved. The Commission intervened at an early stage of that process, and in the result, there was made the Bluescope Steel (Regulation of Disturbance to Production and Supply) Interim Award 2004 ('the Interim award'). There then followed an orderly process of dispute resolution managed by the Commission which resulted in the settlement of all relevant issues, save for three particular matters which we shall shortly identify. 2 The agreement between the parties will result in: i) the termination of the enterprise agreement; ii) the rescission of the former two steelworks awards known respectively as the BHP Steel (AIS) Pty Ltd – Port Kembla Steelworks Employees Award 2000 and the BHP Steel (JLA Pty Limited – Spring Hill and CRM Works) Employees Award 2001 ('the former steelworks awards') and the Interim award; iii) the establishment of two new awards which encompass the former steelworks awards together with agreed variations arising from the enterprise bargaining process (and any variations granted by us in arbitration). 3 The new awards shall be known respectively as BlueScope Steel (AIS) Pty Ltd – Port Kembla Steelworks Employees Award 2004 and BlueScope Steel Ltd – Springhill and CRM Employees Award 2004 ('the awards') which, by their very titles, represent the culmination of significant corporate and industrial developments since 2001. 4 It is important to note that the agreement reached between the parties has retained many important elements of the former enterprise agreement, including those provisions concerning continuity of supply and security of employment. Further, it should be noted that there are significant improvements in rates of pay and conditions of employment. 5 The disputed matters are essentially twofold. First, there is an issue about two components of the hot metal arrangements found within the continuity of supply provisions of the awards. Those issues were concisely described by Mr Heycott in his evidence as follows: a) stacking slabs after two hours of industrial action; b) stacking slabs in one central location, either in the 17 area or number 6 yard. 7 Secondly, The Australian Workers' Union, New South Wales, The Electrical Trades Union, New South Wales Branch and The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch ('the Unions') claimed that there should be introduced a new trade union training provision to replace the existing clauses of the former steelworks awards relating to delegates' training. The Unions claimed: Each employee covered by the award and nominated in writing by their respective union as the elected union delegate shall be allowed up to ten days paid trade union training leave per annum to attend trade union training courses conducted or approved by Trade Union Training Australia Inc, or one of the Unions party to this award. 6 However, at the conclusion of the proceedings today, and in the light of a difficulty encountered by the Unions in their cases in this respect, this claim was agreed to be placed in leave reserved. 8 It must be borne steadily in mind that the contested provisions as to the dumping of hot metal derived from the Recommendation of the Commission given on 13 May 2002 in Notification under s130 by Minister for Industrial Relations of an Industrial Dispute between BHP Billiton and the Australian Workers' Union, NSW and Others [2002] NSWIRComm 378 ('the 2002 Recommendation'). At the outset of that recommendation the Commission made the following observations as to the nature of the dispute then under consideration: The resolution of the issues in this dispute essentially involve a wholesale reconsideration of longstanding industrial and employment relationships in this industry. Those relationships have as their foundation the extensive programme of industry reform brought about by the Steel Industry Plan and subsequent steel industry agreements. The arrangements arising from the plan and those agreements constitute the modern history of the steel industry and were instrumental in the emergence of internationally competitive corporations in the steel industry in Port Kembla. Until more recent times, those arrangements also produced relatively stable industrial relations in the industry. The determination of those issues represents, therefore, no less than a watershed for industrial relations and employment in the steel industry in the Illawarra area. 9 The resolution of the present industrial dispute, in our view, involves no less a watershed for industrial relations in this industry. The enterprise agreement and its innovative terms have stood the test of time and produced real benefits, in our view, for both the steelworks business and its employees under the industrial climate that has prevailed at the steelworks since 2001. Whilst we would not wish to be taken as stating that the provisions deriving from that enterprise agreement are immutable, it must be said that, having regard to the history of industrial relations at the steel works since 2002, the provisions remain poignant and necessary at this time. In other words, we are not satisfied that the industrial circumstances applying at the steelworks are such as would require some substantial revisiting of those provisions at the present time. 10 On the other hand, we are mindful that these provisions will only be effective if they represent a fair and reasonable balance between the respective interests. In this respect, the management of the corporation, as well as the Unions, bear some considerable responsibility for approaching industrial relations issues at the steelworks from this point, not only within the parameters of the terms of the proposed awards, but in a mature and moderate way. We repeat in that respect, the observations made by the Commission in the 2002 Recommendation as follows: It is essential that arrangements be put in place to maintain the viability of this important industry. However, it must also be said that in order for the industry to remain viable, it will be necessary for management and the unions, by their officers and members, to once again establish common goals for the industry and implement those objectives for the benefit of the companies and their employees and for the public interest (most immediately found in the welfare of the people of the Illawarra community). These recommendations are intended to strike a balance between the economic interests of the companies and the basic and reasonable rights and interests of employees and their unions. 11 With those considerations in mind, we note that the issue of trade union training may well become connected to the dispute resolution provisions of the enterprise agreement, but in a different way to provisions concerning the dumping of hot metal arrangements. 12 Finally then, before we approach the particular issues, we wish to make it abundantly clear that we have approached the task of resolving the disputed matters with three considerations foremost in our minds: 1) The terms of the agreement reached between the parties. 2) The overall historical context in which the provisions of the enterprise agreement must be reviewed. 3) The need to achieve a proper balance between the maintenance of a competitive industry and fair industrial relations. 13 We shall now consider seriatim each one of the contested areas: Stacking of slabs after two hours of industrial action 14 There was some confusion at the outset of the Unions' case about this matter. Their claim had originally been directed to the former cl 9.3.1 of the Interim award which, for the most part, concerned the time from which normal production rates would reduce after industrial action. In their amended claim, the Unions sought a variation of cl 9.3.3 of the Interim award by inserting the following provision: That after two hours' notice of a dispute all slabs from that point on will be stacked in the following areas. Area 17 and 6 yard of the slab yard only. 15 This amended claim represented an effective merging of the two claims we have described earlier. In this part of our decision we shall deal with what we understand to be the first claim of the Unions, namely that the provision of the award requiring the stacking of slabs after industrial action shall operate after two hours from the giving of notice of, in the Unions' case, "notification of industrial dispute". 16 We note that, despite this confusion, the companies (no doubt because of the negotiation process) proceeded to put their case upon a proper understanding of the claim of the Unions. However, we would observe that in the future the cases brought by the Unions would be assisted by some greater attention to detail and compliance with directions. We emphasise that these remarks are not designed to introduce some form of legalese into the dispute settlement process, but simply to ensure that the issues to be resolved are clear (a point which was eventually reached in this matter). 17 We should note, at the outset, that the existing provision and, indeed the whole tenor of cl 9 of the Interim award, relates to the taking of industrial action. No proper basis has been put to us to sustain a change in that position. Hence, we shall approach this aspect of the Unions' claim from this standpoint. 18 The existing cl 9.3.3 of the Interim award relating to this disputed matter is in the following terms: All iron that is at the BOS at the time industrial action commences will be processed as normal. 19 We understand the effect of the claim to be that the words "until two hours after notice of the commencement of the industrial action is provided" would be added to the end of the existing clause. 20 The issue then relates to the period of time that will pass before slabs are required to be stacked rather than processed normally. In order to more fully explain that distinction it is necessary to refer to the evidence of Mr Heycott which is set out below: Q. And in the past in the normal disputes it would be one about every four hours? A. No, more regularly. It would be a period of four to six hours at the throughput rates of machines because essentially there was quite a bit of material we had poured in front of the BOS, up to four pots which is equivalent to four tonnes worth of hot metal not even started in the steel making process, just sitting ready to charge the BOS. Q. And you say now four to six hours in the past, you say four to six hours, that is your statement? A. Four to six hours in general to clear that process, that's correct. WALTON J, V-P: Q. I wonder if you could assist me in indicating what you understand to be the present practice that is adopted by the companies when there is an industrial dispute in terms of defining for me in the course of a production effect when it is that a particular set of materials and/or slabs will be treated as being the subject of the slab storage arrangements? In other words how does the company presently establish a cut off point from which material will be treated as being affected by the position or not affected by the position. Have I explained that sufficiently for you? A. Yes. The cut off point that exists under the EA has been applied on clearly five occasions since the EA has been in process, has been the point of pouring at the BOS weighbridge. So metal that has been poured into hot metal pots ahead of the BOS steel making furnace. The last full pot that is poured in and exists, poured at the point of time that a strike is in process, has commenced, is material that would go through the system and be not subject to a hold. So that material and material subsequently any further through the process would be continued to go through the process and be cast as slabs that would be despatched without a hold applied to the normal storage locations that we direct that product type to. Any metal that was then subsequently poured out of torpedoes into hot metal pots ahead of the BOS and then progressed through the process to eventually be cast would be the first of the slabs that would be subject to hold or stacking in terms of the enterprise agreement. Q. So at what point does the company determine that condition would operate? Is it from the point of the notice of a stoppage of work and then there is a measurement taken as to the state of melt at that point? A. That's correct. So my team would have an indication from the direct manager of the operational area or the senior HR representative of that area that they have confirmed that the strike is in progress, would be immediately notified to my co-ordinators. They are tracking product right through the slab making system in its various forms. They would then make the judgment in terms of what, where the line in the sands would exist in terms of the poured melts, from which poured metal through what heats are currently causing and identify that on an actual tracking sheet immediately at that point of time. What material then has to flow through the system. So they have identified what is at heats are currently in process. And then would identify from the point of time in terms of the consecutive heats from then on that would be produced from the metal poured out of torpedo ladles subsequent to the strike commencing the exact identities of those heats, once they track through the system and becoming a cast heated slabs and then immediately start applying the hold and arrange for stacking of those slabs SAMS DP: And how long might that process take on average? A. The process would take - WALTON J, V-P: Q. Perhaps if I can just ask you this: You have dealt with this in various ways in your statement but allowing from the point of the notice -? A. To fully clear the system of slab product before it becomes subject to hold is that four to six hour time period because the time period is essentially exactly the same in terms of the process covered in terms of previous industrial practice prior to the striking of the current EA. <RE-EXAMINATION GOOT: Q. That process which you have described before the hold is applied, the process that occurs after the metal is transferred from the torpedo ladle at the weighbridge, before notification or at the time of notification of industrial action, which goes through the process, takes four to six hours, is the process you have described, what is referred to or what you understand is referred to in the enterprise agreement as processed as normal? A. That's correct. 21 When described in this way it would appear that the dispute between the parties consists of an issue as to whether the slabs would be stacked under the provisions of the award or approximately two to four hours earlier, as properly conceded by Mr Goot SC, who appeared with Mr S Meehan of counsel for the companies. 22 This matter was not the subject of any extensive examination by the Commission in the 2002 Recommendation. It emerged from the negotiation process as a consent position. This is a factor against the grant of the claim as we would be reluctant, in the ordinary course, to disturb consent arrangements. However, that factor has to be balanced against the consideration that the Commission is now reviewing this provision for the first time after the enterprise agreement's terms were settled and after the effective expiry of the agreement. In that light we are inclined to review the provision substantially in the light of the merits of the parties' respective cases about the provisions of the Interim award. We do not feel that we are greatly assisted in this regard by practices adopted prior to the making of the enterprise agreement. 23 On balance, we consider that this particular aspect of the Unions' claim (save for the aspect of the proposed clause which changes the existing terminology to a reference to an "industrial dispute") should be granted for the following reasons: 1) The stacking of the slabs from a point nearer the commencement of industrial action is more consistent with the overall balancing of arrangements in the no dumping of hot metal and continuity of supply provisions of the awards. The stacking of slabs represents the counterpoint of the limitations otherwise imposed upon the Unions as to the manner in which they engage in industrial action. 2) The companies have not demonstrated any substantial prejudice by the proposed provision. We note there was no direct evidence as to the precise impact of the proposed clause (including a two hours notice provision) when compared to the existing provision. However, the impact, in relative terms, appears to be modest. The mere statement that more slabs may be required to be stacked, as conveyed in the evidence of Mr Peters, does not materially advance the case of the companies. The two hours notice requirement enables an effective time for the provision of notice of the industrial action and arrangements to be put in place. 3) It has not been suggested to us that the Unions' alternative provision would in any way result in the dumping of hot metal of itself; or for that matter, any other significant adverse affect on productivity. Slab storage location 24 The normal arrangements for slab storage and dispatch are intricately summarised in the evidence of Louis Caruana, Slab Yard Manager for BlueScope Steel Limited. We do not propose to set out the entirety of the evidence, but for present purposes refer to the following extract from his statement of evidence: The slab yard receives slabs produced from the Company's slab caster area. During normal operations, about 15,000 tonnes of slab is cast in the slab caster area each day. However, the slab caster itself is not a designated storage area and therefore slab must be transferred to one of the Company's slab yards prior to delivery to the end destination of the slab. The particular slab yard selected to store slab depends upon whether the slabs produced are designated for the domestic mills (Hot Strip Mill or Plate Mill), Westernport or for export. In general, the system in place is as follows: a) slab designed for the Hot Strip Mill is stored in the No.1 and No. 2 yards; b) slab designated for the Plate Mill is stored in the No. 2 and No. 3 yards; c) slab designated for Westernport is stored primarily in the waterfront, gantry and pads (about 75%), and the soaking pits (about 25%); and d) slab designed for export is stored and assembled in the 17 Area. 25 It was emphasised in Mr Caruana's evidence there are various systems for the tracking of slabs when made and stored. The tracking system used in the internal yard areas is automatic and involves essentially a computer tracking system. In his evidence he states that there is no such automated tracking system in the external yards. 26 It is the Unions' case that all slabs made and stored during the course of industrial action should be, in fact, stored in Area 17 or Yard 6. These are both external yards. 27 We should note at this juncture that the Commission had the benefit of both the provision of maps (one of which we attach), oral evidence and a view of all relevant slab storage areas to assist it in the consideration of this claim. 28 There are three important observations to be made at the outset in relation to this matter. They are as follows: 1) The essence of the existing provisions within the award are not affected by this claim. The award will continue to provide that once a slab is made during the course of industrial action it will not be further handled, despatched or processed until the actual cessation of industrial action; that is, an actual return to normal production for any reason. In that respect, the provision does not prohibit the taking of industrial action by the Unions per se , but ensures during the course of that industrial action there is no dumping of hot metal. 2) This issue was the subject of consideration by the Commission in the 2002 Recommendation. In that case (as in the present matter) it was clear that the companies had the capacity, either by electronic or other means, to effectively monitor the whereabouts of a slab during the course of industrial action. In other words, it was possible for a slab to be stored in any location and "tagged" to identify it as being incapable of handling or dispatch (or further process) during the industrial action. 3) Further, in the 2002 Recommendation the Commission ruled against the Unions' claim in this respect. It should be noted however, that the claim then pursued by the Unions was somewhat different in that there were a variety of propositions mounted as to where slabs should be stored. In the present matter, the Unions have fixed their attention upon Area 17 and Yard 6 which raise some particular additional issues but the core of the considerations undertaken by the Commission in the 2002 Recommendation remain the same. 29 As we have mentioned, because of the re-framing of the Unions' claim in this case a considerable amount of evidence was directed to the consequences of granting the claim requiring the storage to occur in Area 17 or Yard 6. In that respect we find that the evidence demonstrates the following: 1) There are limitations as to rail operations accessing Area 17 because of, among other things, the requirement to isolate the area for safety reasons each time the locomotives/rail borne vehicles move in and out of the area. There is also the necessity of having to shunt backwards and forwards between Area 17 and the road which acts as a limitation. 2) There are limitations in the capacity to handle slabs in Area 17 due to the system of slab handling involving forklifts rather than cranes, as in other areas and the requirement for at least one of the two forklifts to be deployed on handling export slab onto ships from Area 17 (thus reducing overall handling capacity). 3) When there occurs continuous casting of slabs from the two slab casters, these limitations will eventually cause bottlenecking within the system and, in turn, the dumping of hot metal. 4) There are significantly increased costs involved in the retrieval of slabs from the disputed areas. 30 In the absence of any contradictory evidence called by the Unions, we do not consider that any conflict between the evidence of Mr Heycott and Mr Caruana is sufficient to warrant the rejection of the direct and cogent evidence of those persons as to the undesirability of requiring the stacking of slabs in the disputed areas during the course of industrial action. 31 However, the safety issues raised by the companies as to the necessity to transport/transfer slabs by forklift across bumpy terrain into Area 17 are inherent, in our view, and do not materially impact on the question we are asked to consider. In other words, the risk would appear, on the evidence, to exist whether the transport occurs under normal operations or in circumstances of industrial action. We do not, therefore, consider this factor should be taken into account in support of the merits of this part of the companies' case. Rather, it is a matter that the companies should attend to in the usual way. We are minded to make those observations also in the light of the evidence showing an absence of shunt warning systems in the disputed areas. 32 Issues raised by the companies' witnesses as to additional difficulties in tracking slabs during times of industrial action do not appear to us to ultimately assist the companies case given the evidence, in particular that of Mr Peters, to the effect that the slabs are subject to a computerised tracking system regardless of where they might be stacked. We do not consider that the companies' case in this respect can be sustained because of some possibility of human error in the external yards. 33 Against this we have to acknowledge the Unions' evidence and submissions, the thrust of which may be summarised as follows: 1. There has been a significant change in recent times in the industrial relations approach of the employer towards employees, such that there has been a shift away from genuine consultation as to structural change and its consequences for employment security. 2. Such a change in the employer's approach can be said to be the result of existing arrangements regarding slab handling during industrial action in that there are minimal consequences of such action for the employer. 3. There has been significant movement by the Unions away from the earlier position whereby one result of industrial action might be and has been the dumping of hot metal to a position whereby, if the claim is granted, hot metal will be cast in slabs and stored after 2 hours of industrial action. 4. Whilst it is conceded by the Unions that slab storage will result in double handling and added cost, there would no longer be the prospect of dumping metal and losing it forever. 6. The Unions' claim with respect to stacking slabs would, if granted, restore industrial equity or as another witness described it, would "even up the playing field" as between the employer and employees. 34 We note in that regard that the position now adopted by the Unions as to the dumping of hot metal represents a seachange in the unions' approach, particularly that of the AWU, and in our opinion must be recognised as such. We regard this significant attitudinal change on the part of the Unions a substantial footing upon which a more stable and productive industrial relations framework within the Port Kembla steelworks can be erected. 35 We do not think this evidence can be lightly dismissed on the basis of an objection raised by the companies as suggested by Mr Goot, SC given the absence of cross-examination of the Unions' witnesses. It is fanciful to suggest that some case management by the Commission may have resulted in the companies' choosing not to test evidence said to be critical to their case. The evidence must, therefore, be said to raise real issues as to the state of industrial relations from the perception of employees. 36 However, on balance, we consider that the Unions' claim should be rejected and the existing provision retained. We have reached this conclusion for the following reasons: 1. On the evidence before us, there is a real prospect that industrial action of a more extensive duration would, if the claim were granted, result in the loss of production and ultimately the dumping of metal. This would be entirely inconsistent with the intention of cl37 of the proposed award. It is utterly at odds with the Unions' present commitment not to dump hot metal during industrial action. 2. There is insufficient evidence before us to establish that the companies have taken such advantage of the system of regulation of disturbances to production and supply under the award as would warrant, as a matter of fairness, the imposition of what effectively amounts to a penalty upon them under the claim. We do not consider that, on the basis of evidence before us as to the costs, burdens and inefficiencies resulting from the Unions' claim, the claim should be granted. This is not to suggest that we have not given some anxious reflection as to the factors identified by the Unions, given the deterioration in industrial relations at the workplace. 3. Most significantly, we consider that the Unions have not demonstrated by their approach to industrial disputation to this date that some alleviation of the present regime is warranted or that some further re-balancing of the regulatory mix should occur. It was only very recently that the Unions abandoned their active proposition that they should, as a matter of right, be permitted to dump hot metal; a proposition which, we must say, is remarkable. We would wish to acknowledge, however, that the intimation now given by the Unions with respect to the dispute settlement regime represents a significant positive shift in position. When that statement of intent is put into effect, together with the new dispute settlement procedures, there may well be established a good foundation for reviewing some aspects of the current arrangements upon the expiry of the award we will now make. We consider industrial relations may also be improved by suitable educational arrangements as to trade union training leave. 37 With the placement of the claim for trade union training in leave reserved, and the resolution of the two disputed provisions in the hot metal clause the industrial dispute in Matter IRC 400 of 2004 is resolved and the two application matters (IRC 2167 and 2543 of 2004) are concluded. 38 We direct that the parties confer to settle the final form of the awards in accordance with our decision. The draft awards should be filed and served within 7 days. If there is any dispute as to the form of the awards the issue will be dealt with by his Honour, Deputy President Grayson. 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