[Congressional Record Volume 145, Number 58 (Tuesday, April 27, 1999)]
[Senate]
[Pages S4281-S4284]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JEFFORDS (for himself, Mr. Leahy, Mr. Specter, Mr. 
        Cochran, Mr. Moynihan, Mr. Sessions, Ms. Snowe, Mr. Lott, Ms. 
        Landrieu, Ms. Collins, Mr. Kennedy, Mr. Schumer, Mr. Shelby, 
        Ms. Mikulski, Mr. Hollings, Mr. Hutchinson, Mr. Dodd, Mr. 
        Breaux, Mr. Thurmond, Mr. Chafee, Mr. Smith of New Hampshire, 
        Mr. Sarbanes, Mr. Coverdell, Mr. Cleland, Mr. Gregg, Mr. Reed, 
        Mr. Kerry, Mr. Helms, Mr. Byrd, Mr. Torricelli, Mr. Edwards, 
        Mr. Lieberman, Mr. Ashcroft, Mr. Rockefeller, Mrs. Lincoln, Mr. 
        Biden, Mr. Frist, Mr. Bond, and Mr. Thompson):
  S.J. Res. 22. A joint resolution to reauthorize, and modify the 
conditions for, the consent of Congress to the Northeast Interstate 
Dairy Compact and to grant the consent of Congress to the Southern 
Dairy Compact; read the first time.


re-authorization of the northeast dairy compact and ratification of the 
                         southern dairy compact

  Mr. JEFFORDS. Mr. President, I rise today to introduce legislation to 
make permanent the Northeast Interstate Dairy Compact and to ratify a 
Southern Dairy Compact. I am so pleased to be joined by 38 of my 
colleagues as original cosponsors of this important legislation.
  In 1996, Senator Leahy and I fought an uphill battle and secured 
eleventh hour passage of this landmark legislation. We were met with 
resistance in every step of the legislative process, yet we succeeded 
in passing the Compact as a three-year pilot program.
  The Northeast Compact has a proven record of effectiveness. All eyes 
have been on New England since the compact became law. The Compact has 
been studied, audited, and sued--but has always come through with a 
clean bill of health. Because of the success of the Compact it has 
served as a model for the entire country. Since the Northeast Compact 
was approved by Congress as part of the 1996 Farm Bill, it has been 
extremely successful in balancing the interests of processors, 
retailers, consumers, and dairy farmers by helping to maintain milk 
price stability.
  The 1996 Farm Bill authorized the Dairy Compact for three years and 
was originally due to expire in April of 1999. Senator Leahy and I, 
during the 1999 Omnibus Appropriations bill, included language that 
extended the life of the Compact for six additional months. The Compact 
will expire on October 1, 1999, unless congressional action is taken.
  Mr. President, in addition to the six New England states, 23 states 
have either passed or are considering legislation for dairy compacts 
that would help both farmers and consumers in their states. During the 
past year Alabama, Arkansas, Kentucky, Louisiana, Mississippi, North 
Carolina, South Carolina, Tennessee, Virginia and West Virginia have 
passed legislation to form a Southern Dairy Compact. Florida, Georgia, 
Missouri, Oklahoma, Texas and Kansas are also considering joining the 
Southern Compact. The Oregon legislature is in the process of 
developing a Pacific Northwest Dairy Compact as well.
  New Jersey, Maryland and New York have passed state legislation 
enabling them to join the Northeast Dairy Compact. Delaware, 
Pennsylvania and Ohio may also join if passed in their states. These 
states have recognized how dairy compacts can help provide stability to 
the price paid to dairy farmers for the milk they produce, while 
protecting the interests of consumers and processors. The Dairy Compact 
Commission that was established by the 1996 Compact legislation is made 
up of 26 members from the six New England states. The members, which 
are appointed by each state's governors, consist of consumers, 
processors, farmers and other state representatives.

  The legislation being introduced today, establishes that the dairy 
compacts may regulate only fluid milk, or Class I milk. It ensure that 
the dairy compacts compensate the Commodity Credit Corporation for the 
cost of any purchases of milk by the corporation that result from the 
operation of the compacts. In addition, the legislation exempts the 
Woman, Infant and Children (WIC) program from any costs related to the 
dairy compacts. More importantly, the Daily Compact operates at no 
costs to the federal government.
  A 1998 report by the Office of Management and Budget (OMB) on the 
economic effects of the Dairy Compact illustrates the Compact's 
success. The OMB reported that during the first six months of the 
Compact, consumer prices for milk within the Compact region were five 
cents lower than retail store prices in the rest of the nation. OMB 
concluded that the Compact added no federal costs to nutrition programs 
during this time, and that the Compact did not adversely affect farmers 
outside the Compact region.
  Helping farmers protect their resources and receive a fair price for 
their products in vital to Vermont's economic base and, indeed, its 
very heritage as a state. Establishing a fair price for dairy farmers 
has been an on-going battle throughout my time on Capitol Hill. Few 
initiatives in my long memory have sparked such a vigorous policy 
debate as the Northeast Dairy Compact. I am so pleased and proud at how 
industry and government leaders from throughout Vermont and the New 
England region pulled together to pass the Compact. I am also impressed 
by the tremendous coalition of support for permanent authorization of 
the Northeast and Southern Dairy Compacts.
  The adoption of the Northeast Compact in 1996 simply could not have 
happened in Congress without the help and dedicated work for the 
veritable army of Compact supporters from throughout Vermont and the 
country. This year, our legislation again is supported by Governors, 
State legislators, consumers and farmers from throughout the country.
  Mr. President, on March 5, 1999, the Basic Formula Price (BFP) paid 
to farmers dropped from $16.27 to $10.27, the largest month to month 
drop in history, bringing the lowest milk price in about 20 years to 
dairy farmers. In the beginning of April the full impact to farmers was 
$7.07 per hundredweight loss from December of 1998's BFP. This drop in 
price will have a severe negative impact on dairy producers from 
throughout the country. In New England, the Dairy Compact that 
currently

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exists will help cushion the price collapse, with no cost to the 
federal government.
  Farmers from throughout Vermont and New England have praised the 
Compact for helping maintain a stable price. ``Without the Northeast 
Dairy Compact, we would be in real trouble, the price drop would put a 
lot of people of out business.'' Simply it's a blessing--no, that's an 
understatement--it's a lifesaver''.
  Mr. President, earlier today, I joined several of my Senate and House 
colleagues on the Capitol lawn to announce the introduction of this 
important legislation. I was so pleased to see the support and interest 
for this bill. I urge my colleagues to support this legislation. Give 
the states their right to join together to help protect their farmers 
and consumers by supporting this bill.
  Mr. LEAHY. Mr. President, I am proud to continue my support for dairy 
farmers by introducing legislation which will make permanent the 
Northeast Interstate Dairy Compact and will authorize the Southern 
Interstate Dairy Compact.
  The Northeast Interstate Dairy Compact has proven itself to be a 
successful and enduring partnership between dairy farmers and consumers 
throughout New England, and we want to make sure that this partnership 
continues.
  The Northeast Dairy Compact has done exactly what it was established 
to do: stabilize fluctuating dairy prices and keep New England dairy 
farmers in business. The Compact provides the perfect safety net for 
dairy farmers. When milk prices are high, dairy farmers receive no 
benefits. When milk prices are low, the Compact takes effect, providing 
temporary benefits to dairy farmers. Yet the Compact costs taxpayers 
nothing. I don't need to tell you that a zero cost is very unusual 
among farm programs.
  The Compact makes a big difference in the lives of dairy farmers in 
New England. Since the Compact went into effect one and a half years 
ago, the attrition rate for farms has declined throughout New England. 
In fact, the Vermont Department of Agriculture recently announced that 
since July of last year, there has actually been an increase in farms 
in Vermont. Just a few years ago, an increase in the number of farms 
would have been unfathomable. Solid dairy prices coupled with the 
safety net of the Dairy Compact have caused a rebound in the dairy 
industry in New England. We can achieve similar success in the South 
with a Southern Dairy Compact.
  Many of our allies from the South have watched the Northeast Dairy 
Compact survive several legal and political challenges. They have 
watched milk sales continue without interruption. They have seen the 
participation in the WIC nutrition program rise because of help from 
the compact. And, most important, they see how the compact provides a 
modest but crucial safety net for struggling farmers. They, too, want 
the same for their farmers and their farmers deserve the opportunity to 
create their own regional compact.
  Compacts are state-initiated, state-ratified and state-supported 
voluntary programs. And the need for regional compacts has never been 
greater. Low dairy prices coupled with a disastrous decision on federal 
milk marketing reform have made the compact more important to us now 
than ever before. Our legislation is a huge step toward ensuring that 
the safety net of the Compact will continue.
  The fight to continue the Northeast Compact and create the Southern 
Compact, however, will be tough. Opponents of regional compacts--large 
and wealthy milk manufacturers, represented by groups such as the 
International Dairy Foods Association--will again throw millions of 
dollars into an all-out campaign to stop the compacts. And they will 
say anything to stop it.
  Some of the most common anti-Compact rhetoric that I have heard 
suggests that the Compact creates a barrier for trade between states 
within the Compact and states outside of it. On the contrary, as 
reported by the Office of Management and Budget, the Northeast Dairy 
Compact has in fact prompted an increase in interstate dairy sales--
particularly for milk coming into New England.
  Another common anti-Compact argument concerns the impact of the 
Compact on consumers. However, New England retail milk prices under the 
Dairy Compact continue to be lower on average than the rest of the 
nation.
  Processor groups who are opposed to dairy compacts simply want milk 
as cheap as they can get it to boost their enormous profits to record 
levels, regardless of the impact on farmers. But at some point if a lot 
of dairy farmers go out of business, IDFA and others might regret what 
they have caused.
  Make no mistake--I do believe that dairy processors deserve to make 
their fair share of income. However, the farmers that produce the milk 
deserve to make a fair living. And a fair living is what dairy compacts 
provide for farmers.
  Compacts have been consumer tested and farmer approved, and I look 
forward to making them a permanent part of our dairy industry.
  Mr. SPECTER. Mr. President, I join today with my colleagues from 
Vermont, Senators Jeffords and Leahy, in introducing legislation to 
reauthorize the Northeast Dairy Compact and to authorize a Southern 
Dairy Compact.
  This legislation will create a much needed safety net for dairy 
farmers and will bring greater stability to the prices paid monthly to 
these farmers. The fill authorizes an Interstate Compact Commission to 
take such steps as necessary to assure consumers of an adequate local 
supply of fresh fluid milk and to assure the continued viability of 
dairy farming within the compact region. Specifically, states that 
choose to join the compact would enter into a voluntary agreement to 
create a minimum price for milk within the compact region. This price 
would take into account the regional differences in the costs of 
production for milk, thereby providing dairy farmers with a fair and 
equitable price for their product.
  This bill would authorize Pennsylvania, New Jersey, Delaware, New 
York, Maryland, and Ohio to join the existing Northeast Interstate 
Dairy Compact. New York, New Jersey, and Maryland have already agreed 
to join and the Pennsylvania State Legislature is currently considering 
compact legislation. Further, it would authorize states in the southern 
part of the country to form a similar compact to provide price 
stability in this region.
  In order to ensure that this legislation does not provide a negative 
impact to low-income nutrition programs that use a large quantity of 
dairy products each year, the bill ensures that the Women, Infants and 
Children (WIC) program and the School Lunch program will not be 
required to pay higher prices for milk as a result of any action taken 
by the Compact Commission.
  Over the past several years, I have worked closely with my colleagues 
in the Senate in order to provide a more equitable price for our 
nation's milk producers. I supported amendments to the Farm Bills of 
1981 and 1985, the Emergency Supplemental Appropriations Bill of 1991, 
the Budget Resolution of 1995 and the most recent Farm Bill in 1996 in 
an effort to insure that dairy farmers receive a fair price. As a 
member of the U.S. Senate Agriculture Appropriations Subcommittee, I 
have worked to ensure that dairy programs have received the maximum 
possible funding. In the past four years alone, I have worked to obtain 
almost $1.1 million for dairy research conducted at Penn State 
University. I have also been a leading supporter of the Dairy Export 
Incentive Program which facilitates the development of an international 
market for United States dairy products.
  In recent years, however, dairy farmers have faced the dual problems 
of a record high cost of feed grain and a record drop in the Basic 
Formula Price paid for dairy products. Prices have fluctuated greatly 
over the past several years, setting new record highs and lows, thereby 
making any long-term planning impossible for farmers. Most recently, 
after reaching an all time high in December of 1998, the Basic Formula 
Price for milk dropped $5.72 per hundredweight to a price of $11.62 for 
March 1999. These economic conditions have placed our nation's dairy 
farmers in an all but impossible position. In order to hear the 
problems that dairy farmers are facing first hand, I asked Secretary of 
Agriculture Dan Glickman to accompany me to northeastern Pennsylvania 
on February 10, 1997. We met a crowd of approximately 750 angry farmers 
who

[[Page S4283]]

rightfully complained about the dramatic fluctuations in the price of 
milk.
  Upon our return to Washington, in an attempt to bring greater 
stability to the dairy market, I introduced a Sense of the Senate 
Resolution on February 13, 1997 which passed by a vote of 83-15. The 
Resolution stated that the Secretary of Agriculture should consider 
acting immediately to replace the National Cheese Exchange as a factor 
to be considered in setting the Basic Formula Price for Dairy. I 
successfully attached an amendment to the 1997 Supplemental 
Appropriations Act which required the Department of Agriculture to 
replace the National Cheese Exchange, which had proven to be an 
unreliable source of price information, with a systematic national 
survey of cheese producers. As a result of this legislation, the Basic 
Formula Price increased from $12.46 in February of 1997 to $13.32 in 
February of 1998, which represented an increase of .86 cents per 
hundredweight over the course of the year.
  Unfortunately, this action alone was not sufficient to bring long-
term stability to the dairy market. Consequently, on April 17, 1997, I 
introduced legislation to require the Secretary of Agriculture to use 
the price of feed grains and other cash expenses in determining the 
basic formula price for milk. Further, on September 9, 1997, I joined 
with Senator Feingold of Wisconsin in introducing S. Res. 119, which 
urged the Secretary of Agriculture to set a temporary minimum milk 
price that was equitable to all milk procedures nationwide and provided 
price relief to economically stressed milk producers.
  When we began to see some momentum on the national level to reform 
the current milk pricing system, we were stopped by a Federal District 
Court, which in December of 1997 ordered the USDA to scrap the price 
differentials in the current milk pricing formula. This change would 
have had a major negative impact on the dairy farmers in Pennsylvania. 
In reaction to this decision, on December 4, 1997, I wrote to the 
federal judge, asking him to stay his decision striking down the 
current Class I dairy pricing formula pending appellate review. Sixty-
five Congressman and twenty other Senators signed onto my letter and on 
December 5, 1997, the Judge granted the requested stay.
  After this short victory, we received further bad news earlier this 
year, when Secretary Glickman released a new rule for setting the Basic 
Formula Price for dairy. While better than the proposed rule released 
last year, this new pricing formula will compound the already dire 
economic position of dairy farmers by removing an additional $196 
million each year from the dairy industry nationwide.
  Our nation's farmers are some of the hardest working and most 
dedicated individuals in America. In the past several years, I have 
visited numerous small dairy farms in Pennsylvania. I have seen these 
hard working men and women who have dedicated their lives to their 
farms. The recent drop in dairy prices is an issue that directly 
affects all of us. We have a duty to ensure that our nation's dairy 
farmers receive a fair price for their milk. If we do nothing, many 
small dairy farmers will be forced to sell their farms and leave the 
agriculture industry. This will not only impact the lives of these 
farmers, but will also have a significant negative impact on the rural 
economies that depend on the dairy industry for support. Further, the 
large-scale departure of small dairy farmers from agriculture could 
place our nation's steady supply of fresh fluid milk in jeopardy, 
thereby affecting every American.
  We must recognize the importance of this problem and take prompt 
action. I urge my colleagues to cosponsor this legislation as we 
continue to work in Congress to bring greater stability to our nation's 
dairy industry.
  Ms. COLLINS. Mr. President, I rise today as a cosponsor of a Joint 
Resolution to reauthorize the Northeast Interstate Dairy Compact. I am 
proud to give my support to this measure and do so without hesitation 
because the New England Dairy Compact is a proven success that is 
critical to the survival of dairy farmers in Maine and New England.
  First approved by Congress in the 1996 Farm Bill, the New England 
Dairy Compact already has a proven track record of quantifiable 
benefits to both consumers and farmers. The Compact works by simply 
evening out the peaks and valleys in fluid milk prices, providing 
stability to the cost of milk and ensuring a supply of fresh, 
wholesome, local milk.
  Over the past eight months, in particular, the Compact has proven its 
worth. As prices climbed and farmers were receiving a sustainable price 
for milk, the Compact turned off, when prices dropped, the Compact was 
again triggered. The Compact simply softened and slowed the blow to 
farmers of an abrupt and dramatic drop in the volatile fluid milk 
market.
  It is important to reiterate that consumers also benefit from the 
Compact. Not only does the Compact stabilize prices, thus avoiding 
dramatic fluctuation in the retail cost of milk, it also guarantees 
that the consumer is assured the availability of a supply of fresh, 
local milk. We've known for a long time that dairy products are an 
important part of a healthy diet, but recent studies are proving that 
dairy products provide a host of new nutritional benefits. Just as we 
are learning of the tremendous health benefits of dairy foods, however, 
milk consumption, especially among young people, is dropping. It is a 
crucial, common-sense, first step to reverse this trend, for milk to be 
available and consistently affordable for young families.
  Finally, the Compact, while providing clear benefits to dairy 
producers and consumers in the Northeast, has proven it does not harm 
farmers or taxpayers from outside the region. A 1998 report by the 
Office of Management and Budget showed that, during the first six-
months of the Compact, it did not adversely impact farmers from outside 
the Compact region and added no federal costs to nutrition programs. In 
fact, this legislation specifically excepts the Women, Infants and 
Children (WIC) program from any costs related to the Compact.
  I would like to thank the Senators from Vermont for their leadership 
on this critical issue. I look forward to working with them to see this 
important resolution passed.
  Ms. SNOWE. Mr. President, I rise today as a cosponsor of the Senate 
Joint Resolution not only in support of the reauthorization and 
modifications for the very successful Northeast Interstate Dairy 
Compact, but also to grant the consent of Congress for the formation of 
the Southern Dairy Compact. This issue is really a state rights issue 
more than anything else, Mr. President. Quite simply, it addresses the 
needs of states in two different areas of the country, one in the North 
and one in the South, who wish to work together within their regions 
for two different and totally independent dairy compacts--in the 
Northeast to continue and modify their current Compact, and in the 
Southeast where 10 states wish to work closely together--to form a 
compact for determining fair prices for locally produced supplies of 
fresh milk.
  As recently as last September, the Congress sanctioned another 
interstate compact, one that allows states to set regional prices for a 
commodity. In passing the Texas Compact for the storage of low-level 
radioactive waste, the states of Texas, Maine and Vermont were given 
permission to jointly manage and dispose of their low level waste--and 
are free to set any price they wish for the disposal of the waste. 
Congress has now approved ten such compacts involving 45 states.
  All we are doing here is continuing another states rights activity--
dairy compacting, an idea whose time has now come throughout different 
regions of the country. Currently, New Jersey and Maryland have passed 
Dairy Compact legislation seeking to join the Northeast Compact. In 
addition. Delaware, New York, Pennsylvania, and Ohio have expressed 
interest in joining. A state may join the Compact if they are 
contiguous to a participating state and Congress approves its entry, 
and we are asking for Congressional approval to extend this right also 
to New York, New Jersey, and Maryland.
  The Northeast Dairy Compact currently encompasses all New England 
states and builds on the existing Federal milk marketing order program 
for Class I, or fluid, milk, and only applies to fluid milk sold on 
grocery store shelves. As you may know, a federal milk marketing order 
is a regulation that already sets a minimum milk price in different 
areas around the

[[Page S4284]]

country, of which the Northeast region is one, and is voluntarily 
initiated and approved by a majority of producers in each milk 
marketing order area, which places requirements on the first buyers or 
handlers of milk from dairy farmers.
  Currently, the Northeast Interstate Dairy Compact allows the New 
England milk marketing order region to add a small increment to the 
Federal order price for that region, which is the floor price, so only 
the consumers and the processors in the New England region pay to 
support the minimum price to provide for a fairer return to the area's 
family dairy farms and to protect a way of life important to the people 
of the Northeast.
  Mr. President, the Northeast Interstate Dairy Compact has provided 
the very safety net that we had hoped for when the Compact passed as 
part of the Freedom to Farm Act, the omnibus farm bill, of 1996. The 
Dairy Compact has helped farmers maintain a stable price for fluid milk 
during times of volatile swings in farm milk prices. In the spring and 
summer months of 1997 and 1998, for instance, when milk prices 
throughout most U.S. markets dropped at least 20 cents a gallon while 
consumer prices remained constant, the payments to Northeast Interstate 
Compact dairy farmers remained above the federal milk marketing prices 
for Class I fluid milk because of the Dairy Compact--and, I might add, 
at no expense to the federal government. The costs to operate the Dairy 
Compact are borne entirely by the farmers and processors of the Compact 
region.
  Also, in considering what has happened to the number of dairy farms 
staying in business since the formation of the Dairy Compact, it is now 
known that throughout New England, there has been a decline in the loss 
of dairy farmers since the Compact started. This is a clear 
demonstration that, with the Northeast Interstate Dairy Compact, the 
dairy producers were provided a safety net--and when there has been a 
rise in the federal milk marketing prices for Class I fluid milk, the 
Compact has automatically shut itself off from the pricing process.
  Mr. President, over ninety seven percent of the fluid milk market in 
New England is self contained within the area, and fluid milk markets 
are local due to the demand for freshness and because of high 
transportation costs, so any complaints raised in other areas about 
unfair competition are a bit disingenuous. In addition, the Compact 
requires the compact commission to take such action as necessary to 
ensure that a minimum price set by the commission for the region does 
not create an incentive for producers to generate additional supplies 
of milk. No other region should feel threatened by our Northeast Dairy 
Compact for fluid milk produced and sold mainly at home.
  It should be noted that, in the farm bill conference in 1996, the 
U.S. Secretary of Agriculture was required to review the dairy compact 
legislation before implementation to determine if there was 
``compelling public interest'' for the Compact within the Compact 
region. On August 9, 1996, and only after a public comment period, 
Secretary Glickman authorized the implementation of the Northeast 
Interstate Dairy Compact, finding that it was indeed in the compelling 
public interest to do so.
  In addition, the Agriculture Appropriations Act for FY1998 directed 
the Office of Management and Budget (OMB) to study the economic effects 
of the Compact and especially its effects on the federal food and 
nutrition programs, such as the Womens, Infants and Children program. 
Key findings of the OMB study released in February of 1998, showed 
that, for the first six months of the Compact, New England retail milk 
prices were five cents per gallon lower than retail milk prices 
nationally. Also, the Compact did not add any costs to federal 
nutrition programs like the WIC program and the school breakfast and 
lunch programs. The GAO study also stated that the Compact economically 
benefitted the dairy producers, increasing their income from milk sales 
by about six percent, with no adverse affects to dairy farmers outside 
the Compact region.
  Mr. President, the consumers in the Northeast Compact area, and now 
other areas around the country, are showing their willingness to pay 
more for their milk if the additional money is going directly to the 
dairy farmer. Environmental organizations have also supported dairy 
compacting as compacts help to preserve dwindling agricultural land and 
open spaces that help combat urban sprawl.
  I ask for the support of my colleagues for the reauthorization of the 
Northeast Compact and the ratification of the Southern Compact.
  Mr. SCHUMER. Mr. President, I am proud to join with 35 of my fellow 
Senators to introduce legislation to re-authorize the Northeast Dairy 
Compact and extend it to New York State. This legislation is vital to 
the Northeast Region and it will strengthen the economy of upstate New 
York.
  The Compact may add a couple of cents to the consumer price of milk 
during months when the retail price of milk falls below a federally set 
minimum price, but it is a small price to pay to preserve the family 
dairy farm in rural New York.
  The purpose of the Compact is to stabilize dairy prices and therefore 
enable small dairy farmers to budget their expenditures and plan for 
the future. The Northeastern Dairy Compact works by ensuring a minimum 
retail price for milk producers. The price paid to farmers for milk has 
fallen from $2.77 in 1960 to $1.36 in 1997. These low milk prices have 
forced many small farmers into insolvency over the years and have put 
the entire concept of family farms in peril.
  The Northeast Dairy Compact will preserve the American tradition of 
local family farms in every region. I believe that this is a tiny price 
to pay to keep local farmers in business, and keep New York State's 
rural identity intact.

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