Cook v. Eanes ISD 043-R8-02-2014



DOCKET NO. 043-R8-02-2014CAREN COOK § BEFORE THE §§§V.§ COMMISSIONER OF EDUCATION§§EANES §INDEPENDENT SCHOOL DISTRICT§ THE STATE OF TEXASDECISION OF THE COMMISSIONERStatement of the CasePetitioner, Caren Cook, complains of actions and decisions of Respondent, Eanes Independent School District. Christopher Maska is the Administrative Law Judge appointed by the Commissioner of Education to preside over this cause. Petitioner is represented by Robert F. Johnson, III, Attorney at Law, Austin, Texas. Respondent is represented by Ellen H. Spalding, Attorney at Law, Houston, Texas.The Administrative Law Judge issued a Proposal for Decision recommending that Petitioner’s appeal be dismissed in part, remanded in part, and denied in part. Exceptions and replies were timely filed and considered. This case presents an issue of first impression. The Texas Education Code does not clearly give school districts the right to lease property. However, courts have held that there is an implied right to lease. The Commissioner has never ruled whether a school district lease has or has not violated the implied right to lease. While the implied right to lease is nearly one hundred years old, its statutory basis has remained unclear. It is held that the statutory basis for the implied right to lease is found at Texas Education Code section 11.151 (a) and (b). A school district may lease property but only when the lease does not interfere with the district’s use of the property for school purposes.In the present case, Respondent leased school property to be used as a multi-sport complex. Respondent then amended the lease on two occasions. Petitioner filed her grievance after the Second Amendment to the lease was executed. Applying Respondent’s grievance policy it is concluded that Petitioner has timely grieved both the Ground Lease and the Second Amendment. However, since the Second Amendment in some respects increases the district’s control over the property and in other respects maintains the same level of control, the Second Amendment does not violate the implied right to lease school property. Petitioner’s real dispute concerns the Ground Lease, not the Second Amendment.The Commissioner lacks jurisdiction over several of Petitioner’s statutory claims. Texas Education Code section 7.057(a)(2)(A) provides jurisdiction for violations of the school laws of this state. The Texas Constitution, the Texas Government Code, and Texas Labor Code do not meet the definition of the school laws of this state. While the Commissioner has jurisdiction over ancillary constitutional claims, the Texas Constitution, Article III, Section 52(a) claim is not such an ancillary claim, but is instead an independent claim. Petitioner has not made a proper Texas Education Code section 11.151(c) claim as that section applies only to the sale, gift, or exchange of land. The right of first refusal in the lease does not convert the lease into a sale of real property.Findings of FactAfter due consideration of the record and matters officially noticed, it is concluded that the following Findings of Fact are supported by substantial evidence in the local record and are the Findings of Fact that can best support Respondent’s Decision.1.Respondent purchased an 86.7 acre tract of undeveloped land located at the intersection of Taylor Road and River Hills Road. The land was purchased for educational purposes. Subsequently, Respondent determined it had no need for approximately 50 acres of the tract. 2.In 2010, Respondent issued a Request for Proposals seeking a long term tenant for the approximately 50 acres. 3.Western Hills Little League (hereinafter, “WHLL”) was the only entity to submit a bid. In April 2011, Respondent executed the Ground Lease with Western Hills Little League. 4.The Ground Lease is for a term of fifty years. It provides WHLL is to use the property as a multi-sport park. It does not give Respondent the right to use the tract during the term of the lease. It gives WHLL a limited right of first refusal. It allows Respondent to terminate the lease, after one year’s notice, if Respondent needs the property for educational uses or if a defined financial exigency occurs. 5.The First Amendment to the Ground Lease was executed in October 2012 to clarify the tract at issue was actually 51.8 acres.6.The Second Amendment to Ground Lease was signed by Respondent on September 10, 2013 and by WHLL on September 9, 2013. It provides that Respondent has the right to use improvements on scheduled school days during school hours. It provides that WHLL may sublease with Respondent’s prior approval and Respondent’s approval for subleases is given for Westlake Pop Warner and Westlake Youth Soccer. It amends the limited right of first refusal.7.Respondent’s policy GF(LOCAL) provides that:Complaint forms must be filed out:Within 15 days of the date the individual first knew, or with reasonable diligence should have known, of the decision or action giving rise to the complaint or grievance.8.Petitioner’s grievance was filed on September 9, 2013.9.Ed Burbach is the Secretary, V.P. External Relations & Legal Liaison of the Rob Roy Homeowners Association and was very involved in the dispute concerning the Ground Lease from at least June 2013. The Local Record does not establish that Ed Burbach is Petitioner’s husband.10.Petitioner did not know or should not have known with reasonable diligence of the Ground Lease more than fifteen business days prior to her filing her grievance. 11.Petitioner’s claims concerning the Ground Lease are timely.DiscussionPetitioner contends that Respondent violated the Texas Open Meetings Act, Texas Education Code section 11.151, Texas Constitution, Article III, Section 52(a); Local Government Code section 272.001. Respondent contends that the Commissioner lacks jurisdiction over these claims and asserts that Petitioner has failed to exhaust administrative remedies as to some of these claims.School Laws of this StateThe Commissioner has jurisdiction over violations of the school laws of this state. Tex. Educ. Code § 7.057(a)(2)(A). The “school laws of this state” are defined as the first two titles of the Texas Education Code and the rules adopted under those titles. Tex. Educ. Code § 7.057(f)(2). Hence, the Commissioner does not directly have jurisdiction over Petitioner’s claims that Respondent violated Texas Government Code ch. 551, the Texas Open Meetings Act, Texas Constitution, Article III, Section 52(a); Local Gov’t Code section 272.001 under Texas Education Code section 7.057(a)(2)(A). However, Petitioner contends that the Commissioner has jurisdiction over provisions of other laws because she argues Texas Education Code section 11.151(c) requires school districts to comply with other laws. This will be addressed below.Ancillary ClaimsPetitioner contends that because the Commissioner has jurisdiction over ancillary constitutional claims that the Commissioner has jurisdiction over the claim that Respondent violated Article III, Section 52(a) of the Texas Constitution. The leading case on this subject is Jones v. Clarksville Indep. Sch. Dist., 46 S.W.3d 467, 474 (Tex. App.-Texarkana 2001, no. pet.). For the Commissioner to have ancillary jurisdiction over a claim, he must have direct jurisdiction over at least one claim. The claim which the Commissioner has jurisdiction over in the present case concerns a violation of the limited right to lease property which is found at Texas Education Code section 11.151(a) and (b). Court cases beginning with Royse Indep. Sch. Dist. v. Reinhardt, 159 S.W. 1010, 1011 (Tex. Civ. App.-Dallas 1913, writ ref’d) and extending to River Road Neighborhood Ass’n v. South Texas Sports, 720 S.W.2d 551 (Tex. App.-San Antonio 1986, writ dism’d w.o.j.), hold that the implied right to lease can only be exercised if the lease does not interfere with the district’s use of the property for school purposes. The prohibition against giving away public property found in Article III, Section 52(a) of the Texas Constitution is not ancillary to the limited right of school districts to lease property. It is an independent cause of action that is not required to be asserted in conjunction with a claim a school district has violated the implied right to lease. Tex. Educ. Code § 11.151(c)Texas Education Code section 11.151(c) provides:All rights and titles to the school property of the district, whether real or personal, shall be vested in the trustees and their successors in office. The trustees may, in any appropriate manner, dispose of property that is no longer necessary for the operation of the school district.Petitioner contends that the authority to dispose of property in an appropriate manner means that any disposition of property must at least be according to law, else the disposition would not be in an appropriate manner. Petitioner argues that a disposition of property in violation of the Texas Constitution, the Texas Local Government Code and the Texas Public Information Act, would be a violation of Texas Education Code section 11.151(c). While this may or may not be true, what is at issue in this case is a lease. A lease is not a disposition of property. There are three ways that a government entity may voluntarily depose of land: sale, gift, and exchange. Bowling v. City of El Paso, 525 S.W.2d 539, 541 (Tex. Civ. App.-El Paso 1975, writ ref’d n.r.e.). This is in accord with Black’s Law Dictionary:Dispose of. To alienate or direct the ownership of property, as disposition by will. Used also of the determination of suits. To exercise finally, in any manner, one’s power or control over; to pass into control of someone else; to alienate, relinquish, part with, or get rid of: to put out of the way: to finish with; to bargain away. Often used in the restrictive sense of “sale” only, or so restricted by context. As a lease does not dispose of property, Petitioner has not alleged a potential violation of Texas Education Code section 11.151(c). Petitioner, however, cites to an Attorney General’s Opinion that might imply that a property can be disposed of by a particular type of lease. Tex. Atty Gen Op. GA-0321 (2005). In this opinion, the question presented concerned whether a school district could lease land for a term of fifty years with an option to renew the lease for an additional fifty years. The Attorney General held:But this does not mean that we believe that these limitations on the board's authority preclude it from leasing the school land to Huntsman, or that the school district's lease of the Huntsman tract may not be taken into account as a relevant factor in considering the school district's authority to lease its land to Huntsman. In contrast to the actively used school district facilities at issue in Royse and River Road, PNG describes the property it would lease to Huntsman as "unused excess land." PNG Letter, supra note 1, at 1. The fact that the land is not used by the school district is relevant to whether the proposed lease would permit uses of the property that would interfere with the property's use for district purposes. See, e.g., Tex. Att'y Gen. Op. No. JM-531 (1986) at 3 (addressing a school district's authority to lease for a 50-year term undeveloped land that it did not plan to use for instructional purposes and distinguishing River Road on the basis that the facility in that case was actively used by school district sports teams). But the board of trustees must also consider whether PNG may need the land for school district purposes over the term of the lease and, if so, whether the lease would permit the school district to use the land. See, e.g., Tex. Att'y Gen. Op. Nos. GA-0252 (2004) at 7 (concluding that a junior college district may not divest itself of the right to control campus facilities constructed under a lease); M-1047 (1972) at 3 (concluding that school district lacked authority to lease an unused elementary school for a 20-year term with no right to terminate). The PNG letter indicates that Huntsman will not agree to a lease that gives PNG the right to terminate. See PNG Letter, supra note 1, at 2. A lease divesting PNG of any right to manage and control the property for a term of 50 to 100 years is problematic under relevant precedent, unless the board of trustees can expressly find that the property is no longer necessary for the operation of the school district. Cf. TEX. EDUC. CODE ANN. § 11.151(c)(Vernon Supp. 2004-05)(authorizing a school district board of trustees to dispose of property "that is no longer necessary for the operation of the school district"). In making such a finding, the board of trustees could take into account the fact that the Huntsman tract would be available for school purposes.The citation to Texas Education Code 11.151(c) might seem to indicate that this subsection applies to long term leases. However, the signal Cf. shows this is not the case. The Bluebook clarifies that “Cf.” “means that “cited authority supports a proposition different from the main proposition but sufficiently analogous to lend support.” Bluebook, 16th ed., p.23. This Attorney General’s Opinion does not hold that sale, gift, and exchange are not the sole methods to dispose of real property.Right of First RefusalPetitioner contends that a right of first refusal is an interest in land. Petitioner may be correct as to this point. However, a right of first refusal does not dispose of the real property at issue. Hence, the right of first refusal does not make Texas Education Code section 11.151(c) applicable to this cause.Local Government CodePetitioner contends that whether a lease is actually a sale depends on certain factors. However, the full sentence, which Petitioner only quotes in part, reads:Whether a lease arrangement is a sale or exchange subject to section 272.001 depends upon the lease's terms, such as the lease's duration, the political subdivision's right to control the land during the lease term, and the political subdivision's right to improvements at termination.Tex. Atty. Gen. Op. GA-252 (2004) at 8. The reference to section 272.001 is a reference to a particular section of the Texas Local Government Code. While the Attorney General Opinion may properly interpret the Texas Local Government Code, it does not prove that the land at issue in the present case was disposed of under Texas Education Code section 11.151(c).Since Texas Education Code section 11.151(c) does not apply to even long term leases, Petitioner has not pled a potential violation of this section. Further, Texas Education Code section 11.151(c) cannot be used in the present case as authority for the proposition that school districts must comply with laws outside of the Texas Education Code and Title 19 of the Texas Administrative Code when the school districts are leasing property. Power to LeaseThere is no explicit authority in the Texas Education Code for school districts to lease property. The seminal case on the issue of the authority of school districts to lease property found that such a power was an implied power. Royse Indep. Sch. Dist. v. Reinhardt, 159 S.W. 1010, 1011 (Tex. Civ. App.-Dallas 1913, writ ref’d). However, Royce also stands for the proposition that:. . . a board of education is a creature of statute, that it has only such powers as are conferred upon it and such implied powers as are necessary to execute such express powers.Id. The question becomes which statute was the source of the implied power to lease. Royse does not cite to the portion of the then current school law at issue as the basis for the implied power. But the Royse court does state:An independent school district, such as appellant, is a quasi corporation under the laws of this state, with its administrative powers vested in a board of trustees. This board of trustees, by the statute under which the school district is organized, is given exclusive power of management, regulation, and control of the schools and school property of the corporation.Id. It is assumed that court was referring to the following statute:The trustees elected in accordance with the preceding section shall be vested with the full management and control of the free schools of such incorporated town or village, and shall in general be vested with all the powers, rights, and duties in regard to the establishment and maintaining of the free schools, including the powers and manner of taxation for free school purposes, that are conferred by the laws of this State upon the council or board of aldermen of incorporated cities and towns.An Act Providing for a Complete System of Public Free Schools in Texas, 29th Leg., R.S., ch. 124, §161, 1905 Tex. Gen. Laws 263, 306. See also An Act Providing for a Complete System of Public Free Schools in Texas, 29th Leg., R.S. , ch. 124, §168, 1905 Tex. Gen. Laws 263, 308. The current basis for the implied power to lease is Texas Education Code section 11.151(a) and (b):(a) The trustees of an independent school district constitute a body corporate and in the name of the district may acquire and hold real and personal property, sue and be sued, and receive bequests and donations or other moneys or funds coming legally into their hands.(b) The trustees as a body corporate have the exclusive power and duty to govern and oversee the management of the public schools of the district. All powers and duties not specifically delegated by statute to the agency or to the State Board of Education are reserved for the trustees, and the agency may not substitute its judgment for the lawful exercise of those powers and duties by the trustees.While Texas Education Code section 11.151(c) provides significant powers to school boards concerning disposing property, it does not provide explicitly or implicitly grant the power to lease school property. Petitioner has stated a potential violation of the school law of this state by contending that Respondent has violated the implied right for a school district to lease property. Exhaustion of RemediesAn appeal to the Commissioner under Texas Education Code section 7.057 of an action of a school district is a substantial evidence appeal based on the local record. Tex. Educ. Code § 7.057(c). The Commissioner has held that this standard of review is very similar to a substantial evidence appeal under the Administrative Procedure Act. Dana v. Fort Bend Independent School District, Docket No. 043-R10-1203 (Comm’r Educ. 2004). Issues have to be raised first at the local level and must be raised in conformity with a school district’s procedures. Respondent’s PolicyRespondent dismissed many of Petitioner’s claims by asserting that the local grievance timelines were not complied with. Petitioner contends that it has exhausted local remedies and that Respondent’s interpretation of its grievance policy should not be deferred to. Respondent’s policy GF(LOCAL) provides that:Complaint forms must be filed:Within 15 days of the date the individual first knew, or with reasonable diligence should have known, of the decision or action giving rise to the complaint or grievance.The policy specifies that “days” means business days. Petitioner contends that her grievance, filed on September 19, 2013, is timely based on the date when the Second Amendment to Ground Lease was executed on September 10, 2013. Respondent contends the timeline began to run in 2011 when the original lease was executed. There is no evidence in the record that Petitioner knew of the Ground Lease when it was executed in 2011. Further there is no evidence in the record that Petitioner knew or with reasonable diligence should have known of the Ground Lease more than 15 days prior to her filing her grievance. Hence, Petitioner has exhausted administrative remedies as the Ground Lease, the First Amendment, and the Second Amendment. Because Respondent did not reach the merits of Petitioner’s Ground Lease claims, the Ground Lease claims should be remanded to Respondent for consideration.Second AmendmentThe parties dispute the importance of the Second Amendment. Petitioner contends the Second Amendment is so significant that its execution allows for any issues concerning the lease as a whole to be raised and if that is not the case it allows for many issues to be raised. Respondent contends that the Second Amendment is mostly just a clarification. Neither party quite gets the issue correct.The Second Amendment makes two principal changes to the Ground Lease and the First Amendment. It clearly allows for subleasing and it allows Respondent to use the property during the school day. While the Second Amendment does make changes to the Ground Lease, the changes are not so great as to constitute a complete revision that would allow grievances to be filed as any aspects of the Ground Lease and its amendments. The execution of the Second Amendment creates a new grievance timeline only as to the changes made by the Second Amendment. Use of Property The Second Amendment adds a new section 8.08 that allows Respondent to use the improvements to the property during school days and school hours. This provision increases Respondent’s rights to make use of the facilities. While the Second Amendment does make changes to the Ground Lease, the changes are not so great as to constitute a complete revision that would allow grievances to be filed as any aspects of the Ground Lease and its amendments. The execution of the Second Amendment creates a new grievance timeline only as to the changes made by the Second Amendment. For such a grievance to be timely, it would have had to be brought within Respondent’s timeline for appealing the Ground Lease. SubleasingThe Ground Lease seems to ban subleasing under Article 12:NO ASSIGNMENT OR SUBLEASE. Lessee shall have no right to assign this Lease or to sublease under this Lease.(Emphasis in Original). However, there is also a provision of Article 8.1 of the Ground Lease which reads:Lessee and its sublessees shall have the right to use the property for the construction, operation, and management of a multi-sport park. The parties dispute whether subleasing was allowed under the Ground Lease. If subleasing was not allowed under the Ground Lease, the provisions of the Second Amendment allowing subleasing in some instances would be a change. If subleasing was allowed under the Ground Lease, the provisions of the Second Amendment allowing subleasing in some instances would be a minor change. There is no necessity to resolve this issue in the present case. The merits issue in this case is whether the Second Amendment interferes with the right of the district to use the land for school purposes. Allowing subleasing does not give to other parties greater rights to use the property in ways that could potentially interfere with the district’s right to use the land for school purposes than would be allowed if there was no right to sublease. Sublessees are not allowed to use the land in a manner that the Lessee would not be allowed to use the land. The sublessees can only do what the lessee could do. As the Second Amendment gives no greater rights of use than does the ground lease, this change in the Second Amendment cannot be used to assert that Respondent does not have sufficient control of the land. Petitioner’s real complaint concerns the Ground Lease, not the Second Amendment.ConclusionThis cause should be dismissed in part, remanded in part, and denied in part. The Commissioner lacks jurisdiction over Petitioner’s Texas Government Code ch. 551, the Texas Open Meetings Act, Texas Constitution, Article III, Section 52(a); Local Gov’t Code section 272.001 and Texas Education Code section 11.151(c) claims. Petitioner did not fail to exhaust local administrative remedies. However, the changes to the Ground Lease made by the Second Amendment do not support a claim that Respondent violated the implied right to lease because the changes made by the Second Amendment either show that district’s ability to use the property remained the same or increased. Reply to Exceptions to Proposal for DecisionThe parties filed Exceptions to the Proposal for Decision. Some of the issues raised by the parties will be addressed.Petitioner correctly points out that there is no evidence in the Local Record that Petitioner’s husband is the Secretary, V.P. External Relations & Legal Liaison of the Rob Roy Homeowner’s Association who was involved in the dispute concerning the Ground Lease from at least June 2013. The Local Record is silent as to whether or not the two individuals in question are married. While Respondent is correct that Petitioner has not denied that the two are married, this does not establish that the two are married. The Commissioner is required to base his decision in this case based on the Local Record. Tex. Educ. Code § 7.057(c). As the Local Record does not establish that the two individuals are married, Respondents Board could not have reasonably determined that Petitioner knew or with reasonable diligence should have known of the Ground Lease at a time that would make her grievance untimely. For this reason, the case should be remanded to Respondent to consider Petitioner’s claims regarding the Ground Lease.Petitioner was not aggrieved by the Second Amendment because the injury she alleges was caused would have been caused by the Ground Lease. As the Second Amendment does not exacerbate any potential injury caused by the Ground Lease, Petitioner is not aggrieved by the Second Amendment. The Commissioner only has jurisdiction over a board’s decision or action if the petitioner is aggrieved by that action or decision. Tex. Educ. Code § 7.057(a)(2). Respondent contends that because its actions concerning the Ground Lease occurred in open meetings and there was some publicity that Petitioner knew or should have known with reasonable diligence of its actions. While the Texas Open Meetings Act is designed to make sure that the subjects that governmental bodies are to consider are not secret, it is not designed to give each citizen notice of what a governmental body is considering. While the local record shows that there was some media coverage, the record does not show that a reasonable body could conclude that Petitioner knew or with reasonable diligence should have known of the board’s actions concerning the Ground Lease. Reasonable diligence does not mean that each property owner will always check the meeting agendas for each governmental body whose actions could affect the individual’s property. Reasonable diligence does not mean that each property owner would have viewed the media accounts in evidence. Respondent’s interpretation of its policy is not reasonable and should not be deferred to.Respondent contends that the relevant date to consider whether grievances concerning the Second Amendment were timely should be August 28, 2013, the date of the board vote, not September 10, 2013, the date the Second Amendment was executed. Respondent is incorrect because Petitioner’s claim to be aggrieved only accrued when the Second Amendment was executed. The Second Amendment was not a unilateral action of Respondent. If the other party withdrew its offer prior to the execution of the lease there would be no dispute. Further, the issue remains when did Petitioner know or when should Petitioner have known. Conclusions of LawAfter due consideration of the record, matters officially noticed, and the foregoing Findings of Fact, in my capacity as Commissioner of Education, I make the following Conclusions of Law:1.The Commissioner of Education lacks jurisdiction over the Amended Petition for Review under Texas Education Code section 7.057, except for the claims that the changes to the Ground Lease found in the Second Amendment provide evidence that the lease interferes with the district’s use of the property for school purposes and the claim that Respondent improperly dismissed some claims.2.The implied power for a school district to lease property is exclusively found at Texas Education Code section 11.151(a) and (b).3.There are three ways that a government entity may voluntarily depose of land: sale, gift, and exchange. 4.The Commissioner lacks jurisdiction over Petitioner’s Texas Education Code section 11.151(c) claim because Respondent did not dispose of the property in question.5.Texas Education Code section 11.151(c) does not apply to the leasing of school property, even if the lease includes a right of first refusal.6.Texas Education Code section 7.057(a)(2)(A) grants the Commissioner jurisdiction to hear cases concerning violations of the school laws of this state. “The school laws of this state” are defined as the first two titles of the Texas Education Code and the rules adopted under those titles. Tex. Educ. Code § 7.057(f)(2). 7.The Commissioner of Education lacks jurisdiction over Texas Government Code ch. 551, the Texas Open Meetings Act, Texas Constitution, Article III, Section 52(a); and Local Gov’t Code section 272.001 under Texas Education Code section 7.057(a)(2)(A), as these laws do not meet the definition of “the school laws of this state.” 8.The Commissioner has jurisdiction over ancillary constitutional claims.9.Petitioner’s Texas Constitution, Article III, Section 52(a) claim, is not an ancillary constitutional claim, but is instead a standalone claim. 10.Under Texas Education Code section 11.151(a) and (b) a school district may lease property when the lease does not interfere with the district’s use of the property for school purposes.11.An appeal to the Commissioner under Texas Education Code section 7.057 of an action of a school district is a substantial evidence appeal based on the local record. Tex. Educ. Code § 7.057(c). This standard of review is very similar to a substantial evidence appeal under the Administrative Procedure Act. Issues have to be raised first at the local level and must be raised in conformity with a school district’s procedures. 12.Petitioner exhausted local administrative remedies as to the claims based on the Ground Lease and the Second Amendment.13.Petitioner’s claims based on the Second Amendment fail because the changes to the Ground Lease made in the Second Amendment do not show that the lease interferes with the district’s use of the property for school purposes. The changes in the Second Amendment show either that district’s ability to use the property either remained the same or increased. Petitioner’s complaint about the lease is really about the original Ground Lease. Petitioner failed to timely object to Ground Lease and, hence, has failed to exhaust administrative remedies.14.The Amended Petition for Review should be dismissed in part, remanded in part, and denied in part.OrderAfter due consideration of the record, matters officially noticed and the foregoing Findings of Fact and Conclusions of Law, in my capacity as Commissioner of Education, it is herebyORDERED that the Petitioner’s appeal be, and is hereby, dismissed in part, remanded in part, and denied in part.SIGNED AND ISSUED this ______ day of ___________________, 2014.________________________________________________MICHAEL WILLIAMSCOMMISSIONER OF EDUCATIONSigned and issued on December 10, 2014 by Michael Williams, Commissioner of Education ................
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