| FWCA 1187 [Note: This decision and the associated agreement has been quashed - refer to the Full Bench decision dated 22 June 2018  FWCFB 3702]|
|FAIR WORK COMMISSION|
Fair Work Act 2009
CPB Contractors Pty Limited
CPB CONTRACTORS (VICTORIA) CIVIL FRAMEWORK AGREEMENT 2017
Building, metal and civil construction industries
MELBOURNE, 23 FEBRUARY 2018
Application for approval of the CPB Contractors (Victoria) Civil Framework Agreement 2017.
 Application has been made pursuant to s.185 of the Fair Work Act 2009 (the Act) for approval of a greenfields agreement known as the CPB Contractors (Victoria) Civil Framework Agreement 2017 (the Agreement). The Agreement was made on 10 November 2017 between CPB Contractors Pty Ltd (CPB) and the Australian Workers Union (AWU). It will cover CPB and its employees undertaking civil construction work on projects with a value of $1 billion or less in Victoria. It will not cover employees to whom a project-specific enterprise agreement applies; or building construction work as defined in the Building and Construction General On-site Award (the Award); or tunnelling work other than micro tunnelling and directional horizontal drilling.
 On 29 November 2017 the Construction, Forestry, Mining and Energy Union, Mining and Energy Division (CFMEU) sought copies of documents related to the application and asked that the Agreement not be approved. Copies of the Form F19, Form F20 and Form F21 relating to the Agreement were provided to the CFMEU on 5 December 2017. On 8 December 2017, the CFMEU filed submissions and two witness statements 1 opposing the approval of the Agreement for reasons including that it does not cover a ‘genuine new enterprise’.
 The CFMEU acknowledged that it does not have standing to be heard in relation to the Agreement. Nevertheless, it filed submissions asking the Commission to hear from it under section 590 of the Act, including because there were existing employees who would be covered by the Agreement. I decided to hear from the CFMEU on whether the Agreement relates to a ‘genuine new enterprise’ as required by the Act. I was not otherwise satisfied on the material before me that the CFMEU had relevant knowledge or information about the Agreement that would be likely to assist in my consideration of the application.
 Directions were issued for the filing of further materials. Submissions were filed by CPB and the CFMEU on 22 December 2017 and by the CFMEU on 11 January 2018. The matter was heard on 12 January 2018.
 This decision deals with the application for approval of the Agreement.
Is the Agreement a ‘greenfields agreement’?
 Section 172 of the Act provides for the making of greenfields agreements 2 which are a form of single-enterprise agreement made under section 172(2)(b). That section provides as follows:
(b) with one or more relevant employee organisations if:
(ii) the employer or employers have not employed any of the persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement.
Note: The expression genuine new enterprise includes a genuine new business, activity, project or undertaking (see the definition of enterprise in section 12).”
 There is no dispute that the Agreement was made between CPB and the AWU. What is not agreed is:
1. Whether the Agreement relates to a genuine new enterprise that CPB is establishing or proposes to establish; and
2. Whether CPB has employed any of the persons who will be necessary for the normal conduct of the enterprise and who will be covered by the Agreement.
 Each of these are jurisdictional facts to be established on the balance of probabilities. 3
Does the Agreement relate to a genuine new enterprise that CPB is establishing or proposes to establish?
 In deciding whether an enterprise agreement relates to a genuine new enterprise, it is relevant to consider matters such as the objective character and identity of the enterprise, its novelty in relation to the business, and its proposed method of operation. 4
 CPB submitted that the Agreement relates to a ‘genuine new enterprise’ for the purposes of the Act. According to CPB 5:
1. Prior to 2015, Leighton Contractors Pty Ltd (Leighton) and Thiess Pty Ltd (Thiess) were wholly owned subsidiaries of Leighton Holdings Pty Ltd. Each had their own construction, mining and services divisions. Thiess performed water industry work but Leighton did not.
2. The Leighton Contractors Pty Ltd Civil and Rail Industry Enterprise Agreement (Victoria) 2012-2015 (2012 Civil Agreement), an enterprise agreement between Leighton and the CFMEU, has overlapping coverage with the Agreement. It has passed its nominal expiry date and no employee has been employed under its terms since 2 May 2016.
3. In 2015, the construction division of Thiess was absorbed by Leighton. From 1 January 2016, the merged entity became CPB. This led to the establishment of a discrete business unit dealing with both civil construction and water works.
4. In 2017, CPB won 31 capital projects with Melbourne Water with a total value of more than $137 million.
5. At the time the Agreement was made, CPB had:
a. seven employees on the CityLink Tulla Widening Project (CityLink Project), which is covered by a project-specific enterprise agreement 6. Each of these employees ceased employment on or before 22 December 2017;
b. a number of employees working on the Caulfield to Dandenong Level Crossing Removal Project and other civil construction / water projects in Victoria in managerial and technical roles, but none who would be employed in any of the classifications covered by the Agreement; and
c. one employee performing building and construction work on the Post Entry Quarantine project under an enterprise agreement with the CFMEU 7 which is outside the scope of the Agreement.
1. CPB currently undertakes civil construction and water industry works, but to the extent that work would be covered by the Agreement, it is currently performed by contractors or through labour hire arrangements.
2. CPB has decided to change its operating model by establishing a core workforce that will transfer from project to project rather than engaging contractors to perform award-covered civil and construction / water work on each project. The new workforce will be covered by the Agreement. Only projects with a value of more than $1 billion will be covered by project-specific agreements in the future.
 CPB initially described its ‘genuine new enterprise’ as “civil construction works and water industry capital works in the State of Victoria. 8 In later submissions, it characterised the new enterprise as either:
● its discrete business unit dealing with both civil construction and water works after 1 January 2016;
● its move from discrete project engagements to ongoing engagements; and/or
● its “new operating model”, comprised of its proposal to establish a “new workforce of direct employees engaged on an ongoing (rather than discrete project) basis to perform civil construction and water industry works with project values of up to $1 billion.” CPB pointed to earlier decisions of the Commission approving greenfields agreements on a similar basis, including one with the support of the CFMEU. 9
 As I understand CPB’s evidence, this new workforce will be established on an ongoing basis so that employees can be deployed as required on civil construction work across Victoria. By taking on the role and responsibility of employer for this category of work, CPB is rebuilding its own internal capability for a range of business reasons related to safety, productivity and performance. One consequence will be that the use of contractors will be significantly reduced. There is no acquisition or transfer of business involved.
 The CFMEU submitted that the Agreement does not relate to a genuine new enterprise, because:
1. CPB has had an ongoing enterprise in the civil construction industry for a number of years, including in Victoria. There are 90 enterprise agreements on the Commission’s website relating to CPB.
2. CPB initiated bargaining with the CFMEU for an enterprise agreement to cover “building construction works” in July 2016. Negotiations ‘petered out’ after it became apparent that CPB employed very few workers and because of issues relating to the Commonwealth Government’s Code for Tendering and Performance of Building Work 2016 (Building Code). 10
3. Both the 2012 Civil Agreement and the Leighton Contractors and the CFMEU Building and Construction Industry Enterprise Agreement 2012-2105 (2012 Building Agreement) cover work that will be covered by the Agreement. Neither complies with the Building Code 11 and CPB has at least one employee currently employed under the Building Agreement.12
4. Until 24 November 2017, CPB employed employees on road building works under the Citylink Tulla Widening Bulla Road to Power Street Greenfields Agreement 2015 (Citylink Agreement). The Citylink Agreement overlaps with the Agreement in relation to its scope of works and employee classifications. It does not comply with the Building Code.
5. CPB has supervisory employees employed on a range of civil construction projects, including up to 191 employees on the Caulfield to Dandenong project. 13 These employees would be covered by the Agreement.14
 The CFMEU also submitted that the Act places primacy on bargaining with employees; greenfields agreements are exceptional; and that applications for their approval should be approached with a higher degree of care, caution and scrutiny than would be required for agreements made directly with employees. However, the Act recognises both employee bargaining and bargaining for greenfields agreements and does not prefer one form of bargaining over the other. 15
 Mr Edwards 16 gave evidence for the CFMEU that while CPB historically used contractors for a significant portion of its civil construction works, it also had a directly employed workforce which it transferred from site to site. It was not uncommon for Leighton to transfer employees from civil construction jobs to general building and construction jobs and back again.17 CPB disputed this evidence. In my view, it does not appear to be supported by any direct knowledge of the employment arrangements at CPB at the relevant time. I note in particular the reference to arrangements at ‘Leighton’ and the fact that Leighton was rebranded CPB from 1 January 2016, much earlier than the time the Agreement was made. I have not given this evidence much weight.
 ‘Enterprise’ is defined broadly in the Act. An employer can have more than one enterprise, as can an ‘enterprise’ as defined. For example, a business can have more than one project; a project may involve many different activities; and an undertaking might require more than one business.
 Conveniently, CPB illustrates the point. It is a business with a number of different projects, including the CityLink Project. For each project, the Act permits a greenfields agreement to be made as long as the relevant jurisdictional facts are established. In the case of the CityLink Project, the CityLink Agreement is a greenfields agreement that relevantly covers the work of CPB and its employees.
 To be a greenfields agreement, sections 172 and 182 of the Act require the employer(s) to be establishing or proposing a ‘genuine new enterprise’ at the time the Agreement is made. That is, an established enterprise will not meet the relevant test. 18
 The CFMEU suggested that an enterprise with the same character as an enterprise that once existed before can never be a ‘genuine new enterprise’ under the Act. In my view, that submission is too broadly expressed. It would prevent legitimate greenfields agreements being made in a range of scenarios involving cessation of trade and subsequent renewal, where no such intention is expressed in the Act.
 The CFMEU also referred to the approximately 90 enterprise agreements linked to CPB on the Commission’s website in support of its submission that there is no ‘genuine new enterprise’ in this case. The existence of an enterprise agreement may be indicative, but does not establish, the existence of an enterprise itself. There are many scenarios where enterprise agreements might continue to operate even though the subject enterprise has since been extinguished, such as in a transfer of business, a cessation of trade or when a project comes to an end. A brief review of that list indicates that few of those agreements have any operation outside of Victoria and many have passed their nominal expiry date. Beyond those observations, there is limited material before me about the agreements in the list 19and their particular relevance is not apparent. Accordingly, and except where those agreements were the subject of specific submissions, I have given them little weight.
 As to the enterprise itself, I accept that the ‘merged’ entity which commenced undertaking civil construction and water works on or after 1 January 2016 may have been a genuine new enterprise for CPB at that time. However, it would now appear to be an established enterprise and thus not one that CPB was establishing or proposing to establish when the Agreement was made.
 I agree with the CFMEU that it is difficult to see how an enterprise so broadly described as “civil construction works and water industry capital works in the State of Victoria” could be considered a genuine new enterprise for CPB, having regard to CPB’s own evidence that it has a number of current civil construction and water industry projects, including in Victoria. In my view, the description describes CPB’s business generally rather than the character of the particular enterprise to which the Agreement relates.
 That enterprise can best be described as general Award-covered civil construction and water industry works in Victoria. The evidence establishes that when the Agreement was made, this was a new activity or undertaking that CPB proposed to establish by employing a new permanent workforce in Victoria. Until that time, such work was contracted out to third parties and not performed by CPB at all. The one exception, relating to the CityLink Project, was being demobilised and nearing completion.
 I am satisfied that the Agreement relates to a genuine new enterprise that CPB was proposing to establish when the Agreement was made.
Has CPB employed any of the persons who will be necessary for the normal conduct of the enterprise and will be covered by the Agreement?
Who will be covered by the Agreement?
 The question of who will be covered by the Agreement was not agreed. Accordingly, it is necessary to determine that question in order to ascertain whether any relevant employees were employed at the time the Agreement was made.
 Clause 1.3 of the Agreement describes the “parties” to the Agreement as follows:
“1.3 PARTIES TO THE AGREEMENT
The parties to this agreement are:
1.3.1 CPB Contractors.
1.3.2 All employees of CPB Contractors who are covered by the classification structure contained within this agreement.
1.3.3 The Australian Workers’ Union, Victorian Branch.”
 Clause 1.5 separately describes the “Scope and Application” of the Agreement. It provides that the Agreement “applies to CPB contractors and all of its employees undertaking civil construction works in the State of Victoria”. It includes a description of those works which relevantly mirrors the definition of civil construction in clause 4.10(b) of the Award. 20
 Clause 1.5.2 of the Agreement excludes certain categories of employees from the Agreement, as follows:
“1.5.2 This agreement does not apply to:
(a) An employee to whom a project enterprise agreement applies. A project agreement is an enterprise agreement which applies to employees of CPB contractors whilst they are performing work on a specific project where the enterprise agreement has been approved by the Fair Work Commission and is compliant with the Act and the Code for Tendering and Performance of Building Work 2016 (as amended or replaced from time to time) and any applicable Victorian building code.
(b) Building construction work as defined and covered by clause 4.10(a) of the award, with the exception of building works that are a part of major civil and/or rail construction projects, such as railway stations.
(c) Tunnelling work involving the use of road headers or tunnel boring machines. This agreement does however apply to micro-tunnelling and directional horizontal drilling.
(d) Any project where the project value exceeds $1 billion.”
 Clause 4.10(a) of the Award defines “general building and construction” separately to “civil construction”, which is defined in clause 4.10(b).
 The CFMEU relied on clauses 1.5.1 and 1.5.2 of the Agreement to submit that the Agreement covers all of CPB’s “employees undertaking civil construction works in the State of Victoria”, including supervisory and managerial employees. CPB argued for a narrower construction, referring to clause 1.3 which describes the “parties” to the Agreement as “all employees of CPB Contractors who are covered by the classification structure contained within this agreement”.
 The construction of an enterprise agreement begins with a consideration of the ordinary meaning of the words used, having regard to their context and evident purpose. As a general principle, all words in an enterprise agreement must prima facie be given some meaning and effect, 21 and a ‘narrow or pedantic’ approach to interpretation is to be avoided.22 Context may be found in the provisions of the agreement as a whole, or in their arrangement and place within the agreement. The Act can provide context, as can an instrument from which the particular provisions might have been derived.23 In this respect, while admissible extrinsic material may be used to aid interpretation, it cannot be used to disregard or rewrite a provision to give effect to externally derived notions of what the parties’ intentions were.24
 The concepts of coverage and application in sections 52 and 53 of the Act provide the key to interpretation of the phrase “who will be covered by the agreement”. 25 An enterprise agreement covers an employee if it is expressed to cover the employee.26 An enterprise agreement applies to an employee in relation to particular employment if the agreement covers them and the agreement is in operation.27
 While clause 1.3 specifies the “parties” to the Agreement, the Act (under which the Agreement is made) does not speak in terms of enterprise agreement ‘parties’. It deals instead with who is ‘covered by’ an agreement. 28
 Clause 1.5 elaborates on clause 1.3 by making clear that the Agreement covers civil construction work as defined in the Award. It also expressly excludes from its coverage certain types of work, employee groups and projects.
 Clause 1.7 is also relevant. It incorporates certain terms of the Award, including the Award’s classification structure and related definitions.
 In my view, to properly understand who the Agreement covers, clauses 1.3 and 1.5 must be read together with the classification structure at Appendix 3 and relevant incorporated terms of the Award. As the High Court recently observed, “to speak of an employee being covered by an agreement is to speak of the agreement providing terms and conditions for the job performed by, or to be performed by, the employee.” 29 In my view, this can only be ascertained in this Agreement by reference to the “classifications relevant to CPB Contractors’ operations”30 in Appendix 3. Key terms of the Agreement, including rates of pay, are defined by reference to job classifications and the classification structure which describes the nature of the job to be performed in each case.
 The CFMEU’s approach would give effect to clause 1.5 of the Agreement to the exclusion of clause 1.3. Such a literal construction gives no meaning or effect to clause 1.3.2 of the Agreement, simply because there are no employees who can be a “party” to a greenfields agreement. In my view, that approach is inconsistent with the evident purpose of the Agreement, which is to regulate CPB’s Award-covered civil construction work in Victoria.
 I find that the employees who will be covered by the Agreement are employees of CPB who will undertake civil construction work in Victoria that is covered by the Award. It will not cover employees to whom a project agreement (as defined) applies or employees employed on projects with a value of more than $1 billion.
Has CPB employed any of the persons covered by the Agreement who are necessary for the normal conduct of the enterprise?
 In this case, the relevant enterprise is general Award-covered civil construction and water industry works in Victoria.
 At the time the Agreement was made, CPB says it had:
● seven employees on the CityLink Project who were employed under the CityLink Agreement; 31
● one employee performing building and construction work on the Post Entry Quarantine project;
● approximately 200 employees working in managerial and technical roles employed on civil construction projects in Victoria including the Caulfield to Dandenong Level Crossing Removal Project; and
● except in relation to the CityLink Project, no employees working on civil construction projects in Victoria who would be covered by the Agreement.
 I am satisfied that the employee performing building and construction work on the Post Entry Quarantine project is not a person who is necessary for the normal conduct of the enterprise who will be covered by the Agreement. The employee is employed on building and construction work, as defined in clause 4.10(a) of the Award. The Agreement will apply to civil construction work, as defined in clause 4.10(b) of the Award. The employee will not be covered by the Agreement.
 It appears to be agreed 32 that CPB’s employees in managerial and technical roles on civil construction projects are not performing work that is covered by the Award. If so, they also will not be covered by the Agreement for the reasons set out above. In any event, they were employed separately to, and before, it was proposed that a new enterprise be established. The new enterprise does not depend on their employment. I am not satisfied that they are necessary for the normal conduct of that enterprise.
 That leaves the seven employees who were employed on the CityLink Project until 22 December 2017. Relevantly, clause at 1.5.2 of the Agreement excludes from coverage of the Agreement employees who are employed on projects valued at more than $1 billion 33 and employees “to whom a project enterprise agreement applies”.34 “Project agreement” is defined as follows:
“A project agreement is an enterprise agreement which applies to employees of CPB contractors whilst they are performing work on a specific project where the enterprise agreement has been approved by the Fair Work Commission and is compliant with the Act and the Code for Tendering and Performance of Building Work 2016 (as amended or replaced from time to time) and any applicable Victorian building code.”
 The CFMEU estimated the value of the CityLink Project at $570 million and CPB led no contradictory evidence on this point. 35 Accepting the CFMEU’s estimate at face value, employees on the CityLink Project would not appear to be excluded from coverage by reason of its monetary value.
 Under the Agreement, a project agreement is one that, among other things, is compliant with the Act and the Building Code. The CFMEU submitted that the CityLink Agreement was not compliant with the Building Code. CPB’s submissions operated from the basis that the CityLink Agreement was a ‘project agreement’ for the purposes of clause 1.5.2, but did not deal with the issue in any detail. If the title of each document is any guide, it appears that the CityLink Agreement was made before the Building Code commenced.
 The material before me does not establish that the CityLink Agreement is compliant with the Building Code. The significance of the matter is that if it is not, the CityLink Agreement is not a ‘project agreement’ of the type excluded from coverage of the Agreement. This means the seven employees employed under the CityLink Agreement were employees who would be covered by the Agreement at the time it was made.
 The question then becomes whether those seven employees were necessary for the normal conduct of the enterprise. In my view, they were not. While they may have been covered by the Agreement, the employees were employed on a specific project which, at the relevant time, was being demobilised. CPB gave evidence that each of the employees ceased employment by 22 December 2017. Evidence for the CFMEU suggested the date may even have been earlier. 36 Whatever the date, it appears to be agreed that by the time of the hearing, there were no longer any employees employed under the CityLink Agreement. In my view, it is reasonable to infer that just as things transpired, there was no expectation these employees would form part of the new enterprise once established, let alone be necessary for its normal conduct.
 I am satisfied that CPB has not employed any of the persons who are necessary for the normal conduct of the enterprise and who will be covered by the Agreement.
Other agreement approval requirements
 The Award is the relevant modern award in relation to the Agreement for the purposes of the better off overall test.
Better off overall test
 The rates of pay in the Agreement are generally in the range of 35% to 90% above the Award. However, the rates of pay for first year adult apprentices appear to fall below the Award. CPB has given an undertaking to address the concern in relation to apprentices.
 There are a range of more beneficial terms in the Agreement compared to the Award. These include higher meal, leading hand and first allowances, working away from home allowances, guaranteed minimum superannuation contributions, accident make up pay, a 36 hour week, higher weekend, overtime and shift penalties, double the number of rostered days off, construction industry picnic day and income protection insurance.
 There are some less beneficial terms in the Agreement compared to the Award, including reduced allowances dealing with first aid, employees in charge of plant and some meals.
 On balance, I am satisfied that employees would be better off overall under the Agreement than if the Award applied to their employment.
Abandonment of employment
 The Agreement deals with abandonment of employment and there is a concern that the term might exclude the National Employment Standards (NES) in relation to notice of termination, having regard to the Full Bench decision in Bienias v Iplex Pipelines Australia Pty Limited 37. CPB has given an undertaking to address the concern.
Representation and the public interest
 I am satisfied that the AWU is entitled to represent the industrial interests of a majority of the employees who will be covered by the agreement in relation to work to be performed under the Agreement. The CFMEU agreed that the AWU had relevant coverage and no submission was made to the contrary.
 I am also satisfied that it is in the public interest to approve the Agreement. It will result in the creation of up to 200 new jobs at any given time on projects of significance to Victoria. It will reduce reliance on contractors and labour hire arrangements on those projects. As the AWU notes 38, it will provide for terms and conditions of employment well in excess of the statutory minimum. It will assist in improving workplace safety standards and give certainty as to the relevant terms and conditions of employment. It will promote productivity and support economic growth, enable fairness and representation at work, and provide accessible and effective procedures to resolve grievances and disputes.
Nominal expiry date
 The nominal expiry date in the Agreement is “four years”. The actual date of expiry is not clear and CPB has given an undertaking to address the concern.
 The undertakings given by CPB in relation to the Agreement are set out in Annexure A. The AWU was consulted on the undertakings and agrees with them. I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement.
 Subject to the undertakings referred to above, I am satisfied that the agreement is a greenfields agreement under the Act and that each of the requirements in ss.186, 187, 188 and 190 as are relevant to the application for approval have been met.
 The Agreement is approved and, in accordance with section 54 of the Act, will operate from 2 March 2018. The nominal expiry date of the Agreement is 22 February 2022.
1 Submissions dated 7 November 2017 (filed 8 December 2017); Exhibits 2 and 3
2 Act, s.172(4)
3 National Union of Workers (NSW) v HP Distribution Pty Ltd  FCA 139 per Rares J
4 Patrick Cargo Pty Ltd v Transport Workers Union of Australia PR920391 24 July 2002; Re HP Distribution Agreement 2011  FWAFB 6302
5 Exhibit 1
6 Citylink Tulla Widening Bulla Road to Power Street Greenfields Agreement 2015
7 Leighton Contractors and the CFMEU Building and Construction Industry Enterprise Agreement 2012-2105
8 Form F20
9 John Holland Queensland Pty Ltd  FWC 783; Re HP Distribution Pty Ltd Greenfields Agreement 2011  FWAFB 6302
10 Exhibit 2
11 Exhibit 2
12 Leighton Contractors Pty Ltd Civil and Rail Industry Enterprise Agreement (Victoria) 2012-2015; Leighton Contractors and the CFMEU Building and Construction Industry Enterprise Agreement 2012-2105
13 Exhibits 3 and 4
14 Transcript, 12 January 2018
15 CFMEU v John Holland Pty Ltd FCAFC 16 at 
16 Branch President, CFMEU Construction and General Branch, Victoria and Tasmania
17 Exhibit 5
18 ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association  HCA 53 at 
19 Exhibit 5, Attachment RE3
20 Agreement, clause 1.5
21 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited  FWCFB 3005 at 
22  FWCFB 3005 at 
23 Thiess Pty Ltd v Construction, Forestry, Mining and Energy Union  FWCFB 2459
24  FWCFB 3005 at 
25 ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association  HCA 53 at 
26 Act, s.53
27 Act, s.52
28 AMWU v Berri Pty Limited  FWCFB 3005 at 
29  HCA 53 at 
30 Agreement, clause 4.1
31 Citylink Tulla Widening Bulla Road to Power Street Greenfields Agreement 2015
32 Audio file of hearing, 12 January 2018
33 Agreement, clause 1.5.2(d)
34 Agreement, clause 1.5.2(a)
35 Exhibit 2
36 Exhibit 3
37  FWCFB 38
38 Form F21, AWU, 24 November 2017
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