Category Archives: Affirmative Action

June 23, 2016

Affirmative Action Policy Upheld By Supreme Court

Huntington_CBy R. Calder Huntington

Race may be taken into account when public universities and colleges admit students, ruled the U.S. Supreme Court today. For the second time, the Court was asked to decide whether the University of Texas at Austin’s admissions policy, which uses a variety of affirmative action factors to increase the diversity of its student population, violates the Equal Protection Clause of the Constitution. In a 4-to-3 decision (with Justice Kagan taking no part in the decision), the Court ruled that the race-conscious admissions program in question is lawful under the Equal Protection Clause. Fisher v. University of Texas at Austin, 579 U.S. __ (2016).

White Applicant Denied Admission Challenged Policy

Abigail Fisher, a white applicant who was denied admission to the University of Texas at Austin, sued the University alleging that its use of racial preferences in undergraduate admissions decisions is unconstitutional. She asserted that by including race in its admissions decisions, the University disadvantaged her and other Caucasian applicants.

The District Court in Texas that considered Fisher’s claims ruled in favor of the University, and the Fifth Circuit Court of Appeals agreed. Fisher appealed to the Supreme Court and in 2013, the Court kept her claims alive by sending them back to the Fifth Circuit so that the University’s admissions policy could be evaluated under the proper strict scrutiny standard. The Fifth Circuit reexamined the policy but came up with the same result, ruling in favor of the University. Fisher appealed to the Supreme Court again.

Court Finds Compelling Interest In Diversity of Students

In Fisher I, the Court ruled that the University’s affirmative action process, in which race was only one factor in assigning a numerical admissions score, needed to further a constitutionally permissible and substantial purpose or interest in order to meet the strict scrutiny standard. In today’s decision, the Court found that the University’s desire to provide its students the educational benefits that flow from having a diverse student body was a compelling interest sufficient to overcome the strict scrutiny standard.

Fisher had argued that the University failed to state more precisely what level of minority enrollment would constitute a “critical mass” at which time race would no longer need to be an admissions consideration. The Court rejected Fisher’s argument, stating that the educational benefits promoted by a diverse student body should not be reduced to pure numbers, especially in light of the fact that the University is prohibited from having a quota for minority student enrollment.

The Court also rejected Fisher’s assertion that the University had already achieved “critical mass” of minority enrollment, finding that the University had studied both statistical and anecdotal evidence that showed that race-neutral programs had not achieved its diversity goals. In addition, the Court rejected Fisher’s position that there were other workable race-neutral means of meeting the University’s educational goals.

University Must Continue to Evaluate Use Of Race In Admissions 

Although a slim majority of the Court upheld the University’s ability to use race as a factor in its admissions policy, the Court wrote that the University has a continuing obligation to satisfy the burden of strict scrutiny in light of any changing circumstances. It stated that the University must conduct periodic reassessments of its admissions program and continue to examine data to ensure that “race plays no greater role than is necessary to meet its compelling interest” in promoting the educational benefits advanced by diversity among students. Read more >>

September 3, 2013

OFCCP Announces New Veterans and Disability Regulations for Contractors

By Brad Cave 

OFCCP-logoLast week, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) announced Final Rules that are intended to improve job opportunities for disabled workers and veterans.  Whether the rules will accomplish that purpose is uncertain; what is clear is that the new rules greatly increase affirmative action requirements and burdens on federal contractors.    Under the new regulations, federal contractors and subcontractors face significantly increased documentation, data collection, recordkeeping and hiring goals. 

Key Provisions of New Disability and Veterans Regulations 

On August 27, 2013, OFCCP released the content of its Final Rules that change the regulations implementing Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act as amended by the Jobs for Veterans Act of 2002 (VEVRAA).  Section 503 of the Rehabilitation Act of 1973 prohibits discrimination in employment decisions against individuals with disabilities and requires federal contractors and subcontractors to take affirmative action to recruit, hire, promote and retain disabled workers.  VEVRAA prohibits federal contractors and subcontractors from discriminating against protected veterans and requires affirmative action in employing these veterans.  The key provisions of the Final Rules that change the regulations implementing these laws include: 

  • A 7% Utilization Goal for Qualified Individuals with a Disability.  For the first time, contractors must strive to employ disabled workers at a level that reaches 7% of each job group.  For contractors with 100 or fewer employees, the 7% goal applies to the contractor’s entire workforce, rather than each job group.  OFCCP states that this is not a quota and failure to meet the disability utilization goal will not, by itself, constitute a violation of the regulation.  However, OFCCP requires contractors to conduct an annual utilization analysis to find deficient areas and determine specific actions to rectify identified problems.

 

  • Establishing Hiring Benchmarks for Veterans.  Without setting a specific utilization goal for hiring veterans, OFCCP will require federal contractors to establish hiring benchmarks each year for protected veterans.  Contractors may choose to use the national percentage of veterans in the civilian labor force, as updated annually by OFCCP (currently 8%), as a benchmark, or may establish their own benchmark using a combination of data from the Bureau of Labor Statistics, Veterans’ Employment and Training Service and the contractor’s unique hiring circumstances.

 

  • Collect and Retain Comparison Data on Disabled and Veteran Applicants and Employees.  Under the Final Rules, contractors must document quantitative comparisons of the number of disabled workers and veterans who applied for jobs and the number hired.  The data must be compiled annually and retained by the contractor for three years in order to track trends and measure outreach efforts.

 

  • Ask Applicants and Employees to Self-Identify as Individuals with a Disability and as a Veteran.  The Final Rules mandate that employers invite applicants at both the pre-offer and post-offer stage to self-identify themselves as individuals with a disability and as veterans.  The Final Rules further require that contractors invite their current employees to self-identify at least every five years.  OFCCP offers sample self-identification language.

 

  • Mandated Equal Opportunity Clause in Subcontracts.  Under the Final Rules, contractors must include specific language to incorporate the equal opportunity clause into subcontracts so that subcontractors know their responsibilities as federal contractors.

 

  • Provide OFCCP Access to Records.  The Final Rules specify that contractors must allow OFCCP to review documents related to a focused review or compliance check either on-site or off-site, at OFCCP’s option.  OFCCP can request that contractors reveal all formats in which they maintain records and then request the records in whatever format OFCCP chooses.

 

  • Updates to Comply with the ADAAA.  The  Final Rule related to the disability regulations updates the regulations in light of the revised definition of “disability” and certain nondiscrimination provisions under the ADA Amendments Act of 2008 (ADAAA).

 


Still Burdensome, But Some Proposals Slightly Watered Down  

Federal contractors were critical of the many regulatory changes first proposed by the OFCCP in 2011.  OFCCP received many comments in response to the proposed rules and made some modest improvements based on those comments.  For example, the proposed rules sought to impose a five-year recordkeeping requirement.  The Final Rules reduced that requirement to three years.  The proposed disabilities rule sought to require contractors to review their physical and mental job qualifications on an annual basis while the Final Rule allows contractors to establish their own schedule for reviewing job qualifications.  Despite these and other small revisions from the proposed to the final regulations, the Final Rules add significant burdens on contractors who must revamp their employment policies and documentation practices to comply with the new regulations.

So, Are You Sure You’re Not Disabled? 

The new hiring quota for disabled individuals places employers in a very awkward position.  For the first time, employers are required to ask and need to know whether applicants and employees consider themselves to be disabled.  Under these rules, employers are expected to meet the 7% “goal” by workgroup.  But some employees who meet the definition of disabled will not consider themselves to be disabled or be reluctant to disclose their status to their employer.  The OFCCP recognized that a study has shown that only about 50% of those with disabilities are likely to self-identify.  The OFCCP is not concerned about this high degree of inaccuracy.  According to its preamble to the new rules, even inaccurate data which greatly underreports the number of disabled applicants and employees will still assist the contractor and the OFCCP to evaluate the contractor’s hiring and selection process!  Stated differently, the OFCCP does not care if the data is faulty by as much as 50% as long as it has some data on which to base its enforcement decisions. 

The OFCCP also suggested that employers should designate individuals as disabled, even if they decline to self-identify, where the disability is obvious or the employer knows about the disability.  Of course, for years we have cautioned employers to never label an employee as disabled to avoid “regarded as” claims under the ADA.   Now, employers who are federal contractors will have an incentive to identify employees as disabled to meet the goal, and have the OFCCP’s permission to do so.  In an interesting twist, the OFCCP’s permission for employers to designate employees as disabled was explained in the preamble to the new rule, not in the new regulations.   Since the preamble does not have the force and effect of law, the OFCCP’s permission is not likely to have much value as a defense to an employee’s allegation that the employer regarded them as disabled when the employer designates the employee for purposes of complying with this rule.  While federal contractors may have little choice if a disabled employee declines to self-identify, it will continue to be very important for employers to keep all such designations strictly confidential and out of the hands of supervisors and managers. 

Effective Date of the Disability and Veterans Affirmative Action Final Rules 

The Final Rules become effective 180 days after they are officially published in the Federal Register which is expected to occur in the next two weeks.  Consequently, contractors have about six months to get policies and procedures in place to comply with the new regulations.  Contractors subject to written affirmative action plan requirements are allowed to continue with the plan they have in place on the effective date of the Final Rules.  However, the next cycle of their affirmative action plan must be drafted to comply with the new regulations. 

OFCCP will be hosting webinars on the new regulations.  Information about the webinars and the Final Rules may be found on the OFCCP website: http://www.dol.gov/ofccp/.


Disclaimer:This article is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal advice and are not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.


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July 1, 2013

Affirmative Action by State University Requires Strict Scrutiny and No Workable Race-Neutral Alternatives

College gradsBy Jude Biggs 

In a highly anticipated opinion regarding the future of affirmative action, the U.S. Supreme Court ruled that to avoid violating the Equal Protection Clause, the University of Texas’ consideration of race in its admissions process must meet a strict scrutiny standard where its affirmative action efforts are narrowly tailored to meet its diversity goal.  Fisher v. University of Texas at Austin, No. 11-345 (U.S. June 24, 2013).  Because the Fifth Circuit Court of Appeals gave the University substantial deference in deciding whether its affirmative action plan was narrowly tailored to meet its stated goal, the Supreme Court vacated the lower court’s decision in favor of the University and sent the case back to the lower court with instructions to apply the tougher strict scrutiny standard.

Rejected Caucasian Applicant Alleges School Violated Constitution by Considering Race  

In 2008, Fisher applied for admission to the University of Texas at Austin.  Fisher, who is white, was denied admission.  For years, the University had considered race as one of various factors in its undergraduate admissions process.  Under the affirmative action plan in place when Fisher applied, the University remained committed to increasing racial minority enrollment on campus but did not assign a numerical value based on race for each applicant.  Instead, the University included an applicant’s race as one of numerous components that made up the applicant’s Personal Achievement Index.  When Fisher was rejected, she sued the University and various school officials alleging that the University violated the U.S. Constitution’s Equal Protection Clause by considering race.   

Affirmative Action Survives, But Is Narrowed 

The federal district court and the Fifth Circuit appellate court upheld the University’s admissions plan.  The Fifth Circuit, however, gave substantial deference to the University, both in the definition of its compelling interest in creating diversity in its student body and in deciding whether its affirmative action plan was narrowly tailored to meet its goal.  When the Supreme Court agreed to hear this case, supporters of affirmative action worried that the more conservative court would rule that consideration of race under affirmative action programs was unconstitutional.  

The Fisher decision, however, does not actually decide the constitutionality issue but instead defines the standard by which courts must evaluate a program that considers race as a factor.  The Court explained that the University must meet the demanding burden of strict scrutiny and remanded the case to the Fifth Circuit to analyze whether the University has offered sufficient evidence to prove that its admissions policy meets that scrutiny.  The Court stated that “the reviewing court must ultimately be satisfied that no workable race-neutral alternatives would produce the educational benefits of diversity.” 

Justice Thomas: “Use of Race is Categorically Prohibited” 

Justice Clarence Thomas joined in the majority’s decision, agreeing that strict scrutiny should apply to the University’s use of race in its admission program.  Writing a separate concurring opinion, however, he went further, stating that he would hold that a state’s use of race in higher education admissions decisions is categorically prohibited by the Equal Protection Clause.  Justice Thomas would overrule the 2003 Supreme Court decision in Grutter v. Bollinger, which upheld the use of race as one of many “plus factors” in an admissions program, and abolish the use of race as a factor in affording educational opportunities.  He finds that there is no compelling interest that could justify what he calls racial discrimination.  He states that there is no doubt that the University’s discrimination injures white and Asian applicants who are denied admission because of their race, but he also believes that those who are admitted under the “discriminatory admissions program” suffer even more harm, stamping them with a “badge of inferiority.”

Justice Thomas’ views differ from those of retired Justice Sandra Day O’Connor, who wrote in 2003 in Grutter, that “classroom discussion is livelier, more spirited, and simply more enlightening and interesting” when students are exposed to the “greatest possible variety of backgrounds.”  Justice O’Connor also stated that the Court expected that after 25 more years, the use of racial preferences would no longer be needed.  Today, some might say American universities have reached the point when affirmative action is no longer needed; others, however, do not believe the United States has achieved the promise of true equality. 

Whether Justice Thomas’ view is adopted or whether Justice O’Connor’s views remain in force in the future – at least for awhile – remains to be seen. 

Will Fisher Be Revisited Again? 

The Fifth Circuit now must apply the strict scrutiny standard to the evidence provided by the University of Texas to determine whether its consideration of race meets Equal Protection muster.  No matter the outcome, it is likely the “losing” party will seek review of that decision by the U.S. Supreme Court.  We know how Justice Thomas will rule, but the question remains, will enough other justices join him to throw out any consideration of race in state affirmative action programs? 

Private Employers Not Bound by This Decision  

Because the Equal Protection clause applies only to state actors (providing that no state shall deny to any person the equal protection of the laws), the analysis of whether an affirmative action program violates the Equal Protection clause does not apply to private companies or organizations.  That said, there could be a spillover effect.  Generally, discrimination in the workplace is governed by Title VII and analogous state laws.  It is unclear whether individuals who feel they have suffered reverse discrimination by a private employer’s affirmative action or diversity efforts will leverage the narrowing scope of affirmative action in the public sector.  It is likely private sector litigants will point to Justice Thomas’ concurring opinion to try to abolish any consideration of race in the employment context as discriminatory, and others will point to Justice O’Connor’s rationale for affirmative action.  So stayed tuned! 


Disclaimer:This article is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal advice and are not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.


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April 29, 2013

OFCCP Settles Alleged Systemic Discrimination Against…Males

By Chris Chrisbens

Occasionally, the question arises whether the Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP) will pursue alleged discrimination against white males.  The OFCCP answered that question last Thursday announcing an audit settlement with federal contractor Goodwill Industries of Southern California alleging systemic discrimination against men.  OFCCP’s press release
states that “Goodwill’s hiring process favored female applicants for
entry-level positions as attendants at local donation centers, in part because
of perceptions that women have better customer service skills.” 

While denying discrimination, Goodwill agreed to pay $130,970 in back wages to 200 unsuccessful male applicants and to make 18 job offers to qualified men previously rejected. 

"Sex discrimination in the workplace can take many forms, and we are committed to fighting all of them," said OFCCP Director Patricia A. Shiu. "That means getting away from outdated notions about
what constitutes 'men's work' and what constitutes 'women's work.'”

For federal contractors it is especially important that they pay attention to statistically significant hiring disparities against both women and men, and are prepared to defend their hiring criteria as job-related and consistent with business necessity. In this case, Goodwill’s alleged belief that men were not as well-suited for customer service as women clearly did not pass muster. 

April 3, 2013

OFCCP Wins Again: Health Care Providers May Be “Subcontractors” with Affirmative Action Obligations

By  Chris Chrisbens 

In the latest decision in the ongoing battle between the Office of Federal Contract Compliance Programs (OFCCP) and health care providers, a U.S. district court ruled that certain health care providers may be “subcontractors” covered by federal affirmative action laws and regulations.  UPMC Braddock v. Harris.  In that case, UPMC Health Plan, a health maintenance organization (HMO), contracted with the U.S. Office of Personnel Management (OPM) to provide insurance coverage and HMO services to federal employees participating in the Federal Employees Health Benefits Program (FEHBP).  The HMO Health Plan then contracted with UPMC Braddock and two other hospitals to provide HMO medical services to covered federal employees.

Two Key Findings

Key to the court’s decision were two findings:  (1) the provision of medical services by the hospitals is a “nonpersonal service” within the definition of “subcontract” found in the affirmative action regulations; and (2) the HMO Health Plan’s contract with the federal government (OPM) obligated it to provide medical services, as opposed to only insurance coverage, which it provided through the hospitals.  Accordingly, the hospitals in the case qualified as “subcontractors” under both prongs of the definition:

Subcontract means any agreement or arrangement between a contractor and any person… :

(1) For the purchase, sale or use of personal property or nonpersonal services which, in whole or in part, is necessary to the performance of any one or more contracts; or

(2) Under which any portion of the contractor's obligation under any one or more contracts is performed, undertaken or assumed.

Although the Braddock case may be appealed, as it currently stands health care providers and insurers may have affirmative action obligations arising out of:

  • Any direct contracts with the federal government of $50,000 or more, such as contracts with the Veterans Administration, Health and Human Services (including Centers for Medicare and Medicaid Services), Department of Justice, and under the FEHBP;
  • Subcontracts of $50,000 or more as defined above, including those under FEHBP; or
  • Direct contracts and subcontracts under Medicare Parts C (Medicare Advantage) or D (prescription drug plans).  OFCCP concedes that Medicare reimbursements under Parts A and B are financial assistance rather than government contracts and thus are not subject to affirmative action obligations. 

Currently, healthcare providers who are network providers in TRICARE—a U.S. Department of Defense healthcare program for military personnel and their families – are not “subcontractors” pursuant to a 2012 amendment to the TRICARE program.  That could also change. 

As stated in OFCCP’s Directive 301, OFCCP takes a case-by-case approach to determining health care provider and insurer coverage.  However, OFCCP’s Directive 293 (although rescinded by Directive 301), still provides some useful insight into the OFCCP’s analysis.  The bottom line is OFCCP remains very interested in health care providers and insurers who therefore, must carefully analyze and understand their federal government contacts with the foregoing in mind.

 

Court Rejects Hospitals’ Arguments to Avoid Subcontractor Status

In Braddock, the UPMC hospitals made four arguments to counter their alleged status as “subcontractors” subject to affirmative action obligations.    First, they argued that the contract between OPM and the HMO Health Plan specifically excluded medical providers from the contract’s definition of “subcontractor,” and therefore, they were not “subcontractors” under the regulations.  To the contrary, the court found that because the parties had “no authority to define the contours of the equal opportunity laws governing federal procurement by devising their own meaning for the word ‘subcontractor,’ the definition of that word in the OPM/Health Plan contract has no effect on whether the hospitals lawfully may be regarded as government subcontractors and subject to the attendant legal obligations.”

The hospitals next argued that because the medical services they provided to federal employees are very personal in nature, rather than “nonpersonal services,” the first prong of the “subcontractor” definition was not met.  Because affirmative action regulations do not define the term “nonpersonal services,” the court turned to the definition found in the Federal Acquisition Regulations (which also apply to federal contractors and subcontractors), and which contain a “materially identical definition of ‘subcontract.’”  That regulation provides that a non-personal services contract focuses on the fact that the employees performing the contract are not subject to the “supervision and control usually prevailing in relationships between the Government and its employees."  It also explains that "[a] personal services contract is characterized by the employer-employee relationship it creates between the Government and the contractor's personnel.”  Under this generally-applicable standard, the court found that the hospitals’ services were non-personal because the employees performing them were not controlled by the government. 

The hospitals also argued that they were not “subcontractors” under either prong of the definition because:  (1) the medical services performed were not “necessary to the performance” of the HMO Health Plan’s contract with OPM; and (2) they had not “performed, undertaken or assumed” any of the HMO Health Plan’s obligations under the OPM contract.  These arguments turned on whether the OPM contract obligated the HMO Health Plan to provide only insurance coverage, medical services or both.  It was also based on the administrative ruling in OFCCP v. Bridgeport Hospital.  There it was held that because Blue Cross/Blue Shield (not an HMO) was obligated under its contract with OPM to provide only insurance coverage, the health care providers to which it provided reimbursement for services rendered to federal employees were not “subcontractors” because they provided nothing necessary to the performance of the OPM contract and likewise undertook no obligation of the Blue Cross OPM contract.  In contrast, in Braddock, the HMO Health Plan’s contract with OPM required it to put an HMO into operation, and otherwise provide specified medical services, which it accomplished via the hospitals.  Thus, unlike Blue Cross in the Bridgeport case, it was both an insurer and a medical services provider.  Thus, the UPMC hospitals both performed a service necessary to the OPM contract and undertook at least one of its obligations.

Finally, the hospitals made a contractual argument that because affirmative action obligations had not been incorporated into the hospitals’ contracts with the HMO Health Plan, they were not binding on the hospitals.  The court rejected that argument finding that such obligations were nonetheless incorporated into the contracts by operation of law because they express “a significant or deeply ingrained strand of public procurement policy.” 

Unless the UPMC hospitals are successful in an appeal, it appears likely that OFCCP will pursue compliance audits of health care providers as outlined above.

March 4, 2013

Pay Discrimination Standards Ditched to Broaden OFCCP’s Title VII Discrimination Analysis

By

On February 26, 2013, the Office of Federal Contract Compliance Programs (OFCCP) announced changes to its enforcement standards and investigation procedures regarding compensation discrimination by federal contractors and subcontractors.  Charged with enforcing Executive Order 11246 which requires nondiscrimination as well as affirmative action, the OFCCP rescinded two 2006 pay discrimination enforcement guidance documents.  Concurrently, it issued a written compensation directive to improve compensation investigation procedures and protocols.  Directive 307, entitled Procedures for Reviewing Contractor Compensation Systems and Practices, will apply to all OFCCP reviews scheduled on or after February 28, 2013.  The intended effect of the rescission and Directive 307 is to broaden OFCCP’s compensation enforcement tools to all those available under Title VII of the Civil Rights Act of 1964. 

In large part, the rescission and Directive 307 simply capture the sort of compensation analyses OFCCP has already been conducting for the last couple years.  Nonetheless, Directive 307 will require even greater attention to and analyses of compensation practices and results.   

2006 Compensation Guidance Rescinded as Too Constraining on OFCCP Investigators 

The OFCCP rescinded two 2006 guidance documents:  (1) Interpreting Nondiscrimination Requirements of Executive Order 11246 With Respect to Systemic Compensation Discrimination, which provided the procedures used by the OFCCP when issuing a notice of violation for pay discrimination; and (2) Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance with Nondiscrimination Requirements of Executive Order 11246,  which provided contractors with a set of directions to show their compliance with fair pay practices.  The OFCCP states that it decided to rescind these documents because they significantly constrained its ability to fully investigate pay discrimination and were not consistent with other federal laws that address systemic discrimination.  The OFCCP also found that contractors rarely used the voluntary guidelines to demonstrate compliance. 

Title VII Discrimination Standards Will Apply 

In place of the standards articulated in the two rescinded guidance documents, the OFCCP now will use the same breadth of standards that courts use to evaluate pay discrimination claims under Title VII.  The OFCCP points out that these standards already apply to federal contractors in all other contexts and using them for pay discrimination enforcement will avoid subjecting contractors to different rules.   

New Investigation Procedures 

Directive 307 establishes procedures for the OFCCP to review compensation systems and practices.  It addresses data received at the beginning of a desk audit pursuant to a Scheduling Letter as well as at subsequent stages of a compliance evaluation.  These procedures will also apply to the investigation of complaints alleging compensation discrimination.  They do not, however, change any existing recordkeeping or reporting requirements that already apply to federal contractors. 

Additional information regarding the rescission of the 2006 guidance documents as well as Directive 307 may be found in “Frequently Asked Questions:  OFCCP Procedures for Reviewing Contractor Compensation Systems and Practices.”    


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