Notice2026-05765
Michael W. Williams-Control Exemption-McCloud Railway Company; Ozark Valley Railroad, Inc.; and Washington & Idaho Railway, Inc.
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Published
March 25, 2026
Issuing agencies
Surface Transportation Board
Full Text
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<title>Federal Register, Volume 91 Issue 57 (Wednesday, March 25, 2026)</title>
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[Federal Register Volume 91, Number 57 (Wednesday, March 25, 2026)]
[Notices]
[Pages 14618-14621]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-05765]
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SURFACE TRANSPORTATION BOARD
[Docket No. FD 36848]
Michael W. Williams--Control Exemption--McCloud Railway Company;
Ozark Valley Railroad, Inc.; and Washington & Idaho Railway, Inc.
On March 27, 2025, Michael W. Williams (Williams), a noncarrier
individual, filed a petition for exemption under 49 U.S.C. 10502 from
the provisions of 49 U.S.C. 11323-24 for after-the-fact authority to
control three Class III rail carriers: Ozark Valley Railroad, Inc.
(OVR); McCloud Railway Company (MCR); and Washington & Idaho Railway,
Inc. (WIR). As discussed below, the Board will grant the petition for
exemption.
Background
On November 13, 2020, S&S Shortline Leasing, LLC (S&S), filed a
verified notice of exemption under 49 CFR 1150.41 in Docket No. FD
36461 to acquire approximately 127 miles of rail line in Nevada.
Williams filed on the same day a verified notice of exemption under 49
CFR 1180.2(d)(2) in Docket No. FD 36460 to continue in control of S&S
upon S&S becoming a rail carrier. In late December 2020, he also filed
a verified notice of exemption pursuant to 49 CFR 1180.2(d)(2) in
Docket No. FD 36474 for after-the-fact authority to acquire control of
MCR.
The Board postponed the effectiveness of those exemptions, sought
clarification about various issues, Williams--Control Exemption--S&S
Shortline Leasing, LLC, FD 36460 et al., slip op. at 3-4 (STB served
Dec. 10, 2020); Williams--Control Exemption--S&S Shortline Leasing,
LLC, FD 36460 et al., slip op. at 4 (STB served Jan. 26, 2021), and
ultimately rejected the verified notices, Williams--Control Exemption--
S&S Shortline Leasing, LLC (September 2021 Decision), FD 36460 et al.,
slip op. at 2-4 (STB served Sept. 29, 2021).\1\ The Board explained
that the matters were sufficiently complicated and non-routine to make
them inappropriate for consideration under the streamlined class
exemption procedures of 49 CFR 1150.41 and 1180.2(d). September 2021
Decision, FD 36460 et al., slip op. at 4. The Board found that more
scrutiny and a more complete record were necessary, especially given
Williams' unauthorized control of MCR and another carrier, OVR, that
had come to light during the proceedings. Id. at 2, 4. The Board
directed Williams to file petitions for exemption or full applications
to control OVR and MCR after the fact. Id. at 4. The Board also
provided guidance to S&S and Williams should S&S wish to acquire the
line in Nevada. Id. at 4-5. Finally, the Board ``strongly advise[d]
counsel to be meticulous and thorough in any future proceedings before
the Board.'' Id. at 5.
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\1\ A fuller description of Williams' history before the Board
can be found in the September 2021 Decision.
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Petition for Exemption
In response, Williams filed in this docket a petition for exemption
on March 27, 2025, seeking after-the-fact authority to control OVR,
MCR, and an entity not discussed in the September 2021 Decision, WIR.
The petition describes the other carriers Williams has already been
authorized to control (BG & CM Railroad, Inc. (BG&CM); St. Maries River
Railroad, Inc. (SMRR); Boot Hill & Western Railway Holding Company,
Inc. (BHWH); and Dakota Southern Railway Company (DSR)) and explains
why Williams no longer believes authority to control S&S is necessary.
(Pet. 4-17.) Williams' petition also refers to two other entities (MB
Rail IB, LLC (MB Rail IB) and Midwest & Bluegrass Rail, LLC (M&B
Rail)), but he asserts that no Board authority is necessary to control
these carriers because he has a non-controlling interest in MB Rail IB
and no interest in MB Rail. (Id. at 17-18.) He also states that he had
owned Fremont Northern LLC (Fremont Northern) and that that entity had
owned an abandoned right-of-way, but that no authority was necessary
given the corridor's non-jurisdictional status. (Id. at 18-19.)
Richard Huff, another noncarrier individual, submitted a reply on
April 30, 2025, suggesting that Williams does not actually control WIR
and that DSR has been dissolved by the State of South Dakota. (Huff
Letter 1-2.) He also questions the number of carriers controlled by
Williams by noting discrepancies between Williams' petition and a
website for an entity Huff claims is headed by Williams. (Id. at 2.)
Williams responded on May 9, 2025, challenging Huff's contentions.
June 2025 Decision
In Williams--Control Exemption--McCloud Railway (June 2025
Decision), FD 36848 (STB served June 24, 2025), the Board instituted a
proceeding under 49 U.S.C. 10502(b) and sought clarification on issues
concerning MB Rail IB, M&B Rail, and Fremont Northern to ensure it had
a complete picture of Williams' current railroad holdings. The decision
sought information regarding the ownership interests of Williams and
his daughter, Avory Beggs, in MB Rail IB and M&B Rail and whether, as a
result, Williams and Beggs, individually or jointly, need authority to
control two Class III carriers, Youngstown & Southeastern Rail, LLC
(Y&S) and TransKentucky Transportation Railroad, Inc. (TransKentucky).
The decision also sought more explanation as to why no authority was
necessary to acquire Fremont Northern.
Williams responded with a supplement, including a verified
statement, on July 14, 2025. He asserts that no authority is necessary
to control Y&S, TransKentucky, or Fremont Northern. As directed in the
June 2025
[[Page 14619]]
Decision, he also provided organizational charts and ownership
percentages for MB Rail IB and M&B Rail. He later filed a ``Motion for
Leave to File Supplemental Correction and Supplemental Correction'' on
September 8, 2025.\2\
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\2\ The Board will grant Williams' motion and accept his
correction. As he notes, it is important for the Board to have
accurate and up-to-date information when ruling.
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Discussion and Conclusions
Issues Raised in the June 2025 Decision
As discussed in the June 2025 Decision, additional information was
needed concerning MB Rail IB and M&B Rail. June 2025 Decision, FD
36848, slip op. at 3. The June 2025 Decision noted that MB Rail IB
currently controls Y&S, and that Williams and his daughter, Beggs, both
hold non-controlling interests in MB Rail IB. Id. at 2-3. The record
did not reflect, however, the percentage of membership stake each
currently holds. Id. at 3.
Additionally, the June 2025 Decision noted that M&B Rail also
controls Y&S as well as TransKentucky. Id. Williams acknowledged that
his daughter currently has a non-controlling interest in M&B Rail and
claimed that he has no ownership interest in that entity. Id. The June
2025 Decision noted, however, that he does appear to share a business
address with M&B Rail. Id.
Based on these issues, Williams was asked to provide information to
determine if he controls MB Rail IB and M&B Rail and also to explain
why he and his daughter do not individually or jointly require
authority to control the Class III carriers. Id.
In response, Williams asserts that, although he has a 42.5% stake
in MB Rail IB, he has never had a majority ownership stake in the
enterprise. (Williams Supp. 5, July 14, 2025.) He adds that he has not
exerted and cannot on his own exert indirect control over Y&S through
MB Rail IB. (Id.) He acknowledges that Beggs ``holds a collective
30.75% ownership stake'' and that he, Beggs, and Tammy Williams (his
wife and Beggs' mother) hold a collective 79.75% in MB Rail IB. (Id. at
5 n.3, 6.) He also notes that he holds a 25% stake and Beggs a 50%
stake in MB Rail TTI, LLC, an entity that controls TransKentucky. (Id.
at 9.)
He adds, however, that he and Beggs are not party to a membership
agreement or other contract obligating them to vote in unison with
respect to MB Rail IB. (Id. at 6, Ex. C.) According to Williams, ``each
individual can and does harbor differing perspectives and expectations
with respect to the operation of MB Rail IB'' and, in turn, Y&S.
(Williams Supp. 6, July 14, 2025.)
Furthermore, Williams reaffirms in his July 14, 2025 supplement
that he has no ownership interest in M&B Rail. (Id. at 4, Ex. C.) He
adds that, although he allowed Beggs to use his business address in an
earlier transaction, that was temporary. (Pet. 10-11, Ex. C.) \3\
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\3\ He also asserted that Beggs recently became a majority
stakeholder in M&B Rail. (Id. at 4) but later corrects the record in
his September supplement to state that she did not become a majority
stakeholder. (Williams Mot. 1-2, Sept. 8, 2025.)
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Williams has satisfactorily shown that he and his daughter do not
jointly control MB Rail IB, M&B Rail, Y&S, or TransKentucky. According
to Board precedent, control analyses are fact-specific and look to
evidence of actual or de facto control and factors such as a voting
trust. See Mich. Cent. R.R.--Acquis. & Operation Exemption--Lines of
Norfolk S. Ry., FD 35063 et al, slip op. at 6 (STB served Dec. 10,
2007); Paducah & Louisville Ry.--Control Exemption--Paducah & Ill.
R.R., FD 33362 (STB served Aug. 25, 1997); Bradford Indus. Rail, Inc.--
Acquis. & Operation Exemption--Consol. Rail Corp., FD 32240, et al.
(ICC served Dec. 7, 1995). Here, Williams has sufficiently demonstrated
that he and his daughter do not act in unison as they are not bound by
a contract or voting agreement. Furthermore, agency precedent
recognizes that family relationship is only one of a host of factors in
determining common control. See S. Kan. & Okla. R.R.--Acquis. &
Operation Exemption--Atchison, Topeka & Santa Fe Ry.--Pet. to Revoke,
FD 31802 (Sub-No. 1) (ICC served Nov. 27, 1992) (denying petition to
revoke as the entities were independent despite family relationships
and sharing the same address); S. Bend Freight Line--Purchase--Delia
Cartage, Inc., 127 M.C.C. 169, 181-82 (1977). In light of this
precedent, it is also not dispositive here that Williams and Beggs
temporarily shared a business address.
Additionally, based on the noncontrolling stake Williams and Beggs
each have in MB Rail IB and Beggs has in M&B Rail and the absence of
additional evidence, the Board is satisfied that neither individual
must seek authority to control the underlying carriers. The Board
notes, however, that Williams' September correction indicates that
Beggs plans to move forward with a transaction whereby she would obtain
a majority ownership in M&B Rail and hence its carriers, Y&S and
TransKentucky. (Williams Mot. 2, Sept. 8, 2025.) The Board reminds
Beggs and her counsel to seek the requisite authority when she wishes
to proceed with that transaction.
Williams was also asked to explain why no authority was necessary
when an entity he used to own, Fremont Northern, acquired what he
described as ``an abandoned rail line right-of-way'' in Nebraska. June
2025 Decision, FD 36848, slip op. at 4; see Chi. & N.W. Transp. Co.--
Aban. Exemption--in Dodge, Cuming, Stanton, & Madison Cntys., Neb., AB
1 (Sub-No. 180X) (ICC served May 10, 1985). The June 2025 Decision
described an unresolved dispute about whether what seemed to be the
same right-of-way had rejoined the interstate rail system after two
post-abandonment transactions. See C.T. Chappelear--Feeder R.R. Dev.
Appl.--Line of Neb. R.R. Museum Between Fremont & W. Point, Neb. (C.T.
Chappelear), FD 35405, slip op. at 3 (STB served Sept. 17, 2010);
Fremont, W. Point & Pac. Ry.--Exemption--Operation--Certain Abandoned
R.R. Lines Owned by the E. Neb. Chapter of the Nat'l Ry. Hist. Soc'y in
Dodge & Cuming Cntys., Neb., FD 31147 (ICC served Nov. 25, 1987);
Fremont Nw. R.R.--Lease & Operation Exemption--Rail Line of the E. Neb.
Chapter of the Nat'l Ry. Hist. Soc'y, FD 34383 (STB served Aug. 8,
2003).
Williams was asked to clarify whether the line in C.T. Chappelear
is the same line discussed in his petition and, if it is, expand upon
his statement that Fremont Northern did not require Board authority to
acquire the line. June 2025 Decision, FD 36848, slip op. at 4.
He responds that a portion of the right-of-way is indeed the same
one from C.T. Chappelear and that Fremont Northern, now dissolved, did
own that portion between 2010 and 2019. (Williams Supp. 11-12, July 14,
2025.) He adds that it is unclear that common carrier operations were
ever resumed over the portion of the right-of-way by either of the
entities that obtained agency operating authority in 1987 and 2003.
(Id. at 13.) Williams argues that even if such operations resumed, they
would not have resulted in the return of the underlying abandoned rail
line to the national rail system or caused the right-of-way owner to
become a rail carrier. In support, Williams cites Wisconsin Central
Ltd. v. STB (Wisconsin Central), 112 F.3d 881, 893 (7th Cir. 1997).
(Williams Supp. 13, July 14, 2025.)
The Board agrees that Wisconsin Central governs here. The Wisconsin
Central court found that when the agency authorizes operations by a
non-owning carrier over an abandoned line, only the transportation
service comes under the Board's jurisdiction. See
[[Page 14620]]
Wisconsin Central, 112 F.3d at 890. The Board has also applied
Wisconsin Central to find that an underlying right-of-way does not
rejoin the interstate rail system. See, e.g., Iowa Traction Ry.--
Discontinuance of Serv. Exemption--in Cerro Gordo Cnty., Iowa, AB 1269
(Sub-No. 1X) (STB served Apr. 6, 2020) (denying trail-use request as
the agency has no jurisdiction over the abandoned right-of-way despite
an entity having received an exemption to permit it to operate via a
lease). Here, therefore, the 1987 and 2003 operations transactions did
not bring the right-of-way back into the system, so Fremont Northern
did not need Board authority to acquire it.
Huff Issues
As noted above, Huff filed a letter raising questions about
Williams' petition. Specifically, Huff suggests that Williams does not
actually control WIR and that DSR has been dissolved by the State of
South Dakota. (Huff Letter 1-2.) He also questions the number of
carriers Williams controls by noting discrepancies between Williams'
petition and the website of Midwest Pacific Rail Net & Logistics Co.
(MPR), an entity Huff claims is headed by Williams. (Id. at 2.)
Williams provides adequate responses to Huff's assertions. Williams
supports his claim that he controls WIR by providing an Idaho state
judgment whereby all shares in WIR are delivered to Michael and Tammy
Williams. (Williams Reply 2, Ex., May 9, 2025.) Although Williams also
provided support in June that DSR is in good standing, (Williams Reply
1, June 4, 2025), the point is now moot as DSR later terminated
service.\4\ The asserted discrepancy in the number of carriers Williams
controls also is not concerning, as Williams explains that the website
is out of date (Williams Reply 3, May 9, 2025) and clarifies his
holdings in his July 14 supplement.
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\4\ DSR had been operating based on a modified certificate under
49 CFR 1150.24, but on August 7, 2025, it filed a notice in this
docket and Docket No. FD 36086 that it wished to terminate service
in 60 days. (DSR Notice 1-2, Aug. 7, 2025); Dakota S. Ry.--Modified
Certificate of Pub. Convenience & Necessity--Yankton, Bon Homme, &
Charles Mix Cntys., S.D., FD 36086 (STB served Jan. 25, 2017). As a
result, DSR's modified certificate expired on October 6, 2025, and
it ceased to be a carrier.
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Exemptions for OVR, MCR, and WIR
The acquisition or continuance of control of a rail carrier by a
person that is not a rail carrier but that controls any number of rail
carriers requires prior approval from the Board under 49 U.S.C.
11323(a)(5). Under section 10502(a), however, the Board shall, to the
maximum extent consistent with 49 U.S.C. subtitle IV, part A, exempt a
transaction or service from regulation when it finds that: (1)
regulation is not necessary to carry out the Rail Transportation Policy
(RTP) of 49 U.S.C. 10101; and (2) either (a) the transaction or service
is limited in scope, or (b) regulation is not needed to protect
shippers from the abuse of market power.
Here, Williams seeks after-the-fact authority to continue in
control of OVR and to acquire control of MCR and WIR. As discussed
below, after reviewing Williams' description of the three carriers, the
Board will grant the exemptions he seeks and provide after-the-fact
approval to control the carriers.
OVR
Williams explains that he incorporated OVR as a noncarrier in early
2007 to acquire from The Kansas City Southern Railway Company and
operate approximately 25 miles of rail line between Mexico, Mo., and
Fulton, Mo. (the O Lines). (Pet. 5.) OVR later sought authority to
acquire and operate the O Lines. See Ozark Valley R.R.--Acquis. &
Operation Exemption--Kan. City S. Ry. (OVR Acquisition), FD 34989 (STB
served June 8, 2007). He asserts that he was unaware of the need to
secure control authorization based on OVR Acquisition and that his
previous counsel appeared to have overlooked applicable agency
procedures. (Pet. 7.)
MCR
Williams states that MCR now holds 19.6 miles of ``largely inactive
(but un-abandoned) rail line'' (Pet. 8.), as well as the residual right
to reactivate service over approximately 80 miles of rail line approved
for abandonment that are railbanked. See McCloud Ry.--Aban. &
Discontinuance of Service Exemption--in Siskiyou, Shasta, & Modoc
Cntys., Cal., AB 914X (STB served Oct. 14, 2005 and Apr. 29, 2016).
Williams states that he acquired MCR's stock in 2011. (Pet. 8.) He
asserts that ``there may have been some confusion concerning whether
MCR was still a common carrier, given the circumstances surrounding its
inactive lines[,]'' (Pet. 9.) but notes that any confusion has been
resolved, and he now seeks after-the-fact authority to control MCR.
WIR
Williams explains that WIR initially provided contract service over
lines in eastern Washington but then became a Class III carrier after
it leased and began common carrier operations on the lines. (Pet. 11 &
n.24 (citing Wash. & Idaho Ry.--Lease & Operation Exemption--Wash.
State Dept. of Transp., FD 35028 (STB served May 25, 2007, corrected on
June 1, 2007).) According to Williams, from WIR's initiation of common
carrier operations until 2015, he held a non-controlling, minority
stake in WIR. (Pet. 11.) However, in April 2015, he obtained a
controlling stake in the railroad, albeit one not authorized by any
corresponding control proceeding. (Id.)
Williams notes that he should have secured Board authorization to
acquire control of WIR in 2015, but that, as with MCR, he did not.
(Pet. 12.) He therefore seeks authority now but adds that WIR will
consider its options to discontinue service over its entire system.
(Pet. 12-13 & n.26.) \5\
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\5\ Acquisitions of active rail lines are generally supposed to
be for continued rail use, though the Board has, in certain limited
situations, granted acquisition authority when discontinuance/
abandonment was subsequently planned, where the circumstances
warrant it, as in this case. See, e.g., Independence Rail Works--
Acquis. & Operation Exemption--Byesville Scenic Trails, FD 36432,
slip op. at 4, n.11 (STB served Apr. 13, 2021).
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Application of Exemption Criteria
In this case, an after-the-fact exemption from the prior approval
requirements of sections 11323-24 is consistent with section 10502.
Detailed scrutiny of Williams' control of OVR, MCR, and WIR through an
application is not necessary to carry out the RTP. Williams' control of
the three carriers will have no adverse impact on competition. None of
the carriers connect with each other, or with any of the other
railroads controlled by Williams. Indeed, these railroads are scattered
across the western United States--in California (MCR), Missouri (OVR),
Washington (WIR), Idaho (BG&CM and SMRR), and Kansas (BHWH). An
exemption allowing common control would further the RTP by promoting a
safe and efficient rail transportation system, 49 U.S.C. 10101(3);
ensuring the development and continuation of a sound rail
transportation system to meet the needs of the public, 49 U.S.C.
10101(4); fostering sound economic conditions in transportation, 49
U.S.C. 10101(5); and encouraging efficient management of railroads, 49
U.S.C. 10101(9). Furthermore, an exemption would also promote the RTP
by minimizing the need for federal regulatory control over the
transaction, 49 U.S.C. 10101(2); reducing regulatory barriers to entry,
49 U.S.C. 10101(7); and providing for the expeditious resolution of
this proceeding, 49 U.S.C. 10101(15). Other aspects of the RTP would
not be adversely affected.
[[Page 14621]]
Nor is detailed scrutiny of the proposed transaction necessary to
protect shippers from an abuse of market power.\6\ As OVR, MCR, WIR,
and Williams' other carriers do not connect, common control has not and
will not affect any carrier's market power. No shipper facility has or
will be served by more than one Williams-controlled railroad, and no
shipper has objected to the common control.\7\
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\6\ Given this finding, the Board need not determine whether the
transaction is limited in scope. See 49 U.S.C. 10502(a).
\7\ The after-the-fact exemption granted by this decision is not
retroactive. The Board generally disfavors granting retroactive
relief. See Independence Rail Works, FD 36432, slip op. at 5-6.
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Future Requests for Exemption
Williams hopes that his efforts through his petition would entitle
him, once again, to be able to invoke the Board's class exemption
authorization procedures. (Pet. 2.); September 2021 Decision, FD 36460
et al., slip op. at 4-5.
At this time, the Board will permit Williams to invoke the class
exemption process where appropriate in the future. He has provided what
the Board understands to be a comprehensive review of the carriers he
has acquired and explained the circumstances whereby he acquired
carriers without the required approval. Williams is reminded to
continue to carefully consider the potential need for Board authority
concerning any future rail-related transactions and to be thorough and
meticulous in his future filings to avoid the mistakes in the earlier
dockets and to ensure compliance with all governing statutes and
regulations related to his rail holdings.
Employee and Environmental/Historic Matters
Under 49 U.S.C. 10502(g), the Board may not use its exemption
authority to relieve a carrier of its statutory obligation to protect
the interests of employees. Section 11326(c), however, does not provide
for labor protection for transactions under sections 11324 and 11325
that involve only Class III rail carriers. Therefore, because all of
the carriers involved in the control transaction are Class III
carriers, the Board may not impose labor protective conditions.
The control transaction is exempt from environmental reporting
requirements under 49 CFR 1105.6(c)(1)(i) because it will not result in
any significant change in carrier operations. Similarly, the
transaction is exempt from the historic reporting requirements under 49
CFR 1105.8(b)(1) because there is no indication that Williams plans to
dispose of or alter properties subject to the Board's jurisdiction that
are 50 years old or older.
It is ordered:
1. Williams' September 8, 2025 motion is granted, and his
correction is accepted into the record.
2. Under 49 U.S.C. 10502, the Board exempts from the prior approval
requirements of 49 U.S.C. 11323-25 the control transaction described
above.
3. Notice of the exemption will be published in the Federal
Register.
4. The exemption will become effective on April 19, 2026. Petitions
for stay must be filed by March 30, 2026. Petitions for reconsideration
or petitions to reopen must be filed by April 9, 2026.
By the Board, Board Members Fuchs, Hedlund, and Schultz.
Decided: March 19, 2026.
Jeffrey Herzig,
Clearance Clerk.
[FR Doc. 2026-05765 Filed 3-24-26; 8:45 am]
BILLING CODE 4915-01-P
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