 United States Court of Appeals for the Federal Circuit

                                      2007-3200



                                   DORIS A. RICE,

                                                      Petitioner,

                                           v.


                      MERIT SYSTEMS PROTECTION BOARD,

                                                      Respondent,

                                          and


                            DEPARTMENT OF THE NAVY,

                                                      Intervenor.


      Omar Vincent Melehy, Melehy & Associates, LLC, of Silver Spring, Maryland,
argued for petitioner. With him on the brief was Andrew J. Perlmutter.

      Joyce G. Friedman, Attorney, Office of the General Counsel, Merit Systems
Protection Board, of Washington, DC, argued for respondent. With her on the brief were
B. Chad Bungard, General Counsel, and Rosa M. Koppel, Deputy General Counsel.

       Joan M. Stentiford, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, argued for intervenor. With
her on the brief were Jeanne E. Davidson, Director, and Todd M. Hughes, Deputy
Director.

Appealed from: Merit Systems Protection Board
 United States Court of Appeals for the Federal Circuit


                                        2007-3200

                                      DORIS A. RICE,

                                                 Petitioner,

                                            v.

                       MERIT SYSTEMS PROTECTION BOARD,

                                                 Respondent,


                                           and


                             DEPARTMENT OF THE NAVY,

                                                  Intervenor.


   Petition for review of the Merit Systems Protection Board in DC-0752-07-0091-I-1.

                           __________________________

                           DECIDED: April 11, 2008
                           __________________________



Before BRYSON, GAJARSA, and LINN, Circuit Judges.

BRYSON, Circuit Judge.

      Appellant Doris A. Rice appeals from a decision of the Merit Systems Protection

Board. The Board dismissed Ms. Rice’s appeal from the decision of the Office of Naval

Intelligence to remove her from the position of Information Technology Specialist. We

affirm the Board’s dismissal order.
                                             I

       In December 1981, Ms. Rice was appointed to a competitive service position in

the Naval Communications Unit, an agency within the Department of the Navy. As an

employee in the competitive service, she was entitled to appeal adverse actions against

her to the Board either after one year had passed or after she had completed any

applicable trial or probationary period.         5 U.S.C. § 7511(a)(1)(A).     The Naval

Communications Unit does not perform intelligence activities.

       In November 1985, Ms. Rice voluntarily accepted a new appointment to an

excepted service position with the Naval Intelligence Processing System, a predecessor

of the Office of Naval Intelligence.      That agency (and its successor) performed

intelligence activities.   In connection with the new appointment, Ms. Rice signed a

statement acknowledging that her acceptance of the new position meant that she was

voluntarily separating from the competitive service and that she was being appointed to

an excepted service position. The statement read as follows:

       By accepting this position, the following information is understood:
             (a) That I will be given an Excepted Appointment;
             (b) That this position cannot be filled by Competitive Service; and
             (c) That I will be taken out of the Competitive Service; and
             (d) That I volunteer to be separated from the Competitive Service.

       In the following years, Ms. Rice held a number of other positions with the Office

of Naval Intelligence and related intelligence components. In April 2005, however, the

Office of Naval Intelligence terminated her for allegedly adulterating a urinalysis sample.

She subsequently filed a discrimination complaint with the Navy’s equal employment

opportunity office, alleging that her removal was the result of discrimination based on

race and sex. The Navy rejected her claim of discrimination, referring to a decision by




2007-3200                                   2
the Equal Employment Opportunity Commission in which an administrative judge ruled

that the Navy had not discriminated against her. The notice of decision informed Ms.

Rice that she had appeal rights to the Merit Systems Protection Board or to a United

States District Court. The Navy subsequently notified Ms. Rice by letter that it had

erroneously advised her that she had appeal rights to the Board and that in fact her

appeal rights were limited to the Equal Employment Opportunity Commission or a

United States District Court. Before receiving that notice, Ms. Rice filed an appeal of

the removal action with the Board.

      The Navy filed a motion to dismiss the Board appeal, contending that the Board

lacked jurisdiction to entertain the appeal because, under 5 U.S.C. § 7511(b)(8), Ms.

Rice was not entitled to appeal to the Board from an adverse action against her.

Section 7511(b)(8) states that sections 7511 through 7514 of title 5, which govern

adverse actions by agencies and authorize employees to take adverse action appeals

to the Board, do not apply to a non-preference-eligible employee (such as Ms. Rice)

whose position is within “an intelligence component of the Department of Defense.” The

administrative judge who was assigned to the case issued an order advising Ms. Rice

that she had the burden of proving that the Board had jurisdiction over her appeal and

ordering her to file evidence and argument to establish the Board’s jurisdiction.

      In response, Ms. Rice argued that, as an excepted service employee who had

completed more that two years of continuous service in the same position, she was

entitled to appeal her removal to the Board under 5 U.S.C. § 7511(a)(1)(C). She argued

that section 7511(b)(8) did not exclude her from the Board’s jurisdiction because, under

the rationale of Czarkowski v. Merit Systems Protection Board, 390 F.3d 1347 (Fed. Cir.




2007-3200                                   3
2004), the Navy had failed to show that the Secretary of Defense had explicitly

designated the Office of Naval Intelligence as an intelligence component of the

Department of Defense. Additionally, Ms. Rice argued that under Clarke v. Department

of Defense, 102 M.S.P.R. 559 (2006), the Board retained jurisdiction over her removal

appeal because Office of Naval Intelligence had not given her “actual notice of the

potential loss of her appeal rights” when she accepted a “reassignment” to an excepted

service position from her previous position in the competitive service. Finally, Ms. Rice

contended that her appeal rights to the Board were preserved under the “grandfather”

clause of 10 U.S.C. § 1612(b)(1). That provision, she alleged, affords an employee

appeal rights if the employee’s transfer into an excepted service position in an

intelligence unit was immediately preceded by a position within the same agency that

was subject to Board appeal rights.

      The administrative judge dismissed Ms. Rice’s appeal for lack of jurisdiction. The

administrative judge found that the Office of Naval Intelligence is an intelligence

component of the Department of Defense and that Czarkowski is inapposite because

that case involved 5 U.S.C. § 2302(a)(2)(C)(ii), a different statute with a different

standard than 5 U.S.C. § 7511(b)(8), the jurisdictional statute at issue in this case. The

administrative judge noted that section 2302(a)(2)(C)(ii) exempts employees from the

right to appeal to the Board in whistleblower cases if they work for an agency “the

principal function of which is the conduct of foreign intelligence or counterintelligence

activities . . . as determined by the President.” The administrative judge found that

section 7511(b)(8) requires no such explicit exemption by the President.




2007-3200                                   4
       The administrative judge found Clarke distinguishable because Ms. Rice had

received express written notice that she was relinquishing her rights as a competitive

service employee to accept an excepted service position. The administrative judge also

rejected Ms. Rice’s argument that 10 U.S.C. § 1612(b)(1) preserved her Board appeal

rights because she did not previously work in a position with Board appeal rights that

was reestablished as an excepted service position under 10 U.S.C. § 1601. Concluding

that Ms. Rice had failed to satisfy her burden to show that the Board had jurisdiction in

the case, the administrative judge dismissed the appeal.

                                                II

       An individual who appeals to the Board under 5 U.S.C. § 7701 bears the burden

of proving that the Board has jurisdiction. See Monasteri v. Merit Sys. Prot. Bd., 232

F.3d 1376, 1378 (Fed. Cir. 2000); 5 C.F.R. § 1201.56(a)(2)(i). To satisfy that burden,

the appellant must first make a non-frivolous allegation of facts sufficient to establish

jurisdiction; if such a showing is made, the appellant is entitled to a hearing at which the

appellant bears the burden of showing Board jurisdiction by a preponderance of the

evidence. See Garcia v. Dep’t of Homeland Sec., 437 F.3d 1322, 1344 (Fed. Cir. 2006)

(en banc). The Board held, and we agree, that Ms. Rice failed to make a non-frivolous

allegation of facts sufficient to prove jurisdiction.

                                               A

       Ms. Rice argues that the Office of Naval Intelligence does not qualify as an

intelligence component of the Department of Defense under 5 U.S.C. § 7511(b)(8), and

that she was therefore not excluded from the definition of an “employee” for purposes of

adverse action appeals. The Board, however, correctly ruled that an order issued by




2007-3200                                       5
the Department of Defense, Directive 5240.1, establishes that the Office of Naval

Intelligence is an intelligence component of the Department of Defense within the

meaning of section 7511(b)(8).

       As she did before the Board, Ms. Rice bases her argument on this court’s

decision in Czarkowski. She interprets Czarkowski to mean that in order for an agency

to qualify as an “intelligence component of the Department of Defense” within the

meaning of section 7511(b)(8), the document designating the agency as having that

status must specifically reference the two statutory provisions, 5 U.S.C. § 7511(b)(8)

and 10 U.S.C. § 1614(2), that render inapplicable the provisions of title 5 governing

adverse action appeals.

       We decline to read Czarkowski so broadly. The statute at issue in Czarkowski

required the President or his delegate to decide that a particular agency had as its

“principal function” the “conduct of foreign intelligence or counterintelligence activities.”

Czarkowski, 390 F.3d at 1349, quoting 5 U.S.C. § 2302(a)(2)(C)(ii). This court rejected

the government’s argument that the Board could make that determination for the

President by reviewing documentary evidence suggesting that an agency has been

determined to have the principal function of conducting such activities.          The court

pointed out that many agencies have some authority to conduct intelligence activities,

but that the statute “assigns to the President the task of identifying which agencies meet

the ‘principal function’ test.” Czarkowski, 390 F.3d at 1350. That determination, the

court added, “surely is a delicate call in some circumstances, and it certainly is a call

that Congress has left to the President or his delegate.” Id. The court then set forth its

ruling as follows:




2007-3200                                    6
      The statutory language does not suggest that the Board can effectively
      make a determination for the President by reviewing documentary
      evidence that may suggest an agency has been determined to have the
      principal function of conducting foreign intelligence or counterintelligence
      activities. Documents that suggest to the Board that a Presidential
      determination should or could have been made cannot stand as a proxy
      for an actual Presidential determination that references the statute. The
      burden is on the agency to show that the President, or his delegate, has
      explicitly exempted an agency or unit thereof under section
      2302(a)(2)(C)(ii).


Id.

      Seizing on the reference in the portion of the Czarkowski opinion quoted above

to “an actual Presidential determination that references the statute,” Ms. Rice argues

that Department of Defense Directive 5240.1 was insufficient because it failed to cite 5

U.S.C. § 7511(b)(8) and 10 U.S.C. § 1614(2). However, nothing in section 7511(b)(8)

or section 1614(2) requires that the determination by the Secretary of Defense that an

agency is an intelligence component of the Department of Defense be accompanied by

a citation to the pertinent statutes or else be deemed insufficient. Section 7511(b)(8)

requires only that the employee’s position be within “an intelligence component of the

Department of Defense (as defined in section 1614 of title 10).” 5 U.S.C. § 7511(b)(8).

Section 1614 defines “intelligence component of the Department of Defense” to include

any “component of the Department of Defense that performs intelligence functions and

is designated by the Secretary of Defense as an intelligence component of the

Department of Defense.” 10 U.S.C. § 1614(2)(D).       The determination that the Naval

Intelligence Service is an intelligence component of the Department of Defense was

made in haec verba in Department of Defense Directive 5420.1. In particular, Directive

5240.1 designates the Office of Naval Intelligence as one of the named Department of




2007-3200                                  7
Defense “Intelligence Components” and identifies it as a component of the Department

of Defense that “conduct[s] intelligence activities.”   The Directive therefore explicitly

identifies the Office of Naval Intelligence as a designated intelligence component of the

Department of Defense that performs intelligence functions. Finally, Directive 5240.1

was issued by the Deputy Secretary of Defense, the lawful delegate of the Secretary of

Defense. That is all that is required by section 7511(b)(8) and section 1614(2).

      It is true that the court in Czarkowski stated that “an actual Presidential

determination that references [section 2302(a)(2)(C)(ii)]” would suffice to satisfy the

statutory exemption, while “[d]ocuments that suggest to the Board that a Presidential

determination should or could have been made” would not. 390 F.3d at 1350. While

the court clearly indicated that a determination that included a statutory reference would

be sufficient, it did not hold that an express Presidential determination would be invalid

absent an explicit reference to section 2302.      Because there was no Presidential

determination at all in Czarkowski, it was not necessary for the court to decide whether

a statutory reference is a sine qua non of such determination. At least in the context of

the determination referred to in section 7511(b)(8), which merely requires a statement

that the agency in question is an intelligence component of the Department of Defense,

we hold that such a statutory reference is not required. Just as in Czarkowski the

critical question was whether the President or his delegate “has explicitly exempted an

agency or unit thereof under section 2302(a)(2)(C)(ii),” 390 F.3d at 1350, the critical

question in this case is whether the Secretary of Defense or his delegate has

designated the agency as an intelligence component of the Department of Defense

under sections 7511(b)(8) and 1614(2). That determination was plainly made, and an




2007-3200                                   8
express reference to the pertinent statutes would add nothing of substance to that

determination.   Accordingly, we hold that the Board properly ruled that Ms. Rice’s

position fell within 5 U.S.C. § 7511(b)(8) and that she was not an employee who would

be entitled under 5 U.S.C. § 7513(d) to appeal an adverse action to the Board. 1

                                            B

      Ms. Rice also contends that she was not given sufficient notice at the time she

accepted the appointment to the Naval Intelligence Command that she would no longer

have the right to appeal to the Board from any adverse action. She argues that the

notice that she was moving from a competitive service position to an excepted service

position and the form that she signed acknowledging that she was voluntarily separating

from the competitive service were not sufficient to advise her of the change in her Board

appeal rights because the notice she was given was not sufficient to give rise to a

“knowing and voluntary” waiver of those rights.

      Ms. Rice first contends that in light of McCall v. United States Postal Service, 839

F.2d 664 (Fed. Cir. 1988), Reise v. Merit Systems Protection Board, 37 M.S.P.R. 364

(1998), and Ferby v. United States Postal Service, 26 M.S.P.R. 451 (1985), she cannot

be deemed to have waived her Board appeal rights unless she signed a written

statement indicating that she knowingly waived those rights. We reject that argument.




      1
            The administrative judge decided this case based on her conclusion that the
Office of Naval Intelligence is “an intelligence component of the Department of Defense
(as defined in section 1614 of title 10).” Neither the administrative judge nor the parties
have discussed whether the Office of Naval Intelligence would also qualify for inclusion
within section 7511(b)(8) as “an intelligence activity of a military department covered
under subchapter I of chapter 83 of title 10.” For that reason we do not rest our decision
on that ground.



2007-3200                                   9
The cases on which Ms. Rice relies all deal with waivers signed in the context of “last

chance” agreements. “Last chance” agreements are used to settle conflicts between

employees and agencies; the employee typically agrees to waive Board appeal rights in

exchange for favorable settlement terms allowing the employee a “last chance” to

perform according to the agency’s expectations. A “last chance” appeal waiver is very

different from a change in appeal rights that accompanies the voluntary acceptance of

an excepted service position. The former is a waiver of a right that attaches to the

employee’s ongoing position; the latter simply reflects a difference in the rights

associated with one position occupied by the employee and another to which the

employee has chosen to transfer. We decline to apply the same standard to the waiver

of an existing statutory right to appeal to the Board (as in a last chance agreement) and

to the waiver of Board appeal rights when an employee voluntarily accepts appointment

to a position that carries different statutory appeal rights (as in the case of a transfer to a

Defense Department intelligence agency).

       Relying on a line of Board decisions that includes Clarke v. Department of

Defense, 102 M.S.P.R. 559 (2006); Park v. Department of Health and Human Services,

78 M.S.P.R. 527 (1998), and Exum v. Department of Veterans Affairs, 62 M.S.P.R. 344

(1994), Ms. Rice next argues that she could not lawfully be deprived of her right to

appeal to the Board unless she was explicitly notified that she was losing her Board

appeal rights when she accepted a position with the Naval Intelligence Command. She

contends that because there is no evidence that she was notified of the loss of appeal

rights, she retained her Board appeal rights from that time until her removal.




2007-3200                                     10
       Before the administrative judge, Ms. Rice did not deny that she was informed of

the change in her Board appeal rights; she simply stated that she did not recall having

been so advised. Unsurprisingly, the agency was unable to introduce any evidence

regarding any oral statement that may have been made at the time of Ms. Rice’s

appointment to the excepted service in 1985 regarding her appeal rights; the agency’s

evidence was limited in this regard to the written statement that Ms. Rice signed

acknowledging that she was entering the excepted service and was being “taken out of

the Competitive Service,” and “volunteer[ed] to be separated from the Competitive

Service.” Based on that evidence, the administrative judge distinguished the cases on

which Ms. Rice relied on the ground that she “did receive notice that she was

relinquishing her rights as a competitive service employee to accept an excepted

service position.” Under those circumstances, the administrative judge held that she did

not retain a right to appeal from her removal during the 20 years after her transfer to the

excepted service.

       Ms. Rice responds that the administrative judge’s opinion is contrary to the

Board’s decisions in cases such as Clarke, Park, and Exum. Ms. Rice is correct that

the Board cases on which she relies set forth a broad rule that, if applied in this case,

would appear to accord Board appeal rights to a person in Ms. Rice’s position, or at

least call for a jurisdictional hearing as to whether she was given appropriate notice of

the loss of her Board appeal rights that would result from her joining the excepted

service. In Park, for example, the Board stated the rule as follows:

       An employee must receive notice from his employing agency regarding
       the effect of a change in tenure before he can relinquish an agency
       appointment with career tenure and adverse action appeal rights to accept
       another appointment within the agency that lacks such tenure and appeal



2007-3200                                   11
      rights. . . . An employee who has not knowingly consented to the loss of
      career tenure and appeal rights in accepting another appointment with the
      agency is thus deemed not to have “accepted” the new appointment and
      to have retained the rights incident to the former appointment; the Board
      therefore may exercise jurisdiction over an appeal of an adverse action
      against that employee.

Park, 78 M.S.P.R. at 534; see also Clarke, 102 M.S.P.R. at 562-63; Edwards v. Dep’t of

Justice, 86 M.S.P.R. 404, 406 (2000). In the brief it filed as respondent in this case, the

Board distinguishes some of the cases in that line of decisions on the ground that Ms.

Rice was expressly advised that she was transferring from the competitive service to

the excepted service. For that reason, the Board contends that, unlike in Exum, the

Navy had no reason to believe that Ms. Rice was under a misapprehension about the

change in her appeal rights that resulted from her transfer to a new position, and unlike

in Kaiser v. Department of the Army, 75 M.S.P.R. 440 (1997), Ms. Rice was alerted to

the fact that her job status was being changed in an important respect.

      What the Board in its brief seems to overlook in characterizing those cases

narrowly is that the Board’s own rule is quite broad. It requires that the employing

agency not merely advise the employee of the change in his job status, but that the

agency expressly advise the employee regarding the loss of tenure and Board appeal

rights that is attendant to that change. Moreover, under the Board’s rule, at least as

stated in the Edwards and Park cases, the agency’s duty to advise the employee of the

loss of Board appeal rights appears to apply without regard to whether there was

evidence that the agency knew or should have known that the employee was operating

under the misapprehension that the transfer to a new position would not result in the

employee’s loss of appeal rights.




2007-3200                                   12
      The Board case that is closest to this one is Clarke. In that case an employee

transferred from a non-intelligence component within the Department of Defense to an

intelligence component and thereafter was involuntarily transferred to other positions

within the intelligence component. The effect of the transfers was that, when she was

removed from her position, she was statutorily ineligible to appeal the removal action to

the Board. Because she had not been advised of, and did not knowingly consent to, the

loss of her appeal rights, however, the Board held that she was “deemed to have

retained the rights incident to her former position.” 102 M.S.P.R. at 563. The Board

therefore held that, even though she fell within 5 U.S.C. § 7511(b)(8), the Board had

jurisdiction over her removal appeal.

      The Board, qua litigant, makes two weak efforts to distinguish this case from the

decision in Clarke, issued by the Board qua adjudicative body. First, the Board in its

brief argues that because Ms. Clarke remained in the same position following her

transfer, “the Board found that Ms. Clarke’s appeal rights were impacted by 10 U.S.C.

§ 1612(b).”   In fact, the Board in Clarke found that because Ms. Clarke changed

positions twice after joining the intelligence component, she did not have Board appeal

rights by virtue of section 1612(b); that is the reason the Board in Clarke invoked the

Park rule, which otherwise would have been unnecessary. Section 1612(b) therefore

does nothing to distinguish this case from Clarke. Second, the Board in its brief argues

that under the circumstances, Ms. Clarke “could not have been expected to know that

she was relinquishing her appeal rights,” while Ms. Rice was informed “of her change in

service status.”   While that much is true, there is no evidence that Ms. Rice was

informed that one effect of her change in service status was that she would lose her




2007-3200                                  13
Board appeal rights.     Merely informing Ms. Rice that she was moving from the

competitive service to the excepted service would not seem sufficient to satisfy the

Board’s standard, which requires that the employee “knowingly consent to the loss of

her appeal rights.” See Clarke, 102 M.S.P.R. at 563.

       For those reasons, we do not believe the Board’s decisions cited above can be

persuasively distinguished on the grounds offered by the Board in its brief (and the

similar grounds offered by the Department of the Navy as intervenor). We need not

decide whether we would adopt the rule set forth in the cite line of Board cases,

however, because the Board’s jurisdictional ruling can be affirmed on a different ground,

as set forth below.

       In 1985 Ms. Rice took a position in the excepted service. At that point, her status

as a non-preference-eligible employee in the excepted service meant that she did not

have Board appeal rights, because the Civil Service Due Process Amendments, Pub. L.

No. 101-376, 104 Stat. 461 (1990), which gave appeal rights to many such individuals in

the excepted service, had not yet been enacted. In 1990, when the Civil Service Due

Process Amendments statute was enacted, non-preference-eligibles in the excepted

service were given Board appeal rights under the provision that became 5 U.S.C.

§ 7511(a)(1)(C). However, another provision of the same Act, which became 5 U.S.C. §

7511(b)(8), had the effect of denying Board appeal rights to all non-preference-eligible

employees of “an intelligence activity of a military department covered under section

1590 of title 10.” Six years later, in the National Defense Authorization Act for Fiscal

Year 1997, Pub. L. No. 104-201, § 1634, 110 Stat. 2422, 2753 (1996), Congress again

amended section 7511(b)(8), this time adding the reference to “an intelligence




2007-3200                                  14
component of the Department of Defense (as defined in section 1614 of title 10),” the

language that the administrative judge relied on to hold that Ms. Rice was not entitled to

appeal her removal to the Board. Thus, as of 1996, it was not Ms. Rice’s status as an

excepted service employee that barred her from having Board appeal rights, but rather

her status as a non-preference-eligible employee of “an intelligence component of the

Department of Defense” under section 7511(b)(8). Even if Ms. Rice had enjoyed Board

appeal rights before 1990 or 1996, she would have lacked them afterwards because of

the operation of that statute.

       There is no suggestion that the 1990 and 1996 amendments to section

7511(b)(8) cannot be given their intended effect as to Ms. Rice because she was not

told at the time of those amendments about the effect they would have on her Board

appeal rights. By 1996, it was clear that that section 7511(b)(8) denied Board appeal

rights to an employee in her position, and the statutory language is mandatory. See 5

U.S.C. § 7511(b)(8) (“This subchapter [sections 7511-7514 of title 5] does not apply to

an employee— . . . whose position is within . . . an intelligence component of the

Department of Defense”). Because Ms. Rice was working in an intelligence component

at the time Congress excluded non-preference-eligible employees of such components

from the Board’s adverse action jurisdiction, the statute foreclosed her—then and at the

time of her subsequent removal—from appealing to the Board.

       In that setting, to “deem” an employee such as Ms. Rice not to have accepted the

appointment in the Naval Intelligence Command in 1985 and to have remained a non-

employee of that component until the time of her removal would base Board jurisdiction

on a fiction. That fiction, moreover, would fly in the face of Congress’s determination




2007-3200                                  15
that an employee such as Ms. Rice should not have the rights created by sections 7511

through 7514 of title 5, including the right to appeal removal actions to the Board under

section 7513(d).

       Any failure in 1985 to give Ms. Rice explicit notice that non-preference-eligible

employees in the excepted service lack Board appeal rights is insignificant in light of the

amendments in 1990 and 1996 to section 7511(b)(8), which denied Board appeal rights

to all employees of Defense intelligence components except for preference eligibles.

Accordingly, without addressing whether notice of the loss of appeal rights might be

required in other settings, as the Board has ruled, we hold that the Board lacks

jurisdiction over Ms. Rice’s appeal regardless of any failure to alert her to the loss of

Board appeal rights when she first joined the excepted service.

                                       AFFIRMED.




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