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On November 29, 2012, the California Public Utilities Commission held its regularly-scheduled agenda meeting.  There were numerous speakers addressing the basic service redefinition proceeding, and the meeting culminated in a “discuss and hold” conversation amongst the Commissioners.  On the consent agenda, the Commission authorized a reimbursement of $93,140 to Siskiyou for costs associated with its Godfrey Ranch Project.  The Commission held several very important items, including the Proposed Decision denying an all-party settlement agreement between Kerman and DRA to resolve Kerman’s General Rate Case.  Additionally, the Commission continued to hold the Proposed Decision designed to enhance customer awareness of Enhanced 9-1-1 PBX/MLTS safety issues and Draft Resolution L-436, which would adopt new regulations governing public access to Commission records and utility records held by the Commission.  These and other items of interest on the Commission’s agenda are discussed below.

REGULAR AND CONSENT AGENDA ITEM

Proposed Decision and Alternative Proposed Decision to Revise the Definition of Basic Telephone Service (discussed and held until 12/20) – This Proposed Decision would adopt revisions to the definition of basic telephone service that would be applied to carriers seeking to receive support from the California High Cost Fund-B and/or the California LifeLine program.  The current basic telephone service definition was adopted in 1996.  The Commission’s stated goals in reviewing the basic service definition are to (a) consolidate and streamline existing listings of service elements, (b) apply technology-neutral terminology and definitions, and (c) avoid degrading standards necessary to meet essential universal service needs.
 
An Alternate Proposed Decision of Commissioner Florio was made available on July 18, 2012.  Both the Proposed Decision and the Alternate have converged on issues after several iterations of revisions, and the Commissioners agreed to a hold to encourage President Peevey and Commissioner Florio to resolve the remaining differences. 
 
President Peevey opened the discussion by stressing the swift and dramatic technological shift from wireline to wireless service and the archaic definition of basic service drafted in 1996 when wireline service was the overwhelmingly dominant form of telecommunications service.   He then sought to clarify what he perceived to be misconceptions surrounding the Proposed Decision, as expressed by the numerous public speakers.  Specifically, he clarified that the Proposed Decision does not affect consumer rates, take away access to wireline services, nor make changes to emergency 911 services.  He proceeded to clarify that the Proposed Decision is intended to  update the definition of basic service to accommodate technological changes and expand basic service to allow LifeLine subsidies to extend to wireless technologies.  He further emphasized the need to provide LifeLine customers with a choice between wireline and wireless technologies, noting that low-income customers are disconnecting subsidized wireline services for unsubsidized wireless services, a trend that reflects the mobile nature of low-income communities.  Finally, he briefly summarized some specific provisions that would implemented by the Proposed Decision, including the requirement that wireline customers have access to directory listings, requiring providers provide an unlimited incoming calls for wireline customers, and mandating wireless providers offer at least one plan with  unlimited incoming and 1-800 calls.

Commissioner Florio agreed with President Peevey’s goal of providing Lifeline subsidies to wireless customers.  However, he also emphasized the need to preserve traditional wireline service for those who find it desirable and to maintain COLR services for those who depend on it.  He further emphasized that a primary goal in the Alternate is to prioritize safety and access.  Nevertheless, Commissioner Florio acknowledged that the two decisions have converged and expressed his interest in working with the President Peevey, the Communications Division, and the ALJ to resolve what he perceives has minor remaining differences.

Commissioner Simon strongly expressed his support for a decision that supports mobility and wireless technology.  He noted a personal story involving his brother, who relied heavily on social programs upon moving to California and his brother’s difficulties in coordinating the enrollment of these programs when LifeLine subsidies were not available to a wireless technologies.   He indicated a strong belief that  basic service cannot be tied to a residence, but that it should be tied to whatever location the customer happens to be in. He asserted that a basic service definition tethered to wireline technology would create a government mandated digital divide.  He also explained that customers are increasingly interested in a range of mobile technologies and inhibiting this access to technology would be blatant discrimination.  He then highlighted that mobile technology is critical to advance 911 and emergency access, arguing that that basic service should allow consumers to receive emergency alerts wherever they are.

Commissioner Simon also expressed criticism to the advocates coordinating the public speakers on this proceeding for misinforming customers and scripting speeches that incorrectly claimed that the Proposed Decision would be threat to wireline technology.  He questioned the motivation of these advocates and suggested that they have stripped these individuals of their ability to make their own informed and independent choices. Finally, he expressed his opinion that public purpose programs should be structured to help participants get out of poverty and not to help them adjust to poverty.  He indicated his belief that transformative technology, particularly mobility access, would allow low-income communities move out of poverty.

Commissioner Ferron commented on the issues that he wished to see in the next set of revisions.  Particularly, he focused on the need to maintain consumer protections within the definition of basic service.  He indicated that he favored the Alternate on the basis that it had stronger consumer protections around 911 emergency service requirements, early termination abilities for basic service, and the implementation of oversight provisions subjecting rates and charges to the Commission’s formal complaint process.  He stressed that any decision adopted must continue to protect the consumer interest and offer necessary consumer protections.

Commissioner Sandoval noted that the basic service definition and LifeLine program were two separate issues.  Specifically, she explained that the LifeLine rules do not reference basic service except to the extent that LifeLine costs are tethered to 50% of basic service costs.  She queried whether LifeLine providers must meet minimum basic service requirements and suggested that the statutory language governing LifeLine may allow different minimum service requirements.  Similarly, she questioned whether the basic service definition necessarily crossed over with 911 emergency access requirements and expressed concern as to how certain provisions in the Proposed Decision and Alternate reconciled with state, federal and other Commission decisions or orders.

Additionally, Commissioner Sandoval noted general concerns with the basic service redefinition, particularly with regard to establishing reliable wireless penetration within a customer’s residence.  She indicated a need to ensure that customers had access to wireless technology within the residence, noting that consumers in low-income communities do not have the option of conducting calls outdoors.  Finally, she expressed support for the Alternate’s inclusion of operating provisions because it would ensure that the implementation of any changes occur more efficiently.

A copy of the Proposed Decision underlying this item is available at the following link.
 
A copy of the Alternate Proposed Decision underlying this item is available at the following link.
 
Siskiyou Reimbursed $93,140 For Godfrey Ranch Project (Item 13, approved on consent) – This Resolution authorizes a reimbursement of $93,140.13 to the Siskiyou Telephone Company (“Siskiyou”) for the costs incurred with the Godfrey Ranch Line Extension Project Phase 2 (“Godfrey Ranch Project”).  Siskiyou previously applied for funding for the Godfrey Ranch Project through the Rural Telecommunications Infrastructure Grant Program (“RTIGP”), a program that provides funds for the deployment of telecommunications services in rural areas currently not served by existing local exchange carriers.  The Communications Division determined that the Godfrey Ranch Project met the eligibility requirements of the RTIGP and recommended funding; however, the RTIGP funding was not authorized by the Commission based on a 4-1 vote resulting from concerns about the high cost of the project.  Nevertheless, the RTIGP application process also provides applicants with an opportunity to recover costs related to cost studies.  The Resolution authorizes the reimbursement after concluding that Siskiyou’s costs related to the Godfrey Ranch Project were well supported and reasonable.  The reimbursed costs were associated with staking and mapping plans ($8,935.66), a Proponents Environmental Assessment ($79,229.47), and obtaining necessary permits ($4,975).
 
A copy of the Draft Resolution underlying this item is available at the following link.
 
Nespresso Authorized to Acquire Indirect Control of Cebridge Telecom (Item 29, approved on consent) – This Decision authorizes a transaction whereby Nespresso Acquisition Corporation (“Nespresso”) acquires indirect control of Cebridge Telecom CA, LLC d/b/a Suddenlink (“Cebridge”) by acquiring Cebridge’s holding company, Cequel Communications Holdings, LLC (“Cequel Holdings”).  Cebridge is a wholly owned subsidiary of Cequel and a certificated subsidiary providing facilities-based local and interexchange services in California.  The Decision determines that authorization is appropriate because Nespresso meets the financial qualifications and technical requirements necessary to acquire a CPCN in the state.  This Decision further notes that the acquisition transaction closed on November 16th, thereby violating Commission rules by closing in advance of receiving authorization by the Commission. The applicants explained the urgency to close the transaction on the substantial sums of interest incurring on a daily basis from a $500 million bond offering completed to finance the transaction.  The Decision provides that penalties may be assessed at a later date.       
 
A copy of the Proposed Decision underlying this item is available at the following link.

Tele Circuit Network Granted CPCN (Item 35, approved on consent) – This Decision approves a settlement agreement between the Consumer Protection and Safety Division (“CPSD”) and Tel Circuit Network Corporation (“Tele Circuit”), and grants Tele Circuit’s application for a Certificate of Public Convenience and Necessity (“CPCN”). Tele Circuit’s CPCN was previously revoked for its failure to comply with the Commission’s surcharge and fee-reporting requirements.  Nevertheless, Tele Circuit continued operating as a switchless reseller in California without a valid CPCN.  Earlier this year, Tele Circuit filed an application to register as an interexchange carrier and the CPSD protested the application for the following reasons: (1) Tele Circuit had been providing telecommunications services in California without a CPCN; (2) Tele Circuit failed the CPSD’s data request and Notice to Cease and Desist; (3) an ongoing Federal Communications Commission investigation into Tele Circuit for its failure to comply with Consumer Proprietary Network Information (“CPNI”) reporting requirements; (4) many consumer complaints against lodged Tele Circuit; (5) slamming violations reported by the FCC; and (6) concerns regarding Tele Circuit’s Chief Executive Officer’s fitness to operate the company.  A response by Tele Circuit was rejected for being untimely and the parties ultimately entered into a Settlement Agreement.
 
The Settlement Agreement provides for a $32,500 penalty assessed against Tele Circuit.  The Settlement Agreement identifies all carrier disputes, consumer complaints, violations and other complaints lodged against Tele Circuit.  It also details how each complaint was resolved to the consumer’s satisfaction and provides that Tele Circuit agrees to comply with the Commission’s requirements to provide service in California.  In return, CPSD withdraws its protest against Tele Circuits’ CPCN application.  Drawing on the Settlement Agreement, the Decision concludes that Tele Circuit appropriately resolved all concerns raised by the CPSD’s protest and meets the requirements necessary for a CPCN holder.
 
The Proposed Decision underlying this item is available at the following link.
 
Central Valley Telecom’s CPCN Transferred to CVIN, LLC (Item 36, approved on consent)
This Decision approves the transfer of Central Valley Telecom, LLC (“CVT”)’s CPCN to CVIN, LLC (“CVIN”), approves CVIN’s application for exemption from the CASF program’s performance bond requirement, and grants CVIN’s motion to file audited financial statements under seal.  CVT and CVIN are under common ownership and the common control and ownership of affiliates of several rural incumbent local exchange carriers.  The immediate purpose of the proposed transfer is to facilitate CVIN’s access to CASF grant funds for the CVIN’s Central Valley Next Generation Infrastructure Project (“Project”).  The Project is intended to provide 1,371 miles of open-access middle-mile fiber-optic network infrastructure to 18 Central Valley Counties in California.  
 
The Decision concludes that the transfer of CVT’s CPCN is appropriate on the basis that CVIN meets the requirements of a CPCN-holder and because the change of control is not adverse to the public interest.  The Decision also grants an exemption from the CASF program’s performance bond requirement for the Project.  The CASF program permits exemptions where project funds are partially derived from internally generated funds.   CVIN certified that 20% of its total project costs will come from internally generated funds ($13,319,934) and the Decision determines that it is appropriate to waive the performance bond requirement.
 
The Proposed Decision underlying this item is available at the following link.
 
Pine Mountain Learning Center Granted Funding (Item 12, approved on consent) – This Resolution authorizes a RTIGP grant in the amount of $390,000 to AT&T California (“AT&T”) for the construction of the Pine Mountain Learning Center Line Extension Grant Project (“Pine Mountain Project”).  The Pine Mountain Project will provide a line extension of approximately 9,100 feet of direct buried cable to Pine Mountain Learning Center, a public elementary charter school.  Service will also be provided to the Apache Saddle Forest Service Fire State, a Forest Service Ranger Station, and a children’s camp near the learning center.  This Resolution also authorizes the Commission’s Executive Director to enter into a contract with the El Tejon Unified School District  (“El Tejon”) to act as a Fiscal Agent for the receipt and distribution of funds for the Pine Mountain Project.  The Resolution concludes that El Tejon is a local agency that meets the requirements necessary to act as a Fiscal Agent.  As a Fiscal Agent, El Tejon will receive $1,500 per month of work and up to $18,000 total, on the Pine Mountain Project.  This grant will be funded from the CHCF-A. 
 
The Proposed Decision underlying this item is available at the following link.

Customer Denied Relief From Slamming Charges (Item 30, approved on consent) – This Decision dismisses a complaint against Verizon Wireless (“Verizon”) for “slamming” allegations.  The complaint alleged that Verizon engaged in “slamming” when Verizon inadvertently ported complainant’s landline telephone number to a wireless number.  Verizon acknowledged this incident as a honest mistake for which it apologized and corrected.  complainant suffered certain inconveniences from this incident and Verizon refunded all costs incurred by complainant for these inconveniences.  Additionally, Verizon offered additional compensation of $500, which was refused by complainant.  The Decision concludes that given the totality of the circumstances, complainant failed to demonstrate that Verizon engaged in “slamming” activity and denies the complainant’s request for relief.
 
The Proposed Decision underlying this item is available at the following link.

T-Mobile’s Settlement Offer Approved (Item 16, approved on consent) – This Decision approves a settlement offer by T-Mobile West Corporation (“T-Mobile”) to a former customer to resolve a billing dispute.  The customer alleged that T-Mobile improperly charged penalties and fees despite the customer’s cancellation and discontinuation of service.  T-Mobile asserts that the bills were accurate based on non-payment and termination costs.  Nevertheless, T-Mobile made a settlement offer to credit the customer’s account with $224.44 and removed customer’s account from the collection agency.  This Decision approves this settlement offer, noting that neither party appeared at a Commission hearing and that no other relief is warranted.
 
The Proposed Decision underlying this item is available at the following link.
 
Statutory Deadline Extended in Commission’s Investigation into TracFone’s Business Activities (Items 31, approved on consent) – This Order extends the statutory deadline in the Commission’s investigation into TracFone Wireless, Inc. (“Tracfone”)’s failure to collect and remit public purpose program surcharges and user fees on revenue from its sale of intrastate telephone service to California consumers.  The deadline is extended to August 19, 2013 from December 17, 2012.  This Decision determines that this extension is reasonable to accommodate a procedural schedule that would allow sufficient time for each party to prepare and present its case and for a decision to be issued. 
 
The Proposed Order underlying this item is available at the following link.
 
Statutory Deadline Extended in VAYA Telecom v. AT&T (Item 38, approved on consent) – This Order extends the statutory deadline for resolving two consolidated complaints between VAYA Telecom, Inc. (“VAYA”) and Pacific Bell Telephone Company d/b/a AT&T California (“AT&T”).  The first complaint was filed by VAYA, seeking resolution of an Interconnection Agreement dispute with AT&T concerning AT&T’s billing of tandem switching elements of its interstate switched access tariff for certain transit traffic, including Voice over Internet Protocol (“VoIP”) traffic.  A second complaint was filed by AT&T against VAYA asserting that VAYA breached their Interconnection Agreement by delivering InterLATA traffic over Local Interconnection Trunks.  These complaints were resolved by a Confidential Settlement Agreement approved by the Commission.  However, the terms of the Settlement Agreement were later made uncertain by pending state legislation, SB 1161, regarding VoIP enabled communications services that were also at issue in the complaints.  SB 1161 was ultimately adopted.  The Order notes that while the legislation does not appear to be determinative of the issues raised in the complaint and the Settlement Agreement, an extension is nevertheless necessary to allow the Commission to fully evaluate the impacts of SB 1161. 
 
The Proposed Order underlying this item is available at the following link.
 
Statutory Deadline Extended for Commission’s Investigation into Telseven’s Business Practices (Item 39, approved on consent) – This Order extends the statutory deadline for resolving the Commission’s investigation into the operations, practices and conduct of Telseven, LLC (“Telseven”), Calling 10 LLC d/b/a California Calling 10 (“Calling 10″) and Patrick Hines to determine if any of the named parties violated the laws, rules and regulations of the State of California in the provision of directory assistance services to California consumers.  The Decision determines that an extension is necessary due to delays caused by Telseven’s bankruptcy filing and the subsequent withdrawal of Telseven, Calling 10, and Patrick Hines’s counsel on record.  The Statutory Deadline is extended to December 16, 2013.
 
A copy of the Proposed Order underlying this item is available at the following link.
 
SIGNIFICANT HELD ITEMS
 
Kerman’s All-Party Settlement Agreement to Resolve its GRC – (Item 4, held by Florio) –  This Proposed Decision would deny a joint motion for adoption of an all-party settlement agreement that would resolve all elements in the Kerman Telephone Company (“Kerman”)’s General Rate Case.  Some of the terms of the proposed settlement agreement included, establishing Kerman’s rate of return at 10%, establishing its rate base at $3,775,740, and increasing its CHCF-A draw by $831,738.  
  
A copy of the Proposed Decision underlying this item is available at the following link.
 
Public Safety Concerns Related to 9-1-1 Emergency Response to Multi-Line or Large Business Locations (Item 3, held by Simon until 12/20) – This Proposed Decision would address public safety concerns related to California’s 9-1-1 emergency response system for Private Branch Exchanges (“PBX”)/Multi-Line Telephone Systems (“MLTS”) locations.  The Proposed  Decision would adopt requirements on telecommunications carriers and direct Commission Staff to facilitate awareness of inaccurate caller locations received from PBX/MLTS locations in emergency situations.
 
The Proposed Decision would impose the following requirements on carriers: (1) the obligation to provide a copy of the Commission’s 911/MLTS brochure to existing PBX/MLTS customers and to new customers upon initiation of PBX/MLTS service; (2) the provision of a link on a carrier’s website to the CalPhoneInfo website and to the PBX 911 Advisory; (3) an obligation to proactively publicize the Commission’s CalPhoneInfo webpage and PBX 911 Advisory; and (4) an obligation that a carrier update its tariff language with specific language provided in the Proposed Decision so as to specifically inform customers of their responsibilities relative to accurate caller location information.
 
The Proposed Decision would require Commission Staff to place and maintain a PBX 9-1-1 Advisory on the Commission’s CalPhoneInfo website.  Additionally, the Proposed Decision would impose a continuing duty on Staff to update and maintain PBX 9-1-1 Advisories on the website and to raise awareness of E911 issues associated with PBX/MLTS.  Staff would also be directed to work with the Office of Governmental Affairs to introduce effective legislation requiring PBX/MLTS owners, operators, and lessees to provide Enhanced 9-1-1 services with accurate caller location information for their customers. 
 
A copy of the Proposed Decision underlying this item is available at the following link.
 
Draft Resolution L-436 Modifying Confidentiality Standards Applicable to Documents Held by the Commission (Item 49, held by staff until 12/20) – This Draft Resolution would adopt new regulations governing public access to Commission records and utility records held by the Commission.  The Resolution would repeal the long-standing  procedures for obtaining information and records from the Commission, now embodied in G.O. 66-C.  These rules would be replaced with a new G.O. 66-D.  G.O. 66-D would eliminate the current protections for documents which, if revealed, would create an “unfair business disadvantage.”  It would also shift the burden of proving confidential designation of utility information and data to the utility at the point of submission.  The Draft Resolution directs the Staff to develop a publicly accessible index of information on the confidentiality presumptions applicable to broad classes of records and, where applicable, establish the legal basis for withholding records from the public. 
The Draft Resolution would also increase public access to safety-related documents and records by ordering the creation of a safety information portal on the CPUC’s internet site.  Under the Draft Resolution, the Staff would be directed to maintain a publicly accessible index or database of safety related records and information in the custody of the CPUC.  The index or database would provide links to such safety-related records.  
  
A Draft Resolution was not issued for this item; however, a copy of the most recently published Draft Resolution is available at the following link.

Revisions to the Certification Processes for Telephone Corporations Seeking or Holding CPCNs and WIRs (Item 48, held by Sandoval until 12/20) – This Proposed Decision would adopt revisions to the certification process for telephone corporations seeking or holding Certificates of Public Convenience and Necessity (“CPCN”) and wireless carriers seeking or holding Wireless Identification Registration (“WIR”).  The changes to the certification processes are intended to increase accountability for carriers, reduce the need for enforcement actions to be brought., and improve the Commission’s ability to collect fines, penalties and bring restitution. 
 
The Proposed Decision would require all applicants seeking or holding a CPCN or WIR to post a bond to facilitate the collection of fines, fees, surcharges, taxes, penalties, and restitution.  URF and ILECs are specifically exempted from the bond requirement.  The bond amount for existing CPCN holders and wireless registrations would be equal to or greater than 10% of the intrastate revenues reported to the Commission during the preceding calendar year or $25,000, whichever is greater.  The bond amount for new applicants granted a CPCN or WIR that have not reported annual intrastate  revenues to the Commission would be $25,000. 
 
The Proposed Decision would also impose the following revisions: (1) require CPCN applicants and wireless registrants to provide the Commission with resumes and detailed information on key officers, directors and certain owners; (2) require applicants seeking to transfer licenses or registrations to verify compliance with Commission reporting, fee, and surcharge transmittals; (3) increase the application fee for new and transferred CPCN authority from $75 to $500, subject to legislative approval; (4) require wireless registrants to pay a $250 fee for new and transferred registration; and (5) establish a minimum annual user fee of the Commission-established rate in effect at the time or $100, whichever is greater. 
 
A copy of the Proposed Decision underlying this item is available at the following link.

Complaint Against Verizon Business Services (Item 15, held by Ferron until 12/20) – This item would grant MCI Communications Services, Inc. d/b/a Verizon Business Services (“Verizon”)’s Motion to Dismiss Cinderella Hair Inc. (“Cinderella”)’s Complaint.  Cinderella’s complaint alleged that the T-1 system installed by Verizon caused it to lose an entire day of business.  Cinderella demanded reimbursement for its daily loss of business, a local point of contact, and a replacement of copper lines as backup at no charge.  The Proposed Decision would grant the Motion to Dismiss on the basis that Verizon Business Service Agreement contains a mandatory arbitration clause.  Additionally, the Proposed Decision notes that the facts were undisputed and as a matter of law, the Commission would have to rule in the moving party’s favor.  Finally, the Proposed Decision also indicates that the Commission lacks the jurisdiction to award the relief requested by Cinderella.  
 
A copy of the Proposed Decision underlying this item is available at the following link.
 
NOTES AND COMMISSIONER REPORTS
There were numerous speakers who spoke on the basic service redefinition proceeding.  The speakers supporting President Peevey’s Proposed Decision highlighted the need to expand basic service to wireless technology, particularly in low-income communities that tend to be more mobile.  The speakers supporting Commissioner Florio’s Alternate were primarily comprised of Single Room Occupancy Hotel residents or tenant organizers.  These speakers emphasized the need for reliable, stand-alone service. 
 
Commissioner Florio noted that hearings will be held on December 11th – 14th regarding the Commission’s investigation into the alleged failure of TracFone Wireless, Inc. to collect and remit public purpose program surcharges and user fees on revenue from its sale of intrastate telephone service to California consumers.  Commissioner Simon noted his attendance at the Critical Consumer Issues Forum in Florida, where he was reminded that California is closely watched by other regulatory bodies. 
 
Commissioner Sandoval noted her attendance at the Comcast Youth Technology Summit.  The Summit was extremely well attended by enthusiastic youths.  At the Summit, she was made aware of the fact that families disconnect their broadband services during summer months when students are on vacation in order to save money.  She expressed concern over this decision, emphasizing the need to ensure that students do not lose access to learning tools during the summer months.  She also discussed the Emerging Technology Fund’s research on “unadopters” — individuals who previously subscribed to broadband services and later “unadopted.”  The researchers identified several reoccurring causes contributing to the “unadoption” of internet access, including income fluctuations and billing disputes.  Commissioner Sandoval encouraged the Commission to closely consider the implications of disconnects on the basis of billing disputes.  She intends to coordinate a NARUC panel to share and discuss best practices and perspectives to encourage internet adoption and to limit barriers related to inadvertent business or regulatory practices.  She emphasized once again the importance of ensuring that 100% of youths have access to computers and internet. 
 
The Consumer Protection and Safety Division (“CPSD”) gave a brief report on emergency preparedness within the Commission and the utilities.  It was noted that there were three tracks related to safety: (1) safety inside a building; (2) safety within industries; and (3) emergency preparedness.  The CPSD explained that it is currently in the process of developing training programs, establishing roles for the individual Commissioners, collecting emergency plans from utility companies, and will subsequently follow-up with details and timelines regarding this important issue. 
  


 
If you have questions regarding any of the above items, or the underlying proceedings in which they arose, please feel free to contact us.

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