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Welcome to our final issue of The Site Report for 2025! As always, the construction industry is ever-changing. This year, we reported to you about various impacts to the industry from the Trump administration’s immigration and tariff policies, increased use of artificial intelligence and the data center construction boom, clean and renewable energy usage and outlook, DBE program changes, passage of the One Big Beautiful Bill Act, among other topics. As we wind up the year, we look back at the top issues that affected our clients, colleagues, and the industry. This edition features a top trending topic from each of the past 11 issues of The Site Report. And, as a holiday bonus, we have also included insights on a new topic. We note that our featured articles published from January through November 2025 were current as of the time of the articles’ publishing. Look for updates to these and other 2025 articles from our authors in 2026. For specific questions you may have, please contact the author for more current information.
As we look forward to 2026, we are planning our ninth year of this publication. We are dedicated to providing the most up-to-date and insightful information, so please let us know if there is something you would like to see in our discussions each month. Also, let us know if there is someone you know who should be receiving this publication so we can add them to our distribution list.
Thank you again for reading! From our construction team to yours, we wish you the most joyous of holidays and a prosperous new year!
Stephanie U. Eaton - Co-Chair, Construction Group and Editor, The Site Report
and
Julian E. Neiser - Co-Chair, Construction Group and Chair, Litigation Department
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By Mitchell J. Rhein
“Business owners in segments such as restaurants, construction, and meatpacking should be prepared for an increase in I-9 audits and immigration raids after President Donald Trump signed a slate of immigration-related executive orders.”
Why this is important: The first weeks of the Trump administration have confirmed that employers can expect increased enforcement of immigration compliance. Immigration & Customs Enforcement (ICE), Department of Homeland Security (DHS), and Homeland Security Investigations (HSI) will conduct more I-9 audits and other worksite enforcement actions (i.e., “raids”). All employers should develop proactive plans to mitigate the risks of these enforcement actions, including civil money penalties, seizure of employer resources, and criminal charges.
The most common enforcement action is an I-9 audit. These audits may be random. In such an audit, an ICE, DHS, or HSI agent will serve the employer with a Notice of Inspection requiring the employer to produce all Form I-9s for a specified period, supporting documents for the Form I-9s, and other information about employees (e.g., a list of employees and contractors). The agent will review the documents provided by the employer. The agent may provide the employer time to correct any minor errors, and uncorrected technical and substantive violations can result in a civil penalty of $281 to $2,789 for each individual violation.
“Raids” are much more infrequent than I-9 audits. These actions require a warrant for agents to seize information and individuals. Unlike an audit, an employer will have no advance notice. Many agents will appear at the worksite, secure the worksite, and enter the worksite with a warrant. In response, employers must immediately contact their legal counsel. Employers do not have to answer an agent’s questions, but agents may detain unauthorized workers and seize employer property.
To mitigate the risks of enforcement actions and penalties, employers should have an attorney conduct or supervise an internal audit of the employer’s I-9 compliance. Any errors discovered during such an audit should be corrected to avoid or mitigate potential penalties before the employer is audited or raided by immigration agencies. Additionally, employers should ensure responsible employees are properly trained on preparing and maintaining Form I-9s and how to respond to any worksite enforcement actions.
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By Stephanie U. Eaton
“Contractors have rushed to buy materials before potential tariffs go into effect, pushing prices higher.”
Why this is important: Attention Contractors: Have you bid enough for your upcoming project? Or if your project is in progress, do you need or expect to need a change order to cover material price increases? And can you still obtain the materials upon which your project was designed, engineered and/or bid? These are all questions that many contractors are asking themselves, their construction and project managers, and their subcontractors. Moreover, these are also questions many owners are facing. After a year of relative stability for contractors, this article highlights three primary factors for the sharp increase in price signals for construction projects following the recent change in presidential administrations: (1) increased energy prices; (2) producer price hikes; and (3) demand surges and related material “hoarding” related to anticipated effects of U.S. tariffs. While the first two factors can be more predictable and even expected, there are many unknowns about the impacts that tariffs will have on the construction industry now and in the coming years. Some products may become difficult, if not impossible, to obtain from overseas markets affected by tariffs. This, in turn, could clog the supply chain for those products and cause sharp price increases for existing supplies. According to the Associated Builders and Contractors, or ABC, construction costs are 40.5 percent higher than they were five years ago, with prices jumping 1.4 percent from December 2024 to January 2025. Therefore, construction teams and owners need to take time now to reassess project bids on upcoming projects, more realistic timeframes for material deliveries and potential for supply chain gridlock, the potential for alternative (and U.S.-sourced) building materials, and the need for price adjustments and change orders for ongoing projects. If any of these questions are impacting your construction project, our Construction Practice Group is here to help guide you through the quagmire of potential legal issues to keep your project on track.
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By Nicholas A. Muto
“The Chinese firm’s highly efficient chatbot won’t slow the need for U.S. data centers or the energy projects to power them, experts say.”
Why this is important: The rise of DeepSeek AI and its ability to operate at a lower cost than other artificial intelligence models have many worried about the growth of data center power. Those fears should be put aside as DeepSeek will be one of the factors that facilitate data center power growth. DeepSeek lowers the cost of computing, which can potentially increase the number of companies that use the AI model. With the reduced costs, new potential applications for the AI model may emerge.
One major legal consideration is compliance with environmental laws and energy regulations. Governments worldwide are implementing stricter carbon reduction policies, and data centers—historically known for their high energy usage—must adhere to these standards. By integrating energy-efficient designs, companies like DeepSeek AI can mitigate regulatory risks while positioning themselves favorably under green energy incentives and tax credits.
The demand for power construction is rising rapidly alongside data center projects as contractors strive to keep pace with increasing needs. The current U.S. grid was not meant to handle the current level of demand and growth. In addition to the new building of "power islands" designed to house gas energy, solar energy, batteries, and a data center, older power plants once slated for retirement are now being renovated into data power centers. A significant challenge for both new data center construction and the renovation of older power plants is the demand for skilled labor required to build and maintain these facilities. As data center construction increases, competition is not just for projects but also for experienced teams to build them. Contractors must compete for both clients and skilled labor, posing challenges for both developers and builders.
The lack of capacity in the current power grid and the need for more data centers have caught the attention of the Oval Office. President Trump recently issued an executive order declaring an energy emergency aimed at expediting the development of new power generation and transmission infrastructure. As power consumption continues to rise, there may be changes in state and federal regulations to promote or restrict the expansion of data centers and AI usage.
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By Stephanie U. Eaton
“Generative AI is the tech buzzword of the decade; American Big Tech firms alone announced an investment of $300bn in AI infrastructure.”
Why this is important: Despite the daily barrage of articles, discussions and news stories related to the development and use of generative artificial intelligence (AI), the construction industry may be one of the slowest industries to embrace AI technology. Part of the reason for this relates to the very nature of the construction industry’s work product. Large language models (LLMs) were initially developed for written text, not for product details, architectural renderings, CAD drawings, and documents filled with architectural, engineering and construction instructions. AI was not focused on analyzing construction data needed to bring projects to life in three-dimensional planning.
The landscape for using AI is expanding so that the construction industry can take advantage of the technology. AI can now monitor live stream video from a job site so that the contractor can monitor safety for workers. AI can analyze 3D building scans to building design teams and help identify construction and planning conflicts for various tradesmen. AI can help with automation of digital and mechanical systems. Further, Agentic AI allows AI to learn from prior mistakes that can be useful on repetitive projects and designs. Called Hierarchical Reinforcement Learning (HRL), goals are broken down into sub-goals for more accurate construction planning and implementation. Creating industry-native environments in which AI agents can work will help the industry improve construction durations, reduce the variety of skills and numbers of contractors in a time of labor shortages, and allow for adaptable construction practices as unexpected issues arise during construction.
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By Jonathan E. Gharib, Summer Associate
“A new study from the Boston University Institute for Global Sustainability finds that construction costs run over budget for more than 60% of energy infrastructure projects worldwide.”
Why this is important: Over the next few decades, trillions of dollars in investments will be poured into the clean energy sector both at home and abroad. Many, if not most, of these projects will involve exorbitant budgets paired with large-scale construction and logistics. Despite this wealth of resources, most of these major energy projects will run behind schedule and far over budget. In fact, according to a study published in the journal Energy Research & Social Sciences, the average energy project comes in 40 percent more expensive than the initial projected construction cost and takes around two years longer than planned to build.
According to the study, the most egregious offenders are typically nuclear power plants. The plants usually cost more than double what was initially anticipated and are well behind schedule on construction. Nuclear power projects are not the only problematic form of energy construction projects, and even newer forms of clean energy, such as hydrogen and natural gas, run outsized risks of coming in far over budget and behind schedule.
Despite these dire statistics, it’s not all bad news. While their energy counterparts tend not to meet projected budgets or timetables, solar energy and electricity transmission projects have been a recent marker of efficiency and often come to completion under budget and ahead of schedule. These projects, also including wind farms, stand out among their energy project peers as relatively cheap, quick, and small-scale, making them attractive to public and private actors alike.
As the world transitions away from fossil fuels and looks to clean energy alternatives to meet its energy needs, the cost and speed at which new energy infrastructure can be completed will be of the utmost importance. While these findings do put a damper on the massive clean energy projects that have been popular in the past, the alternative may actually be better for energy generation and the environment. These smaller-scale projects, which allow for relatively quick and easy energy infrastructure construction, will be attractive for parties looking to transition from their fossil fuel-based energy infrastructure to one based on clean energy, and allow for these transitions to occur on a smaller and more local scale.
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By Steven C. Hemric
“In a proposed settlement, the agency said the initiative ‘can no longer pass constitutional scrutiny,’ effectively abandoning its defense of the decades-old policy.”
Why this is important: Since the U.S. Supreme Court ruling against affirmative action programs in higher education admissions, the federal DBE program, SBA’s Section 8(a) program, and state- and local-level M/WBE programs have been subject to increased scrutiny and challenges. The SBA’s Section 8(a) program has already undergone changes, and the construction industry has been anticipating changes in DOT’s DBE program. This proposed settlement would force implementation of those changes in the DBE program, and if implemented as stated in the proposed settlement, the changes would have immediate, far-reaching impacts. While not a death knell for the DBE program, the entire DBE certification process would have to be revamped, and it is very likely that most DBEs would need to be recertified through a new process focused on particularized inquiries into how each applicant has been harmed due to their race or gender. That alone would be a massive undertaking, but the potentially larger impact would come from the proposed settlement’s mandate that “DOT may not approve any federal, state, or local DOT-funded projects with DBE contract goals where any DBE in that jurisdiction was determined to be eligible based on a race- or sex-based rebuttable presumption.” If this term is implemented, awarding of new DOT-funded projects across the country could come to a standstill until the recertification process is complete, which would have a large cascading effect on specialty highway construction businesses while no new projects are being awarded.
All of the above being said, this settlement is not set in stone and could change, as it still needs the court’s approval and is being challenged by multiple advocacy groups. Spilman’s Construction Practice Group is monitoring this case and proposed settlement closely and is ready to assist construction businesses in navigating the changing DBE landscape.
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By Jason E. Wandling
“Firms expect a spike in starts, but the race to break ground may compound certain issues.”
Why this is important: While Biden’s Inflation Reduction Act and related measures focused on carbon-neutral energy production projects like wind and solar, dedicated tens of millions of dollars to methane emission reduction through oil and gas well plugging, and added millions more to brownfields and abandoned coal mine development, the Trump administration has turned elsewhere. The new focus on federally subsidized construction under the One Big Beautiful Bill Act spending appears to be targeted more specifically. The OBBBA includes the restoration of 100 percent bonus depreciation, the immediate expense of research and development costs, and a permanent extension of the 20 percent pass-through deduction under Section 199A.
The primary winners of the new federal spending and tax structures will likely be manufacturers across all sectors, defense contractors, and traditional energy generation equipment. Nuclear energy producers may see a kickstart to their industry for the first time since the 1950s.
What’s the largest potential drawback or snag point? Joseph Molloy, a tax partner at Anchin, a New York City-based accounting, tax, and advisory firm, notes that “The bill’s emphasis on domestic sourcing and reshoring may increase demand for U.S.-based construction labor and materials … potentially intensifying workforce and supply chain pressures.”
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By Jamie L. Martines
“Several states in the South rank as the most efficient, according to a new report that aggregates data from building departments, zoning boards and state environmental agencies.”
Why this is important: Navigating local construction permitting procedures can be a significant hurdle to moving forward with a project, so it is important to be prepared and anticipate when and where extra time might need to be built into project timelines. This knowledge is especially critical against the backdrop of the Trump administration’s efforts to accelerate permitting for projects valued at $500 million or more, according to the article, because those efforts could change permit review periods to the tune of months or years. Avoiding permitting hang-ups will help construction project managers keep projects on track and avoid disputes and expensive litigation later in the process. Three states in the Spilman footprint – Florida, North Carolina, and Virginia – all rank in the top 10 states for “permitting efficiency,” according to the Red Tape Index, a report that measured “how quickly and effectively states process building permits and zoning changes.” Ohio and South Carolina trailed the top ten at 11th and 12th, respectively, while Pennsylvania and West Virginia hovered near the bottom of the list at 29th and 31st, indicating that project timelines in those states might require some extra planning and attention when it comes to managing local permitting processes.
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By Jamie L. Martines
“A recently released agenda flags the removal of the Biden-era regulation, itself a replacement for guidance from the first Trump administration.”
Why this is important: While the Department of Labor has signaled that a new rule for classifying independent contractors is in the pipeline, it could still take several years for those new guidelines to move through the review process and for a new rule to be finalized.
In the construction context, this rule is particularly relevant to determining whether workers are classified as subcontractors or as employees of the contractor. In turn, the nature of this relationship affects the contractor’s obligations to the workers in terms of benefits, as well as the contractor’s liability for certain actions performed by the workers.
The independent contractor rule, which is part of the Fair Labor Standards Act, has been in flux for the past five years. The first Trump administration instituted what is generally described as an employer-friendly framework in early 2021. By 2022, the Biden administration announced plans to replace that framework with an “economic realities” test focused on protecting workers who are routinely misclassified and who, as a result, miss out on benefits that they should be receiving from their employers. That set of guidelines went into effect in 2024.
The Department of Labor stopped enforcing the Biden administration rule in May 2025. While that announcement did not repeal the 2024 rule, the Department directed the agency to instead follow enforcement guidelines that predate the 2024 rule.
During this period of transition, employers should still be aware of and in compliance with state laws governing the classification of independent contractors. In addition, local, state and federal courts may also have their own rules and tests for classifying workers.
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By Steven C. Hemric
Why this is important: Since the new federal administration took over and the U.S. Supreme Court ruling against affirmative action programs in higher education, many in the industry have anticipated significant changes to the DBE program and certification process. Some expected the changes to come via litigation, and The Site Report has reported multiple times on updates from the Mid-America Milling Company case in the Eastern District of Kentucky that looked to be the avenue through which the changes would come. In fact, earlier this year, DOT proposed a settlement in the Mid-America case that would have forced implementation of wide-sweeping changes to the program via an agreed injunction. Following that proposal, however, the Supreme Court ruled that Federal District Courts do not have the authority to enter nationwide injunctions. Now, the administration has also moved to implement its proposed changes to the DBE program via this Interim Final Rule (IFR), which will have immediate, far-reaching impacts. The entire DBE certification process is being revamped to omit the prior race- and sex-based presumptions of “disadvantaged” status, and all currently certified DBEs are required to undergo a re-evaluation process. This process could result in businesses being de-certified as DBEs, as well as new applicant businesses that would have been certified facing denials of certification. In the interim, DBE goalsetting and compliance have been suspended, and a lot of uncertainty remains on exactly how existing contracts/projects will be impacted as the re-/de-certification process moves forward. As the IFR’s impacts become clearer, Spilman’s Construction Practice Group will be tracking the situation closely and will be ready to assist businesses throughout the contracting chain in navigating the changing landscape.
| November -- Building for 2026 – What can We Expect? | |
By Stephanie U. Eaton
As the construction industry looks ahead to 2026, I offer the following considerations for our construction industry readers:
1. Potential interest rate reductions could provide an opportunity for property owners to refinance some of the $1.8 million in commercial real estate debt, which in turn could lead to new development where construction has become stagnant with high inflation and interest rates over the past several years.
2. For projects that involve repurposing office and retail properties into residential or mixed-use properties, contractors who have never engaged in projects of this nature need to carefully evaluate the cost to convert and be code-compliant before tackling them. In addition to residential and mixed-use space, developers should also consider recreational and entertainment venue uses when considering the conversion of unprofitable office and retail space.
3. Labor shortages remain in both the property management and maintenance sectors, but also in the skilled trades. For contractors, connecting with vocational and community colleges to tap into graduates continues to be an important source for new labor, especially as necessary construction skill sets continue to evolve with technology.
4. Using technology such as smart-building platforms, predictive maintenance tools, and AI scheduling can improve productivity and reduce downtime. In fact, many articles in prior editions of The Site Report have emphasized how the use of technology -- such as drones to survey construction progress and storm damage during construction, robots to detect potential hazards, wearable technology to more accurately identify worker locations on (especially larger) construction sites to minimize injury, and incorporation of smart thermostats to more efficiently regulate HVAC usage.
5. The importance of carefully reviewing insurance policies with brokers to understand what is and is not insured for a construction project cannot be understated. Severe storm damage, while becoming more prevalent, may or may not be covered. The insurance limit may or may not reflect the value of the property it is intended to cover. Business disruptions, losses, and lost profits, which are very often not recoverable under a construction contract, may be insurable (for a cost, of course).
6. Preparedness for cyberattacks also cannot be understated. Data and/or financial loss from a cyberattack may or may not be covered by insurance. Revenue loss is often the most significant business impact. Moreover, cyberattacks rarely occur in isolation. A single phishing incident can trigger a domino effect resulting in financial losses, harm to the reputation of the business, and potential regulatory investigation. Regular training for your entire staff on how to spot potential cyberattacks and what to do if one is suspected should be a first line of defense to protect your company’s business. If your company is subjected to a cyberattack, contact your insurer and legal counsel immediately. Our firm has experience mitigating the impacts of these attacks, and we are happy to evaluate the situation with you.
7. Finally, however redundant this may sound, I cannot emphasize enough the importance of reviewing and understanding what is in your construction contract. Force majeure clauses are not all the same – and can often be tailored to address a potential risk anticipated by the parties for a given site. Risk shifting provisions, such as indemnity clauses and liability waivers, need to be balanced in consideration of who faces the risk of foreseeable and unforeseeable events. Dispute resolution provisions need to clearly establish what the parties need to do in the event of a significant dispute that cannot be resolved informally.
We look forward to working with all of you as you, too, focus on wisely growing your businesses in 2026.
| December -- Yoder v. McCarthy Constr., Inc., 345 A.3d 668 (Pa. 2025) | |
By Jamie L. Martines
The Pennsylvania Supreme Court’s recent decision in Yoder v. McCarthy Construction, Inc., et. al., is notable not only because it reaffirms longstanding precedent surrounding tort immunity available to general contractors when an employee of a subcontractor is injured on the job, but also because it highlights the Court’s reluctance to overrule precedent to act on behalf of the state legislature.
Background:
McCarthy Construction, Inc., a carpentry company, was hired by the Borough of Norwood in 2016 to remove and replace the Norwood Public Library’s roof, among other projects. McCarthy subcontracted with RRR Contractors, Inc. to perform roofing on the library. Jason Yoder, the plaintiff, worked for RRR. He was injured when he fell through an uncovered hole and sustained severe and permanent injuries.
Yoder sued McCarthy for negligence in the Philadelphia County Court of Common Pleas. The trial court determined that McCarthy did not establish that it was Yoder’s statutory employer and therefore was not immune to Yoder’s negligence claim. A jury went on to award Yoder $5 million. McCarthy appealed the judgment to the Pennsylvania Superior Court, which vacated the trial court’s judgment and sent the case back down to the lower court to enter judgment in favor of McCarthy. Yoder then appealed to the Supreme Court.
What was at stake?
Yoder, the plaintiff, asked the Court to change the law so that he could recover damages for his injuries against McCarthy, the general contractor, even though McCarthy argued it should be immune to Yoder’s tort claim because it is a statutory employer.
Under Pennsylvania’s Workers’ Compensation Act, a general contractor who hires a subcontractor is considered an employer who is secondarily liable if a subcontractor’s employee is injured, but the subcontractor fails to make payment to the injured employee as required by the Act. But, as explained by the Court, “[i]n exchange for this imposition of secondary liability, the Act’s statutory employer provision . . . extends to a general contractor the same tort immunity afforded to the subcontractor of the injured worker.”
In other words, while the general contractor will be responsible for any Workers’ Compensation Act payments a subcontractor fails to make to an injured employee, the general contractor also cannot be sued for torts, like negligence, by the injured employee.
What this decision means for general contractors:
In short, nothing has changed. The Court’s decision leaves decades of case law interpreting the Workers’ Compensation Act in place.
A general contractor still must assume secondary liability and make payments to the employee of a subcontractor who is injured on the job in the event the subcontractor does not make the payments required under the Act. But, in exchange for taking on this responsibility, the general contractor, like the subcontractor, has immunity against tort claims brought by the injured employee—provided that it meets the conditions set out in case law for statutory employer status.
The Court did reverse and remand the Superior Court’s decision on whether McCarthy actually had statutory employer status, finding that the Superior Court exceeded the scope of its review of the matter when it conducted its analysis. This action does not affect the application of the law at this time.
What this decision tells us about the Court’s reasoning:
The plaintiff’s appeal asked the Supreme Court to consider overruling precedent in two cases, both of which interpreted aspects of statutory employer status and whether a general contractor can waive that immunity. The Court declined and instead reaffirmed its holdings in those cases, firmly stating that the plaintiff “failed to advance a special justification for us to overrule our decades-old precedent” in those cases and that any changes to the Act are a job for the state legislature, not the Court.
| | Spilman’s Construction Practice Group | | |
Spilman’s Construction Practice Group is a full-service, interdisciplinary team consisting of experienced construction practitioners who regularly collaborate with other members of the firm handling labor and employment, real estate, economic development, workers’ compensation, product liability, corporate transactions, alternative dispute resolution, and litigation matters, some of whom authored articles that we have featured in The Site Report throughout the year.
The firm’s Construction Practice Group counsels companies of varying sizes, as well as individuals, involved in construction, design, engineering, and associated industries. Our team has collectively represented developers, general contractors, subcontractors, property owners and managers, design professionals, insurers, and product manufacturers, including construction supervisors and related management. We also work closely with lenders, sureties, insurers, and inspectors, and we have experience with matters involving government entities on the federal, state and local levels.
Our commitment to you is paramount. We are not just a group of lawyers. We are an extension of your team. If you need legal guidance, we would be honored to collaborate with you on all aspects of your business. We look forward to continuing to represent you and your best interests.
Primary Contacts:
Stephanie U. Eaton
336.631.1062
seaton@spilmanlaw.com
Julian E. Neiser
412.325.1116
jneiser@spilmanlaw.com
Full Team Roster:
Carl H. Cather III
F. B. Webster Day
Jonathan A. Deasy
Lee D. Denton
Stephanie U. Eaton
Travis H. Eckley
Joseph A. (Jay) Ford
W. Eric Gadd
Matthew W. Gallimore
Matthew W. Georgitis
Ralph “Joe” J. Hagy
Anthony J.G. Hassey
Matthew P. Heiskell
Steven C. Hemric
Joshua L. Jarrell
Clifford F. Kinney, Jr.
Michael W.S. Lockaby
Gerald E. (Gee) Lofstead III
Jamie L. Martines
Julian E. Neiser
Nicholas A. Muto
Mitchell J. Rhein
James E. Simon
John R. Teare Jr.
Alexander L. Turner, CIPP/US
James A. Walls
Jason E. Wandling
Robert A. Ziogas
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