The regulatory and legal landscape is changing, driven by a sense of momentum and urgency in the wake of an unprecedented series of climate-driven disasters and against the backdrop of COP26, which is being hailed as the last chance for countries to make the necessary changes to limit global warming.

The only thing the public wants less than to consume products that damage the environment is being duped by greenwashing into consuming products that damage the environment.

The lack of any legal definitions around words like ‘sustainable’ have allowed companies to promote a level of environmental credentials that they don’t, in fact, have. They accomplish this by using undefined terms that convey a common meaning. Sustainability is such a term, and since it’s not defined, a chocolate company that says they’re 100% sustainable, actually means nothing.

It’s time for the lawmakers to eliminate the confusion, not by controlling the dialogue, but by controlling the imports.

Globally, an estimated 18,000,000 acres of  forest,  an  area  more than  half the size of New York State, are lost every year to deforestation [zotpressInText item=”{8690787:GGJRD9F9}” brackets=”no”]

Food and Agriculture Organization

To have an impact at a meaningful level, a new approach was needed. Self-regulation of the industry didn’t work, and this was the catalyst for legislation. The chocolate companies themselves suggested that regulation was a preferred option at this stage, as it would provide a level playing field for the industry to operate on.

As we are considering the impact on the Cocoa and Coffee industry, we have focused on the regions with the biggest consumption, namely the EU and the US, and to a lesser extent, the UK.

Countries With New Deforestation Laws

Currently, the major laws being considered, and at different stages of being passed are in the UK with the Environmental Bill [zotpressInText item=”{8690787:57HJ9NMH}”], the USA with the FOREST Act [zotpressInText item=”{8690787:CRH47DGR}”], and Europe deforestation bill (still in draft, a leaked copy referenced) [zotpressInText item=”{8690787:TVB3NN6T}”].

Additionally, for completeness, and to add context we briefly mention New York State’s Deforestation Procurement Act [zotpressInText item=”{8690787:V2ITI8QT}”] and California’s Deforestation Procurement Act. [zotpressInText item=”{8690787:U7MLXENN}”]

Common Elements

While there may be differences in implementation, there is a common set of objectives and tools being considered.

  • In-scope forests will include those where cocoa and coffee are grown
  • Having a transparent supply chain is key to evidencing compliance
  • Administrative fines are allowed
  • Both the EU and US customs have mechanisms to allow the seizure of products at port.
  • Definitions are provided in EU and US laws
  • Both the EU and US definitions of deforestation would not cover clear-cut forestry in Europe or North America because deforestation is defined as the conversion of natural forest to other uses or plantations. The US still leaves some ambiguity because it doesn’t define ‘plantation’ while the EU is proposing a definition of a plantation that very deliberately would not cover the clear cut of European managed forests as long as they are grown back

Different Approaches

  • Non-compliance is identified upfront in the US and is followed with an action plan to address. In the EU, there is currently no upfront process to identify and work with high-risk countries.

Traceable Supply Chain

A transparent and evidential network joining the dots all the way back to the farm is one of the most important, yet difficult and expensive parts of a sustainable supply chain. Companies were earlier quick to claim a transparent supply chain, but these would be traceable only to the container, or perhaps to a cooperative. 

Unless goods can be traced back to the originating farm, then it cannot claim to be deforestation-free.

The same is true for Mass Balanced purchased cocoa – cocoa that is traceable from a chocolate company’s direct supply chain that gets mixed with non-traceable cocoa. 

For these laws to be effective, they must require documented evidence at the ports, that the cocoa’s provenance can be identified.

Fortunately, as they stand, and remembering that neither bills have passed yet, both the EU and US laws require an evidence-based supply chain. Products that cannot prove their origin and compliance will put the US at risk of essentially funding bad environmental practices. The definition in the act is written as:

UK Legislation – The ‘Environment Bill’


A new law called ‘The Environment Bill’ was announced by the government on 11th November 2020 covering a range of environmental issues, including an effort to prevent businesses in the UK from importing commodities linked to illegal deforestation overseas. The page on the official government website refers to their law as “world-leading new measures to protect rainforests”.

The Bill and associated schedules contained in the long explanatory notes7, is not easy to read, partially because it is so broad in scope. Deforestation and cocoa are specifically catered for as a ‘forest-risk’ commodity

Two Subsections detail two procedures, the first is the ‘Affermative Procedure’ which captures in-scope commodities, relevant local law (this is the contentious element), and enforcement provisions.

The second is the ‘Negative Procedure’ which details the due diligence, annual reporting and process for requesting an exemption.


Forest Risk Commodity

“…The meaning of “forest risk commodity”. This captures agricultural commodities whose production is associated with wide-scale conversion of forest. Some examples of commodities likely to be considered for inclusion within this definition include beef, cocoa, leather, palm oil, rubber and soya. The Secretary of State will have power to make regulations specifying the commodities to which the Part 1 requirements will apply. This means that commodities will be brought into scope at a later date by laying further secondary legislation. “

“…prohibits the use of regulated forest risk commodities, and products derived from forest risk commodities, in a regulated person’s UK commercial activity unless they were produced in compliance with relevant local laws.

Local Law

“…defines “local law” as any law that has effect in the country or territory where the organism from which a forest risk commodity was produced was grown, raised or cultivated. 

Relevant Local Law

“… defines “relevant local law” as a local law which relates to land use or land ownership where the commodity was grown, raised or cultivated. A relevant local law would include, for example, a law designating an area as a national park…. The effect of this definition is that the commodity must be sourced from land that is legally occupied or used…”

As WWF puts it: 

“​​The objective of the due diligence legislation is to ensure that the ‘forest risk commodities’, ie soy used for animal feed, palm oil used for soap and other products, and cocoa, are imported into the UK only where they are in compliance with the local laws in the country of production.” [zotpressInText item=”{8690787:IRS8TEEJ}”]

Forest and Communities Platform in Cameroon, a large cocoa producer commented: 

“[We call on…] the United Kingdom to go beyond the objectives of respecting legality in production processes…[and integrate sustainability criteria]. Cameroon’s legislation, like that of all Central African forest countries, remains very weak on essential points…”

[zotpressInText item=”{8690787:IRS8TEEJ}”]

Global Witness has a detailed blog on why the UK Environment Bill should be updated to remove the reference to ‘Illegal deforestation”. Some countries that benefit from large exports of tropical commodities could just change their laws.

Some Chocolate companies are unhappy for other reasons. Cargill, who is actively lobbying against the EU’s proposed deforestation law, weighs into the UK debate with a vague and suspiciously specious looking claim:

There is a risk due diligence will not sufficiently overcome [issues with traceability of goods] without harming supply chain resilience and efficiency, with associated cost impacts.

Cargill – – source The Guardian

The law was proposed after a public consultation of around 63,000 UK citizens found that consumers in the UK don’t want to buy products linked to the destruction of the planet.

“The move coincides with the publication of a new report setting out government’s approach to tackling deforestation linked to UK demand for products such as cocoa, rubber, soya, and palm oil.”

All Brazil or Cote d’Ivoire need to do to have their cocoa authorised for import into the UK, is to claim any deforestation occurring in the production of goods questions is legal. In fact, this is what they are doing according to an article by Greenpeace.

In fact, there is potential for the law to make things worse, since the UK consumer could believe products to be deforestation-free, when they may not be.

Despite the ringing endorsements, activists and interested stakeholders wanted more from the UK government. However, as one person put it “It’s better than nothing”. Perhaps the flexibility of interpretation is necessary.

Several open letters have been written, urging the government to tighten the bill, including this one8 which makes the case for removing the references to ‘illegal’ deforestation.

CEO of Tesco UK & ROI, Jason Tarry, chose his words carefully when he endorsed the law.

“We welcome these new measures as an important first step towards creating a level playing field in the UK, aligned with Tesco’s goal of zero deforestation. We hope this encourages all businesses to do the right thing.”

CEO of Tesco UK & ROI, Jason Tarry, chose his words carefully when he endorsed the law.

US Legislation


The aptly named FOREST act [zotpressInText item=”{8690787:CRH47DGR}”], which belies the awkward formation of that acronym it represents – Fostering Overseas Rule of Law and Environmentally Sound Trade, was introduced on 6th October 2021.

The proposed Act currently runs to 34 pages, but there are helpful summary documents available.

The authors refer to it as a framework, with the intent of providing a toolkit that can be used to create a more comprehensive answer to the problem of deforestation. There are four tools:

  1. A risk-based framework for increasing transparency and reporting in companies’ international supply chains – built from the success of the Lacey Act.
  2. Financial and technical assistance that enable countries, companies, and the U.S. federal government to coordinate solutions to reduce illegal deforestation.
  3. Provisions that include illegal deforestation in financial crime statutes so the Unites States can prosecute those who use the proceeds from deforestation to fund other criminal or terrorist enterprises.
  4. Purchasing preference for the federal government for deforestation-free products.

This is an effective approach that combines stick and carrot in the pursuit of a successful outcome.

This proposed bill will be adopted at a Federal level, meaning that it will apply to all States. Since it deals with the importation of goods into the country, it will naturally fall into the purview of the federal government.

Three members of Congress (two Democrats and one Republican) have created the first legislation in the US to control imports of goods to the US that have links to deforestation.

Senator Brian Schatz (D-Hawai‘i) and U.S. Representatives Earl Blumenauer (D-Ore.) and Brian Fitzpatrick (R-Penn.) came together in a show of bipartisan support to introduce this important legislation.

“Illegal deforestation is threatening local communities and wildlife and is a major driver of climate change. American consumers are unknowingly and unintentionally driving this destruction, and our bill will help put an end to that.”

But Senator Blumenauer captured the zeitgeist of consumer sentiment when he stated:

“Americans shouldn’t have to worry about whether they are contributing to illegal deforestation every time they browse the shelves at their local home improvement or grocery store,” said Representative Blumenauer.

Verified Supply Chain

Since chocolate companies like to say they have a 100% traceable supply chain (and then in the small print, clarify they are referring to their ‘direct supply chain’), I read with interest that the wording in the FOREST act looks as though it might be difficult to continue to accommodate that argument. Here are the relevant clauses.

SUPPLY CHAIN.—The term ‘supply chain’ means the end-to-end process for getting commodities or products to the United States, beginning at the point of origin and including all points until entry into the United States, including refiners, manufacturers, suppliers, distributors, or vendors.

In its current form, the proposed bill does not seem to provide an allowance for practices such as ‘Mass Balance Sourcing’, which is a method of mixing certified and non-certified cocoa together and is common practice with organisations such as the Rainforest Alliance.

“a person may not import a covered product containing any covered commodity produced in the country and identified in the action plan unless the person files upon entry a declaration that includes sufficient information to show— 

  1. (i) the supply chain and the point of origin of the covered commodity; and 

(ii) steps taken to assess and mitigate the risks that the point of origin was subject to illegal deforestation on or after the date of the enactment of the FOREST Act of 2021; or 

  1. (i) all possible points of origin that could have contributed to the supply chain of the covered commodity, if mixing or points of aggregation exist within the supply chain; and

(ii) steps taken to assess and mitigate the risks that any possible points of origin were subject to illegal deforestation on or after such date of enactment”

In brief, the FOREST act requires a risk-led approach, whereby the companies will have to convince the authorities, with supporting documents, that they have taken the necessary steps to avoid deforestation in their supply chain. 

Interesting, this reference “ if mixing or points of aggregation exist within the supply chain”, seems to include consideration for Mass Balancing – the process where cocoa of known and unknown origins are mixed together.

Annual Reporting Requirement to Congress

The Act requires the activities of the Federal agencies tasked with enforcing the new law to report the results to Congress annually, starting before the end of the second year.

The agencies must report:

  • The number of audits carried out to detect violations of the Act
  • The amount of information submitted to the agencies
  • The number of investigations into potential violations that were initiated on the back of the information submitted
  • The results of those investigations
  • Data on how the agencies prioritised audits and cases

Potential Guidance for Cocoa Importers

Laws or regulations that are risk-led or ‘principled’ as opposed to ‘prescriptive’, leave some aspects up to interpretation. As time passes, case law helps define how the regulation works in practice, but until then, regulators will often write guidance notes. 

This seems to be the case suggested here.

‘‘GUIDANCE.—Not later than 90 days after the date of the FOREST Act of 2021, and as appropriate thereafter, the Commissioner of U.S. Customs and Border Protection (in this section referred to as the ‘Commissioner’)— 

(A) shall publish guidance on what constitutes reasonable care under paragraph (1) and sufficient information under paragraph (2), which may include guidance with respect to specific commodities, as appropriate; and 

(B) may, as appropriate, issue guidance about the potential role of third-party certifications assisting importers with meeting the requirements of this section.

If the certification schemes from Rainforest Alliance, for example, are accepted, then I wonder if Mass Balancing, which is a practice allowed under the RA scheme will also be acceptable. That would be a shame, as there is a significant amount of Cocoa involved in Mass Balancing that has no provenance, and which we can assume has a deforestation risk attached to it.

Cocoa Commodities in Scope

Cocoa is recognised as one of the main contributors to deforestation, and the Act notes this on page 11, where Harmonized Tariff Schedule (HTS) codes are listed for cocoa products. Affected products are:

HTS CodeDescription
1801Cocoa Beans, Whole Or Broken, Raw Or Roasted
1802Cocoa Shells, Husks, Skins And Other Cocoa Waste
1803Cocoa Paste, Whether Or Not Defatted
1804Cocoa Butter, Fat And Oil
1805Cocoa Powder, Not Containing Added Sugar Or Other Sweetening Matter.
1806Chocolate And Other Food Preparations Containing Cocoa

The US Trade Representative (USTR), an agency, headed by Catherine Tai (the position is confusing also referred to as the Trade Representative), now has 180 days from the date of enactment (6th October 2021) to identify, through consultation with various stakeholders, the countries which fail to meet an adequacy standard determined by adequate and effective protection against deforestation in the production of commodities that are likely to enter the US. 

A committee of 12 individuals will form an advisory board to make recommendations to the USTR and other heads of Federal agencies. The board comprises 5 people from higher education or NGO’s, 5 industry representatives, and 2 people to represent labour organizations.  This should work well, on the condition the 5 people from the NGO’s are not from those organizations that receive funding from the industry.

Countries that fail to meet the standard required will then be required to follow an action plan to remediate the problems. The US will offer support in developing the action plan, which must include communities, indigenous people, society and local governments. A plan must be completed within 3 years of the bill’s enactment.

Ms Tai has stated that the agency is willing to use trade as a tool to wield as a means to achieve its sustainability goals!

New York Deforestation-Free Procurement Act

Bill 05921, otherwise known as the New York Deforestation-Free Procurement Act [zotpressInText item=”{8690787:GGJRD9F9}”], has been tabled by Senators;  krueger,  cooney,  kaplan, may, reichlin-melnick, and   kaminsky

As the name suggests, this bill, if passed, will only apply to procurements that the state of New York makes. 

Bill Summary:

Enacts the New York deforestation-free procurement act requiring that companies contracting with the state do not contribute to tropical or boreal intact forest degradation or deforestation directly or through their supply chains (emphasis added)


Tropical  [rain] forests” shall mean [any and all forests classified by the scientific term “tropical moist forests”, the classification determined by the equatorial region of the forest and average rainfall]. A  natural ecosystem within the tropical regions, approximately bounded geographically by the tropics of  Cancer and  Capricorn but possibly affected by other factors such as prevailing winds, containing native species composition, structure, and ecological function,  with a  tree canopy cover of more than ten per cent over an area of at least 0.5  hectares. “Tropical forests” shall include all  of  the  following: 

  1. Human-managed tropical forests or partially degraded tropical forests that are regenerating; and
  2. Forests identified by multi-objective conservation-based assessment methodologies, such as high conservation value (HCV) areas, as defined by the  HCV  resource network, or high Carbon stock forests, as defined by the high carbon stock approach, or by another methodology with equivalent or higher standards that includes primary forests and peatlands of any depth. “tropical forests” shall not include tree plantations of any type.

“ii) “Forest-risk commodity” means any commodity,  excluding tropical hardwood,  whether, in raw or processed form, that is commonly extracted from, or grown, derived, harvested, reared, or produced on land where tropical or boreal intact forest degradation or deforestation occurred.

The bill names a non-exclusive list of commodities to be covered under the act, which will include Coffee, but does not include Cocoa at present. Officials from Senator Krueger’s office told Bartalks that the list is based on New Yorks procurement requirements, rather than listing commodities that present a deforestation risk. 

This differs from the FOREST Act, by operating at the State level, with the intent to remove from any New York State public procurement tender, products that could be associated with deforestation.

New York has an existing bill, but there were too many loopholes inserted after lobbyists successfully declawed it. Hardwoods, for example, could not be procured,’ unless they couldn’t find anything cheaper.’

The Senators promoting this bill, see it as an opportunity to close those loopholes and make legislation that is fit for the purpose it was designed for. They are meeting resistance 

California Deforestation-Free Procurement Act

Bill AB-416 otherwise known as the California Deforestation-Free Procurement Act [zotpressInText item=”{8690787:U7MLXENN}”], was introduced by assembly member: Ash Kalra.

Bill Summary:

This bill, the California Deforestation-Free Procurement Act, requires entities that contract with the state for a forest-risk commodity, on or after 2024, to certify to the Department of General Services (DGS) that the product’s supply chain does not contribute to tropical deforestation.

“Forest-risk commodity” means any commodity, whether in raw or processed form, that is commonly grown, derived, harvested, reared or produced on land where tropical deforestation occurred. Forest-risk commodities include, but are not limited to, palm oil, soy, beef, leather, lumber, paper, rubber, cocoa, coffee, wood and wood pulp.

Definitions Used in this Bill

As we’ve seen, the definition of a word can completely change the meaning of the rest of the legislation. Here are the definitions for this bill.


The term ‘deforestation’ means a loss of natural forest resulting from the whole or partial conversion of natural forest to‘‘(A) agricultural use or another non-forest land use; or ‘‘(B) a tree plantation.

Illegal Deforestation

The term ‘illegal deforestation’ means deforestation conducted in violation of the law (or any action that has the force and effect of law) of the country in which the deforestation is occurring, including‘‘(A) anti-corruption laws; ‘‘(B) laws relating to land tenure rights; and ‘‘(C) laws relating to the free, prior, and informed consent of indigenous peoples and local communities.

Indian Tribe

The term ‘Indian Tribe’ has the meaning given the term ‘Indian tribe’ in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304). ROS21F49 LDY

Natural Forest

The term ‘natural forest’ means a natural arboreal ecosystem that‘‘(A) has a species composition a significant percentage of which is native species; and ‘‘(B) includes‘‘(i) a native tree canopy cover of more than 10 per cent over an area of not less 0.5 hectares; or ‘‘(ii) other wooded land with a combined cover of shrubs, bushes, and trees of more than 10 per cent over an area of not less than 0.5 hectares.

It’s worth noting that part (ii) would cover woody savannahs like the Cerrado in Brazil, and some other partially wooded ecosystems, going beyond the scope of the definition in the EU proposal

The part (B) statement used to define ‘Deforestation’ relies upon the word ‘plantation’, which itself is not defined.

EU Legislation

The EU has been actively establishing laws and initiatives through a number of different bodies and has passed two laws related to the timber market directly Regulation (EU) No 995/2010 – ‘The EU Timber Regulation’, and Regulation (EC) No 2173/2005, the Forest Law Enforcement, Governance and Trade licensing scheme (FLEGT)

Neither of these laws had the impact the EU had hoped according to a leaked draft, but NGO’s feel differently. A group of human rights and environmental NGO’s wrote an open letter9 to the EU Commission laying out their concerns over the abandoning of the legislation, which, they claim, will have a major negative impact on those parties, including target governments who have been using this legislation to encourage adoption of forest-friendly laws in producing nations.

The draft legislation [zotpressInText item=”{8690787:TVB3NN6T}”] appears to have been proposed without consultation or the communication you might expect with key third parties and stakeholders.

Legal or Illegal?

The UK has adopted language in their Environmental Bill that refers to banning ‘Illegal deforestation’, eliciting a collective moan among many of the environmental groups. The EU takes a different stance here, as they write in their draft:

“Focusing only on legality would not reduce the EU consumption footprint, fail to make a significant contribution to halting deforestation and would likely result in further deforestation”

EU’s Public Consultation

The EU initiated a public consultation that concluded in December 2020 and with the help of a number of organisations and NGO’s gathered an impressive 1,194,761 responses. [zotpressInText item=”{8690787:8ZIZZN52}”]

One question that stood out was if the public believed an EU Intervention on the consumption of goods, would reduce global deforestation.  Almost 82% answered either ‘very much’, or ‘much’. See figure 1 below.

A second question that caught my attention was in relation to the proposed measures that the public thought would be most appropriate and effective.  The legend that links the colours to the response on the chart below is at the bottom.

In particular, the first suggested measure – that of EU regulation requiring standards to be met before a product can be imported into the territory – gets the highest positive response. 

Also of great interest is the contrast between voluntary vs mandatory due diligence. The public overwhelmingly thinks that it needs to be mandatory, illustrating that there is a clear lack of trust in any self-certification or self-verification scheme.

The EU, therefore received in December 2020, a clear direction and mandate from a large representative base of the public to take action that has a foundation in law, and requires independent mechanisms of verification.

What they have been working on since then is a regulation that will be arguably one of the toughest in the world. This is important because the amount of Cocoa that Europe processes mean it will become a necessary standard to meet.

Through the UN Programme on Reducing Emissions from Deforestation and Forest Degradation (REDD+) there is already an incentive scheme in place. The new regulation from the EU will complement that with the stick by requiring companies to evidence their supply chain is free from any of the banned activities.

How the EU Defines Deforestation

The definition of “deforestation-free” should be sufficiently broad to cover at the same time deforestation and forest degradation should ensure legal clarity and should be measurable based on quantitative, objective data.

The definition of “deforestation-free” was hoped to be sufficiently broad to cover unwanted activity, while the terms, deforestation and forest degradation should ensure legal clarity and should be measurable based on quantitative, objective data.

The clearing of land that is not repurposed, may not be covered under the EU’s definition, however, this is not a relevant risk in the Cocoa of Coffee industry.

Timetable for Implementation

Unfortunately, the EU is a big bureaucratic machine that moves slowly. In October of 2020 they passed a resolution that called for an “EU legal framework to halt and reverse EU-driven global deforestation”.

Actually passing the law might take another year, so we can perhaps expect it sometime in 2022. When a law is passed, time must pass before it comes into effect, and in the EU, this is typically a further 2 years. 

So, in reality, the EU law will not be implemented for another 3-4 years. The rationale is understandable to a point. Companies and countries will need time to adapt and develop systems and procedures to work within that time frame. 

However, there may be a case to argue the timescale can be brought forward, perhaps as much as a year. I’m sceptical of the argument that the countries will make effective use of the 2 years between the law being passed and it coming into effect.

Instead, I’d prefer to see an approach more similar to that of the US in which a committee, comprising industry experts, NGO’s and company representatives, together determine the status and risk of each exporting country, and if necessary work with them to put a plan in place.


The US ACT has yet to pass into law, and there will likely be much lobbying before it reaches a vote.

About 23% of global human-caused greenhouse gas emissions come from agriculture, forestry and other land uses11. Self-regulation has failed, so these laws are essential if we are to meet our GHG targets.

The UK Bill touts itself as ‘World Leading’, which just adds to the embarrassment of how toothless it is. Yes, it is “Better than nothing”, but surely our objective should be more ambitious?

The EU has the potential to be a significant influencer especially for those West African producing countries which have been ponderous and maladroit, despite many promises and public commitments. 

The US FOREST Act has good potential to be meaningful to the industry, by using a combination of stick and carrot. But the verdict will have to be reserved until we see the detailed guidance for Cocoa, and whether certification schemes can use deceptive mass balancing techniques and still convince the authorities of its credibility.

Appendix 1 – Cocoa Import Numbers (US)

The top 5 Companies Importing using HTS 1801;

Origin of Imports by Total Value: Jul 2020
Top 5 Originating CountriesValue
Cote d’Ivoire$22,672,861
Dominican republic$8,245,397
Papua new guinea$4,311,313

The top 5 Companies Importing using HTS 1802;

Origin of Imports by Total Value: Jul 2020
Top 5 CountriesValue

Top 5 US Importing Companies for HS 1803

Origin of Imports by Total Value: Jul 2020
Top 5 CountriesValue
Cote d’ivoire$23,003,033

Top 5 US Importing Companies for HS 1804

Origin of Imports by Total Value: Jul 2020
Top 5 CountriesValue

The top 5 Companies Importing using HTS 1805;

Origin of Imports by Total Value: Jul 2020
Top 5 Originating CountriesValue

The top 5 Companies Importing using HTS 1806;

Origin of Imports by Total Value: Jul 2020
Top 5 CountriesValue

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