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JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 6 Sep 2006

Scrutiny of EU Proposals.

Item No. 3 is a discussion on COM (2003) 644 re. the registration, evaluation, authorisation and restriction of chemicals — REACH. I welcome the representatives from the Department of Enterprise, Trade and Employment and the Health and Safety Authority.

I welcome Ms Anne-Marie O'Connor and Ms Aisling O'Reilly from the Department of Enterprise, Trade and Employment and Dr. Sharon McGuinness, Ms Majella Cummins and Ms Marie McCarthy from the Health and Safety Authority. I also welcome the return of Mr. John Kissane as our consultant.

Before asking Ms O'Connor to commence her presentation, I draw witnesses' attention to the fact that while members of the committee have absolute privilege, this same privilege does not extend to them. Members are also reminded of the long-standing parliamentary practice to the effect that they should not comment on or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

Ms Anne-Marie O’Connor

I thank the Chairman and members for the invitation to attend. We are happy to brief the committee on the stages of the negotiations and the current position. Dr. Sharon McGuinness and I have divided the presentation. I will focus on the EU negotiations and where matters stand, while Dr. McGuinness will brief the committee on the implementation measures and the position to date on those.

How long will the presentation take?

Ms O’Connor

We estimate that it will take approximately 20 minutes — approximately ten minutes for each part. Somewhat more or less time may be needed. We will leave plenty of time for questions.

I forwarded the presentation to the committee secretariat earlier. I will not go into it in detail because much of it is factual and refers to the situation I presented to the committee on 20 December last. Nothing has happened since then because the Common Position, which I outlined at the time, was formally transmitted to the European Parliament for a Second Reading. Effectively, that formal process begins in this week's Parliament session in Strasbourg.

The Finnish Presidency of the European Union is looking to reach a Second Reading agreement on the REACH regulation. A Second Reading phase — unlike the first phase — has a specific timeframe. In that context, the timeframe envisaged is three months, with the possibility of an additional month. If that objective is achieved, we should see adoption of the regulation by December at the latest.

The environment committee of the Parliament is preparing the draft amendments for the Second Reading and they will only become apparent in the middle of October when the European Parliament's committee votes on those specific amendments. As the deadline for those amendments is Monday of next week, we will have some idea of what will be involved in negotiations relating to the second phase.

The rapporteur of the REACH regulation in the Parliament is Mr. Guido Sacconi, an Italian MEP. He will lead the negotiations for the Parliament while the Presidency will lead for the Council side. Informally, the Council side is preparing for the negotiation phase. It is trying to guess what might be on the table and engaged very much in first phase preparations. The real preparations will commence towards the end of October when we will know for sure what the Parliament is facing and when the formal negotiations will start. At this stage, our focus is on the European Parliament and the MEPs. We do not know what we will have to negotiate on the Second Reading. Ireland supported the Common Position last December and, in a sense, that is our starting point. It is very likely the main issue for negotiation on the Second Reading will be the authorisation of chemical substances and mandatory substitution. This is the area in which there was most difference between the Common Position and the First Reading in Parliament.

The European Commission, in its original draft, proposed an approach whereby an authorisation would be granted automatically where the applicant had demonstrated adequate control in accordance with requirements set out in the annex to the regulation. Ireland supported the approach, which was agreed by the Council of Ministers last December, as well as the proposals that the definition of "adequate control" would be reviewed by the Commission to benefit from the most up-to-date scientific advice and the requirement that all applicants for authorisations would be obliged to provide an analysis of alternative substances while considering the risks and the technical and economic feasibility of their use.

We have relied very much on the Health and Safety Authority, the Environmental Protection Agency and other experts in the Department of the Environment, Heritage and Local Government regarding technical issues. Our advice is that the requirements in the regulation to prove adequate control are extremely demanding of an applicant company and, in practice, it would only be possible to demonstrate such control in very few cases. It has been suggested that automatically granting an authorisation once a company can demonstrate adequate control would be an easy way to achieve it but that would not be the case in practice. It would be much more difficult and, in most cases, impossible. On the basis of the amendments proposed on the First Reading, the European Parliament wants a stronger emphasis on the principle of substitution — effectively a mandatory substitution — and informal signals suggest the amendments will be resubmitted.

Mandatory substitution is not workable, as it will lead to practical difficulties such as finding and evaluating alternative substances; the time needed to find out if another substance is suitable for a particular use; the potential necessity for extensive technological investment to use an alternative; the validation or qualification of the new substance or process — it is not an automatic swap; and the potential consequences if alternatives are found to be unsuitable for the particular use, which could result in a workplace accident or an inferior final product or which might be later be discovered to be more hazardous than the substance it was seeking to replace.

The Common Position agreed by the Council is strict regarding authorisation but, importantly, it is still workable for industry in that it provides certainty. The rules are specified and once industry fulfils the rules, it is possible to obtain an authorisation. Under the Common Position, the authorisations would be granted in respect of individual use and, therefore, no blanket authorisations would be granted. The requirements for adequate control are clearly set out. All applicants would have to provide an analysis of the alternatives. Authorisations would be subject to a time-limited review. It would not be an authorisation for life — there would be an obligation to take various developments into account.

I would like to speak briefly about the next steps. As I outlined, we are now in the Second Reading negotiation process, more or less. If that is successful, a final decision will be made at the end of the year. If it is not successful and if the European Council and the Parliament cannot reach an agreement, it will be the subject of a process of conciliation under the German Presidency.

I thank Ms O'Connor. I welcome Senator Glynn, who is deputising for Senator Hanafin.

I thank the Chairman and the rest of the members of the joint committee. As representatives of the Health and Safety Authority, my colleagues and I welcome the opportunity to update the committee on the authority's strategy on REACH implementation and enforcement. I am the assistant chief executive of the authority's chemicals policy and services division, which was established recently. As the written submission we presented to the committee is quite long and detailed, I will summarise it for the members. I hope to give them the broadest possible overview of what we are trying to do as we prepare for REACH. I propose to outline the background and the context of REACH, which essentially represents a challenge and an opportunity for those who will have obligations under the regulation.

There should be no need for alarm on the part of industry in respect of the forthcoming implementation of REACH. Industry will be obliged to step up to the plate, however, and take on board the enhanced responsibilities that are being introduced to safeguard the health, safety and welfare of employees and citizens and to protect the environment. I do not think anybody disagrees that this is a modern business requirement.

The proposed REACH regulation consolidates existing legislation and sets out some new provisions. The existing chemicals legislation has been in place since 1967. Many aspects of the four main instruments in that legislation deal with the substances or preparations that are introduced in the marketplace. After 40 years had passed and 40 legislative provisions had been introduced, various authorities and industry interests called for modernisation. They considered that the existing regime was unwieldy, not transparent and often slow to identify and respond to the real risks posed by chemicals.

REACH seeks to bridge the information gaps in the supply chain. It is not acceptable that, according to recent estimates, little information is publicly available regarding approximately 30,000 chemicals that are on the market. It is not always possible for downstream users of chemicals to obtain the information they need from their suppliers. The current system was not really designed to encourage innovation. Essentially, it places the burden on those who developed new substances by requiring them to undergo a regulatory testing procedure. The system basically penalises companies rather than stimulates them for innovation. The European chemical industry is lagging behind its competitors in Japan and elsewhere.

As a result of these various concerns, action was sought. In 2005, the Government designated the Health and Safety Authority as the interim competent authority for the REACH regulation. Additional funding and resources were provided to the authority in recognition of its significant extra role. Before I refer in detail to the authority's preparations for its new role, I would like to emphasise that Ireland's preparations in this regard are much more advanced than those of many other EU member states. Ireland was the first member state to appoint a competent authority. As a result, the preparation for implementation in Ireland is well advanced.

In developing its approach to REACH, the Health and Safety Authority has basically taken the key objectives of REACH as a starting point. We are seeking to ensure there is a high level of protection of human health in the environment, while enhancing competitiveness and innovation. We aim to achieve these objectives by doing three things. We are preparing ourselves, providing support and going into partnership with other competent authorities and the future central agency. As part of our preparations, we established a chemicals policy division within the authority and I took up my current position on 24 April. It is the newest division of the authority and will be headquartered in Kilkenny when everything is up and running. We have a REACH implementation project team led by my colleague, Ms Cosgrave, which has been in place since the end of 2005. It is a cross-functional team within the authority which considers the different elements we will need to put in place including IT, administrative and technical support. Our immediate priorities are to provide technical and scientific advice to the Department in its negotiations, contribute to the Commission's interim strategy, develop and deliver our communications strategy to stakeholders and recruit the necessary staff. While I will not discuss the EU negotiations in detail as Ms O'Connor has already alluded to them, it is important to note our contribution to the Commission's interim strategy, the aim of which is to ensure that all stakeholders are adequately prepared.

A number of REACH implementation projects are ongoing, of which the authority is focusing on the information technology system and the guidance documents for industry and member states. On page 10 of our submission, members will see the list of REACH implementation projects in which we are actively involved. The guidance is intended to provide industry and the authorities with the necessary structures to observe their obligations under the REACH regulation. In addition, we review constantly and comment on other interim strategy work. A further priority in our preparations is the recruitment of the necessary staff, a process which is well under way. We intend to have all staff members in place by the time the main provisions of REACH are effective in 2008.

The provision of support and assistance is a key objective for the authority as none of the REACH obligations will be met in the absence of full awareness and training. We aim to provide support through a series of awareness campaigns which provide information, general training and a dedicated help desk. We aim to achieve this through consultation and partnership with employers and their representatives, employees and consumer and other groups which have an interest in the way REACH is implemented and enforced in Ireland. A key focus for the authority will be the provision of information to small and medium enterprises. We recognise that SMEs do not always have the necessary staff and financial resources to undertake additional work and aim to target them through specialised campaigns in partnership with organisations which work in that space. We will provide transparent and targeted information for the sector.

We are in the process of establishing a REACH help desk. Rather than create an entirely new structure, we are adding to our existing workplace contact unit, which already provides REACH information. Calls are already being made to the unit, as well as to individuals within the authority from people looking for precise information. In addition to providing the ability to talk to someone at the end of a phone line, we are reviewing our Internet provision. We hope the Internet will become a main provider to industry of guidance and answers to frequently asked questions. We hope also to partner with other organisations in the industry space to ensure good links which facilitate the provision of consistent, transparent information.

Our awareness raising campaign will kick off on 21 September with a representative group of stakeholders. The campaign has attracted strong interest from industry, employees and other groups. Our aim is to establish how we can all work together to raise awareness and provide training on REACH. REACH will be a collective exercise and cannot be implemented in isolation by individual organisations. The first events we have planned will take place in October and November. We continue to provide advice and expertise for trade associations and other groups which are preparing seminars. We have already provided input to IBEC and Enterprise Ireland seminars on REACH and I will make a presentation personally to IBEC in Cork on 14 September.

The authority's approach to REACH will be research based. Research will, I hope, yield a deeper and more comprehensive overview of the chemicals in use in Ireland and the manner in which they are used. The Health and Safety Authority hopes this information will enable us to prioritise our actions in regard to REACH in order that we can support industry in the areas about which it is most concerned and ensure best practice.

I will conclude on the Health and Safety Authority's overall preparations for REACH by briefly outlining our plans for partnership with other member states. The HSE regards such partnerships as an important function and intends to develop them with its counterparts in the United Kingdom and Northern Ireland as soon as the competent authority for that jurisdiction has been formally announced. Through these interactions we will aim to provide for an integrated and consistent approach which will benefit all of the authorities and industry.

I do not propose to discuss in detail how REACH can work but members may find information in this regard in the presentation. I note that a delegation from IBEC raised some concerns about the level of support for industry at a meeting of the joint committee in April. I propose to address some of these concerns and clarify a few points.

Although REACH is major legislation, its main focus is on consolidating existing legislation rather than on new information. It is about producer responsibility as opposed to enforcing this responsibility throughout the supply chain. Duties are imposed only on those actors who are next to each other in the supply chain, for example, between the supplier and recipient, etc., and most methods currently used to provide information are maintained.

While the Health and Safety Authority is doing everything in its power to support industry through its awareness campaigns, training and a help desk, industry will still need to play its part. REACH reverses the burden of proof from the authorities to industry and, as such, it is up to industry to prove its chemicals are safe to use. With this reversal come significant changes and responsibilities which industry will have to address. While the HSA will play its part, industry must also play its part.

The Health and Safety Authority intends to implement REACH with the objective of fostering compliance and enforcement. In addition to the safety of employees and members of the public, our efforts will be focused on promoting innovation and the economic interests of Ireland.

I thank Dr. McGuinness. Before I call Deputies Callanan and Quinn, Deputy Neville is substituting for Deputy Pat Breen, while Senator Finucane is substituting for Senator Coghlan.

Is the Health and Safety Authority satisfied it has sufficient expertise available to it to deal with queries raised by industry? Is there or should there be financial provision for research and development of new, safer chemicals covered by this proposal in one of the framework programmes for the period 2007 to 2013? I am informed the changes proposed by the Council in December 2005 could result in a reduction of up to 60% in costs across the board for industry. Will Dr. McGuinness comment on the position in this regard? Is it possible or desirable to provide for a one-year period before the regulations take effect to allow industry to have queries it raises answered by the Health and Safety Authority, if necessary with assistance from Helsinki?

Ms O’Connor

I suggest I address the Chairman's questions on the framework programme and the impact of the proposed changes and that Dr. McGuinness address the other questions raised. While the seventh framework programme is not within my specific policy remit, I am aware that it contains measures for funding research across the board. It is not outside the bounds of possibility that it already includes provision for researching alternative substances but I do not have further information on that matter.

As regards the impact of the changes proposed by the Council, the percentage cited by the Chairman may be based on some studies carried out by the Dutch Administration. It was pretty much taken as given that this would be the impact. In the area of registration provisions in particular, the Council did not accept the amendments from the Parliament on registration to the extent that the latter would have desired. Doing so would have led to even further reductions but the Common Position concerned trying to balance one set against the other and thus the agreed registration provisions were balanced against the agreed authorisation provisions.

Therefore, it is a reduction of up to 50%.

Ms O’Connor

Yes.

That is positive. It is good news.

On the question of our being happy with the expertise, there is a new chemicals division in the authority. We are building on our existing expertise and have been working on chemicals legislation for a considerable number of years. We, therefore, have the background knowledge. With the additional resources allocated for REACH, amounting to over 40 people, we feel we will have sufficient numbers available to provide the necessary expertise for the industry and to meet our own obligations within the authority.

From where does the authority derive its model of best practice?

We work together with other member states and derive our model through professional development and our own scientific and technical backgrounds. We constantly talk and communicate. REACH presents an opportunity to consider new ways of working in partnership. We are trying to take the view that we can work together with industry to provide the best available information for everybody.

What about the one-year comfort zone?

The one-year clause is in the regulation. Essentially, it is required to give the European Chemicals Agency a chance to get up and running before the main provisions of REACH come into force. Much guidance is already coming through and more will come through before the regulation is in place. Not everything will kick in on the first day and there will be periods in which deadlines can be met. Pre-registration, for example, must be considered and therefore it is not as if everything is coming through to the industry immediately.

The other point is that one will already be used to the methods or systems of providing information through safety data sheets, etc. Industry can do a lot to prepare itself through communicating with those in its own supply chains. Normal business practice dictates that one should talk to one's suppliers and those to whom one is selling. We encourage industry to do this right now in order that it will be ready.

I welcome the delegates. Industrial representatives raised a number of questions with committee members. The representatives are concerned that the regulation in its current format is almost unworkable and that the European Union should make it more workable. They feel downstream users will be the worst affected and that trying to send the required information on how a chemical is used by a downstream user back up the supply chain will be almost impossible.

The representatives also feel the cost to downstream users has been very much underestimated in the Forfás report. What are the delegates' views on this issue? Are the representatives overreacting or have they a strong case?

I am not an expert in this area and was not at the IBEC presentation. However, I get the sense from what the delegates are saying that the measure is really to enable the European Union to co-ordinate its own chemical production industries on a level playing pitch so the relevant information and environmental and health risks will be understood, chaired and rationalised within the Union. There is a reference in the delegates' documentation to the lack of competitiveness of the European chemicals industry vis-à-vis Japan and the United States. Do chemicals comprise a significant European export or are the commodities generated within the European Union predominantly for consumption within the Union? How much competition is there between US and EU-produced chemical substances for processing? This proposal seems to favour a system of self-certification rather than having the authority clear a product, similar to the self-certification system in place, for example, in building regulations. Switzerland is a major chemical producer in Europe. Do these provisions cover the Swiss chemical industry?

I propose that Deputy Callanan chair the meeting. Is that agreed? Agreed.

Ms O’Connor

I will respond to Deputy Quinn's questions then deal with Deputy Callanan's questions and Dr. McGuinness will continue with those.

The objective of REACH is to fill the gap in information about chemicals. There is no readily available information about many chemicals because it is held by various competent authorities throughout the European Union. The benefit of this proposal is that there will be a single repository and database which makes information on the intrinsic properties of substances available in a common format.

I do not know the answer to the Deputy's question about competitiveness. One concern about the EU chemicals industry is its lack of innovation in that it has not produced new substances. This was due to the stringent rules that existed for new chemical substances. One idea behind REACH is to make requirements for regulating new substances more realistic. For example, the provisions for research and development on chemicals make it much easier for a company to do this work. It no longer has to register when there is 10 kg of product, assuming that it has all the controls in place and it is not put on the market etc. The other side of the coin is that REACH regulation could impose an unfair burden on the EU industry by comparison with the United States and Japanese industries.

The various impact assessment studies, to which the Chairman referred in respect of how the negotiations have proceeded, have tried to reduce the estimated cost of implementing the new regulations. The European Union wishes to be to the forefront in global regulation and, as part of the international agreements it has entered into under the various UN agreements, REACH is seen as a model which the European Union will seek to promote. In other words, the hope is that everybody else will copy us and there will be a level playing field.

Self-certification involves responsibility, as well as the prospect of being evaluated. There is a serious chance that the national competent authority will evaluate tests. Switzerland follows us very closely in all of the rules. Effectively, it is a member of the Community with regard to any laws made. While the regulation will affect manufacturing within the European Union, in practice the Swiss will follow EU rules.

Deputy Callanan referred to the almost unworkable regulation and the concerns expressed by industry representatives which have described REACH as unworkable. If we were to look at the Common Position reached in December and compare it with the proposal on REACH made in October 2003, industry representatives would have to agree it is now far more workable. The Deputy is correct to say downstream users will be affected. One of our aims has been to establish how such users will be affected. The Deputy referred to the Forfás report which presented one of the difficulties we had with the impact assessment. However, we were not alone. The European Commission also had great difficulties in assessing the impact. For example, if a chemical manufacturer decides to withdraw a substance from the market, a downstream user can look for a substitute, close his or her business or take many other decisions. There are so many unknowns that it is difficult to produce an economic model which would provide for any degree of certainty. It is important to note that downstream users will be in close contact with their suppliers. Dr. McGuinness has mentioned that users must know what will happen with the substances they are seeking.

We think the composition is more workable. As I have come from industry, I have been on the other side with regard to REACH. I have been involved in many notification systems worldwide. Therefore, I know of the different systems in different regions. The composition is much more workable than the original Commission proposal. Having read the IBEC submission, there are some misconceptions about what REACH is really about. The idea that it forces everybody in the supply chain to communicate is incorrect. It is about talking to people on either side of business in the supply chain. This is normal business practice and not difficult to implement. If downstream users are using a chemical in the manner suggested by their suppliers, they do not need to do anything else other than make sure the information is passed on. There are means to allay some of the concerns of downstream users. Part of our awareness campaign is to explain the real requirements of REACH, as opposed to the perceived requirements.

Deputy Quinn made a point about chemicals. While I do not have specific numbers for production volumes, I can certainly provide them for him. There is a much lower number of new substance notifications — new substances that go through a registration process — in Europe than in the United States or Japan, as it is more difficult to pass through the system and a lot more tests must be done. In that sense, there is definitely a difference in the number of new substances being developed in Europe. I hope that answers both questions.

I welcome the delegations. I will direct my first question to Ms O'Connor. The proposed regulation she outlined encourages substitution by industry. Her information is that the European Parliament proposes to strengthen the regulation to mandate industry to use substitutes for dangerous substances. She outlined the concerns and difficulties such a change would pose for Ireland. What happens if the European Parliament proceeds with that proposal? Does the Department have the resources and manpower to deal with this matter? Who determines what dangerous substances must be substituted? When will the Department take a final decision on this matter?

I welcome the Health and Safety Authority, as the competent authority, to the constituency of Carlow-Kilkenny. It is very welcome and I hope it brings many staff with it.

Ms O’Connor

Kilkenny is very nice. In a way, the matter involves second-guessing how far the European Parliament will go. As the Second Reading involves a process of negotiation, what emerges in the end remains to be seen. With regard to the timeframe for a decision, if we manage to find agreement in the next four months, December will be the specific timeframe for the Second Reading. If agreement is not possible, the conciliation procedure will begin during the German Presidency in the first half of 2007. Conciliation procedure is not pretty. All bets would be off and we do not know what would happen in that event.

There are provisions in the regulation which identify the substances of very high concern. Many of these substances are already identified in existing legislation and will be automatically transferred to the REACH regulations. They are fairly well known and include carcinogenic substances, persistent and bioaccumulative substances and environmentally unfriendly substances. There will also be a process whereby substances which are identified by virtue of new scientific evidence can be identified as candidates for authorisation.

On the question of who will determine what dangerous substances must be substituted, the decision will be taken by the Commission on the basis of advice from the agency committees. On the question of candidates for authorisation, the decision will be taken by the agency, as I understand it. The provisions are in the text of the regulation. The idea is that the scientific basis must be the starting point. This will be open to stakeholder comment and the various committees of the agency, such as the risk assessment committee, will consider these. If there is not full agreement by the committee of the agency, it will be a matter for the Commission to take a decision.

I am interested to hear Dr. McGuinness's assessment. Having come from the industry side, she might be in a position to articulate this matter. If there is now the possibility for enhanced innovation in chemical formation and research and development, and having regard to the fact that perhaps 90% of the top pharmaceutical companies in the world are located in Ireland, albeit on the production side, is there a strategic possibility for the development of the research capacities of such companies in Ireland through linkages with bodies such as Science Foundation Ireland? While this is a million miles from the topic under discussion, namely, the regulatory system, the Health and Safety Authority's presentation referred to it making the European chemical industry more innovative. I refer to the 10 kg restriction. Do the delegates see potential for the development of Ireland's pharmaceutical industry and for going up the value chain? Is this a concrete example whereby Science Foundation Ireland, the Department of Enterprise, Trade and Employment and Enterprise Ireland could begin discussions with such companies to ascertain the possibility of considering research and development, as well as the development of new chemicals on this island?

There are many opportunities to increase innovation in Europe in the context of REACH. For example, there will be a process whereby one will be afforded the possibility of carrying out research and development for five years before being obliged to do anything with one's chemical. Moreover, in certain instances, particularly for those chemicals to be used in the medical sector, one will be able to get a further extension of up to ten years. Hence, the emphasis will be on product and will be process oriented, as well as on research and development.

As for our current system, as notifications primarily come from the pharma-chemical sector, it is already active in respect of innovation. This will continue because in general, a favourable and pragmatic approach to the industry has been taken by the authority in supporting them in their measures to introduce new products.

Another point is that in a way, companies view REACH as offering a new approach in terms of opportunities regarding green chemistry and the possibility of developing alternatives. Some companies are already considering this aspect. Other companies that have been large chemical manufacturers have begun to provide a service for their suppliers and consequently are seeking new business opportunities. Hence, there are many opportunities and people will begin to address them through the various organisations.

Ms O’Connor

Regulation is only part of the story. Science Foundation Ireland has an enormous amount of money and the IDA now has enormous sums of money to invest in research-specific projects. On an organisational level, the industrial agencies have been plugged into the development of the Irish position in this regard and are aware of the regulation and its implications. If regulation becomes a little more workable, it is clear that opportunities will be opened.

I thank Ms Anne-Marie O'Connor and Ms Aisling O'Reilly of the Department of Enterprise, Trade and Employment, as well as Dr. Sharon McGuinness, Ms Majella Cummins and Ms Marie McCarthy of the Health and Safety Authority for appearing before the joint committee to provide it with an update. As this concludes the committee's deliberations on this proposal, I ask its consultant, Mr. John Kissane, to draw up a report for its consideration. Is that agreed? Agreed.

The joint committee went into private session at 12.29 p.m. and adjourned at 12.31 p.m. until 11.30 a.m. on Wednesday, 20 September 2006.

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