Volume Two Number 3 March 18, 2015 Geothermal Exchange Organization GEO .

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Volume Two Number 3 March 18, 2015 Geothermal Exchange Organization GEO Industry News GEO Seeks Tax Credit Extension in Comments to Senate Working Groups March 11 – The Geothermal Exchange Organization (GEO) has submitted comments to bipartisan Individual and Business Tax Reform Working Groups recently formed by U.S. Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) to solicit ideas from stakeholders on how best to overhaul the tax code. Their goal is to secure input, data, and information so they can better analyze existing tax law, examine policy trade-offs, and review reform options. In his comments, GEO President Doug Dougherty lauded the success of federal tax credits for residential and commercial geothermal heat pump (GHP) installations, but lamented: “Even with all its potential benefits to the country, the nascent GHP industry claims less than 2% of the HVAC marketplace in the United States. Though approximately two million GHP systems have been installed—and Energy Starendorsed GHP equipment efficiencies are better than ever— many competitive barriers remain for the industry . foremost among these barriers is higher ‘first cost.’ “During the recession, the federal tax credits for GHP systems helped prevent a crash in installations. Though more recent GHP sales have declined, the industry believes this can be attributed to still lagging home construction and sales, as well as continued lack of consumer awareness. As the housing economy improves, the tax credits will reduce first cost and allow GHPs to make significant contributions to efficient heating and cooling in new and retrofit projects of all sizes. “With improving sales and installations will come greater recognition of GHPs, and an expanding HVAC market share. With that, the positive impact of the federal tax credit program will be assured. Indeed, the GHP tax credits are already helping the nation with consumer cost savings, good jobs, more efficient energy use, enhanced electric utility operations, improved air quality and a better environment for all Americans.” “Even so,” Dougherty concludes, “It will take time for the geothermal heat pump industry to increase its market share from 2% to 20% or higher for the industry to move beyond its need for tax credit support. In the interim, Congress can help the GHP industry achieve greater market share by extending IRS Code sections 25D and 48(a) to the end of 2020.” For GEO’s comments, click here for the Individual Income Tax Working Group, and here for the Business Income Tax Working Group. (GEO) GEO Industry News Page 1

Down to Earth Answer for EPA Rule Editor’s Note – The following article from GEO about how geothermal heat pumps can help achieve U.S. climate change goals appeared in a recent edition of Illinois Country Living, a publication of the Illinois Association of Electric Cooperatives. March 4 – Climate change is a hot-button issue worldwide, as nations wrangle with ways to cut carbon emissions that are warming the planet. The Obama Administration has voiced its commitment to the cause, and through executive order has directed the U.S. Environmental Protection Agency (EPA) to come up with solutions. Last June (2014), EPA proposed a rulemaking for new regulations under the Clean Air Act section 111(d) that demands sharp reductions in carbon emissions from coal-fired generation facilities. The proposal has everyone involved—from utilities to state regulators—scrambling to offer ways to meet EPA goals while causing the least harm to our still fragile economy. Here’s the rub: Coal still provides nearly 40% of the nation’s baseload electricity. It is cheap and abundant. And many utilities, especially in the Midwest, rely on coal to satisfy the needs of their ratepayers. So how can they continue to use coal and satisfy our collective need to save the planet from global warming? The answer in part is geothermal heat pumps. Carbon pollution vs. GHPs If EPA includes renewable thermal energy technologies — such as geothermal heat pumps — as a utility compliance option, GEO believes that our technology will be an appropriate and effective tool to help cut greenhouse gas emissions. The Geothermal Exchange Organization (GEO) submitted comments to EPA late last year, urging that renewable thermal energy and geothermal heat pumps (GHPs) be recognized in its proposed rulemaking. The proposed rule allows flexibility in meeting the agency’s desired emissions reductions across the nation, including renewable energy and energy efficiency. In building its case for GHPs, GEO emphasized the efficiency that the technology can bring to EPA’s expected mandates, and benefits of more widespread use by reducing fossil-fuels consumption, leveling utility loads, and cutting carbon emissions from existing power plants across the United States. Encouraging GHP technology is one of the few policy initiatives that can simultaneously and cost-effectively help states and EPA advance its renewable energy concepts, as well as its allowances for energy efficiency and reduction in demand. We then asked EPA to take the next logical step, to specifically recognize within the 111(d) Final Rulemaking the role that renewable thermal energy can play in offsetting carbon and emissions. We believe that GHPs should be specified among the most efficient renewable thermal energy technologies for accomplishing that goal. Illinois electric cooperatives recognize that GHPs offer a unique and efficient renewable energy technology for heating and cooling. They have successfully promoted the benefits of GHPs to their GEO Industry News Page 2

members since the 1980s. Indeed, nearly 10% of co-op members in the state have opted for the efficiency and comfort of heating and cooling with GHP systems, tapping the renewable energy of the earth and reducing power and fossil-fuel use for the benefit of all. Energy efficiency is the least cost, lowest risk energy resource—and GHPs are the most energy efficient technology for satisfying the thermal loads of buildings. Our ability to use the earth for the exchange of free, renewable and readily available energy to homes, buildings of all sizes and even district heating projects, is limitless. The technology is proven and waiting to be used. To ensure that the full potential of GHPs is realized toward the goal of carbon reductions, EPA must recognize that our technology may increase electricity use, but at the same time it replaces heating and cooling systems that rely on natural gas, propane and fuel oil. Elimination of such onsite fossil fuel use can be an important offset to carbon emissions by power plants. EPA should consider both the renewable thermal energy (BTUs) that GHPs can provide in lieu of electricity generation and the elimination of fossil-fuel burning for heating and cooling of buildings. GEO hopes that our message to EPA rings loud and clear as the agency considers a mountain of comments on its controversial proposed rulemaking. If the agency specifically includes renewable thermal energy technologies—including GHPs—as a utility compliance option for the states, we believe that GHPs can be flexibly incorporated into utility, state and multi-state carbon emission reduction programs as appropriate tools to reduce consumer energy costs and cut greenhouse gas emissions. A complete copy of GEO’s comments urging EPA to consider thermal energy and GHPs as a renewable energy and efficiency offset under its proposed Section 111(d) rulemaking is available on the GEO website, here. (Illinois Association of Electric Cooperatives / Illinois Country Living) GEO-GAOI Efforts Pay Off with Upcoming ComEd GHP Program March 14 – For the first time in its history, Commonwealth Edison (ComEd) will soon announce a residential geothermal heat pump (GHP) financial incentive program in the State of Illinois. In anticipation of this program, the Geothermal Exchange Organization (GEO) and the Geothermal Alliance of Illinois (GAOI) arranged a focus group meeting of GHP installers and ComEd officials at the GAOI Illinois Geothermal Conference in Peoria on March 11-13. “ComEd recognizes that the success of their program will rely on a strong trade ally relationship with drillers and contractors—and GEO and GAOI are helping build that relationship," said GEO President Doug Dougherty. “The meeting provided ComEd with valuable feedback from GHP contractor/ installers to ComEd about the utility’s planned GHP financial incentive program.” Dougherty provided the conference final keynote address to 200 participants. He described the highly technical and sometimes intense GEO and GAOI legislative and regulatory work to pave the way to ComEd’s GHP program. That effort was invaluable not just for Illinois, but for the nation. "The ComEd program will gain national attention, which we believe will have significant market impact by serving as a model for additional electric utility support of GHPs," said Dougherty. (GEO) Support the Industry GEO Industry News Page 3

Geothermal Heat Pump Industry Hitting its Stride Editor’s Note – The following article featuring comments by Geothermal Exchange Organization (GEO) President Doug Dougherty appeared as a sidebar to “Geothermal Outlook 2015” in the January / February issue of Renewable Energy World magazine. After several years of disappointment, the geothermal heat pump (GHP) industry beat 2014 expectations and made political strides. From 2011 to 2013, residential GHP sales were down due to the recession, according to Doug Dougherty, president and CEO of the Geothermal Exchange Organization (GEO), and despite sales being down 30% in the first quarter of 2014, the industry turned that around in the third and fourth quarter to beat sales year-over-year. “Next year I expect to see a good 10-15% increase in sales,” said Dougherty. “We’re on a good roll here.” The commercial market has been consistently running strong as many organizations are realizing the benefits of GHPs— from schools, to libraries to museums—and Dougherty expects the commercial sector to have an even better 2015. Despite sales being back on track, geothermal heat GEO President Doug Dougherty discusses geopumps have mostly run under the radar for many in the thermal markets with Scott Emery (GeoEx AnalyUnited States, and Dougherty blames this on public policy. tics) at the 2014 IGSHPA Expo in Baltimore, MD. For example, in Illinois two electric utilities could not promote GHPs because they were deemed inefficient. So Dougherty successfully petitioned to rewrite the rules that govern how efficiency is determined. GEO also supported a coalition in Massachusetts that petitioned to have geothermal heat pumps deemed “renewable” and made eligible for alternative energy credits. “Going forward as we change laws state by state—a long arduous, detailed bureaucratic process—we are beginning to see progress across the country,” said Dougherty. “It’s an educational process to explain how the technology works and how we use thermal energy. People are realizing that we are an efficient and renewable source of energy.” On the federal level, the GHP industry is facing an expiring (residential)30% tax credit in 2016. Dougherty said he’s optimistic that there will be an extension, preferably to 2020. Since the industry is so small and production levels low, components are still expensive. The industry needs the (residential and commercial) tax credits until it can scale up and brings prices down. However, if the tax credits are not extended, Dougherty said that the market will take the hit and rebound within a couple of years. Until then, developers are finding innovative ways to monetize the GHP market. For example, the “net-zero energy” Whisper Valley residential development outside of Austin, Texas includes a GHP system underneath 7,500 homes and businesses. The developer owns the system, which is expected to have a very short return on investment, and leases it to the homeowners. “Once other people see this project and how to make money, it will have a snowball effect,” said Dougherty. Read the entire article here. (Renewable Energy World) GEO Industry News Page 4

GEO Heat Pump Manufacturers News Click logos to access the Newsrooms of GEO’s Geothermal Heat Pump Manufacturer Members IGSHPA Announces First Board of Directors IGSHPA Board of Directors 2015-16, from left to right: Cary Smith (Sound Geothermal), Dr. Dan Fisher (CEAT – OSU), John Henrich (Bergeson-Caswell, Inc.), Michael Albertson (WaterFurnace), IGSHPA President John Turley (Middleton Geothermal Services), IGSHPA Vice President Garen Ewbank (Ewbank Geo Testing, LLC), IGSHPA Secretary Jeromy Cotton (Tennessee Valley Authority), Don Penn (Don Penn Consulting Engineer/IEG Ltd.), IGSHPA Treasurer Allan Skouby (GeoPro, Inc.), and IGSHPA Executive Director Bob Ingersoll (non-voting ex-officio). Photo courtesy of IGSHPA. Editor’s Note – The following message by newly elected IGSHPA Board President John Turley (Middleton Geothermal Services) appeared in the International Ground Source Heat Pump Association’s In the Loop online newsletter. Feb. 26 –As the saying goes, "Be careful what you wish for—you might just get it!" Last week, the first elected IGSHPA Board of Directors met, elected officers, and began the next phase of what Executive Director Bob Ingersoll has named IGSHPA 2.0. The implementation of IGSHPA 2.0 means that membership now has responsibility—not just input. Members, working through their elected representatives, will assist and guide the Executive Director and staff in the development of priorities, strategic direction, allocation of resources and much more—all within the new bylaws approved at the IGHSPA 2014 Conference and Expo last October. This will be a "ground-up" process (no pun intended). The new organizational structure creates an information and communication channel between members and the Executive Director, Board, and staff. The actions of both the Board and staff will be conducted with transparency to the membership, and will be continually evaluated against membership needs. GEO Industry News Page 5

Your new Board is made up of representatives from all the major sectors of our industry. These Board members all give their time and energy on a volunteer basis. Our two-day meeting last week in Stillwater, OK was exciting and promising. The nine members of the Board, along with the IGSHPA staff, brought their different backgrounds and viewpoints together to develop a framework for identifying IGSHPA's challenges and making decisions. All who were at these meetings realize that getting to this point has taken a lot of time. As President, I see my primary responsibility as making sure we, the Board and Staff, move forward as quickly and conscientiously as practical. Most importantly, we need to communicate our status and progress to membership, and affiliated organizations on a regular basis. We will do this through as many channels as possible. Finally, I want to emphasize what I said earlier. This is a "ground-up" organization with more control and responsibility for its own destiny than it ever has ever had. This means we will need much broader volunteer participation than we have had in the past to move IGSHPA forward. We have a great organization in a great industry. Let's work on this together! (John Turley, President, IGSHPA) ASHRAE Publishes Revision of Ground Source Heat Pump Book March 3 – When the American Society of Heating, Refrigeration and Aircondition Engineer’s (ASHRAE) original book on ground source heat pumps was published 17 years ago, such systems were used mainly in residential settings and designers who used them were seen as risk takers. Today, the technology is much more widely used and recognized for its benefits. Lessons learned during that time are incorporated in a newly published book from ASHRAE, Geothermal Heating and Cooling: Design of Ground-Source Heat Pump Systems (GSHP). The publication is a complete revision of Ground-Source Heat Pumps: Design of Geothermal Systems for Commercial and Institutional Buildings, published in 1997 and recognized as the primary reference for non-residential GSHP installations. The new book was written by Steve Kavanaugh, professor emeritus at the University of Alabama, and Kevin Rafferty, a consulting engineer, Klamath Falls, OR. Both have spent the last 25 years focused on geothermal/GSHP work. Their work was performed under the guidance of ASHRAE Committee TC 6.8, which includes Geothermal Exchange Organization (GEO) Board Member Keith Swilley (Gulf Power). “One of the realities of the GSHP industry is that, to some degree, it has been a victim of its own success,” Rafferty said. “Years ago the struggle was to simply get design teams to consider using the technology. Though this is still an issue in some areas, nationally it is far less of an issue than 20 years ago. There is now fairly wide recognition of the benefits of GSHP systems, particularly on the part of building owners in the schools and office building sectors, where the technology has achieved its highest penetration rates. However, there also is a widely held view that anything bearing the name ‘geothermal,’ ‘ground source’ or ‘earth energy’ will produce the desired high efficiency/low operating cost. As a result, poorly designed systems are often installed and building owners expectations are unmet.” The book provides benchmarks, design strategies and information necessary for engineers to configure the most efficient and cost effective systems and avoid problems such as inefficient pumping, high-cost ground loop designs, inadequate outside air provisions, unnecessarily complex control schemes and other common design errors. GEO Industry News Page 6

In addition to cost and performance data, Kavanaugh provides building owners and their architects the information necessary to ask the right questions and accurately evaluate potential engineering consultants. The net effect is a more cost effective and efficient design and satisfied building owners. “GSHPs produce superior HVAC system performance, and when properly implemented can be cost competitive with many (but not all) conventional systems,” Rafferty said. “They can be operated with far simpler controls than traditional HVAC systems, and can reduce building space requirements, reduce duct work requirements, and eliminate the need for external building mechanical equipment.” As part of the book revision, seven of the original eight chapters and appendices were completely rewritten, and now include coverage of close-loop ground (ground-coupled), groundwater, surface water, GSHP equipment and GSHP piping. Additional information on site characterization has been added including a new hydrogeological chapter. The final chapter was replaced and the new section contains results of recent field studies, energy and demand characteristics and updated information to optimize GSHP system cost. Cost of Geothermal Heating and Cooling: Design of Ground-Source Heat Pump Systems is 128 ( 109, ASHRAE members).To order, contact ASHRAE Customer Contact Center at (800)-527-4723 (United States and Canada), (404) 636-8400 (worldwide), fax (678) 539-2129. Or visit the ASHRAE bookstore website. Natural Gas Gamble March 10 – As utilities rely more and more on natural gas to generate electricity instead of renewables and energy efficiency options, homes and businesses across the country are being led into a danger zone and made increasingly vulnerable to higher electricity bills, according to a new report by the Union of Concerned Scientists, The Natural Gas Gamble. Ramping up energy efficiency and renewable energy resources like solar and wind power would help insulate consumers against these economic risks, while also diversifying the power mix and reducing climate risks by cutting heat-trapping carbon missions. Further, if renewables made up a much greater share of the U.S. electricity mix and were combined with investments in energy efficiency, electricity prices would stabilize and consumers would ultimately pay less for their energy. Read the article here. (Union of Concerned Scientists) DOE Efficiency Standard Could Eliminate Certain Gas Furnaces Feb. 17 – The U.S. Department of Energy (DOE) has issued a new proposed rulemaking to increase the minimum efficiency standards for gas furnaces, which are mostly fueled by natural gas but also include propane furnaces. However, going from the current minimum efficiency level of 78 to 92 AFUE (annual fuel utilization efficiency) would eliminate noncondensing gas furnaces from the marketplace. Condensing furnaces (at least 90 AFUE) made up about half of all gas furnace shipments nationally and about two-thirds of shipments in the northern part of the country in 2009, the most recent year for which data were provided. Furnaces with efficiency ratings of at least 92 AFUE currently make up about 42% of the commercially available models listed in DOE's Compliance Certification database. Read the release here. (U.S. Energy Information Administration) GEO Industry News Page 7

Report: Geothermal Systems in New York City The New York City Mayor's Office of Long-Term Planning and Sustainability has released its February 2015 report, Geothermal Systems and Their Application in New York City. The 64-page document is “meant to serve as a tool to those who are interested in implementing geothermal technology throughout New York City, and to assist in identifying and analyzing the relevant factors to determine if geothermal energy systems are a viable solution.” You can access the report here. Geothermal to Cool the Big Apple In November 2013, while attending the Long Island Geothermal Conference, Jay Egg, geothermal consultant and owner of Egg Geothermal, Port Richey, FL, was invited to share feasibility ideas with the New York City Committee on Environmental Protection and committee chair Donovan Richards, Jr. (D). Richards is also a member of the NYC Council. The committee plans to implement a geothermal-based load-sharing system and reduce city CO2 emissions by 80% by 2050. New York City’s tight infrastructure and dense population provide an especially good opportunity to apply thermal-load sharing between adjacent structures, along with all of the challenges of a congested infrastructure. Egg has worked with multiple municipalities, government agencies, and private entities on similar geothermal-sourced thermal-grid applications. He will provide reports about this project in the coming months. His first report is in a Commercial Building Products magazine article, here. Click here to download Egg’s paper, “Demonstration of the Feasibility of Geothermal Sourced Thermal Grids (GSTG) to Produce Site-Sourced Energy.” Jay Egg can be reached at jayegg.geo@gmail.com. (Commercial Building Products) More GHP Legislation in New Mexico March 14 – In addition to bills introduced in the New Mexico Senate and House that will among other things allow renewable energy certificates for thermal energy produced by geothermal energy sources (see February GEO Industry News, here), the state Senate recently sent SB585 to committee. It is a technical bill that addresses specifications about property and buildings, as well as marriage issues in the state’s existing income tax credit for geothermal heat pump (GHP) installations. The state incentive covers 30% of GHP cost, to a 9,000 maximum, for systems with a Coefficient of Performance (COP) of 3.4 , installed between 2010 and 2020. Up to 2 million can be granted for such credits per year. According to Geothermal Exchange Organization (GEO) President Doug Dougherty, “The existing credit was championed by New Mexico State Sen. Phil Griego (D-San Jose), who has championed GHPs for the past decade. He introduced the state income tax credit for GHPs in 2009, which runs from 2010 to 2020. The purpose of SB584 is to “clarify that the geothermal, ground-coupled heat pump tax credit is applicable to each unit of property that a heat pump or pumps may be installed on,” and not multiple buildings or homes owned by the same person (though the credit can cover the cost of more than one unit at a given property). The bill also redefines “marriage” to better synch with state tax forms. (GEO) GEO Industry News Page 8

Call for Papers 2015 IGSHPA Conference and Expo The International Ground Source Heat Pump Association (IGSHPA) invites you to submit a 100-word Abstract for review and the opportunity to present during the IGSHPA 2015 Technical Conference and Expo in Kansas City, MO. Participants will include contractors, dealers, distributors, installers and others involved in the geo-thermal heat pump industry. This year’s conference technical/scientific presentations theme will revolve around residential, commercial and institutional installations. Send your Abstract(s) to Shelly Fitzpatrick here. Certified Geothermal Designer Course July 15-17 Designing Ground-Source Heat Pump Systems will keep you competitive in a market offering customers a lowmaintenance, economical and green alternative for their space conditioning needs. In partnership with GEO—the Geothermal Exchange Organization, the International Ground Source Heat Pump Association and the Association of Energy Engineers, designed this course to offer advanced training toward certification as a Certified GeoExchange Designer (CGD). From an introduction to the technology to a complete review of a commercial design process, participants learn the specific information they need to be successful. The CGD Plus course is taught by a professional CGD Instructor with more than 30 years of experience engineering and designing ground source heat pump systems. Topics covered will include Design Process for Geothermal Systems Energy Modeling Mechanical Systems Ground Loop Heat Exchanger Software Site and Geology Vertical, Horizontal, Pond, Open Well, Standing Column and Hybrid Options Integrated Design Process Energy Cost Construction Cost Test Drilling for TC Test Design GHX Design System, Specifications and Drawings Construction Quality Assurance and Control Commissioning and Training Personnel. The next CGD Course will convene on July 15-17, in Stillwater, OK. Course Instructor will be Ed Lorenz, B.E.S., CGD. Cost is 1995. For more information and to register, click here. GEO Industry News Page 9

Zero Net Energy Seminar Webinar to Focus on ZNE Buildings in California Learn more about the concept at Creating Zero Net Energy Buildings with Offthe-Shelf Technologies, a simultaneous seminar webinar from 8:15 a.m. to 5:00 p.m. on Thursday, April 23 at San Jose City College’s Technology Center, 600 South Bascom Avenue, in San Jose, CA. The event is a co-production of CaliforniaGeo and the Division of Business and Workforce Development at San Jose City College, with Education Partner sponsorship by the Geothermal Exchange Organization (GEO). How can we achieve a carbon-free economy by 2050 at less cost for our energy than we spend today? The seminar will tackle this question and a full agenda of related topics as experts explore what a carbonless, electric-based economy will look like, powered by wind, water, and solar renewable energy sources. Today’s high efficiency envelopes, ventilation, and lighting systems, coupled with geothermal heat pumps’ access to the subsurface thermal resource will lead the way. A professional slate of speakers will provide an in-depth view of how residential, commercial and institutional buildings can meet both near-and long-term Zero Net Energy (ZNE) goals. Case studies of various types of buildings will demonstrate how ZNE efficiency goals can be achieved with existing technologies that are seldom used in concert with one another in the same design. Who should attend? Everyone who cares about our future energy needs and the policies and technologies we can use today to reach our goals should consider attending this important event. Architects, engineers, builders, contractors (HVAC, mechanical, solar), school administrators and facilities staff, policy makers, and representatives of government agencies will benefit from the experience. AIA and GBCI CEUs are available through Education Partner-Sponsor Geothermal Exchange Organization (GEO). Seminar cost. Variable ( 25 - 150), depending on seminar vs webinar attendance and Continuing Education Units options. Lunch is included for in-person attendees. To learn more about the seminar and webinar—and to register— please visit CarbonFreeZNE.CaliforniaGeo.org. For more information about CaliforniaGeo, visit their website, or call (916) 668-6868. (CaliforniaGeo) Call for Papers ASHRAE 2016 Winter Conference Jan. 6 – ASHRAE has announced a Call for Papers for its 2016 Winter Conference in Orlando, FL on Jan. 23-27, 2016. The event will feature design-build practices and residential systems, with emphasis on energy efficiency and sustainability. ASHRAE offers two types of paper submissions: Conference Paper Abstracts that are due by March 23, 2015; and Full Technical Papers that are due by April 20, 2015. Papers submitted for review must be both technically accurate and clearly written. Papers undergo a rigorous double-blind review and can be a maximum of 30 double-spaced pages. To submit a Conference Paper Abstract or Technical Paper for the ASHRAE 2016 Winter Conference—and for more information about available conference tracks— click here. (ASHRAE) GEO Industry News Page 10

SPEER 2015 Summit The South-central Partnership for Energy Efficiency as a Resource (SPEER) will convene its 2015 Summit on April 13-14 in Dallas, TX. This year’s agenda is packed with the most relevant, timely topics in energy efficiency. Take this opportunity to meet leaders from across Texas and Oklahoma and around the nation, who will gathe

tion of this program, the Geothermal Exchange Organization (GEO) and the Geothermal Alliance of Illinois (GAOI) arranged a focus group meeting of GHP installers and ComEd officials at the GAOI Illinois Geothermal Conference in Peoria on March 11-13. "ComEd recognizes that the success of their program will rely on a strong trade ally relationship

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