Conductor derating

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velvet hammer

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Here is the problem.
8 current carrying conductors install in a 1" conduit. Conductors are #10 XHHW-2 cu.
In Table 310.16 the 90 degree column states that #10 is good for 40 amps.
In Table 310.15(B)(2)(a) 7-9 conductors adjust to 70%. Adjusted allowable current is 28 amps.
The question is;
Does 240.4(B) apply after the conductor has been adjusted to 28 amps? If not, what code article would require a 25 amp OCPD be installed?
 
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