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1. Lightly grease a large baking sheet; set aside. Combine flour, baking powder, and 1/2 teaspoon salt. Cut in shortening and butter until mixture resembles coarse crumbs. Add cheese and pepper; mix well. Make a well in center of the dry mixture. Add milk all at once; stir until just moistened.
2. Turn dough out onto a lightly floured surface. Quickly knead dough 10 to 12 strokes until almost smooth. Divide dough in half. Roll or pat each half into a 6-inch square, about 1 inch thick. Using a sharp knife, cut dough into 2-inch squares. Combine egg and 1 teaspoon water; brush tops of biscuits. Place on prepared baking sheet.
3. Bake in a 400 degree F oven 13 to 15 minutes or until golden on top. Transfer to a wire rack. Serve warm. Makes 18 biscuits.