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As the others stated that is the PCV valve. The lower right hand diagram shows how the factory had it installed on 5.8L engines. There is an elbow in the valve cover, then an L shaped hose. The PCV goes on the other end of the L shaped hose with a hose clamp to hold it in place. It's a hokey setup that over time usually ends up as a big vacuum leak as the hose ages and valve cover grommet shrinks.
courtesy of Steve83
In the mid-90s Ford issued a technical service bulletin to re-route the PCV vacuum line to the vacuum tree in the middle of the intake manifold. They also had you move the power brake booster vacuum line to the port on the back of the intake that was previously used for the PCV.
On my old 1992 350 w/5.8L engine I did away with the plastic elbow and L shaped hose then mounted the PCV directly in the valve cover. The upper intake completely covers it up so replacing it would be a bigger chore but I wanted to reduce the chances of a vacuum leak. The original elbow and hose had seen better days....
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