So, now we're partners? - Garl B. Latham - myProgressiveRailroading Blogs - MyProgressiveRailroading

So, now we're partners?

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Garl B. Latham

Ruminations of a foaming professional.

So, now we're partners?

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U.S. Transportation Secretary Ray LaHood is back at the forefront of railroad news. Yesterday, in Minneapolis, he delivered the keynote address for the opening general session of Railway Interchange 2011.

Now, I'll be honest about two things right off the top.

First of all, it would have been wonderful to take part in the conference and exhibition. I can't think of anything I might enjoy more than a leisurely stroll through a yard full of the latest and greatest innovations in rolling stock and equipment. [Well...maybe things like a foot rub and a big plate of Mexican food would rank right up there, too; but, y'all know what I mean!] Seriously, I hate it that I'm not in attendance - and it gives me an even bigger feeling of regret to know I'm writing these words while the event is still taking place.

Secondly, I have grown to despise most "keynote addresses," especially those by elected officials, their appointees and others outside our industry. Even if I was in Minnesota instead of Texas, I'm not sure I'd have had the stomach to sit through some inane speech right after breakfast.

Which brings me to the subject at hand.

Ray LaHood is now touting the Class Is as "partners" in Barack Obama's "vision for high speed rail."

Of course, he also referred to President Obama and Vice President Joe Biden as "THE rail men of the 21st century" [emphasis mine], so I'm not quite sure we can take his statements at face value.

Still, it's this "partners" deal I'm finding so interesting.

I have been begging anyone at the U.S. D.O.T. who'd pay attention - here on this site (beginning with my essay, "Obama Speed Rail," over fifteen months ago) and elsewhere - to treat our private railroad companies with respect, AS PARTNERS, and go to them for guidance (listening to what they have to say) when developing a plan for improved and expanded passenger train service. [In fact, just for the record, our private railroad companies should always play an integral role, from the outset, with any plans involving their property!] Under ideal circumstances, one might hope that the Secretary's use of this potentially loaded word means the feds are finally getting the picture.

Unfortunately, not only have my concepts (and those of far more influential people) apparently fallen on deaf ears, but the only thing which seems to have changed is Mr. LaHood's penchant for that one word: "partners." He even managed to use it two sentences in a row! When noting the administration's various financial commitments toward rail-based passenger initiatives - projects "that could not have been done without our Class I partners" - he acknowledged the government's practical inability to develop a railroad system of any sort without the participation of the railroads! "There is not enough money available for what we want to accomplish without good partners like them,” he stated.

Fine.

Then, he said a few more things which indicated his continued ignorance of the issues at hand and the administration's real intent behind its persistent proposals.

Regarding the feds' fatuousness, LaHood indicated that the current administration "strongly supports" both "high speed rail and freight rail." For whatever reason(s), the DOT remains unclear on the most basic concept of all: true H.S.R. is literally incompatible with existing Class I railway infrastructure and operations!

Now, if they'd like to seriously discuss conventional passenger service, that's another matter. Let interested governmental bodies come to the table with a pile of cash - and the understanding that public benefits must be funded with public monies, that current and future capacity is a vital matter, that liability protection is non-negotiable, and that ALL costs for improvements which the railroad's don't require for their own operations but are only necessary for the passenger side of the equation, including ongoing maintenance and taxes, must be borne by other entities - then I'm sure the "partners" will be ready to negotiate. Please note, however, my use of the modifier "conventional." No matter how much certain parties might wish this wasn't true, we'd still not be discussing true H.S.R.!

You know, there's actually a lot of wiggle room between "high speed rail" and "freight rail." In fact, conventional passenger trains - trains which would be efficient, practical and marketable - fall right in there someplace! It's frustrating beyond degree to see someone in power who ostensibly knows better, yet continually spouts the same ol' claptrap.

Insofar as Washington's true motives are concerned, it only took LaHood's emphasis on "jobs" to make that clear. The Secretary publicly urged Congress to pass the American Jobs Act of 2011, stating that its four billion dollars of railroad-oriented money (with two billion specifically for Amtrak) would "create thousands of jobs." He also called upon Congress to put together another six-year surface transportation funding bill, in order "to put Americans back to work."

I agree that increased domestic employment is absolutely indispensable and our national economy will continue to suffer dreadfully without it. I only wish our industry and our technology weren't being used as pawns in these political games.

For ONCE, why can't we decide whether or not a given project is useful and if we honestly believe it will achieve its stated goals before throwing money at it?! We'll never achieve true H.S.R. the way Washington is handling these things, anyway! So, is H.S.R. really necessary? Would we fail if literal high-speed service wasn't our ultimate goal? Precisely what do we want these trains to do; what markets will they serve and what unique attributes will they bring into the mix?

These questions are foundational and should be addressed before any funds are allocated.

Over the past couple of years, much of what I've written here has concerned our country's flawed thinking regarding intercity passenger service and its future. When it comes to envisioning tomorrow's passenger trains, much less engaging in their planning and execution, cognitive dissonance exists at the U.S. D.O.T. (and most state departments), Amtrak and the railroads, themselves. This isn't just Ray LaHood's problem; it's most people's problem!

You'll never find a greater proponent for a revitalised national network of railway passenger train services than I! My advocacy is not blind, however. There are potential pitfalls within the best of plans. Worse yet, when plans aren't the best, when ulterior motives are at work, when supporters expect unreasonable results...well, it indicates serious problems afoot.

I'm convinced passenger service, of all types, can stand on its own merits. I'm also convinced that the public exposure, operational discipline and capital infusion which accompanies those trains will be good for our industry. I could also be wrong! But, no matter what, all the players involved should be able to expect a candid and technically reasonable set of proposals from those in positions of authority.

I'm afraid anything less is unconscionable.

 

 

  • Private railroad companies are corporations, not people.  People work at corporations. When warranted, people deserve respect or criticism.  The same is true of elected officials and their appointed bureaucrats.  They all are fallible humans.

    Class-1 railroad officials want you to understand these points clearly:  Modern railroads are independent machines hauling exclusively volume freight shipments.  Railroad officials want the individual to know they are owned by stockholders, deserving maximum return-on-investment.  Railroad policies shirk any responsibility to the traveling public, the ancestors of the people who gave the railroads their first right-of-way and business.  

    There is an aura of misdirected ownership and staunch self-righteousness in this statement, “…our private railroad companies.”  First, these are not “our” railroads.  Few if any individuals hold more than a 51% majority of railroad stock. Second, modern US railroads are cold steel monoliths that hold little corporate consciousness or responsibility to the downstream customer, the US citizen.  One expects at any time the corporate railroad flag to fly above the Star Spangled banner in Fort Worth and Omaha.  

    When one embraces this perspective, the confrontational relationship between railroad officials and the Obama Administration becomes clear.  As the elected voice of the people, the Obama Administration is seeking a better relationship with those running US railroads.  Official railroad policy discourages this relationship.  The one corporate memory is that of oppressive regulation prior to Staggers.  Such represents both railroad official paranoia and keen business policy.  Railroads are not in danger of re-regulation.

    Modern railroad officials use the unfortunate term “freight railroad” to describe their industry.  In fact, railroads are common-carrier transportation providers, implying of course a responsibility to both their freight and passenger customers.  The “freight railroad” term is political.  “Yes Virginia, railroad officials do engage in politics.”  Its use has allowed railroad officials to steer public rail policy to the fiercely independent condition existing today.  This policy implies that corporations themselves have no duty to the US citizen.

    The unfortunate divestiture of passenger rail by the federal government to an upstart Amtrak in 1971 represents an early round of the corporate game called “Privatize Profits/ Commonize Costs.”  Amtrak’s 40 year policies and Class-1 railroads’ slow, but effective, reprogramming of the US citizen has allowed the “freight railroad” myth to perpetuate.  Repeat a myth long enough and it becomes fact.

    The US citizen now believes railroads only carry freight.  Any other responsibility has been divested to Amtrak.  The for-profit freight railroads serve as Amtrak “hosts.”  Railroad officials forget that they were Amtrak’s original partners and owners.  

    The blog implies that the railroads should be exempt from laws as upstanding corporate “citizens.”  It implies that the railroads are entitled to this treatment because they are sterling examples of what is right with US business, i.e. “the profitable corporation can do no wrong.”  It further paints the Obama Administration and USDOT Secretary Ray Lahood as the bumbling ill-informed villains who are attacking US industry policies and profits.  This is unfortunate.

    If Class-1 railroad policy is to avoid full common-carrier responsibility, stiff penalties should be levied.  Skimming the cream off of the top of freight business should be recognized as a problem, even when considering the necessary economic rebirth of the industry since 1980.  

    The railroads are no longer financially endangered.  Today, a new industry problem rears its ugly head.  Class-1 railroad policy refuse to serve all markets the technology can support.  The result is to force small customers to the road where the individual taxpayer pays more than his fare share through road damage and insignificant personal transportation alternatives.  This policy is good for railroad shareholders, but bad for the individual US citizen.  

    Government should begin aggressively enforcing penalties, as stated in the Rail Safety and Improvement Act of 2008.  Further, railroad industry laws must change to encourage common carrier venture capitalism.  Government officials must at the same time understand the inherent break-even proposition of carrying passengers.  The belief the US does not need passenger rail is fading rapidly.  How it is delivered is the debate today.

    A simple formula of a modest Class-1 profit beyond the prevailing interest rate, gained through government capital investment and operational subsidies is one way to encourage this development.  If this requires passenger-freight modal separation for High-Speed Rail, so be it.  However; the railroads must ethically present the technological argument on a case by case basis.  Today, I am appalled at the railroad policies for passenger transportation.

    Case in point: In 1999 the Heartland Flyer began operation between Oklahoma City – Fort Worth over the BNSF Railway at a capital cost of just $2.6 million.  In March 2010 Amtrak released its feasibility study for passenger rail between Fort Worth – Oklahoma City – Wichita – Kansas City (The TOK-Corridor).  The costs were surprisingly high.  With BNSF Railway input, the capital cost for a 197 mile Heartland Flyer extension between Oklahoma City and Newton, Kansas (Wichita) was $155 million.  Even more staggering was the cost of beginning a new 606 mile service between Fort Worth and Kansas City.  The capital requirement there was $479 million.  “Give them a price they cannot afford and we can get back to hauling freight.”

    The official Amtrak-BNSF Railway position is that the Rail Safety Improvement Act of 2008 required Amtrak and the BNSF Railway to study the route for 100% On-Time-Performance.  Apparently these cost figures were/are negotiable.  However; there still is no respected independent entity to provide study oversight, to question or confirm these figures.  Such does not exist within industry or government circles.  The potential public benefit may be lost due to this omission.  Are BNSF Railway and Amtrak officials providing ethical numbers?  There is no way to tell in today’s railroad environment.

    Yes there is a need for better railroad official/ USDOT bureaucrat relationships.  This is to protect the US citizen investment and ethical railroad profits.

  • I look forward to Garl Latham's essays.  He puts a lot of hard, honest thinking into each one.  In this case, he comments on a SecDot who barely knows the difference between a train and an airplane, if he knows that much.  Ray LaHood, a retired Republican Congressman, is on the side of the angels with his campaign against distracted driving and other safety issues.  But when he delivers speeches such as Garl reviews, he reveals his lack of qualification for his current job.  The FRA, which reports to him, has failed to produce a national rail plan, although one was promised more than a year ago.

    PassRailOK, on the other hand, uses this blog as a vent for his rant.  Myth 1: the public gave the railroads their right-of-way.  Not so.  The railroads had to do certain things - like build railroads into a wilderness with no traffic or commerce - in exchange for the patent on the land grants.  Then they had to extend discounts to the government for the carriage of mail, troops and government material.  The government, according to a 1939 congressional study recovered its costs of the land grant program by a factor of 10 - then allowed the railroads to continue providing the discounts all through WW II when they handled 90% of the movement for the war effort.  Also, only 8% of the U.S. rail system was built with land grants, but railroads that competed with the land grant roads still felt the competitive necessity to give the same discounts for government business.  Yes, the railroads sure did rip off the public.  As for PassRailOK's desire for a simple formula foor deciding how much profit a railroad can get for being involved in a passenger project, perhaps he should be reminded that railroads were deregulated almost 31 years ago.  They are private property, whether he likes the semantics or not, and in our society, making a profit is the goal and it is not an evil.  If Amtrak gets DOT grants for it to use use on projects near and dear to Amtrak, the freight railroads over whose track Amtrak operates will get some benefit.  The odds are, however, that the benefit will not equal or exceed the cost of having Amtrak operations on their lines.  Begin to get the picture?  PassRailOK sure displays a lot of animus toward the freight railroads.  Perhaps he'd rather see all the traffic off his left front fender in a truck doing well above the speed limit on a right-of-way that the public provided for the trucker.

  • I absolutely can't resist the urge to chime in on this blog. Excellent initial blog and follow-up discussion!

    First, my up front disclaimer:  I am a technical person (Railway Engineer) and my comments are an attempt to shed some light on this discussion from that perspective.  

    I agree with the points made by all parties, incuding those by PassRail OK, with respect to the challenges of running passenger trains on privately held railroads.  Something I have learned over the course of my 26 years in this field is that often times disagreements are based on fundamentally varying perspectives.  I'm going to attempt to demonstrate this point by describing a situation I gathered at a recent conference.

    It seems the mechanical folks are busy looking for root causes to a problem they refer to as "vertical split rims" (VSR); a significant wheel defect that has resulted in an increasing number of costly derailments. Obviously our freight railroads steady increase of axle loads is one undeniable contributor.  Of course the mechanical engineers concern themselves primarily with the wheel steel metallurgy and studying crack growth models. The clue that these kinds of defects don't occur (at least there doesn't appear to be any reports in the literature) at locations outside of the U.S. was of particular interest to me.  One of the major differences I have observed between our freight systems and comparable systems in other parts of the world is the relatively large number of joints in our track (both temporary in continuous welded rail lines and in conventional jointed lines). In the event it's not obvious, track joints represent a weak link and a relatively high maintenance location for freight railroads; it's not inconceivable to imagine that the batter received at a rail joint is reciprocated with a certain level of wheel tread damage (that could subsequently contribute to crack initiation and eventually VSRs). While I wouldn't discourage any of the mechanical folks from looking for solutions related to improving wheel steels or the like, my perspective is clearly different.  As a railroad track maintenance person, I would be happier if the mechanical folks resolved to pursue joint elimination as an effective means of mitigating their VSR problems.  

    I have my own very strong opinions related to running passenger trains on freight railroads and, in my opinion, Garl hits the nail precisely on the head when he asserts that "true" HSR operations require dedicated tracks and ROW.  I also have reservations about running passenger trains on many of today's existing freight lines without significant initial capital improvements.  Today's freight line owners/operators are undeniably experts at operating and maintaining lines designed to move freight.  Capacity concerns aside, I don't advocate adding passenger trains to most of today's existing lines without significant and passenger-train specific capital improvements and more rigorous maintenance programs to improve the comfort, efficiency and safety of track and signal systems.

  • "Blaine, you're as thoughtful as Garl.  I agree that true HSR must have its own tracks, although I'm not sure a separate ROW is required.  Except for Australia, U.S. freight railroads operate at higher tonnages than do railroads virtually anyplace else in the world.  When the industry went from 263K standard GVW to the current 283K, there was a significant increase in derailments and a matching requirement that maintenance budgets be increased.

    The Ntional Rail Passenger Service Act tht created Amtrak and provides the framework for what passenger service this country has, requires that Amtrak pay for any capital improvements to railroad property that are made for Amtrak's benefit.  No problem there.  But, and a big but it is, Congress never has provided Amtrak with the funding to enable it to pay for all sorts of capital expenditures it would like to have.  Maybe Grover Norquist, who opposes any and all taxes at all times, and John Mica, who wants us all to believe that he can cut surface transportation authorization by 35% and still build and maintain the national highway system.  Some of these guys are growing incredibly long noses, Pinocchio style.

  • My finger slipped in the previous comment.  The current weight limit is 286K, not 283K as I said.  And, why is the funding of capital projects important?  If Amtrak on-time performance is affected by it always being put in sidings to allow long drag freights to pass, the solution would be to lengthen the sidings so the drag train goes in the hole instead of Amtrak.  Dispatchers get a lot of undeserved blame from people who simply do not understand the dynamics of rail network operations.

  • Larry,  I always appreciate your comments.  On the subject of the Highway Tax, I have these comments that, in my opinion, puts the whole transportation problem into perspective.  The $0.185 per gallon federal tax that is used to fund the so called Highway trust fund is interesting when you consider the average fuel economy of today's passenger vehicles and the federal mandate to acheive Corporate Average Fuel Economy (CAFE) goals for 2025.  First, let's consider today.  Without trying to actually compute the math, how much money would you guess the average American driver contributes to the Highway Trust Fund on an annual basis?   I'll give you and other readers a few seconds to think about it......

    .......

    ......

    ......

    ......

    If you guessed about $90 per year you'd be pretty close.  OK. Let's see this is supposed to be enough money to maintain the national interstate network and also support federal programs for transit initiatives and, my interest, intercity and higher speed rail.  A good guess is that less than 10% of the total goes towards transit projects to support the infrastructure at the ends of complementary transportation modes such as air and intercity passenger rail.  And even less would be included in a national intercity passenger rail program.  I was actually surprised to learn these numbers.  (way low if you ask me).  And, to add insult to injury, the current (and conceivably any) Administration wants to improve CAFE standards so that by 2025 the average vehicle manages ~54 mpg; effectively reducing the contributions to Highway Trust fund coffers to just ~$45 per year (in today's dollars) per driver per year.  I'm no economist but my guess is that the current model is far from being sustainable.

    One more point on the issue of shared ROW.  As "true" HSR will neccessarily require the complete elimination of all at-grade road and rail crossings (may require tracks to be elevated or below grade), a predominately tangent alignment, lighter weight alternative CEM vehicles, and positive trespasser deterrence; a separate ROW seems to make the most economic sense.

    Looking forward to further discussion!

  • Yes, let's have further discussion.  You may be an engineer, but you demonstrate more thoughtfulness than do many, and my father was an engineer.  I don't have any problem with anything you said above.  If anything, you were more easy on the subject than was necessary.  For example, there are thousands of miles - perhaps a million or more, I simply don't remember - of highways and roads that are not on the Interstate system and that are paid for by state fuel taxes and ad valorem taxes by local residents.  They don't get a penny from the Highway Trust Fund.

    You are correct that funds flowing to the HTF are falling both in absolute and inflation-adjusted terms.  I don't know what can or should be done about or to the anti-tax zealots.  Perhaps barring them from driving on public rights-of-way?

  • A couple points.  Remember, engineers had to be professional nay-sayers during pre-Staggers days, and that poisoned the well a little.

    Speaking of which:  while I agree that a good bit - no, most- of the Tea Party platform is based on wishful thinking, ignorance, or other bad stuff, it's still worth keeping up on, if only because of the potential political consequences.

    Finally, although I don't think rail-or anyone- should support policies which are against the national interest, it's worth remembering that political movements that demand that most public projects pay their own way are, almost by definition, friendlier to rail than rubber.

  • And just how and who decides what is in the national interest, eh?  Liberal that I am (and obviously not running away from the term), I have no problem with having elected representatives perform that function collectively and collegially.  It is the yutz that starts out a discussion declaring that anything is "off the table," that I have a problem with.  Once you get into the refusal to negotiate anything and everything, you no longer have compromise - or even real representative government.

  • I try my best to stay out of the two party political debates, particularly those that seem to oppose the other side merely for the sake of opposing the other side. And while I'm no economist, I am baffled by arguments that suggest lowering taxes and reducing government spending as measures to stimulate job growth.  It becomes even more confusing for me when I hear our current president suggest that extending and further increasing the current reduction in social security taxes (SST) into 2012.  Information I have gathered related to this proposal includes lowering the nominal employee paid 6.2% SST from the 2011 level of 4.2% to a rate of 3.2% in 2012 and in addition passing additional cuts onto employers.  This is estimated to cost the U.S. gov't approximately $175B in 2012.  At the same time, the current Mica plan related to Transportation and Infrastructure spending and the proposed 6-year re-authorization Bill includes 25-30% cuts in FTA and Amtrak spending and quite likely near $0 for highspeed and intercity passenger rail projects.  If we look only at the high speed and intercity passenger rail portion of the Bill and consider that between 2008 and 2009 the Obama Administration allocated a total of $10B ($8B +$2.5B - $0.4B), we see this equates to ~$5B on an annual basis.  Returning to the proposed SST cuts, the $175B price tag for 2012 would pay for high speed rail development projects for the next 35 years!  A long term Bill that includes this level of funding would easily create "true" HSR networks in California, Florida, Illinois, Texas, and several other states where densities justify these types of systems.  While my employer's average take on these capital intensive projects averages less than 2%, I would gladly offer to give back the 3% in SST if at least some of this money could be used to stimulate job growth by investing in this form of much needed public infrastructure.  

    Unfortunately, I fear that tabling a plan like this or any plan for that matter, will lead to more declarations that anything is "off the table".

  • Blaine:  A certain amount of yin and yang on economic and political issues is to be expected, probably even to be desired.  I have read reputable economists from both ends of the liberal-conservative spectrum who quite honestly have differing views on whether and when government stimulus spending is "good" and when "tax cuts" are good.  It is the intransigent ideologues at either end of the spectrum that I condemn.  

    More specifically, when it comes to government financial assistance for transportation infrastructure, for passenger service subsidies, and for high-speed rail, I find entirely too many people arguing from invalid perspective.  That is, such spending is regarded as good for "jobs,"  "stimulus," and the like.  I'd be much more comfortable if there were legitimate cost-benefit studies and such programs were evaluated from a transportation perspective.  I still do not see how Mica can cut surface transportation spending authorization by 35% and still argue that he is increasing spending on transportation infrastructure.  Alchemy?  Smoke and mirrors?  He holds out the prospect of more public-private partnerships but is mute when it comes to discussing the guaranteed stream of revenue that the private entity will insist on seeing before it commits significant capital.

  • Larry,

    Thanks, I always appreciate your perspective.  I'm no economist so I approach the subject from a somewhat simple perspective.  If the infrastructure is needed anyway, and the construction of a HSR system promises the greatest capacity to move more people per unit width of development for the lowest cost, and the taxpayer is looking to maximize the value of their contributions, HSR systems make more economic sense than constructing additional freeway lanes and adding airport runways.  

    There are numerous cost studies which aim to demonstrate the lower costs of building HSR projects as alternatives to adding freeway and airport capacity when person trip miles are considered.  I think the fact that few, if any, studies suggest that adding highway capacity is a more cost-effective means of enhancing mobility speaks volumes about the choice of HSR as an attractive alternative.

    And clearly the costs to operate and maintain state highways is also considerable.  How it compares to costs to operate and maintain a HSR system is a whole new argument.  I would not be surprised to learn that the difference in capital cost to construct a HSR system did not at least partially offset the subsidies needed to operate and maintain the system for a given period of time.  In fact, many of today's HSR Design-Build-Operate-Maintain concessions are set-up to do just that.

    I encourage others to chime in as well.

  • All this is complicated by the fact that externalities, by their very definition, are difficult to price, and that is where uncertainty, slop, or mendacity creeps into cost analyses.

  • Some potential goods news on the horizon.....Mica announced today that he and other Republican members of the House Infrastructure and Transportation Committee are interested in revising the 6-year Re-authorization Bill to maintain current levels of funding.  Recall that Mica's earlier proposal included upt to 30% cuts to Transit and Amtrak programs.  

    Mica and others are still dead set against raising the gas tax but they are at least open to discussions which hopefully will identify alternate sources of funding.  In my opinion, the current gas tax rate, the 2025 CAFE mandate and the aging/capacity-limited interstate and airport infrastructure represents a rapidly growing disparity between funding and capital/maintenance needs. If we're not going to consider increasing the gas tax then we are going to need to consider more radical and less familiar mass transit solutions.

    "Express" High Speed Rail is one alternative that makes economic sense between the most densely populated urban centers less than 400 miles apart.  

  • Mica is a fraud.  He has to believe in alchemy if he thinks he can craft a bill that continues the current spending level for another six years, but that an increase in the fuel tax to pay for it remains "off the table."  He's open to suggestions?  Let's see now, most economists in the field think there should be an axle-mile tax or some other distance-related method of assessing taxes for transportation infrastructure.  The trucking industry is adamantly opposed to anything but an increase in the per-gallon fuel tax.  At least when Bud Shuster and Don Young were the Republican chairmen of the Transportation and Infrastructure Committee, they were open about being big spenders.  That meant they didn't have to remember their last lie; they just bellied up to the trough.  Mica still is trying to be all things to all people, and doesn't seem to understand that he can't be.  This legislation is now into its third year since the previous authorization expired.  Any bets on when a real reauthorization will be enacted?