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FMCSA Seeks Feedback on Carrier Safety Fitness Determination Notice of Proposed Rulemaking

Federal Motor Carrier Safety Administration (FMCSA) today announced a rulemaking proposal designed to enhance the Agency’s ability to identify non-compliant motor carriers. The Safety Fitness Determination (SFD) Notice of Proposed Rulemaking (NPRM), to be published in the Federal Register, would update FMCSA’s safety fitness rating methodology by integrating on-road safety data from inspections, along with the results of carrier investigations and crash reports, to determine a motor carrier’s overall safety fitness on a monthly basis.

The proposed SFD rule would replace the current three-tier federal rating system of “satisfactory–conditional–unsatisfactory” for federally regulated commercial motor carriers (in place since 1982) with a single determination of “unfit,” which would require the carrier to either improve its operations or cease operations.

Once in place, the SFD rule will permit FMCSA to assess the safety fitness of approximately 75,000 companies a month. By comparison, the agency is only able to investigate 15,000 motor carriers annually – with less than half of those companies receiving a safety rating.

The proposed methodology would determine when a carrier is not fit to operate commercial motor vehicles in or affecting interstate commerce based on:

  1. the carrier’s performance in relation to a fixed failure threshold established in the rule for five of the agency’s Behavior Analysis and Safety Improvement Categories (BASICs);
  2. investigation results; or
  3. a combination of on-road safety data and investigation information.

The proposed rule further incorporates rigorous data sufficiency standards and would require that a significant pattern of non-compliance be documented in order for a carrier to fail a BASIC.

When assessing roadside inspection data results, the proposal uses a minimum of 11 inspections with violations in a single BASIC within a 24-month period before a motor carrier could be eligible to be identified as “unfit.” If a carrier’s individual performance meets or exceeds the failure standards in the rule, it would then fail that BASIC.  The failure standard will be fixed by the rule. A carrier’s status in relation to that fixed measure would not be affected by other carriers’ performance.

Failure of a BASIC based on either crash data or compliance with drug and alcohol requirements would only occur following a comprehensive investigation.

FMCSA estimates that under this proposal, less than 300 motor carriers each year would be proposed as “unfit” solely as a result of on-road safety violations. Further, the agency’s analysis has shown that the carriers identified through this on-road safety data have crash rates of almost four times the national average.

FMCSA encourages the public to review the NPRM and to submit comments and evidentiary materials to the docket following its publication in the Federal Register. The public comment period will be open for 60 days. FMCSA will also be  providing a reply comment period allowing for an additional 30 days for commenters to respond to the initial comments.

The Agency is requesting specific comments and data in the NPRM including, but not limited to,

  • Moving to dynamic safety event groups
  • Moving to low, medium, and high severity weightings
  • Removing English Language Proficiency violations from the SFD process
  • Establishing lower failure standards for Passenger and Hazardous Materials carriers
  • Additional critical and acute regulations
  • Implementation impacts to States

For more information on FMCSA’s Safety Fitness Determination proposed rule, including a full copy of the NPRM, an instructional webinar, and a Safety Fitness Determination Calculator, visit www.fmcsa.dot.gov/sfd. To comment on the rule once it is published in the Federal Register, please use www.regulations.gov and docket number FMCSA-2015-0001.

Is It Too Early to Think About 2017 in the Oil Patch?

2016 is only two weeks old, but it sure does feel longer than that. In just two weeks, oil is down 18%, oil service stocks have lost 14%, and shares of E&P companies are down 17%. It is widely expected that 2016 will be a year of rebalancing, which will be unpleasant.

Today, we are trying to look beyond the 2016 carnage in front of our noses and imagine the O&G world of 2017. Regular Oilpro readers know that our house view is everything bottoms in 2016. This doesn’t necessarily mean growth comes roaring back in 2017, but it does mean that contraction fades into stability.

2017 may seem an eternity away, but a blurry shape is starting to form, and some baseline expectations have been set. So without further ado, here are some early high-level thoughts on what 2017 may look like in O&G:

  • Sharp Oil Production Declines. There is no defined consensus, but most observers (ourselves included) share the view that global oil production will be contracting meaningfully by 2017, particularly in the US. Even with OPEC going full tilt and shale more resilient than expected, low oil prices will take their toll. The massive global spending reduction of approximately 45% from 2014 levels + time = production curtailment. The question is: will it be enough to consume the glut?
  • Oil Demand Should Be Higher. Consensus expectations are for an increase in global oil demand of 1.2mmbpd by early 2017. Chinese growth concerns and spreading macro economic concerns are potential flies in the ointment, but we still expect more oil will be burned in 2017 than in 2016.
  • NAM Capex Bounce? We evaluated Wall Street consensus expectations for a group of 59 independent E&Ps. After falling 48% in 2015 and another 26% fall forecast in 2016, the market is looking for a spending rebound of 16% in 2017. This seems a bit on the high side of likely, but if oil fundamentals improve, companies may be willing to spend a bit more next year to fend off production declines.
  • Less Oilfield Competition. A wave of bankruptcies, distressed sales, equipment attrition, and rig scrapping will occur over the next 12-24 months. This means the oilfield service landscape will look very very different in 2017. Fewer companies and less equipment chasing work could enable a pricing / margin rally in 2017 for oilfield service even with no incremental drilling. In other words, an activity-less recovery may be in the cards.
  • Jobs Growth Possible. Because of the massive cash burn the industry is going through this year, lay-offs will likely overshoot to the downside. By 2017, companies should be dipping their toes in the job market again, selectively hiring out of the pool of skilled, sidelined workers. Companies will be motivated to nibble in the jobs market even ahead of a big activity recovery because i) stability will foster recovery predictions, ii) they will realize the loss of skilled workers has adversely impacted operations, and iii) they’ll want to hire the best available talent before their peers do.
  • E&P Focuses On Short Cycle, Lower Cost Projects. The industry is rethinking its approach to field development. By 2017, new protocols will be in place to evaluate final investment decisions. The industry’s appetite for long lead time and cost intensive developments will be a fraction of prior levels in 2017. As a result, offshore investment allocations could increasingly move towards onshore projects.
  • WTI Oil Price Expectations. We don’t maintain an in-house oil price forecast, but we monitor the consensus view. The median forecast for the 38 analysts polled by Bloomberg is $60/barrel in 2017 vs. $50 in 2016 and the current spot price of $30.60. Downgrades lie ahead as the consensus view needs to catch up to the recent sell-off. The futures price for 2017 delivery is currently $41/barrel (market in contango).
  • HHUB Nat Gas Price Expectations. We don’t maintain an in-house gas price forecast, but we monitor the consensus view. The median forecast for the 23 analysts polled by Bloomberg is $3.25/mmbtu in 2017 vs. $2.85 in 2016 and the current spot price of $2.28. The futures price for 2017 delivery is currently $2.77/mmbtu (market in contango).

While it’s still early to completely give up on 2016, it is looking like this may be a lost year for our industry. By 2017, further downside will be limited, but how much upside can be reasonably assumed for 2017? Answering this question is more an exercise in imagination than fundamental analysis as we remain adrift in uncharted waters.

— Joseph Triepke, Oilpro Managing Director

FMCSA Seeks Feedback on Carrier Safety Fitness Determination Notice of Proposed Rulemaking

Federal Motor Carrier Safety Administration (FMCSA) today announced a rulemaking proposal designed to enhance the Agency’s ability to identify non-compliant motor carriers. The Safety Fitness Determination (SFD) Notice of Proposed Rulemaking (NPRM), to be published in the Federal Register, would update FMCSA’s safety fitness rating methodology by integrating on-road safety data from inspections, along with the results of carrier investigations and crash reports, to determine a motor carrier’s overall safety fitness on a monthly basis.

The proposed SFD rule would replace the current three-tier federal rating system of “satisfactory–conditional–unsatisfactory” for federally regulated commercial motor carriers (in place since 1982) with a single determination of “unfit,” which would require the carrier to either improve its operations or cease operations.

Once in place, the SFD rule will permit FMCSA to assess the safety fitness of approximately 75,000 companies a month. By comparison, the agency is only able to investigate 15,000 motor carriers annually – with less than half of those companies receiving a safety rating.

The proposed methodology would determine when a carrier is not fit to operate commercial motor vehicles in or affecting interstate commerce based on:

1.       the carrier’s performance in relation to a fixed failure threshold established in the rule for five of the agency’s Behavior Analysis and Safety Improvement Categories (BASICs);

2.       investigation results; or

3.       a combination of on-road safety data and investigation information.

The proposed rule further incorporates rigorous data sufficiency standards and would require that a significant pattern of non-compliance be documented in order for a carrier to fail a BASIC.

When assessing roadside inspection data results, the proposal uses a minimum of 11 inspections with violations in a single BASIC within a 24-month period before a motor carrier could be eligible to be identified as “unfit.” If a carrier’s individual performance meets or exceeds the failure standards in the rule, it would then fail that BASIC.  The failure standard will be fixed by the rule. A carrier’s status in relation to that fixed measure would not be affected by other carriers’ performance.

Failure of a BASIC based on either crash data or compliance with drug and alcohol requirements would only occur following a comprehensive investigation.

FMCSA estimates that under this proposal, less than 300 motor carriers each year would be proposed as “unfit” solely as a result of on-road safety violations. Further, the agency’s analysis has shown that the carriers identified through this on-road safety data have crash rates of almost four times the national average.

FMCSA encourages the public to review the NPRM and to submit comments and evidentiary materials to the docket following its publication in the Federal Register. The public comment period will be open for 60 days. FMCSA will also be  providing a reply comment period allowing for an additional 30 days for commenters to respond to the initial comments.

The Agency is requesting specific comments and data in the NPRM including, but not limited to,

  • Moving to dynamic safety event groups
  • Moving to low, medium, and high severity weightings
  • Removing English Language Proficiency violations from the SFD process
  • Establishing lower failure standards for Passenger and Hazardous Materials carriers
  • Additional critical and acute regulations
  • Implementation impacts to States

For more information on FMCSA’s Safety Fitness Determination proposed rule, including a full copy of the NPRM, an instructional webinar, and a Safety Fitness Determination Calculator, visit www.fmcsa.dot.gov/sfd. To comment on the rule once it is published in the Federal Register, please use www.regulations.gov and docket number FMCSA-2015-0001.

FMCSA Seeks Feedback on Carrier Safety Fitness Determination Notice of Proposed Rulemaking

Federal Motor Carrier Safety Administration (FMCSA) today announced a rulemaking proposal designed to enhance the Agency’s ability to identi

 

Federal Motor Carrier Safety Administration (FMCSA) today announced a rulemaking proposal designed to enhance the Agency’s ability to identify non-compliant motor carriers. The Safety Fitness Determination (SFD) Notice of Proposed Rulemaking (NPRM), to be published in the Federal Register, would update FMCSA’s safety fitness rating methodology by integrating on-road safety data from inspections, along with the results of carrier investigations and crash reports, to determine a motor carrier’s overall safety fitness on a monthly basis.

The proposed SFD rule would replace the current three-tier federal rating system of “satisfactory–conditional–unsatisfactory” for federally regulated commercial motor carriers (in place since 1982) with a single determination of “unfit,” which would require the carrier to either improve its operations or cease operations.

Once in place, the SFD rule will permit FMCSA to assess the safety fitness of approximately 75,000 companies a month. By comparison, the agency is only able to investigate 15,000 motor carriers annually – with less than half of those companies receiving a safety rating.

The proposed methodology would determine when a carrier is not fit to operate commercial motor vehicles in or affecting interstate commerce based on:

1.       the carrier’s performance in relation to a fixed failure threshold established in the rule for five of the agency’s Behavior Analysis and Safety Improvement Categories (BASICs);

2.       investigation results; or

3.       a combination of on-road safety data and investigation information.

The proposed rule further incorporates rigorous data sufficiency standards and would require that a significant pattern of non-compliance be documented in order for a carrier to fail a BASIC.

When assessing roadside inspection data results, the proposal uses a minimum of 11 inspections with violations in a single BASIC within a 24-month period before a motor carrier could be eligible to be identified as “unfit.” If a carrier’s individual performance meets or exceeds the failure standards in the rule, it would then fail that BASIC.  The failure standard will be fixed by the rule. A carrier’s status in relation to that fixed measure would not be affected by other carriers’ performance.

Failure of a BASIC based on either crash data or compliance with drug and alcohol requirements would only occur following a comprehensive investigation.

FMCSA estimates that under this proposal, less than 300 motor carriers each year would be proposed as “unfit” solely as a result of on-road safety violations. Further, the agency’s analysis has shown that the carriers identified through this on-road safety data have crash rates of almost four times the national average.

FMCSA encourages the public to review the NPRM and to submit comments and evidentiary materials to the docket following its publication in the Federal Register. The public comment period will be open for 60 days. FMCSA will also be  providing a reply comment period allowing for an additional 30 days for commenters to respond to the initial comments.

The Agency is requesting specific comments and data in the NPRM including, but not limited to,

  • Moving to dynamic safety event groups
  • Moving to low, medium, and high severity weightings
  • Removing English Language Proficiency violations from the SFD process
  • Establishing lower failure standards for Passenger and Hazardous Materials carriers
  • Additional critical and acute regulations
  • Implementation impacts to States

For more information on FMCSA’s Safety Fitness Determination proposed rule, including a full copy of the NPRM, an instructional webinar, and a Safety Fitness Determination Calculator, visit www.fmcsa.dot.gov/sfd. To comment on the rule once it is published in the Federal Register, please use www.regulations.gov and docket number FMCSA-2015-0001.