Training Session Houston, TX February 4, 2008 Board Business, EC Business, Subcommittee Business

1. North American Energy Standards Board Training Session Houston, TX February 4, 2008 Board Business, EC Business, Subcommittee Business William P. Boswell, Esq. NAESB General Counsel wpboswell@comcast.net

2. Secrets I tell the Board • They apply to the EC, too • They also apply to subcommittees

3. General Duties of the Board • Duty of Care • Duty of Loyalty • Fiduciary Duties • Duty to Accomplish Organization’s Objectives • Duty to be Well-informed

4. Who’s the Client? • Primary duty is to the organization • Secondary duty is to your employer or the group that elected you • Conflicts between the two • Abstention and recusal • More for the Board and the EC – subcommittees can be a bit more feisty

5. Role of Directors • Policy Statement • General Oversight • Set Budget • Establish Administration Bylaws & Process

6. Process • NAESB is all aboutprocess • How we do things is as important as what we do • The reason for this is credibility • NAESB is successful because regulators and the public trust us to do the right thing the right way and on time

7. Do’s • Prepare for meetings in advance • Read the agenda • Listen • Act in best interest of the organization

8. Don’ts • Be a jerk • Speak to hear your own voice • Forget to read the minutes • Rubber stamp (not so much a subcommittee issue – you have nothing to stamp)

9. Don’ts • Dominate the meeting • Confuse yourself with staff • Vegetate • Nit pick (opposite of rubber stamp) – let others do the wordsmith and format grunt work after you decide what the standard ought to look like

10. But Why Am I Here? • You are here to deal with substance: you are supposed to be the subject-matter experts • The process is in place; you are not here to mess with the process • If you are obsessed with process get yourself elected to the Board

11. Why So Many Don’ts • Disruption is worse than inaction • Most people prefer to avoid confrontation, so: • Confrontation leads to silence, and: • Silence means the loudest person gets his way, and

12. Why So Many Don’ts (continued) • If the loudest person gets his way all the time, people won’t bother, and finally: • If people don’t bother, the organization suffers and maybe fails

13. Your Time is Valuable • How many 1-hour meetings have lasted 4 hours? • Did the extra time come from ignoring do’s and don’ts? • Did you have a better use for the wasted time? • Do you really want to waste resources?

14. Your Time is Valuable (continued) • Did you start thinking of ways to be busy and miss the next meeting? • Did the concept of a “hit man” begin to seem less morally objectionable?

15. Subcommittees • Your rifle is your best friend* • So is a subcommittee *(Source: Every DI who ever lived)

16. EC and Subcommittees • Many of the same rules of behavior apply • The EC is charged by the certificate and bylaws with developing standards, recommending standards-related activities, establishing working committees to develop standards, preparing annual plan recommendations, and interpretingstandards

17. “To Develop Standards” • The Board and the EC have defined roles • Establishing process is a Board issue • Standards are an EC issue

18. Roles • The EC recommends the annual plan • The Board approves the annual plan • The EC carries out the Board’s directives as to the annual plan – including Boardamendments • The annual plan is the Board’s management tool for accomplishing NAESB’s mission

19. Therefore The EC uses the process established by the Board to develop standards in a timely fashion according to the annual plan as administered by the Board

20. Subcommittees • Are established by the EC under Sec. 10.5 of the bylaws • Report to the EC • Develop standards as directed by the EC • Do not get to change their functions or go off the reservation: they are not independent agents • Are a forum for more open discussion and debate than at the EC and Board levels

21. What Do Subcommittees Do? • Focus on discrete issues • Research issues more thoroughly • Vet alternatives • Make recommendations • EC subcommittees make recommendations to the EC • The EC makes decisions on standards

22. Subcommittee Reports • Should be submitted in advance but to permit timely action • Should describe task, matters considered, alternatives discussed, reasons for recommendations • Should provide clear recommendations • Are entitled to deference at the EC

23. What Does “Deference” Mean? • Don’t rehash the subcommittee’s work at a EC meeting • Ask questions before making statements (or even before the meeting) • Don’t automatically assume you know more than the subcommittee, BUT • Make decisions in the best interests of NAESB

24. Deference • EC members: you may disagree or propose to modify subcommittee recommendations after you clarify your issues through questions • You should state your reasons for disagreement with precision • Avoid rambling statements, repetition, or general moaning • If you agree, say so - subcommittee members like expressions of support - it makes them feel appreciated

25. Deference • Resolve the issues in a timely manner • Don’t forget we have deadlines – sometimes good is better than perfect • If you can’t resolve the issues, send them back to subcommittee for further consideration • Don’t beat issues to death

26. Deference (The Big One) • NEVER, NEVER, EVER, agree to serve on the EC or a subcommittee, fail to attend meetings, and then complain about the result or insist on revisiting decisions because you weren’t there • If you are ever tempted to do so, read St. Thomas Aquinas or watch a few episodes of The Sopranos • Others will notice and get annoyed

27. Bottom Line for the EC • Consider what the subcommittee has to say • Consider the comments received through the NAESB process, both before the subcommittee acts and after it posts its work product • Everyone is entitled to make comments before the final decision is made by the EC • These comments are a part of the permanent record that goes to the FERC

28. After Comments & Debate • The EC makes the final decision on the wording of all standards – that is their job under the certificate and bylaws • But: The EC is to make its decisions in the best interests of what NAESB stands for as an organization • The members ratify that decision

29. Responsibilities of Chairs • The Chairs have the full authority to control discussion and are required to do so • The Board issued a policy statement on the responsibilities and authority of the chairs in 1997 • If the chairs do not follow the policy they are not doing their jobs properly – it is binding

30. Responsibilities of Chairs • The chairs are not there to make you feel all warm & fuzzy; nor for your self-esteem, like kindergarten teachers • They are there to see to it that NAESB meets its commitments

31. What Can They Do • Fire laser beams • Use disintegrator rays • Hurl thunderbolts like Jove • Invoke plagues of locusts & rains of frogs

32. Really? • Set time frames for discussion • Limit discussion to avoid repetition • Control the order of the meeting – including ruling motions and discussion out of order • Assign people to task forces • Set informal comment periods if needed • Set deadlines to meet NAESB commitments per Board and EC instructions

33. But What If They’re Mean to Me? • An effective chair must be objective • An effective chair must be seen to be objective (this is a different skill) • An effective chair must see to it that the subcommittee effectively and timely meets its goals in a manner that meets NAESB’s goals and objectives as established by the Board and implemented by the EC

34. Rules to Live By • You are not a minor deity nor are you a prophet, and the hem of your robe is not sacred • NAESB acts collectively • Individual directors, individual EC members, and individual subcommittee members have opinions and one vote • One person’s vote does not a decision make

35. The Rule • NAESB decisions are made by the whole according to our bylaws and processes

36. My Buddy Winston • A bad director, EC member, subcommittee member: Lord Charles Beresford

37. Admiral B. • “He can be described as one who, before he gets up, does not know what he is going to say; when he is speaking, does not know what he is saying; and when he has sat down, does not know what he has said, but knows it was said well.”

38. Winston’s Buddy Bill • A Good Director, EC member, subcommittee member NEVER: WAAP – w/o OAS

39. Winston Redux • “A cavalry charge is very like ordinary life. So long as you are all right, firmly in your saddle, your horse in hand and well armed, lots of enemies will give you a wide berth.” • “Why is it the ship beats the waves when the waves are so many and the ship is one? The reason is that the ship has a purpose.”

40. Questions?