2. - 2 - Making Complex Systems Safe Jeff Wiese Associate Administrator for Pipeline Safety May 4, 2014 GM/UAW Leadership Team

3. Today’s Agenda  Who the Heck am I and How Did I Get Here –Not specific to GM or labor-management issues  What I Do for a Living and How May Be Relevant  Complex Systems and High Hazard Industries –Injects from Chris Hart / NTSB  Managing Complex Systems for Pipeline Safety  Parting Thoughts on Leadership’s and Culture’s Role and Importance  Open Discussion

4. Who the Heck?  Jeff Wiese – US/DOT Associate Administrator for Pipeline Safety  Work for Secretary Anthony Foxx, and Administrator Cynthia Quarterman  Our domain – U.S. energy pipeline safety  Primary duties: regulation, inspection, enforcement, research, public engagement, and organizational scout master  Substituting for Chris Hart / Acting Chair of NTSB - 4 -

5. My First Real Exposure to GM - 5 -

6. What We Regulate Pipeline Miles by System Types – as-of 3/7/2014 System Type Miles%Total # Operators Hazardous Liquid 185,6297%410 Gas Transmission 303,30811%953 Gas Gathering 16,7281%342 Gas Distribution (Mains & Services ) 2,138,67681%1,356 Total2,644,341 Some Operators have multiple System Types Liquefied Natural Gas 130 Plants 203 Tanks 82

7. U.S. Pipeline Transportation System

9. Key Stakeholders  State and Local Officials –National Association of Regulatory Utility Commissioners –National Association of Pipeline Safety Representatives  Other Federal Agencies/Administration –Department of Energy –Department of Homeland Security –Department of Interior –Federal Energy Regulatory Commission –Federal/State Joint Pipeline Office – Alaska –Office of the Federal Coordinator Alaska Natural Gas Transportation Projects  Public on/near/affected by ROW –The Pipeline Safety Trust  Industry: Associations & Companie s –American Gas Association –American Public Gas Association –Association of Oil Pipelines –American Petroleum Institute –Interstate Natural Gas Association of America –National Propane Gas Association  Consensus Standards/Best Practices Organizations –American National Standards Institute –American Society of Mechanical Engineers –American Society for Testing and Materials –Common Ground Alliance –NACE International –National Fire Protection Association

10. Outline from Chris Hart  The Context  Importance of “System Think”  Importance of Better Information  Safety Benefits  Productivity Benefits  Aviation Successes and Failures  Roles of Leadership and Regulator - Courtesy of Chris Hart / NTSB -10

11. The Contrast  Conventional Wisdom: Improvements that reduce risk usually also reduce productivity  Lesson Learned from Proactive Aviation Safety Programs: Risk can be reduced in a way that also results in immediate productivity improvements - Courtesy of Chris Hart/NTSB - 11

12. Information From Front Lines Improved Safety Process Plus Fuel Creates a Win-Win System Think Process AND ImprovedProductivity - Courtesy of Chris Hart / NTSB -

13.  More System Interdependencies – Large, complex, interactive system – Often tightly coupled – Hi-tech components – Continuous innovation – Ongoing evolution The Context: Increasing Complexity INVESTIGATORAIRLINESPILOTS REGULATOR CONTROLLERS MECHANICSMANUFACTURERS The System  Safety Issues Are More Likely to Involve Interactions Between Parts of the System - Courtesy of Chris Hart / NTSB - 13

14. - Courtesy of Chris Hart / NTSB - Engage All Participants In Identifying Problems and Developing and Evaluating Remedies  Airlines  Manufacturers – With the systemwide effort – With their own end users  Air Traffic Organizations  Labor – Pilots – Mechanics – Air traffic controllers  Regulator(s) [Query: Investigator(s)?] INVESTIGATORAIRLINESPILOTS REGULATOR CONTROLLERS MECHANICSMANUFACTURERS The System Aviation “System Think” Success

15. Energy Pipeline Safety Experience Complex Systems Management - 15 -

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20. Complex Systems / High Hazards  Smart people in a variety of high hazard industries around the world have looked for ways to improve safety – especially for low frequency, high consequence events – with impressive results. –Airline, Nuclear, Chemical, Offshore Oil & Gas, etc.  Oil & gas safety regulators are coordinating on the topic: –NTSB, PHMSA, BSEE, OSHA, Canada’s NEB, NRC, NASA, DOE - 20 -

21. Complex Systems / High Hazards  Major failures have driven the pursuit of safer systems  Primary areas of focus beyond pure prescriptive compliance –Safety Management Systems (“systems think”) Let’s take a closer look in the pipeline worldLet’s take a closer look in the pipeline world –Safety Culture Widely recognized as determinative in success (OECD)Widely recognized as determinative in success (OECD) Currently being studied for offshore applications by the National Academy of Sciences – broadly applicableCurrently being studied for offshore applications by the National Academy of Sciences – broadly applicable More on safety culture in a bitMore on safety culture in a bit - 21 -

22. API RP 1173 Pipeline Safety Management System Requirements

23. Why? Energy Pipelines are Hazardous  Industry driven standards and regulations have governed operations for decades with major change driven by accidents (etching learning)  Safety Management Systems can provide a more holistic approach to controlling for hazards  Many operators already have aspects of a Safety Management System in place in accordance with regulations and standards  API’s RP 1173 will provide guidance for operators to identify areas for improvement and measurement. – Ballot open for comment until April 11 / again in June (final draft) – http://ballots.api.org/login.aspx http://ballots.api.org/login.aspx

24. Foundation – Plan, Do, Check, Act

25. Major SMS Elements Under Consideration 1.Leadership and Management Commitment 2.Stakeholder Engagement 3.Risk Management 4.Operational Controls 5.Incident Investigation, Evaluation & Lessons Learned 6.Emergency Preparedness & Response 7.Competence, Awareness & Training 8.Safety Assurance 9.Management Review & Continuous Improvement 10.Documentation & Record Keeping 25

26. How do we know it is working? 26

27. LEADERSHIP AND CULTURE Parting Thoughts on the Role and Importance of - 27 -

28. The Critical Roles of Leadership  Establish, communicate, and LIVE BY the organization’s vision and values – the “compass” for all settings  Recruit, train, retain – or remove if needed, the kind of people who resonate to and embody these values – include Board!  Dispassionately understand your strengths and opportunities and those of your organization and your situation in the world  Focus on tangible business problems and enlist your people in helping set the road map to solutions – use your “compass” –Engage leaders at all levels  Build the necessary policies, processes, and procedures  Dedicate to all aspects of continuous improvement (innovation)  Be attuned to internal and external drivers and expect change - 28 -

29.  Demonstrate Safety Commitment... The Role of Leadership  Include “Us” (e.g., System) Issues, Not Just “You” (e.g., Training) Issues  Make Safety a Middle Management Metric  Engage Labor Early  Include the System -- Manufacturers, Operators, Regulator(s), and Others  Encourage and Facilitate Reporting  Provide Feedback  Provide Adequate Resources  Follow Through With Action But Acknowledge That Mistakes Will Happen - Courtesy of Chris Hart / NTSB -

30. Organizational Culture  “A pattern of basic assumptions invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore is to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.” ‒ Edgar H. Schein - 30 -

31. The Value of Culture  Parting Thoughts –Build a great culture that defines you and your company Safety is a key core value, but only oneSafety is a key core value, but only one –What about learning and just culture Safety is a product of a great cultureSafety is a product of a great culture –Avoid a culture of authority – engagement of employees and collaboration is reinforcing and essential to success –Foster questioning attitudes and a dialog based approach to institutionalize values (ownership) –Foster “emotional ambivalence” – joining positive and negative aspects – e.g., pride AND constant unease including reporting of concerns across the organization - 31 -

32. Ingredients for Healthy Culture  Some parting thoughts – from Lori Ann LaRocco –Know your strengths and weaknesses Be honest – goal is to play to strength, and mitigate weakness; deceiving yourself is counterproductiveBe honest – goal is to play to strength, and mitigate weakness; deceiving yourself is counterproductive –Have a mantra (aka, the compass) Guiding star – and bedrock of all decisionsGuiding star – and bedrock of all decisions –Stay the course No situation is entirely bad or good – is what it isNo situation is entirely bad or good – is what it is –Value “human capital” – I prefer “human beings” Healthy culture built on respect fosters engagement and growth AND retention of talent needed to succeedHealthy culture built on respect fosters engagement and growth AND retention of talent needed to succeed - 32 -

33. DISCUSSION SESSION Your Turn