Background North American Energy  Trade Energy markets across the United States, Canada, and Mexico are  extensively integrated. For example, Canada and Mexico—respectively,  the largest and fourth largest foreign suppliers of crude oil to the United  States—together supply almost half of total U.S. petroleum imports,  according to DOE data. The United States is by far Canada’s most  significant crude-oil customer. In addition, Canada and Mexico are major  buyers of petroleum products refined in the United States. A growing  trade in natural gas produced in the United States is also increasingly  important to the energy relationship among the three countries, according  to a government report. Moreover, trade in the other energy  commodities, such as electricity, natural gas liquids, and coal, is  comparatively small yet important to some U.S. regions. In 2017, the  value of the energy trade between the United States and its North  American neighbors exceeded $125 billion, with almost $83 billion in U.S.  energy imports and almost $43 billion in exports, according to U.S.  Census data (see fig. 1). Cross-Border Energy  Infrastructure Extensive cross-border infrastructure is used to transport oil, refined  petroleum products, and natural gas between the United States and both  Canada and Mexico. Pipelines are the primary means of transporting  crude oil from Canada to the United States; at present, six pipeline  systems link the petroleum-producing regions in western Canada to U.S.  markets. Marine vessels are the primary means used to convey Mexican  crude oil imported by the United States. Marine vessels are also used to  transport more than 75 percent of refined petroleum products exported by  the United States to Canada and Mexico, and pipelines, rail, or trucks are  used to transport the remainder. Pipelines are also used to transport all  U.S. exports of natural gas to Canada and Mexico as well as Canadian  gas exports to the United States, with 24 pipelines crossing the U.S.– Canadian border and 16 pipelines crossing the U.S.–Mexican border. Cross-border electrical infrastructure is significant between the United  States and Canada but is limited between the United States and Mexico.  There are 30 major U.S.–Canadian transmission connections, while  synchronized U.S.–Mexican connections exist only at the border between  Mexico and the state of California. North American Energy  Integration and Security According to the U.S. Department of Energy (DOE), energy integration is  in the interest of all North American countries because it expands the size  of energy markets, creates economies of scale to attract private  investment, lowers capital costs, and can reduce energy costs for  consumers. Expanding energy systems may also allow for the  development of a more diverse mix of energy resources, processing  facilities, and end uses, all of which increase energy security. The International Energy Agency defines energy security as the  uninterrupted availability of energy sources at an affordable price.  According to agency documents, long-term energy security primarily  involves timely investments to supply energy to meet economic  development and environmental needs. Short-term energy security  focuses on the ability of the energy system to react promptly to sudden  changes in the supply-demand balance. Mexico’s Energy Reform Energy reforms in Mexico’s oil and gas sector, which received limited  capital investment for decades, could contribute to North American  energy and security as well as cross-border energy trade, according to  government reports. Until 2013, Mexico’s constitution prohibited foreign  involvement in most activities in the oil and power sectors, according to a  think-tank report. According to the report, the Mexican congress enacted a sweeping energy reform in 2013 that ended the state-owned oil  company PEMEX’s monopoly over oil exploration and production and the  state-owned electric company Federal Electricity Commission’s control  over electricity generation. As a result, Mexico’s energy sector opened to  foreign investment in ways not possible since the sector was nationalized  in 1938, providing new opportunities for U.S. investors, according to the  think-tank report and the Congressional Research Service. According to  Mexican government officials, since that time Mexico has established or  revamped a number of agencies to govern and operate its energy sector  and has awarded leases and contracts to expand exploration, production,  and distribution of energy supplies. Since Mexico’s reform was enacted,  U.S. companies have participated in winning bids for each of Mexico’s oil  and gas tenders, with $6.5 billion pledged in upstream investment,  according to the think-tank report. North American Free  Trade Agreement  Renegotiation The current administration has made the renegotiation of the North  American Free Trade Agreement (NAFTA) a priority; as of April 2018,  negotiations to renew NAFTA had been ongoing since August 2017.  According to a January 2017 Congressional Research Service report,  since NAFTA entered into force on January 1, 1994, its market-opening  provisions have gradually eliminated nearly all tariff and most nontariff  barriers on goods produced and traded within North America, including  energy commodities. In addition, according to energy industry  representatives, despite previous limited investment opportunities in  Mexico, NAFTA has enhanced North American energy integration,  facilitating a greater flow of oil, natural gas, and petroleum-derived  products among all three North American countries. U.S. Agencies’ Roles and  Responsibilities Related to  North American Energy  Integration A number of U.S. agencies oversee activities related to energy  collaboration efforts with Mexico and Canada. We identified the following  eight agencies as having a role in energy cooperation efforts that may  support North American energy integration. Department of Energy (DOE). DOE is responsible for advancing the  energy, environmental, and nuclear security of the United States.  DOE also plays a lead role in North American energy integration  activities. DOE has established partnerships with its primary  government partners in Canada and Mexico—the Department of  Natural Resources of Canada (Natural Resources Canada) and  Mexico’s Secretariat of Energy—through various memorandums of  understanding (MOU). While multiple DOE offices engage in energy  integration activities, the Office of International Affairs has primary  responsibility for international energy cooperation and leads key  cooperation initiatives. The Office of International Affairs is  responsible for coordinating the framework for bilateral collaboration  between DOE and Natural Resources Canada. According to DOE,  areas of U.S.–Canadian cooperation include responsible development  of unconventional oil and gas, safe and modern infrastructure,  responsible use of energy and energy efficiency, and carbon capture  and storage. DOE issues presidential permits for cross-border electric  transmission lines and associated facilities, authorizes electricity  export and is responsible for authorizing natural gas exports from the  United States. Authorization for natural gas exports is granted  without modification or delay for U.S. partner countries in free trade  agreements that provide for national treatment for trade in natural gas,  which, according to Congressional Research Service, presently  includes Canada and Mexico. Department of the Interior (Interior). Interior plays an important role  in domestic energy production, managing energy produced on  America’s federally managed lands and the U.S. outer continental  shelf, including oil, gas, coal, wind, solar, and hydropower. Interior  also has important cooperative relationships with counterpart  agencies in Canada and Mexico, according to Interior officials. As  subject matter experts, various Interior offices, such as the Bureau of  Ocean Energy Management, and the Bureau of Safety and  Environmental Enforcement collaborate with their counterparts in  Canada and Mexico to share information, experience, and best  practices and provide advice and technical assistance. Interior’s  Office of International Affairs is responsible for providing coordination  and support as needed on cross-cutting international issues that  relate to more than one bureau, including energy cooperation. Department of Commerce (Commerce). Commerce’s International  Trade Administration works to remove barriers to U.S. energy  development and trade, notably U.S. exports of energy resources and  products to Mexico and Canada. The International Trade  Administration also works to open markets for energy products in  Mexico and Canada, and organizes trade missions. Department of State (State). As the lead agency for foreign policy  related to energy, State may play a part in most bilateral and trilateral  efforts. State’s role related to North American energy integration  includes that of a convening or facilitating authority. State’s Bureau of  Energy Resources typically leads these activities but also works  closely with State’s Bureau of Western Hemisphere Affairs. In  addition, as subject matter experts, State energy and economic  officers at embassies in Canada and Mexico report on energy policy  and market developments and play a role in communicating, and  helping to facilitate interactions, with other U.S. federal agencies and  their foreign counterparts. Further, the Secretary of State plays a key  role in energy infrastructure because of his or her responsibility in  issuing or denying presidential permits for liquid petroleum pipelines  that cross U.S. international borders. Department of Transportation (DOT). DOT plays a role in regulating  and enforcing safety standards for the transportation of energy  products, including crude oil and gas, ethanol, and natural gas.  According to DOT, its Pipeline and Hazardous Materials Safety  Administration is responsible for regulating and ensuring the safe and  secure movement of energy and other hazardous materials to industry  and consumers by all modes of transportation, including pipelines.  DOT officials work closely with their counterparts in Canada and  Mexico when developing draft regulations related to various energy  transportation issues, notably those that could affect cross-border  trade and safety. Federal Energy Regulatory Commission (FERC). As an  independent regulatory agency, FERC has authority to regulate the  transmission of electricity, natural gas, and oil between U.S. states  and plays a role in facilitating cross-border natural gas pipelines.  FERC has responsibility for issuing or denying presidential permit  applications for natural gas pipelines that cross the U.S. border with  Mexico or Canada. United States Agency for International Development (USAID).  As  part of its mission and in support of U.S. foreign policy, USAID leads  the U.S. government's international development through partnerships  and investments. According to USAID officials, USAID has played a  role in integrating the electricity markets of the United States and  Mexico by supporting the synchronization of regulations, enhancing  investment opportunities, and creating easier transmission  interconnections between the two countries.  As part of those efforts,  USAID facilitated technical exchanges between Mexican officials and  U.S. grid operators, universities, and other stakeholders. Department of the Treasury (Treasury). The role of Treasury’s  newly reorganized Office of Investment, Energy, and Infrastructure  includes developing a multipart approach that seeks to promote U.S.  exports of energy and energy infrastructure; attract investments in the  areas of energy and infrastructure; and catalyze private capital for the  financing of exports and investment projects. As part of that approach,  the office is in the process of formulating and negotiating energy  frameworks with foreign partners, including Mexico, according to  officials. U.S., Canadian, and  Mexican  Governments  Cooperate on Energy  Integration, although  Some Strategic  Efforts Have Made  Limited Progress Generally speaking, the United States cooperates on energy integration  with Canada and Mexico strategically at the presidential and ministry  levels and technically at the agency level, although progress on some  strategic efforts has been limited. At the presidential level, trilateral  cooperation has occurred mainly through the North American Leaders’  Summit, where the leaders of the three countries discuss economic  issues, including energy, according to U.S. government officials. The last  summit was in 2016, and as of April 2018 a future summit had not been  scheduled. At the ministry level, DOE and State have recently conducted  meetings with their Canadian and Mexican counterparts. However, efforts  to develop a North American Energy Strategy were placed on hold in late  2017 because of disagreement about its scope, although discussions  resumed in 2018, according DOE officials. At the agency level, U.S.  officials and their counterparts in Mexico and Canada cooperate  technically to address specific issues related to North American energy  integration. Figure 2 illustrates the three levels of cooperation on energy  integration between the U.S., Canadian, and Mexican governments. Presidential-Level  Cooperation U.S. cooperation with Canada and Mexico at the presidential level has  occurred primarily through the North American Leaders’ Summit,  according to U.S. government officials. During the summits, the leaders of  the three countries meet to discuss economic, social, and political  issues—including energy—on which the three countries can cooperate.  The summits have taken place every 1 or 2 years since 2005; the last  summit was held in June 2016, in Ottawa. State officials said that if past  patterns were followed, the next summit would be scheduled in 2018 and  hosted by the United States. However, a future summit had not been  scheduled as of April 2018. State officials told us that it is the  responsibility of the White House to decide whether a North American  Leaders’ Summit will take place and that they therefore would not  comment on whether a summit will be scheduled in 2018. The 2016 summit, which focused on energy, formalized the North  American Climate, Clean Energy, and Environment Partnership Action  Plan (Action Plan), which included pledges to cut greenhouse gas  emissions from the oil and gas sectors, boost the development of clean  power, and support the development of cross-border transmission lines.  However, according to State officials, implementation by each country is  voluntary, because the commitments in the Action Plan are not binding.  According to State officials, the National Security Council (NSC)—the  agency responsible for implementing the Action Plan—has indicated that  specific aspects of the plan are being reviewed to ensure alignment with  the current administration’s policy priorities. Officials from State, Interior,  and Energy—which are among the agencies responsible for developing  or implementing certain Action Plan commitments—said that, although  they have continued to work with Mexico and Canada on energy-related  issues, efforts to implement the plan had not been conducted since  January 2017. The United States has also engaged at the presidential level bilaterally  with Mexico and Canada to address issues that include energy  integration. In a February 2017 meeting—their first during the current  administration—the U.S. President and the Canadian Prime Minister  identified a number of areas in which the two countries agreed to  cooperate, including improving energy security. As of April 2018, the  current administration had not held a presidential meeting with Mexico.  The previous administration held bilateral presidential meetings with both  Mexico and Canada that resulted in the initiation of efforts to improve  energy integration. For example, meetings in 2010 and 2011 led to the  establishment of, respectively, the U.S.–Mexico High-Level Regulatory  Cooperation Council and the U.S.–Canada Regulatory Cooperation  Council to help align the countries’ regulatory principles. Ministry-Level Cooperation The U.S. Secretaries of Energy and State cooperate with their Canadian  and Mexican counterparts (i.e., ministers) through meetings focused to  varying extents on energy, according to DOE and State officials. DOE  cooperates with Natural Resources Canada and Mexico’s Secretariat of  Energy through various bilateral and trilateral meetings that focus on  energy collaboration and integration. State holds bilateral and trilateral  ministry-level meetings with its Canadian and Mexican counterparts,  where discussions may include energy cooperation. For example, in  February 2018, State attended the North American Foreign Ministers’  Meeting in Mexico, where energy and the renegotiation of NAFTA were  topics of discussion. State also co-chairs, with Commerce and the United  States Trade Representative, the High Level Economic Dialogue with  Mexico. However, according to Commerce officials, High Level Economic  Dialogue meetings have not been held since 2016. According to DOE officials, ministry-level meetings result in important  exchanges of information and collaborative efforts. DOE officials indicated  that ministry-level cooperation on energy integration with Mexico and  Canada has been consistent. For example, soon after his confirmation in  March 2017, the U.S. Secretary of Energy visited Mexico to initiate talks  on cooperation, where he made statements recognizing Mexico’s  importance both as an economic partner and, along with Canada, in  promoting regional energy security. During this visit, the Secretary  announced a proposal to pursue a North American energy strategy that  would promote comprehensive energy and economic security for the  three countries. Characterizing its development as a top priority, the  Secretary stated that the North American energy strategy was meant to  establish a robust trilateral work plan to guide trilateral cooperation on  shared energy interests, such as developing North America’s untapped  energy resources, diversifying energy supplies, and supporting the growth  of each country’s energy industries. Canadian and Mexican energy  officials whom we interviewed expressed agreement with the proposal to  develop a North American energy strategy and indicated that a regional  energy strategy would further facilitate energy integration efforts. DOE officials stated that DOE, Natural Resources Canada, and Mexico’s  Secretariat of Energy held a ministry-level meeting in November 2017— the North American Energy Ministerial—in part to discuss the proposed  trilateral energy strategy. However, efforts to formalize the strategy were  subsequently suspended because of a lack of agreement on its scope,  according to U.S., Canadian, and Mexican officials. Instead, the three  ministries released a joint summary outlining their discussions on efforts  to address regional energy security. According to DOE officials, the  ministries resumed discussions of the strategy in 2018 and are continuing  to work on developing either a joint energy strategy or a separate  document that would accomplish the objective of such a strategy.  However, Canadian officials told us that any expected document on  cooperation may not be comprehensive enough to be labeled a strategy.  Officials of DOE, Natural Resources Canada, and Mexican Secretariat of  Energy said that, despite not having a formal North American energy  strategy, the three countries maintain a cooperative ministry-level  relationship. Agency-Level Cooperation U.S. agency staff and their counterparts in Mexico and Canada cooperate  to address specific, technical issues related to North American energy  integration, according to U.S., Canadian, and Mexican officials. According  to DOE officials, cooperation may be trilateral or bilateral and may be led  by various U.S. agencies with the required technical expertise. For  example, according to DOE staff, they are working on a technical project  with Canada and Mexico to improve energy import and export data that  all three countries can use. According to DOE officials, involvement in  agency-level technical cooperation can occur apart from higher-level  strategic or political cooperation and often addresses ongoing issues  essential to the industry’s functioning, such as transborder industry  inspections and information sharing. According to Interior officials,  involvement in agency-level technical cooperation almost always occurs  apart from higher-level strategic or political cooperation. Some U.S. agencies’ technical cooperation with their Mexican  counterparts is more recent than their cooperation with their Canadian  counterparts, according to U.S. agency officials. Officials from Interior,  one of the agencies involved in providing technical assistance to Mexico,  explained that since 2013, when Mexico’s energy reform began allowing  private investment in its oil, gas, and electricity sectors, Mexico has  sought to establish regulatory frameworks and oversight mechanisms  comparable to those in the United States and Canada. For example,  according to Mexican officials, Interior assisted Mexico’s regulatory agencies in developing oversight regulations for their oil and gas sectors,  while USAID helped Mexico’s Secretariat of Energy to plan future  electricity infrastructure development and meet its clean energy goals. In  contrast, U.S. agencies’ technical cooperation with Canadian agencies  was already well established, according to some U.S. agency officials. U.S. Agencies  Reported Numerous  Activities Related to  North American  Energy Integration The eight federal agencies that we identified as having a role in North  American energy integration—DOE, Interior, Commerce, State, DOT,  FERC, USAID, and Treasury—reported involvement in 81 activities  related to facilitating energy integration from 2014 through 2017. While  some of these activities had multiple purposes or goals, the activities  generally comprised five types: technical discussions and assistance,  regulatory cooperation, international agreements and other instruments,  trade promotion, and research and development. In addition, agencies  reported having undertaken other activities, such as internal policy  reviews. Table 1 shows the types and numbers of activities that each  agency reported. (See app. III for a full listing of these agencies and  descriptions of their activities). Technical Discussions and  Assistance Several of the U.S. agencies we surveyed reported having participated in  technical discussions that provided a forum for exchanging information  and best practices with their Canadian and Mexican counterparts. Four  agencies—DOE, Interior, State, and USAID—identified a total of 33  technical forums and assistance activities, such as consultative  mechanisms, technical committees, and assistance programs. For  example: DOE. Since 2015, DOE has participated with Natural Resources  Canada and Mexico’s Secretariat of Energy in a trilateral working  group focused on carbon capture, utilization, and storage (CCUS)  initiatives. According to DOE officials, the group meets twice per year  to exchange information about each country’s CCUS programs. DOE  officials reported that the group’s primary focus has included carbon- capture technologies, with an emphasis on industrial CCUS, CCUS on  power systems and carbon dioxide utilization in enhanced oil  recovery, and consistent and harmonized messaging regarding  CCUS. DOE also engages in bilateral nuclear security cooperation  with Mexico, supporting two to three workshops with Mexico annually  on topics such as nuclear security culture and cybersecurity for  nuclear facilities. Interior. Since Mexico’s energy reforms, Interior has held discussions  with Mexican agencies about environmental and other matters related  to offshore oil and gas extraction. Interior also participates in a  number of international multilateral forums, including the International  Regulators Forum, the International Offshore Petroleum  Environmental Regulators and the International Upstream Forum,  which bring together government regulators from multiple countries,  including Mexico and Canada. State. State has provided technical assistance to Mexico through the  Power Sector Program, which supplies guidance and training on a  number of regulatory frameworks, market processes, and software  tools to support Mexico’s transition to a competitive power market. For  example, the program has supported the development of a  competitive wholesale power market through technical support to  Mexico’s Energy Regulatory Commission, the National Center for  Energy Control, and Mexico’s Secretariat of Energy. USAID. According to USAID officials, the agency’s Mexico mission  energy program has provided technical assistance to Mexico's  Secretariat of Energy, its National Energy Control Center, its Energy  Regulatory Commission, and the Federal Electricity Commission.  USAID officials reported that this assistance focused on a wide range  of energy-integration activities, including the design and  implementation of four energy auctions, as well as the development of  a public–private contract mechanism to tap private sector resources  for energy-transmission construction. As part of this program, USAID  also designed, and is currently managing, an activity to reduce social  impacts associated with energy-infrastructure projects. USAID also  provided technical assistance on grid integration and the planning and  development of infrastructure, according to officials. Regulatory Cooperation U.S. agencies engage in regulatory cooperation to support coordination in  the various energy sectors and to try to identify gaps, best practices, and  inconsistencies among U.S., Canadian, and Mexican regulations. Four of  the agencies we surveyed—DOE, DOT, FERC, and USAID—reported 13   regulatory cooperation efforts, including discussions between regulators  and trilateral and bilateral working groups focused on the various energy  sectors and the development of reliability standards. For example: DOE. In 2011, the U.S. President and Canadian Prime Minister  created the Canada–United States Regulatory Cooperation Council to  facilitate closer cooperation between the countries to develop more  effective approaches to regulation. As part of that effort, DOE and  Natural Resources Canada have cooperated on two joint energy  initiatives, according to DOE officials. First, DOE and Natural  Resources Canada have cooperated on energy efficiency standards,  with the goal of aligning new and updated standards and test methods  for energy-using equipment through enhanced information sharing.  Second, DOE and Natural Resources Canada have cooperated on  developing natural gas–transportation standards. According to DOE  officials, DOE and Natural Resources Canada will continue to build on  previous work, facilitate the development of common codes and  standards by industry organizations, and explore opportunities for  alignment among stakeholders. DOT. DOT officials reported having worked with Canadian and  Mexican agencies to collaborate on regulations and standards related  to various modes of transportation. For example, DOT has engaged in  the North American Pipeline Safety Regulator Initiative. According to  DOT’s survey response, the goal of this initiative is to share  perspectives, experience, and information on regulatory activities as  well as effective strategies for improving pipeline safety for each  participating agency and for cross-border energy pipelines. According  to officials, DOT also collaborates with Transport Canada on certain  facility investigations. FERC. FERC officials reported that FERC has represented the U.S.  government at meetings of the Trilateral Electric Reliability Working  Group, where U.S., Canadian, and Mexican regulators coordinate on  electric grid reliability issues. USAID. According to USAID officials, under a mechanism financed  and managed by USAID, the National Association of Regulatory Utility  Commissioners provided technical assistance to the Mexican Energy  Regulatory Commission on energy-integration topics, such as  auctions, reducing barriers to investment and competitive market  restructuring. International Agreements  and Other Instruments According to agency officials the U.S. government and individual U.S.  agencies have entered into various formal agreements to engage Canada  and Mexico on energy integration. Three of the agencies we surveyed— DOE, Interior, and State—identified 11 international agreements and  other instruments related to North American energy integration, including  several MOUs with Canadian and Mexican counterpart agencies. According to officials, such agreements often include a framework under  which bilateral and trilateral cooperation can proceed and can serve to  highlight areas of priority or focus for the countries. According to one  official, the MOUs are based on need and create a mechanism for  technical experts to collaborate on specific topics or action items. Other  officials noted that periodic renewals of MOUs can provide opportunities  to decide whether agreed-on activities have been completed, are  obsolete and should be discontinued, or should be continued. The  following are examples of the agencies’ reported activities: DOE. In 2014, DOE, Natural Resources Canada, and the Mexican  Secretariat of Energy signed an MOU to further collaboration on data  and information sharing and to create a trilateral framework for  sharing publicly available information. The MOU outlined several  areas of cooperation, including systematic comparison of energy  export and import flow data; sharing of publicly available geospatial  information related to utility infrastructure; exchange of views and  projections of cross-border flows of natural gas, electricity, crude oil,  and refined products; and development of a cross-reference for the  three countries’ energy sector terminology. According to DOE officials,  as a result of this MOU, an integrated trilateral energy information  website was launched in November 2017. The website consolidates  energy-related data, integrated maps, analyses, and references from  the three countries in English, French, and Spanish. Interior. Interior officials reported that since 2014, Interior has signed  several binding and nonbinding instruments, including two MOUs, to  facilitate cooperation with Mexico on energy and environmental  matters. In 2016, Interior signed two MOUs with its counterparts in  Mexico to facilitate bilateral cooperation on energy and environmental  cooperation. Moreover, Interior helped to negotiate the Agreement  between the United States and Mexico Concerning Transboundary  Hydrocarbon Reservoirs in the Gulf of Mexico, which entered into  force in 2014. According to Interior officials, the department, in  coordination with State, implements the agreement, which addresses  the development of oil and gas reservoirs that span the international  maritime boundary between the two countries in the Gulf of Mexico. State. State has played a role in finalizing a United States–Mexico  agreement on peaceful nuclear cooperation, according to State  officials. The officials said that the U.S. and Mexican governments  have agreed on the final text of the agreement, which is awaiting  approval by the countries’ legislatures. Trade Promotion Commerce leads U.S. trade promotion efforts related to energy  integration. In response to our survey, Commerce officials reported  having engaged in at least 10 trade promotion activities and Treasury  officials reported one additional effort. Commerce. Commerce activities include trade missions to Canada  and Mexico, seminar and event presentations, and buyers’ programs.  For example, Commerce officials have organized export promotion  activities targeting the Canadian and Mexican markets and led  delegations of Canadian and Mexican executives to attend major U.S.  trade shows in the energy sector to facilitate business partnerships  with U.S. firms through its International Buyers Program. According to  Commerce officials, Canadian delegations typically consist of 15 to 20  executives and Mexican delegations typically consist of 25 to 100  executives. In addition, Commerce officials reported that the  department’s Foreign Commercial Service in Canada has organized  and staged annual country briefings and interactions with trade  associations from multiple countries at two lead events—the Global  Petroleum Show and the Atlantic Petroleum Show. Further, according  to Commerce officials, the International Trade Administration  conducted two energy-related trade missions to Mexico in 2017—a  civil nuclear trade mission and a renewable energy trade mission. Treasury. Treasury’s Office of Investment, Infrastructure, and Energy  has formulated and negotiated a framework for energy activities with  Mexico’s Secretariat of Energy and the National Center for Energy  Control. This energy framework is designed to achieve a high degree  of energy integration, growth, and security through initiatives in the  energy and infrastructure areas, to be jointly pursued by the United  States and the host country partner, according to a Treasury official.  The effort will involve Treasury’s Office of Technical Assistance and is  envisioned to include activities such as assisting the Mexican  government to realize more value and impact with various  procurement projects related to the energy value chains. Research and  Development U.S. agency officials and their foreign counterparts cited research and  development activities as an important aspect of cooperation to facilitate  North American energy integration. Three of the agencies we surveyed— DOE, Interior, and DOT—reported having engaged in seven scientific  research and development activities. Examples include the following: DOE. DOE officials reported that the department plans to explore  areas of mutual interest for trilateral cooperation in the area of civil  nuclear research and development with Natural Resources Canada  and Mexico’s Secretariat of Energy. In addition, DOE is engaged  bilaterally with Canada in research and development on topics such  as nuclear reactor technologies, including small modular reactors. Interior. In 2014, Interior’s U.S. Geological Survey issued a report on  the assessment of unconventional oil and gas resources in northeast  Mexico. In addition, Interior officials reported that the U.S.  Geological Survey has collaborated with Canada on scientific  research to better understand the geological framework from eastern  Arctic Alaska to the Canadian Arctic Islands. DOT. DOT has engaged with its Canadian counterpart in research  and development activities focused on alternative fuels. For example,  DOT officials reported that its Federal Aviation Administration Center  of Excellence for Alternative Jet Fuels and Environment and Canada’s  Transport Canada are undertaking cooperative research and  development that primarily focuses on the development of sustainable  alternative jet fuels and technical research on aviation noise and  emissions mitigation. Other Efforts Three agencies—DOE, Commerce, and State—reported engaging in a  total of six other efforts related to North American energy integration. For  example: DOE. A Joint U.S.–Canada Electric Grid Security and Resilience  Strategy was released in December 2016. DOE and Natural  Resources Canada developed this strategy and its accompanying  plans to improve the grid security of the countries’ shared electric  system. The three goals of the strategy are to protect today’s electric  grid and enhance preparedness, to manage contingencies and  enhance response and recovery efforts, and to build a more secure  and resilient future electric grid. According to DOE officials, DOE is  working to implement numerous items from an accompanying action  plan over multiple years. Commerce and DOE. Commerce and DOE lead the United States– Mexico Energy Business Council with their Mexican counterparts.  According to Commerce officials, the council is a unique effort to  gather consensus recommendations from the council’s private sector  representatives on ways to strengthen the economic and commercial  ties between energy industries in the two countries. The council has  met twice a year since its creation in 2016 and has developed a set of  recommendations for consideration by U.S. and Mexican government  officials. According to DOE officials, these recommendations were  discussed at the Council meeting on June 15, 2018. State. State officials reported that the department is engaged in an  ongoing effort to streamline its review process for presidential permit  applications for cross-border energy infrastructure. U.S. Agencies  Reported  Coordinating through  High-Level  Interagency Meetings  and Working-Level  Efforts Agency officials reported coordinating their energy integration–related  activities through a number of coordination efforts and mechanisms. First,  an interagency working group at NSC represents a high-level interagency  coordination effort. In addition, staff preparations for high-profile bilateral  and trilateral summits present further opportunities for high-level  interagency coordination. Moreover, agency staff engage in working-level  efforts such as serving on formal coordinating bodies that bring together  stakeholders in the energy sector; soliciting input from, or providing input  to, other agencies; and participating in direct coordination activities at the  program level. Coordination at National  Security Council  Interagency Meetings According to participating agency officials, NSC created a working group  in May 2017 to facilitate formal interagency coordination on North  American energy integration. Officials reported that the working group  comprises representatives of NSC, DOE, Interior, Commerce, and State  and has met five times since it was formed, most recently in November  2017. According to officials from participating agencies, the group’s  primary purpose is to bring together the key agencies that have a stake in  North American energy integration and to receive guidance and input  from NSC and other agencies on related activities. Consequently, the  group also serves advisory, information-sharing, and coordination  purposes. We spoke with agency officials who participate in the working group,  asking in particular about their experiences in several aspects that we  have previously identified as key to interagency collaboration—identifying  outcomes, establishing leadership, involving relevant participants and  clarifying their roles and responsibilities, and obtaining necessary  resources. Some officials noted the value of the group’s meetings. The  following summarizes the officials’ comments. Outcomes. Officials of agencies participating in the NSC-led working  group reported that it served primarily as a mechanism to promote  coordination and to bring awareness of agencies’ bilateral and  trilateral engagement with Canada and Mexico to the NSC and to the  other agencies participating in the group. Agency officials identified  this high-level, in-person coordination as valuable and as one of the  group’s primary outcomes. For example, according to the officials,  agencies contributed to, and developed, a matrix of cross-border  energy activities with Mexico and Canada, which helps to make the  administration and other agencies aware of each other’s efforts and to  see the bigger picture of those efforts. Agencies also developed a  coordinated set of talking points on energy integration. One official  noted that, because staff from the various participating agencies often  work with the same Canadian and Mexican counterparts, coordinating  the talking points is useful for ensuring that messages are presented  in a consistent and substantive way. Leadership. Participating agency officials indicated that NSC has a  clear leadership role in the interagency group and is responsible for  calling the meetings, setting the agenda, and assigning tasks to  participants. Officials noted that NSC appropriately assigned tasks  based on agencies’ particular expertise and capabilities. Officials also  reported being generally satisfied with NSC’s leadership and noted  that this group has created a needed space for high-level interagency  coordination. Roles and responsibilities. Agency officials did not report any  confusion about their roles and responsibilities in the NSC-led working  group. According to agency officials, the agencies generally served in  a primarily informational and advisory role, sharing information with  each other about their respective agencies and providing input both  during and outside the group’s meetings. Participating agency officials  are responsible for providing updates on relevant energy-related  activities at each meeting. Other assigned tasks include drafting and  clearing coordination documents, talking points, and policy papers. Participants. According to participating agency officials, the agencies  invited to participate in the NSC-led working group—DOE, Interior,  Commerce, and State—were those with the most relevant roles  related to North American energy integration. Officials noted that they  communicated with each other regularly to follow up on issues raised  at a meeting or as a part of normal agency coordination. Resources. Participating agency officials generally reported that,  because the NSC working group’s meetings aligned with their regular  and ongoing responsibilities, additional resources were not required. Coordination in  Connection with Bilateral  and Trilateral Summits Bilateral and trilateral summits can be important methods of collaboration  with Mexico and Canada and also serve as episodic or event-related  mechanisms for U.S. interagency coordination on energy integration– related activities. According to U.S. agency officials we interviewed,  multiple agencies have provided input and advice in preparation for  summits and meetings such as the North American Leaders’ Summit, the  North American Energy Ministerial, the North American Foreign Ministers’  Meeting, and the U.S.–Mexico High Level Economic Dialogue. According  to officials, broadly focused ministerial meetings such as these have  included participation from multiple agencies. For example, the U.S.– Mexico High Level Economic Dialogue—a whole-of-government effort  that included energy as one its priorities—led to the development of the  U.S.–Mexico Energy Business Council, which is cochaired by DOE,  Commerce, Mexico’s Secretariat of Energy, and Mexico’s Secretariat of  Economy. Agency officials we interviewed stated that they also  coordinate on follow-up efforts after these meetings. For example, DOE  and Commerce officials said that they conduct ongoing coordination on  council business, holding weekly calls with each other and their Mexican  counterparts to coordinate the council’s implementation. In addition,  Commerce officials told us that they report on the council’s progress to  other agencies at the NSC working group. Other Interagency  Coordination Efforts Officials of multiple agencies we surveyed reported other interagency  coordination efforts related to North American energy integration. These  efforts included participating in formal coordinating bodies, soliciting and  providing input, collaborating directly with other agencies’ staff, and  collaborating at U.S. embassies. Participating in formal coordinating bodies. Multiple U.S. agencies  (e.g., DOT, FERC, and the Department of Homeland Security)  participate in the Electricity Sub-Sector Coordinating Council, the  Energy Sector Government Coordinating Council, and the Oil and  Natural Gas Sector Coordinating Council, according to DOE officials.  The Electricity Sub-Sector Coordinating Council’s charter states that  the council’s purpose includes coordinating activities and initiatives  designed to improve the reliability and resilience of the electricity  subsector and serving as the principal liaison between the council’s  membership and the Energy Sector Government Coordinating  Council. The Energy Sector Government Coordinating Council—the  government counterpart of the Electricity Sub-Sector Coordinating  Council and the Oil and Natural Gas Sector Coordinating Council — enables interagency and cross-jurisdictional coordination on planning,  implementing, and executing resilience programs for the nation’s  critical energy infrastructure. Agency officials reported that the Oil and  Natural Gas Sector Coordinating Council serves as the principal  liaison between the U.S government and representatives for oil and  natural gas companies and major trade associations on matters  related to oil and natural gas physical and cyber security. Soliciting and providing input. Multiple agencies reported soliciting  or providing input regarding certain energy integration efforts. For  example, multiple agencies contributed to the development of the U.S.  Quadrennial Energy Review, which explicitly discusses North  American energy integration and how to better assess and promote  opportunities for better coordination between U.S., Canadian, and  Mexican energy systems. In addition, DOE, State, and FERC officials  reported coordinating with each other and with the Department of  Defense to obtain required concurrence on presidential permit  applications. For example, when State was reviewing the presidential  permit for the Keystone XL pipeline, State asked seven other  agencies to provide their insights and opinions, according to State  officials. Collaborating directly with other agencies’ staff. Multiple agency  officials reported working with other agencies as needed. For  example, Treasury officials reported working with staff from State,  Interior, and DOE to formulate and negotiate a framework of energy-  and infrastructure-related initiatives with Mexico. Agency officials also  reported that agency staff responsible for various energy integration  activities have engaged in a number of informal activities—including  periodic meetings, telephone calls, and e-mails—to directly coordinate  these efforts with related federal and industry efforts. Collaboration at U.S. embassies. Agency officials we interviewed at  the U.S. embassies in Canada and Mexico stated that they have  routinely collaborated and coordinated on energy integration–related  activities with staff of other relevant U.S. agencies who were also  stationed at the embassies or who visited the embassies from the  United States. U.S. Agencies Obtain  Feedback and Input  from Private Sector  and Civil Society  Stakeholders through  Both Formal and  Informal Mechanisms U.S. agencies reportedly obtain feedback and input from private sector  and civil society stakeholders through a variety of formal and informal  mechanisms. To gather this input, agencies use formalized mechanisms  such as requests for public comment through the Federal Register, public  hearings, public-private bodies, and joint stakeholder events. Civil society  and private industries also employ informal methods to communicate their  positions to agencies and individual agency staff. Formal Mechanisms U.S. agencies solicit and consider private sector and civil society input  related to North American energy integration through formal mechanisms  that include provisions for public comments in response to Federal  Register notices; open hearings, where public comment is allowed; and  public–private input entities. The Administrative Procedure Act of 1946  generally requires agencies to publish a notice of proposed rulemaking  and to provide an opportunity for public comment through the Federal  Register. The private sector and civil society use this process to formally  issue public statements on various topics related to energy integration.  For example, with regard to the renegotiation of NAFTA, private sector  entities and environmental groups have sent letters to the U.S. Trade  Representative expressing their respective concerns about negotiations  related to the energy sector. Agencies can also hold public hearings  where stakeholders can make statements and submit data. According to  the Office of the Federal Register, some agencies operate under laws  that require rulemaking hearings, while others may hold public meetings  to obtain public input or to help affected groups better understand the  proposed rule. Moreover, Office of the Federal Register documents state  that many agencies are beginning to use webcasts and interactive  Internet sessions to broaden the audience attending public meetings.  Further, under the National Environmental Policy Act, a process exists  through which stakeholders can provide input during the consideration of  environmental effects of proposed projects for which the agency has  prepared an environmental impact statement. Additionally, agencies may use formal public–private bodies and  collaborations that gather private sector and civil society input on energy  integration issues. For example, the private sector members of the U.S.– Mexico Energy Business Council are able to provide recommendations to  U.S. and Mexican agencies. The council’s stated objectives are to (1)  bring together representatives of the respective energy industries of the  United States and Mexico to discuss issues of mutual interest, particularly  ways to strengthen the economic and commercial ties between energy  industries in the two countries, and (2) communicate actionable,  nonbinding recommendations to the U.S. and Mexican governments.  According to officials, the council comprises 20 private sector  representatives—10 from the United States and 10 from Mexico—and is  co-chaired by DOE, Commerce, and the Mexican ministries of economy  and energy. Officials reported that the council is to meet twice each year  to provide consensus recommendations to both governments on ways to  improve the safety and efficiency of energy-related activities, improve the  commercial environment and investment climate, and enhance collective  energy security. Civil society representatives also participate in some formal advisory and  information-gathering collaborations. For example, in 2015, the United  States and Mexico held an energy education roundtable that brought  together key stakeholders to explore possible areas for cooperation,  including sharing best practices in energy education, developing  vocational and polytechnic-level energy skills training programs,  examining joint industry certifications, and promoting greater  communication among key players in both countries. In another example,  the 2016 North American Leaders’ Summit announced the first annual  Stakeholder Dialogue on North American Competitiveness, with a goal of  providing private sector, local government, labor, and civil society  representatives an opportunity to contribute ideas on increasing North  American competitiveness. In response, the Wilson Center, a think tank,  in coordination with the three North American governments, assembled a  group of more than 40 representatives of entities engaged in North  American issues. The results of this dialogue included recommendations  on energy integration–related issues, such as energy infrastructure and  the U.S. presidential permitting process. Civil society stakeholders also  provide expertise by participating in activities such as the U.S.–Canada  Northern Oil and Gas Research Forum. According to agency officials, this  forum has typically been held every 2 years at locations in the United  States and Canada since its founding in 2008 by Interior’s Bureau of  Ocean Energy Management and Canada’s Indigenous and Northern  Affairs Canada. The forum provides an opportunity for decision-makers,  regulators, industry members, nongovernmental organizations, and  scientists to discuss current scientific research and future directions for  northern oil and gas activities, according to Interior officials. Informal Mechanisms Agencies receive input on North American energy integration from the  private sector and civil society through informal mechanisms such as  letters, emails, phone calls, interactions at various related events,  personal connections, and reports. According to private sector and civil  society representatives we interviewed, open letters (e.g., letters to the  editor) and letters sent to agencies allow such groups to describe their  perspectives on policy choices and advocate for preferred solutions. One  civil society stakeholder noted that think tanks and trade association  reports and forums also play an important role in allowing civil society and  industry to communicate their perspectives and positions to Congress  and federal agencies. Another civil society stakeholder reported having  directly contacted State officials responsible for issuing presidential  permits for the Keystone XL pipeline. Industry association representatives  noted that they also have opportunities for informal meetings with agency  officials at various events or through phone calls. During our discussions  with civil society and private sector organizations, we heard that informal  feedback or input mechanisms between stakeholders and agencies were  available and functional. U.S., Canadian, and  Mexican Officials  Suggested Steps to  Further Energy  Integration but  Expressed General  Satisfaction with  Intergovernmental  Cooperation Some of the officials we interviewed from all three countries suggested  several new or additional steps that the U.S. government could take, in  cooperation with Canada and Mexico, to address factors that might  impede energy integration and to facilitate a more integrated and secure  energy market in North America. Suggestions mentioned by officials in all  three countries included aligning energy-related regulations, streamlining  the U.S. presidential permitting process, facilitating cross-border  transportation of equipment and workers, and involving states and  provinces in energy integration efforts. However, U.S., Canadian, and  Mexican officials we interviewed expressed general satisfaction with  bilateral and trilateral strategic and technical cooperation regarding efforts  to facilitate North American energy integration. U.S., Canadian, and  Mexican Officials  Suggested Steps to  Enhance North American  Energy Integration Some U.S., Canadian, and Mexican officials we interviewed suggested  several new or additional steps that the U.S. government, in cooperation  with Canada and Mexico, could take to address several factors that may  impede energy integration and to facilitate a more integrated and secure  energy market in North America. According to some officials, factors that  may impede energy integration include duplicative or inconsistent energy  regulations, inconsistent cross-border permitting processes, difficulties in  cross-border movement of equipment and workers, and the need to  involve states and provinces in transborder issues. The text box shows  steps suggested by at least one official in all three countries to address  these factors. Steps Suggested by U.S., Canadian, and Mexican Officials to Further North American Energy Integration Align energy-related regulations. To reduce the burden on energy companies conducting transborder activities, align  regulations, codes, and standards in appropriate sectors in all three countries, to the extent possible. Streamline the U.S. presidential permitting process. To assure that requirements are consistently implemented, by having a  set process for obtaining presidential permits for transborder energy infrastructure projects. Facilitate cross-border movement of equipment and workers. To avoid delays in business and trade transactions,  implement processes to facilitate movement of energy company personnel and equipment across borders. Involve states and provinces in energy integration efforts. Given states’ and provinces’ control over local regulations,  resources, and markets, increase their involvement in efforts to advance North American energy integration. U.S., Canadian, and Mexican officials suggested that the three countries  should continue working together to eliminate unnecessary differences in  energy sector regulations. Some officials indicated that harmonizing,  when appropriate, or establishing comparable regulations, codes, and  standards in all three countries could reduce the burden on energy  companies conducting transborder activities and enhance regulatory  cooperation. According to some government officials and private sector  representatives we interviewed, the need to align U.S., Canadian, and  Mexican energy-related regulations is generally recognized by industry  stakeholders as a factor that could be addressed to further facilitate  regional energy integration. Several government initiatives have been undertaken to increase  alignment or reduce differences among the countries’ regulatory  frameworks, such as the creation of the U.S.–Canada Regulatory  Cooperation Council and the U.S.–Mexico High-Level Regulatory  Cooperation Council. Nevertheless, officials in the three countries  identified a need to expand efforts in certain areas. For example,  according to one Canadian official, because of the large number of  energy regulations, much remains to be done to align them. According to  an industry association representative in Mexico, eliminating duplicative  regulations is very challenging and efforts to align them have sometimes  not been sufficient. For example, he explained that one company—a  member of his association—embarking on a transborder project reported  having to conduct extensive work to meet Mexican regulations, despite an  earlier effort by Mexico’s Agency for Safety, Energy, and Environment  and Interior’s Bureau of Safety and Environmental Enforcement to  develop similar regulations for safety and environmental management  systems. Streamline the U.S.  Presidential Permitting Process Some U.S., Canadian, and Mexican government officials suggested that  the U.S. government should streamline its presidential permitting process  to ensure that requirements for obtaining permits for transborder energy  infrastructure projects are consistently implemented. U.S. presidential  permits are required for the construction, connection, operation, and  maintenance of certain facilities that cross the United States’ borders with  Canada and Mexico. Issuance or denial of permits is delegated to the  U.S. Secretary of State for pipelines that transport liquids such as  petroleum and petroleum products, to FERC for natural gas pipelines,  and to DOE for electricity transmission lines. Some officials in Canada and Mexico explained that industry sector  representatives have expressed concerns about the process for obtaining  the permits. Members of a Canadian energy association expressed  concern that requirements for the presidential permits have not been  implemented consistently or in a timely manner. According to a  representative from the association, in some cases presidential permits  have been granted in a relatively short period of time, while in other cases  the process has taken over 2 years. For example, members of the  Canadian energy association said that the company developing the  Keystone XL pipeline spent a significant amount of money and time trying  to navigate the permit process before receiving permits in March 2017. A  representative from a Mexican energy association told us that, whereas  Mexico’s energy reforms were aimed at increasing efficiency to attract  investment, the processing time for U.S. presidential permits—up to 2  years, according to the representative—can both interfere with the  Mexican government’s efforts and hinder more integration between the  two countries. Some U.S. government officials acknowledged a need for streamlining  the presidential permitting process. State and DOE officials informed us  that they had initiated internal reviews to streamline the process but that  as of April 2018, these reviews were ongoing and a completion date had  not been set. Facilitate Cross-Border  Movement of Equipment and  Workers U.S., Canadian, and Mexican government officials suggested  implementing processes to facilitate the movement of energy company  personnel and equipment across borders to reduce delays in business  and trade transactions. In a discussion among stakeholders after the  2016 North American Leaders’ Summit, participants agreed that there is a  significant need to increase the efficiency with which cargo and  individuals cross North America’s land borders and that border efficiency and the competitiveness of North America as a region are strongly  linked. In addition, a U.S. official working with small and midsize U.S.  energy companies with operations in the United States and Canada told  us that moving equipment and personnel across the border can be  challenging. The official explained that equipment has sometimes crossed  the border with minimal delays but at other times has been detained for  hours or days. Energy associations from the United States, Canada, and Mexico have  advocated jointly for NAFTA negotiations to include provisions that would  facilitate the movement of equipment, such as drilling rigs and vessels,  and personnel—including for emergency response—across the U.S.– Canadian and U.S.–Mexican borders. These associations have also  advocated for a NAFTA visa program to provide access for skilled energy  professionals. Involve States and Provinces  in Energy Integration Efforts U.S., Canadian, and Mexican government officials suggested increasing  the involvement of states and provinces in energy integration efforts,  given their control over local regulations, resources, and markets. The  roles played by states and provinces in the countries’ energy sectors vary  by country. Canada’s system, where provinces have control over natural  resources and specific related procedures such as approval process for  local permits, is less centralized than the United States’ system,  according to a Canadian government official. In contrast, Mexico’s system  is more centralized than the United States’, with Mexican states’ having  less control over natural resources, according to a Mexican government  official. In addition, the official stated that, while discussion of North  American energy integration often focuses on the role of national  governments, the inclusion of U.S. and Mexican states and Canadian  provinces—especially those on the border—in discussions of regional  energy integration is essential. Moreover, the electricity sector is particularly influenced by the  participation of states and provinces because of the sector’s dependence  on regional markets and interconnected infrastructure, according to an  electricity sector representative. For example, the representative stated  that the design of Canada’s electrical transmission system sometimes  facilitates the transport of electricity more easily from north to south, to  the United States, than from east to west, across Canadian provinces. As  a result, U.S. markets are an important outlet for Canadian generators in  eastern Canada and the Pacific Northwest. Currently, little cross-border electricity trade takes place between the  United States and Mexico, other than the importation of electricity from a  few power plants in Baja California, Mexico, to supply demand in the San  Diego area. A Mexican government official stated that the limited level  of electricity integration between the United States and Mexico is due in  part to the role of the U.S. states in regulating the electricity industry,  since their regulations and plans for working with Mexico may differ.  According to the official, it is therefore essential to include the states in  any discussions about promoting integration of the U.S. and Mexican  electricity sectors. According to USAID officials, a public–private  contractual mechanism developed by USAID to tap private sector  resources for constructing electricity transmission will be used for the first  time to build a project to connect the Mexican state of Baja California with  the rest of the Mexican grid, which had previously been isolated from Baja  California and the market in the U.S. state of California. According to  these officials, the transmission line could also connect the Mexican state  of Sonora with the U.S. state of Arizona. U.S., Canadian, and  Mexican Officials’ Views  on Bilateral and Trilateral  Cooperation U.S., Canadian, and Mexican energy officials we interviewed indicated  that they were generally satisfied with bilateral and trilateral strategic and  technical cooperation to facilitate North American energy integration.  According to U.S. officials, energy is an area in which the interests of the  United States, Canada, and Mexico align and cooperation has been well  established. U.S. officials also stated that trilateral cooperation works well  at both the strategic and technical levels and that regional cooperation  enhances energy security for all three countries. Canadian officials stated  that cooperation with the United States at the strategic level has often  served as a springboard for purposeful action to address shared priorities.  Mexican officials stated that there has been extensive communication  with the United States on energy issues, in particular at the ministerial  and agency levels, which has led to activities to improve integration. Some officials also identified changes in the overall foreign policy context  that could affect cooperation in the future. Some Canadian and Mexican government officials we interviewed  expressed concern that the renegotiation of NAFTA and the  administration’s decision to withdraw from the Paris Agreement could  create uncertainty among investors in the energy sector. U.S.,  Canadian, and Mexican officials , as well as private sector  representatives we interviewed, stated that they viewed NAFTA  renegotiation as an opportunity to improve the agreement and that  any changes to NAFTA should “do no harm” to free-trade  arrangements in energy commodities. However, a Canadian official  told us industry representatives had expressed concern that the issue  of energy could be used as a pawn in NAFTA renegotiations, resulting  in harm to the sector. Furthermore, some Mexican officials stated that  they were particularly concerned that any change in Mexico’s status  as a U.S. free-trade partner could complicate flows of natural gas from  the United States, which has assumed a more important role as an  energy source for Mexico. Some Canadian and Mexican officials we interviewed expressed  concern that the June 2017 announcement of the United States’  intention to withdrawal from the Paris Agreement could create a  perception of an uneven playing field and uncertainty among energy  sector investors, given Canada’s and Mexico’s continued participation  in the accord. However, the officials noted that the commitment of  some U.S. states, cities, and private sector companies to adhere to  the accord’s tenets may minimize any negative impacts of the U.S.  government’s withdrawal on their countries’ energy sectors. State and  DOE officials we interviewed said they did not expect the U.S.  renegotiation of NAFTA and withdrawal from the Paris Agreement to  have a significant impact and stated that the energy sector in North  America is already well integrated and well positioned to address  these changes. U.S. government officials we interviewed noted that the United States’  energy sector is already extensively integrated with both Canada’s and  Mexico’s. The officials stated that most easily accomplished actions to  promote integration have already been taken and that they are primarily  looking for ways to enhance a system that is working well. They also  stated that it is important not to disrupt the advances that have already been made. Further, they stated that, to enhance integration, it is  necessary to focus on practical steps that result in concrete changes to  further facilitate cross-border production and trade. Agency Comments  and Our Evaluation We provided a draft of this report to DOE, Interior, Commerce, State,  DOT, FERC, USAID, Treasury, the Environmental Protection Agency,  and the Department of Homeland Security for review and comment. We  received comments from USAID, which are reproduced in appendix IV. In  its comments, USAID provided additional information about the agency’s  contributions to North American energy integration, which we  incorporated in the report as appropriate. DOE, Interior, Commerce, DOT,  FERC and Treasury provided technical comments, which we also  incorporated as appropriate. State, the Environmental Protection Agency,  and the Department of Homeland Security informed us that they had no  comments. We are sending copies of this report to the appropriate congressional  committees; the Secretaries of Energy, the Interior, Commerce, State,  Transportation, the Treasury, and Homeland Security; the Executive  Director of FERC; the Administrators of USAID and the Environmental  Protection Agency; and other interested parties. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact  me at (202) 512-8612 or gianopoulosk@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix V. Appendix I: Objectives, Scope and  Methodology This report examines (1) ways in which the U.S., Canadian, and Mexican  governments cooperate on North American energy integration; (2) U.S.  agencies’ activities to facilitate North American energy integration; (3)  U.S. agencies’ efforts to coordinate among themselves on North  American energy integration; (4) ways in which U.S. agencies obtain  feedback and input from U.S. industry and civil society regarding North  American energy integration; and (5) steps that U.S., Canadian, and  Mexican officials suggested to further facilitate North American energy  integration. To address these objectives, we reviewed documents and information  provided by cognizant U.S., Canadian, and Mexican government officials;  U.S., Canadian, and Mexican energy sector associations; and U.S. civil  society groups such as think tanks and environmental nongovernmental  organizations. We conducted field work in Mexico City, Mexico, and in  Ottawa, Canada, where we met with government and energy sector  association representatives. We also collected information on activities  related to North American energy integration from U.S. agencies  implementing such activities. In addition, we obtained and analyzed data  from the U.S. Census Bureau regarding the extent of the United States’  energy trade with Canada and Mexico. To examine the ways in which the U.S., Canadian, and Mexican  governments cooperate on North American energy integration, we  interviewed officials in each country who were responsible for energy- related cooperation, asking about the processes they follow to cooperate  on energy integration at the strategic and technical levels. In the United  States, we spoke with officials from the Departments of Energy (DOE),  State (State), Interior (Interior), Commerce (Commerce), the Treasury  (Treasury), Transportation (DOT), and Homeland Security (DHS); the  U.S. Agency for International Development (USAID); and the Federal  Energy Regulatory Commission (FERC). We also corresponded with  officials from the Environmental Protection Agency. In addition, we spoke  with officials of the North American Electric Reliability Corporation.  Further, we met with Canadian and Mexican embassy officials in  Washington, D.C. In Canada, we met with officials from Natural  Resources Canada and Global Affairs Canada and spoke with officials  from the Alberta provincial government. In Mexico, we met with officials  from Mexico’s Secretariat of Energy; National Hydrocarbons Commission;  Energy Regulatory Commission; National Gas Control Center; National  Center for Energy Control; and Agency for Safety, Energy and  Environment. We also reviewed documents developed to formalize  bilateral and trilateral cooperation, such as the 2016 North American  Climate, Clean Energy, and Environment Partnership Action Plan;  documents related to the U.S.–Mexico High Level Economic Dialogue;  and the “2017 North American Energy Ministerial Joint Summary.” To examine U.S. agencies’ energy integration activities implemented  since 2014, we reviewed agency documents; interviewed DOE, Interior,  Commerce, State, DOT, FERC, USAID, and DHS officials; and  corresponded with officials from the Environmental Protection Agency.  Also, in May 2018, we contacted Treasury officials after learning about  recent Treasury activities related to North American energy integration.  In addition, we sent a survey to DOE, Interior, Commerce, State, DOT,  FERC, USAID, and DHS, asking them to, among other things, identify  their energy integration activities implemented from 2014 through 2017;  describe each activity, including its purpose; identify the type of activity  (e.g., joint research and development, trade mission, forum for technical  discussion, regulatory cooperation, technical assistance, other); and  identify other agencies participating in the activity. The survey also asked  whether the identified activities were bilateral with Canada or Mexico,  trilateral, multilateral, or unilateral. We followed up with the agencies to  ask for clarifications. We did not independently determine whether the  agencies had identified all relevant activities. In addition, we reviewed agencies’ responses to identify any overlap and  duplication among federal energy integration efforts. We focused on the  goals and outcomes of energy integration activities as described in the  agency-provided descriptions and in background material, as needed. We  also focused on the activities’ target populations, or intended  beneficiaries, since a bilateral U.S.–Canadian activity would have a  different target population than a bilateral U.S.–Mexican activity. We  compared activities within categories to look for evidence of duplication or  overlap based on the description provided by the agency or other  background material (i.e., agency website and documents). We  determined, in accordance with GAO’s definitions of duplication and  overlap, that no two of the agency activities were duplicative or  overlapping because the activities did not have the same or similar goals  or the same or similar beneficiaries. To examine U.S. agencies’ efforts to coordinate with each other on North  American energy integration, we conducted interviews with DOE, Interior,  Commerce, and State officials, asking them to identify and discuss any  mechanisms, such as interagency groups, offices, activities, or initiatives,  used for collaboration for the purposes of energy integration. To conduct  a more detailed analysis of interagency coordination on North American  integration, we interviewed participants in a National Security Council  (NSC)–led interagency working group using a standard set of questions  about interagency coordination and collaboration. We selected the NSC  working group because it provides an example of very high-level  interagency collaboration, could address multiple aspects of energy  integration, and had a specific focus and effect on energy-integration  efforts. Although we had intended to interview NSC officials, as of April  2018, NSC had not responded to our requests for documents and an  interview. As a result, we were unable to include NSC views about the  interagency collaboration considerations discussed. However, we were  able to mitigate this limitation by interviewing and comparing the  testimonial evidence of officials from the four participating agencies. We  provided agency officials a structured set of questions about interagency  coordination and collaboration that were based on key considerations for  implementing interagency collaboration identified in a prior GAO report. To examine the ways in which U.S. agencies obtain feedback and input  from U.S. industry and civil society, we conducted several informational  interviews with industry associations and civil society organizations, such  as think tanks and other environmental groups. To identify these  organizations, we reviewed witness lists at relevant congressional and  agency hearings, panel lists at energy-related conferences, and  recommendations from agency officials. In addition, as we interviewed  representatives of these organizations, we asked them to identify other  groups that might provide further information. Using this approach, we  interviewed representatives from seven civil society groups and 10  industry associations, including organizations based in Mexico and  Canada. However, our sample was judgmentally selected and their  opinions are not generalizable to all private industry and civil society  stakeholders. To report on steps suggested by U.S., Canadian, and Mexican officials to  further facilitate North American energy integration, we interviewed  officials in each country who were responsible for energy-related  cooperation and asked them to suggest additional steps or options that  the United States, in collaboration with Canada and Mexico, could take to  facilitate building a more integrated and secure energy market in North  America. In the United States, we spoke with officials from DOE, Interior,  Commerce, State, DOT, FERC, USAID, Treasury, and DHS. We also  spoke with Canadian and Mexican embassy officials in Washington, D.C.  Additionally, in Canada, we spoke with officials from Natural Resources  Canada, Global Affairs Canada, and the Alberta provincial government. In  Mexico, we spoke with officials from Mexico’s Secretariat of Energy,  National Hydrocarbons Commission, Energy Regulatory Commission,  National Gas Control Center, National Center for Energy Control, and  Agency Energy and Environment Safety. We analyzed responses  provided by officials in the three countries and identified four steps  suggested by one or more officials in each of the countries: (1) aligning  energy regulatory cooperation, (2) streamlining the presidential permitting  process, (3) facilitating cross-border movement of equipment and  workers, and (4) involving states and provinces in energy integration  efforts. After identifying these four steps, we elaborated on each one by  reviewing related documents and reports and discussing them with  private sector representatives and researchers in nongovernmental  organizations. We did not elaborate on steps suggested by U.S.,  Canadian, or Mexican officials that were not suggested by at least one  official in all three countries. We conducted this performance audit from April 2017 to July 2018 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. Appendix II: North American Electric  Reliability Corporation The North American Electric Reliability Corporation (NERC) is a not-for- profit international corporation that plays a role in regulating and  establishing reliability standards for cross-border North American  electricity markets. NERC’s mission is to assure the effective and efficient  reduction of risks to the reliability and security of the bulk power system in  the United States, Canada, and part of Mexico. While not a federal  agency, in July 2006, NERC was certified by the Federal Energy  Regulatory Commission (FERC) as the electric reliability organization for  the United States. Subsequently, compliance with NERC reliability  standards became a legal requirement for certain bulk power system  owners, operators, and users. NERC is subject to oversight by FERC  and governmental authorities in Canada. NERC has a trilateral focus,  which enables it to more easily forge partnerships in Canada and Mexico,  according to NERC officials. The officials stated that NERC’s work has  primarily focused on electrical grid reliability in Canada and the United  States, as Mexico’s electricity market was restricted until its recent  reforms. NERC identified several activities related to North American energy  integration. For example: NERC leads GridEX, a biennial electrical grid security exercise  involving industry and government from the United States,  Canada, and Mexico. The exercise attempts to execute the  electricity sector’s emergency response to simulated cyber and  physical security threats and incidents, strengthen utilities’ crisis  response functions, and provide input for lessons learned. NERC engages in regulatory cooperation with government entities  in Canada and Mexico to improve the reliability of the electric grid.  As the electric reliability organization certified by FERC, NERC  convenes stakeholders from across the interconnected North  American bulk power system to develop continent-wide reliability  standards. NERC has entered into a number of memorandums of  understanding (MOU) with Canada and Mexico. In September  2006, NERC signed an MOU with Canada’s National Energy  Board that committed the parties to work together to promote a  reliable bulk electric system in North America through a  cooperative relationship. Moreover, NERC officials stated that  because electricity is the domain of Canadian provinces, NERC  signed an MOU with the responsible organization in a number of  provinces. Further, the Mexican government recently began to  engage with NERC to bring certain areas into compliance with  NERC standards, and officials reported that in March 2017, NERC  and Mexico’s Energy Regulatory Commission and National Center  for Energy Control signed an MOU as a framework for, and to  facilitate, cooperation. According to NERC officials, the MOU with  these Mexico energy agencies defines roles and responsibilities,  states Mexico’s general commitment for Mexico to use NERC  standards as a basis for Mexico’s electric reliability system, and  identifies some technical areas in which NERC will provide  capacity-building assistance. Appendix III: U.S. Agencies’ North American  Energy Integration Activities, 2014-1017 Table 2 describes activities related to North American energy integration  in 2014 through 2017 reported by eight U.S. agencies—the Departments  of Energy, Interior, Commerce, State, Transportation, and the Treasury;  the U.S. Agency for International Development; and the Federal Energy  Regulatory Commission. Appendix IV: Comments from U.S. Agency  for International Development Appendix V: GAO Contact and Staff  Acknowledgements GAO Contact Kimberly Gianopoulos, (202) 512-8612 or gianopoulosk@gao.gov. Staff  Acknowledgements In addition to the contact named above, Kim Frankena (Assistant  Director), Francisco M. Enriquez (Analyst-in-Charge), Brian Tremblay,  Martin De Alteriis, Philip Farah, Christopher Keblitis, Reid Lowe, Grace  Lui, Franklin Rusco, and Sarah Veale made key contributions to this  report.
According to a U.S. government study, increased U.S. energy trade with Canada and Mexico—two of the United States' top energy trade partners—is viewed as a major contributor to U.S. economic prosperity and energy security. In recent years, North American energy production has experienced changes. For example, the United States has become the world's top oil producer, Canada has substantially increased its oil outputs, and Mexico has implemented energy reforms. To address energy production and trade issues, the public sector and private sector stakeholders have advocated for further integration of the three North American countries' energy sectors. GAO was asked to review the role of U.S. agencies in supporting energy integration in North America. This report examines (1) ways in which the U.S., Canadian, and Mexican governments cooperate on North American energy integration; (2) U.S. agencies' activities to facilitate North American energy integration; (3) U.S. agencies' efforts to coordinate among themselves on North American energy integration; (4) ways in which U.S. agencies receive feedback from U.S. industry and civil society regarding North American energy integration; and (5) steps that U.S., Canadian, and Mexican officials suggested to further facilitate North American energy integration. GAO reviewed bilateral and trilateral cooperation activities and mechanisms; surveyed U.S. agencies involved in energy integration; and interviewed U.S., Canadian, and Mexican energy officials. GAO is not making any recommendations in this report. Cooperation. The United States cooperates with Canada and Mexico on integrating North American energy markets and infrastructure (energy integration). Cooperation occurs at the presidential and ministerial levels (e.g., the countries' secretaries or ministers of energy) for strategic issues and at the agency level for technical issues. However, progress on some strategic issues has been limited. For example, development of a North American energy strategy, which the U.S. Department of Energy (DOE) proposed in March 2017, was suspended later that year because of disagreement about its scope. Discussions of the strategy resumed in 2018, according to DOE officials. Agency activities. Eight U.S. agencies have engaged in multiple efforts to facilitate North American energy integration. DOE generally serves as the lead agency on energy integration issues, while the Department of State—the lead agency on foreign policy—also leads some bilateral and trilateral efforts. Other agencies play roles in areas such as regulatory compliance or efforts to open energy markets. Agency officials GAO surveyed and interviewed identified 81 energy integration–related activities conducted in 2014 through 2017, including international agreements and other instruments, research and development, technical forums and assistance, regulatory cooperation, and trade promotion. Interagency coordination. U.S. agency officials reported coordinating on energy integration through high-level U.S. interagency meetings, summits, and other means. For example, agencies participating in a National Security Council–led working group share information, provide advice, and coordinate on activities. Agency officials also reported using mechanisms such as stakeholder forums and staff discussions to coordinate on energy integration issues. Stakeholder feedback. U.S. agencies receive feedback on energy integration issues from the private sector and civil society through formal mechanisms such as comments in the Federal Register and public–private advisory entities. For example, the U.S.–Mexico Energy Business Council is designed to capture private sector feedback. Informal feedback comes through activities such as emails, phone calls, and letters. Steps suggested by U.S., Canadian, and Mexican officials . Officials in the three countries expressed general satisfaction with intergovernmental cooperation on energy integration and said cooperative activities had helped foster integration. They also suggested further work in areas such as aligning energy regulations. Source: GAO analysis of information provided by U.S, Canadian, and Mexican officials. | GAO-18-575