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). 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. 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. 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. 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. 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. 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. 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. 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. 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. 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). 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. 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. 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. 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. 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. 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. 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. 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. 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. 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 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. 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. 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. 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. 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. 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. 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. 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 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. 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. 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. 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. 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. Kimberly Gianopoulos, (202) 512-8612 or gianopoulosk@gao.gov. 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.

Summary: 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