The externality costs of fossil fuel production—including pollution costs—are not accounted for under the U.S. Department of the Interior’s (Interior) coal, oil, and natural gas leasing programs. This results in fossil fuel production on public lands imposing significant social costs. Interior’s leasing programs have never been tailored to meet any past or present climate change goals, despite their significant contribution to domestic greenhouse gas emissions.

Cooperative federalism can lead to more efficient and pragmatic environmental protection, and allow states to develop effective programs tailored to their needs and resources. Nevertheless, the future of the federal-state relationship in the environmental context is uncertain as state and federal priorities come into conflict: for instance, EPA’s proposal to revoke California’s authority to regulate tailpipe emissions of greenhouse gases. Recent reports have begun a discussion on the future of cooperative federalism and environmental protection, but significant questions remain unanswered.