Federal Lands and Fossil Fuels: Maximizing Social Welfare in Federal Energy Leasing

This Article suggests a rational path forward for federal fossil fuel leasing. Just as a private company would seek to maximize net revenue in its operations, Interior should seek to manage its program to provide maximum net benefits to the public, to whom public resources belong. This includes accounting for all of the costs and benefits of leasing—including environmental and social costs—and adjusting the fiscal terms of its fossil fuel leases to recoup unmitigated externality costs. The Article describes how maximizing social welfare is consistent Interior’s statutory mandates, legislative history, judicial precedent, and principles of executive review that instruct agencies to maximize the net benefits of their policy choices. The reforms suggested here can significantly increase revenue for states and the federal government while reducing greenhouse gas emissions, illustrating the utility of using fiscal reform as a policy lever in the absence of comprehensive climate change legislation.

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