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Historic Teapot Dome/NPR-3

Teapot Dome was the popular name for a scandal during the administration of U.S. President Warren G. Harding. The scandal, which involved the secret leasing of naval oil reserve lands to private companies, was first revealed to the general public in 1924, after sensational findings by a committee of the U.S. Senate. One cabinet member eventually went to prison for his part in the affair, and a number of Washington officials were implicated, which threatened to destroy confidence in Republican leaders of the period. But, Calvin Coolidge, who had acceded to the presidency upon Harding's death in 1923, handled the problem skillfully and averted damage to his own administration.

The Teapot Dome incident became a symbol for supposed excesses and government graft and corruption. Origins of the scandal went back to the growth of federal conservation policy in the presidencies of Theodore Roosevelt, William Howard Taft, and Woodrow Wilson, specifically to the creation of naval petroleum reserves in Wyoming and California. These reserves were tracts of public land in which it was intended that oil should be kept in its natural reservoirs, or domes, for the future use of the Navy. "Teapot Dome" originally acquired its name from a rock nearby that resembled a teapot.

Leaders of both parties supported the petroleum reserve policy. That it would be a continuing one seemed certain, with passage of new statutory provisions in 1920. Actually, however, private oil interests and many politicians had always been opposed, claiming that the reserves were unnecessary, and that American oil companies could provide for the needs of U.S. naval vessels.

One of these politicians, a longtime foe of federal conservation programs, was Sen. Albert B. Fall of New Mexico. In 1921, Fall became Harding's Secretary of the Interior and quickly moved to open the reserves to private exploitation. Though he attempted to keep his actions secret, he could not, and the Senate authorized an investigation by the committee on public lands. The driving force in this difficult assignment was Thomas J. Walsh, a Montana Democrat respected for his legal prowess and incorruptibility. Most responsible for initiating the probe were Sen. Robert M. Lafollette and the conservationist "watchdogs" that advised and supported him.

The Senate committee held extended hearings and soon set in motion a whole chain of occurrences. Secretary Fall, they found, had convinced Secretary of the Navy Edwin Denby and others that the administration of the reserves should be turned over to him. Fall had then leased Teapot Dome to Harry F. Sinclair's Mammoth Oil Company and the rich Elk Hills reserve in California to Edward L. Doheny's Pan-American Petroleum and Transport Company, meanwhile receiving from these oilmen gifts and "loans" amounting to some $400,000. The leases Fall had made were technically complicated and could be defended, but the money was his undoing. For a time, Fall had the protection of powerful friends in the government, including Attorney General Harry M. Daugherty, but widespread distrust of the Department of Justice and of Daugherty (who resigned in 1924), as well as the pressures brought to bear by extensive press coverage of the scandal, forced Coolidge to appoint special prosecutors under presidential direction to protect the interests of the government.

Civil and criminal suits, lasting through the 1920's, then followed. The Supreme Court, finding that the oil leases had been corruptly obtained, invalidated the Elk Hills lease in February 1927 and the Teapot Dome lease in October of the same year. The reserves, as a result, were restored to government control. Albert Fall was found guilty of bribery in 1929. He was fined $100,000 and sentenced to one year in prison. The lessees were assessed for damages, but it is ironic that the oilmen and their associates escaped conviction on a conspiracy charge, whereas the official who took their money was convicted.

Sinclair did not escape entirely. A second Senate investigation in 1928 gave additional evidence of his payments to Secretary Fall and of corporate malpractices that had provided Sinclair with his "slush" fund. After refusing to cooperate with government investigators, Sinclair was charged with contempt and eventually received a short sentence for tampering with the jury, or criminal contempt.

The legacy of Teapot Dome is an ambiguous one, although the scandal in its final outcome was a victory for honest government. Neither party could take full credit for the disclosures, and when the Democrats tried in 1924 and 1928, they were defeated. The policy of conservation made some gains; yet the petroleum reserves, as such, did not prove to have the importance earlier attributed to them. All in all, this controversy illustrates the complexity of natural resource problems and the difficulty of planning successfully for the public interest and for the eventual needs of generations yet to come.

Upon the 1927 Supreme Court decision, the U.S. immediately shut in Teapot Dome. Some exploratory and offset wells were drilled in the 50's and 60's. Naval Petroleum Reserve (NPR) No. 1 and NPR-3 opened to full development in 1976.

1977: NPR jurisdiction transferred from the U.S. Navy to Department of Energy (DOE). An initial production of 1,000 barrels per day (BOPD) was at first disappointing, in view of rates exceeding 100,000 BOPD at NPR-1 (Elk Hills). However, subsequent development and enhanced oil recovery (EOR) projects raised rates to 5,000 BOPD in 1979-80.