The Teapot Dome Scandal forever tainted the reputation of the Harding Administration. The Secretary of the Interior Albert B Fall sold the right to extract oil from government land in Wyoming at a below market price after receiving a bribe from the oil companies. He was eventually convicted of receiving a bribe..

As the US Navy converted its ships from coal burning to oil burning it acquired a strategic reserve of oil in Wyoming and California. The Wyoming field was known as the Tea Pot Dome field. In 1921 President Harding issued an executive order transferring the control of the fields from the Navy to the Interior Department. In 1922 when the transfer was actually implemented Secretary of the Interior Albert Fall leased the fields without competitive bidding at a below market rate. Tea Pot Dome he leased to Harry F. Sinclair of Mammoth Oil, a subsidiary of Sinclair Oil Corporation and the California fields to Edward L. Doheny of Pan American Petroleum and Transport Company. Leasing the fields without bidding was legal, the problem was that Fall received bribes in return for what he did. Fall received a no interest loan of $100,000 and other gift valued at $400,000.

The scandal began to come to light when a competing firm wrote a letter to Senator John B Kendrick. Kendrick then introduced a resolution in the Senate to investigate the matter. The Senate Committee on Public Lands. By 1924 the basic outline of what had taken place had become clear. Fall was charged with accepting bribes and was eventually found guilty and served time in prison. Those doing the bribery were acquitted. In the meantime the Supreme Court invalidated the lease and returned them to the navy stating the Harding did not have the ability to transfer the leases from the Navy.