In 1922, the Senate Committee on Public Lands and Surveys began inquiries into allegations that members of President Harding's cabinet had corruptly leased several naval oil reserves to private oil firms. One of the reserves was the Teapot Dome tract in Wyoming.

     Senate hearings began in October 1923. In January 1924, Senator Walsh of Montana stated at an executive session of the Public Lands Committee that he would offer a resolution to authorize President Coolidge to appoint a special counsel. Shortly after, Coolidge publicly supported the appointment of special counsel, stating:

I feel the public is entitled to know that in the conduct of such action no one is shielded for any party, political or other reasons. As I understand, men are involved who belong to both political parties, and having been advised by the Department of Justice that it is in accord with the former precedents, I propose to employ special counsel of high rank drawn from both political parties to bring such actions for the enforcement of the law. Counsel will be instructed to prosecute these cases in the courts so that if there is any guilt it will be punished; if there is civil liability it will be enforced; if there is any fraud it will be revealed; and if there are any contracts which are illegal they will be canceled.

     The special counsel measure moved quickly through both Houses and was signed into law on February 8, 1924. It recited (based on the evidence before the Public Lands Committee) that several oil leases "made in form by the Government of the United States, through Albert B. Fall, Secretary of the Interior, and Edwin Denby, Secretary of the Navy, ... were executed under circumstances indicating fraud and corruption." It directed the President to institute suit to cancel the leases "and to prosecute such other actions or proceedings, civil and criminal, as may be warranted by the facts in relation to the making of said leases and contract." To accomplish that, the joint resolution authorized the President "to appoint, by and with the advice and consent of the Senate, special counsel who shall have charge and control of the prosecution of such litigation, anything in the statutes touching the powers of the Attorney General of the Department of Justice to the contrary notwithstanding." S.J. Res. 54, 68th Cong., 1st Sess.; 43 Stat. 5-6 (1924). For six or more years, Congress appropriated funds specifically for the work of the special counsel. E.g., H.J. Res. 160, 68th Cong., 1st Sess.; 43 Stat. 16 (1924).

     After some controversy (two initial candidates were withdrawn), the Senate confirmed Coolidge's two special counsel nominees: former Democratic Senator Atlee Pomerene and Republican lawyer Owen Roberts. For six years until Roberts was appointed to the Supreme Court, the two represented the Government in a range of civil and criminal cases growing out of the oil lease scandal. They brought successful civil actions to cancel fraudulent oil leases. E.g., Mammoth Oil Company v. United States , 275 U.S. 13 (1927)). They had mixed results in criminal actions directed against the corruption that precipitated their appointment, but ultimately secured the bribery conviction of former Interior Secretary Fall. See Fall v. United States , 49 F.2d 506 (D.C. Ct. App. 1931). They obtained a landmark Supreme Court ruling in what might be described as "related" anti-coverup litigation, a criminal contempt of Congress conviction against oil company executive Harry Sinclair. Sinclair v. United States , 279 U.S. 263 (1929).⁽¹⁾

     The need to appoint special counsel followed from a loss of confidence in the Department of Justice. A separate Senate resolution authorized a committee investigation of the "alleged neglect and failure" of Attorney General Harry Daugherty (who obtained his position after managing Warren Harding's presidential campaign) to "arrest and prosecute" the principals in the oil lease scandal, among other derelictions in office. See McGrain v. Daugherty , 273 U.S. 135, 151 (1927). By the end of March 1924, Coolidge dealt directly with that issue by obtaining Daugherty's resignation.

     Daugherty had met with Coolidge to discuss a committee demand for Department records. The President expressed his support for the Department's need to protect its records. But in a letter to Daugherty, Coolidge said he could not rely on Daugherty's evaluation of the issue as he had "become an interested party." The letter went on to describe Daugherty's irreconcilable conflict: "You have a personal interest in this investigation which is being made of the conduct of yourself and your office, which may be in conflict with your official interest as the Attorney General. * * * I do not see how you can be acting for yourself in your own defense in this matter and at the same time and on the same question acting as my adviser as Attorney General." 18 Messages and Papers of the Presidents 9386, 9387.

     Daugherty was replaced as Attorney General by Harlan Stone, who was succeeded by John Sargent when he was appointed to the Supreme Court in 1925. With the change in Justice Department leadership, the need to maintain separation between the two special counsel and the Department evidently diminished. Roberts and Pomerene "were ‘specially retained' by the Attorney General of the United States, to serve as special assistants to the Attorney General." In the Fall prosecution, they worked with the U.S. Attorney for the District of Columbia and another counsel retained by the Attorney General. United States v. Fall , 10 F.2d 648, 649 (D.C. Ct. App. 1925). Fall challenged his indictment on the ground that "unauthorized persons," such as the United States Attorney, took part in the grand jury proceedings leading to the indictment. The court held that the United States Attorney and other U.S. law officers could participate in the case "subject, however, to the charge and control of the special counsel, instead of the Attorney General." Id. at 650.