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U.S. federal oil and gas royalties are payments made by firms to the federal government in exchange for the opportunity to explore for oil and gas on government-owned land or water. Traditionally, most of the funds generated by these royalties have gone directly into the general U.S. Treasury. Some of the funds have been directed to the Historical Preservation Trust Fund and the Land and Water Conservation Fund. During most of the twentieth century, oil and gas companies generally paid between 12.5 and 16.7 percent in royalties for a lease to drill on public land or water. Over time, these royalty payments generated over $100 billion in revenues.

The House Natural Resources Committee has just announced hearings next week into the latest scandal to grip a federal agency under the Bush administration. Turns out an Interior Department agency in charge of collecting oil and natural gas royalties was compromised for years, investigators said, alleging that employees improperly accepted gifts from oil companies, handed out sweetheart deals, had sex with subordinates and used illegal drugs. As the Los Angeles Times described it, investigators spent two years examining the cozy relationship between the energy industry and the Minerals Management Service, an obscure Interior Department agency that issues lucrative drilling leases to energy companies and then collects royalties from leases of the land, which is owned by taxpayers.

The Bush administration gave energy companies steep discounts in the royalties they will be required to pay as it established the groundwork Monday for commercial oil shale development on federal land. Interior Department officials said the 5 percent royalty rate during the first five years of production was needed to spur drilling while still giving taxpayers a fair return. But that rate is much lower than the 12.5 percent to 18.8 percent the government collects from companies harvesting conventional oil and gas on public lands.

* Opens federal waters beyond 50 miles from shore along the Atlantic and Pacific coasts to oil and gas drilling, ending drilling bans that have been in effect for 26 years. States would have to agree to drilling for areas between 50 and 100 miles from land. * Rolls back $18 billion in tax breaks for the five largest oil companies and requires energy companies to pay billions of dollars in additional royalties from oil taken from the deep water areas of the Gulf of Mexico under questionable leases issued in the late 1990s. * Requires the release of 70 million barrels of oil from the government's Strategic Petroleum Reserve to put more oil on the market and lower gasoline prices. * Makes it a federal crime for oil companies holding federal leases to provide gifts to government employees, a response to a recent sex and drug scandal involving the federal office that oversees the offshore oil royalty program and energy company employees. * Provides tax credits for wind and solar energy industries, the development of cellulosic ethanol and other biofuels, and purchase of plug-in gas-electric hybrid cars. * Requires utilities to generate 15 percent of their electricity from solar, wind or other alternative energy source. * Gives tax breaks for new energy efficiency and conservation programs including the use of improved building codes low-interest loans for energy efficient homes, and for companies that promote their employees use of bicycles for commuting.

A "culture of substance abuse and promiscuity" existed in the federal agency that handles royalty payments from oil companies, including sexual encounters between government employees and industry representatives, according to a memorandum released today. The Interior Department's Inspector General, who has been investigating the U.S. Minerals Management Service's Royalty-In-Kind program, said government employees who were supposed to be regulating the oil companies were engaging in drug use and having sex with industry contacts.

A scandal involving sex, drugs and - uh, offshore oil drilling. It's a strange mix, and it couldn't have come at a worse time for those in Congress pressing to expand oil and gas development off America's beaches while trying to stave off an election-year rush by Democrats to impose new taxes and royalties on the oil industry.

Federal investigators say government officials handling billions of dollars in oil royalties engaged in illicit sex with employees of energy companies, and received improper gifts. The alleged transgressions involve 13 Interior Department employees in Denver and Washington. Alleged improprieties include rigging contracts, working part-time as private oil consultants and having sexual relationships with - and accepting golf, ski trips and dinners from - oil company employees, according to three reports released Wednesday by the Interior Department's Inspector General.

The Interior Department will announce new rules today that clear the way for the first offshore wind turbines to be erected along the Atlantic Coast. The rules will set long-awaited guidelines for offshore leases, easements and royalty payments that the Bush administration worked on for years but did not complete.

Tips on leasing your land for oil and gas drilling and what to be careful of.