The investigation looked at the Minerals Management Service
A US government report has accused some interior department officials of unethical conduct while doing business with the oil and gas industry.
The report says several workers at the agency that collects drilling royalties received gifts from energy companies.
Some employees also partied with energy company representatives, having sex and taking illegal drugs, the report said.
The findings come as the US Congress is considering legislation to expand offshore oil drilling.
The report was the result of a two-year, $5.3m (£3m) investigation by the Department of the Interior's inspector general, Earl Devaney.
The alleged improprieties occurred between 2002 and 2006, and involved 19 former and current employees at the offices in Denver and Washington of the department's Minerals Management Service (MMS).
The officials were involved in the "royalty-in-kind" programme under which energy companies barter oil and gas to the government in return for permission to drill on federal land.
Mr Devaney's investigation uncovered a "culture of substance abuse and promiscuity" by a small group of individuals "wholly lacking in acceptance of or adherence to government ethical standards".
He said a third of the 55 staff at the Denver office were found to have socialised with and received a wide array of gifts from companies with which they were doing business.
US federal employees are banned from receiving gifts above $20.
Several members of staff in one office admitted to illegal drug use as well as being "engaged in brief sexual relationships with industry contacts", he added.
"Sexual relationships with prohibited sources cannot, by definition, be arms-length," Mr Devaney said in his report.
The inspector general said that many of those questioned did not believe federal government ethics standards and department policies had applied to them because of their "unique" role.
"Employees said they felt that in order to effectively perform their official duties, they needed to interact in social settings with industry representatives to obtain 'market intelligence'," Mr Devaney said.
A senior Democrat said it appeared that officials who were supposed to be looking out for taxpayers had instead been corrupted by gifts and a culture of ethical failure.
"American taxpayers deserve to have confidence that their interests are being protected when it comes to collecting royalties from the production of public oil and gas resources, especially given the potential for expanded domestic drilling," said Sen Jeff Bingaman, chairman of the Senate Energy Committee.