[co-author: Dave Finkel, Law Student]
Three months on from the Supreme Court’s decision in McGirt v. Oklahoma,[1] the fallout is becoming increasingly clear in Oklahoma. On July 9, 2020, the Supreme Court issued its opinion in McGirt, ruling that most of the eastern half of Oklahoma is an Indian reservation.[2] While the decision ostensibly resolves a jurisdictional challenge to a criminal conviction, the labeling of over 19 million acres in Oklahoma (including most of the city of Tulsa) as reservation could significantly impact area businesses, including oil and gas development. Chief Justice Roberts’ dissent forecasted as much, stating, “The decision today creates significant uncertainty for the State’s continuing authority over any area that touches Indian affairs, ranging from zoning and taxation to family and environmental law.”[3]
Tax ImplicationsThe first such rumblings are on the tax front, where the Oklahoma Tax Commission’s executive director, Jay Doyle, has recently indicated the state could see losses of $60 million in annual income taxes and sales and use taxes from the Creek Nation reservation alone.[4] If the McGirt ruling is applied to the remaining members of the Five Civilized Tribes (Cherokee, Chickasaw, Choctaw, and Seminole Nations), then combined tax losses could top $200 million.[5] Equally troubling for the Oklahoma coffers is the likelihood that the Tax Commission will have to issue up to $218 million in tax refunds to tribal citizens for the past three years of filings.[6]
The Tax Commission’s report was submitted to the Oklahoma Commission on Cooperative Sovereignty, the entity Oklahoma Governor Kevin Stitt formed in July to “address concerns and make recommendations to the State and the United States Congress in light of [McGirt.]”[7] In a nod to the importance of oil and gas interests to the health of the Oklahoma economy, Gov. Stitt has loaded the Commission on Cooperative Sovereignty with energy professionals such as Larry Nichols, chairman emeritus of Devon Energy; Harold Hamm, executive chairman of Continental Resources; and Alan Armstrong, president and CEO of the Williams Companies.[8]
Other members of the Commission include former U.S. Senator Don Nickle; former U.S. Representative J.C. Watts; Oklahoma Senator Julie Daniels; Oklahoma Representative Mark Lepak; Brent Bolen of the State Board of Agriculture; Suzie Brewster, a lobbyist with the National Association of Convenience Stores; and Joe Robson, an Oklahoman homebuilder and businessman.[9]
There are already two cases in Oklahoma state court implicating the potential for formal recognition of the Cherokee and Chickasaw reservations.[10] The first involves a case in Craig County where the Cherokee Nation presented evidence of the tribal jurisdiction in a hearing for a Native American “charged with crimes within the tribe’s historical boundaries.”[11] The second case involved Oklahoma death row inmate Shaun Bosse, convicted in McClain County for the 2010 murder of his ex-girlfriend and her two children.[12] Bosse is not Native American, but his victims were, which his attorneys argue is enough to establish the state of Oklahoma never had jurisdiction to try him for the killings. Instead, Bosse’s attorneys argue that, because the crimes were committed against Indians within the historical boundaries of the Chickasaw Reservation (and therefore Indian Country), Bosse was subject to federal criminal jurisdiction. The Chickasaw Nation is expected to present evidence its reservation was never disestablished and “continues to exist within the Treaty Territory.”[13]
Oklahoma Attorney General Mike Hunter has stated he does not intend to stipulate to the existence of a reservation and is forcing inmates appealing their criminal convictions to meet their burden of proving (1) their crimes involved Indians and (2) the crimes were committed in Indian Country. Hunter is also arguing that, “if a non-Indian is the perpetrator … it ought to continue to be the subject of state jurisdiction.”[14] It appears to be only a matter of time until formal recognition is the new norm, and Hunter’s rearguard action may just be buying time in the name of public safety.
While Oklahoma officials and the Five Tribes had an “agreement in principal” regarding civil and criminal jurisdiction soon after the court’s McGirt decision, it quickly fell apart with the Seminole Nation withdrawing first.[15] The other tribes soon followed. While a rapid transition, the Five Tribes have had their own attorneys general, prosecutors, and police forces for much longer than the recent McGirt decision and are accustomed to working with federal prosecutors.[16] With a Native American population of 420,000, Oklahoma has the largest American Indian population in the country by total numbers and by percentage of the population at 14.6%.[17]
The Supreme Court has previously held that any tribal member living in “Indian Country” under the Major Crimes Act must be considered “outside the State’s taxing jurisdiction” absent explicit congressional direction to the contrary.[18] As such, not only are the half-million tribal members potentially exempt from the various state taxes, but the “Indian Country” or reservation designation also empowers tribal actors to regulate much of the non-Indian activity that occurs in the area, potentially taxing certain activities by non-members on the reservations.[19] This could include the likely taxation of oil and gas business in eastern Oklahoma by the tribes imposing their own taxes on these lessees.
Such an eventuality has already been confirmed by Supreme Court precedent in Kerr-McGee Corp. v. Navajo Tribe of Indians, 471 U.S. 195 (1985), when the court upheld the authority of the Navajo to “tax business activities conducted on its land,” even when those activities were conducted by non-Indian...
