Tribal reservation ruling puts governance of half of Oklahoma in doubt

A U.S. Supreme Court ruling that declared that Native American tribes had never ceded control of reservation land that covers most of eastern Oklahoma raises the prospect of fiscal and regulatory disruption, according to filings in the case.

The 5-4 decision Thursday will “cause the largest judicial abrogation of state sovereignty in American history, cleaving Oklahoma in half,” according to a state brief filed in the case, adding that the ruling “would create the most populous Indian reservations in America, shocking the 1.8 million residents of eastern Oklahoma. The civil and regulatory repercussions would reverberate for decades.”

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The court’s decision narrowly applies to the state’s criminal jurisdiction over a child sexual-abuse case prosecuted in eastern Oklahoma. The defendant argued that his conviction in state court was invalid because the crime was committed on Creek Nation land against another Indian and thus was subject to the exclusive jurisdiction of the federal government.

Justice Neil Gorsuch's opinion, for the 5-4 majority, said "nothing we might say today could unsettle Oklahoma’s authority to try non-Indians for crimes against non-Indians on the lands in question."

But the ruling raises profound questions because 43% of the state, including the city of Tulsa, sits within boundaries allocated to five tribes, and remains so according to the ruling.

"The Court has profoundly destabilized the governance of eastern Oklahoma," Chief Justice John Roberts wrote in dissent. "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."

In McGirt v. Oklahoma, the court held that three million acres of eastern Oklahoma never left the Muscogee Creek Nation. By extension, that would mean an additional 16 million acres never left the other four southern nations: the Cherokee, Choctaw, Chickasaw, and Seminole. Those tribes were forcibly moved to what would become Oklahoma from their ancestral homes in the eastern United States. The treaty providing the reservation to the Creek Nation dates to 1833.

“Congress has since broken more than a few promises to the Tribe,” the court noted. “Nevertheless, the Creek Reservation persists today. Once a federal reservation is established, only Congress can diminish or disestablish it. Doing so requires a clear expression of congressional intent.”

Oklahoma’s arguments that the reservations were dissolved by state laws and local agreements, land sales and other practices since statehood in 1907 did not prevail.

State and local filings warned of implications beyond criminal law enforcement.

“An adverse decision could affect existing funding and taxation schemes, zoning laws, and law enforcement,” a friend of the court brief by the American Association of Municipal Lawyers said. “The basic blocks of a democratic society — local governments — could be fundamentally altered.”

State and local claims are "hyperbole and simply not true," said attorney Mary Kathryn Nagle, a native Oklahoman and Cherokee who specializes in tribal law issues.

"The reality is that the fact that the Muscogee (Creek) Nation Reservation still exists really does not change much," said Nagle, who was not involved in the suit. "Under current federal law, Tribal Nations are precluded from collecting taxes on their lands in most circumstances, with only a few exceptions."

Nagle said she is not an expert in public finance, "but I don’t see any reason why local and state governments could not continue to offer public bonds. Certainly nothing I know of in the law would prevent them from doing so."

Moody’s analyst Josh Grundleger said the ruling’s implications for general fiscal policies remains to be seen.

“From the state perspective, in the short run there’s likely little to no impact from a credit perspective,” he said. “Now that the Creek reservation does exist, this could serve as a precedent in other realms. But Oklahoma has a long history of being able to work with the tribes.”

After the court’s ruling, Oklahoma Attorney General Mike Hunter and the five tribes issued a joint statement about plans to resolve the issues in Congress.

“The Nations and the State are committed to implementing a framework of shared jurisdiction that will preserve sovereign interests and rights to self-government while affirming jurisdictional understandings, procedures, laws, and regulations that support public safety, our economy, and private property rights,” the statement read. “We will continue our work, confident that we can accomplish more together than any of us could alone.”

The oil and gas industry that dominates Oklahoma could be directly affected, according to briefs in the case. Attorneys for state and local government raised the prospect of double taxation and regulation of businesses within tribal territory.

“The Petroleum Alliance of Oklahoma is disappointed in today’s majority opinion in McGirt v. Oklahoma, but we are moving forward to work with the state of Oklahoma, the tribes and Oklahoma’s Congressional delegation to ensure that our members continue to have a stable, predictable regulatory and tax environment consistent with their interests,” said Brook A. Simmons president of the alliance. “It is critical for continued investment in Oklahoma that the state maintain primacy with regard to the regulation of oil and gas operations, and that issues of title with regard to real property remain unaffected.”

The city of Tulsa, in its amicus curiae brief, said that “a new two-tiered taxation regime would spring into existence overnight, even creating new Indian tax shelters. Although non-Indians would continue to owe taxes to the City and state, a tribal member might not.”

Tulsa also cited potential conflicts over land use and zoning, citing an example in which an electronic billboard on Indian land violated zoning regulations but was allowed to remain in place.

“Numerous lots in residential neighborhoods could suddenly be exempt from zoning,” the city’s brief said. “The City’s taxing and regulatory authority could be subject to numerous challenges and endless litigation.”

In 2019, the city of Tulsa’s property tax, franchise tax, use tax, and hotel/motel tax accounted for 75.7% of the total revenues. Property tax, sales tax, and use tax accounted for 70.1% of the total revenues generated by Tulsa County.

“It is difficult to predict with any certainty the amount of property or transactions that would suddenly become exempt from local taxes,” according to a joint amicus brief from the International Municipal Lawyers Association and National Sheriff's Association. “As a result, municipalities would be left guessing as to the effect this decision would have on their tax revenue. The inability to accurately predict their revenue could result in chaos for the municipal budget writing process.”

Under the Enabling Act of 1906, the people living in Indian Territory and Oklahoma Territory were empowered to elect delegates to a state constitutional convention and to be admitted to the union as a single state. In the Supreme Court Case, the state argued that the Enabling Act disestablished the reservations that made up Indian Territory.

In last week’s ruling, the Supreme Court majority found that Congress failed to disestablish the reservations in the Enabling Act, and thus for purposes of the Major Crimes Act, lands that were former reservations should be considered "Indian country" and are overseen by federal jurisdiction.

“I have no doubt we can work together with state officials, tribal organizations and the delegation to find a workable solution for everyone that ensures criminals are prosecuted and brought to justice in the most appropriate manner,” U.S. Sen. Jim Inhofe, R-Okla., said after the ruling.

Oklahoma’s other senator, Republican James Lankford, cited “the commitment from the state and the five Tribes to work with the delegation to craft legislation that ensures that the ruling has a minimal impact on individuals and businesses throughout Oklahoma. I look forward to working with the tribes, the state, and other members of the Oklahoma congressional delegation to finding a solution acceptable to all parties.”