Supreme Court Rules Nearly Half of Oklahoma is Owned by Sovereign Tribes; Oil and gas producers express concern about regulatory changes

In July 2020, the United States Supreme Court ruled that nearly half of the State of Oklahoma is owned by sovereign nations.  In McGirt v. Oklahoma, the question was whether under the federal Major Crimes Act (the “MCA”) an Oklahoma state court had jurisdiction to convict a member of the Seminole Nation, Jimcy McGirt, of three serious sexual offenses.  The MCA provides federal jurisdiction over “[a]ny Indian” who commits certain offenses against another Indian “within the exclusive jurisdiction of the United States.”  18 U.S.C. § 1153(a).  While the Court questioned the propriety of the MCA, the Court determined that state courts have no jurisdiction to try Indians for conduct in “Indian country.”  Thus, at issue was whether McGirt had committed crimes in the State of Oklahoma—or on sovereign land of the Muscogee (Creek) Nation.

In concluding that McGirt’s crimes took place on reservation land belonging to the Muscogee (Creek) Nation, the Court observed that the State of Oklahoma was formed from two territories: the Oklahoma Territory in the west and the Indian Territory in the east.  “The MCA just doesn’t apply to the eastern half of Oklahoma, and it never has. . . .  Only the federal government, not the State, has jurisdiction and may prosecute Indians for major crimes committed in Indian country.”

The Court acknowledged that recognition of the existence and sovereignty of the Muscogee (Creek) Reservation might provoke a variety of federal statutes and rules.  “[W]e proceed well aware of the potential for cost and conflict around jurisdictional boundaries, especially ones that have gone unappreciated for so long.”  Yet the Court was not deterred by the possibility of such disputes or the concerns of the State of Oklahoma.  “Oklahoma fears that perhaps as much as half its land and roughly 1.8 million of its residents could wind up within Indian country,” including most of Tulsa.  “But it is unclear why pessimism should rule the day.  With the passage of time, Oklahoma and its Tribes have proven they can work successfully together as partners.  Already, the State has negotiated hundreds of intergovernmental agreements with tribes, including many with the [Muscogee] Creek.”  According to the Oklahoma Department of Transportation, there are 38 federally recognized tribes in Oklahoma.  The State has nearly identical treaties with its five tribes—the Muscogee (Creek), Cherokee, Chickasaw, Choctaw, and Seminole Nations.

In January 2020, Oklahoma Governor Kevin Stitt, a controversial member of the Cherokee Nation, called for the State and its five largest tribes to enter into formal negotiations after unsuccessful “discussions with tribal leaders for many months concerning the impacts of the McGirt ruling.” Six months later, Stitt requested authority from the Environmental Protection Agency (EPA) for the State of Oklahoma—not the Tribal Nations—to oversee the more than two dozen EPA programs affecting Indian land.  The EPA approved the State’s request in October 2020.

The implications of McGirt were not missed by the oil and gas industry, as industry leaders expressed concern about increased regulatory requirements, changes in taxation, and a shift in production away from the eastern half of Oklahoma.  After the Court issued its opinion in McGirt, the Petroleum Alliance of Oklahoma immediately released a statement that it was “disappointed” by the Court’s decision and expressed concern that the regulatory and tax environment in Oklahoma would become unstable.  The Alliance further insisted that regardless of McGirt, it was critical that the State of Oklahoma “maintain primacy with regard to the regulation of oil and gas operations, and that issues of title with regard to real property remain unaffected.”  Some historians have attributed the loss of Muscogee (Creek) land in the late 19th and early 20th centuries to the discovery of oil.

In December 2020, the Seminole Nation sent a letter to oil and gas producers on its land asserting the tribe’s right to receive an 8.00% severance fee.  Seminole Chief Greg Chilcoat later clarified that the tax was part of an existing policy and applied only to non-tribal producers operating on tribal trust and restricted land: “At this time, the Seminole Nation has not exerted taxation authority over nonmember oil and gas producers operating on fee simple land.”

In 2019, Oklahoma was the nation’s fourth largest state producer of crude oil behind Texas, North Dakota, and New Mexico.  Approximately 25% of Oklahoma’s oil and gas wells and 60% of its refineries are located on Tribal land.

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