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Supreme Court Ruling on Oklahoma Tribal Land Raises Questions for Oil Industry

A US Supreme Court decision recognizing about half of Oklahoma as Native American reservation land has implications for oil and gas development and raises regulatory and tax questions that could take years to settle.

On 9 July, the court overturned an Oklahoma tribe member’s criminal conviction—in the McGirt v. Oklahoma decision—because the crime was committed on reservation land and therefore outside the reach of state criminal law.

While the decision does not affect property ownership, attorneys said it has regulatory and tax implications within reservation lands. Until the McGirt decision, neither the federal government nor the State of Oklahoma recognized historical territory ­granted to the state’s “Five Tribes”—Cherokee, Chickasaw, Choctaw, Creek, and Seminole—as reservations.

The land of the Five Tribes encompasses 19 million acres and comprises the entire eastern half of Oklahoma.

Oklahoma was the fourth-largest US crude-oil producer last year, accounting for about 5% of production, according to government data.

“You’ll see the Five Tribes make arguments perhaps that they have taxation authority,” said Taiawagi Helton, University of Oklahoma law professor, adding that companies may be required to pay production taxes to both the state and tribes. This case suggests the tribes would have regulatory authority over oil and gas, and that there may be implications for wind energy and electric transmission as well as water sales.

Although the Oklahoma Corporation Commission has concurrent jurisdiction over lands of the Five Tribes for certain purposes related to oil and gas, it is unclear whether the Five Tribes will tax or regulate nontribal oil and gas interests—such as private and state oil and gas leases, royalties, and liens—within their boundaries.

The Petroleum Alliance of Oklahoma and other business groups had opposed the recognition of reservation status, arguing that it would “recast the business and legal environment” across lands of all Five Tribes.

At this stage, the scope and framework of any final agreement is unclear; it may take years of litigation before there is jurisdictional and regulatory clarity with respect to oil and gas interests in the state.

Supreme Court Ruling on Oklahoma Tribal Land Raises Questions for Oil Industry

01 September 2020

Volume: 72 | Issue: 9

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