The Oklahoma Supreme Court upheld a decision by the Oklahoma Tax Commission today and found that Muscogee Nation citizen Alicia Stroble is subject to state income taxation, declining to extend the McGirt v. Oklahoma decision’s application to matters of civil jurisdiction, such as taxes and regulations.
By rejecting Stroble’s appeal for an income tax exemption, justices issued their strongest answer yet to a convoluted question looming since the U.S. Supreme Court functionally affirmed the eastern half of Oklahoma as a series of Indian Country reservations in July 2020: Do the Muscogee, Cherokee, Chickasaw, Choctaw and Seminole nations have reservations only for purposes of criminal jurisdiction, or do the typical rules for civil jurisdiction in Indian Country apply in Oklahoma?
Nearly 18 months after hearing oral arguments in Stroble v. Oklahoma Tax Commission, the court split 6-3 and issued a per curiam opinion that holds Stroble is not entitled to the state income tax exemption she sought. A per curiam opinion denotes no individual author and represents a joint opinion of the majority justices, but five of those justices released their own opinions on the controversial case, which could ultimately be appealed to the U.S. Supreme Court.
In his concurrence, Justice James Winchester emphasized the multitude of practical legal questions that would befall Oklahoma if Stroble had prevailed.
“Despite today’s decision, the McGirt decision continues to create significant uncertainty regarding regulatory and civil matters in eastern Oklahoma. If Congress did not disestablish the Muscogee (Creek) Nation’s historical reservation, do tribal members living in eastern Oklahoma have to pay state sales taxes? Has the McGirt decision impacted the Oklahoma Corporation Commission’s ability to regulate oil and gas? Does the ruling affect other agencies that provide essential services to citizens in eastern Oklahoma? Does the McGirt decision introduce an additional layer of governance to navigate in eastern Oklahoma? How does it impact property owners who have relied on city, county, and state laws and regulations regarding zoning for over 100 years? Questions remain as to whether McGirt impacts the maintenance of state highways, environmental regulations, and operations of oil and gas production owners in the region,” Winchester wrote. “Extending McGirt to civil and regulatory matters would create greater uncertainty in commerce throughout eastern Oklahoma. The McGirt court recognized five separate reservations encompassing the entire eastern half of Oklahoma, each with its own unique culture and laws. This divergence would ultimately affect mortgages, auto and appliance loans, and landlord-tenant relationships. Many everyday contractual and economic activities would fall under the jurisdiction of tribal courts. Extending McGirt would also introduce an additional layer of governance, which would exclude non-tribal citizens — who make up 85 percent of the population in eastern Oklahoma — from voting in the government that oversees their affairs. The resulting uncertainty about these activities could impair commerce between tribal and non-tribal entities and individuals.”
Like Winchester, Chief Justice Dustin Rowe, Vice Chief Justice Dana Kuehn, Justice Richard Darby and Justice John Kane IV each wrote their own concurrence. The court’s newest member, Justice Travis Jett, joined Kane’s writing.
Joined by Justice James Edmondson and Justice Noma Gurich, Justice Douglas Combs wrote the dissent, arguing that the majority opinion “ignores” constitutional law and that Stroble’s victory in the case should have been “mandated” by the U.S. Supreme Court’s 1973 ruling in McClanahan v. Arizona State Tax Commission.
“The majority’s insistence that McGirt is limited to defining ‘Indian Country’ only for purposes of federal criminal law is simply a cherry-picked statement out of a broader discussion (in the McGirt majority opinion),” Combs wrote. “As I see it, Ms. Stroble’s victory in this income tax protest is predetermined by the U.S. Supreme Court’s definition of ‘Indian Country’ in McClanahan [and other cases]. McClanahan was a unanimous opinion in which the U.S. Supreme Court first found that, in light of ‘the relevant treaty and statutes,’ Arizona’s income tax could not lawfully be imposed upon individual ‘reservation Indians with income derived wholly from reservation sources.”
Justices: ‘This we cannot do’
In making their ruling, the majority justices generally focused on the McGirt decision’s qualifying language specifying the affirmation of the Muscogee Reservation for “purposes” of the Major Crimes Act. With its fifth anniversary approaching next week, the majority opinion in McGirt made questions about whether the Muscogee Reservation exists for civil jurisdiction purposes inevitable.
“The issue presented is whether the state has jurisdiction to impose income taxes on a tribal member who resides and works for the tribe within the boundaries of the tribe’s reservation as recognized in McGirt,” the per curiam opinion reads. “McGirt declared the reservation status of the land at issue. The United States Supreme Court determined that because the land was reservation land, it constituted ‘Indian country’ for purposes of the Major Crimes Act. Therefore, the state was without jurisdiction to prosecute certain crimes committed by an Indian on the reservation. Stroble is asking this court to extend McGirt to civil and regulatory law — to find the state is without jurisdiction to tax the income of a tribal member living and working on the tribe’s reservation. This we cannot do.”
While stopping short of calling for the U.S. Supreme Court to take up the issue, the court noted it would not extend McGirt’s holding to civil jurisdiction without some direction from the nation’s highest legal body.
“The United States Supreme Court’s declaration — 113 years after statehood — that nearly half of Oklahoma is a reservation is unprecedented. To date, the United States Supreme Court has not extended its ruling in McGirt beyond the Major Crimes Act. To date, the United States Supreme Court has not extended its ruling in McGirt to the state’s civil or taxing jurisdiction,” the justices wrote. “And it is not this court’s place to do so.”
Stroble is a Muscogee Nation citizen, lives within the nation’s reservation and works as the secretary for the Muscogee National Council. She had argued that the McClanahan case prevented the state from levying an income tax against her, which the court’s majority opinion did not specifically address. In fact, the per curiam opinion only cited to two U.S. Supreme Court decisions — the McGirt ruling and Oklahoma v. Castro-Huerta — and included no discussion of the U.S. Supreme Court’s Indian Country tax law jurisprudence.
Gov. Kevin Stitt, who has been a vocal critic of the McGirt decision and its ramifications, praised Tuesday’s ruling in favor of state tax jurisdiction.
“This is a big win for the future of Oklahoma. From day one, I’ve fought to make sure every Oklahoma is treated equally,” Stitt said. “Tribal governments, liberal groups and some elected officials have pushed for special tax exemptions that would create a two-tiered system — one set of rules for tribal citizens and another for everyone else. That’s wrong. It would divide our state and weaken the public services every family relies on. This ruling makes it clear that attempts to expand McGirt into civil and tax matters have no basis in the law. We are one Oklahoma. And as long as I’m governor, we aren’t going backwards.”
Muscogee Nation Principal Chief David Hill said he was “disappointed” in the decision and that the tribe was reviewing its legal options. He also hinted at what could be broader implications if Stroble’s case were appealed to the U.S. Supreme Court unsuccessfully, thereby creating a ruling adverse to tribal sovereignty with “broad implications” for all tribal governments.
“The Muscogee Nation is disappointed in the Oklahoma Supreme Court’s ruling today in Stroble v. Oklahoma Tax Commission departing from well-settled law originally recognized by the United States Supreme Court over 50 years ago and that is inconsistent with the state’s own administrative tax rules,” Hill said. “Ever since the McGirt ruling, we have seen Oklahoma state courts go through legal gymnastics to come up with results that are not in compliance with federal law and that do not even follow pre-McGirt state court precedent on the limits of state authority in Indian Country. The Stroble ruling is another sad example of those antics. We know that this ruling could have broad implications for Indian Country, so we are carefully reviewing the decision with our legal team and preparing for the next steps. While it is important to remember that the Muscogee Nation cannot provide legal advice on individual tax cases to citizens, the nation will remain diligent in coordination and communication of what our response will be.”
Six justices agree on outcome, five concurring opinions published
While the nine-page majority opinion avoided deep dives into case law, several justices were more direct in their concurring opinions’ analysis, highlighting the substantial disagreement among the justices that had been hinted at in their unanimous February ruling about how to apply the Indian Child Welfare Act in eastern Oklahoma.
Rowe, the court’s current chief justice, wrote in his concurring opinion that he believed the application of the principles of the 2020 McGirt decision were not retroactive and therefore the Oklahoma Tax Commission was correct in denying Stroble’s request for a refund for her payments from 2017, 2018 and 2019. Rowe also acknowledged that the Oklahoma Tax Commission had voluntarily adopted the federal definition of Indian Country into its regulations, which the agency did not alter after McGirt. He did not speak to the validity of state income taxes levied after 2020, a detail that caught the attention of Combs in his dissent.
“Chief Justice Rowe’s concurring opinion is forcing this court to kick the can down the road to address the issue when it arises again — and it will,” Combs wrote. “Perhaps Ms. Stroble herself has filed protests concerning tax years 2020, 2021, 2022, 2023, and potentially 2024, all of which have been held in abeyance pending the outcome of this appeal. Those facts aren’t in our record on appeal. But I am aware of at least one other pending protest involving the same issue for tax years 2020 and 2021. That case has been stayed pending resolution of Ms. Stroble’s appeal. Why not address the issue now?”
Rowe, a former Chickasaw district court judge, also critiqued the concurring opinions from Kuehn and Kane and Jett for advocating the “equitable doctrine of laches, acquiescence, and impossibility,” pushing back against the argument that the passage of time from statehood to the McGirt decision prevents legal relief.
“To deny Ms. Stroble’s claim using the equitable doctrines of laches, acquiescence, and impossibility would be an affront to the progress and advancement that Native-people have accomplished, despite facing century-long policies of opposition,” Rowe wrote. “Relying solely on the passage of time to bar Ms. Stroble’s claim would write another chapter in our history reflecting that equity has not weighed in favor of Native Oklahomans.”
Kuehn argued in her concurrence that the question of reservation status in Oklahoma was settled by McGirt, but she still found that the state had tax jurisdiction by citing the controversial City of Sherrill v. Oneida Nation decision, which held that a tribe in New York had relinquished its legal claim to historic lands owing to the passage of time, physical relocation and other equitable doctrines.
“Let me be clear. I believe the question of reservation status is settled. But this court neither can nor should apply the McGirt criminal remedy — lack of jurisdiction requiring dismissal — to any Oklahoma civil cases. McGirt applied that remedy in a criminal law context only,” Kuehn wrote. “The Oklahoma Supreme Court has the authority to rule that we will not wholesale extend that remedy to civil law matters. Otherwise, we will need to continue our practice of reviewing every civil law matter from here to eternity to discern whether reservation status alone requires Oklahoma courts to apply a remedy dictated by a federal criminal case. I would not continue to do so and find that the remedy does not apply to civil matters. And I note that the doctrines of latches, acquiescence, and impossibility ‘protect those who have reasonably labored under a mistaken understanding of the law.'”
Justice Richard Darby’s concurrence focused on arguing that the land at issue is not Indian Country for civil purposes.
“In other words, under McGirt allotment did not disestablish the Creek Reservation as far as federal criminal law is concerned, but it did change the nature of the land such that it is no longer all set apart for the use of Indians under the superintendence of the federal government. Because, post-allotment, the remaining Creek Reservation is not set aside for use by Native Americans under federal superintendence, it is not Indian Country generally, and thus it is not exempt from tax jurisdiction for income tax,” Darby wrote. “Oklahoma maintains the duty to provide roads, schools, and needed services for the entirety of the state and has done so, including where Ms. Stroble resided during the years for which she claims an exemption. The Creek Reservation found in McGirt for purposes of criminal law is not Indian Country for tax purposes.”
The longest concurrence — 39 pages — was authored by Kane, with Jett joining the opinion. The pair argued that:
- Oklahoma should be presumed to have jurisdiction unless explicitly preempted by “treaty or federal statute”;
- The Bracker balancing test should be applied and its factors weigh in the state’s favor;
- The City of Sherrill v. Oneida Nation decision barred Stroble’s claim;
- Oklahoma law did not exempt Stroble from taxation; and
- The Oklahoma Tax Commission did not formally adopt the federal definition of Indian Country.
“The United States Supreme Court’s most recent statement on preemption in Castro-Huerta undermines Stroble’s [Oklahoma Tax Commission v. Sac & Fox Nation] argument. I am persuaded that, in light of Castro-Huerta, the default is the state has jurisdiction unless that jurisdiction is preempted,” Kane wrote. “Just as Oklahoma does not need a permission slip from Congress to exercise criminal jurisdiction within its territory, Oklahoma does not need a permission slip from Congress to exercise taxing jurisdiction within its territory. Oklahoma has taxing jurisdiction within the boundaries of a reservation unless that jurisdiction has been preempted by a treaty or federal statute. Again, Stroble has not identified a treaty or federal statute that preempts Oklahoma’s taxing authority. Oklahoma’s sovereign authority to tax the income of its residents, who are tribal members living and working within the boundaries of the tribe’s reservation, has not been preempted under ordinary principles of federal preemption.”
In defending the application of the Bracker balancing, a legal test developed to analyze a tribe’s right to regulate non-Indian conduct on a reservation, test to Indians, Kane cited several decisions by the Oklahoma Court of Criminal Appeals, including Deo v. Parish, City of Tulsa v. O’Brien, and Stitt v. City of Tulsa.
Combs, Edmondson, Gurich dissent
In their joint dissenting opinion weighing in at 52 pages, Combs, Edmondson and Gurich attempted to reject every argument that justified the majority opinion, as well as offering a rare acknowledgement of the court’s elongated deliberations.
“The brief legal analysis of the majority’s per curiam opinion and the splintered nature of the special concurrences, along with my desire to address the arguments raised in all the writings, lead me now to address why it took so long for this court to issue a decision that’s only nine pages long. Ms. Stroble’s appeal was retained by this court on Nov. 14, 2022. An oral argument was held on Jan. 17, 2024. The majority opinion that eventually emerged was a per curiam opinion circulated in an attempt to simplify the majority’s holding, along with several special concurrences that hold the bulk of the legal analysis,” Combs wrote for the dissenters. “I intend to address most of the arguments raised by the justices comprising the majority regardless of where in the various writings those arguments appear.”
The dissenting opinion, quoting a 2005 edition of Cohen’s Handbook of Federal Indian Law, stresses the notion that “‘[i]t is now well-established that the categorical prohibition against state taxation of Indians applies in ‘Indian Country,’ broadly defined, including ‘formal and informal reservations, dependent Indian communities, and Indian allotments, whether restricted or held in trust by the United States.'” Combs also strongly objected to the concurrences’ handling of the U.S. Supreme Court’s McClanahan decision.
“Nevertheless, Justices Kane and Jett attempt to discredit, distinguish, and recharacterize McClanahan. They argue that McClanahan ‘has been repeatedly miscredited for reversing the [typical] preemption analysis when it comes to state taxation of tribal members,'” Combs wrote. “Then, in a true plot twist, they conclude ‘Oklahoma has taxing jurisdiction within the boundaries of a reservation unless that jurisdiction has been preempted by a treaty or federal statute’ without any analysis of the relevant treaties or federal statutes that they claim we should look to when utilizing ‘ordinary principles of federal preemption.’ Instead of applying those ordinary principles for which they argue, they rely solely upon Oklahoma v. Castro-Huerta, to assert that ‘Oklahoma does not need a permission slip from Congress to exercise taxing jurisdiction within its territory.’ This is a true departure from U.S. Supreme Court precedents governing preemption in taxation cases. These assertions from Justices Kane and Jett fail when you read what McClanahan actually said.”
Background: ALJ sided with Stroble, OTC reversed
According to court filings, after the McGirt decision, the Oklahoma Tax Commission approved several income tax exemption returns or amendments from tribal citizens claiming a tax exemption for tribal citizens who live on their tribe’s reservations and derive their income from tribal sources. However, a “special project” by the director of the OTC eventually reversed course and applications were denied unless the applicant lived on “restricted or trust lands.”
When Stroble’s application was denied by an OTC employee in February 2021, she appealed the decision. Judge Ernest Short, an administrative law judge, recommended that the OTC grant her the exemption in April 2022. But his decision was overruled by an order of the three OTC commissioners that October.
OTC commissioners are appointed by the governor pending the approval of the State Senate, and all three commissioners who ruled against Stroble were appointed by Gov. Kevin Stitt. The commission was founded during the tenure of former Oklahoma Gov. and attempted colonizer of the Bolivian Chaco Alfalfa Bill Murray.
Stroble was supported by the Muscogee Nation during the Oklahoma Supreme Court appeal, with Chief David Hill personally attending oral arguments. The Seminole Nation, Cherokee Nation, Chickasaw Nation and Choctaw Nation also filed amicus briefs in the case supporting her position.
During oral arguments, justices were told the exemption would cost the state roughly $72 million annually in revenue, although the Legislature reduced the state income tax rate 0.25 percent earlier this year. Some lawmakers had openly discussed working to eliminate the state’s income tax as a matter of fairness if Stroble were victorious in her appeal.
U.S. Supreme Court appeal possible
A looming question during oral arguments was whether the Oklahoma Supreme Court would have the final word in the Stroble case. Attorneys for both the Muscogee Nation and the Oklahoma Tax Commission referenced the possibility of an appeal, and Rowe even suggested that Oklahoma courts were “marking time” for a future federal case.
ORAL ARGUMENTS
During Stroble arguments, Oklahoma Supreme Court hints at SCOTUS appeal by Tristan Loveless
“We don’t get the final say. The United States Supreme Court will ultimately say whether (Section) 1151 (of federal code) is extended or if there is a Sherrill test or Congress will determine the reservation status, but that’s where this is headed, is it not?” Rowe asked during oral arguments.
Riyaz Kanji, an attorney representing the Muscogee Nation, responded to Rowe by arguing the U.S. Supreme Court would likely decline to hear an appeal of an Oklahoma Supreme Court decision in favor of his client.
“Very candidly, if this court were to uphold the rule of law to vindicate the black-letter principle, I’m not sure the (U.S.) Supreme Court would take that case. It would not create a conflict with any established precedent,” Kanji replied.
Kannon Shanmugam, an attorney representing the Oklahoma Tax Commission, indicated an appeal to the U.S. Supreme Court was imminent during oral arguments back in January.
“I think that there is a very good chance that the federal law issues that are presented in this case are ultimately going to have to be resolved by the United States Supreme Court, both the question of the extent to which federal law preempts state law, and the question of the application of Sherrill,” Shanmugam said. “Those chips are going to fall where they may in Washington at some point down the road.”
(Correction: This article was updated at 1:40 p.m. Thursday, July 3, to correct reference to the number of concurring opinions released. It had previously been updated to correct reference to the client of attorney Riyaz Kanji and to change a photograph.)
