The U.S. Supreme Court ruled on July 9 that half of eastern Oklahoma is Native American land. The decision has complex regulatory and tax implications that could take years to settle, including for the oil and gas industry.
The ruling confirmed that the Creek reservation continues to exist after Oklahoma became a state and that “the land these treaties promised remain an Indian reservation for purposes of federal criminal law.”
Oklahoma was the fourth-largest oil producing state last year, accounting for nearly 5% of the nation’s production. Drillers have operations within the Muscogee (Creek) Nation and four other reservations. The town of Cushing, home to about 15% of the nation’s crude oil storage, is not within reservation lands, but a quarter of recently drilled oil and gas wells lie within the territories. Additionally, around 60% of the state’s refining capacity and several pipeline networks that pump to and from Cushing cross reservation borders.
Questions about taxation and enforcement of environmental rules may take years to resolve. The court’s ruling could lead to increased production taxes and require new pipeline approvals within the reservation lands of the Cherokee, Chickasaw, Choctaw, Creek and Seminole tribes.
Producers are concerned about the possibility of a double tax – one from the state and a second from the tribes. Since the decision, Oklahoma state officials have sought to reassure oil and gas drillers of their ability to continue producing in the region.
Join PESA’s Government Affairs Townhalls for further discussion on this news and its impact on OFS sector.
