On Tuesday, July 1, the Oklahoma Supreme Court issued a pivotal decision in Stroble v. Oklahoma Tax Commission, 2025 OK 48. Most importantly, the Court held that McGirt v. Oklahoma, which recognized that the Muscogee Nation's reservation was never disestablished, does not extend to civil jurisdiction. In doing so, the Court construes "Indian country" civil jurisdiction in such a way that advances state power over tribal citizens and reservations. Accordingly, the ruling has significant implications for tribal and state governmental interests and citizens navigating the complex intersection of state taxation, tribal sovereignty, and jurisdictional disputes.
Background
Long standing federal case law holds that tribal citizens earning income from tribal governments that live on "Indian country" are exempt from state taxes. Oklahoma Tax Commission v. Sac & Fox Nation (U.S. 1993).
Based on this caselaw, Ms. Stroble, a tribal citizen, timely sought refund of personal income taxes paid for 2017, 2018 and 2019 from the Oklahoma Tax Commission (OTC) totaling approximately $7,800. She lives in Okmulgee on fee land, worked for the Muscogee Nation National Council on trust land, all within the Muscogee Nation reservation, recognized by the Treaty of 1866 and recognized by the United States Supreme Court as never disestablished in McGirt v. Oklahoma.
The OTC hearing officer applied existing OTC rules regarding exemptions for tribal citizens living within Indian country and working for a tribal government and granted the refund. The OTC commissioners overrode their hearing officer and reversed. Ms. Stroble appealed and the Oklahoma Supreme Court directly took the case in 2022. All five tribes with similar Treaty of 1866 reservations in eastern Oklahoma and similarly recognized reservations backed up Ms. Stroble with friend of the court briefs. The Oklahoma Supreme Court heard oral arguments in January 2024 and struggled with reaching decisions.
State and tribal issues have remained contentious and quite political since McGirt came down five years ago. Justice Kauger, who participated in the oral arguments and was the Court's longest serving Justice, was not retained by voters in November. Justice Jett replaced her and participated in this ruling. Governor Stitt appointed four of the six Justices that ruled against Ms. Stroble.
Tribal and state interests closely watched and highly-anticipated this ruling. Collectively those interests were huge: If McGirt extended to all of the "Five Tribes" reservations in eastern Oklahoma, the OTC estimated that the state's loss in income tax revenue would exceed $72 million per year and that potential individual taxpayer refund claims for the disputed three tax years could total $218 million. But the issue of tribal sovereignty jurisdiction, including whether and to what extent tribes have civil regulatory and tax powers over fee lands within their reservations was even larger. Ultimately, the Justices found very little common ground to agree upon.
Key Holdings
The Court's per curium majority opinion provides critical insights. Most importantly, the Court held that McGirt does not extend to civil jurisdiction. According to the Court, the Muscogee Nation's 1866 Treaty reservation, reaffirmed by McGirt, was not "Indian country" for civil purposes. Fee title matters, even within a reservation. The majority narrowly limited Indian country jurisdiction under the federal Major Crimes Act for civil purposes. They wrote:
"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 to the State's civil or taxing jurisdiction. And it is not this Court's place to do so."
Insights from the Concurrences
The Justices were very divided and quite verbose. All the slip opinions together run 120 pages or 31,946 words. The majority included Chief Justice Rowe, Vice Chief Justice Kuehn, and Justices Winchester, Darby, Kane and Jett. Their per curium decision (the very little all majority Justices could agree upon) is 9 pages. Justices Rowe, Kuehn, Winchester and Kane (joined by Jett) wrote separate concurring opinions on diverging grounds. The four concurrences run 59 pages total including Justice Kane's lengthy concurrence setting forth the most reasons at 39 pages. All of rulings are here: https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=548948
The concurring opinions in Stroble reflect deeper concerns:
- Funding State Services and Use of State Infrastructure. Some Justices emphasized the practical reality that all citizens—including tribal citizens—utilize state services, raising questions about how state governments fund those services, particularly in reservation areas.
- Civil and Regulatory Administration Challenges. The concurrences acknowledged the administrative complexity of resolving civil and regulatory disputes between the state and tribal entities, especially when jurisdiction is uncertain.
- Retroactivity of Refund Claims. A key concern is how far back taxpayers, including tribal entities, might seek refunds if courts later hold that certain taxes were unlawfully assessed, potentially exposing the state to significant financial liability.
- Equitable Principles Such as Laches. The concurrences discussed whether taxpayers or tribal governments who "sleep on their rights" (i.e., delay in challenging taxes) should be barred under equitable doctrines like laches, even where the underlying tax may have been invalid or the assertion of civil jurisdiction was invalid.
- Settled Expectations. Courts are concerned about preserving settled expectations of both governments and businesses that rely on established tax and regulatory frameworks.
- Administrative Tax Rule Interpretations. The Court highlighted the significance of administrative interpretations and rules adopted by the OTC, which can carry substantial weight but still must operate within statutory and constitutional boundaries. Some Justices quibbled about whether the OTC adopted the federal Major Crimes Act definitions of Indian country at 18 U.S.C. §1151 et. seq., the Sac and Fox Nation case and other interpretative case law.
- Preemption, Infringement, and Balancing Tests. The Justices recognized that tribal sovereignty raises federal preemption and infringement concerns, and that courts often employ balancing tests to resolve conflicts between state authority and tribal self-government but disagreed on which test or whether infringement applied.
Insights from the Dissent
Justice Combs wrote a long dissent joined by Justices Edmondson and Gurich. In essence the dissent reasons that the Stroble majority is out of step with a long line of SCOTUS cases that hold the Major Crimes Act definitions for Indian country apply in a civil context, not just for criminal law purposes. The dissent refutes the points in the per curium opinion and the four concurrences. Their key points included:
- Federal law preempts Oklahoma's power to tax Native Americans living and working on Indian country
- The OTC's rules adopted both the Sac & Fox Nation's and the Major Crimes Act definitions of "Indian country"
- McGirt impacts the application of the OTC's income tax rules
- Equitable doctrines of laches, acquiescence or impossibility should not apply
McGirt and Its Implications
While McGirt v. Oklahoma (2020), arose in the criminal context, its affirmation of the continued existence of reservations has triggered significant questions about civil and regulatory jurisdiction—including taxation. In McGirt, SCOTUS largely set aside considerations such as practical governance concerns, funding challenges, or administrative inconvenience, focusing instead on the plain treaty and statutory text recognizing reservation boundaries. Only Congress can extinguish or disestablish reservations.
However, the Oklahoma Supreme Court's majority decision in Stroble illustrates that, in the civil, tax and regulatory contexts, these practical and equitable considerations remain very much in play. As courts grapple with the post-McGirt legal landscape, state and tribal governments can expect continued litigation over:
- State Taxation Authority in Indian Country. Tribes may assert that certain state taxes are preempted by federal law or unlawfully infringe on tribal self-government. State and local governments may assert that only incidence of taxation on trust or allotments lands will qualify for state tax exemptions–commerce occurring on, or income earned on fee lands within Indian reservations would be subject to state tax.
- Jurisdictional Uncertainty and Economic Impacts. Businesses, including tribally owned enterprises, face uncertainty about tax obligations and potential liabilities.
- Retroactive Claims and Refunds. The state may confront claims for significant tax refunds for transactions previously taxed in areas now confirmed as Indian country under McGirt.
Conclusion
The Oklahoma Supreme Court's decision in Stroble v. Oklahoma Tax Commission will likely set up an appeal to the Supreme Court of the United States. SCOTUS could take another look at these issues from a civil perspective, particularly following Oklahoma v. Castro-Huerta (2022) a criminal case that eroded some of the holdings in McGirt. The composition of SCOTUS has changed since McGirt in 2020 with the retirement of Justice Breyer, the death of Justice Ginsburg and the additions of Justices Coney Barrett and Brown Jackson. Recall that SCOTUS decided McGirt (and Castro-Huerta) by five-to-four. It takes four Justices to vote to hear and retain a case (called granting certiorari). Tribal interests remain cautious though because a SCOTUS decision could have a monumental and long-lasting impact on tribal sovereignty and namely, the extent of tribal civil regulatory powers. Stay tuned.
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