Law & Principles

Senate overrides Stitt veto, creates one-year tribal compacts

July 24, 2023

Ray Carter

After having failed earlier this month, members of the Oklahoma Senate succeeded on their second attempt to override Gov. Kevin Stitt’s recent veto of two bills that authorize one-year state-tribal compacts regarding tobacco taxes and motor-vehicle tags.

The override succeeded primarily due to the unified support of Democrats, who rely heavily on campaign donations from tribal entities and have been among the most vocal proponents of overriding Stitt’s veto.

The override increases the likelihood that potentially tens of millions of dollars in tobacco tax collections could soon be diverted from state government to the control of small tribal governments because lawmakers failed to address the impact of recent court rulings when they drafted the one-year agreement.

Opponents warned the long-term impact of lawmakers’ actions could be significant.

“What’s going on right now is shortsighted and it’s not going to end well for us,” said state Sen. Shane Jett, R-Shawnee and a member of the Cherokee Nation. “Because it creates a perverse incentive, if we set the precedent today, that instead of negotiating with the chief executive of the state of Oklahoma elected by the people that they can do an end-run or anybody can do an end-run around policy, come to us and begin cutting deals.”

“I don’t think that this body fully understands what exactly your ‘yes’ vote to override the governor’s veto, what does that mean,” said state Sen. Warren Hamilton, R-McCurtain.

The U.S. Supreme Court’s 2020 ruling in McGirt v. Oklahoma declared the Muscogee (Creek) Nation’s historic Oklahoma reservation was never formally disestablished for purposes of federal major-crimes law. That ruling has since been expanded to include other tribes whose historic reservations cover most of eastern Oklahoma and now impacts 42 percent of the state, a figure that translates into more than 28,000 square miles.

Existing state-tribal compacts on tobacco-tax collections, which currently allow tribes to receive 50 percent of all taxes collected through tribal smoke shops, are set to expire at the end of the year, and Stitt has been working to negotiate new compacts.

However, lawmakers have instead voted to unilaterally approve compacts for another year, weakening the state’s position in negotiations by reducing the governor’s leverage.

SB 26X would authorize one-year state-tribal tobacco compacts that duplicate language in expiring compacts, including references stating that compacts apply to sales in “Indian country.”

Stitt says that two-word phrase is now a problem because under McGirt the territory covered by “Indian country” is exponentially greater than it was 10 years ago when state-tribal tobacco compacts were last renegotiated. Previously, “Indian country” referred only to Oklahoma land held in trust for a tribe.

House Bill 1005X would approve one-year state-tribal compacts regarding motor vehicle licensing or registration and license tags.

Lawmakers have referred to the bills as “extending” existing compacts, but the practical effect is to approve new compacts with shorter terms without the involvement of the governor in the negotiation process.

State Sen. Nathan Dahm, R-Broken Arrow, said the legislation violates both existing state law and a provision of the Oklahoma Constitution.

Oklahoma law states, “The Governor is authorized to negotiate and enter into cooperative agreements on behalf of this state with federally recognized Indian tribal governments within this state to address issues of mutual interest.”

Article 6, Section 8 of the Oklahoma Constitution states that the governor “shall conduct in person or in such manner as may be prescribed by law, all intercourse and business of the State with other states and with the United States, and he shall be a conservator of the peace throughout the State.”

The compacts approved by SB 26X and HB 1005X reference that constitutional provision, Dahm said.

“The compact itself says that the governor has the power to negotiate compacts,” Dahm said. “Not the Legislature. The governor. The Constitution says the governor has the authority. Statute says the governor has the authority.”

He noted legislators could change state law to take the governor out of the process but SB 26X does not do so.

“We cannot simply ignore the Constitution,” Dahm said. “We cannot simply ignore statute.”

Jett said the legislation is an effort to “disrupt a negotiation process” because some tribal entities are “trying to avoid sitting down with the chief executive who represents the entire state of Oklahoma.” He said tribal officials take that stance, in part, because Stitt, although a Cherokee, is also a conservative Republican.

“There are partisan elements involved in these negotiations,” Jett said. “Some tribes stand behind sovereignty, but sometimes the motivation, it’s quite partisan. You can see it in their rhetoric.”

He noted that Stitt withstood an estimated $50 million in attack-ad spending by so-called dark-money groups during his successful 2022 reelection campaign, and linked SB 26X and HB 1005X to the funders of those attack ads.

“Here’s the other thing: 50 million dollars were spent trying to persuade the state of Oklahoma to remove the chief executive,” Jett said. “A lot of that money came from within Oklahoma. A lion’s share came from the tribes, and the Cherokee Nation in particular.”

Oklahoma Ethics Commission records show that many lawmakers have received either direct campaign contributions from tribal governments or have been supported by political action committees that are funded by tribal governments.

Jett suggested approving legislation that allows campaign donors to avoid negotiating with the state’s elected governor could put the state on a path to increased public corruption.

“Ask yourself this question: Is bypassing the natural negotiating process as stipulated by law in the best interest of every citizen of Oklahoma, or does it just further add to the chaos that is being created and creates a perverse incentive to begin cutting deals behind closed doors for political or personal advantage?” Jett said. “We need to avoid that.”

Only two lawmakers debated in favor of SB 26X: State Sen. Mary Boren, D-Norman, and Senate President Pro Tempore Greg Treat, R-Oklahoma City.

Boren said it is important to enact the one-year compacts because that would be “affirming the sovereignty of the 39 federally recognized tribes.”

Treat denied that SB 26X “removed the governor’s authority to negotiate” compacts even though the bill creates a one-year compact without the governor’s input or participation. He also suggested lawmakers will try next year to formally end the governor’s executive-branch role in state-tribal compact agreements.

“If this body finds that the governor is not negotiating in good faith, I reserve the right as the leader of this body, and you all shall reserve the right, to change that law if we so desire and have the support to do so next year,” Treat said.

Treat said Oklahoma has “a governor right now that doesn’t seem willing to negotiate these issues in good faith, in my opinion.”

Treat said the state half of tobacco tax collections that run through tribal smoke shops totals $57 million per year, meaning the full amount is $114 million annually.

Based on Census data showing just 9.5 percent of Oklahomans are American Indian, as little as $10.8 million may be owed the tribes under existing court rulings that exempt tribal tobacco sales to tribal members from state taxes, yet the tribes receive $57 million, or 427 percent more than what may truly be owed under existing court rulings.

That figure could increase dramatically if more outlets are incorporated into the compact provisions as a result of the McGirt ruling.

Contrary to Treat’s claims that Stitt has not negotiated fairly with tribal governments, the governor recently offered to approve new compacts with nearly identical language to current compacts, including the lavish 50-percent cut reserved for tribes from tobacco taxes collected at their outlets.

The only major change Stitt has sought is to limit compacts to tribal shops on trust land, as has been the practice for decades, rather than the more expansive McGirt “Indian country” language included in the legislators’ version of the compacts that could include 42 percent of the state.

So far, tribes have refused to agree to those terms.

The Oklahoma Senate voted 34-7 to override Stitt’s veto of SB 26X. The override needed 32 votes to prevail and succeeded thanks to unified Democratic support of the effort.

An override effort in early July fell one vote short. Three lawmakers who were not present at the first override attempt provided the margin required to override: State Sens. Brenda Stanley, R-Midwest City; Darrell Weaver, R-Moore; and George Young, D-Oklahoma City. Oklahoma Ethics Commission records show all three lawmakers have received contributions from the Cherokee Nation.

SB 26X now proceeds to the Oklahoma House of Representatives.

The Oklahoma Senate similarly voted 34-7 to override Stitt’s veto of HB 1005X. Members of the Oklahoma House of Representatives have already voted to override Stitt’s veto of that measure.

A document obtained by the Oklahoma Council of Public Affairs shows that the Cherokee Nation may have used as much as $850,000 in funds obtained from the vehicle revenue authorized by state-tribal compacts for a “get out the vote” effort that included funding “political donations for the Cherokee Nation, which gives our tribal government the opportunity to financially support and build relationships with political candidates who are or will be good representatives of Cherokee citizens and our interests.”

Stitt issued a brief statement following the vote.

“Despite real concerns for the future of our state, the Senate has chosen to disregard the governor’s compact in favor of compact language the tribes wanted,” Stitt said. “I am trying to protect eastern Oklahoma from turning into a reservation, and I've been working to ensure these compacts are the best deal for all four million Oklahomans. Unfortunately, the Senate seems to disagree and used an illegitimate process to do so.”