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In McGirt v. Oklahoma, the Supreme Court held that the eastern half of Oklahoma was Indian country. This bombshell decision was contrary to settled expectations and government practices spanning 111 years. It also was representative of an increasing trend of federal courts recognizing Indian sovereignty over large and economically significant areas of the country, even where Indians have not asserted these claims in many years and where Indians form a small minority of the inhabitants.

Although McGirt and similar cases fundamentally turn on questions of statutory and treaty interpretation, they are often couched in consequence-based arguments about the good or bad economic effects of altering existing jurisdictional relationships. One side raises a “parade of horribles.” The other contends that “the sky is not falling.” Yet, to date, there is hardly any empirical literature to ground these debates. Litigants have instead been forced to rely upon impressionistic reasoning and economic intuitions.

We evaluate these competing empirical claims by exploiting natural experiments: judicial rulings altering the status quo of Indian reservation status. Applying well-established econometric techniques, we first examine the Tenth Circuit’s Murphy v. Royal decision in 2017 and the Supreme Court’s McGirt v. Oklahoma decision in 2020, which both held that the eastern half of Oklahoma was in fact Indian country. To do so, we leverage monthly employment data at the county level, annual output data at the county level, and daily financial data for public companies incorporated in Oklahoma. Contrary to the “falling sky” hypothesis that recognition of Indian jurisdiction would negatively impact the local economy, we observe no statistically significant effect of the Tenth Circuit or Supreme Court opinions on economic output in the affected counties.

We supplement these findings by analyzing five further case studies. These include three Supreme Court decisions: Nebraska v. Parker (concerning the Village of Pender, Nebraska); City of Sherrill v. Oneida Indian Nation (City of Sherrill, New York); and South Dakota v. Yankton Sioux Tribe (Mix County, South Dakota). We also analyze settlements between tribes and state governments in Mt. Pleasant, Michigan, in 2010 and Tacoma, Washington, in 1989. On balance, we report no statistically significant evidence that recognition of tribal jurisdiction reduces economic performance in the affected counties, and we provide several hypotheses to contextualize these findings. These results have important consequences for future litigation related to tribal sovereignty.


Originally published in the Yale Journal on Regulation