Trust Application By Keweenaw Bay Indian Community
Posted by Amy Clickner on January 16, 2013
Gerald F, Parish, Superintendent
Bureau of Indian Affairs Michigan Agency
United States Department of the Interior
2845 Ashmun St.
Sault Ste. Marie, Michigan 49783-3732
STATE OF MICHIGAN EXECUTIVE OFFICE LANSING
January 7, 2013
Re: Trust application by Keweenaw Bay Indian Community in Negaunee County, Michigan
Dear Mr. Parish:
It is our understanding that the Keweenaw Bay Indian Community (KBIC or Tribe) has purchased land along US-41 in Marquette Township in Michigan’s Upper Peninsula and intends to submit an application to the U.S. Department of the Interior (DOI) to have that land taken into trust for its benefit. According to various news articles (enclosed), KBIC intends to build a gas station and convenience store on this property where it will provide “discounted” gasoline to the surrounding area, These articles include representations by KBIC that it is able to discount its sales because the Tribe does not pay Michigan taxes on such sales. Michigan’s tax on such transactions is 6% of the retail price. For a gallon of gas otherwise costing $4.00, the tax would add another $24 for each gallon sold. This would represent a considerable savings that will naturally be attractive to potential purchasers. Apparently the tribe is already selling gasoline at comparable discounts from a retail location on its reservation.
This apparent willingness to undercut the price of gas has caused numerous local competitors to contact the Governor in order to voice their concerns. With a gross profit margin of less than 5%, the non-tribal businesses are indicating that they will be unable to compete on both gasoline and convenience store sales. If these stores go out of business, the State loses revenues from both the stores and their employees. Such revenues are essential for funding local schools, social services, and a variety of other state and local services.
Just as important, it is simply unfair for one retailer to enjoy such a marketing advantage. This is exactly why the United States Supreme Court has made it clear that an Indian tribe may not “market an exemption from state taxation to persons who would normally do their business elsewhere.” See Washington v. Confederated Tribe, 447 U. S. ‘l34(1980) at page 155. if DOI approves any land into trust request by the Tribe so that it can operate a retail gas station, it will effectively facilitate the Tribe’s unlawful efforts to market its sates tax exemption. This will be extremely detrimental to the local community and to the state.
Moreover, this land is located more than an hour from the tribe’s reservation. This land will not enhance the tribes reservation or facilitate lawful economic development. Taking this land into trust so that the KBlC may unlawfully compete with tax-paying businesses would use the land into trust process as a sword rather than a shield, and alter the cordial and cooperative relationship the state now shares with the tribes within its borders.
We are considering our options for addressing any failure to collect and remit state taxes by the tribe. However, rather than push the parties into costly and divisive
litigation, the State respectfully asks DOE to decline any request by KBJC to have the specified land taken into trust by the United States. While the tribe is free to run any business it chooses, it should not be able to gain an unfair commercial advantage over the surrounding competitors by having the property put into trust for the admitted purpose of marketing a tax advantage. We welcome additional gas stations and convenience stores to the Marquette area; after all, legitimate competition will only benefit consumers. However, if the tribe or its members wish to compete, let them do so lawfully and on the same terms as lVlichigan’s other businesses.
We appreciate your consideration in this matter. Please let us know if we can provide any further information.
Sincerely
Dave Murley
Deputy Legal Counsel
Enclosures
cc: Heather Chapman, KEilC
Senator Tom Casperson
Representative John Kivela
