Tribe responds to gas station letter

MARQUETTE – The Keweenaw Bay Indian Community said Friday its plans for a new gas station in Marquette Township are moving forward and despite an objection from Gov. Rick Snyder’s office, the tribe expects to gain federal approval for the project.

In a Jan. 7 letter from Snyder deputy legal counsel Dave Murley told U.S. Bureau of Indian Affairs’ Michigan Agency Superintendent Gerald Parish the proposed gas station could be “unlawful” and offer “an unfair commercial advantage over surrounding competitors.”

The BIA must decided whether to put the land for the project into trust for the tribe, allowing the project to move ahead. Unlike with the tribe’s proposed Ojibwa II Casino project in Negaunee Township, Snyder does not have a final say. Snyder recently received a six-month extension from the BIA, until June, before weighing in on the casino project.

Murley urged federal authorities not to take the land into trust for the gas station.

“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 the Department of Interior to decline any request by KBIC to have the specified land taken into trust by the United States,” Murley wrote. “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.”

By not charging state sales tax, tribal officials and competitors have suggested the price of gas at the station in Marquette Township would be similar to The Pines Convenience Center station run by the KBIC in Baraga County, where gasoline prices can range from 15 to 25 cents cheaper than at stations charging sales tax.

“We welcome additional gas stations and convenience stores to the Marquette area; after all, legitimate competition will only benefit consumers,” Murley wrote. “However, if the tribe or its members wish to compete, let them do so lawfully and on the same terms as Michigan’s other businesses.”

Murley cited a former court case from Washington state, saying if the BIA put the land into trust for the tribe, “it will effectively facilitate the tribe’s unlawful efforts to market its sales tax exemption. This will be extremely detrimental to the local community and the state.”

The tribe’s response to Murley’s arguments issued Friday said the KBIC believes, and hopes residents of Marquette understand, Snyder’s objection has been prompted by existing gas station owners and operators. The KBIC said it is “very disappointed” in Murley’s letter.

“The state’s objection appears to be solely for the benefit of a small number of gas station owners and operators that apparently want to insulate themselves from competition, to the detriment of area residents,” the KBIC said. “Sadly, Gov. Snyder did not consult with KBIC before sending this letter to the federal government.”

The KBIC said it didn’t appear Snyder communicated with Marquette Township officials either. The Upper Peninsula Petroleum Association vehemently objected to the tribe’s gas station proposal when first announced last summer. This week, the group declined to comment on the letter from Murley.

Association officials said gasoline sold without sales tax collected competes unfairly, compromising regular tax-charging stations, operating on a 5 percent profit margins.

The tribe characterized any perceived threat to local businesses as “baseless.” The KBIC said it has operated The Pines Convenience Center in Baraga for more than a decade and other gas station in the Baraga and L’Anse area “remain open and competitive.”

“KBIC is working for the mutual prosperity of our tribal members in Baraga and Marquette, as well as for the greater communities of the Upper Peninsula,” the tribe said. “KBIC’s goal is to provide permanent jobs and services to the local community while generating the revenue to support essential programs and services for KBIC and the surrounding communities. With revenue from its business ventures, KBIC contributes millions to local communities in the U.P. and it plans to continue in this manner.”

The tribe said Snyder’s “hasty pronouncement” -through Murley”s letter- that the tribe will be acting unlawfully is “not only premature, but presumptuous.” The KBIC said Murley makes the assertion based on a 1979 U.S. Supreme Court ruling.

“There are obvious differences between that case and the KBIC’s operation of its proposed gas station. Most notably, that case involved the sale of cigarettes and Washington state’s tax laws,” the tribe said. “In fact, in a previous tax dispute between KBIC and the State of Michigan, the federal Court of Appeals found that the State of Michigan had misstated federal law in its efforts to tax KBIC.”

Tribal officials thanked the people of Marquette for their support of the KBIC’s efforts to bring jobs to the area. The tribe said it hopes that support “pays off” and that the tribe can continue to partner with Marquette Township to create jobs and bring better service to the community.

The KBIC urged Marquette residents to contact their state representatives and Snyder’s office “to let them know we want and need these jobs and services and to stop putting special interests in Lansing ahead of the interests of the people in the U.P.”

John Pepin can be reached at 906-228-2500, ext. 206. His email address is