CHOCTAW RESERVATION — The Mississippi Band of Choctaw Indians (MBCI) has been on a roll: hospitality, high technology, casinos and golf courses.
But one of the tribe’s latest ventures — getting into the auto sales business — has raised the ire of a group of Mississippi auto dealers who say they’ll try to block the tribe’s attempts to enter the car sales business.
They argue that it would create an uneven playing field because the tribe would be operating on sovereign lands and would not be subject to the same strict regulations other dealers must follow.
“There isn’t a new car dealer that I have spoken with anywhere in the state who is opposed to the Choctaws opening a car dealership in Mississippi, provided that they are required to play by the same rules as every other car dealer,” said Bill Lehman, executive director of the Mississippi Automobile Dealers Association. “But it gives a huge competitive advantage to them over every other dealer. It almost amounts to . . . reverse discrimination.”
On Feb. 20, the seven-member Mississippi Motor Vehicle Commission granted an unconditional license by a 3-2 vote to allow the tribe to own and operate the Frontier Ford dealership in Carthage. Partly as a result of receiving an unconditional license, Ford Motor Co. granted the tribe approval.
“Two days after the Feb. 20 meeting, nine dealers located close to Carthage filed a formal complaint stating that issuance of the license was not in the public interest and it should be revoked,” said Lehman. “Approximately 150 other licensed dealers and salespeople later joined the original nine in the complaint. They requested and were granted a hearing to provide the commission with additional information which would convince them to consider either revoking the license or conditioning its issuance on appropriate commitments by the Choctaws to maintain a level playing field.”
When the Choctaws first applied for a license in June 2001, the application listed a Mississippi partnership, a legal entity that would not qualify for the privileges associated with sovereign immunity, said Lehman.
“The application was easily approved and no dealers took much interest,” he said. “Then in January 2002, the tribal council changed its mind, withdrew the original application and re-applied with the tribe listed as 100% owners, which, due to various privileges granted to tribal businesses, would give them a significant competitive edge over other dealers.”
Using their tax-exempt status, for example, would allow the Choctaws to earn more than $1 million profit annually. And even though the Choctaws have volunteered to collect sales taxes at the auto dealership and to pay property taxes to the City of Carthage and Leake County, the tribe would not be required to honor the voluntary concessions unless contractually bound.
“The Choctaws like to point out that, unlike our dealer members, they must build and pay for their own roads, hospitals, schools, et cetera, and that as such they don’t really profit from their various business ventures because they must reinvest their profits back into their infrastructure,” said Lehman. “What they rarely mention, however, is that they also receive millions annually in federal grants, which, according to the Choctaw’s license application to the commission, totaled over $47 million during 2000 alone.”
When a California tribe attempted to purchase an auto dealership on tribal land in California, the state department of motor vehicles compliance board turned down the request on the grounds that, as a sovereign nation, they were not part of the state of California and therefore, the state department of motor vehicles could not issue them a dealer license, Lehman was told.
Mississippi Attorney General Mike Moore recently issued an opinion that there was no legal precedent for denying the MBCI a license.
“The only difference between the two situations, if it’s valid, is the Choctaws have applied to buy a dealership not on tribal land,” said Lehman. “Of course, they don’t have to pay state and federal income taxes, but they’ll do everything everybody else does. But the reality is, any time they want, they can apply for ‘in-trust’ land status. When that’s granted, the dealership becomes reservation-based and would be exempt from federal and state income taxes, property taxes and sales taxes. If that happens, the commission should have the authority to pull their license because the commission doesn’t have issuing authority over a sovereign nation. But I’m just speculating.”
At a regularly scheduled April 17 meeting, about 160 dealers, salespeople and expert witnesses crowded into the commission’s tiny office on Lelia Drive to make a formal complaint. After a three-hour hearing, during which auto dealers explained the competitive disadvantages, the commission delayed a possible vote to rescind the license. The commission is scheduled to meet again May 15.
“The group has filed a complaint to have the unconditional license adjudicated,” said Kevin Watson of Jackson, attorney for the group. “The commission could vote to issue a conditional license requiring the Choctaws to waive sovereign immunity, pay taxes and play by the same rules as every other dealer in the state. Surely, it should come to a vote at the May 15 meeting, but I’m not sure it will.”
Buster Davis, governor-appointed chairman of the commission, was non-committal about a possible vote on the matter.
“We’ve taken it under advisement from the last meeting and that’s all I can say at the present time,” he said.
When contacted about the story, Choctaw Chief Phillip Martin called it “a dead issue.”
“If the unconditional license goes through, the business community in Mississippi needs to keep its eyes and ears open,” said Lehman. “If this can happen to an automobile dealership, then a bank, an insurance company or radio station could be next.”
Contact MBJ contributing writer Lynne W. Jeter at (800) 993-3392 or firstname.lastname@example.org</a.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info