MACKINAC ISLAND — A federal appeals court has ruled that Mackinac Island cannot regulate parking fees at mainland ferry docks but may proceed with regulating boat ticket prices for now. The decision from the U.S. Court of Appeals for the 6th Circuit partially reverses a lower court’s injunction that had blocked the city’s oversight of consolidated ferry services.
The legal dispute follows the 2024 acquisition of all major island ferry lines by the Hoffmann Family of Companies. In response to the consolidation, the city passed Ordinance 629 to control fares and ancillary fees. As the only remaining special charter municipality in Michigan, Mackinac Island argued its unique charter granted it broad authority to regulate transportation to and from the island to prevent a monopoly.
Shepler’s Inc. and the Mackinac Island Ferry Company, which operates as Arnold Transit Company, are currently under the common ownership of the Hoffmann Family of Companies. The Hoffmann group acquired the Mackinac Island Ferry Company in 2024 after previously purchasing Shepler’s in 2022. This consolidation brought all primary ferry services for the island under a single entity. To offset investments, the companies notified the city of plans to increase ferry fares by $2.00 and raise parking fees for the 2025 season.
Circuit Judge Richard Allen Griffin, writing for the court, noted that the city viewed the consolidation as a threat to local residents and tourists. The city responded by passing a resolution to freeze rates at 2024 levels before enacting Ordinance 629.
“The City found that the recent purchase of all the ferry boat companies by one company presents the City with a monopoly situation, a situation the City has never faced before,” Griffin wrote. “And it passed a resolution freezing the rates that were in place for the 2024 season.”
The appellate court upheld the district court’s decision to block the city from regulating parking fees at mainland docks in St. Ignace and Mackinaw City. The judges found that the city’s founding charter does not provide authority over mainland parking lots, which are located miles away from the island’s borders. Griffin explained that the term “landing” in the city’s 1899 charter does not encompass parking facilities.“A parking lot does not fit within this definition of “landing,”” Griffin stated in the opinion. He noted that the state of Michigan would have explicitly stated so if it intended to grant the city “broad extraterritorial authority over substantial land” on the mainland.
Regarding ticket prices, the court found the 2012 franchise agreement between the parties was “ambiguous” concerning who determines when competition has ceased. Section 9 of the agreement allows the city to regulate rates if “no competition is found to exist,” but the court noted the contract is silent on which party makes that finding. Because the language is open to multiple interpretations, the court ruled that the city could implement its rate regulations while the lawsuit continues.
“Because the City’s reading of Section 9 is reasonable and the district court’s reading of the same provision is reasonable as well, “the language is susceptible to two or more reasonable interpretations,”” Griffin wrote. “Accordingly, we conclude that Section 9 is ambiguous.”
Circuit Judge David McKeague filed a separate concurring opinion. He pointed out that the city’s initial resolution to freeze prices did not specifically mention a lack of competition, which is a requirement to trigger the city’s regulatory power under the existing contracts.
“Conspicuously absent from that resolution is any mention of a lack of competition,” McKeague wrote. “Perhaps the City did not need to use the word “competition.” But that conclusion is not apparent from the Franchise Agreements.”
The case will return to the U.S. District Court for the Western District of Michigan for further proceedings to resolve the legal meaning of competition within the contracts. The current franchise agreements between the ferry companies and the city are set to expire on June 30, 2027.
“Regardless of who ultimately prevails... the Franchise Agreements expire by their terms next year, meaning that the parties must negotiate new terms very soon or risk disrupting ferry service,” McKeague wrote.