The federal government officially said “no” to the Menominee Nation’s Kenosha casino project Wednesday.

Interior Secretary Dirk Kempthorne rejected the tribe’s land-into-trust application for the project, citing its noncompliance with 2008 guidelines that discourage approval of off-reservation casinos outside of a “commutable distance” from a tribe’s reservation.

The tribe has a lawsuit pending against the government, contending these guidelines are an illegal attempt to quash off-reservation casinos. Kempthorne’s decision came days before his term expires Jan. 20, when the Bush administration leaves office.

A spokesman for the Kenosha casino effort said Wednesday the project will continue in spite of the denial.

“Kenosha should know that the Menominee are continuing to pursue this project aggressively,” spokesman Evan Zeppos said.

The Menominee and its partner, the Mohegan Tribe of Connecticut, have long marketed the $1 billion project as a means to boost the Menominee — the state’s largest and poorest tribe — and the Kenosha community.

In an 11-page letter to the tribe, an Interior Department official stated the secretary has determined the Kenosha land is not “necessary” to facilitate economic development for the tribe, as required under Indian Reorganization Act regulations.

George Skibine, the department’s acting deputy assistant secretary for policy and economic development, wrote that acquiring the land roughly 170 miles from the Menominee reservation could perpetuate a past splintering of the tribal community, having a detrimental effect on reservation life.

“Furthermore,” Skibine wrote, “the tribe has not convincingly demonstrated that the mere injection of revenues would directly decrease reservation unemployment, ameliorate social and health care problems or balance the tribe’s reservation demographics, which is 42 percent under the age of 20 and 45 percent female head-of-households as of the year 2000.”

A “guidance memo” issued by a Bureau of Indian Affairs leader in January 2008 stated that more weight would be given to state and local concerns, including effects on reservation life, the farther a proposed casino is from a tribe’s reservation. This guideline’s timing coincided with the government’s rejection of 11 other off-reservation casino bids.

The Menominee lawsuit against the government, filed in U.S. District Court in Green Bay in November, challenges the validity of the memo, which Zeppos charged does not carry the force of law and was never properly published in the Federal Register. A government motion to dismiss the case, filed Tuesday, awaits a judge’s ruling.

Zeppos said the tribe will continue to pursue the litigation aggressively.

Meanwhile, he said plans are under way to resubmit the application to the Obama administration, which casino backers believe will be more open-minded.

President-elect Barack Obama has appointed Colorado Sen. Ken Salazar to succeed Kempthorne, pending confirmation by the Senate.

Kenosha Mayor Keith Bosman and County Executive Jim Kreuser reacted similarly to Wednesday’s news.

“We’re going to be fine with or without a casino,” Kreuser said. “We’re going to keep just moving along, and those interactions regarding the casino are going to continue on for a while. I’m going to focus on moving Kenosha County forward, and we have a lot of good things going on here in Kenosha County.”

Bosman said the city has not budgeted to receive the revenues anticipated if the project is built.

The casino was slated to pump more than $521 million into local governments’ coffers over 22 years, according to an analysis conducted in 2004. These payments would be required under an intergovernmental agreement adopted in 2005.

Bosman said he believes the casino would be terrific for the people who would ultimately find work there or on its construction, but he said it is not something on which the city is basing its economy.

“If it does come along, we will welcome it,” Bosman said. “And if it doesn’t, we’ll find something else.”

Kenosha County Supervisor Jim Moore, a longtime casino opponent, said he believes Wednesday’s action spells an end to the project, no matter how hard the tribe fights.

Moore, also the chairman of the Kenosha Coalition Against Legalized Gambling, said the government’s action confirms his group’s long-held belief that the Menominee application goes against what federal law intended.

“I’m just sorry that our community and local government has wasted so much money and energy on this thing,” Moore said.

It was five years ago this week that the Menominee and their local developer at the time, Dennis Troha, introduced this iteration of the effort to build a tribal casino at Dairyland Greyhound Park.

An earlier project, involving the Menominee and NII-JII Entertainment LLC, passed a citywide referendum in 1998 but stalled in 2001, amid the pressures of an anti-gambling governor and turmoil within NII-JII.

The version of the project that the government denied Wednesday passed a countywide referendum on a vote of 56 percent to 44 percent in November 2004, after a heated campaign in which Troha spent upward of $1 million to fight attacks from the Forest County Potawatomi.

Since 2004, Troha has been convicted for making illegal campaign contributions as part of an investigation that landed former County Executive Allan Kehl in prison for taking improper donations from Troha.

The government’s letter of denial did not mention the Troha scandal. Troha’s interest in the project was bought out by the Mohegan Tribe, which also holds an agreement to manage the proposed casino for its first seven years of operation.

Wednesday’s rejection does not immediately affect an offer that the Menominee and Mohegan hold to purchase Dairyland for an unspecified amount. Dairyland Executive Vice President Roy Berger said that deal will remain in place as long as the tribes continue to pay to maintain it.

“We’re not particularly surprised by this,” Berger said. “We’re disappointed. But we think they were prepared for this, and obviously they have a game plan in force.”

Menominee Chairwoman Lisa Waukau, in a statement released Wednesday, reiterated the tribe’s belief that the project is good for all of the involved parties.

She said the denial ensures the tribe will pursue its case vigorously.

“The only viable legal argument that the department has put forward in the litigation is that it had not made a final decision on our application; therefore, the tribe’s lawsuit was premature,” Waukau said. “The department’s action today removed that argument, and we are supremely confident that the court will overturn this illegal action.”