MISSOULA — Montana Supreme Court justices peppered attorneys with questions Friday during a special hearing on the Whitefish “doughnut” jurisdiction battle as they considered key issues in the long-running conflict.

The high court heard oral arguments in a public venue Friday morning on the University of Montana campus. Only a select number of appeals — those with statewide significance — are chosen for oral arguments open to the public, a UM law professor pointed out to a large crowd that included dozens of Whitefish area residents as well as law-school students.

It’s the second time the Supreme Court has considered the case, but in 2008 the high court sent the doughnut lawsuit back to Flathead District Court.

Before the District Court issued a ruling, however, the initial lawsuit was dismissed as part of a 2010 compromise agreement between the county and city. The latter agreement fell apart when city voters threw it out via a referendum.

A second lawsuit erupted in late 2011 when four Whitefish-area residents sued the city, asking the court to throw out the referendum that repealed the 2010 planning agreement for the doughnut.

For Whitefish residents who have closely followed the seven-year-long doughnut dispute, the oral arguments were a refresher course as attorneys representing the four parties in the lawsuit argued on behalf of their clients.

For law students, it was a crash course in how Flathead County and Whitefish came to loggerheads over who should have the right to make land-use decisions in the two-mile area around Whitefish known as the doughnut.

Supreme Court Justice Beth Baker pointed out how the city helped negotiate the 2010 compromise agreement  and that it “served to help settle the lawsuit.”

Justice James Rice asked attorney Terry Trieweiler, the city of Whitefish’s legal counsel, about the effect of the 2010 agreement, commenting that it seemed to him that Whitefish had the same level of zoning authority before the agreement as it did afterwards.

Trieweiler said the 2010 agreement “in reality, gave the county oversight it didn’t have before.

“We know they [the county] wanted to terminate [the agreement] and planned to,” Trieweiler told the justices. “The county got what it wanted. They just had to wait a year.”

He was referring to the county’s decision to give its required one-year termination notice to the city, anticipating the effect the referendum would have on the control of the doughnut.

There were questions from the justices about the original 2005 agreement, which the four plaintiffs believe is void. In fact, the lawsuit quotes District Judge Katherine Curtis’ ruling as saying the 2005 agreement “is void and is clearly superseded by the 2010 agreement.”

“What do you go back to” if the 2005 agreement was declared void, and “assuming the referendum was valid?” Justice Laurie McKinnon asked.

Trieweiler said he disagreed with Judge Curtis’ declaration that the 2005 agreement is void.

Justice Mike Wheat called the city voter-approved referendum “a two-step” move in light of the fact that the 2010 agreement it tossed out also had been used to settle the first lawsuit.

“Does that seem like something that will be a good policy in Montana?” Wheat asked.

Wheat further inquired whether county residents could have enacted their own referendum. Trieweiler said county citizens “have the same power” to do so.

Justice Baker kept on the same line of questioning, stressing that the 2010 agreement “was a product of long negotiations of voters in two jurisdictions.

“What consideration do we give when voters in one part of the contract affect the entire jurisdiction?” Baker asked. “The doughnut residents didn’t get a chance to weigh in on the referendum.”

Trieweiler said state law allows citizens the right to conduct a referendum. While an injunction has stopped the county from imposing interim zoning in the doughnut, Trieweiler said the county has “nothing similar to Whitefish” for regulations protecting water quality and county zoning regulations are more permissive.

Justice Baker interrupted Trieweiler, asking, “Why is that relevant to our decision?”

Trieweiler said city zoning can better protect the community and its quality of life.

Kalispell attorney Duncan Scott, representing the four plaintiffs — Lyle Phillips, Turner Askew, Anne Dee Reno and Ben Whitten — called the doughnut dispute “a fight between a government and its colony.” He pointed out how the city’s critical areas ordinance, what he deemed heavy-handed enforcement of drainage issues in the doughnut, has been “incomprehensible and costly.”

“The doughnut people didn’t enjoy the right of referendum on the critical areas ordinance,” Scott said. He referred to the doughnut residents’ lack of representation in having no voice in city decisions that affect them.

Justice Baker quickly responded.

“The representation issue — what are we supposed to do with that concept?” she asked.

Scott agreed the representation issue “doesn’t fit in today if you hold that the 2005 agreement is dead. You don’t need to get there.”

But, Scott said, if the Supreme Court reinstates the 2005 agreement, “there will be [another] lawsuit and representation would be an issue.”

As Missoula attorney Alan McCormick, the county’s lawyer, stepped the justices through a 40-year history of joint land-use planning in the doughnut and cited state statutes dealing with extraterritorial jurisdiction, Justice McKinnon bluntly responded: “It seems like we’re going around and around.”

One of the pivotal issues is whether the 2010 agreement was a legislative or administrative act. Scott maintains that referendums can only address legislation and a lawsuit settlement is not legislation but rather an administrative act.

McCormick said the city should not have had the power to overturn a contract that is administrative in nature.

Kalispell attorney John Lacey was the fourth attorney to make oral arguments on behalf of his clients, intervenors Dan Weinberg, Ed McGrew, Mary Person and Marilyn Nelson. He contended the plaintiffs didn’t legally challenge the referendum in a timely manner.

“Public policy should be to act in a reasonable manner...” Lacey said. “In this case waiting 11 months [to file a lawsuit] is not reasonable.”

Chief Justice Mike McGrath then asked: “Is 30 days reasonable? Is 120 days not reasonable?”

Whitefish residents weighed in on the arguments following Friday’s session, saying it was a privilege to witness the court session.

“I thought the Supreme Court asked excellent questions,” said Diane Smith, a Whitefish businesswoman who has been an advocate for allowing doughnut residents to have a voice in the discussion. “The doughnut people need some certainty and need to have the opportunity to have control over their lives. Whitefish has been wrong-headed and unfair, and to me this is an issue of fairness.”

Rebecca Norton of Whitefish said she believed both sides were heard in the questioning by the justices.

“This will have a long-range impact on the whole state,” Norton said. “It makes me value our democracy even more. It feels good to have this thoughtful deliberation.”

Mary Person, one of the intervenors, said she lives in the doughnut but considers herself a Whitefish resident.

“We care about what happens to our community,” Person said, pointing out the water-quality issues that affect the entire area.

Mayor John Muhlfeld said he felt both parties presented strong oral arguments. He still holds out hope for reconciliation and a cooperative approach between the city and county.

“We share more values than not,” Muhlfeld said, adding it’s unfortunate the matter has been “muddied by politics.”

It’s not known when the Supreme Court will rule in the doughnut case, but the oral arguments were the last chance for all parties to state their case. From here on out the justices will discuss the merits of the case behind closed doors.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.