The Montana Supreme Court has ruled in favor of Flathead County in the long-running Whitefish “doughnut” jurisdiction battle.

On a 4-3 vote on Monday, the high court affirmed a Flathead District Court decision that determined the 2010 interlocal agreement between the city and county was not subject to referendum and therefore has been legally terminated by the county.

With that decision, control of the two-mile planning area around Whitefish returns to the county.

A year ago, Whitefish appealed to the state Supreme Court a decision by Flathead District Court Judge David Ortley that gave the county jurisdiction over the doughnut and declared invalid a city referendum that threw out the 2010 interlocal agreement.

The Supreme Court heard oral arguments in the appeal April 11 in Missoula.

In its decision, the high court agreed with Ortley that the 2010 agreement “was a predominantly administrative act not subject to referendum.”

The court noted that the 2010 agreement “only changed a small portion of the prior agreement, did not actually declare any land-use policies or changes, did not remove the city’s power to regulate land use in the doughnut, and was entered after extensive negotiations for the purpose of settling already lengthy litigation in order to restore a cooperative relationship between the parties.”

Justice Jim Rice delivered the court opinion. Justices Laurie McKinnon, Beth Baker and James Haynes concurred.

The court’s dissenting opinion said that since the agreement concerned land-use planning and regulation, “the decision to enter it was unmistakably legislative, just as the adoption of any zoning ordinance would be.”

Dissenting justices also noted that the addition of the unilateral withdrawal and five-year duration provisions in the 2010 agreement were significant policy changes, rendering the agreement legislative and therefore subject to referendum.

The roots of the lawsuit date back to 2005 when the city and county entered into an interlocal agreement that gave the city exclusive planning jurisdiction in the doughnut.

In 2008 Whitefish adopted a critical areas ordinance that imposed zoning restriction in the doughnut to protect lakes, streams and wetlands from development.

Opposed to what it saw as overreaching enforcement in the two-mile area, the county unilaterally rescinded the agreement based on the premise that doughnut residents have no representation since they can’t vote in city elections.

That led to the city filing a lawsuit alleging the county could not unilaterally withdraw from the interlocal agreement. The county countered with several arguments attacking the validity and enforceability of the agreement.

Ultimately, the city and county attempted to resolve their differences through a joint city and county committee.

In November 2010, the Whitefish City Council voted to enter into a new interlocal agreement that amended the 2005 agreement. The county also voted to enter the agreement, and the lawsuit was dismissed.

The new agreement provided county oversight of the city’s oversight of zoning in the doughnut. It also allowed the city or county to terminate the agreement after giving one year’s notice.

Unhappy with the council’s decision to support the 2010 agreement — viewed as a compromise between the city and county — a group of city residents began gathering signatures in April 2011 to put a referendum on the ballot to repeal the new agreement.

In light of the developing referendum, in June 2011 the county gave its one-year notice that it was withdrawing from the new agreement.

The referendum passed by a 2-to-1 margin, so the city took the position that the new agreement was null and void and the 2005 agreement was back in force.

A lawsuit challenging the validity of the referendum was filed Dec. 20, 2011, by Lyle Phillips, Anne Dee Reno, Turner Askew and Ben Whitten. A key issue in the legal challenge was whether the City Council’s resolution to sign a lawsuit settlement that adopts an interlocal agreement can be overturned by referendum.

The plaintiffs maintained a legal settlement is an administrative act, not a legislative act, and therefore could not be subject to referendum.

Ortley’s ruling in July 2013 noted there is no valid interlocal agreement between the two parties. Until the county adopts its own zoning for the doughnut — which it had begun to do when the court imposed an injunction stopping the interim zoning from moving forward — the city of Whitefish has the authority to enforce zoning in the two-mile area, Ortley said.

The Supreme Court did not address whether the 2005 interlocal agreement has been reinstated.

Baldwin is the editor of the Whitefish Pilot.