Federal regulators violated the law by not considering potential health dangers from a large surface mine near the Knott-Perry County line, an attorney for two environmental groups argued Tuesday.
An attorney for the U.S. Army Corps of Engineers, however, said the agency properly considered the environmental impact of the activity over which it has control.
Now, the fate of the permit is in the hands of a three-judge panel of the U.S. 6th Circuit Court of Appeals.
The case is on the leading edge of efforts to open a new front in opponents' fight against surface mining, based on arguments that it exposes nearby residents to higher risks of cancer, kidney disease, birth defects and other health problems.
For years, environmentalists have used other arguments to fight surface mining, including that it damages water quality and destroys streams.
The studies to underpin a challenge based on harm to human health began emerging in 2009 and 2010, said Neil E. Gormley, who represents the groups challenging the permit at issue in Tuesday's arguments.
Gormley told appeals judges meeting in Lexington that the Corps of Engineers was supposed to evaluate the potential impact of the proposed mine on human health but didn't, and that Kentucky, which also had a role in authorizing the mine, is not required to consider such effects.
"The bottom line is if the Corps doesn't consider the public health risks, no agency will," Gormley argued.
The mine at issue in the case is called the Stacy Branch mine, which would include more than 850 acres near Vicco, a small town in Perry County, and Sassafras, a community in Knott County.
Leeco Inc., a company owned by Richmond, Va.-based James River Coal Co., first applied to mine the area in 2007.
The initial plan included creating six valley fills. Surface mining in Eastern Kentucky involves blasting apart hillsides to uncover coal; coal companies often can't put all the rock and dirt back on the mined site, so they fill nearby valleys, burying sections of streams.
The Sierra Club objected, citing concerns about potential runoff of pollutants from the mine, and the U.S. Environmental Protection Agency warned that the proposed mine could further damage water quality.
Leeco then came up with a new mine design that would have only one valley fill and would bury about 3.5 miles of stream area, much of it so-called "ephemeral" area that has water only when it rains or when snow melts.
The EPA agreed that the plan would significantly reduce potential water-quality problems, and the Corps of Engineers and the state issued permits, according to court documents.
The Corps concluded that the mine would not cause significant degradation of streams.
Still, residents and environmental groups objected.
Pam Maggard, a school teacher who lives in Sassafras, told the Herald-Leader last year that she has miners in her family and is not anti-coal, but that the massive disruption caused by surface mining disturbs her.
"I want people to have jobs," she said. "But I can stand on my front porch and see that mountain they want to mine on. What do we do when the last of the coal is gone? If we've polluted the water and destroyed the natural beauty, nobody is going to want to visit or live here."
The coal industry contends that federal rules under which coal companies operate protect water quality and that companies restore land after mining.
Maggard and others who live near the proposed mine, along with Kentuckians for the Commonwealth and the Sierra Club, sued the Corps of Engineers in October 2012, claiming that it improperly gave Leeco a permit to mine through and bury streams.
The groups said there are a growing number of studies that document a correlation between surface mines and health problems among nearby residents, perhaps linked to heavy metals and other pollutants released as a result of the mining.
Last August, U.S. District Judge Thomas B. Russell ruled that the Corps acted properly, but he also issued an injunction blocking the mine while the environmental groups appealed.
The oral arguments Tuesday in Lexington were part of the appeal.
One key issue is the roles of the Corps of Engineers and Kentucky regulators in issuing a surface-mine permit.
Surface-mining rules are federal, but the federal government has designated Kentucky to issue permits and enforce rules, with oversight by federal agencies.
However, the Corps has jurisdiction over what are called "waters of the U.S.," including streams. That means the agency must give a coal company permission to put fill material in such streams when creating valley fills.
In the Stacy Branch case, the Corps argued that it is required to consider only the environmental impact of putting rock and dirt in streams — not the effects of the entire mining operation, including the potential impact on human health.
On that front, the Corps did its job, the agency argues.
The review showed that the mine would not hurt drinking-water supplies, and the Corps required Leeco to improve another watershed to compensate for filling streams at Stacy Branch mine, the agency argued in a motion.
None of the studies cited by opponents of the mine show a direct link between health problems and putting rock and dirt in stream areas, the Corps' attorney, John D. Gunter II, told the appeals judges.
The issue of effects from the entire mining operation would be under the state's jurisdiction, Gunter said.
Leeco also has argued that the studies have not confirmed that surfaced mining causes cancer and other health problems.
Russell agreed with the Corps' position that it didn't have to assess the health impacts of the entire mine, but the environmental groups argue the judge and the Corps erred.
The Corps is required to consider the potential health dangers of mining because they flow from an activity the Corps regulates — mining in and filling streams, the groups argue in court documents.
There's no way to separate the Corps' purview over streams from the larger operation because mining could not go forward without the Corps permit, the groups argued.
The fact that Kentucky has authority to issue permits for surface mining does not end the Corps' responsibility to assess health impacts, according to the environmental groups.
The groups also contend that the Corps' did not properly consider evidence that the plan for Leeco to compensate for damage to streams in Stacy Branch was likely to fail.
During the arguments Tuesday, appeals Judge Eugene Siler Jr. asked Gormley whether the effect of the environmental groups' position would be to stop all surface mining.
Gormley said it wouldn't. Rather, the Corps would have to include a "hard look" at the health impacts of mining when reviewing a permit application, and could require additional measures to protect health.
It could be several months before the appeals panel rules.
Bill Estep: (606) 678-4655. Twitter: @billestep1.