Sept. 8 (Bloomberg) -- The Environmental Protection Agency is reconsidering a permit issued in 2007 letting Arch Coal Inc. fill valleys and streams with debris from a mountaintop-removal coal mine in West Virginia.

The EPA, in a Sept. 3 letter to the Army Corps of Engineers, said the permit for the 2,278-acre coal mine fails to deal with the effect on downstream water quality, said Mark Taylor, supervisory biologist in the Army Corps’ Huntington, West Virginia, office. The letter also questions plans to create streams to replace those filled with mining debris.

In June, six months after President Barack Obama took office, the EPA said it would review all pending mountaintop mining permits in the Appalachia region because of the potential effect on nearby streams and rivers. Last month, the agency approved Consol Energy Inc.’s Peg Fork coal mine over objections from environmental groups.

“It’s not the death of mountaintop coal mining,” said Mary Anne Hitt, deputy director of the Sierra Club’s campaign to limit the use of coal. “But it’s clear that it’s not just going to be blanket approval of anything the Corp wants to do, which was essentially the case under the Bush administration,” Hitt said in an interview.

Removing mountain peaks to expose coal deposits and filling in adjacent valleys with mining debris is the least expensive and more environmentally harmful method of extracting the fuel, according to the Sierra Club, an environmental advocacy group based in San Francisco.

‘Suspend, Revoke or Modify’

The EPA asked the Army Corps to “suspend, revoke or modify the permit,” for the Spruce No. 1 Surface Mine in Logan County, according to the letter. “Recent data and analyses have revealed that downstream water quality impacts have not been adequately addressed.”

Kim Link, a spokeswoman for St. Louis-based Arch Coal, didn’t return a call for comment.

The permit would let Arch Coal fill six valleys and 43,000 linear feet of streams, Taylor said. The company must create on- site stream channels to replace lost water resources.

The EPA said sediment from mountaintop mining that includes fine particles of metals such as iron and aluminum may degrade streams and rivers affecting fish habitat. The agency also said permits should consider the cumulative effect of nearby coal mines.

Luke Popovich, a spokesman for the Washington-based National Mining Association, an industry lobby group, said the EPA was “cherry picking” scientific data to block coal mining.

“They’ve been looking at these permits for a long time and suddenly the new cop comes to town and says the work they’ve done heretofore is questionable,” Popovich said in an interview. “They seem to be moving the goalposts around so that you can’t score a touchdown.”

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net.

Last Updated: September 8, 2009 16:59 EDT