In that report, Arch Coal informed investors that a federal court lawsuit was filed in July which challenges the legality of mountaintop removal permits. The suit alleges valley fills that bury streams violate the federal Clean Water Act.

The Arch Coal SEC report said the lawsuit identified nine company permits that are alleged to violate the legal standards. The suit cites the Dal-Tex expansion permit as one that shouldn't be issued as written.

Arch Coal said in the report that any changes in existing or pending permits could hurt the company.

"Elimination of valley fills altogether as an engineering alternative for disposal of soil and rock in large- scale surface mining would have a material adverse effect on the results of operations," the report said.

Arch Coal also said that the company is not sure that EPA will withdraw its objection to a permit for the Dal-Tex expansion, or that if it does, the permit will be issued in a timely fashion.

Permit applications on file with the DEP Office of Mining and Reclamation state that Arch Coal originally wanted to start mining the new, 3,100-acre permit in January 1998. The initial date was later pushed back to July 1, the records show.

Joe Lovett, a lawyer representing citizens who are fighting mountaintop removal, has filed court motions that explain his lawsuit won't stop all mountaintop removal.

"Valley fills would have to be smaller and would have to be constructed in the portions of the hollows that are above the waters of the United States," Lovett said in a recent court brief. "This could be accomplished by reducing the size of the mining cut and by requiring the mining operations to place more of the mining spoil back on the mountain after mining," Lovett wrote.

In a report filed with the U.S. Securities and Exchange Commission, Arch Coal said it is worried about a federal court lawsuit and permit objections raised by the federal Environmental Protection Agency.

Arch Coal on Wednesday issued a statement to alert investors that its mining operation profits for the third quarter of 1998 would be below expectations.

Company officials blamed high maintenance costs, operating problems at two large surface mines in West Virginia - Dal-Tax and Hobet 21 - and poor rail service at Arch's western operations.

In a news release, Arch Coal CEO Steven Leer also said that, "However, in order to improve the performance at our Dal-Tex mine, we will need to secure the new permit for that operation in a timely fashion.

"A substantial delay in obtaining that permit or significant new restrictions on the surface mining process at the Dal-Tex mine would result in a curtailment of production," Leer said.

Dal-Tex wants a new permit to strip 3,100 acres of hills and hollows across W.Va. 17, to the east of its current operations near Blair in Logan County. A permit for the operation is being held up by EPA.

Federal officials say that Arch Coal and the state Division of Environmental Protection have not fully evaluated the environmental impacts of the mining and related valley fills.

The permit may still be months from being issued. EPA has scheduled a public hearing on it, and an A.T. Massey Coal Co. mountaintop removal permit, for Oct. 24 in Logan.

Leer's press statement was based on a quarterly report Arch Coal filed in mid-August with the SEC.

In that report, Arch Coal informed investors that a federal court lawsuit was filed in July which challenges the legality of mountaintop removal permits. The suit alleges valley fills that bury streams violate the federal Clean Water Act.

The Arch Coal SEC report said the lawsuit identified nine company permits that are alleged to violate the legal standards. The suit cites the Dal-Tex expansion permit as one that shouldn't be issued as written.

Arch Coal said in the report that any changes in existing or pending permits could hurt the company.

"Elimination of valley fills altogether as an engineering alternative for disposal of soil and rock in large- scale surface mining would have a material adverse effect on the results of operations," the report said.

Arch Coal also said that the company is not sure that EPA will withdraw its objection to a permit for the Dal-Tex expansion, or that if it does, the permit will be issued in a timely fashion.

Permit applications on file with the DEP Office of Mining and Reclamation state that Arch Coal originally wanted to start mining the new, 3,100-acre permit in January 1998. The initial date was later pushed back to July 1, the records show.

Joe Lovett, a lawyer representing citizens who are fighting mountaintop removal, has filed court motions that explain his lawsuit won't stop all mountaintop removal.

"Valley fills would have to be smaller and would have to be constructed in the portions of the hollows that are above the waters of the United States," Lovett said in a recent court brief. "This could be accomplished by reducing the size of the mining cut and by requiring the mining operations to place more of the mining spoil back on the mountain after mining," Lovett wrote.