As a federal judge moved a mountaintop removal lawsuit closer to trial, negotiations toward a possible settlement of the case appeared to be in trouble Friday.

Industry negotiators had proposed tougher restrictions on mine blasting and a costly plan for companies to turn land over to a trust for public uses, according to a settlement proposal reviewed by The Charleston Gazette.

In exchange, the industry wanted the West Virginia Highlands Conservancy to drop its claims that filling in creeks with millions of tons of rock and earth valley fills violates a federal stream buffer zone rule, according to the proposal.

The conservancy agreed to keep talking about the proposal, but coal operators pulled out of key parts of the potential deal, according to sources on both sides.

At the same time, Chief U.S. District Judge Charles Haden II denied efforts from both sides to have the case decided solely on legal arguments, rather than by testimony at trial.

"The court remains firmly of the opinion that the issues of fact and law in the case can be resolved fully and appropriately in a trial on the merits," Haden wrote in a two-page order filed Friday morning.

Haden scolded lawyers for seeking summary judgment, after he told them not to when he agreed in March to move up the trial date from September to July 13.

"The court then provided a scheduling order expediting the trial and purposely providing no date for dispositive motions," Haden wrote. "Despite the language of the order, the parties have ignored it and attempted to insert motions for summary judgment into their sought-after foreshortened trial schedule."

On Thursday, Haden approved a previous partial settlement of the lawsuit.

That agreement, reached in December, settled the conservancy's claims that the U.S. Army Corps of Engineers improperly permitted valley fills in violation of the Clean Water Act. Under the agreement, federal regulators agreed to conduct a two-year environmental impact study on mountaintop removal and to subject mining permits to more scrutiny in the meantime.

Negotiations have continued behind closed doors on other claims, which allege the state Division of Environmental Protection violates numerous mining and water pollution laws in permitting mountaintop removal.

One claim is that valley fills are not allowed under a federal regulation which prohibits mining within 100 feet of streams. If upheld by a court, that claim could lead to serious limitations on the size of streams buried by mountaintop removal.

In the last few weeks, the broad outline of a possible settlement was worked out by DEP lawyer Brian Glasser, coal industry lawyer Terry Sammons and Joe Lovett, lead lawyer for the environmentalists.

According to the summary reviewed by the Gazette, the terms included:

The conservancy and other plaintiffs dropping their buffer zone claims.

Industry negotiators had proposed tougher restrictions on mine blasting and a costly plan for companies to turn land over to a trust for public uses, according to a settlement proposal reviewed by The Charleston Gazette.

In exchange, the industry wanted the West Virginia Highlands Conservancy to drop its claims that filling in creeks with millions of tons of rock and earth valley fills violates a federal stream buffer zone rule, according to the proposal.

The conservancy agreed to keep talking about the proposal, but coal operators pulled out of key parts of the potential deal, according to sources on both sides.

At the same time, Chief U.S. District Judge Charles Haden II denied efforts from both sides to have the case decided solely on legal arguments, rather than by testimony at trial.

"The court remains firmly of the opinion that the issues of fact and law in the case can be resolved fully and appropriately in a trial on the merits," Haden wrote in a two-page order filed Friday morning.

Haden scolded lawyers for seeking summary judgment, after he told them not to when he agreed in March to move up the trial date from September to July 13.

"The court then provided a scheduling order expediting the trial and purposely providing no date for dispositive motions," Haden wrote. "Despite the language of the order, the parties have ignored it and attempted to insert motions for summary judgment into their sought-after foreshortened trial schedule."

On Thursday, Haden approved a previous partial settlement of the lawsuit.

That agreement, reached in December, settled the conservancy's claims that the U.S. Army Corps of Engineers improperly permitted valley fills in violation of the Clean Water Act. Under the agreement, federal regulators agreed to conduct a two-year environmental impact study on mountaintop removal and to subject mining permits to more scrutiny in the meantime.

Negotiations have continued behind closed doors on other claims, which allege the state Division of Environmental Protection violates numerous mining and water pollution laws in permitting mountaintop removal.

One claim is that valley fills are not allowed under a federal regulation which prohibits mining within 100 feet of streams. If upheld by a court, that claim could lead to serious limitations on the size of streams buried by mountaintop removal.

In the last few weeks, the broad outline of a possible settlement was worked out by DEP lawyer Brian Glasser, coal industry lawyer Terry Sammons and Joe Lovett, lead lawyer for the environmentalists.

According to the summary reviewed by the Gazette, the terms included:

The conservancy and other plaintiffs dropping their buffer zone claims.

Coal operators would agree to a tougher definition of approximate original contour. By putting more waste rock and earth back on mountaintops, the definition would have reduced the size of valley fills by 20 to 50 percent.

Companies would pay "enhanced mitigation" by donating land to a new land trust that would promote economic development and provide free land where Southern West Virginia families could build homes. Families that earn less than $60,000 could receive up to 10 acres free under a new "homesteading" post-mining land use plan.

Under enhanced mitigation, a typical 1,000-acre mining permit with a 175-acre valley fill would require coal company land donation of 2,500 acres.

Regulators would eliminate pasture land, hay land, and range land as post-mining land uses for mountaintop removal mines with approximate original contour variances.

Commercial woodland would be allowed as post-mining land use, but "the reclamation ... must be upgraded to permit real, commercial tree growth."

At least half of all mountaintop removal permits granted by DEP must propose actual development, defined as commercial, residential, industrial or public parks with developed facilities, such as golf courses or swimming pools.

Coal companies would agree to expand pre-mining blast and water quality surveys, and not fight a change in law that would allow regulators to assume damage to property and water near mountaintop removal blasting was caused by the mining.

Late this week, coal industry officials took the buffer zone, land trust and blasting issues off the table, according to some sources.

The decision was made after reports that the U.S. Office of Surface Mining planned to write new rules to define how the buffer zone rule applies to valley fills.

Originally, OSM appeared to be backing the industry view that the rule did not apply to valley fills.

But two weeks ago, environmentalists sued OSM because the agency was writing a new buffer zone policy without allowing for public comments and a hearing. Word leaked on Thursday and Friday that OSM might be switching its position and writing rules to cement the stance.

"If they would go into rule-making, that would certainly alter things," said one industry source. "If you go into rule-making, it comes out how it comes out and that seems to take that issue off the table."

Other sources close to the negotiations said Friday that talks were continuing, just not on all of the issues.

"We have moved in a much different direction," said one source. "However, we are still engaged in what we hope will be fruitful negotiations. The parties are negotiating in good faith."

To contact staff writer Ken Ward Jr., call 348-1702 or e-mail kw...@wvgazette.com.