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The U.S. Army Corps of Engineers Tuesday asked a federal court not to rehear a closely watched case on mountaintop-removal coal mining, saying it's taking new steps to scrutinize the environmental effects of the practice.

The Obama administration in its first months has moved to toughen regulations of mountaintop removal, by which the tops of mountains are sheared off to gain access to coal seams. But Tuesday's filing in the U.S. Fourth Circuit Court of Appeals in Virginia backs up the coal industry, which is fighting an appeal by environmental groups.

The four-year-old federal case focuses on Army Corps permits for the disposal of rock and other material from four proposed mines. Environmental groups say allowing companies to dump the rubble from mountaintop mining in nearby valleys damages water quality and violates the Clean Water Act.

The environmental groups won in district court, but a circuit court panel overturned the ruling in February, setting up the current appeal to the full circuit court.

Lawyers for Army Corps said the case doesn't merit further review because the agency is developing a new tool to analyze the effects of the mining practice on streams in West Virginia. At the same time, the Corps and the Environmental Protection Agency are looking at the overall permitting process.

"Nothing in the opinion will constrain the Corps and EPA in deciding how to analyze permits in the future, which could include additional environmental safeguards," the Army Corps said in its brief.

The Obama administration on Monday sought to reverse a last-minute Bush administration rule that made it easier for companies to dispose of waste from the mining practice. The EPA last month said it would scrutinize more than a hundred mining permits because of concerns over the effects on water quality.

But Jennifer Chavez, an attorney for environmental group Earthjustice, described the administration's approach as "schizophrenic" so far, saying it needs to bring together federal agencies to come up with a coherent policy on mountaintop mining.

"There are a lot of inconsistencies," she said.

Decisions on the mining practice would most greatly affect central Appalachian surface-mining operations, which account for about 10% of U.S. coal production, according to Energy Information Administration data.

-By Mark Peters, Dow Jones Newswires; 201-938-4604; mark.peters@dowjones.com