By Charles Wolfe
The Associated Press

FRANKFORT - A law requiring coal companies to pay the full amount of an environmental fine before being allowed to contest it was declared unconstitutional Friday by the Kentucky Court of Appeals.

Requiring prepayment could actually foreclose an important avenue of appeal, a three-judge panel said.

The ruling came in a case that pitted Kentec Coal Co. against the Natural Resources Cabinet in Franklin County Circuit Court. The case arose from an alleged violation in Kentec's reclamation of mined land in Perry and Leslie counties.

A cabinet hearing officer proposed a penalty of $29,700. Kentec asked for a conference but failed to put up the money, which would have been held in escrow.

The secretary of the cabinet then upheld the penalty, as did the circuit court.

In its appeal, Kentec claimed it was denied its legal rights by being required to pay a penalty in order to contest the same penalty. It also was noted that an individual can request a waiver of the payment but a corporation cannot.

Writing for the court, Judge Sara Walter Combs of Stanton said the law amounted to "a monetary bar to access to the fundamental due process right to a hearing."

Coal companies "are placed in the anomalous posture of enjoying access to a hearing as to an underlying violation but facing perhaps an insurmountable financial hurdle when seeking to challenge at the subsequent penalty hearing the propriety or amount of penalty imposed," Combs wrote.

"As a practical matter, the amount or propriety of the penalty imposed could be as critical as ... the violation itself," Combs' opinion said.

As for waivers being foreclosed for corporations, Combs said the judges "have been unable to discern any rational basis or legitimate state interest to explain - much less to justify - the arbitrary singling out of a corporation for such disparate treatment."

The case was sent back to the circuit court with instructions to enter a different order. Judge William McAnulty of Louisville joined in the opinion. Judge Lewis Paisley of Lexington concurred in the result but did not join in the opinion.