By Laura Zuckerman

SALMON, Idaho (Reuters) - Attorneys for Montana's prison system on Friday asked a federal judge to dismiss a lawsuit by the American Civil Liberties Union claiming the state illegally imposed an "English-only" policy on inmates' mail.

In a complaint filed June 30 in U.S. District Court in Helena, Montana, the ACLU said the state Corrections Department violated constitutional rights to free expression and equal protection under the law by confiscating letters in Spanish to a foreign-born inmate.

The case centers on William Diaz-Wassmer, 26, a Guatemalan national sentenced in 2007 to life in state prison after being convicted of murder, robbery and arson in the 2006 shooting death of an elderly woman, according to legal documents and corrections records.

In May 2010, Montana corrections officers stopped delivering letters to Diaz-Wassmer from family members who wrote in Spanish, citing security concerns. They argued that restrictions on inmate correspondence prohibit letters written in "code or foreign language not understood" by corrections staff who monitor prison mail, court filings show.

In years past a Montana prison worker has voluntarily translated correspondence -- "written partly in English and partly in Spanish" -- to Diaz-Wassmer, but that service ended when the worker left, state attorneys said in court papers.

Ira Eakin, staff attorney for the Corrections Department, said budget constraints have prevented the state from hiring another interpreter, and that requiring the state to provide translation services would pose a financial hardship.

"While it is true that prisoners do not lose all of their constitutional rights upon incarceration, some rights retained by free citizens are lost or necessarily diminished by imprisonment," Eakin said in legal documents filed in federal court on Friday.

Eakin said the single, nondiscriminatory aim of Montana was to ensure that inmate mail be understood by authorities so it could be screened for a "potential security threat."

He said research by Montana officials proved the inadequacy of computer software to automate translation.

Although Montana penal codes do not explicitly restrict correspondence to English only, the effect of the mail restrictions is the same, and that is discriminatory, ACLU Montana legal director Betsy Griffing said.

"If anything written in anything other than English or in code is held, that is the equivalent of an English-only policy," she said.

(Editing by Steve Gorman and Peter Bohan)