The Roman Catholic Church in Letterbarra, just outside Donegal Town, is said to be in urgent need of additional graveyard space.
Donegal County Council had originally given permission for the new graveyard located on the adjoining and now derelict Parochial House and would measure 22m x 28m.
Local parish priest Fr Francis Ferry instructed the application be made as the current graveyard across the public road from the existing church, and located on a steep hill was full to capacity.
The decision by the council to award conditional permission has been appealed to the planning board.
A local resident has objected claiming the new graveyard would pollute both surface and ground water and presents and unacceptable risk.
The claim the existing water course flows directly withing 700m of Salmon spawning beds of the Eanymore water Fishery and as a result the application should be refused.
An Bord Pleanala says it will make a decision on the case the the 27th of August this year.