By Jonathan Stempel and Terry Baynes

WASHINGTON, Jan 4 (Reuters) - Taking up a case described as a "human tragedy," the U.S. Supreme Court on Friday agreed to hear an appeal by a couple who were ordered to turn over a 27-month-old girl they had raised since birth to her biological father simply because he was an American Indian.

In a brief order, the court accepted the appeal of Matt and Melanie Capobianco, who had been caring for the girl until a family court ordered them to turn her over to her biological father, Dusten Brown, a member of the Cherokee Nation.

Brown said the Indian Child Welfare Act of 1978, intended to curb abusive child welfare practices that caused many Native American children to be separated from their families, entitled him to custody of the girl.

Custody was transferred at the end of 2011, when the girl was a little over two years old, and she began living with Brown and his parents in Oklahoma, where she was born.

"My clients are just thrilled" that the Supreme Court agreed to hear the appeal, the Capobiancos' lawyer, Mark Fiddler, said in a phone interview. "They have been through agony over the last year, and never gave up hope. They are looking forward to seeing justice done, so that they can get their daughter back."

Charles Rothfeld, a lawyer for Brown, declined to comment.

The girl was conceived while Brown was engaged to be married, but the engagement broke down and he later renounced his parental rights by text message.

Brown changed his mind after learning while en route to military service in Iraq that his former fiancée, who was not an American Indian, had put the girl up for adoption and that the girl was being cared for by the Capobiancos, of Charleston, South Carolina.

"HEAVY HEART"

The Capobiancos - Matt a Boeing technician, and Melanie with a doctorate in developmental psychology - countered that state law allowed the girl to stay with them. They had raised the girl since her birth on Sept. 15, 2009, pending completion of adoption procedures.

By a 3-2 vote in July, South Carolina's Supreme Court ruled in Brown's favor, and denied the couple's adoption efforts.

Chief Justice Jean Toal said she felt "constrained by the law" and was ruling with a "heavy heart" because the Capobiancos were "ideal parents who have exhibited the ability to provide a loving family environment."

Justice Kaye Hearn filed a sharp dissent. "Apart from the human tragedy that Father's reluctance to act like a father until the eleventh hour has wrought on Baby Girl, Adoptive Couple, and their extended family, I profoundly disagree with the majority's elevation of the Indian Child Welfare Act to a position of total dominance over state law and settled principles of the best interests of the child," she wrote.

BROKEN BONDS

In their appeal, the Capobiancos said U.S. state courts are divided over whether the 1978 law applies when a non-Indian parent puts her child up for adoption, and over what steps an unmarried father must take to qualify as a parent under that law.

They also said the decision to deny custody could affect thousands of cases a year, and chill efforts to adopt children of Native American descent.

Lawyers for Brown countered that the case turned not on his status as a "parent" but on the girl's undisputed status as an "Indian child."

"There is no denying that the circumstances of this case have been painful and personally difficult for all of the parties," his lawyers acknowledged, but "the dispute here turned on the unique facts of this case and the conclusions drawn."

Paul Clement, a lawyer representing a guardian appointed by the court for the girl, urged the Supreme Court in a court filing to accept the case, saying it is "rare to see a case of such deep and well-established family bonds utterly disregarded."

A decision is expected by the end of June.

The case is Adoptive Couple v. Baby Girl et al, U.S. Supreme Court, No. 12-399.

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