Residents who live near Whitehaven Coal's Maules Creek Mine have taken the NSW Environment Protection Authority to court, arguing it hasn't fulfilled its core duties.
At issue is the watchdog's review last year of the mine's environmental protection licence.
Members of the Maules Creek Community Council claim the watchdog failed to consider dangerous pollutants the mine emits, namely fine-particle pollution called PM2.5 and methane.
The result, they say, is that the mine continues to operate with no limits on known hazards.
PM2.5 pollution particles are so small they can get deep into the lungs and into the bloodstream. Prolonged exposure can cause respiratory and cardiovascular disease and shorten lives.
And methane is a potent greenhouse gas that drives climate change.
The Environmental Defenders Office is representing the community group in the Land and Environment Court.
"The proper regulation and review of licences is, we say, central to the EPA's core tasks to protect the environment and risks to human health from pollution," EDO barrister Robert White told the court on Tuesday.
He said licence reviews, which must be carried out by the EPA every five years, are an opportunity to respond to evolving environmental threats, which may have changed since licences were originally granted.
He said they were also a chance to review efforts to reduce harm.
But in the case of PM2.5 pollution particles and methane, no such changes were made, and Mr White said it was a simple case of licensing conditions being "not fit for purpose".
The EDO has urged the court to declare last year's review invalid.
"If this review miscarried because there was a failure to take into account the relevant considerations, then we say ... they should be ordered to do the review again in accordance with the law."
The case continues.
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