The Baird government's approval of a Blue Mountains coal mine expansion contravenes its own planning policy, say environment groups who have begun legal action to overturn the decision.
The 13-year extension of the Springvale coal mine, located near Lithgow, was backed by the Planning Ministry and secured final approval from the independent Planning Assessment Commission (PAC) last September.
The underground mine will produce as much as 4.5 million tonnes of coal a year from 20 new longwall panels, and continue to discharge untreated waste water into the upper Coxs River.
The river flows through the Blue Mountains World Heritage Area and is the second-largest source of water for Sydney's main water reservoir at Warragamba Dam.
Environment groups led by 4nature are challenging the approval in the Land and Environment Court, arguing the move is not compliant with the 2011 State Environmental Planning Policy (SEPP) covering Sydney's drinking water catchment. The policy permits approvals only for projects that have a neutral or beneficial effect on the area.
Andrew Cox, 4nature's president, said the groups had found no evidence the government had taken the SEPP into account when approving the project.
The mine will release 19 megalitres a day of waste water – containing salts, metals and other materials – with the flows making up as much as two-thirds of the water in the river at the discharge point.
"How can you possibly rationally conclude that the mine isn't lowering water quality?" Mr Cox said.
Gary Whytcross, director south for the NSW Environment Protection Authority, told Fairfax Media in July that "there's no doubt there will be impacts" for the Coxs River from the mine discharges, with the high salinity the main concern.
The first legal challenge of the particular SEPP may affect future mine approvals, Mr Cox said.
"It could set an important precedent for development in the catchment, he said. "Other coal mines in the catchment will have to demonstrate that they have a neutral or beneficial impact."
The Environmental Defenders Office of NSW filed the case on December 18, and the court will next consider the matter on February 12, 2016. Operations at Springvale would not be affected until a final court ruling, 4nature said.
"It is important that the community is able to ensure that decisions are legally robust, and we respect the EDO's right to take this action following the decision by the independent [PAC]," Rob Stokes, Planning Minister, said.
A spokeswoman for the Department of Planning and Environment said, the approval had followed an extensive consultation process including state agencies, independent experts and a "rigorous assessment of all environmental, economic and social impacts".
Since the approval includes "strict limits" on the salinity of discharges "the department concluded the mine extension would have a beneficial effect on Sydney's drinking water catchment, compared to the mine's previous operations", the spokeswoman said.
Opponents, though, say they will argue the comparison should be made with the absence of discharges, not the previous workings of the mine.
Fairfax Media also sought comment from the mine's owner, Centennial Coal.
Keith Muir, director of the Colong Foundation for the Wilderness, said he raised the SEPP issue with the PAC prior to its approval.
The waste water had previously been sent to the Wallerawang power station before it closed down. Mr Muir has proposed the waste water be transported for treatment and use at the mine's main customer, the nearby Mt Piper power plant – a course only noted by the PAC as an option.
"It isn't diluted and there is no reduction in the impact on the environment," Mr Muir said, adding that upland swamps had also been affected along with the river.
NSW Greens mining spokesman Jeremy Buckingham said the protection of Sydney's drinking water catchment was a crucial principle that should not be compromised.
"It's obvious that coal mining will be detrimental to the quality of water in the drinking water catchment, so the PAC should not have approved this mine extension.
"Protection of our drinking water catchments should be enshrined in legislation rather than relying on a planning policy that is routinely ignored or bypassed by planning authorities," Mr Buckingham said.
The local Lithgow Council has supported the mine's continuation, arguing that hundreds of full-time jobs and royalties approaching $200 million were at stake. The mine is Mt Piper's only coal source, with the plant providing 15 per cent of the state's electricity.