Whitehaven's Maules Creek Mine, in NSW's north east, has been fined $200,000 for unlawfully capturing a billion litres of water during the recent drought.
The Whitehaven mine passively collected the water in its water storages from rainfall and runoff between 2016 and 2019, without an access licence, in violation of the Water Management Act 2000.
The Land and Environment Court handed down the fine on Wednesday, after the company pleaded guilty earlier in 2021.
Lock the Gate Alliance spokesperson Georgina Woods said she was outraged by a "pathetic" penalty.
In a statement to the ASX, Whitehaven said the judgement "noted the offence was at the low end of the medium range of objective seriousness".
The Natural Resources Access Regulator (NRAR) did not contend that the company's water take was intentional, and didn't establish any material environmental harm.
"No adverse impact on other water users was established," the company said.
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Whitehaven has since made changes to improve clean water management at the mine, the company said.
NRAR Chief Regulatory Officer Grant Barnes said the company had also promised to undertake a range of additional actions outside the fine, including decommissioning a dam and updating its biodiversity management plan.
The enforceable undertaking is legally binding.
"This judgment needs to be viewed in the context of our complementary work outside of the courtroom," he said.
"The enforceable undertaking strengthens yesterday's judgment and highlights the need for regulators to use multiple tools to ensure compliance."
Lock the Gate Alliance spokesperson Georgina Woods said the company had got away with a serious crime.
"In a week that a peaceful activist has been jailed [for a year] for protesting, it is particularly jarring that this repeat offender should effectively get off scot-free for such a major offence," she said.
"It is difficult to see how the public can have faith in the legislation that governs coal mining companies when it is so clearly failing to keep the companies in line."
Boggabri farmer Sally Hunter said the $200,000 fine did not come close to reflecting the seriousness of the offence, which she called a "heinous crime".
"While farmers were ploughing in their crops and stock were dying during the drought, Whitehaven took one billion litres of water without a licence," she said.
"This water, at this time was priceless, and would have been a lifesaver for lots of farms and businesses."