A community action group that challenged an Environment Protection Authority (EPA) decision to renew a New South Wales coal mine's environmental licence says it has had one small win, even though its case was dismissed.

The Maules Creek Community Council (MCCC) argued in the Land and Environment Court that the EPA failed in its duty when it reviewed Maules Creek's Environmental Protection Licence in 2023 without setting limits on dangerous fine dust and methane.

The Maules Creek coal mine is located near Narrabri in north-western NSW.

Chief Justice Brian Preston dismissed the group's case against the EPA on Thursday.

However, in his reasoning, Justice Preston rejected the argument that community groups could not bring this kind of action to court.

MCCC representative Roslyn Druce said the ruling was a light at the end of a tunnel.

"We don't feel like this a total loss," she said.

Case dismissed

Ms Druce said the group was formed to act as an intermediary between mine sites and the community.

In court, the group had argued that toxic dust particles, sulphur dioxide and heavy metals were being produced outside of Maules Creek Mine's environmental licence.

"Obviously if you live next door to an open-cut coal mine there's a lot of fine particulate matter [and] dust floating in the air every day," Ms Druce said.

"This is where our community is really affected badly and unfortunately we didn't get any sort of ruling that would have tried to cut those emissions in any way."

In Chief Justice Preston's reasoning for the dismissal, he said the community group failed to prove that Maules Creek Mine had not properly adhered to its environmental protection licence.

The chief justice pointed out the EPA's development of its climate change policy and climate change action plan.

He said it was reasonable to infer that the EPA was well aware of the pollutants emitted from Maules Creek Mine.

Environmental Defenders Office solicitor, Anita O'Heart, represented the Maules Creek community group in court.

She said her clients were disappointed by the decision.

"[Whitehaven] agreed that [dangerous fine dust] PM 2.5 and methane are harmful pollutants, and it was agreed the EPA is required to regulate them," she said.

"However, the court found through [the EPA's] broader policies, it wasn't required to specifically refer to the pollutants in the licence."

Although the applicant failed, the court ruled that the community group was well within its right to have launched the challenge.

"We can possibly challenge, or others, can challenge this type of thing in the future now," Ms Druce said.

All parties have 14 days to decide whether to apply for a cost ruling.

The Environment Protection Authority has been contacted for comment.