A major petroleum and coal mining company has been spared prosecution for unlawfully using hundreds of millions of litres of water from a river in rural New South Wales during one of the worst droughts in the state's history.
Japanese energy giant Idemitsu was found to be unlawfully collecting and using the water at its Boggabri Coal Mine in northeastern NSW following an investigation by the state's water regulator.
Anti-mining collective Lock the Gate Alliance alerted the Natural Resources Access Regulator of the violation in 2021, saying the water should have been diverted around the mine into the local creek system.
The regulator confirmed Idemitsu had acted unlawfully but said the parties settled to an enforceable undertaking negotiated with the company itself.
"As a result of the investigation, NRAR identified that surface water was taken unlawfully at the mine from an unregulated river water source," an email correspondence between the regulator and the alliance dated June 16 and seen by AAP read.
The regulator on Wednesday confirmed the terms of the undertaking, including an agreement to pay $54,000 in compensation.
Other terms include $15,000 to cover the regulator's investigation costs and quarterly surface water reporting until 2027 and consultation with the local Indigenous community about the impact of past water take.
The agreement gave the regulator strong oversight of water management operations and ensured the mine had the necessary data to stay within its water licence requirements, the regulator said.
Investigations and enforcement director Lisa Stockley said the decision was considered to be the best outcome given that court prosecution outcomes are not always certain.
"We felt that overall, this enforceable undertaking was the best result for lasting compliance heading into drier times as well as benefits to the community and the environment as a result of the offending," she said.
Ms Stockley said improving the way water use was measured and reported in mining and extractive industries had been a "key focus area" for the regulator.
Lock the Gate Alliance criticised the state's failure to prosecute coal mining companies for crimes such as water theft.
The alliance alleges Idemitsu had been stealing the water for its mine about 120km northwest of Tamworth since at least 2017.
It was "totally out of touch" to not take the company to court over water theft "during the peak of the worst drought in living memory", alliance co-ordinator Nic Clyde said.
Boggabri farmer Sally Hunter, whose family endured significant hardship during the drought, said the decision not to prosecute was totally unacceptable.
"While we and many other farmers were forced to destock or even sell up due to a lack of water, and the price of water was going through the roof, Idemitsu was siphoning hundreds of millions of litres out of this catchment illegally," she said in a statement.
The "slap on the wrist" response only encouraged coal mining companies to commit serious environmental crimes without the risk of serious penalty, she said.
"It seems these companies can just do what they like with no repercussions, even during devastating times like the last drought."
In a statement, Idemitsu said it remained committed to sustainable environmental practices and compliance and the Boggabri Coal Mine "operates under rigorous approvals and management plans" approved by the state and federal government.
"We recognise the importance of our environment and have monitoring programs in place to ensure we deliver on our commitment to preserve the region's water, biodiversity and environmental outcomes," the company told AAP.
The regulator's investigation comes two years after Whitehaven Coal Ltd - which had a joint venture with Idemitsu - was prosecuted for a similar offence and ordered to pay $200,000 in the Land and Environment Court.
At the time, local farmers said the $200,000 fine amounted to a "slap on the wrist."