Berrima Colliery's bid to extend its coalmining operations until 2020 has been refused, amid complaints about noise and traffic problems from trucks hauling coal through the nearby village.
The long-running colliery, located west of the Wingecarribee River, was given the green light to continue mining last year but the Southern Highlands Coal Action Group (SHCAG) challenged the decision in the Land and Environment Court.
Commissioner Susan O'Neill and Acting Commissioner Dr Paul Adam upheld SHCAG's appeal last week, finding the impact of the colliery's proposed haulage route would be "sufficiently detrimental" to residents in Medway.
The colliery, believed to be one of the oldest in the state, has been the dedicated source of coal for Boral Cement Works.
Boral had lodged a proposal with the Minister for Planning and Infrastructure, requesting an extension of its operations until April 2020 and permission to expand mining about four kilometres north of the existing site.
The proposal was approved but residents called for a review, citing concerns over the impact of coal haulage along Medway Road.
During a four-day hearing last month, residents argued the road was unsuitable for regular use by heavy trucks as the vehicles damaged the pavement and compromised the safety of children boarding school buses.
Residents also took issue with the noise generated from the trucks hauling coal through the town.
The court heard 23 truckloads of coal currently travelled along the road daily but operations were expected to increase, causing 132 truck movements, equivalent to a truck travelling through the village every six to seven minutes, to occur.
The hearing commissioners found that the residents had raised valid concerns.
"Medway Road, even if it is repaired, widened and maintained ... is unsuitable for 132 truck movements every weekday because trucks pass through [the village], creating noise and emitting dust," they said.
"There is inevitably a conflict between the large number of trucks passing through the village, and traffic and pedestrians.
"We are not satisfied that the proposed conditions, including the preparation of a road transport protocol, will satisfactorily ameliorate the detrimental impacts."
The commissioners said the haulage route should not be through the village and invited the colliery to consider alternate paths. SHCAG also claimed impact on groundwater levels had not been adequately identified and mining would result in pollution to the Wingecarribee River, which could harm marine life.
The court found there were "major and fundamental issues" with the proposal unresolved.