The Federal Court has upheld Environment Minister Tanya Plibersek's refusal to assess the climate impacts of coal mine expansions at Narrabri and Mount Pleasant near Muswellbrook.
The Environment Council of Central Queensland took Ms Plibersek and Narrabri Coal Operations (a subsidiary of Whitehaven Coal) and MACH Energy to court for failing to protect the environment from climate harm resulting from new coal and gas projects.
The mining companies joined Ms Plibersek in court to defend the case.
The court found on Thursday that, under existing environment laws, the minister was not legally required to assess risk to the environment from the climate harm of the coal mine expansions.
"We are devastated and heartbroken by today's decision," Ashleigh Wyles from the Environment Council of Central Queensland said.
"We're afraid this decision will open the floodgates for the Minister to approve dozens of new goal and gas projects currently on her desk.
"Instead of standing up to fossil fuel companies, our Environment Minister is standing with them in court, defending her refusal to act on the climate harm of new coal and gas mines."
The minister employed the "market substitution" argument or "drug-dealers defence" to defend her decisions.
But the ECoCeQ argued this was dangerous logic because it was out of step with the law, with science and with public expectations.
"Our client is dismayed that under law as it currently stands, it is somehow not the role of the Environment Minister to protect our environment from the climate harm of new coal and gas mines," Environment Justice Australia co-chief executive Elizabeth McKinnon said.
"This judgement today does not change the science. What it does show is that Australia's environment laws are utterly broken.
"Our laws are failing to keep up with the climate crisis. They are failing to protect the iconic places, plants and animals of this country from the devastation of climate change."