The state government is pursuing a group of Fullerton Cove residents for legal costs after they unsuccessfully challenged its approval of coal seam gas exploratory drilling in their suburb.
Dart Energy, which has since shelved the pilot project, is not participating in the Land and Environment Court hearing that began Tuesday morning into whether the Fullerton Cove Residents Action Group should foot the cost of legal bills.
But the NSW Department of Trade and Investment has, arguing the original case against it and Dart Energy was not mounted on public interest grounds.
The group lost the case after Justice Rachel Pepper found that the cumulative impacts of drilling exploratory wells would not significantly affect the environment.
In a decision handed down in March, Justice Pepper rejected the group's argument that Dart Energy should have been required to undertake a full environmental impact study that looked at cumulative impacts, rather than just a "review of environmental factors".
Barrister for the Fullerton Cove residents Ian Hemmings told the court this morning it was "incongruous" that Premier Barry O'Farrell had announced earlier this year the government was getting "tough" on coal seam gas, yet on the other hand the department was pursuing the group.
He cited a press release from Mr O'Farrell's office earlier this year that said the government would implement new exclusion zones for gas wells and others measures in response to community concerns about the industry.
Mr Hemmings said there was a continuing public debate about coal seam gas and the group had raised concerns about the potential impact of drilling on aquifers during its case.
Group public officer Justin Hamilton told the court it had raised funds through the course of the court case but those had mostly been used to pay for its own legal fees.
Alan Shearer, for the department, put to Mr Hamilton that the group's members would have opposed the project even if further testing showed there would be no adverse environmental impacts.
"They want to stop it come what may," Mr Shearer said.
"... I believe different members of our group have expressed different levels of anxiety and frustration," Mr Hamilton replied.
The hearing is continuing.