The NSW Chief Scientist's Independent Expert panel has found that two mines belonging to Dendrobium could be draining up to three and a half million litres of water on a daily basis from nearby Reservoirs.
The panel has found water levels at Cordeaux Dam are dropping.
In the meantime, the panel has endorsed the State Government's approach to approving longwall expansion only on an " incremental basis ".
Battle 4 Berrima Group Spokesperson Michael Verberkt says although Hume Coal is proposing a different method called pine feather mining, there are still too many potential risks.
He says the method has been used in two different countries overseas without success.