Chairwoman of the Mudgee District Environment Group (MDEG) Bev Smiles told about 110 people at a NSW Planning Assessment Commission (PAC) meeting in Dunedoo this week that the 48,500 hectares purchased for the proposed mine should be sold back to primary producers five years after the approval of the project, if construction and production had not begun.

Ms Smiles was among 41 registered speakers at the public meeting where PAC commissioners Paul Forward and David Johnson asked for feedback on the NSW Department of Planning and Infrastructure's (DPI) assessment of the project, recommending approval subject to conditions.

The MDEG chairwoman responded with an address and written submission identifying perceived deficiencies in the assessment.

She stressed the importance of the preparation of the promised Integrated Land Management Plan (ILMP), and the inclusion in it of an "exit strategy".

Ms Smiles said the department's report noted that project proponent, state-owned Cobbora Holding Company (CHC) , had started preparing the ILMP and had "instigated a process for the consolidation and management of its landholdings".

"MDEG believes that the proper management of 458 square kilometres of land purchased with NSW taxpayers' funds is a critical requirement regardless of the approval of Cobbora Coal Project," she said.

"The ILMP should include an exit strategy involving the sale of land back to primary producers in the event of the project being rejected or not finding a buyer or leasee."

MDEG maintains the low-grade coal project is "without merit" and should be rejected by the commission that has been asked by the state government to approve or refuse it.

But its submission covers the possibility the project will get the commission's nod by calling for conditions of approval to include the presentation of the ILMP sooner than recommended by the department, and the setting up of a trust fund to manage the implementation of the ILMP including the exit strategy.

"DPI has varied the PAC recommendations for the ILMP by removing the requirement to set up a dedicated trust fund and leaving the funding arrangements to the yet-to-be produced plan," Ms Smiles said.

The eight-page submission challenges department advice to the commission across multiple areas, including job figures that MDEG reports have not changed despite downscaling of intended mine operations and need of the project based on demand for coal.

"The justification provided that society is heavily reliant on coal to meet its basic energy needs does not recognise the ongoing drop in demand for coal-fired electricity and the increased usage of renewable energy sources," Ms Smiles said.

The chairwoman has impressed on the commission the "critical" need for all required surface and groundwater modelling to be completed before it makes a decision and lampooned CHC for making 21 commitments in the assessment it cannot keep if the project is sold or leased.

A potential delay of a "number of years" in the launch of the operational stage of the proposed mine is being forecast by the department.