Environment Victoria, represented by Environmental Justice Australia, filed a motion to the state's Supreme Court last week, challenging the Victorian EPA's review of coal power station licences.
The legal group will argue that the EPA's decision to extend the operators' licences were invalid, because it ignored requirements of the state's Climate Change Act, passed in 2017.
The case is the first to test Victoria's climate change laws, as well as challenging the regulation of air pollution from the state's coal-fired power stations.
EnergyAustralia, AGL and Alinta operate the Yallourn and Loy Yang A and B power stations respectively.
The Climate Change Act requires the EPA to consider climate change in their review of coal power station licences.
In 2017, the EPA launched a review of the three power stations, concluding in March this year that it would not force the companies to lower their emissions, instead capping them at "approximately current levels".
"After a drawn-out review of coal power station licences, Victoria's EPA did very little about toxic air pollution and chose not to place limits on greenhouse gases," Environment Victoria CEO Jono La Nauze said.
"Now we're challenging that decision in the Supreme Court."
Environment Victoria claims that the EPA failed to adhere to the principle of intergenerational equity laid out in the Climate Change Act when granting approval of the operators' licences, despite the environmental impacts the emissions released by the power stations will have on future generations.
It will also argue that the EPA failed to adhere to the ‘polluter pays' principle "despite being directly relevant to the evaluation of the economy, social and environmental considerations that the [EPA] was required to consider".
AGL, EnergyAustralia and Alinta benefited from the decision, so are named as defendants.
The EPA could not be reached for comment.
An AGL spokesperson said as the matter was before the courts, it could not comment on the specifics of the case.
"As Australia's largest energy generator and greenhouse gas emitter, we understand and acknowledge our significant role in the energy transition and are committed to ensuring this is done responsibly, balancing Australia's current and future energy needs with the commitment to decarbonise," the spokesperson told Energy News.
Earlier this year federal resources minister Keith Pitt, an advocate for Australia's coal, oil and gas sectors, lashed out at fellow environmental legal group The Environmental Defenders' Office.
He said the organisation was "determined to stop new jobs and economic opportunities being provided by legitimate resources projects that have received all state and federal government approvals".
Yesterday AGL faced a shareholder revolt
, going against the board's recommendation to vote in favour of a motion demanding the company set Paris-aligned reduction targets for its scope 1, 2 and 3 emissions.
However, because the resolution was linked to a resolution to change in the company's constitution, which did not receive broad support, the motion was not passed. It received 55% of the vote, putting it well ahead of a simple activist shareholder vote.
The company said it did not believe the resolution to be in the best interest of its shareholders.
The Victorian EPA knocked back AGL's proposal for an LNG import terminal at Crib Point earlier this year after much deliberation.