LANDHOLDERS near Whitehaven Coal's Maules Creek Mine have filed a complaint against the company, claiming the mining giant contaminated the water in Back Creek.
Nearby farmer Ros Druce notified the NSW Environmental Protection Authority (EPA) after discovering thousands of small styrofoam balls in the creek.
Ms Druce said she believed the balls may have been used in explosive blasts and the company, if responsible, should be punished.
"This styrofoam could have long lasting negative impacts on the local aquatic ecosystem," she said.
"We also don't know what else has been released into the river system.
"That's why we're urging an urgent investigation into whether Whitehaven has once again failed in its responsibilities to protect the community and environment that it operates in.
"This company is a repeat offender, and has no social licence left in this community."
An EPA spokesperson said the incident was being investigated.
"The EPA was made aware of the incident on Monday morning," the spokesperson said.
"An investigation is under way and will be carried out as soon as possible."
The Leaderunderstands Whitehaven is investigating the incident and is co-operating with the EPA.
Back Creek is part of the Namoi River system, which eventually flows into the Murray Darling System.