The cost of toxic waste from a West Coast coal mine soon to be sold to private owners will be borne by taxpayers, according to Forest and Bird.
Official documents obtained by the advocacy group show Cabinet agreed in July last year to take on $57 million in environmental costs from Solid Energy's Stockton mine.
Last year, Phoenix Coal agreed to buy three operations, including Stockton, for $46m upfront, and up to $50m in subsequent revenue.
The group is set to confirm the settlement next month, after approval from the Overseas Investment Office.
Forest and Bird chief executive Kevin Hague said documents showed the government took on the environmental liabilities of the mine so it would be easier to sell it.
"The government is essentially giving away the assets of Solid Energy.
"[Phoenix Coal owners] Bathurst-Talleys are simply buying the assets of Solid Energy, and the taxpayer is paying for the liabilities.
"This has always been a really terrible deal for nature and what we're finding out now is it's also a really terrible deal for the taxpayer."
He said the government may be taking on the responsibility for toxic waste, such as acid mine drainage, into the future
"When you open a coal mine you create sulphuric acid and you create it not only for the life of the mine but for many, many years to come.
"Advice from officials to the government says actually taxpayers could be asked to pick up more of the cost of acid mine drainage caused by further coal mining.
"In other words, we're not only paying for Bathurst and Talleys to take over this mine now, but we may be paying more, as taxpayers in the future, picking up the cost of further damage that they are going to create when they do more coal mining."
Mr Hague said Bathurst and Talleys should be picking up the cost of acid mine drainage.
"That's part of coal mining - actually paying for that.
"Much of coal mining has impacts on the environment, impacts on nature that can never be remedied or repaired."
The Minister of State Owned Enterprises Todd McClay has been approached for comment.