A US-based environmentalist group has filed charges against Broken Hill Propriety (BHP) Billiton, stating that the company's Mexico operations have polluted its groundwater flowing into the neighboring areas.

Sierra Club, one of the largest and oldest environmental organizations in the US, submitted its court documents earlier this month, with allegations on BHP's San Juan Coal Company operations, threatening the lives and health of its members residing outside the company's permitted area.

Allegations include discharging contaminants - arsenic, lead, chromium and sulphates - which are not supported by water monitoring area at BHP's coalmine in Northwest New Mexico. The contaminants, called coal combustion waste, is fatal to one's health.

The iron ore company refuted Sierra Club's allegations and said its operations were in compliance with New Mexico's mining division.

''Monitoring data is submitted to state of New Mexico Mining and Minerals Division on a quarterly basis and is available to the public,'' BHP said.

''The results from this program demonstrate that coal combustion waste placement at San Juan has not adversely affected water quality and is in compliance with all state and federal regulations."

The environmental group said the illegal acts were detected last September during a mine inspection. A testing showed that several wells on the site showed continuous violations on regulations.

The court document passed to the court stated that the San Juan coal mine is used as a disposal site for coal combustion waste from 1973 to 2010, with at least 40 million tonnes being disposed.

The club also accused BHP that the materials disposed outside its permitted area have affected "individuals in maintaining their health, in conducting agricultural and other businesses and in using and enjoying the water resources.''

If found guilty, BHP will be fined with millions of dollars in penalties and legal fees.