The soil company belonging to Port Stephens mayor Bruce MacKenzie has been fined $15,000 dollars for water pollution.
Macka's Sand and Soil was penalised after EPA officers noticed water filled with sediment flowing beyond the boundaries of its Salt Ash quarry last year.
An analysis of water samples taken by the environmental agency confirmed high levels of suspended particles in the water, which has the potential to cause damage to the fragile balance of the Hunter's waterways.
"Luckily, there was no evidence of environmental harm on this occasion," said EPA Director Hunter Karen Marler.
In May 2016, the EPA launched a case in the Land and Environment court against Grafil, alleging that the Macka's Sand and Soil premises had been used as an illegal waste dump.
That case will return to court in April.