The EPA's acting director in the Hunter, Lindsay Fulloon, said the release occurred in November last year after debris from a blast blocked a sediment containment drain at Liddell Coal, 25km north-west of Singleton.

"We allege that a combination of the blocked drain, a failure to inspect the blast area and heavy rain caused sediment laden runoff to breach the containment drain and flow into a pool in nearby Bowman's Creek," he explained.

"The EPA estimates 26,000 litres of sediment laden water, combined with around 170,000 litres of natural runoff from vegetation areas entered the waterway.

"Liddell Coal took action to pump the runoff back to the mine site and no environmental impact was identified.

"However, there was potential for environmental harm, including from turbidity, which we consider may have been avoided if the blocked drain had been cleared."

Liddell Coal Mine has now developed a hazard plan to ensure similar incidents do not occur in future.

"Penalty notices are one of a number of tools the EPA can use to achieve environmental compliance including formal warnings, official cautions, licence conditions, notices and directions and prosecutions," Mr Fulloon said.

"In this instance, the EPA issued a penalty notice.

"The notice recipient may pay the penalty notice, seek a review, or elect to have the matter determined by a court."

For more information about the EPA's regulatory tools, see the EPA Compliance Policy atwww.epa.nsw.gov.au/legislation/prosguid.htm