The Environment Protection Authority took almost a year to issue a $1500 fine to energy company Santos over contamination of an aquifer near a major coal seam gas project, which included uranium at a level 20 times the Australian drinking water guideline for human health.
But the authority has defended the time taken to act and the size of the fine - which could have been as high as $1 million - arguing it immediately moved to establish there was no threat to human health or livestock.
Fairfax Media revealed details of the incident on Saturday, the first confirmation of aquifer contamination associated with coal seam gas activity in Australia.
It has prompted a call from the NSW opposition for a memorandum of understanding signed by Deputy Premier Andrew Stoner to fast-track the project, in the Pilliga Forest, near Narrabri, to be torn up.
The Wilderness Society and Greens are demanding a halt to coal seam gas operations in Australia pending a full investigation into the industry.
The investigation was sparked last March after Santos informed the EPA that routine testing of groundwater at the project detected ''elevated levels'' of naturally occurring elements.
It concluded the contamination was caused by water leaking from a pond used to hold waste water when gas is extracted from wells. The pond was poorly constructed by the project's previous owner, Eastern Star Gas.
Santos says the pond was decommissioned in December 2011, shortly after it took full ownership of the project.
Test results commissioned by Santos showed lead, aluminium, arsenic, barium, boron, nickel and uranium at levels ''elevated when compared to livestock, irrigation and health guidelines''.
The uranium level detected was 335 micrograms per litre - about 20 times the Australian drinking water guideline for health of 17 micrograms per litre. However, the EPA says the metals are ''not additives'', and occur naturally in the surrounding soil and water.
The results were available to the EPA by the end of March 2013.
On Sunday an EPA spokeswoman said Santos contacted the agency and ''within 24 hours of receiving the results the EPA had contacted NSW Health and the Office of Water and ascertained that there was no immediate health or environmental risks posed by the readings''.
Despite legislation allowing for a maximum fine of $1 million for corporations that pollute water if the matter is heard in court, the agency decided a $1500 penalty notice was appropriate.
This was based on ''evidence which showed that environmental impacts were minimal and that Santos had reported and responded to the incident quickly''.
On Saturday Santos described the affected aquifer as ''localised groundwater'' that is ''very limited in area and water volume … water sampled is not connected with regional aquifers''.