The owner of a controversial "pop-up" tip in Hume has been ordered to reduce the amount of rubbish on the site or face heavy fines.
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The ACT Environment Protection Authority served an order on the owner, Southern State Waste Recycling, a fortnight ago, saying it had contravened environment-protection laws.
Southern State denies any breach.
The environment-protection commissioner, Greg Jones, told a Legislative Assembly hearing on Tuesday the company had failed to meet its deadline for reducing the stockpile.
In March, South State was given six months to reduce the amount of rubbish on-site.
Authority inspectors visited the site at least three times a week monitoring the progress, checking that for every unit of rubbish that came in, three units left.
Mr Jones said: "At the end of this week, there'll be a milestone audit done. If they haven't reached the particular milestone that's within that order, then that ratio will change from one to six."
Meanwhile, the owner of a nearby business threatened legal action against the ACT government if it did not protect workers from what it says is a potentially harmful environment.
However, Mr Jones says the authority found no contamination on-site.
Hume businesses made multiple complaints over more than a year about noise, smells and potential contamination from the waste stockpile.
Southern State has accumulated waste at the Tralee Street site since September 2015, which it is allowed to do under its broad industrial lease.
However, it was only when it began recycling the rubbish that it required an environmental authorisation to control issues like dust and run-off, Mr Jones said.
"We gave the operator six months to comply with those requirements under the environmental authorisation," he said.
The authority's protection order alleged that, on September 30, the company had exceeded "aggregate quantity of waste and recovered materials allowed at the premises and the permitted height of stockpiles".
Southern State said adverse weather, such as high wind, meant the Hume site lost almost three months of processing time, preventing it from meeting deadlines.
The new order sets nine conditions, including having the stockpiles surveyed for volume and height by November 17, and again in December.
The authority EPA has also demanded Southern State build a screen within six months, install permanent height markers, and provide weekly reports of inbound and outbound waste quantities.
The maximum penalty for failing to comply with the order is a $30,000 fine for individuals or $150,000 for a corporation.
However Mr Jones said his preference was not to "punish".
"Our view would be if we just went very hard with very strong infringement or enforcement action, he may cease to operate his business and the owners of that block and potentially the government would be left with an expensive clean up," he said.
"That's clearly not in anyone's interest. He's operating a legitimate recycling business and we want to encourage him to do that but do it under the conditions of the environmental authorisation."
In a statement, Southern State denied it had contravened environmental protection laws.
"Southern State Waste Recycling is, and always will, act within its current approvals and license conditions," it said.
"We are operating within the permissible use of the land and within our license conditions ... As responsible business owners, we ensure we implement industry best practice for the suppression of dust."
Despite the weather, aggregate stockpile levels had been reduced by 70 per cent.
Meanwhile, Hume-based business, Eco-Villa Australasia, has complained to the authority and the government about the effects it says the tip has on surrounding businesses.
Eco-Villa director Alex Stodulka threatened to launch legal action over the issue.
"I have supplied copious amounts of prima facie evidence to the EPA and the minister as to the impact that this facility has had on our and surrounding business but to no avail," he wrote to Chief Minister Andrew Barr.
"We (our business and others within the vicinity) have been left with no option than to follow the judicial process to protect our employees and ourselves from a harmful and potentially toxic work environment."
