IT is the baffling case of a "missing" 212 tonnes of contaminated waste from a former coal seam gas drilling operation in the Hunter Valley.
An Environment Protection Authority report written in 2013 said the waste was transported to a "composting" business which was not licensed to take it, sparking concerns by the EPA it "was not being disposed of in an environmentally friendly and proper manner".
AGL dockets are understood to show the destination for their waste was Bettergrow Pty Ltd.
But the business it was supposedly sent to, Bettergrow, said it never received the waste. Spokesman Craig Hogarth said the company had taken a conscious decision not to take any CSG waste even if they were licensed to.
"If that was true [the claim they were unlicensed and took the waste] why were we never contacted about this by the EPA?" asked Mr Hogarth.
"They [the EPA] obviously don't look at their own paperwork. We are not a composting business either," he said.
The mysterious case of the missing contaminated waste was uncovered when Fairfax Media obtained, after a year-long freedom of information bid, site visit reports conducted by the EPA on AGL's coal seam gas drilling sites around Broke and Bulga in the Hunter.
The reports were part of an audit of the coal seam gas industry in May 2013 by the EPA ahead of regulation of the coal seam gas industry in NSW and the development of environment protection licence conditions.
An EPA spokeswoman said at the time of the report all information was passed to the Department of Resources and Energy. The EPA became the lead regulator of the CSG industry in July this year. AGL sold back its licences to the government this year and they have since been cancelled.
After investigations by Fairfax Media, it appears that nothing has been done to follow up the issue of where the contaminated waste ended up.
A spokesman for AGL said they were never told about any compliance issues, and the first time they heard about it was when the EPA documents were subject to an FOI request. Mr Hogarth also said they were never informed of any problem.
But when the EPA was asked why it did not follow up its own concerns in the 2013 report, a spokeswoman said the "EPA does not have any information that the Bettergrow facility at Vineyard has received waste that it is not licensed to receive."
Greens mining spokesman Jeremy Buckingham said "the issue with coal seam gas is the large quantities of toxic waste it produces and there has been a litany of spills and serious pollution incidents".
He said this latest dangerous debacle shows the EPA can't be trusted.
Mr Buckingham said the EPA had failed to protect the environment, and "Minister Speakman must explain..."
He said the EPA must also reveal exactly where this waste has been dumped.
It comes on the back of revelations last week in the Newcastle Herald that the EPA had known about a toxic chemical pollution plume spreading at the RAAF Williamstown base two years ago but did nothing about it.
The Environment Minister Mark Speakman has ordered an inquiry into the EPA's handling of the incident. Mr Speakman has also set up an inquiry into the EPA's handling of contaminated sites and whether it has implemented a range of changes since being criticised in the auditor-general's report last year which said the EPA's management of contaminated sites was inadequate.
The 2013 site visit report at the CSG sites also documented concerns regarding potential groundwater pollution and a lack of records about integrity tests and maintenance.
It also criticised the lack of dust suppression, and absence of sedimentation dams or runoff pits to collect stormwater, raising fears that any spills of drilling mud, diesel and other materials if not cleaned up immediately could cause pollution of waters.
The EPA also warned in the report that their concerns about the spillage or leakage polluting groundwater was heightened by the area because "the drill sites in the Broke-Bulga areas are in locations where groundwater is found very close to the surface and any spillage of chemicals could potentially percolate through the soil into the groundwater causing pollution."
The AGL spokesman said no compliance issues had ever been raised with them about their sites. The EPA spokeswoman said routine inspections at the AGL Broke site to check compliance with licence conditions had been undertaken since the EPA took over as regulator.