Possible breaches of environmental regulations and clearing of native vegetation are being investigated at Killalea State Park.
The Office of Environment and Heritage (OEH) confirmed it was looking into an incident at the park in May when a large stockpile of plant matter was set on fire.
It is understood the Killalea State Park Trust burned weeds and other plant material on May 20.
An OEH spokesman said several site inspections had been conducted since the fire and it had asked the trust for an explanation.
"OEH is still investigating possible breaches of the regulations and the Killalea State Park Trust has now responded to a show cause letter," the spokesman said.
"Some of the clearing may have been weeds and exotics removed to expand the camping ground, collected from various parts of the park and then stockpiled for several years in windrows to be burnt.
"OEH is reviewing the response before making a determination very soon."
Open burning and vegetation removal were permitted in some situations, subject to "any specified exemptions or necessary approvals", the spokesman added.
He did not say what action would be taken if a breach was found.
The park trust's president, Ed Gilmore, refused to comment on the fire, but said the burning off had been arranged with the NSW Rural Fire Service (RFS).
However, the RFS' Illawarra zone manager, Superintendent Richard Cotterill, said it responded to the blaze after a triple-0 call.
He said firefighters may have been at the park earlier, but not in an official capacity.
Fire crews called to Killalea decided to let the blaze burn out rather than dismantle the pile.
"It was determined by senior officers on scene that there was little risk of escape," he said.
News of the OEH inquiries at Killalea comes after recent revelations of controversial plans for a $8-$10 vehicle entry fee at the park.
Proposals for the entry fee and the construction of up to eight cabins at the park are included in the trust's business management plan for this financial year.
The fee plan angered park users, who accused the trust of failing to consult with the community.
It appears the push for an entry fee was prompted by actions of the former state government, which last year approved a grant of more than $63,000 for a control access system, boom gate and ticketing machine at Killalea.
In the meantime, nominations have been called for volunteers to serve on the trust board during its next five-year term.