On March 12, this year, the same day Shellharbour Mayor Marianne Saliba and Shell Cove development director Simone Dyer posed for photographs celebrating the process of opening the marina to the sea, Coastwide Civil machinery cut a protective wall and a large plume of muddy water was discharged from the channel, the Environment Protection Authority said.

Coastwide, a major engineering contractor based at Albion Park, was hit with the $15,000 fine three weeks ago.

"A cut was made in a protective sand bund which opened the harbour to the ocean and resulted in a large visible plume of muddy water discharging from the entrance channel," the EPA said.

Read more: Mayor, development boss gave marina opening the thumbs-up

EPA director of regulatory operations Jacinta Hanemann said an EPA officer was on hand and saw it happen.

"Visibly dirty and turbid water flowed out of the entrance channel from Shell Cove boat harbour into the ocean and resulted in a significant change in the colour of the ocean water for several hundred metres," Ms Hanemann said.

"After being contacted by the EPA, Coastwide Civil closed the opening to stop the discharge.

"It is important for all operators to be diligent when performing dredging operations and dealing with sediment rich or muddy water.

"Muddy water can smother or affect the health of marine plants and animals vital to the local aquatic ecosystem.

"Fortunately, the environmental harm from this incident was short term with the dredging in an area that is not known to contain any pollutants that might have flowed out through the channel."

It's the second $15,000 fine for Coastwide in six months - the company was also fined in November last year after a temporary containment dam failed, also resulting in discolouration of water towards Shellharbour South Beach in an August 2020 incident.

The collapse of the dam wall allowed a large volume of sediment-laden water to reach the ocean. The sediment plume was visible beyond the breakwater.