The quarry is operated by the Daracon company and leased from Port Stephens Council. The Department of Environment, Climate Change and Water NSW (DECCW) launched an investigation in response to allegations Daracon had been draining water containing sediment and other contaminants into Cromarty Bay.

The bay is part of the marine park and a recognised oyster growing area.

The company has since removed the pipe claiming no knowledge of how it got there or its use.

While foliage in the path of the water has died, a spokesman for the department said no evidence of contamination had been found.

"A DECCW investigation, which included unannounced and announced inspections, has not revealed evidence of environmental damage or contamination," he told the Examiner.

"DECCW needs to obtain evidence meeting a very high standard of proof to take any form of regulatory action...unless further evidence is forthcoming, at present there is not enough evidence to support a prosecution."

A second pipe located at the site was found by the DECCW to be used for 'legitimate irrigation purposes'.

Daracon declined to comment when contacted by The Examiner.