A cotton farm has been fined more than $350,000 for knowingly taking too much water from a northern NSW river around the time the state faced a record-breaking drought.
Irrigation company Henry Payson Pty Ltd, based on the Gwydir River and which runs the Biniguy station near Moree, pleaded guilty to knowingly taking water when the meters weren't working from 2016 to 2018.
The water theft take took place over two cotton seasons and was investigated and prosecuted by the NSW government's Natural Resources Access Regulator.
The cotton company, whose sole director is George Barne, also built and used without approval a 610-megalitre dam, the equivalent of 244 Olympic-sized pools.
In a ruling in the NSW Land and Environment Court, the company was fined $175,000 for one offence which involved 12 instances of knowingly taking water while metering equipment was not working during the 2016/17 cotton season.
A second offence attracted a fine of $125,000 for 27 instances of knowingly taking water while metering equipment was not working over a second cotton season.
The cotton growing company was also fined $43,750 for constructing a dam without approval, and fined a further $10,000 for using the dam.
The company runs the 1500ha Binneguy Station in northern NSW, which includes 152 hectares of crops irrigated from the Gwydir River.
In her judgment handed down this week, Justice Rachel Pepper said she was "satisfied beyond reasonable doubt that Payson knowingly took water while the meter was under-recording by a factor of 1.8".
She also found Payson "deliberately deceived the regulator" about how much water was taken from the Gwydir River over the two cotton seasons.
Judge Pepper concluded that water users must accurately meter their water to preserve the integrity and sustainability of the water-sharing scheme.
The fine was the biggest the NSW water regulator has been involved in, its director of investigations and enforcement Lisa Stockley told AAP.
"I do think the sentencing comments reflect that the conduct of the defendant undermined and was intending to undermine the regulatory regime by not properly metering their water take," she said.
But the fines have been condemned as "insulting" by environmentalists, with the NSW Conservation Council's Mel Gray suggesting it was too low.
"The amount of money that is made off this water is enormous compared to the size of this fine," she told AAP.
"Constructing a dam without approval, and then only being fined $40,000 is insulting."
The Environmental Defenders Office said while the successful prosecution was welcome, water theft penalties needed prompt review.
"On its face, $353,000 sounds like a decent fine but it is just five per cent of the maximum penalty that was available," said managing lawyer Andrew Kwan.
"Penalties should be tied to factors like turnover and commercial value of the benefit obtained to ensure the fines are a real punishment and a deterrent," he said.
"Our water is too precious to allow unlawful take, which harms our environment and other water users."
Cotton Australia boss Michael Murray described the fine as "significant" and said compliance has improved among growers since a strict regime was introduced in NSW.
"It's always disappointing when people have done the wrong thing, but it's a historical offence, and we really believe that both the irrigation industry as a whole and cotton growers have certainly lifted their performance."
Lawyers for the irrigation company said it is considering an appeal.
NSW Lands and Water Minister Kevin Anderson's office referred AAP back to the regulator.
