A Bay of Islands business may have to pay a $20,000 clean-up bill after it spilled waste oil into a creek near Paihia.
The spill polluted a stream that feeds into the river supplying Paihia's drinking water and has also contaminated tonnes of soil.
Northland Regional Council says local people first reported seeing traces of oil in the creek in January, but council staff were unable to track the source until a much bigger spill of up to 200 litres.
On that occasion, booms had to be used to stop the oil entering the town water supply.
Council staff then used a remote camera to trace the source of the oil through a wastewater pipe and identified the source of the leak as a building on the Haruru Falls industrial estate.
The council has ordered the company to stop the leak and remove tonnes of contaminated soil and is looking to recover the cost of the investigation and clean-up from the owner.