The state's pollution watchdog has issued a warning to cruise ship operators after one of the world's biggest cruise lines was caught contaminating international waters with waste.
California based Princess Cruise Lines will pay a record $US40 million ($53 million) fine after pleading guilty to seven federal charges in an illegal pollution case that involved one ship's use of a "magic pipe" to shift thousands of gallons of oily bilge into the sea.
On Saturday, the Environment Protection Authority spokeswoman reminded cruise ship operators that they face fines of up to $10 million under the NSW Marine Pollution Act for "conduct such as that which has occurred in the US."
The Princess Cruises scandal came to the attention of authorities in 2013 after a whistleblower engineer on board the 3192-passenger Caribbean Princess alerted British authorities.
According to prosecutors, the vessel had been utilising the so-called "magic pipe" since 2005 to bypass its water treatment system and illegally channel oily discharge into the water.
Authorities said the strategy had been motivated by cost savings with further illegal pollution practices uncovered on four other ships including the Golden Princess - which visits Australia.
But on Saturday, a spokeswoman stressed the ship did not arrive in Australian waters until October 2015, by which time the issue had been "well and truly addressed".
In a general statement from Princes Cruises, the company said it was "extremely disappointed" about the "inexcusable actions of our employees who violated our policies and environmental law."
"The marine environment is incredibly important to us and we are using this experience to further improve our operations," the statement said.
