The Board of Water Supply failed to notify state health officials about a sediment discharge for 15 days, according to the state health department.
North Kona residents have been forced to curtail water use to essentials like cooking and drinking.
The complaint claims the company is violating the Clean Water Act by fouling ocean-bound gulches with animal waste.
A 4-year-old case ends in an agreement to restore water for Hawaiians, renewable energy, agriculture and the environment.
Some near-shore waters can be heavily contaminated with fecal matter. Talks are underway about when signs should be posted.