The Vila Central Hospital was made to put up notices at the start of the year, warning the public against using the lagoon for recreational activities.
The acting director of the Water Monitoring and Evaluation Unit Erie Sami said the hospital ignored an extension to remedy the problem by March, and now at worst risked being shut down.
Mr Sami restated that the discharge of sewage into the lagoon was in breach of the water resources management act, punishable with a penalty of up to $US50,000.
