The permit of Davidstow Creamery may be revoked by the Environment Agency after a conviction in December for 21 environmental offences at the site.
According to Daily Mail, the government's environmental body may cancel the permit of the creamery for polluting a river and killing a "serious" amount of fish.
The publication reported that Queen Elizabeth also enjoys the food made by the factory, which is the only cheddar producer in the country.
It said the creamery is being investigated by anti-pollution group Fish Legal.
Talking to the newspaper, the group's solicitor Geoff Hardy said, "This case could serve as a warning for highly profitable industrial processors in our countryside."