Public Works Director Doug Devlin said the action means the city must more aggressively enforce rules on the discharge of fats, oils and grease into the public sanitary sewer system.
Devlin said a conference call with the EPA in March could shed light on the penalties associated with the Clean Water Act.
EPA officials audited the city's sewer collection system on Jan. 29 and Jan. 30 accompanied by a representative of the Mississippi Department of Environmental Quality.
Devlin said over the next few years, EPA officials will audit all Mississippi municipalities who have treatment permits of 10 million gallons per day or higher.
"This news is going to result in a huge change in the way we do business as far as managing our collection system," Devlin told city board this week. "It's going to take a lot of work on the city's part and also it's going to take a lot of help from the public and from customers in regards to deposits of grease into the sanitary sewage system.
Devlin said the EPA does not usually levy fines unless there is a criminal violation.
He said it works with a local government to develop a plan to correct the problem.
"When we talk to (the EPA) we want to definitely try to work with them and try to minimize the impact of the penalties in any way possible," he said.