An investigation into illegal land clearing against a company part-owned by the family of federal minister Angus Taylor was dropped by the New South Wales government, and a separate investigation under federal environmental laws has taken more than two years.

Both actions relate to allegations of clearing of endangered native grassland in October 2016 near Delegate in southern NSW shortly after a company, Jam Land Pty Ltd, purchased the property. A NSW government briefing document alleged about 200 hectares were illegally cleared.

In Senate estimates hearings on Monday, the environment and energy department said it was aware of the family link between Jam Land, the company under investigation, and Taylor.

But officials repeatedly denied they had any knowledge Taylor’s family trust Gufee is one of Jam Land’s shareholders.

The environment department’s compliance unit commenced an investigation in 2017 into allegations that endangered native grasslands had been illegally sprayed on the property.

The matter is still under investigation and officials refused to provide any information on its progress, citing department policy for compliance matters.

The directors of Jam Land are Richard Taylor, Angus Taylor’s brother, John Jeffreys and David Mitchell, who is chairman of the Local Land Services in the south-east of NSW.

Gufee is a joint holder of a one-third interest in Jam Land, along with other trustee companies that represent the interests of the Taylor family members and Angus Taylor’s business partner, Tony Reid.

In a statement on Monday night, a spokesperson for Angus Taylor said: “The minister has not made any representations to federal or state authorities in relation to this investigation. This is entirely a matter for Jam Land.”

The land-clearing investigation has been a great source of irritation to the Taylor family, who have vigorously proclaimed their innocence and accused the federal authorities of ambushing them with the listing of Monaro grasslands under federal environmental laws, which they say was not properly publicised.

Richard Taylor has strongly defended Jam Land’s actions on ABC radio and outlined the perceived unfairness of the charges in a submission to a federal review looking into how the Environmental Protection Biodiversity Conservation Act affects agriculture.

The NSW government investigated soon after the land clearing was reported to it in November 2016 and conducted site inspections in December 2016 and January 2017.

According to documents obtained by the Guardian under state freedom of information laws, the NSW department’s grassland expert said that the areas sprayed had likely contained slightly more than 50% native grasses, judging by the remaining grassland around it.

The NSW Native Vegetation Act protects native grassland if it is more than 50% native species. But it can be cleared without prior approval if it is less than that.

Jam Land strongly disputed that the cleared land was more than 50 % native and produced it own report from agronomist Stuart Burge. He had made his assessment in October 2016 of a 40-hectare sample area and had concluded that the native ground cover pre-clearing was slightly less than the 50% threshold.

The NSW Office of Environment and Heritage then agreed to a further site inspection, and took the pre-eminent native grassland and remediation expert Kenneth Hodgkinson, of the CSIRO, to the site.

“Mr Hodgkinson’s preliminary opinion is that the cover assessment methods used by Mr Burge were appropriate and that it is possible there was about 50% or less native grassland cover prior to clearing,” a file note from the department says.

But it noted that Hodgkinson did not conduct a detailed post clearing survey, and that there are large areas that likely contain more than 50% native grassland immediately adjacent.

The NSW department decided to drop the investigation.

The federal government has withheld all documents relating to its separate investigation into Jam Land, on the grounds that release would prejudice the ongoing investigation.

A list of documents reveals that the department issued a warrant and has an expert report. There are also numerous emails relating to the case.

The department said at the end of 2018 that investigation remained ongoing.

On Monday, the Labor senator Jenny McAllister and the Greens senator Janet Rice asked officials about its progress and whether anyone in the department had briefed Taylor about issues related to land clearing.

“Senator we understand the familial connection but with respect to the shareholdings of the corporation, I don’t see how that’s been relevant to our investigation,” the department’s deputy secretary, Dean Knudson, told Rice.

The department’s secretary, Finn Pratt, added: “I can be quite explicit about this. I am aware of a familial relationship. I am not aware that the minister is a shareholder, I do not know that information.

“I can be very clear that minister Taylor has never raised the issue with me.”

In March 2018, the federal government commissioned former National Farmers Federation chair Wendy Craik to undertake a review of how the Environment Protection and Biodiversity Conservation Act 1999 (the EPBC Act) affected farmers. The report is complete but has not been released.

Richard Taylor lodged a four-page submission complaining about his experiences at the hands of the federal department.

At the heart of the issue is whether the federal government had sufficiently alerted affected farmers to the listing of native grasslands as an endangered species under the federal act.

“The alleged breach involved spraying a paddock as part of an ongoing program of pasture improvement program and weed control on the property,’ Taylor says in his submission.

“Jam Land was very upfront that all parties involved were completely unaware of the EPBC listing, so an assessment for the federal act had not been undertaken. The key message of the Jam Land case is that a process that would have been considered best practice in terms of natural resource management has now become an alleged illegal activity.

“On notification of the alleged breach, I questioned agronomists, LLS staff, LLS board members, and other agricultural producers, all of whom shared our ignorance of the listing.

“While I understand ignorance is no defence, I would argue the DEE has a moral and ethical obligation to inform the impacted community of the regulation.”