The Scottish Environment Protection Agency (Sepa) is revoking the operating licence of an energy-from-waste plant on the outskirts of Dumfries.
The notice was issued to Scotgen (Dumfries) Ltd on Friday and comes into effect on 23 September.
The £20m plant was the site of a major blaze last month tackled by more than 30 firefighters.
Sepa is also seeking action to avoid pollution and return the site to a "satisfactory state".
The agency cited four reasons for the revocation notice:
- Persistent non-compliance with the requirements of its permit
- Failure to comply with an enforcement notice
- Failure to maintain financial provision and resources to comply with the requirements of the permit
- Failure to recover energy with a high level of efficiency.
Scotgen is entitled to appeal to the Scottish Ministers against the notice.
If there is an appeal, the revocation notice would be set aside until the appeal had been determined.
This would mean that the plant could carry on operating until Scottish ministers make a decision.
Ian Conroy, Sepa's technical support manager in the south west, said: "Sepa recognises the importance of plants like this as part of the overall mix of facilities and services that will have a role in delivering a Zero Waste Scotland."
He said that since the Dumfries plant had opened the agency had provided support and assistance to help meet its requirements.
"Unfortunately despite this, they have not done so," he said.
"The facility started operations more than four years ago, and in that time has never achieved a level of compliance which would give Sepa any degree of confidence that future operation would be any different.
"The facility has consistently failed to meet any reasonable expectation of environmental performance and the predicted level of energy recovery at approximately 3% is particularly disappointing and unsatisfactory."
He said Sepa had taken this "serious and unusual action of revoking the permit" after "careful consideration and assessment of the regulatory options available".
A spokesman for Scotgen said it was currently considering its options with its advisers.