The 175km trail will eventually link Kingston with Walter Peak Station, on the western shore of Lake Wakatipu, via the Mavora Lakes and the remote Von Valley.
Stage One, from Kingston to Mossburn, opened in November.
Last month, independent commissioner Denis Nugent granted the Southland District Council consent to build part of stage two of the cycleway through the Oreti Valley, beside the headwaters of the Oreti River.
Now Fish & Game New Zealand has appealed the decision to the Environment Court, saying it is committed to protecting the Oreti Valley's pristine outstanding features and internationally recognised brown trout fishery.
Fish & Game Southland manager Maurice Rodway said yesterday $100,000 had been budgeted from reserves for the appeal process but he hoped time and costs could be saved if the council entered into mediation and seriously considered Fish & Game's favoured alternative route, through the neighbouring Mararoa Valley.
The Mararoa route would add 5km to the trail but would protect an ''existing important economic and recreational asset'' fished by people from all over the world, he said.
However, there may be no mediation.
Council services and assets group manager Ian Marshall said yesterday while the council would enter mediation if directed by the Environment Court, the Mararoa Valley route was ''just not an option, as far as we are concerned''.
''We want the best route and the best cycle trail product and we think that is through the Oreti Valley. Fish & Game does not agree. It is hard to mediate when the parties' views are so black and white.''
The appeal would probably cost the council at least $100,000, too, he said.
He was disappointed Fish & Game had appealed but not surprised.
''We knew their views. I'm disappointed it is going to cost both organisations a significant amount of money.''
The council received government funding of $4.2 million towards the trail, on the proviso it was completed by the end of this year.
Mr Marshall said now there had been an appeal he was certain the trail would not be completed this year.
The Environment Court's workload was less than it had been but it would still be months before the case was heard, he said.
He said he had spoken to Ministry of Business, Innovation and Employment staff members several times, saying the deadline might not be met.
''We will have to hope there will be some flexibility.''
During a conversation late last year the ministry had indicated the deadline ''wasn't a show-stopper'', he said.
