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Work on the Brassknocker Rd facility in the Manuherikia Valley started in June and would be completed in November, ORC engineering manager Chris Valentine said.
The site, alongside State Highway 85, was chosen by ORC staff and contractors and the NZ Transport Agency, he said.
But some nearby landowners say the site is unsuitable.
Farmer Gary Kelliher, of Springvale Downs, who is also a civil engineer, said he was "astounded" it had been chosen, as it was within the Brassknocker Creek catchment and upstream of some domestic bores.
"Brassknocker Creek is typical of creeks in Central Otago. They will generally run at a normal low flow, however when a thunderstorm or heavy rain occurs they rise very quickly. The neighbours and I have witnessed water right across the highway in this exact site, so we now are all astounded that of all the sites that could be chosen, this would be the one."
He said choosing the site was "another example of this [ORC] council's lack of understanding of its regions and their environment.
"I support the installation of these sites, but at practical locations that don't place what ORC is supposed to protect at risk, or be a substantial further burden on those who contribute funding to them."
Another nearby landowner, Hugh Bradley, who owns land downstream of the facility, was also concerned.
He was worried about flooding over the site contaminating nearby domestic bores, and said he was not contacted by the ORC about the site chosen.
Several other landowners, who preferred to remain anonymous, also said they had not been consulted about the site's location, and that they had seen Brassknocker Creek flood where the effluent disposal facility was being built.
The Otago Daily Times asked Mr Valentine if there was consultation over the facility's location, and if the ORC would take responsibility for any effluent from the site that affected domestic supplies.
He said letters "outlining our plans" were sent in October last year and no objections to the location or proposal were received.
Mr Valentine said the culvert under the state highway had been half-blocked but was now clear of sediment, the facility was "not in any overland flow path" and nearby water bores were not at risk of contamination.
The 22,500 litre tank was "generally sealed but not 100%", and had sensors and alarms that would monitor effluent levels, he said.