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In September last year, a group of Tarras farmers known as the Lindis Catchment Group appealed the regional council's decision to restrict the summer flow of the Lindis River to 900litres/sec.
The council, the farmers and affected parties, including Fish and Game, entered into mediation.
Talks broke down in July without resolution and will now be decided in an Environment Court hearing at a date to be fixed next year.
Otago Fish and Game chief executive Niall Watson said ``in a surprising reversal'' regional council staff reached agreement with the Lindis Catchment Group over a proposal for a reduced minimum flow, to 550litres/sec, with 13 gallery intakes along the upper 18km of the irrigation-affected river. That would leave the lower 6km down to the confluence progressively depleted, he said.
The Department of Conservation and Ngai Tahu have yet to confirm whether they support the agreement reached between the Lindis Catchment Group and the council, but affected parties Fish and Game, Clutha Fisheries Trust, Upper Clutha Anglers Club, Central Otago Environmental Society and NZ Professional Fishing Guides Association supported a minimum flow of 900litres/sec, so the case was going back to court.
``The failure of ORC to support its own commissioners' decision is a real concern and undermines confidence in their resource consent hearing processes,'' Mr Watson said.
``We appreciate how vitally important water is for agriculture in Central Otago but you can't short-change the environment to prop up nonviable businesses.
His organisation was ``really concerned that flows in the Lindis River should connect in a meaningful way from the top of the catchment to the confluence with the Clutha river''.
ORC chairman Stephen Woodhead said he could not comment on the dispute, but from the council's point of view it was positive that both the issue of minimum flows and resource consents to take water from the river would be dealt by the environment court at the same time.
Farmers in Otago have until October 2021 to apply for resource consents for water before their mining privileges or permits lapse.
Perpetual rights for water were issued under the Mining Act more than 100 years ago for gold mining or primary production but when the new Resource Management Act came into force in 1991 farmers were given 30 years' notice to apply for consents.
Mr Woodhead said of the 1000 mining privileges or permits due to expire across Otago, 720 have been processed so far.
ORC executive officer Fraser McRae said he did not think the Lindis case resource consent outcome would set a precedent for the region, but ``it was typical of several catchments in Otago where the mining privileges have enabled more water to be provided than was good for the streams in those catchments''.
He said it was likely the amount of water taken by mining privilege holders was probably not going to be the same amount granted under the RMA.
``That's the reality of leaving water in a river to provide for an aquatic habitat so the river can act as a river and not just as a water supply for irrigation,'' he said.
The RMA and the national policy statement on freshwater management required the ORC to address the river ecological environment and there will be a ``price to pay'' he said.