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The environmental watchdog has negotiated a settlement with the regional council, eight months after filing a statement of claim in the High Court over the issue.
The council granted the non-notified land use consent to NZSki in March last year to extend the learners slope at the Queenstown skifield.
Forest and Bird Otago-Southland regional manager Sue Maturin said the agreement ensured a "much improved process" for how the council handled similar applications in the future.
The terms of the settlement include a memorandum of understanding giving it and the council the opportunity to "raise issues in a more proactive manner".
Asked if the settlement was effectively an admission by the council it bungled its handling of the consent, Ms Maturin said it was.
"They agreed they made errors of law."
The regional council refused an Otago Daily Times request for an interview, instead providing an emailed statement attributed to regulatory general manager Peter Winder.
Mr Winder said the council was pleased the matter was settled, and through the negotiation process the parties had gained a "stronger understanding of each other's roles and expectations".
The terms of the settlement gave Forest and Bird the opportunity to make a "really positive" contribution to the council's biodiversity work, Mr Winder said.
Ms Maturin said the regional plan required that adverse effects on regionally significant wetlands be avoided, so the consent should never have been granted. It should also have been publicly notified.
"By the time we became aware of it, the wetland was already lost, but Forest and Bird was concerned the council had made mistakes in how it processed this consent, and our top priority was to ensure that didn't happen again."
Internal council reports said the work would destroy the 100sq m of wetland, which was protected in the council's water plan.
The council had also relied on the Department of Conservation (Doc) having signed off the consent, even though Doc's technical advice was the wetland's values were significant and the impacts more than minor, she said.
The terms of the settlement include the council not relying solely on the written approval of a party such as Doc, but having to consider environmental effects itself.
It accepted district plan rules for ski sub-zones were not relevant when assessing regional plan policies and rules about wetland protection and that it must consider regional plan rules for diverting water when processing wetland consent applications.
Forest and Bird would be invited to participate in the council's regular consenting forum with other interested parties.