A "legal technicality" will cost farmers and add another layer of bureaucracy if the government does not urgently change the Resource Management Act, Southland's regional council says.
The technicality is in Section 70 of the act, which restricts when a council can include a permitted discharge rule in a plan.
The council said that clashed with Rule 24 in the Southland Water and Land Plan that would allow certain farming discharges - including animal urine - if they were covered by other rules in the plan.
The rule was initially appealed in the Environment Court by Forest and Bird and Fish and Game, after the plan was notified in 2016.
The court then questioned whether it complied with the act.
Environment Southland unsuccessfully appealed the decision to the High Court and the Court of Appeal, meaning it has run out of options in the courts, as they all have indicated the rule did not comply.
Chief executive Wilma Falconer said the decision would likely mean nearly all Southland farmers would need to apply for a resource consent to keep farming lawfully.
"It would be a terrible waste of time and effort and a huge impost on the community and the economy to put 3000 consent holders through a consent process for no benefit," she said.
She doubted the additional resource consents would have any additional environment benefits as the council's plan already provided them.
"Instead, it will add another layer of bureaucracy and cost for farmers and require the Council to resource the significant increase in consents processing that would be needed," she said.
"It's much pretty much a legal technicality, but it's an important one because our Water and Land Plan is created under the National Policy Statement for Freshwater, which is specifically about designing plans to improve water quality over time."
The act talked about immediate improvements, which was "incompatible" with the longer term view adopted by the national stance and the council's plan, she said.
The government is reviewing the Resource Management Act, and the council has written to ministers to ask for Section 70 to be urgently changed.
The decision was unlikely to impact farmers for a while because it was sent back to the Environment Court to finalise the wording, but farmers would mostly likely need a resource consent for the incidental diffuse discharge of nutrients from farming activities in the future, she said.
Forest & Bird said council oversight was appropriate where discharge were having a significant adverse impact on degraded water sources.
"The Court of Appeal decision is a fantastic outcome. It upholds a critical environmental concept in the RMA, that contaminants cannot be discharged as of right where they would have significant adverse effects on aquatic life," a spokesperson said.
"Southland Regional Council's response to losing on this issue for the third time is a knee jerk reaction that prioritises pollution over freshwater health."