Kawarau Jet has gone head to head with Lakes Environmental after it accused the company of operating four boats without resource consent for over a decade.
The council has not backed Lakes Environmental after independent legal advice said the firm was operating within the law and did not need new consents for the bigger boats.
Council chief executive Duncan Field said Lakes Environmental had raised the compliance issue because Kawarau Jet originally had consents for 20-seater boats but had operated 28-seater jet-boats since 1995.
"We believe the original report from Lakes Environmental was wrong. We have read the resource consent and gained legal advice and have come to a different conclusion. We believe it has been written in such a way that it provides for an increase in [boat] size," he said.
Council regulatory manager Roger Taylor would now take over any future matters involving Kawarau Jet.
"Kawarau Jet has raised allegations of some kind of agenda. I don't believe this is correct, but to eliminate the claims, we have brought the management [of Kawarau Jet's compliance] back into our office," Mr Field said.
It did not mean the company would be monitored any less stringently; the safety of jet-boating was paramount, he said.
Kawarau Jet director Andy Brinsley said he was "very happy" the council had decided to take over any future compliance regulation from Lakes Environmental. He said Lakes Environmental's issue came down to a "very strict interpretation".
Lakes Environmental chief executive Hamish Dobbie said he did not know why council had taken over: "I don't know what they are talking about."
He accepted the council's decision that Lakes Environmental had been wrong.
