The land-based discharge has not been operating as intended at the Shotover wastewater treatment plant and the Otago Regional Council announced yesterday it had applied to the Environment Court for an enforcement order against the Queenstown Lakes District Council.
This followed an investigation that ran for more than a year.
The enforcement action was not a decision to prosecute, but it was regarded as an escalation after two abatement notices and a series of infringement notices.
ORC chief executive Richard Saunders said wastewater was being treated to a high level, but the district council was not meeting consent conditions.
The "dose and drain" system was intended to allow treated water to soak into the ground before entering groundwater and, ultimately, the Kawarau River.
However, there has been persistent ponding within the disposal field. Treated water has not soaked into the ground at the rate it is meant to.
River water quality does not appear to be adversely affected.
"While tests have shown the discharges to be highly treated, we want QLDC to be compliant with its consent," Mr Saunders said.
"It's vitally important for the environment overall that consent holders achieve compliance with their consent conditions."
The district council has acknowledged the disposal system experienced "performance issues".
It did not have fresh comment yesterday, but referred to an earlier statement that outlined the nature of the problem and additional context.
The disposal system, located in Frankton, was commissioned in 2019 in recognition of cultural sensitivities about discharges direct to water, the council said.
The council had since allocated $77.5million in its long-term plan for a new disposal strategy.
Regional councillors Michael Laws and Gary Kelliher were critical of that situation.
Both suggested the district was facing unnecessary expense because too much heed was taken of cultural considerations.
"The real reason there's problems...is because culture overtook science and environmental concerns," Cr Laws said.
Cr Kelliher said disposal "to land right beside a river is just ideological nonsense".
Otago Fish & Game Council chief executive Ian Hadland said he hoped enforcement would prompt the QLDC to take faster remedial action.
"We are aware that the issues there are complex and the potential remedies costly, but you just can't have riverside sewage dispersal fields failing to meet consent conditions and potentially risking water quality in rivers."
Mr Saunders said the decision to seek an enforcement order followed a significant amount of work by the regional council's compliance team.
The investigation had been the "highest priority" for the council.
Prosecution was seen "merely as a punitive measure", but an enforcement order was a "court-issued directive requiring certain actions to be taken within set timeframes to fix a problem".