Controversial agreements allowing native forests to be logged can be extended for decades without a fresh assessment of threats including climate change, the Federal Court has found.
Forest defenders in NSW have lost what they hoped would be a landmark challenge against one such agreement that governs logging across four million hectares of native forest from Sydney to the Queensland border.
The Federal Court dismissed arguments about its validity, meaning harvesting will continue in coastal forests that are strongholds for endangered species.
The timber industry welcomed the result saying it secured hundreds of jobs in regional NSW but Premier Chris Minns warned the sector change was coming.
"The forestry industry in NSW has a future," he said but flagged his government planned to explore the expansion of private plantations and forestry-related opportunities for carbon offsets.
"The NSW government wants to work with stakeholders ... to look at the next step in relation to forestry in this state.
"It's important for our domestic economy.
"It's hugely important for housing, but it can't stay just in stasis."
Lawyers for the North East Forest Alliance had argued a regional forestry agreement between the Commonwealth and NSW governments should not have been renewed in 2018 without new environmental assessments.
They said the agreement was renewed for a further 20 years without due regard for contemporary issues, including climate change and native species that had declined to the point of being vulnerable to extinction.
The area covered by the North East Regional Forestry Agreement is important habitat for many threatened species, including koalas, greater gliders, and spot-tailed quolls.
They were not listed as nationally endangered species in 2000 when the first agreement was inked but were before it was extended in 2018.
The region has also been hit by fires that scientists have linked to climate change.
The challenge against the validity of the extended agreement was dismissed by Federal Court Justice Melissa Perry.
She said there was no requirement for a contemporary assessment before the forestry agreement was extended.
The forestry agreement allocated responsibility for matters of national environmental significance to the state of NSW.
"As such, the question of whether or not to enter into or vary an intergovernmental agreement of this nature is essentially a political one," Justice Perry said.
North East Forest Alliance president Dailan Pugh said it was shocking governments could extend native logging agreements without carrying out new forest health checks.
"I find that extremely troubling," he told AAP.
"In this case, the agreement was based on work done in 1997 and it was meant to be for 20 years.
"We now have climate change wreaking havoc - the situation has changed dramatically yet none of that is relevant."
The Environmental Defenders Officer ran the case and said without legal reforms, native forest logging would continue to be exempt from federal environmental assessment for at least another 20 years, with potentially devastating consequences for nature.
NSW crossbench MPs said the result shone a light on the failings of regional forest agreements in protecting threatened species.
They said the outcome was an opportunity for the NSW government to follow Victoria and Western Australia and end logging in native forests.
The Australian Forest Products Association and the Australian Workers Union is thrilled with the outcome, calling it a vindication of sustainable native forestry operations in NSW and great for regional jobs.
"Without the sector, we face a future of more timber and wood fibre imports from countries without Australia's high regulatory standards, fewer quality job opportunities in our regions, increased cost of living and a stalled progression on emissions reduction," AFPA's NSW CEO James Jooste said.
