A campaign by Water Minister Melinda Pavey to change the NSW Upper House's mind on legalising floodplain harvesting was shut down late on Tuesday evening.
The members of the Upper House voted 23 to 16 against a rescission motion tabled by Mrs Pavey to revert their disallowance of a floodplain harvesting exemption regulation.
The regulation, which would have allowed for largely unlimited floodplain harvesting until the government licenced the practice, was originally voted down by the Upper House in September, with the Shooters, Fishers and Farmers, Labor, One Nation and the Greens uniting in opposition.
The disallowance pulled into question the legality of floodplain harvesting and Mrs Pavey said 12,000 farmers across the state could be potentially placed in handcuffs.
Advice from the Crown Solicitor's Office on the legality of floodplain harvesting activity under the Water Management Act was tabled by Ms Pavey before the vote on Tuesday.
The advice said there was generally no ambiguity as to whether a person could carry out floodplain harvesting if they held a water access licence and water supply work approval or basic landholder right in respect to that activity.
However, if they did not hold the relevant licences or approvals an exemption regulation would reduce ambiguity on whether they could undertake FPH or not.
"Those persons could assume that, were such licences or approvals required, the exemption regulation had the effect that this was no longer the case and that they could lawfully carry out floodplain harvesting in the circumstances set out in the regulation," the advice read.
Speaking against the rescission motion in parliament last night, Independent MLC Justin Field said the advice basically came to the conclusion that there is a rule book there that people can use.
"Obviously it's confusing, there is actually legal uncertainty but I'll tell you what you don't do, when you've got this massive, historically unregulated...take, you don't just give it a broad blanket exemption.
"That's not the way to deal with this, not when it has such consequential impacts downstream..."
The Natural Resources Access Regulator (NRAR), which enforces water laws in NSW, has indicated it will not be focused on floodplain harvesting, a practice it expects to be metered by mid-2021.
Ms Pavey said she plans to put the regulation back in place as as as soon as she is able, on January 22.
Once a regulation is disallowed a similar regulation can not be brought in for four months.