Federated Farmers and the Lakes Water Quality Society told the Herald the deal was an acceptable compromise. The court appeal had been running for two years and was set to carry on for two more years when Mr McClay intervened in November.
Farmers had feared meeting the requirement with the 10-year timeframe would have proved devastating for them, causing job losses and hurting the local economy.
But Mr McClay said yesterday that 20 years was "not an unreasonable" deadline, despite nutrients in groundwater having built up over 60 years. The amount of nitrogen in the lake needed to be reduced from 746 tonnes to 435 tonnes.
"This is probably one of the largest challenges of any water body in New Zealand," Mr McClay said.
"This agreement recognises what must be done, but doesn't lessen the significance of the huge effort that must be made."
Rotorua and Taupo Federated Farmers provincial president Neil Heather said reaching the goal would still hurt the farming community.
"It's going to have a huge cost to farmers in production and profitability, there's no two ways about that, but we all want the same outcome - we just don't want to go broke doing it."
The deal also fell short of what the Lakes Water Quality Society had wanted, but was still a "turning point" for restoring the lake's health, spokesman Ian McLean said.
"This, I think, shows what is possible with the right leadership, and as such it's a demonstration to the rest of the country that it's possible to have win-win situations."
He added the effort needed to overcome the battle in Rotorua had been "much harder" than in other parts of the country.
Mr McClay believed it would become a "milestone agreement" that would be replicated elsewhere.
The need to clean up our waterways was highlighted last year by a long-awaited report by the Land and Water Forum, and a Ministry for the Environment report found that more than half of our monitored river sites were unsafe to swim in - information later used in a New York Times article on the eve of the premiere of The Hobbit movie.
Two keynote speakers at a New Zealand Freshwater Sciences Society conference in December called it our largest environmental problem.
Federated Farmers president Bruce Wills said the answer was better collaboration between parties and "not beating each other up about who's to blame".
"You can propose to limit dairying or the impacts of agriculture, but when we start to talk about job losses and the rural community feeling a lack of income, it's not easy to get the balance right between continuing to grow the economy and having a smaller and smaller footprint."
Mr Wills said Horizons Regional Council's controversial One Plan was regulation going a "step too far".
But Dr Mike Joy, a senior lecturer at Massey University's Environmental Science and Ecology Group, said tougher regulation was the only way to reverse pollution of waterways.
"We all know that speeding and drink driving is dangerous, but until you have speed cameras and policemen, nothing changes."
The compromise
A memorandum of understanding between Bay of Plenty Regional Council, Federated Farmers and the Lake Rotorua Primary Producers Collective pushes back the deadline for nutrient loading into Lake Rotorua to be lowered to sustainable levels. But 70 per cent of the target - bringing annual nutrient loading from just under 750 tonnes to 435 tonnes - would still be achieved within a decade.
In signing the deal, Federated Farmers would withdraw legal action against the council. The rules and incentives needed to achieve the reductions will be worked out.
