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An anti-GE lobby group today said the law remained inadequate in protecting New Zealand's environmental and economic interests.

A judge has rejected a claim by Mothers against Genetic Engineering (Madge) that Environment Minister Marian Hobbs should have "called in" an application by AgResearch.

Last September AgResearch, the Government's largest science company, was given approval to insert human, rat, mouse and deer genes into cows, in research into genetically engineered (GE) milk products.

Justice Potter, in a judgment released yesterday, said the decision of the Environment Risk Management Authority (Erma) to approve the application was lawful.

Under the Hazardous Substances and New Organisms (HSNO) Act, the minister can step in to decide an application.

The grounds for doing so included an application's economic, environmental, international or health effects, or its effects in areas where Erma lacked sufficient knowledge or experience.

Justice Potter's decision said the way the legislation was written meant it was "clearly not a licence for the minister to become involved in the nuts and bolts of applications".

However, she said Madge had justifiable concerns about the ministry's "informal" processes in performing its functions of advising the minister over the application.

She added that they needed tightening.

The hearing in the High Court at Auckland last month was told that letters went astray and there was no written procedure for "call-in" reviews.

Madge's legal spokeswoman, Kate Woodd, said Justice's Potter's criticisms came as little surprise.

But Madge was disappointed the judge had not backed its contention that the last two stages of the AgResearch experiment amounted to a "field test", rather than just "development" work as under the application.

"We think she has dodged the issue as to whether or not the definition of 'development' means anything more than simply the genetic modification of an organism," Ms Woodd said.

"We were asking for a bit of statutory interpretation on what GM is and that has not happened."

Ms Woodd said Justice Potter had taken the view that the matter was one of scientific judgment.

She said the result was that "any decision that Erma makes can effectively be unchallenged for eternity".

The case had so far cost Madge up to $20,000 and whether it went any further would depend in part on whether the organisation could raise more funds, she said.

Meanwhile, Ms Hobbs said the High Court decision backed her interpretation of the call-in option as something "to be taken at the highest level and with considerable thought and care".

"The power to call in an application is not a power I am likely to exercise very often."

Ms Hobbs acknowledged the judgment did not absolve the ministry completely.

Despite that, she said "the advice the ministry gave was appropriate", but she had directed the ministry to formalise its procedures.