The 38,000-tonne Rena ran into the reef in the middle of the night on October 5, 2011, leading to New Zealand's worst maritime environmental disaster as 300 tonnes of oil leaked into the ocean, killing marine life and washing up along the coastline.
Ngai Te Hapu's Buddy Mikaere, representing Motiti Island residents, said iwi were disappointed with the decision.
Motiti Island bore the brunt of Rena's spilled oil and debris and have been fighting since the day of the grounding for nothing more than full wreck removal.
"We wanted to send a clear message to overseas ship owners that you need to know that you can't come to our country and do this kind of stuff," Mr Mikaere said.
"I'll give them their due, they tried to clean their mess, as much as they could, but it's only because of the enormous pressure brought to them by the community and the Government that made them do that."
Mr Mikaere said the decision was a blow but they would appeal the decision and take their fight to the Environment Court.
"What it's saying to us in very loud terms is these things which we thought protected Maori cultural issues under the Resource Management Act, which, when it come down to it, don't."
Bay of Plenty iwi would meet this weekend.
"We will be probably looking at a combined iwi group for the appeal, combined so we don't get picked off like last time," Mr Mikaere said.
Daina Shipping Company, the Greek-based company owner of the Rena, said the decision was a "safe and responsible resolution".
Spokesman Konstantinos Zacharatos said his company would work with the Bay of Plenty community, iwi and local authorities on the next steps outlined in the consent decision.
He said salvage work was expected to be completed in March, after which local authorities would review an exclusion zone around the wreck.
"We intend to continue to listen to and work together with iwi, members of the community and local authorities to discuss the decision, including next steps in concluding the incident," Mr Zacharatos said.
"The next steps from here will be to carefully consider the decision and the conditions, in consultation with our New Zealand legal and environmental team, before I return to New Zealand next month." Tauranga Mayor Stuart Crosby was pleased with the decision, despite having been an advocate for full wreck removal following the 2011 grounding.
"At first glance I'm not surprised with the breadth of the conditions.
"They seem to cover the majority of the issues monitoring of Rena, monitoring the reference groups set up, there are a whole lot of plans, there are a number of mitigation funds set up so I think the committee by and large have done a good job," he said.
Mr Crosby said he has accepted the wreck could no longer be completely removed.
Environment Minister Nick Smith said the hearing panel's decision was "common sense" and the process had been "exceedingly thorough".
More than $500 million has been spent on the clean-up so far, and further removal work at the reef could cause more environmental damage than if it were left alone.
