A decision by the Court of Appeal means a biowaste firm can continue to manufacture compost on an island in the Manukau Harbour for 10 years.
Living Earth has been operating on Puketutu Island for nine months.
The Auckland Regional and Manukau City councils originally denied the company resource consent to process 75,000 tonnes of green waste a year.
They argued the compost would smell and would be an industrial activity in a rural zone.
The Environment Court ruled against the councils and the Appeal Court has agreed, saying composting is not strictly an industrial use of the land because it has rural elements.