Logging has been suspended at 34 sites in Victoria following a legal challenge that, if successful, threatens the validity of controversial timber operations in native forests across Australia.
The development comes as the expiry date looms on many of the 20-year deals between the Federal Government and the states that allow logging of native forests on public land, prompting calls for the system - known as regional forest agreements - to be scrapped.
The 10 landmark agreements make logging in certain areas exempt from federal laws. They were designed to end decades of conflict between environmentalists and the timber industry by enabling conservation, recreation and logging to coexist.
However critics say the deals have comprehensively failed to protect the environment.
The Federal Court on Friday issued orders stating that VicForests will not harvest timber from 34 sites, known as coupes, in the Victorian central highlands. The area is home to the critically endangered Leadbeater's possum, and the world's tallest flowering plant, the mountain ash.
VicForests agreed to suspend logging operations until a hearing in mid-December that will consider whether its logging activity is compliant with the regional forest agreement and exempt from federal laws.
Harvesting was under way in four coupes, and was planned for the remainder.
The case, brought by Environmental Justice Australia on behalf of the Friends of Leadbeater's Possum, alleges that logging operations are significantly affecting the possum and the greater glider.
It also alleges that mandated five-yearly reviews of the effectiveness of the agreement have not been carried out, meaning that logging operations have not been conducted in accordance with the rules.
The case asks the court to prohibit logging in the 34 coupes unless federal laws are complied with, and to protect the animals at 32 other sites that have already been logged.
Friends of Leadbeater's Possum spokesman Steve Meacher said the forest agreements had "failed to protect endangered wildlife and have not been complied with".
VicForests chief executive Nathan Trushell said its operations were in accordance with the forest agreement and "we look forward to the court clarifying obligations in regards to this".
"We are keen to see the legal matter resolved as quickly as possible to minimise disruption of timber supply to local mills and to important regional jobs," he said, adding that logging operations must comply with state environment laws.
There are five RFAs in Victoria, three in NSW and one each in Tasmania and Western Australia. The Tasmanian agreement has already been extended until 2037, and the remainder are set to expire between 2018 and 2021.
In May last year, Assistant Agriculture Minister Anne Ruston reportedly said the government planned to extend the agreements for another 20 years, saying they achieved "good environmental outcomes".
However National Parks Association of NSW senior ecologist Oisin Sweeney said the agreements had been "very poor at providing for conservation".
While the deals were supposed to ensure timber extraction did not affect water supply, carbon stores, threatened species or tree hollow density, "we know that is absolutely not occurring," he said.
Dr Sweeney said the legal challenge, if successful, would set a precedent for all other forest agreements, adding that only one five-year review had been conducted in NSW in 18 years. The NSW Environment Protection Authority confirmed this.
"Were the Victorian challenge to be successful, the entire regulatory framework of native forest logging would be in disarray," he said, adding governments should discontinue the agreements and move away from industrial logging in native forests.
The NSW government is also committed to extending the agreements, and says shutting down the forestry industry would "devastate the towns and families that depend on it".
The Victorian government also supports the deals but says they should "better reflect the values, interests and needs of the Victorian community".
