ISLE of Man Friends of the Earth has criticised the decision to rescind the Ramsey Estuary as an Area of Special Scientific Interest (ASSI).
Yesterday (Tuesday), in announcing the news, Environment, Food and Agriculture Minister John Shimmin MHK criticised the way ASSIs are designated and said the process had been "heavily influenced by my department from start to finish."
The department will now look into how to handle ASSI designations in the future.
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Phil Corlett of Isle of Man Friends of the Earth said: "This decision was a bad one, apparently forced by local special interests.
"This area is the most significant remaining estuarine habitat, which includes intertidal mudflats and salt marsh.
"In deciding whether to assign an ASSI the minister should remember that he's bound to act in the national interest.
"It would appear in this case that he has failed to protect an important and vulnerable national habitat."
Ian Costain, FoE's spokesman on biodiversity issues added: "Mr Shimmin has also taken the more radical decision to call for a review of the way in which ASSIs are designated, because he suggests the process lacks transparency.
"It's already fully in his gift to create greater transparency, simply by publishing more information from each ASSI consultation - there is no need to change the law."
The Friends of the Earth said the Isle of Man's process for designating ASSIs is modelled very closely on the UK process for designating Sites of Special Scientific Interest (SSSIs).
In England, Scotland, Wales and Northern Ireland the body responsible for maintaining habitat (for example Natural England or Scottish Natural Heritage) will assess an area to be of particular significance.
It will then notify the public and special interest groups that may be affected by the designation.
A consultation will take place, and then having listened to and recorded all views in a fully open and transparent fashion the body will make a decision about whether to actually assign the SSSI or not.
Mr Costain said: "The same process exists here - the difference is that where around 10 per cent of the UK on average, and 13 per cent of Scotland has now been protected with designated SSSI status, only around 3 per cent of Isle of Man benefits from ASSI protection.
"It could never be said that the Island's habitats are being put before commercial interests."
The Friends of the Earth said each ASSI/SSSI is unique and a management agreement is drawn up in full consultation with the landowner as part of the designation.
"The process works exceptionally well and has protected biodiversity across Britain by ensuring the sensitive maintenance of large areas of vulnerable habitat.
"The process is supported by wildlife, ornithological and environmental groups as well as by bodies representing landowners, such as the National Farmers' Union."
Mr Costain added: "Mr Shimmin is seeking to overly complicate an unusually simple governmental process.
"Change in the law is unnecessary. It will threaten the Isle of Man's ability to successfully protect wildlife and vulnerable or unique habitats in the future.
"It will also diminish our capacity to live up to our international commitments. Furthermore, by creating an overly bureaucratic system Mr Shimmin will also add significant costs to the notification/designation process in the future."