Federal Environment Minister Greg Hunt has agreed to a $10,000 cap on the Environment Centre NT's (ECNT) legal costs if it loses a case about Port Melville, which has allowed the advocacy body to pursue the litigation.

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ECNT launched a Federal Court action against the Minister in January, claiming his delegate's decision to allow Port Melville to operate as a marine supply base without environmental assessment was an improper exercise of his powers.

Last month, ECNT asked the Federal Court for a maximum costs order, warning that if it lost the case a substantial costs order could "cripple" the organisation and force its closure.

The lawyer representing ECNT, David Morris from the Environmental Defenders Office NT, said he could not comment on why Mr Hunt had agreed to limit his client's legal costs.

"We felt we had a very strong case," he said.

"In this instance, we haven't needed to go and argue that point because the Minister has acted very reasonably.

"Our client is a small community environmental non-government organisation, which has a very difficult time raising funds and doesn't have the sufficient resources to bear the burden of a large costs award."

The delegate decided in October 2015 that the port could proceed because the developer - Ezion Offshore Logistics Hub (Tiwi) Pty Ltd - had agreed to several conditions aimed at avoiding "significant impacts" to listed threatened species and ecological communities.

Decision was lawful, Minister says

Mr Morris said the port's location on Melville Island, 120 kilometres north of Darwin, and its surrounding waters were home to 38 internationally, nationally and Territory-threatened species.

Storage tanks that can hold up to 30 million litres of diesel have been installed at the Port Melville site.

Tiwi Islanders in traditional dress commemorate the first loading of woodchips at Port Melville in November, 2015. ( ABC Rural: Daniel Fitzgerald )

"It is of great public importance to understand if this decision was made lawfully and it's of broader public importance to understand the scope of the section which the Minister has used in the Act to approve this development without a full environmental impact assessment," Mr Morris said.

Mr Hunt will argue the decision was lawful and took into account the design of the fuel storage tanks and the distribution and ecology of listed threatened species and migratory species.

In February, the Minister was ordered to hand over a departmental briefing on the decision to give Port Melville the go-ahead without environmental assessment.

The Federal Court was due to hear ECNT's application for a maximum costs order today but that hearing has been vacated.

The case has been listed for trial on September 27.

The Environment Minister has been contacted for comment.