Grape marc, a winemaking byproduct, produces a liquid leachate which can be a toxic pollutant if not stored correctly.

The founder of an environmentally-minded wine company who "significantly" polluted a stream has blamed an early, wet harvest putting pressure on his fledgling waste initiative.

Peter Yealands, founder of Yealands Family Wines, has admitted allowing the black, sticky winemaking byproduct grape marc to leach into soil near a waterway.

The marc leachate, or liquid drained from the marc of grape skins and seeds, seeped into Sixteen Valley Stream, southeast of Blenheim in 2016.

Tests showed the stream's water quality was severely affected with grey clouds and a black fungus appearing.

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Yealands' lawyer Rachel Reed said Yealands signed contracts with several winemaking companies to receive and recycle 20,000 tonnes of grape marc during the 2016 grape harvest. ﻿

Yealands' son Aaron's company GrowCo would then turn the marc into stock feed, Reed said at his sentencing at the Environment Court in Blenheim on Monday.

STUFF Peter Yealands signed a contract to take on 20,000 tonnes of grape marc after the 2016 harvest.

But harvest started earlier than usual, with "a degree of urgency", due to heavy rain. Yealands was not ready to receive the marc and dumped it in a "hastily constructed" pit.

The bottom of the pit was lined with clay, but the walls were not, and the leachate soaked into the soil.

Crown prosecutor Jackson Webber said Yealands dug a trench between the pit and the stream in an attempt to collect the leachate.

"The leachate was moving through the soil as a black sticky substance, emerging from the walls of the trench ... that was a very clear indication that something was wrong at a very early stage."

Marlborough District Council compliance officers found grey clouds of leachate that burnt the grass along the stream, and a black fungus after a complaint.

SUPPLIED Marlborough produces tens of thousands of tonnes of grape marc during harvest each year.

The stream's water quality was already affected by an upstream farm. Tests showed 7 grams of Biological Oxygen Demand (BOD) per cubic metre, a measurement of organic waste polluting the stream.

But water quality downstream of the marc pit was severely affected, with 1080g of BOD recorded in June.

"That's considerably higher than the range of raw sewage. There were also elevated levels of manganese and zinc, which are toxic to marine life," Webber said.

"They were trying to be an environmental leader and they didn't follow through on it properly ... [Yealands] had embarked on a business processing leachate which was known to be toxic. The onus was on him to ensure he was organised."

STUFF Peter Yealands is the founder of major wine company Yealands Family Wines.

Yealands was issued an abatement notice by the council in June.

Both Yealands and GrowCo were charged with pollution, but five charges were withdrawn, leaving Yealands to plead guilty to the remaining charge.

The stream had since cleared up and the grape marc was moved to secure storage in September.

Reed said Yealands was trying to solve the region's grape marc problem, but "his good intentions misfired".

Yealands had previously won awards for his work as an environmental steward, gifted large tracts of land to the Department of Conservation, and won Farmer of the Year in 2013, Reed said.

Judge Melanie Harland said she needed more information before deciding on the size of the fine.

She adjourned the sentencing and was expected to reserve her decision.