Federal Environment Minister Greg Hunt has been ordered to hand over a departmental briefing on the decision to give Tiwi Islands' Port Melville the go-ahead without environmental assessment.

Key points: Greg Hunt ordered to hand over departmental briefing referred to in Port Melville decision

Greg Hunt ordered to hand over departmental briefing referred to in Port Melville decision Environment Centre NT arguing Mr Hunt's decision an improper use of his powers

Environment Centre NT arguing Mr Hunt's decision an improper use of his powers Cost of action could "cripple" Environment Centre, lawyers warn

The order was made on the first day of a Federal Court challenge to the decision, launched by the Northern Territory's peak environmental group, which has warned the action could "cripple" it with legal costs.

The $130-million deep sea port, located on the coast of Melville Island, north of Darwin, is in an area listed as internationally significant for wildlife.

It is operating despite no formal environmental impact assessments from either the Northern Territory or Commonwealth governments.

Environment Centre NT is arguing the decision was an improper exercise of Mr Hunt's powers.

The lawyer representing the Environment Centre NT, David Morris, told the court his client needed a cap on the organisation's legal costs if it loses the case.

The court will hear the Environment Centre NT's formal application for a maximum costs order in April and the result could determine whether the organisation continues the litigation.

"An adverse cost order in a large sum would cripple the Environment Centre, which is the Territory's peak body for non-profit environmental advocacy," Mr Morris said outside court.

"Our client is probably not in a financial position that they could take that risk. That could quite possibly put an end to this litigation."

In a statement to the ABC, a spokesman for Mr Hunt said the project was "assessed in accordance with national environmental law".

Mr Morris said the delegate who made the decision on behalf of the Minister did not in fact assess the project.

"We dispute that," he said. "We say that it wasn't actually assessed at all - what was assessed was the referral information."

"We're talking about terrestrial and marine environment that is habitat to 38 internationally, nationally and Territory-threatened species," he said.

"You've got one of the most important turtle rookeries in the world within very close proximity to this port and we say there's been really insufficient studies done to adequately understand what the impact of this development might be."

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

The Environmental Protection Authority (EPA) NT said about 23 ships, up to 200 metres in length, passed through the Apsley Strait - the divide between the islands - each month in 2015 and this was expected to increase to almost 30 by 2019.

Warning against 'ad-hoc' developments

The Environment Minister's delegate decided in October last year Port Melville did not require an environmental impact assessment under federal laws because it was not a "controlled action".

Environment Centre NT director Ian Harris (left), with lawyer David Morris, outside the NT Supreme Court. ( ABC News: Felicity James )

The decision was subject to the port's developer Ezion Offshore Logistics Hub (Tiwi) Pty Ltd taking steps to "avoid significant impacts" to listed threatened species and ecological communities.

The Environment Centre NT's director, Ian Harris, said it was a huge decision to proceed with the litigation but the transparency of future development decisions was at stake.

"It is really important for the Territory to get the environmental legislation right and by questioning the Minister in this way, we hope to get an answer," he said.

"Future developments up here can't just happen ad hoc."

The NT EPA also announced last year it would not require an environmental impact assessment or public environmental report from Ezion.

After investigating, the NT EPA said environmental risks associated with the port's future operations could be managed to avoid significant environmental impacts.

"In this case it worked out very well, and we believe that the project should simply go ahead," NT EPA chairman Dr Bill Freeland said at the time.

However, in its statement of reasons, the NT EPA said it was concerned the company's procedures for fuel storage, fuel transfers and emergency responses to cyclones and spills were "not fit for purpose".