The Environmental Defenders Office (EDO) faces funding cuts after a Federal Court judge found the organization manipulated and distorted the views of Aboriginal people during a legal challenge to a gas pipeline project.

The Northern Territory government, which provides $100,000 annually to the EDO, announced a review of its funding following the court's decision.

Chief Minister Eva Lawler said, "There does need to be some consequences for anybody who's lied, particularly around something that's so important to the Territory economy."

Federal Opposition Leader Peter Dutton also weighed in, criticizing the EDO's actions and pledging to scrap its federal funding if the Coalition wins the next election.

"This is a body being funded by the Albanese Government, despite losing their federal court case and evidence being deemed confected and lacking integrity," he said.

The controversy stems from a case where the EDO supported Tiwi Island traditional owners challenging Santos' Barossa gas pipeline project on cultural and spiritual heritage grounds.

Justice Natalie Charlesworth found that EDO lawyers "distorted and manipulated" the instructions of the Indigenous people before presenting them to the court.

Dr. Mick O'Leary, an expert witness involved in the case, admitted to making untrue statements to Tiwi Islanders, prompting Justice Charlesworth to conclude he "lied because he wanted his 'cultural mapping' exercise to be used in a way that would stop the pipeline."

The $5.3 billion Barossa project is crucial to the Northern Territory's economy, and the court's findings have reignited debate about the role of environmental groups and their funding.

EDO chief executive David Morris defended the organization's work, stating they "provide a crucial community service" and have served communities across Australia for nearly 40 years.

He expressed disappointment at the potential funding cuts and emphasized the importance of access to legal representation for environmental and Indigenous communities.

The case and its repercussions highlight the complex intersection of environmental protection, Indigenous rights, and legal representation. With both federal and territorial funding under review, the EDO's future remains uncertain.