RENO, Nev.—Conservationists at Lake Tahoe are suing over new regulatory changes they say will erode environmental protection of the mountain lake by failing to adequately monitor water quality, allowing for construction of bigger buildings near the shore and thousands of more housing units in the basin.

The Sierra Club and Friends of the West Shore filed a lawsuit in U.S. District Court in Sacramento on Monday challenging rules the Tahoe Regional Planning Agency adopted in December for its new regional plan.

The suit says the changes would allow local governments around the lake to adopt weakened pollution controls that don't meet minimum standards set by the bistate panel that Congress authorized in 1980.

Among other things, the new rules would allow construction of up to 3,200 residential units and 200,000 square feet of new commercial floor area. It also doubles building height limits—from three stories to six stories just west of the Stateline casino district across the California line in South Lake Tahoe; and from two stories to four stories in smaller villages including Tahoe City, Calif.

"This is a wrenching departure from past practice and is not in line with the spirit or law of the bistate compact created to protect the lake," said David von Seggren of the Toiyabe Sierra Club of Nevada.

The suit drew criticism from officials for the TRPA and another leading environmental group at the lake who said it will be counterproductive because it will delay implementation of positive aspects of the updated regional plan.

"While the plan is not perfect, it is a product of community collaboration and compromise and is designed to be adaptive," said Darcie Goodman, executive director of the nonprofit League to Save Lake Tahoe, the oldest environmental group at the lake and a frequent plaintiff against TRPA in the past.

"The Sierra Club's action goes against the broadest consensus ever achieved at Tahoe," added Shelly Aldean of Carson City, chairman of the TRPA board.

The azure lake about 30 miles southwest of Reno sits in the Sierra Nevada at 6,225 feet above sea level with a depth of about 1,600 feet, the 11th deepest lake in the world and second deepest in the United States.

TRPA is charged with regulating shore-side development as well as runoff into the lake that has caused its famed clarity to be cut nearly in half over the past four decades. A white measuring disk that was visible as deep as 94.1 feet in 1968 could be seen only as deep as 50.4 in the summer of 2012, the lowest ever recorded, the lawsuit said.

"This new plan fails to recognize that an increase in buildings, rooftops and pavements will mean an increase in the amount of polluted rain and snowmelt—runoff that flows directly into the lake," said Laurel Ames of the Tahoe Area Sierra Club of California.

Trent Orr, an Earthjustice attorney for the plaintiffs, said the new rules only track whether runoff catchment basins have been installed where they are needed and don't provide actual monitoring of water quality of the runoff. He said new flexibility for local governments to weaken standards set a dangerous precedent.

"There is no reason to believe that cash-strapped local governments would adopt and enforce adequate environmental protection measures in the face of lucrative development proposals," Orr said.

Joanne Marchetta, executive director of the TRPA, said the new plans mix incentives with a streamlined permit process to promote "21st century environmentalism."

"This lawsuit shows just how out of touch the Sierra Club is with the realities that face Lake Tahoe today," TRPA executive director Joanne Marchetta said. "Simply demanding that development should go away or people should stop coming to Lake Tahoe is not a realistic plan."