Glenrath Farms is currently in negotiation with planners over the development of what could be Europe's largest free range chicken farm near Peebles.
A total of 300,000 chickens could be raised at the farm.
But now environmental consultants Living Water, specialists in environmental concerns across Scotland, have indicated that there could be serious dangers if the site goes ahead.
This is because the proposed site sits above an underground aqueduct which carries water supplies from local reservoirs to Edinburgh.
In a report Living Water says there is a "high risk" of groundwater feeding into the aqueduct being contaminated from the proposed farm.
The report adds that the farm would also "greatly increase" the risk of cryptosporidium - a parasite that leads to the stomach disease cryptosporidiosis.
The report then goes on: "The development will greatly increase the risk of cryptosporidium and will make it more difficult for Scottish Water to eliminate the risk from water supplies."
But in response John Campbell, the owner of Glenrath Farms, said the report would not deter the company from pressing ahead with plans.
He said: "As far as we are concerned, Scottish Water, the Scottish Environment Protection Agency and every other organisation has cleared it, and we go by them.
"It's not what Living Water say, it's what the statutory authorities say, and that's all we need."
Scottish Water has raised no formally objection to the scheme although local authority planners have indicated that they will have to take the Living Water report into account.