What is meant by reference argument must be automatic?

The LRM says

It shall be illegal to use argument passing by reference for subroutines with a lifetime of static.

The reason for this restriction is that you are allowed to hierarchically reference the arguments of a task/function as static variables from the outside of that task/function, and that would not make any sense if the arguments are references. A reference is only valid during an active call of that task/function.