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The Ruataniwha dam could be "put on ice" pending a legal challenge if strict environmental controls proposed for the Tukituki catchment are confirmed by a board of inquiry.
The same environmental controls could have a big impact on major primary sector employers in Hawkes Bay, and cost the region jobs, the regional council was told yesterday.
A new environmental regime - setting limits on nutrient levels and river flows in the Tukituki catchment - is part of a draft decision handed down by the board of inquiry that considered the consent application for the $275 million Ruataniwha dam and irrigation scheme for Central Hawkes Bay.
The regime, known as Plan Change 6, has alarmed the council, which says it will have a significant economic impact on the region because the environmental restrictions it imposes will limit farming and growing activities in the catchment.
A report considered by the regional council's regional planning committee yesterday said Plan Change 6 could result in a $50 million annual loss in regional gross domestic product and add millions of dollars to costs for farmers and the council.
The council and other parties involved in the Ruataniwha hearings process have until tomorrow to lodge submissions on the board of inquiry's draft proposal.
Andrew Newman, chief executive of Hawke's Bay Regional Investment Company, the council's investment arm and promoter of the Ruataniwha project, yesterday raised the prospect of a legal challenge to the board of inquiry decision if the tough conditions in its draft determination over Plan Change 6 were not softened.
Speaking at a meeting in Ongaonga as part of the council's public consultation over its proposal to invest up to $80 million into the project, Mr Newman said nitrate limits proposed by the board of inquiry would have "severe consequences economically" for the Tukituki catchment.
Asked at the meeting what HBRIC and the council would do if the board of inquiry confirmed its draft decision without changes, he said it was likely "we would put the scheme on ice" as the two organisations worked through an appeals process.
The board of inquiry has a statutory requirement to issue a final determination by May 28 but Mr Newman suggested the complexities of issues it would be asked to consider in submissions on its draft proposal could lead it to seek an extension.
That can be granted by Conservation Minister Nick Smith and Environment Minister Amy Adams. The board has already been granted an extension from the ministers after it ran short of time during its hearings process.
At yesterday's council meeting, senior land management adviser Ian Millner said intensive dairy farming and cropping operations in the catchment would "struggle" under the proposed Plan Change 6 conditions.
This included the likes of major employer Heinz Wattie's, whose intensive cropping operations include growing beetroot, tomatoes and corn in a confined area and are heavily reliant on artificial fertilisers.
Some councillors challenged the council's report on the potential impact of the plan change, with Rex Graham calling it "scaremongering".