The Tukituki Catchment Proposal has been directed to an independent Board of Inquiry, to be considered alongside the Ruataniwha water storage scheme.
The board will consider the construction and operation of the dam, reservoir and irrigation infrastructure. The Tukituki Catchment Proposal is for new rules for nutrient management and water allocation.
The Board of Inquiry process enables public submissions and delivers a decision within nine months.
Board members are not yet appointed and it will likely be chaired by a retired High Court or Environment Court judge.
The Hawke's Bay Regional Council is the author of both the proposal and water storage scheme - allowing more water to be put on land but controlling its effect in waterways.
Stock will be excluded from waterways and nutrient-management requirements tightened.
Land-use changes that increase nitrogen leaching will require a resource consent, making conversions to dairy farming difficult.
Improved water allocation and minimum river-flow limits would also be targeted.
Tukituki MP, Craig Foss said he welcomed the inquiry.
"I know there is wide public interest regarding this issue, so it is important everyone has an opportunity to voice their views on the subject," he said.
Napier MP Chris Tremain said: "This is excellent progress, today's announcement will allow everyone an opportunity to express their support, or concerns before an independent Board of Enquiry."
Both Environment Minister Amy Adams and Conservation Minister Dr Nick Smith announced the proposal's direction to a Board of Inquiry yesterday .
The Minister of Conservation is involved because the scheme impacts coastal areas.
In accepting the recommendation of the Environmental Protection Authority to refer the proposal to a Board of Inquiry, the ministers said it met the criteria for being considered nationally significant.
"There is likely to be wide public interest in the proposal, considerable use of natural and physical resources, significant changes to the environment and it affects more than one region or district," the ministers said.
Transparent Hawke's Bay Chair, Pauline Elliott said the Ruataniwha Dam "call in" announcement was "no surprise".
As a project of 'national significance' it will now be referred to a Board of Inquiry appointed by the Minister under the Environment Protection Agency.
Ms Elliott said progress to date plus the Board of Inquiry process would have cost regional ratepayers $6m plus and taxpayers a further $3m plus.
"It has consumed the energies and resources of Hawke's Bay Regional Council and its Investment Company for at least two years. So far the serious concerns of the Mayors of Hastings and Napier, business leaders, Iwi leaders, environmental groups and submitters have gone unheeded. At no time have the people of Hawke's Bay had an opportunity to understand exactly what is involved here, or to understand the level of risk for ratepayers".
The 'call in' means that the environmental impacts of this massive, multi-million dollar project will be assessed by a Wellington appointed Board of Inquiry, and must be determined within nine months from date of public notification, Ms Elliott said.
"In ignoring calls for less haste and greater transparency, the Regional Council's decision to push ahead has squandered the last remnants of public confidence. The Council is on notice that future consultation will demand a robustness not yet seen anywhere in the process to date."
Transparent Hawke's Bay will be hosting an information evening at the Clive Community Hall on Tuesday, 25th June, 7pm.