The rejection wasn't based on the merits, or otherwise, of the project, but on the panel's jurisdiction.
When FNH first applied for fast-tracking, its plans met the Ministry for the Environment's criteria.
However, a case in the High Court last November relating to mangroves in Mangawhai Harbour effectively broadened the definition of a wetland.
Suddenly the mangroves in Kerikeri Inlet were defined as a natural wetland and, because draining a wetland is a prohibited activity under the National Environmental Standards, the expert panel couldn't consider the Rangitane project for fast-tracking.
FNH general manager Chris Galbraith said it was "a real blow".
"The high court interpretation wasn't one the Ministry for the Environment anticipated, and it's had significant and unintended consequences for projects right across New Zealand. It's ironic because the Ministry originally found our project was compliant and technically consentable."
Galbraith hoped the Government would resolve the issue to save dozens of maritime infrastructure projects having to launch costly legal challenges.
In the meantime the Rangitane project was on hold.
It was too early to say whether FNH would consider going through the regular, and far more time-consuming, resource consent process.
He had lined up a series of meetings with government and regional council officials to try to find a way forward.
"Everyone's very frustrated about this outcome," Galbraith said.
Not quite everyone, however. The Rangitane Residents Association has opposed the project from the outset.
Concerns include increased traffic on Rangitane's narrow residential roads, increased threats to kiwi from vehicles at dawn and dusk, and the environmental effects of reclamation.
Chairman John Neison said FNH had already sunk $500,000 of public money into the project via planning costs, consultants' fees and cultural impact assessments.
''$500,000 is a lot of money just to find out what everybody else told them in the first place," he said.
Rival group Rangitane Recreation Association supports the project, saying it will improve access to the water while associated walkways will make the area safer for pedestrians.
The project has also divided iwi and hapū.
Ngāti Rēhia says improved boat launching facilities are needed because locals are increasingly shut out of the Bay by the coastal property boom, while Ngāpuhi and Ngāti Torehina have environmental concerns.
The fast-tracking process was suspended late last year while FNH sought a second cultural impact assessment.
Last Thursday Regional and Economic Development Minister Stuart Nash told the Advocate the Government was keeping a close eye on delayed Provincial Growth Fund projects.
If a project did not have community backing, was too hard, or seemed unlikely to go ahead, the Government would hold "a very honest conversation" about whether it should still go ahead.