A Department of Conservation decision to allow part of the Ruahine Forest to be flooded for a dam may soon face a legal challenge from an environmental group.
Forest and Bird says it will seek a High Court review of DOC's decision to allow 22 hectares of the forest park to be flooded as part of the Ruataniwha Dam project.
DOC this month agreed to a land swap, where it would relinquish a small part of the park to the Hawke's Bay Regional Council's investment company in exchange for land on nearby Smedley Station, which is owned by the Public Trust and run as a training farm.
For the deal to happen, DOC must revoke the protected status of the 22 hectare block.
Forest & Bird has now said the land-swap was unlawful, because DOC had the power to swap stewardship land but not specially protected conservation park land.
"This issue goes far beyond Hawke's Bay and Ruahine Forest Park," Sally Gepp, a lawyer for the group, said in a statement.
"It sets a precedent for all specially protected conservation land, which includes forest parks, conservation parks, and ecological and wilderness areas."
Forest & Bird said the site had "important conservation values including an oxbow wetland, braided riverbed, threatened red mistletoe, and is home for several threatened animal species including the New Zealand falcon, fernbird and long-tailed bats."
A spokesman for DOC said it had already published the documents supporting its decision and wouldn't make any further comment while legal action was pending.
When the department approved the deal, it said it represented a net gain for conservation.
DOC said it would get about 170 hectare of land containing beech forest and regenerating native bush in exchange for site that had been "heavily logged in the past, is partly infested with weeds such as willow and Darwin's barberry and contains a former house site".
The Hawke's Bay Regional Investment Company, which would receive the land for the water storage project, said it was disappointed a review had been called for.
Chief executive Andrew Newman said DOC had already run a "rigours process" to evaluate he decision - including public consultation - and the company had already moved forward with the project since the decision earlier in the month.