More legal action over the Ruataniwha Dam could be looming.
The Department of Conservation has decided to revoke the protected status of 22 hectares of Ruahine Forest Park in Hawke's Bay to enable the Ruataniwha Dam to be built.
The land is currently home to several threatened species, including the New Zealand falcon and long-tailed bat.
DOC Director General Lou Sanson approved an application by the Hawke's Bay Regional Council's investment company HBRIC to exchange the protected land for 170 hectares of private land containing beech forest and regenerating native bush.
Mr Sanson said he approved the land exchange because it would mean a net gain for conservation.
He said the decision followed a thorough and open public process and the careful assessment of the ecological values of both sites.
Under the Conservation Act, proposed land exchanges must result in an overall conservation gain for public conservation land and promote the purposes of the Act.
Mr Sanson said he believed this land exchange fully met that test.
Forest and Bird has said in the past it believes the land swap was illegal.
Forest and Bird said it opposed removing the special protection to allow for the flooding of threatened plants and animals.
It said this was contrary to the Conservation Act and Forest and Bird lawyers are considering options including a judicial review, which if granted could hold up the 600-million dollar water storage project for months.