Forest and Bird is asking the High Court to stop the Department of Conservation (DOC) swapping an area of protected land needed for the Ruataniwha dam.
DOC has agreed to deregister 22 hectares of Ruahine Forest Park and swap it for 170 hectares of nearby private land.
The move is to allow the Hawke's Bay Regional Council to use it for the $600 million dam project.
Forest and Bird environmental lawyer Sally Gepp said she was concerned about the precedent set by the DOC decision.
She said the Conservation Act had been misinterpreted.
"The Conservation Act enables the exchange of land court stewardship land. This is not stewardship land, this is classed as specially protected land.
"We say that to change that status [...] just to essentially get around the restriction in the act is not a legal use of the Conservation Act."