The Hawke's Bay Regional Investment Company is cross-appealing the decision handed down in the High Court over the Smedley land swap.
Earlier this year Justice Palmer agreed with the DOC decision that allowed for the swap so the Ruataniwha dam could go ahead.
A Forest & Bird spokeswoman said at the time that although Justice Palmer agreed with many of its legal arguments, he ultimately found DOC's decision was within the broad purpose of the Conservation Act.
That finding is the central issue in the group's appeal, which it lodged last month.
In a turn of events, DOC's conservation minister and HBRIC counter-filed this week independently of each other, appealing the one point Justice Palmer agreed with the environment group on.
In his judicial review ruling under 'Challenge for Failure to Reserve Marginal Strips', Justice Palmer said he agreed with Forest & Bird that what was currently proposed would constitute a disposition of land under s24 of the act.
"The Crown's and company's argument that the exchange was not a sale or disposition was simply not tenable," he said.
In its letter of notice HBRIC said the grounds of the appeal are that, on its correct interpretation, s24 and Part 4A of the act more broadly, do not apply when stewardship land is being exchanged in accordance with the act.
Solicitor for the environmental group, Sally Gepp, said whenever land was disposed of by the Crown, DOC was required to reserve marginal strips along the sides of any rivers or streams that were three metres or more wide.
"The High Court judgment earlier this year confirmed that this requirement arises when DOC disposes of land by a land exchange, as is proposed in the case of the Ruahine Forest Park to make way for the Ruataniwha dam," she said.
"So where these exist you have these strips of conservation land running along beside them and they remain conservation land even though the rest of the land is in private ownership."
HBRIC responded to this latest development saying it and the minister of conservation argued that marginal strips were not required when land already owned by DOC was exchanged for other land, and in this case a marginal strip serves no purpose.
"Had there been no appeal by Forest & Bird on the land exchange, HBRIC would not have challenged the High Court's decision against it on the issue," it said. "HBRIC notes that the minister of conservation is also cross appealing the issue on the same basis as HBRIC Ltd."
DOC said it was seeking clarity on the marginal strips issue and has cross appealed the decision.
A DOC spokesman said the department had taken this step independently of HBRIC and would not be commenting further while the issue was before the court.
Ms Gepp said while HBRIC noted it was happy with the decision, Forest & Bird was not sure how it was going to deal with the marginal strips requirement.
"Particularly seeing as it has also said in other forums that it has all the statutory approvals that it needs," she said.
"We thought that's not right. It actually needs approval to flood the marginal strips that will be created when this land is privatised.
"Now it appears they are not happy with that finding because they have appealed it."