OLD TOWN – In what conservationists are calling the biggest restoration project north of the Everglades, two dams will be removed from the lower Penobscot River.

Representatives of a broad coalition including the Penobscot Nation, environmental groups, state and federal officials and a hydroelectric company gathered on the riverbank Monday morning to celebrate “a historic agreement for a historic river.”

For nearly a century, the Penobscot has been a broken river. Water pollution has contaminated fish, and hydro-electric dams have blocked their age-old spawning migrations. More than half of the food chain was simply absent.

Now, fish species that haven’t been seen in decades, such as the shortnose sturgeon and blueback herring, may again swim by the Penobscot Nation’s tribal lands. In total, 500 miles of habitat will be restored by the Penobscot River Restoration Project that was announced Monday.

“From the tribal perspective, we’re looking at this as repairing a circle that had been broken,” said John Banks, natural resources director for the Penobscots. “This is it. This is the project that is going to set national precedent.”

The $50 million deal has been in the works since Atlantic salmon were placed under federal protection nearly four years ago, he said.

Negotiators from state and federal agencies, the Penobscot Nation, American Rivers, the Atlantic Salmon Federation, Trout Unlimited, the Natural Resources Council of Maine and later, Maine Audubon, sat down with hydroelectric dam owner Pennsylvania Power and Light to hammer out what they call “a win-win” agreement.

PPL Corp. of Allentown, Pa., agreed to sell its Great Works Dam in Old Town and the Veazie and Howland dams to the coalition for $25 million, with a promise that the groups would not fight the company’s efforts to re-license its other dams.

A purchase agreement gives the organizations five years to raise the money through private donations as well as state and federal grants, said Laura Rose Day, a project director employed by the coalition.

The coalition also will need to raise another $25 million to remove the Great Works and Veazie dams and to decommission the Howland Dam and outfit it with a hydraulic fish lift. The dam removal could begin as early as 2008. The projects will allow thousands of salmon and several other migratory fish species to travel into northern reaches of the river and its tributaries, Day said.

The environmental goals will be accomplished without sacrificing hydro energy, said Dennis Murphy of PPL.

The company plans to increase power generation at six existing dams to replace 90 percent of the 18 megawatts of power-generating capacity that will be lost, Murphy said.

The Graham Lake, Medway, West Enfield, Stillwater, Orono and Milford dams will all increase their energy generation, he said.

Recapturing the first 10 percent of lost power will be relatively easy by simply raising the water level behind existing dams, Murphy said. The rest, accomplished by renovating and improving several dams, will be done as economic considerations allow, he said.

In as few as ten years, the Penobscot River could be transformed, coalition members said with elation.

“There will be huge changes that people will be able to see, that will be part of their lives,” said Brownie Carson of the Natural Resources Council of Maine.

Prehistoric-looking Atlantic sturgeon could be leaping below the Milford dam – where their historic range was bound by a set of natural falls. Millions of alewives, shad and salmon may travel far into the north woods.

Atlantic salmon will benefit from far more than the ability to swim upstream to their spawning grounds, explained Andy Goode of the Atlantic Salmon Federation.

The river’s water will be colder without the dams to slow its flow, providing a better environment for salmon. With ten different species of fish migrating to and from the Atlantic Ocean, important marine nutrients will boost the river’s productivity. River predators like cormorants, gulls and invasive smallmouth bass will spread their feeding across various species, giving salmon a break.

Some fish such as striped bass and American eels have survived despite the river’s barriers, but will expand their ranges after the dams are removed. Alewives and shad remain in small populations near the mouth of the river. Dam removals elsewhere have resulted in population explosions after just a few years, Banks said.

“It’s like these fish were just waiting,” he said. “They’re wired to do their thing.”

Other fish such as tomcod and shortnose sturgeon have been missing so long that more intensive restoration work, like hatcheries and stocking, may be required, Goode said.

But if all goes as planned, the Penobscot’s natural order will someday be restored, and the benefits to wildlife will be innumerable, said Sally Stockwell of Maine Audubon.

Faster currents and natural rapids that have long been hidden under the dams will flush out pollutants, and create habitat for the insects that support the river’s food chain. Slower currents downriver will create gentler riverbanks and seasonal floodplains to provide foraging habitat for birds, mink, otter and other wildlife, Stockwell said.

“It creates a rich new level of complexity,” she said.

Human communities, too, will be revived by the changes.

“When you restore a riverine ecosystem, the benefits go beyond the banks of the river,” Banks said. “You can’t leave man out of this ecology.”

The Penobscots look forward to exercising the aboriginal fishing rights that have been held hostage by a lack of fish.

“We ended up with fishing rights that were just words on paper,” Banks said. “There weren’t any fish to take.”

In recent years, the fish that Penobscots could take have been heavily contaminated with dioxin, causing high cancer rates among the native population. New fish migrating from the sea will provide safer options.

“This river restoration project gives me great hope … hope that like the blood in our veins, the water of the Penobscot River will become healthier,” Penobscot Gov. Barry Dana said.

Maine Gov. John Baldacci on Monday said the state would seek $3 million to $5 million in federal funds to create a team of local representatives to pursue economic development along the revitalized river.

The unearthing of new rapids could create whitewater rafting opportunities. Canoes and kayaks will be able to travel from Old Town to the mouth of the Penobscot in Bucksport.

Shad runs could reach 1.5 million fish annually, and alewives 6 million fish, creating new sport-fishing and commercial bait businesses. Someday, the king of Maine fish, the Atlantic salmon, may again sustain fishing as salmon runs could reach 10,000 fish annually, according to the coalition.

“If salmon angling is to once again become an important part of the Penobscot, then this project must succeed,” Goode said. “The stage is set.”