AUGUSTA- The state Board of Environmental Protection has agreed to consider adjusting some water quality rules for several man-made lakes on the Penobscot River to support a compromise negotiated over several years by environmentalists, hydroelectric dam owners, and state and federal agencies.

Disputes over the relicensing of the hydroelectric dams that regulate water levels at Canada Falls, Seboomook, Caucomgomoc and Ragged lakes on the West Branch of the Penobscot prompted such groups as the Penobscot Nation, the Passamaquoddy Tribe, the Appalachian Mountain Club, American Whitewater, and state and federal agencies to sit down with dam owner Great Lakes Hydro America to seek common ground.

Dana Murch of the Maine Department of Environmental Protection on Thursday called their settlement, which was signed July 30, “a great deal for the West Branch and a great deal for the state of Maine.”

But the settlement also violates state water quality laws by allowing the company to draw down water levels in Ragged and Seboomook lakes below what would provide optimum habitat for fish and other aquatic life, he said.

So the state proposed and BEP members accepted a plan to launch a formal review, known as a “use attainability analysis,” to ascertain the environmental and financial impacts of different levels of water withdrawal from the two lakes and then to write new, unique standards that strike a balance.

The DEP is convinced that writing new standards to fit with the negotiated settlement would be far better environmentally than risking the consequences of rejecting the compromise, Murch said.

“Holding these lakes to drawdowns that would meet current standards comes at an unacceptable price,” he said – namely the loss of the following benefits:

. The settlement proposes limits on how much water can be withdrawn from the reservoirs and requires that low water periods be scheduled around fish life cycles, loon nesting periods and the white-water rafting industry, with the lowest points falling during the winter.

. Other portions of the Penobscot River, below the Long Pond and Dole Pond dams, would benefit from fishery enhancement work, and the Maine Department of Inland Fisheries and Wildlife would receive $35,000 for wetlands and wildlife work at Loon Lake as a trade-off for any losses.

. Research would be conducted to monitor mercury concentrations, as fluctuating water levels are believed to contribute to the biological availability of mercury.

. A conservation easement would be signed to protect 200 feet of shoreline on Ragged Lake and much of Caucomgomoc Lake from development.

Unless the settlement is completed by Jan. 1, 2005, however, the deal is off. Previously signed agreements related to the conservation easement expire with the new year, said Murch.

There are several precedents for the state going through the use attainability analysis process and creating site-specific rules for unusual situations, but the process typically takes months and must be approved by the Legislature, the Federal Energy Regulatory Commission and the federal Environmental Protection Agency, he said.

DEP has been discussing the unusual situation with all of the parties, but has no guarantees that the federal agencies will be able to meet the deadline.

“We believe it is possible, by the skin of our teeth,” Murch said. “[But] this process may fall through. We’re making it up as we go along.”

Thursday the board voted unanimously to try to meet the deadline, setting a schedule that likely will include an Oct. 7 public hearing at the Black Bear Inn in Orono and a final vote on Nov. 18.

However, the BEP process is anything but a rubber stamp, board chairman Richard Wardwell said Thursday, explaining that the board would consider four options for water levels before making its decision.

Despite the uncertainty, John Banks, environmental director for the Penobscots, was pleased with the state’s decision. The settlement agreement is just the sort of ecosystem approach that he has been promoting for years, he said Thursday.

“It looks at a whole section of the Penobscot River at once and recognizes that these decisions have cumulative impacts,” he said.

In other business, the board approved new rules limiting the concentration of volatile organic compounds – a type of greenhouse gas – allowed in 80 products including hairspray, deodorant and bug spray.

Maine’s rules are similar to existing restrictions in New York, New Jersey, Maryland and Delaware, so products that meet the standard are readily available, and consumers are not expected to see increased prices, said Andrea Lani of the DEP.

The board also held a public hearing on new rules requiring any development larger than 1 acre and located near a lake, stream or wetland to acquire a permit and follow rules to ensure that the project will not cause polluted runoff.

The rules had broad support, though some worried that they ignored the cumulative impacts of smaller developments or might unfairly burden municipalities already struggling to follow federal storm water rules.