AUGUSTA – A compromise designed to balance economic and ecological concerns on the East Branch of the Penobscot River will move forward, members of the state Board of Environmental Protection unanimously decided Wednesday.

During the past two years, Great Lakes Hydro America, owner of all the former Great Northern Paper dams and reservoirs, has negotiated with state and federal agencies, as well as local tribes and several environmental groups, over the future of its storage dams at Ragged and Seboomook lakes.

This summer, the groups struck a deal, agreeing that lake levels could be reduced beyond the point where low water levels are known to cause ecological strain. In exchange, the company agreed to conduct or fund a number of conservation efforts, including providing an easement to protect lakeshores and supporting research of local loon populations.

The deal, one of the first of its kind, drew praise for its emphasis on regional watershed-scale benefits and its 50-year guarantee of an absence of legal squabbles over the dams. But without the so-called “use attainability analysis” approved by the board Wednesday, the compromise it strikes would not be legal.

Essentially, the board decreed that Great Lakes Hydro is not capable of meeting state water quality standards that speak to wildlife habitat – both because doing so would not be economically feasible and because strictly enforcing the rules could worsen the ecological situation – and that the company may instead meet lesser, site-specific requirements.

Under the agreement, Ragged Lake can be drawn down a maximum of 20 feet, while Seboomook can be drawn down by no more than 17 feet. To meet water quality standards, which require that enough water remain for the ecosystem to remain essentially intact throughout the year, draw-downs would have been restricted to between 4.5 and 5.5 feet, said Dana Murch, who oversees dam and hydropower issues for the Maine Department of Environmental Protection.

According to Great Lakes Hydro, operating the dams to meet state standards would have required $1.8 million in renovations and added $660,000 to the company’s annual operating expenses, in addition to reducing its ability to produce power at downstream hydroelectric facilities by as much as 44 percent, Murch said Wednesday.

“Great Lakes Hydro America can’t operate a project under these conditions. No dam operator would. They’re not in this business to be altruistic – they’re in it to make a profit,” he said.

The company had said during a public hearing held in Bangor last month that being held to the water quality standard would likely result in its opening up the dams and allowing the river to retain its natural state. State fisheries biologists testified that such an action would be ecologically dangerous because undammed lakes would not retain enough water to sustain native trout and salmon populations and would let invasive fish into the upper reaches of the Penobscot.

Several environmental groups that were not parties to the deal, including the Natural Resources Council of Maine, Trout Unlimited and Maine Rivers, urged the board members not to simply rubber stamp the settlement.

Several board members said they agreed with the need to be thoughtful about their decision.

“We can’t forget, this is a downgrade in water quality … We need to be aware, as a society, of what we’re doing,” said board member Irving Faunce of Kennebunkport.

Several of Faunce’s fellow board members added Wednesday that they would like to have known that federal Environmental Protection Agency questions about the deal had been satisfied before giving their approval.

But the board had to make a decision at this meeting because of a tight timeline necessitated by a December 2004 expiration date on the proposed conservation easement.

The agreement, though “not ideal,” represents a good effort at compromise and will likely avoid litigation, board members said.

“I think the settlement is a better way of dealing with these issues,” said board member Nancy Anderson of Falmouth. “We’re following the law. We’ve got a plus for the environment … it’s something that I feel good about.”

The EPA and Federal Energy Regulatory Commission are likely to weigh in on the deal by the end of the year. The Maine Legislature is expected to consider an after-the-fact approval in the next session, according to DEP officials.