PORTLAND – Maine’s highest court Thursday denied an appeal by FPL Energy on a key issue linked to the power company’s bid for federal relicensing of its Flagstaff Lake hydro dam outside Eustis.

The Supreme Judicial Court unanimously affirmed the Board of Environmental Protection’s 2004 denial of water quality certification, a prerequisite for FPL to obtain a new long-term license from the Federal Energy Regulatory Commission.

The court concluded that the BEP acted reasonably in applying a “natural lake” standard for determining whether water quality was at the Class C level, suitable for such uses as fishing, agriculture, recreation and drinking after treatment.

The board had overruled the Department of Environmental Protection, which previously granted certification after applying a lesser standard comparing the lake’s water quality to that of other water storage impoundments.

The BEP concluded that the federal Clean Water Act requires that the impoundment-to-impoundment comparison needs approval from the Environmental Protection Agency, which was not forthcoming.

Florida-based FPL argued that a 2003 legislative resolve indicated a clear intent to apply the lesser standard for determining compliance, but the court said that lawmakers failed to adopt a new rule in light of the EPA’s disapproval.

The court also rejected the energy company’s procedural argument that the BEP failed to meet a one-year statutory deadline for acting on the request for certification.

Messages seeking comment from FPL Energy and the Portland law firm that argued its case were not immediately returned, but environmentalists were quick to applaud the court’s ruling.

The Flagstaff Storage Project, built nearly 60 years ago to control flooding, enhance log driving and generate electricity, was licensed by FERC to Central Maine Power Co. from 1979 to 1997.

FPL, which acquired the project when it bought CMP’s energy assets in 1999, refiled long-term license renewal applications through 2002.