National Wildlife Federation v. Federal Energy Regulatory Commission, the City of Fort Smith, Arkansas, Intervenor

Opinion for the Court filed PER CURIAM.

The National Wildlife Federation, et al. (“NWF”) petitions for review of orders of the Federal Energy Regulatory Commission (“FERC” or “the Commission") granting to the City of Fort Smith, Arkansas, (“Fort Smith”) a license for the construction and operation of a dam on Lee Creek, near the Arkansas-Oklahoma border. Because a small hydroelectric powerhouse was to be built along the dam, FERC jurisdiction attached to the project which was undertaken primarily to satisfy the water-supply needs of Fort Smith. The questions presented for review are whether FERC, in granting the license, failed to comply with certain requirements, involving the consideration of the projected environmental impact of the proposed dam, of the Federal Power Act (“FPA”), 16 U.S.C. §§ 797(e), 803(a), and 803(j), the Clean Water Act (“CWA”), 33 U.S.C. § 1341, and the National Environmental Policy Act (“NEPA”), 42 U.S.C. § 4332(2)(C). We find no reason to disturb FERC’s actions and accordingly deny the petition for review.

I. BACKGROUND

In the late 1970s, Fort Smith, aware that its municipal water supply would not be able to meet the demands of its growing populace, decided to create a reservoir by building a dam on Lee Creek. Lee Creek flows south from Oklahoma into Arkansas, and the proposed dam was to be built in Crawford County, Arkansas, just south of the Oklahoma-Arkansas border. The proposed dam was to enable Fort Smith to construct a reservoir in Arkansas, but it was also going to flood parts of Oklahoma. In November 1983, Fort Smith sought from FERC a license to construct, operate and maintain a small hydroelectric generator at the proposed Lee Creek site.

As envisioned by Fort Smith, the proposed project was to be implemented in two phases. The initial phase (“Phase I”) was to allow for an approximately 10 million-gallon-per-day water supply. “Phase II,” the eventual extension of Phase I envisioned by Fort Smith, was further to increase substantially Fort Smith’s water supply. Phase II was to entail environmental costs over and above those of Phase I because the rise in the height of the dam would increase the total area of lands flooded, and would eliminate part of Lee Creek in Oklahoma, including several miles of an Oklahoma state-designated scenic river.

Because approval of the proposed project would constitute a major federal action “significantly affecting the quality of the human environment” within the meaning of NEPA, 42 U.S.C. § 4332(2)(C), FERC directed its staff to prepare an environmental impact statement (“EIS”) relating to the proposed dam. After a public hearing and a meeting with interested parties concerning the projected environmental impact of the proposed dam, FERC issued a draft EIS and solicited comments from interested parties and the public. In February 1987, FERC issued a final EIS in which it addressed many of the comments received in response to its draft EIS.

In March of 1988, although numerous objections to the proposed dam project remained, FERC granted Fort Smith’s license application with a few conditions and modifications. Order Issuing License (Minor), 42 FERC ¶ 61,361 (1988). FERC subsequently denied various requests for rehearing and upheld its grant to Fort Smith of a license to undertake the Lee Creek dam project. Order on Rehearing, 44 FERC ¶ 61,160 (1988). The State of Oklahoma and the Oklahoma Water Resources Board (collectively “Oklahoma”) petitioned this Court for review of FERC’s grant of the license, arguing that FERC had failed to comply with certain FPA and CWA requirements involving consideration of the environmental impact of the dam. NWF also petitioned this Court, raising most of Oklahoma’s FPA and CWA contentions, as well as other challenges based on the FPA and NEPA.

*1474 During the pendency of this litigation, Oklahoma and Arkansas agreed to a settlement which addressed many of Oklahoma’s concerns. Pursuant to Oklahoma’s request, this Court dismissed Oklahoma's petition with prejudice. NWF’s petition remains, however, and that petition raises substantially the same arguments as did Oklahoma’s petition.

First, NWF contends that FERC failed to consider adequately the potential environmental effects of Phase II of the dam project in deciding whether to approve Phase I of that project. FERC’s failure to take into account the environmental impacts of Phase II, according to NWF, violated both the FPA and NEPA. Second, NWF argues that FERC violated several other provisions of the FPA by failing to consider adequately and follow the recommendations of various relevant federal and state agencies and by including the water-supply gains from the dam as a benefit of the dam project to be weighed against the costs. Third, NWF argues that FERC violated section 401(a)(2) of the CWA by granting the Fort Smith license without requiring the city to obtain a water-quality certification from Oklahoma. Finally, NWF argues that FERC’s EIS did not comply with NEPA because the EIS failed to explore reasonable alternatives to the project and because the EIS was based in part on data compiled by a concededly interested party.

II.’ FERC’s Consideration of Phase II

Phase I of Fort Smith’s original dam proposal was designed to satisfy the municipality’s short term anticipated needs of about 10 million gallons per day, which required a reservoir water level of 420 feet above mean sea level. The project was to inundate approximately 3.7 miles of free-flowing stream habitat and approximately 1.5 miles, out of 49 miles, of Lee Creek that was listed in the Nationwide Rivers Inventory.

Fort Smith’s initial proposal also contemplated that average daily water consumption in the population served by Fort Smith would increase during the course of ten to fifteen years, requiring an expansion of the reservoir in Phase II. The Phase II expansion of the dam project, which was expected to yield about 70 million gallons per day of water, was to raise the water level to 462 feet above mean sea level, thereby flooding several more miles of Lee Creek, possibly including some river miles designated for protection by the Oklahoma legislature. The Phase II plans for eventual expansion of the reservoir were included in Fort Smith’s original dam proposal.

In the hearings before FERC many of the intervenors were not as concerned about Phase I as they were about the contemplated expansion of the reservoir built into Phase II of Fort Smith’s plan. In response to various intervenors’ concerns, Fort Smith resubmitted a modified license application which incorporated changes addressing some intervenors’ concerns and which specifically withdrew Fort Smith’s request for approval of its Phase II plans.

The Commission, in its original order granting the license, specifically stated that “[t]he present application does not propose, and we do not approve in this order, construction of Phase II.” Order Issuing License (Minor), 42 FERC 1161,362 at 62,051. Following Commission approval of the dam project, then, if Fort Smith wished to implement Phase II by expanding the reservoir it would have to seek Commission approval for its proposed expansion. The Commission consequently adopted an EIS that did not fully consider the environmental impact that might follow from an implementation of Phase II and did not fully consider that impact in granting the license for Phase I.

NWF argues that FERC, in determining whether to issue a license, must, in light of both the plain language of the FPA and any reasonable interpretation thereof, determine not just whether a particular proposal passes statutory and regulatory muster, but whether the “comprehensive plan” submitted is beneficial. According to NWF, FERC acted improperly under the FPA by failing to consider the potential effects of Phase II. Moreover, NWF argues that FERC violated NEPA by failing *1475 to adopt an EIS that fully accounted for the possible impact of Phase II.

A. FERC’s Failure to Consider Phase II and the FPA

Section 10(a)(1) of the FPA, as amended, provides that the Commission shall have the authority to require the modification of any project before approving that project so that the project adopted is, in the judgment of the Commission,

best adapted to a comprehensive plan for improving or developing a waterway or waterways for the use or benefit of interstate or foreign commerce, for the improvement and utilization of waterpower development, for the adequate protection, mitigation, and enhancement of fish and wildlife ... and for other beneficial public uses....

16 U.S.C. § 803(a)(1).

The NWF, relying on this statute and LaFlamme v. FERC, 852 F.2d 389 (9th Cir.1988), argues that prior to approving the proposed dam project FERC should have considered a comprehensive plan for developing the waterway that evaluated the project’s effect on present and future projects within the basin. Specifically, NWF argues that FERC should have taken into account Phase II of the project because Phase I paved the way for the subsequent implementation of Phase II. According to NWF, FERC had an obligation to analyze Fort Smith’s application in a comprehensive manner, meaning it should have considered both contemplated phases of the dam project before granting the license.

The Commission explicitly stated in its initial order that it was reviewing only the proposal to construct a dam and reservoir according to the Phase I plans before it. Order Issuing License (Minor), 42 FERC ¶ 61,362 at 62,051. The Commission stated in its second order, “Phase I neither precludes nor makes inevitable Phase II.” Order on Rehearing, 44 FERC 1161,160 at 61,510. Further, the Commission stated that neither section 10(a)(1) nor LaFlamme mandates that when determining whether to grant a license, the Commission must consider each conceivable use of the project or environment and “develop an immutable master plan.” Id. Rather, the Commission stated that “comprehensive development is a concept that evolves over time, reflecting different eras’ technical options, economic realities, and resource use priorities.” Id.

Upon examining LaFlamme, FPA section 10(a)(1), and the circumstances of this case, we conclude that the Commission did not run afoul of the FPA when it granted Fort Smith’s license application without more thoroughly considering the potential environmental effects of later possible expansions of the dam project.

In LaFlamme, FERC had issued a license for a power project after examining only the various effects of the proposed project itself. The license application at issue was one of several pending before the Commission at the time, and FERC had already approved several proposed projects in the same river basin.' On review, the Ninth Circuit held that section 10(a) of the FPA required FERC to evaluate the effects of the proposed project with reference to the entire water system of which that project was a part. LaFlamme, 852 F.2d at 402-03. The court thus found that the Commission’s inquiry was insufficient because the Commission had failed to examine the effects of the proposed project on the other projects within the system, the impact of those other projects on the proposed project, and the impact of the entire water system as a whole. Id.

Though the reasoning of LaFlamme is persuasive, the present dispute is factually distinguishable. The proposed Lee Creek dam was not part of a larger contemplated water system, and NWF presented no evidence of other related projects for which license applications were pending before the Commission or which had been approved by the Commission. NWF also did not present the Commission with any evidence that tributaries or rivers other than Lee Creek would be affected by the dam in such a way as to require FERC to consider the project’s impact on other waterways. The Commission thus did not evaluate in isolation a proposed project that actually *1476 constituted a mere part of a larger development scheme.

Nor did the Commission improperly ignore the potential effects of Phase II in considering Fort Smith’s application. No applications were pending before the Commission to expand the Lee Creek project to implement Phase II of the initial plan. In fact, in light of Fort Smith’s explicit withdrawal of those aspects of its application relating to Phase II, the Commission had no reason to believe that Fort Smith would necessarily apply to implement Phase II. FERC thus correctly found that the FPA did not require it to delve into the potential ramifications of Phase II in reviewing the license application for Phase I.

B. FERC’s Failure to Consider Phase II and NEPA

NEPA, like the FPA, requires that an agency of the federal government, when reviewing proposals requesting federal action, include an EIS in every recommendation or report on proposals for major federal actions that significantly affect the quality of the human environment. 42 U.S.C. § 4332(2)(C). The EIS should detail:

(i) the environmental impact of the proposed action,

(ii) any adverse environmental effects which cannot be avoided should the proposal be implemented,

(iii) alternatives to the proposed action,

(iv) the relationship between local short-term uses of [the] environment and the maintenance and enhancement of long-term productivity, and

(v) any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented.

Id.

The regulations implementing NEPA provide that where proposed actions are connected or cumulative they should be "discussed in the same impact statement.” 40 C.F.R. § 1508.25(a)(1) & (2) (1989). Actions are connected if they:

(i)Automatically trigger other actions which may require environmental impact statements.

(ii) Cannot or will not proceed unless other actions are taken previously or simultaneously.

(iii) Are interdependent parts of a larger action and depend on the larger action for their justification.

Id. at § 1508.25(a)(1). Actions are cumulative if, when viewed with other proposed actions, they have “cumulatively significant impacts.” Id. at § 1508.25(a)(2). The statutory and regulatory scheme requires comprehensive analysis of the impact of connected or cumulative proposed actions in order to “prevent agencies from dividing one project into multiple individual actions ‘each of which individually has an insignificant environmental impact, but which collectively have a substantial impact.’ ” Natural Resources Defense Council, Inc. v. Hodel, 865 F.2d 288, 297-98 (D.C.Cir.1988) (quoting Thomas v. Peterson, 753 F.2d 754, 758 (9th Cir.1985)).

NWF argues that FERC should have prepared a comprehensive EIS covering both Phases I and II of the Lee Creek Project. NWF cites Scientists’ Inst. for Public Information, Inc. v. Atomic Energy Comm’n, 481 F.2d 1079, 1090 (D.C.Cir.1973), and Swain v. Brinegar, 542 F.2d 364, 369 (7th Cir.1976) {en banc), for the proposition that if a commitment of resources to one action is likely to restrict later alternatives, an EIS should address all of the environmental issues raised by_ the entire project. The question, according to NWF, is not whether granting a license for Phase I makes Phase II inevitable, but is whether granting the Phase I license limits future alternative uses of the resource too restrictively. Because Phase II would become a cheaper and thus more attractive alternative for a future expansion of Fort Smith’s water supply once Phase I was completed, NWF argues that FERC, in preparing its EIS, should have taken into account not only the impact of Phase I of the project, but also the potential effects of Phase II. NWF fears that by granting the license for Phase I the Commission irretrievably committed resources, thereby severely limiting FERC review should the Commission later consid *1477 er the best alternatives to a licensing request for Phase II.

NWF further argues that although Fort Smith may not have formally sought a license for Phase II, the Commission nonetheless reviewed the benefits of Phase II when considering the alternatives to Fort Smith’s proposal. Specifically, NWF argues that FERC compared the water capacity available under Phase II of the dam project with the alternative supplies available through other plans, In essence, the petitioners believe that FERC engaged in a sleight of hand by comparing the water supply available upon completion of Phase II — and the corresponding benefit of alleviating Fort Smith’s anticipated water needs — against the detriment associated with Phase I.

Responding to NWF’s first argument, the Commission maintains, again, that Phase II will by no means inevitably follow from Phase I. The Commission cites Kleppe v. Sierra Club, 427 U.S. 390, 410, 96 S.Ct. 2718, 2730, 49 L.Ed.2d 576 (1976), and argues that NEPA does not require an agency to consider the possible environmental impacts of speculative or hypothetical actions when preparing an impact statement on proposed actions. Rather, contends the Commission, NEPA merely, requires an agency to consider all other proposed actions that may, along with the proposed action in issue, have' á cumulative or synergistic impact on an environment. According to the Commission, in this case Phase II was not proposed at all, and the grant of a Phase 1 license in no way restricted future alternatives. In fact, in its Order on Rehearing the Commission explicitly noted that enlargement of the Lee Creek reservoir pursuant to Phase II plans would likely have a number of highly significant adverse impacts to water quality, fisheries, and recreation and thus might not be approved in a later proceeding. 44 FERC ¶ 61,160 at 61,515. See also Order Issuing License (Minor), 42 FERC ¶ 61,362 at 62,052.

The Commission further denies that it improperly considered the benefits from Phase II in evaluating the Phase I license application. The Commission argues that it merely examined, as one factor in its calculus, possible future expansions of the various alternatives to Fort Smith’s proposal. Order on Rehearing, 44 FERC ¶ 61,160 at 61,514-15.

We conclude that the Commission was not required more thoroughly to evaluate the possible effects of Phase II in its EIS. In Kleppe v. Sierra Club the Court held that the Department of the Interior need not execute a regional EIS regarding a proposal seeking approval for private development of certain coal reserves on federal land. The Sierra Club had argued that because the Department of the Interior, “contemplated” regional development when it evaluated the proposal, NEPA required the Department’s EIS to take into account the regional effects of the otherwise limited proposal. The Supreme Court rejected this contention, arguing that an agency must prepare an EIS concerning an action at “ ‘the time at which it makes a recommendation or report on a proposal for federal action.’ ” 427 U.S. at 406, 96 S.Ct. at 2728 (quoting Aberdeen & Rockfish R.R. Co. v. SCRAP, 422 U.S. 289, 320, 95 S.Ct. 2336, 2356, 45 L.Ed.2d 191 (1975)) (emphasis in SCRAP). Because “the contemplation of a project and the accompanying study thereof do not necessarily result in a proposal for major federal action,” an EIS regarding a project that had not yet reached the proposal stage would be unnecessary. Id. The Court thus concluded that section 102(2)(C) of NEPA requires only that an EIS be conducted in regards to the proposed action.

The Court conceded that “when several proposals for [related] actions that will have cumulative or synergistic environmental impact upon a region are pending concurrently before an agency, their environmental consequences must be considered together,” id. 427 U.S. at 410, 96 S.Ct. at 2730, but the Court explicitly limited the application of this requirement to existing, presently proposed actions that might have cumulative or synergistic effects. The Court wrote:

*1478 At some points in their brief respondents appear to seek a comprehensive impact statement covering contemplated projects in the region as well as those that already have been proposed. The statute, however, speaks solely in terms of proposed actions; it does not require an agency to consider the possible environmental impacts of less imminent actions when preparing the impact statement on proposed actions. Should contemplated actions later reach the stage of actual proposals, impact statements on them will take into account the effect of their approval upon the existing environment; and the condition of that environment presumably will reflect earlier proposed actions and their effects.

Id. at 410 n. 20, 96 S.Ct. at 2730 n. 20 (emphasis in original). Kleppe thus clearly establishes that an EIS need not delve into the possible effects of a hypothetical project, but need only focus on the impact of the particular proposal at issue and other pending or recently approved proposals that might be connected to or act cumulatively with the proposal at issue. In this case, the Commission did not ignore any relevant proposals involving Lee Creek. Fort Smith withdrew its proposals with respect to Phase II, as we have already noted, and any claim that it would reintroduce its Phase II proposal was merely speculative and hypothetical.

NWF’s reliance on Scientists’ Inst. for Public Information, Inc. v. Atomic Energy Comm’n, 481 F.2d 1079 (D.C.Cir.1973), wherein this Court ruled that future, yet unproposed projects should be considered in the EIS analyzing a proposal if the envisioned future projects would impact the relevant environment, is misplaced. We seriously doubt that the relevant reasoning in Scientists’ Institute survives the Supreme Court’s Kleppe decision. Moreover, given that, by approving Phase I, the Commission did not in any way bind itself to approve Phase II, Scientists’ Institute may not even support NWF’s claim.

We further conclude that the Commission did not improperly consider the benefits of the possible Phase II expansion in evaluating the Phase I application. In reviewing Fort Smith’s application FERC compared and analyzed the various alternatives to the proposed project not only with reference to their relative abilities to satisfy Fort Smith’s present water demands, but with an eye to their relative potentials to satisfy Fort Smith’s future water needs. In doing so, the Commission did take into-account factors relating to Phase II of the Lee Creek project. FERC did not, though, compare the 70 million-gallon-per-day yield of Phase II to the present yields of the alternatives to the project. Rather,- FERC weighed each alternative against Fort Smith’s-application, weighing, among other things, the potential for expansion of the available alternatives against the potential for expansion of the proposed Lee Creek dam project.

The mere fact that it considered possible future expansion as one factor in its evaluation of the present project does not bind FERC to consider the future harms and benefits of a proposal not before it. Moreover, FERC is by no means bound to later approve Phase II merely because it considered the possibility of later expansion in approving Phase I. When comparing present alternatives, the Commission should consider potential future expansion to accommodate future needs. By doing so the Commission neither automatically brings Phase II under Commission review nor binds itself to later approve Phase II. In fact, Fort Smith would take a risk if it implemented Phase I at great initial expense, relying on a belief that Phase II would ultimately be approved by the Commission and would render its initial action profitable. Fort Smith may later be forced to rely-on numerous smaller and arguably more expensive water-supply sources to meet its future water needs. We cannot hold that FERC acted arbitrarily by analyzing potential future development.

The Commission did not have before it a proposal for a license as to Phase II and, although the Commission in reviewing the future ramifications of granting Fort Smith’s application did consider benefits that might ensue from the implementation of Phase II of the Lee Creek dam project, *1479 the Commission in no way approved Phase II. The Commission was thus not required to consider the potential environmental impact of Phase II of the project in its EIS regarding Fort Smith’s application.

III. Other FPA Issues

NWF points to two other provisions of the FPA that it claims FERC violated. First, NWF argues that the Commission failed to give adequate consideration to the proposals of various wildlife agencies as required by section 10(j) of the FPA. Second, NWF contends that the Commission improperly considered the water-supply benefits of the project in determining whether to grant Fort Smith’s application, in violation of section 4(e) of the FPA.

A. FERC’s Consideration of Various Agencies’ Recommendations

Section 10®(1) of the FPA, as amended, provides:

That in order to adequately and equitably protect, mitigate damages to, and enhance, fish and wildlife ... affected by the development, operation, and management of the project, each license issued under this subchapter shall include conditions for such protection, mitigation, and enhancement_ [Sjuch conditions shall be based on recommendations ... from the National Marine Fisheries Service, the United States Fish and Wildlife Service, and State fish and wildlife agencies.

16 U.S.C. § 803(j)(l). The statute further provides that whenever the Commission believes that any recommendation referred to in the above paragraph may be inconsistent with the Commission’s legal duties, the Commission and the relevant agency should attempt to resolve the inconsistency, giving due weight to the recommendations, expertise, and statutory responsibilities of the agency. Id. § 8030(2). If the Commission does not adopt, in whole or in part, a recommendation of one of the listed agencies, the statute requires the Commission to publish, together with the basis for each of the findings,

(A) A finding that adoption of such recommendation is inconsistent with the purposes and requirements of this sub-chapter or with other applicable provisions of law.

(B) A finding that the conditions selected by the Commission comply with the requirements of [§ 8030(1)].

Id.

NWF argues that the Commission failed to give due consideration to two general sets of recommendations. First, NWF argues that the Commission improperly ignored various agencies’ recommendations that FERC’s consideration of Fort Smith’s proposal should include review of Phase II of the Lee Creek dam project. Second, NWF contends both that the Commission failed to consult 'with the Oklahoma Department of Wildlife Conservation (“ODWC”) before rejecting ODWC’s recommendations and that FERC’s rejection of ODWC’s recommendations was not supported by substantial evidence.

1. Recommendations Regarding Consideration of Phase II

Several agencies described in FPA section 100(1) recommended to FERC that its review of the Fort Smith application should include review of Phase II. For example, the Arkansas Game & Fish Commission objected to the Fort Smith Project, in part because “the opportunity to mitigate fish and wildlife losses [is] foregone or nullified ... in the case of Phase I planning and evaluation followed by Phase II construction.” Letter from Arkansas Game & Fish Commission to FERC 1 (May 29, 1985) (Joint Appendix (“J.A.”) 529). The Secretary of the Interior similarly protested that Phase I would “lead to approval of future phases as fait accompli.” Letter from United States Department of the Interior to FERC 1 (Apr. 16, 1985) (J.A. 532).

NWF argues that FERC failed either to heed these recommendations, or adequately to explain its failure to do so. To the extent that the recommendations constituted a challenge to the adequacy of FERC’s EIS rather than recommendations for FERC’s disposition of the application, NWF *1480 claims that section 10(j) still required FERC to follow or respond to the agencies’ recommendations. FERC’s refusal to compile information sought by the state and federal resource agencies, according to NWF, prevented those agencies from fulfilling their section 10(j) mandates.

We conclude that the Commission did not improperly ignore the various agencies’ recommendations regarding consideration of Phase II. Section 10(j) requires FERC to respect other agencies’ recommendations in approving a proposal under the FPA. 16 U.S.C. § 803(j). FERC is not bound, however, to respond to or to follow the recommendations of other agencies regarding proposals not before the Commission. As we have explained at length, FERC was not reviewing an application for Phase II of the Lee Creek dam project. Consequently, FERC was not bound under section 10(j) to accord weight to the various agencies’ recommendations to the extent that the recommendations revolved around Phase II of the dam project rather than the proposal before the Commission. Insofar as the various agencies’ recommendations involved Phase II, then, they do not qualify as recommendations for conditions or mitigation under section 10(j).

Even if the recommendations do, to some extent focus on the actual proposed project before the Commission, we conclude that while the Commission must pay due regard to such recommendations, the statute cannot be read to force upon the Commission the burden of strict acceptance of each and every proper recommendation. While the Commission must address each recommendation, the discretion ultimately vests in the Commission as to how to incorporate each recommendation. If we read the statute any other way, the Commission would be held hostage to every agency recommendation, and the Commission’s role of reconciling all competing interests would be compromised.

2. ODWC’s Recommendations

ODWC' opposed the Lee Creek dam project and recommended that the license be denied because the project’s effects could not be mitigated. Specifically, ODWC concluded that the flooding of parts of Oklahoma would result in the stagnation of water, leading to the reduction of .diversity in the fish population through the establishment of dominance by rough fish better adapted to reservoir conditions. For instance, the ODWC feared that the Lee Creek dam project would result in a reduced smallmouth bass population and increased populations of gar, buffalo, and carp, among others. Further, and more important, the ODWC was concerned that the population of the longnosed darter, a fish already on the State of Oklahoma’s endangered species list, would be reduced if the reservoir were constructed. The ODWC warned that the longnose darter was nearly extinct and that the construction of the project could violate the Oklahoma Endangered Species Act.

In its Order on Rehearing the Commission made the finding required by section 10(j)(2) before it could proceed in the face of contrary recommendations from a relevant wildlife agency. 16 U.S.C. § 803(j)(2). The Commission wrote, “To the extent that our issuance of the license for this project is inconsistent with ODWC’s recommendation, we conclude that our license conditions adequately and equitably protect, mitigate damages to, and enhance fish and wildlife.” 44 FERC ¶ 61,160 at 61,511. The Commission stated that it intended to ensure that the project’s effect on the smallmouth bass fishery would be minimal, that it was requiring fish screens on all project intakes, and that it was requiring a study to determine the scope of measures needed to minimize the potential effects of project construction and operation on the longnose darter. Id. The Commission explained that it was requiring the studies in an effort to do what it could to avoid the loss of the longnose darter while proceeding with the construction and operation of the Lee Creek dam project but conceded, “[W]e are prepared -to accept the loss of these fish at this site in exchange for the overall benefits to be produced by this project....” Id. (quoting Order Issuing License (Minor), 42 FERC ¶ 61,362 at 62,-049).

*1481 NWF argues first that the Commission violated section 10(j)(2) of the FPA by making this finding without first consulting with the ODWC regarding FERC’s belief that the recommendation was inconsistent with the law. NWF argues that section 10(j)(2) was designed to make FERC actually consult with wildlife agencies before acting contrary to those agencies’ recommendations. Further, NWF argues that FERC’s findings rejecting the recommendations of the ODWC were not supported by substantial evidence and that FERC did not, as it claimed, assure adequate mitigation of the harmful effects of the Lee Creek dam.

The Commission contends that section 10(j) was designed to require the Commission to give serious attention to the recommendations of all fish and wildlife agencies, but that the section was not intended to give those agencies veto power or mandatory authority over the Commission’s decisions. Further, the Commission argues that its ultimate conclusion was supported by substantial evidence. Although the Commission is required to give equal consideration to environmental values and the need for development, it is not necessarily required to give these sets of competing values equal weight in every situation. In this case, the Commission studied the benefits from development of the Lee Creek dam, and concluded that those benefits justified the environmental costs.

We conclude that the Commission adequately reviewed ODWC’s recommendations and that the Commission’s conclusions were supported by substantial evidence. The Commission did not, as NWF implies, ignore ODWC’s recommendations. In fact, the Commission explicitly addressed ODWC’s claims in its Order on Rehearing. 44 FERC 11 61,160 at 61,510-11. FERC thus did, as required by section 10(j)(2), attempt to “resolve any [inconsistencies], giving due weight to the recommendations, expertise, and statutory responsibilities of [the relevant agency].” 16 U.S.C. § 803(j)(2).

Moreover, we conclude that FERC’s resolution was supported by substantial evidence. The EPA independently concluded that FERC’s conditions were adequate. In its Order on Rehearing, FERC outlined the steps it had taken and planned to take to address the ODWC’s concerns. 44 FERC 1161,160 at 61,510-11. The Commission stated that various agencies, including ODWC itself, conceded that partial mitigation of fishery impacts for Phase I of the project could be accomplished. Id. at 61,-511. The Commission noted that it had provided for the filing of a plan for the propagation of a warm-water fishery to ensure that the dam project’s effect on the smallmouth bass fishery would be minimal. Id. Further, the Commission noted that it was requiring the installation of fish screens on all project intakes. Id. Finally, the Commission explained that it was requiring a study to determine the scope of measures needed to minimize the potential effects of the project on the longnose darter, but that it was prepared to accept the loss of the longnose darter in exchange for the overall benefits of the Lee Creek dam project. Id. The Commission recognized that the project would cause some adverse impact to the environment surrounding the Lee Creek dam, but concluded that this adverse impact was outweighed by the water supply, water power, and recreational benefits expected from the dam. Id.

The Commission’s conclusions are adequately supported in the record. The Commission did adopt plans to minimize the impact of the dam project on the Lee Creek environment, and reasonably concluded that those harms which were inevitable were offset by the benefits of the project. Although the FPA requires that the needs of wildlife be taken into consideration when FERC evaluates license applications, those considerations need not always prevail. In this case the Commission appropriately considered Fort Smith’s serious water needs and reasonably concluded that those needs outweighed the potential harms to the environment from the project. The Commission was not bound to reject the Lee Creek dam project just because the ODWC contended that the environmental harms from *1482 the project could not be mitigated. The Commission’s actions are not subject to the effective veto of every state or federal wildlife agency, and consensus is not required before the Commission can authorize a project to proceed. Rather, the Commission is required to give due consideration to all recommendations from relevant agencies, to reconcile inconsistencies between those agencies’ recommendations and the Commission’s plans to the extent possible, and to explain its reasons for departing from the agencies’ recommendations when it concludes that it must do so in order to fulfill its statutory mandate. We conclude that FERC satisfied these requirements.

B. FERC’s Consideration of Water-Supply Benefits

Section 4(e) of the FPA, as amended, empowers FERC to

issue licenses ... for the purpose of constructing, operating, and maintaining dams, water conduits, reservoirs, power houses, transmission lines, or other project works necessary or convenient for the development and improvement of navigation and for the development, transmission, and utilization of power across, along, from, or in any of the streams or other bodies of water over which Congress has jurisdiction....

16 U.S.C. § 797(e). The FPA further provides:

In deciding whether to issue any license ... the Commission, in addition to the power and development purposes for which licenses are issued, shall give equal consideration to the purposes of energy conservation, the protection, mitigation of damage to, and enhancement of, fish and wildlife ... the protection of recreational opportunities, and the preservation of other aspects of environmental quality.

Id.

NWF argues that this provision requires that the Commission weigh the power and development purposes underlying a license application — meaning the purposes involving facilitating navigation or power transmission — against the environmental costs of the proposed project. NWF contends that water-supply benefits are not listed in the statute as a relevant factor to count in favor of a project and that the Commission is limited to considering only the navigation and power benefits of a proposed project. Because the L