The endangered snail darter that swims in the path of the costly Tellico dam project in Tennessee may turn out to be a blessing in disguise, the chairman of the Tennessee Valley Authority said yesterday.

S. David Freeman said the Supreme Court decision last week against the Tellico project as planned has forced TVA to look for alternatives that could, in the end, bring even greater benefits to the East Tennessee area.

"It may turn out to be a good thing for the tax payer that legal constraints on completing the dam will cause us to take a harder look at how to make best use of the government's investment in the land," he said.

The court held that TVA cannot close the gates on the nearly completed dam on the Little Tennessee River because that would threaten the snail darter, a tiny fish protected by the Endangered Species Act of 1973.

"The real waste of the taxpayers' money may be in flooding the land," Freeman told a House Merchant Marine subcommittee that is considering an extension of the law.

The future of the Tellico development project - that is, finding a way to assure that the more than $106 million already spent is not lost - hangs heavily over the extension of the act.

Rep. Robert Leggett (D-Calif.), subcommittee chairman, said the Tellico case is being cited as an example of the "inflexibility" of the law designed to protect endangered species.

"A central question is whether Tellico is bizarre and different or whether it is an indicator of future problems as we expand the endangered species list across the nation," Leggett said.

Other witnesses yesterday testified at length against a simple extension of the act, which will expire Sept. 30.

Forest products, business and electric power representatives urged the subcommittee to amend the act to provide exemptions so the protection of obscure species would not stand in the way of economic development.

Freeman, although not taking a position on a specific alternative for Tellico, suggested that the snail darter may provide the impetus for converting the project into an enterprise that would aid the valley even more.

"I think it ought to be completed and I would argue very hard against anyone who says it should not," he said. "But we have to determine how it should be finished and what alternatives we have."

TVA and the Department of Interior, protector of the darter and other imperiled creatures, launched a study last month to come up with a plan for saving the project.

Freeman said a final report would be ready Aug. 10.

Freeman, chairman of the TVA board since last month, said a final decision on Tellico's future will not be made until he has "one or two more colleagues." Two of the board's three seats are vacant and await presidential appointees.

Freeman was critical of his predecessors on the board for not considering alternatives to the large-scale development project.