An Overview of the Final Rule Rescinding the Federal Definition of “Harm” and What It Means for Permitting Your Project

Over the past two years, federal agencies have revisited several long-established interpretations of environmental statutes in response to evolving administrative law and executive policy priorities. The latest example is the U.S. Fish and Wildlife Service (USFWS) and National Marine Fisheries Service’s (NMFS) (herein referred to as “the Services”) final rule, published on July 14, 2026, rescinding the regulatory definition of “harm” under the federal Endangered Species Act (FESA).

For project permitting, however, the greater challenge will not be understanding the new rule itself but understanding how it will be implemented—and how that implementation may evolve as litigation and agency guidance continue to develop.

The final rule largely adopts the April 2025 proposal without substantive changes to the regulatory text. Although the rule narrows the federal interpretation of habitat-based “take” under Section 9, it leaves core FESA requirements—including Section 7 consultation, jeopardy analyses, and critical habitat protections—unchanged. The most significant additions in the final rule are the Services’ expanded legal rationale, implementation guidance for future Incidental Take Permits (ITPs) and Habitat Conservation Plans (HCPs) under Section 10 when there is no federal nexus, and clarification that existing permits and HCPs remain valid. For project proponents, the rule represents an important shift in how future projects may be evaluated and permitted, but it should not be viewed as a wholesale reduction in FESA obligations.

From Proposal to Final Rule

This final rule follows the agencies’ April 2025 proposal concerning Section 9 of FESA, previously summarized in, “Taking ‘Take’ into Account: Proposed Rule to the Endangered Species Act.” The agencies ultimately finalized the rule with few changes to the regulatory text. Instead, the most significant developments appear in the preamble, where the Services expand their legal rationale, respond to public comments, and explain how they intend to implement the rescission in future FESA consultations, incidental take permitting, and HCPs. The sections below summarize these developments and their implications for the applicable FESA provisions.

Summary of Changes

Habitat Conservation Plans May Change

One aspect of the final rule that has not received much commentary is its potential implications for future FESA Section 10 HCPs, which is one of the key changes from the proposed rule. Although the final rule does not amend the Section 10 regulations, it signals how the Services intend to administer the existing program and acknowledges that future rulemaking may be needed. Existing HCPs remain unaffected; however, future HCPs may look different. In particular, the Services indicate that they will no longer require applicants to address habitat modification solely for purposes to obtain incidental take authorization. This means future HCPs could place greater emphasis on the following:

• Activities that create a demonstrable risk of direct injury or mortality to listed species.
• Project design measures that avoid or minimize direct encounters with fish and wildlife.
• Operational practices that reduce take during construction or maintenance.
• Species-specific conservation measures tied to direct biological effects rather than habitat acreage alone.

What Does this Mean for Private Applicant Projects?

Projects requiring a federal permit, funding, or authorization should continue to anticipate comprehensive FESA review under these provisions. Many of the principal FESA obligations—biological assessments, jeopardy analyses, and federally designated critical habitat evaluations—remain unchanged and continue to serve as central components of project permitting. The most significant practical change may be in how incidental take analyses distinguish between direct injury to listed species and habitat modification. By contrast, private projects without a federal nexus that might otherwise have pursued a Section 10 ITP and HCP, may experience the greatest practical change under the final rule.

Here are a couple of potential scenarios:

1. A residential developer may propose a 2,000-acre master planned community on private land that provides habitat for a federally listed species and does not require a federal permit or funding. If habitat modification alone were expected to result in incidental take, the developer would have pursued a Section 10 ITP and HCP under the previous framework.
2. A privately funded marina expansion or shoreline stabilization project without a federal permit could historically have considered whether habitat modification affecting listed salmonids or other NMFS-managed species warranted a Section 10 ITP. Under the revised Services’ interpretation, habitat modification alone may no longer constitute take. In these situations, a developer may reassess whether a Section 10 permit is necessary, depending on whether project activities are expected to result in direct injury or mortality to listed fish and wildlife. Whether a future Section 10 permit is needed will remain a project-specific determination.

What Does this Mean for Public-Sector Projects?

By comparison, public-sector transportation, water infrastructure, ports, tidal restoration, bridge replacements, coastal resilience, and similar projects are less likely to experience immediate changes because they typically involve a federal permit, funding, or authorization that triggers consultation. Those projects will continue to undergo biological assessments, Biological Opinions written by USFWS or NMFS, jeopardy analyses, and federally designated critical habitat review regardless of the revised definition of “harm.” Also, it is important to note that state-endangered species laws, the Clean Water Act, and local regulatory programs may continue to require habitat avoidance, minimization, or mitigation regardless of the federal rule.

What Does this Mean for Mitigation Negotiations?

One of the broader implications of the rule may be a shift in how mitigation is negotiated. If habitat modification alone is no longer sufficient to establish incidental take, future projects may experience the following:

• Reduced reliance on habitat-based mitigation where the sole federal basis for mitigation was the previous definition of habitat-based take.
• Project proponents and the Services may place greater emphasis on documenting whether project activities directly injure individual listed species (e.g., direct mortality, direct injury, nest, redd, burrow destruction, crushing, entrapment, vessel strikes), rather than relying on habitat modification as evidence of take.
• Projects may place greater emphasis on avoidance measures that reduce the potential for direct take during construction and operations.
• Future mitigation strategies may place greater emphasis on avoiding or minimizing direct impacts on listed species, while habitat mitigation continues to play a key role under other federal and state permitting authorities.

Habitat mitigation is unlikely to disappear.

Projects with a federal nexus will continue to evaluate fish and wildlife species and federally designated critical habitat through FESA permitting consultation, and many projects will remain subject to state-endangered species laws, Clean Water Act permitting, NEPA, CEQA, and other regulatory programs that independently require habitat avoidance, minimization, or compensation.

What We Are Advising Clients

Although the legal significance of the rule has attracted considerable attention, our advice to clients remains consistent: early environmental planning is still the best strategy for managing permitting risk.

Project teams should continue to do the following:

• Conduct early biological constraints analyses when considering early site selection/due diligence.
• Distinguish clearly between habitat impacts and direct effects to listed species.
• Coordinate early with federal and state resource agencies.
• Reevaluate permitting strategies for projects entering FESA consultation.
• Monitor litigation and agency implementation guidance as the rule is challenged.

Looking Ahead

Although the rule is now effective, its long-term implementation is likely to depend on future litigation, but also on the outcome of several additional FESA rulemakings currently under consideration. As discussed in “Eroding the Federal Endangered Species Act: New Proposals Lessen Species and Habitat Safeguards,” the Services have proposed broader revisions affecting species listings, critical habitat, Section 7 consultation, and threatened species protections. Together with anticipated updates to the Section 7 Consultation Handbook, these actions suggest that FESA implementation will continue to evolve over the coming months and years. Project proponents should continue to monitor regulatory developments and develop permitting strategies that remain adaptable as this broader policy framework takes shape.

We are here to help. ESA will continue monitoring implementation of the final rule and advising clients on project-specific permitting strategies as the regulatory landscape evolves. If you have questions, please email Barbra Calantas, Biological Resources and Land Management Practice Leader.