FWS and NMFS Rescind ESA 'Harm' Definition: Habitat Modification No Longer a Standalone 'Take' — Effective September 14, 2026
FWS and NMFS issued a final rule effective September 14, 2026, rescinding the regulatory definition of 'harm' under the Endangered Species Act. Habitat modification or degradation will no longer, by itself, constitute a prohibited 'take' under ESA Section 9. Real estate developers, infrastructure sponsors, energy projects, and construction companies may face a narrower federal permitting burden — but direct injury to species, critical habitat, federal nexus, and state law obligations remain fully operative.
Regulatory Development
Agencies: U.S. Fish and Wildlife Service (FWS) and National Marine Fisheries Service (NMFS)
Action: Final Rule — Rescission of Regulatory Definition of "Harm"
Effective Date: September 14, 2026
Affected Regulation: 50 C.F.R. § 17.3 (FWS); 50 C.F.R. § 222.102 (NMFS)
Background: The Prior "Harm" Definition
Since 1975, FWS regulations defined "harm" — one component of the ESA's prohibition on "take" — to include significant habitat modification or degradation that actually kills or injures wildlife by significantly impairing essential behavioral patterns, including breeding, feeding, or sheltering. This definition was upheld by the Supreme Court in Babbitt v. Sweet Home Chapter of Communities for a Great Oregon, 515 U.S. 687 (1995).
Under the prior rule, a landowner, developer, or project sponsor whose activities modified habitat in a way that indirectly injured a listed species could be liable for an unlawful "take" under ESA Section 9 — even without any direct physical contact with the animal. This exposure drove widespread use of Incidental Take Permits (ITPs) under ESA Section 10 and Incidental Take Statements (ITSs) under Section 7 consultations for federal projects.
What the Final Rule Does
FWS and NMFS have rescinded the regulatory definition of "harm" in its entirety. Under the agencies' new interpretation:
- Habitat modification or degradation will no longer, by itself, constitute a prohibited "take" under ESA Section 9
- Private parties will generally no longer need an ITP merely to engage in habitat modification, or to prepare mitigation plans addressing habitat alteration on that basis
- The agencies state that "take" under the statute requires a direct, proximate injury to an individual member of a listed species — not an indirect injury mediated through habitat change
What Remains Unchanged
The rescission does not eliminate all ESA exposure. The following obligations and risks remain fully operative:
Direct injury to listed species. Any activity that directly kills, wounds, captures, or harasses a listed species remains a prohibited take under Section 9, regardless of the habitat rule change.
Section 7 federal nexus obligations. Federal agencies must still consult with FWS and NMFS on any action that "may affect" a listed species or its designated critical habitat. The Section 7 duty to avoid jeopardy and to avoid destruction or adverse modification of designated critical habitat is statutory — it is not affected by the regulatory rescission of the "harm" definition.
Existing permits and ITSs. Permits and incidental-take statements finalized before September 14, 2026, need not be reevaluated solely because of the rule change. Existing permit conditions and conservation commitments remain binding on the permit holder.
Designated critical habitat. The Section 7 prohibition on destruction or adverse modification of critical habitat applies to federal actions regardless of the harm definition change. Projects with a federal funding or permitting nexus must still complete Section 7 consultation if critical habitat is present.
State and local species-protection laws. Many states — including California, Washington, Oregon, and New York — have independent endangered species statutes that may define "take" more broadly than the revised federal standard. State law obligations are unaffected by the federal rule change.
Conservation covenants and permit conditions. Existing conservation easements, mitigation banking obligations, and permit conditions do not automatically terminate because of the rule change. Parties bound by such instruments must continue to comply with their terms.
Practical Implications by Sector
Real estate developers and construction companies. Projects in areas with listed species may face a narrower federal permitting burden where the only alleged take was habitat modification. However, developers should not assume that ESA exposure is eliminated. Site-specific analysis of direct injury risk, critical habitat designation, and state law requirements remains essential.
Infrastructure sponsors (roads, pipelines, transmission lines). Linear infrastructure projects that cross habitat areas may benefit from reduced ITP requirements — but Section 7 consultation obligations for federally permitted or funded projects are unchanged. Environmental impact assessments must still address listed species and critical habitat.
Energy projects (wind, solar, oil and gas). Renewable energy and fossil fuel projects in listed-species habitat areas should reassess their ESA compliance strategies. The elimination of habitat-modification liability may reduce the scope of required mitigation — but direct take risk (bird and bat strikes for wind projects, for example) remains fully regulated.
Agricultural operators and forestry businesses. Farming and forestry activities that modify habitat may face reduced federal ESA exposure. However, activities on federal lands or involving federal permits (USDA programs, water rights, grazing permits) retain a Section 7 nexus.
Mining companies. Mining operations that disturb habitat may benefit from the rule change, but operations requiring federal permits (Clean Water Act Section 404, federal land use authorizations) retain a Section 7 consultation obligation.
Due Diligence Considerations
For transactions involving real property, infrastructure assets, or operating businesses with ESA exposure, due diligence should continue to address:
| Issue | Scope |
|---|---|
| Direct injury risk | Assess whether project activities could directly kill, wound, or harass listed species |
| Critical habitat designation | Identify any designated critical habitat within or adjacent to the project area |
| Federal nexus | Determine whether any federal permit, funding, or authorization triggers Section 7 |
| State species-protection laws | Review applicable state ESA equivalents — California, Washington, Oregon, New York, and others |
| Existing permits and covenants | Confirm whether any ITP, ITS, conservation easement, or mitigation obligation is in place |
| Litigation risk | Assess whether environmental groups may challenge the rule or seek injunctive relief |
Litigation Risk
The rescission of the "harm" definition is a significant reversal of a 50-year regulatory interpretation upheld by the Supreme Court. Environmental organizations have indicated they will challenge the rule in federal court. A preliminary injunction could delay or suspend the rule's effectiveness before the September 14, 2026 effective date.
Project sponsors and transaction parties should monitor litigation developments and not structure transactions or project approvals on the assumption that the rule will remain in effect without legal challenge.
Practice Notes
| Issue | Relevance |
|---|---|
| Habitat modification | No longer a standalone "take" under revised federal rule |
| Direct injury | Remains fully prohibited under Section 9 |
| Section 7 consultation | Unchanged — federal nexus triggers jeopardy and critical habitat review |
| Critical habitat | Destruction/adverse modification still prohibited for federal actions |
| Existing ITPs and ITSs | Not automatically voided — permit conditions remain binding |
| State law | Independent state ESA statutes unaffected |
| Litigation risk | Rule likely to face federal court challenge; injunction possible |
ULF New York monitors U.S. environmental regulatory developments affecting real estate, infrastructure, and cross-border investment. This update is prepared for informational purposes and does not constitute legal advice. For project-specific environmental counsel, contact our New York office.