FWS and NMFS Propose Four Rules Overhauling ESA Implementation: Greater Emphasis on Species-Specific Analysis, Economic Impacts, and Critical Habitat Exclusions

On November 21, 2025, the U.S. Fish and Wildlife Service (FWS) and National Marine Fisheries Service (NMFS) (collectively, the Services) have issued a coordinated package of four proposed rules that would significantly revise how the Endangered Species Act (ESA) is implemented. [1] Two of the rules apply to both agencies, and two are FWS-only. Together, the proposals would shift ESA implementation toward a more species-specific, economically informed, and text-focused framework, with important implications for energy, infrastructure, and land-use projects.

Key takeaways include:

1. Threatened Species Protections: Elimination of the Blanket 4(d) Rule for Newly Listed Threatened Species.

Historically, FWS had used a “blanket rule” — when a species was listed as threatened, it automatically received nearly all of the prohibitions under ESA Section 9 that apply to endangered species, unless FWS issued a species-specific rule under Section 4(d). In 2019, the Trump administration removed that blanket rule for newly listed threatened species, requiring a species-specific “4(d) rule” for that species. In 2024, the Biden administration reinstated the blanket rule, making endangered-style prohibitions the default again for new FWS-jurisdiction threatened species.

The 2025 proposal would again reverse course: FWS proposes to remove the blanket option going forward and rely exclusively on species-specific 4(d) rules for future threatened listings and reclassifications. Newly listed or down-listed threatened species would no longer receive automatic endangered-level protections; instead, FWS would tailor prohibitions and exceptions on a species-by-species basis. Thus, for every newly listed or down-listed threatened species, FWS will need a 4(d) rule spelling out exactly which activities are prohibited, allowed, or allowed subject to conditions.

The proposal also requires each 4(d) rule to include an explicit finding that the protection is “necessary and advisable” for the species — supported by analysis of both conservation benefits and economic impacts. FWS must seek public comment on that determination as part of the rulemaking, thus offering opportunities for stakeholders to be heard to argue that certain prohibitions are unnecessary or overly burdensome relative to conservation gains.

While existing threatened species covered by the blanket rule would retain their current protections, FWS signals it intends to replace those with individualized 4(d) rules over time.

2. Critical Habitat: Reinstating the 2020 Critical Habitat Exclusion Framework.

Under ESA Section 4(b)(2), FWS must: (1) consider the economic impact, impact on national security, and “any other relevant impacts” of designating any particular area as critical habitat; and (2) may exclude particular areas if the benefits of exclusion outweigh the benefits of inclusion, unless exclusion would result in extinction. FWS proposes to reinstate, with modifications, the 2020 critical habitat exclusion rule that had established a framework for excluding land from designation as critical habitat under Section 4(b)(2). The proposed rule would:

• Require a draft economic analysis at the proposed-rule stage and publication of a summary in the Federal Register;
• Define “economic impacts” broadly to include not only direct costs, but also opportunity costs and potential economic benefits, such as recreation and ecosystem services; and
• Recognize a wide range of “other relevant impacts,” such as effects on Tribes, States, local governments, energy development, wildfire management, and conservation partnerships.

The proposal would also establish a “credible information” standard under which FWS must conduct an exclusion analysis for particular areas when stakeholders provide supported information about meaningful impacts. Proponents would not need to perform the entire weighing of benefits of inclusion versus exclusion; they would just need to flag plausible, supported impacts. Thus, for project sponsors, a submission during the comment period that identifies specific parcels or units, describes the planned or ongoing activities, and provides concrete information about economic, operational, or community impacts could trigger a mandatory exclusion analysis for those areas. That, in turn, would create a more robust record for later judicial review if FWS declines to exclude.

The proposal is also forward-looking — existing critical habitat designations are not automatically re-opened, as the proposal explicitly states that reinstating the 2020 rule does not require review or alteration of already-designated critical habitat.

3. Section 7 Consultations: Joint Rule to Remove the “Offset” for Reasonable and Prudent Measures.

In the joint Section 7 consultation rule, the Services propose to eliminate the practice of “offsetting” the effects of a proposed action with the benefits of Reasonable and Prudent Measures (RPMs). Under current practice, when evaluating whether an action is likely to jeopardize a listed species or adversely modify critical habitat, the Services have treated the conservation benefits of RPMs — measures required to minimize the impact of incidental take — as partially offsetting the project’s adverse effects. The proposal would prohibit this offset and clarify that:

• RPMs cannot be credited as mitigation for purposes of determining jeopardy or adverse modification;
• RPMs may only minimize the level of incidental take, not alter the baseline effects of the action; and
• The Services’ jeopardy/adverse-modification determination must be based on the effects of the action itself, without incorporating the benefits from RPMs or other post-determination measures.

As a practical matter, as proposed, project proponents should expect a more conservative and effects-focused analysis during formal consultation. If finalized, this could make the process more predictable by limiting the Services’ ability to impose ad hoc conservation or additional mitigation measures. At the same, the proposal offers less flexibility for the Services to incorporate operational commitments through RPMs. Early coordination and proactive development of mitigation components incorporated into the proposed action itself would become more critical.

4. A Post-Loper Bright Regulatory Approach Focused on the ESA’s Text.

The Services frame the rule package in light of the Supreme Court’s decision in Loper Bright v. Raimondo,[2] stating that they are adopting what they view as the “single, best reading” of ESA provisions rather than relying on now overruled Chevron deference. The proposals also reflect recent executive orders emphasizing domestic energy development and requiring review of rules that impose unnecessary burdens. In particular, the proposals rely on: (1) Executive Order 14154 (“Unleashing American Energy”) and the Secretary of the Interior’s Order 3418, directing agencies to revisit actions that may unduly burden domestic energy development and to consider revising or rescinding them; and (2) Executive Order 14219 (“Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative”), directing agencies to rescind regulations that are not based on the “best reading” of the governing statutes. If finalized, the Services focus on a close reading of the ESA suggests that future litigation over 4(d) rules, critical habitat, and the two other joint rules will likely turn on text-heavy Loper Bright-style arguments about statutory meaning.

***

Regulated entities, landowners, and conservation partners should evaluate how the rules may affect ongoing or planned projects — particularly any occurring within potential critical habitat or involving newly listed species — and consider submitting comments. Comments are due December 22, 2025.

[1] The four rules are available as follows: Critical Habitat; Endangered and Threatened Wildlife and Plants; Interagency Cooperation; Listing Endangered and Threatened Species and Designating Critical Habitat.

[2] 603 U.S. 369 (2024). For more information on the ruling, see Sidley’s blog post here.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.