Amends the Endangered Species Act to permit certain Federal actions which will affect the critical habitats of endangered species where the responsible party has (1) demonstrated to the Governor of the affected State that the impact of the action can be mitigated by modifications to the habitat which are not adverse, or (2) made all practical efforts to eliminate significant adverse impacts. States that the Governor may allow any such action to proceed, regardless of the adverse impact on critical habitats, if the benefits of the action outweigh the possible biological costs.