How do I allow a user to respond to Observations they are assigned to, without letting them create new ones?

To achieve this, you need to restrict the user's access level while granting a specific assignee permission:

1. Lower the user's access from Standard to Read Only.

2. Select the Can be assigned as Observation assignee granular permission.

Note: If you want them to be able to respond to Observations assigned to users in their same company (even if those Observations aren't assigned to them directly), also apply Update Status and Comment on Observations Assigned to Users within Same Company.