The U.S. Interior Department says the greater sage grouse does not need federal protections across its 11-state Western range after some limits were put on energy development and other activities.
Tuesday's announcement signals that the Obama administration believes it has struck a balance to save the widespread, ground-dwelling birds from extinction without crippling the West's economy.
It follows a costly conservation effort, and could help defuse a potential political liability for Democrats heading into the 2016 election.
Federal protections could have brought much more sweeping restrictions on oil and gas drilling, grazing and other human activities from California to the Dakotas.
Republicans have seized on the issue as supposed evidence of wildlife protection laws run amok.
Environmentalists who sued to force Tuesday's decision are certain to challenge it.
Senator Cory Gardner (R-CO) said, “Keeping the greater sage-grouse from being listed as an endangered species has always been my goal, and I’m glad Secretary Jewell arrived at the same conclusion. Greater sage grouse populations are increasing, and I commend the collaborative efforts from stakeholders to keep this bird from being listed."
Gardner's office said the state of Colorado has already spent over $60 million for greater sage grouse protection.