The consent decree proposed last summer would have partially settled a lawsuit brought by the American Forest Resource Council, southwestern Oregon's Douglas County and the Carpenters Industrial Council against the U.S. Fish and Wildlife Service. The groups argued the agency inappropriately set aside habitat for the bird in 1996.
The threatened seabird nests in coastal forests in Oregon, Washington and California.
Conservation groups opposed the proposal, saying the birds are in decline and it was important to keep habitat protections in place.
Judge John H. Bates denied the consent decree last week but also suggested that a modified proposal could be acceptable.
A Fish and Wildlife spokeswoman said Monday the agency is reviewing the ruling.
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