Updated at 4:46 p.m. ET
Prosecutors have concluded their two-year investigation into the Bush administration's firing of U.S. attorneys and will file no charges, the Justice Department said Wednesday.
The investigation looked into whether the Bush administration improperly dismissed nine U.S. attorneys as a way to influence criminal cases. The scandal contributed to mounting criticism that the administration had politicized the Justice Department, a charge that contributed to the resignation of Attorney General Alberto Gonzales.
The decision closes the books on one of the lingering political disputes of the Bush administration, one that Democrats said was evidence of GOP politics run amok and that Republicans have always said was a manufactured controversy.
In 2008, the Justice Department assigned Nora Dannehy, a career prosecutor from Connecticut with a history of rooting out government wrongdoing, to investigate the firings.
In particular, she looked into whether the firing of New Mexico U.S. attorney David Iglesias and whether then-Sen. Pete Domenici, R-N.M., or others should be prosecuted for the dismissal or for lying to Congress about it.
"Evidence did not demonstrate that any prosecutable criminal offense was committed with regard to the removal of David Iglesias," the Justice Department said in a letter to lawmakers Wednesday. "The investigative team also determined that the evidence did not warrant expanding the scope of the investigation beyond the removal of Iglesias."
Prosecutors also said there was insufficient evidence to charge someone with lying to Congress or investigators.
Iglesias was fired after the head of New Mexico's Republican Party complained to the White House that the U.S. attorney was soft on voter fraud. He asked that Iglesias be replaced so that the state could "make some real progress in cleaning up a state notorious for crooked elections."
Nearly a year ago, it was revealed that former White House political adviser Karl Rove , according to transcripts of closed-door testimony released Aug. 11, 2009.
Harriet Miers, then White House counsel, said in testimony to House Judiciary Committee investigators that Rove was "very agitated" over Iglesias "and wanted something done about it."
Rove has said he played no role in deciding which U.S. attorneys were retained and which were replaced, that politics played no role in the Bush administration's removal of U.S. attorneys and that he never sought to influence the conduct of any prosecution.
Dannehy faulted the Justice Department for firing Iglesias without even bothering to figure out whether such complaints were true. That indicated "an undue sensitivity to politics on the part of DOJ officials who should answer not to partisan politics but to principles of fairness and justice," the Justice Department wrote in its letter.
But that was not a crime, and was not an effort to influence prosecutions, the letter said.
Domenici became a focus of the investigation because he made three phone calls to the attorney general and one to Deputy Attorney General Paul McNulty complaining about Iglesias. But McNulty didn't mention Domenici's phone calls when questioned by Congress.
In another telephone conversation Iglesias said Domenici pressured him to bring charges in a public corruption case before Election Day 2006. The Senate Ethics Committee said Domenici created an appearance of impropriety with that phone call, and he apologized.
Domenici's push to have Iglesias fired was in part politically motivated, Dannehy determined, but did not violate the law.
The nine prosecutors fired were: Daniel Bogden of Nevada, Paul Charlton of Arizona, Margaret Chiara of Michigan, Bud Cummins of Arkansas, Todd Graves of Missouri, Carol Lam of California, John McKay of Washington, Kevin Ryan of California, and Iglesias.
More on Attorney Firings
Rove Link to U.S. Attorney Firing Detailed
Audit: DOJ Weeded Out Liberals, Dems
Gonzales: I've Done Nothing Wrong
New E-Mails Shed Light On Firings
E-Mails Highlight Rove's Role In Firings
© 2010 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.