A tiny spider-like creature that lives in caves on his property is causing a giant headache for Texas rancher John Yearwood.

The Bone Cave Harvestman, a blind arachnid found in Central Texas, has been on the U.S. endangered species list since 1988.

But Mr. Yearwood wants the harvestman—which resembles a spider but technically is more of a cousin sometimes called a daddy longlegs—removed from protected status. He said its discovery on his land hinders the use of at least 35 acres north of Austin that has been in his family since 1871.

“It’s the government telling me that I, at my own expense, have to have a preserve for everyone in America,” Mr. Yearwood said. “I pay taxes on the land every year. And there’s no way I can sell it—nobody will buy it.”

Federal law prohibits modifications or degradation of habitats of endangered species that could impact their breeding, feeding or sheltering, except under federal permit. Those permits are mostly available for conservation and scientific purposes. Harming or harassing the species, physically or through noise or light is also prohibited.

Mr. Yearwood said he hasn’t been given a list of activities not to do, but is reluctant to do anything with the land in Williamson County.

He and other property owners have filed a lawsuit against the U.S. Fish and Wildlife Service, which oversees Endangered Species rules, to delist the harvestman, saying it isn’t endangered and is unnecessarily restricting use of their property. Mr. Yearwood’s suit also contends that the federal government is exceeding its authority by regulating “noneconomic activity.”

Last month, the state of Texas threw support behind Mr. Yearwood in a friend-of-court brief filed in U.S. District Court in the Western District of Texas, calling the situation a “clear overreach in the use of federal power.”

The rancher’s dilemma is a peculiar example of broader tensions in the West over federal oversight of land. In this case, the conflict confronts federal rules for privately owned land.

But the same frustration fueled the armed takeover of an Oregon wildlife refuge on public land that resulted in the death of a protester at the hands of law enforcement, and it continues to play out in numerous courtrooms and land spats across the region.

The wildlife service didn’t respond to the allegations by Mr. Yearwood, but said last month that it is evaluating the status of the spider “to inform future conservation and recovery efforts.”

The Center for Biological Diversity, a national group focused on the protection of endangered species, has joined other conservation groups in a request to intervene in the court case to support keeping the harvestman as endangered. The conservation groups said the harvestman, which has a scientific name of Texella reyesi—is “incredibly rare” and threatened primarily by development and road construction.

Mr. Yearwood, 71 years old, said three harvestman caves were found on his property about 12 years ago during a highway expansion project. The caves disappear underground from small openings on a mostly flat area of his property. He said that he’s never seen one of the “bugs,” which are pale orange and up to 0.11 inches long.

He calls his 865-acres of farmland “Heartbreak Acres” because of the grief he said that he’s gotten from government officials over the years. He runs a commercial cattle operation and allows community groups to camp free on the property. But he said he keeps farming and camping activity away from the harvestman caves for fear of running afoul of federal rules.

There were 168 confirmed harvestman caves in 2009, according to the wildlife service. Williamson County has 11 harvestman habitat preserves, an area that can include many caves, on almost 900 acres, officials there recently said.

The wildlife service denied a petition in June 2015 by Mr. Yearwood and others to delist the harvestman, saying substantial information wasn’t provided to warrant the change.

In response, a coalition of property owners led by the American Stewards of Liberty, a Texas-based private-property rights group, filed lawsuit in December 2015. Mr. Yearwood and Williamson County received approval by the court to intervene as plaintiffs.

In November, the wildlife service acknowledged in court record that a disc of information submitted with the original petition was misplaced and not used in the 2015 decision. The court has granted the agency’s request for a new review to be submitted by March 31, 2017, and to stay the court proceedings until then. The plaintiffs were against a stay, saying the issue supports their belief that the agency erred in evaluating the petition.

In the end, Mr. Yearwood hopes the court will decide in his favor.

“We’re not saying that there are no bugs in the hole,” he said. “What we’re saying is that the Bone Cave harvestman is not in danger because it’s in every cave and non-cave around.”