Wyoming officials are gearing up for a potential court battle against the Environmental Protection Agency as they try to reverse a sweeping agency ruling that transferred more than 1 million acres of land -- including an entire city of 10,000 -- to Native American tribes.

The dispute started in December when the EPA ruled on a request from the Northern Arapaho and Eastern Shoshone tribes, which sought "state status" in order to administer air quality monitoring. The EPA determined the land in question actually belongs to the Wind River Indian Reservation and has for more than a century, despite a 1905 law opening it to non-tribal members. The decision encompassed the city of Riverton.

Wyoming officials, who call the decision "arbitrary" and "wrong," now have until Feb. 18 to challenge the ruling in federal appeals court. Meanwhile, state lawmakers have introduced legislation to free up money for the legal battle.

Unclear is whether the EPA will put a hold on its decision in the short-term. In a petition filed last month, Wyoming Attorney General Peter K. Michael urged the agency to reconsider and at least stay the ruling, warning about the range of disruptive consequences.

Among them:

-- Dozens of tribal members jailed for crimes committed "in the disputed area" potentially could challenge their convictions.

-- Previously issued environmental permits could be invalid.

-- Food processing facilities could be able to operate without regulation.

-- The Wyoming Highway Patrol would be unable to enforce criminal laws in the area.

"EPA's decision casts a shadow of uncertainty over the transactions and day-to-day operations of state agencies, courts, businesses and individuals within the disputed territory," Michael wrote.

Gov. Matt Mead had earlier objected to the EPA's decision, while urging the agency to reopen the case to incorporate more evidence, and said the state would be preparing a legal challenge.

"My deep concern is about an administrative agency of the federal government altering a state's boundary and going against over 100 years of history and law," he said in a statement last month. "This should be a concern to all citizens because, if the EPA can unilaterally take land away from a state, where will it stop?"

State lawmakers have filed a bill that would direct taxpayer money toward the possible legal battle.

But that sparked heated objections from the Northern Arapaho Tribe.

Tribe spokesman Mark Howell told the Casper Star-Tribune that the bill amounts to the state's "War Powers Act against the tribes in its efforts to attack the EPA."

He added: "If it's passed, they are really declaring war against the tribes on the Wind River Reservation."

That remark drew a rebuke from the same newspaper's editorial board, which wrote that "such overheated rhetoric is the wrong way to calmly work through an issue of such gravity."

Reached Wednesday, Howell told FoxNews.com that while the tribe agrees with the EPA decision, it has joined Wyoming officials in seeking a stay, until the courts weigh in -- "in an effort to kind of quell some of the racial tensions that have been frankly generated by the state of Wyoming."

Howell noted that the EPA was relying on Department of Interior guidance in reaching its decision and blasted the state for putting out "misinformation" on the case. "They've never been left out of the process," he said. "This idea that somehow this came as a surprise is just completely a false statement."

He said he expects the state to file suit.

Asked whether the EPA would consider a stay, a spokesman told FoxNews.com the agency "is currently evaluating" the state's requests.

The EPA's original announcement in December said the agency was required to rule on the reservation's boundaries under Clean Air Act and EPA regulations. The statement said the agency did so "after carefully evaluating relevant statutes and case law, historical documents, the Tribes' application materials, all public comments, and input from other federal agencies." The agency said the ruling was "consistent" with a recent opinion from the Department of the Interior, and it would "work closely" with the tribes and state to resolve any issues.

But congressional lawmakers have started to weigh in as well. Sen. Mike Enzi, R-Wyo., recently called the decision a "great overreach," accusing the agency of using the tribes "as a pawn."