Utah lawmakers are setting aside millions of dollars for a legal showdown with the federal government over control of public lands in a fight fueled by the same rightwing activism that inspired an armed standoff in Oregon.

Republican legislators have earmarked $4.5m in taxpayer funds for a potential lawsuit, which would seek state control of more than 31m acres of land that the federal government currently manages within Utah’s borders.

The substantial budget allocation and the increasingly serious threat of litigation put Utah in a position to be the next frontier in the contentious dispute over public lands in the west, with anti-government activists organizing in recent years to protest environmental and wildlife regulations that they say unfairly restrict ranching, logging and other land uses.

Conservative lawmakers have for months considered pursuing a high-stakes and expensive lawsuit, which officials now estimate could cost up to $14m total. The creation of a formal fund last week marks the first time the GOP-controlled legislature has set aside money for a legal battle that environmentalists say would be a waste of public dollars and, if successful, a catastrophe for wildlife and natural resources.

The push comes as the federal government is aggressively targeting ultra-conservative activists who have staged armed protests against the same kind of land-use regulations that Utah officials hope to eliminate.

Cliven Bundy, the Nevada rancher who refused to pay grazing fees and organized an infamous 2014 standoff with government officials, is now behind bars awaiting trial on a wide range of serious felony charges. His sons Ammon and Ryan Bundy, who led an armed takeover of a wildlife refuge in Oregon to protest the treatment of local ranchers, are also facing prosecution and potentially decades in prison for their demonstrations.

Building on the momentum of the Bundys’ protests – which attracted a number of Utah activists and energized the anti-government movement across the west – state leaders in Utah are hoping to challenge the US government in court, arguing that the state has the authority to regulate public lands.

“This is a huge commitment,” said Utah representative Kay Christofferson, a Republican who sponsored legislation approved last Thursday creating a so-called “public lands litigation account” through which the state is beginning to finance a possible lawsuit.

“What this is saying is we believe as a state that we can manage our lands much better than the federal government,” he said.

The federal government currently manages more than 60% of the state’s total land area, controlling five times the amount of land than the state. Backers of the lawsuit argue that this ownership – along with regulations and national monuments that protect the wilderness – constitutes government overreach that limits the local economy.

But critics say the lawsuit is clearly a longshot and that if the federal government were to lose control of public lands, there would be major environmental and economic consequences.

“We know that state oversight would result in the destruction of the wildest landscapes in Utah,” said Steve Bloch, legal director of the Southern Utah Wilderness Alliance. He added: “It is outrageous that the state is appropriating more than $4m to fight a lawsuit that virtually all legal scholars agree is a loser.”

Michael Noel, a Republican state representative who has repeatedly sponsored legislation to decrease the federal government’s power, said he expects states across the west to support Utah in its effort.

“We want to resolve this through the political process,” he said, arguing that he did not agree with the militia tactics of the Oregon protesters. But, he said, he understood the frustration that led to the dramatic standoff. “Why are people turning to this activity? They see our federal government is out of control.”