Wyoming officials are taking the Environmental Protection Agency to court in a bid to reverse a sweeping agency ruling that transferred more than 1 million acres of land -- including an entire city -- to Native American tribes.

Wyoming Attorney General Peter K. Michael filed his state's appeal Friday morning before the U.S. Court of Appeals for the 10th Circuit. The state wants either the EPA to reverse, or the courts to overturn, a December ruling on a request from the Northern Arapaho and Eastern Shoshone tribes.

The tribes had sought "state status" in order to administer air quality monitoring. The EPA, in the course of reviewing the request, 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, which encompassed the city of Riverton, caused intense controversy as officials warned about a range of disruptive consequences, including the possibility that jailed tribal members could now challenge their convictions.

Offering some relief, the EPA earlier this week agreed to put its own decision on hold at the request of the state and the tribes themselves. The state was the first to ask for a stay, calling the decision "arbitrary" and "wrong." But the tribes followed suit, in the interest of soothing tensions.

In a Thursday letter to Gov. Matt Mead and tribal representatives, an EPA official confirmed the agency would put the decision on hold pending review, "due to the unique circumstances of this case."

The official said the agency "remains committed" to working with all sides in the dispute but noted that "in granting this stay, the EPA is not agreeing with or adopting the State's legal or factual arguments" over the boundaries.

The state made several arguments against the ruling, in a petition filed last month with the EPA.

"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.

He argued that the ruling could impact the area in several ways, including:

-- 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.

The EPA is still weighing the state's request to reconsider its decision. In the meantime, officials will press their case before the courts.

Northern Arapaho Tribe spokesman Mark Howell told FoxNews.com earlier this week that while the tribe agrees with the EPA decision, it joined Wyoming officials in seeking a stay "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."

The EPA said in a separate statement on Friday that the stay will help ensure the case is "decided in an orderly fashion by the courts."

"We are encouraged that this approach will help alleviate tensions and areas of disagreement while providing all parties an opportunity to work together to implement EPA's decision and ensure environmental protection," Shaun McGrath, EPA's regional administrator, said.

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.