"This is your first time, isn’t it?" whispered a kindly Bureau of Land Management matron to an apprehensive Greg Trainor at a recent oil and gas lease auction in Denver, Colo.

Trainor, who manages the water supply for Grand Junction, Colo., had good reason to be nervous. In December, the BLM announced plans to auction 16,000 acres of land for oil and gas development on and around the forested mesa that supplies water to Grand Junction and nearby Palisade. Natural gas drilling creates an extensive network of access roads and well pads, and both communities worry that their water may be contaminated by sediment runoff and spilled waste fluids.

In January, the communities asked the BLM to withdraw the leases to give them time to plan protections for the water supply, including making certain areas off-limits to drilling. Colorado Democrats Sen. Ken Salazar and Rep. John Salazar backed that request, but the agency went ahead with the sale. In a last-ditch effort, the Grand Junction city council dispatched Trainor to the Feb. 9 auction to bid on the mineral rights. The city was "willing to spend quite a bit of money to protect the water system," says Trainor, but "we felt we shouldn’t have been put in this position to begin with."

All three parcels the city hoped to obtain, however, were nabbed by a Denver "land man," who bid a total of nearly $1 million on behalf of an unknown energy company.

The BLM may still decide not to allow drilling on the leases. Officials are reviewing the protests, according to spokeswoman Denise Adamic, and expect to make a final decision by the end of April.