At first, Grand Junction and Palisade tried to buy the mineral rights themselves. In early 2006 they bid more than $300 an acre at auction -- eight times what gas companies were typically paying for mineral leases in that part of the state at the time -- but were outbid by Genesis Gas and Oil.

Then they tried a different tack: If drilling had to go forward, they wanted to define the terms, making sure the safest techniques would be used [4] to protect the quality of their water. In this case, they wanted measures more stringent than what state regulations required.

With BLM officials arbitrating -- the agency made a goodwill agreement a condition of the leasing and permitting process -- the municipalities and Genesis Gas and Oil spent the next two years negotiating a compromise that could now stand as a model for towns across the country.