Magnuson had also set a doomsday clock ticking for Georgia, Alabama and Florida to arrive at a water-sharing agreement. If the states could not reach a settlement by July 2012, Magnuson said, metro Atlanta would only be allowed to take the same amount of water it received in the mid-1970s -- when the population was less than one-third its current size.
That deadline is no longer in effect.
Instead, the 11th U.S. Circuit Court of Appeals set a new deadline. It gave the corps one year to make a final determination over water allocation from Lake Lanier. And the court reminded the corps that the water litigation has already been going on for more than two decades.
"Progress towards a determination of the Buford Dam’s future operations is of the utmost importance to the millions of power customers and water users that are affected by the operations of the project," the court said. "The stakes are extremely high, and all parties are entitled to a prompt resolution. Accordingly, the process for arriving at a conclusion of the bounds of the Corps’ authority should be as swift as possible without sacrificing thoroughness and thoughtfulness."
The 11th Circuit's 95-page ruling, issued by a three-judge panel that heard arguments over the dispute in March, was unanimous.
In a statement, Gov. Nathan Deal's press office said, "At first glance it appears that the state of Georgia has won a great victory. The 11th Circuit panel has ruled unanimously that Lake Lanier was built for the purpose of water supply for the metro Atlanta area. This means that the lake will continue to be available to meet Georgia’s needs."
Attorney General Sam Olens agreed, saying "it is clear that this is a great day for Georgia."
Deal's spokesman, Brian Robinson, said the 11th Circuit's ruling "allows the states to negotiate fairly and without the threat of an extreme and catastrophic result to one of them."
Deal flew to Montgomery on June 15 to meet with Alabama Gov. Robert Bentley and the two governors discussed water. Robinson would not disclose details of the talks, noting that a confidentiality agreement in the case prohibits it.
A statement released Tuesday by Bentley's press office said Alabama is disappointed with the ruling and will ask the entire 11th Circuit to reconsider the three-judge panel's decision. The 11th Circuit has 10 judges -- four from Florida, three from Georgia and three from Alabama -- with two vacancies.
"We are especially surprised by the conclusion of the three judges who issued the opinion that water supply has always been an authorized purpose of Lake Lanier," the statement said. That finding upsets "60 years of settled understanding concerning congressional intent in building Lake Lanier."
Perhaps the 11th Circuit panel's most important finding was that when Congress authorized the construction of Buford Dam in the 1940s, it intended Lake Lanier to be a source of water supply for the Atlanta area. Magnuson had determined that Congress built Lake Lanier for only three primary purposes: hydropower generation, navigation and flood control.
But the 11th Circuit noted that before Buford Dam was built, the Chattahoochee River supplied almost all of Atlanta's water. The building of the dam posed a threat to the city if the corps intended to shut off water flow from the river for extended periods of time, the court said.
"Congress very clearly did not intend the dam to harm the city's water supply," the court said. The language of the Rivers and Harbors Act, which authorized the dam's construction, "clearly indicates that water supply was an authorized purpose of the Buford Project."
The court also handed Georgia another potential victory when it determined that the diversion of water from Lake Lanier's conservation pool to meet the metro area's water needs may not constitute a "major operational change" under the Water Supply Act of 1958. Any major operational change would require approval from Congress and absent that the corps would be violating the law. Magnuson found that a major change had been made.
But the 11th Circuit panel said it determined that "such reallocations to water supply arguably do not actually constitute a ‘change' in operations at all." In sending the case back to the corps, the court said the agency is free to consider the diversion's impact on Buford Dam's hydropower generation, among other factors.
The 11th Circuit said it will retain limited jurisdiction over the case and monitor the corps' compliance with the ruling. "At the end of this one-year period, we expect the Corps to have arrived at a well-reasoned, definitive and final judgment as to its authority," the court said.
Tad Leithead, chairman of the Atlanta Regional Commission, said Magnuson's order posed a serious threat to metro Atlanta's water supply and noted the judge himself said his ruling could lead to a "draconian" result if the July 2012 deadline were not met.
"Had his ruling gone into effect in July 2012, the water supplies that millions of people depend on would have been cut off," Leithead said. "As a result of today’s action by the 11th Circuit, now that won’t happen."
Demming Bass, chief operating officer of the Cobb Chamber of Commerce, said the ruling takes uncertainty off the table in terms of recruiting businesses to locate to metro Atlanta.
"The good news is that because of Judge Magnuson's decision, it forced Georgia and Atlanta to come together and look at worst-case scenarios," Bass said. "It made us pass some great legislation that's going to help us conserve water and get plans in place to look at additional reservoirs, which is something we're going to need anyway."
Staff writers Aaron Gould Sheinin, Patrick Fox, Leon Stafford, Rachel Tobin, Ernie Suggs and Nancy Badertscher contributed to this article.
BIG WIN FOR ATLANTA
Georgia won a significant legal victory Tuesday when the federal appeals court in Atlanta threw out a judge’s ruling that could have greatly restricted water supply to the metro area beginning in July 2012. The court found that a primary purpose of Lake Lanier was to provide water to the metro area, and it gave the Corps of Engineers a one-year deadline to determine how to allocate water from the reservoir formed by Buford Dam.