From the Miami Herald. By RAY HENRY, Associated Press

A long-running dispute threatening metro Atlanta’s main water supply for 3 million people went before appellate judges Wednesday who suggested they could revise or overturn a looming order that would severely restrict the city’s use of water from Lake Lanier.

Georgia wants the 11th U.S. Circuit Court of Appeals to overturn a lower court ruling that would restrict metro Atlanta’s access to water drawn from the dammed lake on the Chattahoochee River to levels last seen in the 1970s, when the city was far smaller. That order from U.S. District Court Judge Paul Magnuson takes effect in July 2012 unless Georgia reaches a settlement with neighboring Alabama and Florida.

Georgia’s neighbors argue that metro Atlanta takes too much water upstream, leaving too little for people and businesses farther south and harming shellfish beds fed by Florida’s Apalachicola River, which is formed by the Chattahoochee and Flint rivers.

During oral arguments, attorney Seth Waxman, who represents Georgia, said that Congress intended that the U.S. Army Corps of Engineers operate the hydroelectric dam forming Lake Lanier in part to assure Atlanta would have a source of water. He asked that the three-judge panel send the issue back to the U.S. Army Corps of Engineers for review and instruct the agency that water supply is an allowable use of the lake.

Waxman also faulted the lower court judge for not appropriately weighing the harm his order could cause the metro region. The uncertainty over water use makes it exceedingly difficult to attract businesses.

“We can’t locate a major industry here telling them it will be fine so long as they bring their own water,” he said.

Judge Stanley Marcus seemed partly sympathetic to the argument, later saying he believed Magnuson failed to weigh the difficulties his order would case. If Magnuson’s deadline were overturned, it would ease the political pressure on Georgia to cut a deal.

The case is especially important to Gwinnett County, a suburb of Atlanta that draws its drinking water from Lake Lanier. William Droze, an attorney representing Gwinnett, said local officials fear Magnuson’s order would cost the area $53 billion in lost economic output and 300,000 jobs. While Gwinnett takes water directly from Lake Lanier, Droze said the lower court failed to consider that the withdrawals are offset by treated wastewater pumped back into the lake.

Lawyers for Florida and Alabama said Congress authorized the building of Lake Lanier, a project completed around 1960, to generate electricity, aid navigation and provide flood control. Atlanta never contributed to the cost of the project. While Congress later gave the U.S. Army Corps of Engineers some flexibility to provide communities water from its reservoirs, major changes require permission from Congress.

“No one has ever suggested that anyone contemplated the use of direct storage for direct withdrawal of water” from the lake or downstream in the Chattahoochee River, said attorney Matthew Lembke, who represented Alabama. Using federal resources to provide a city’s water supply, historically a local responsibility, would have been “inconceivable,” he said.

Judge R. Lanier Anderson challenged Lembke, noting that the original legislation authorizing the dam contemplated the project would assure Atlanta of a supply of water. Anderson said early documents from the Army Corps contemplated that there may be a need to release more water from the dam into the Chattahoochee River to accommodate anticipated growth in Atlanta.

“The legislation is absolutely clear,” he said.

Anderson later told a lawyer for the U.S. Army Corps of Engineers that he thought the case should be sent back to the agency so it could review the availability of water with guidance from the court saying that water supply was part of Congress’ intent for the project.

“We’re probably going to remand this case,” Anderson told a lawyer representing Florida.

The judges did not indicate when they would rule.