A federal appeals panel handed Georgia a victory Tuesday by finding metro Atlanta can legally tap a reservoir that provides water to roughly 3 million of its residents and tossed aside a lower court order that would have severely restricted access to that water starting next summer.

The decision by the 11th U.S. Circuit Court of Appeals struck down a nearly two-year-old ruling from U.S. District Court Judge Paul Magnuson, who found that metro Atlanta had little legal authority to take water from Lake Lanier on the Chattahoochee River. In a ruling that Magnuson acknowledged was "draconian," he said water withdrawals must be reduced starting in July 2012 to levels last seen in the 1970s unless the political leaders of Alabama, Georgia and Florida struck a deal.

Georgia had argued that Congress meant for the project to provide Atlanta with water and accused Magnuson of failing to consider the harm his order would cause. Alabama and Florida, which also rely on the Chattahoochee, said the dam was never intended as a major water supply and that usage by ever-growing Atlanta was harming communities and endangered wildlife downstream.

In their unanimous ruling, the three-judge appeals panel gave the U.S. Army Corps of Engineers, which runs the dam, one year to re-evaluate a request from Georgia for more water with the legal guidance that water supply is one of several permissible uses of the reservoir.