The agreement with the U.S. Army Corps of Engineers -- which Alabama and Florida claim is illegal -- is the foundation of Georgia's long-term water plans, giving the Atlanta region the water it needs to continue growing as one of the nation's major cities. As a signed pact with the federal government, the deal also puts Georgia in a strong negotiating position with its neighbors.
But with the governors of the three states meeting next week for White House-backed mediation, Georgia is in danger of losing its ace in the hole.
A federal appeals court is expected to issue a decision that could invalidate the state's rights under the agreement. The ruling could dramatically change the dynamic in the states' decades-long water wars, and observers say the governors' talks might not get very far with such a crucial decision looming.
No one argues that Atlanta should get no water from Lake Lanier, which provides most of the metro area's drinking water.
But even Georgia supporters acknowledge that the state's case to get nearly one-fourth of the lake's capacity did not fare well during oral arguments last month before the federal appeals court's Washington, D.C., circuit.
A three-judge panel sharply questioned whether the Corps had the authority to grant Georgia the allocation given that federal law says only Congress can sign off on significant changes to water allocations from reservoirs.
A Justice Department attorney representing the Corps struggled to explain the legal rationale, and he acknowledged that the Lanier agreement marks the largest operational change at a federal reservoir that the agency has sought without first going to Congress.
Georgia currently uses about 10 to 15 percent of the capacity in Lanier for drinking, said Mark Crisp, an Atlanta water consultant with C.H. Guernsey & Company.
As Atlanta has exploded with growth, Georgia and the Corps say it makes sense to shift the lake's use toward drinking water and away from its original purpose of producing hydropower. The deal they reached in 2003 would give Georgia about 23 percent of lake's capacity to meet future demand.
But Alabama and Florida counter that Georgia has no legal right to the Lanier water it's already using, much less to take almost a quarter of the lake over the coming decades.
BACKGROUND: Georgia made an agreement with the U.S. Army Corps of Engineers in 2003, securing a quarter of the water in Lake Lanier and ensuring Atlanta's booming population would be well-supplied.
BUT NOW: - Florida and Alabama say the agreement is illegal
- A three-judge panel has questioned whether the Corps had the authority to grant Georgia the allocation
WHAT'S NEXT: A decision by the federal appeals court's Washington, D.C., circuit is expected early next year. It could fuel more legal activity or prod the three governors into more intense negotiations.