The 11th U.S. Circuit Court of Appeals decision lets stand a June ruling by a three-judge panel overturning a 2009 U.S. District Court judge's order, The Atlanta Journal-Constitution reported.
In the 2009 order, U.S. District Judge Paul Magnuson said the U.S. Army Corps of Engineers did not have the right to allow the Atlanta residents to use Lake Lanier, a federal reservoir in northern Georgia, for drinking water. Magnuson gave the states three years to agree on use of the lake and said it would be severely restricted if they did not meet the deadline.
Alabama Gov. Robert Bentley said the state would appeal the 11th Circuit decision not to review the case to the U.S. Supreme Court.
"Allowing Atlanta to tap water from Lake Lanier significantly limits the flow of water downstream to Alabama," Bentley said in a statement Monday.
The appeals court sent the dispute back to the Army Corps of Engineers and set a deadline of one year to work out allocation of water from Lake Lanier.
Brian Robertson, a spokesman for Georgia Gov. Nathan Deal, said the governor believes the decision would allow the states to reach an agreement that benefits all three.
"Today's ruling gives the state of Georgia finality on this issue and allows us to move forward in our negotiations with the governors of Alabama and Florida," Robertson said.