In July 2009, Judge Paul Magnuson ruled that water supply, in the form of withdrawals from Lake Lanier, was not a Congressionally-authorized purpose of the lake. Per his 95-page ruling, authorized uses included hydropower, navigation and flood control. He stated water supply was only an “incidental benefit”. The Judge determined the lack of Coprs action to authorize additional water supply for metro Atlanta constituted a “de facto” reallocation of the storage in Lake Lanier. Magnuson found the current water supply levels exceeded the Corps’ discretionary authority and therefore needed Congressional approval. His ruling gave 3 years for Congress to authorize water supply as a purpose for Lake Lanier. At the end of the three years, if no resolution has been met, the operation of Buford Dam on Lake Lanier would return to 1970s baseline levels. Thus, the allowed withdrawal from the lake would be limited to 8 million gallons per day (mgd) and 2 mgd for Buford and the flow from the dm would be 600 cubic feet per second (cfs). In 2009, 214 mgd withdrawal from the lake was allowed. As a result, the water supply for metro Atlanta from Lake Lanier would drop by 95% taking Gwinnett County’s allowed withdrawal from 150 mgd in 2009 to 0 mgd in 2012 under Magnuson’s ruling. The following is an excerpt of a summary of the ruling written in 2011 by State Sen. Bill Heath, R-Bremen, “In his ruling, Judge Magnuson documented a detailed history of Lake Lanier. Two feasibility reports, the Parks Report and the Newman Report, noted hydropower and navigation as direct benefits. The Southeastern Power Administration ultimately paid approximately $30 million towards construction of the dam. Even though Atlanta did not contribute to the construction costs, Congressional hearings showed that Atlanta was not required to pay because water supply was an incidental benefit in the form of regulation of the Chattahoochee River's flow.

The cities of Buford and Gainesville were authorized to withdraw small amounts of water from the lake because their original water intake structures on the Chattahoochee River were inundated by Lake Lanier. The Corps' 1958 operation manual provided for releases of 600 cfs from Buford Dam; however, the Corps agreed to additional withdrawals and a flow of 750 cfs in 1975. A drought in 1980 and 1981 caused the Corps to re-evaluate its operation of the dam, agreeing to provide minimum releases of 1750 cfs at the request of Georgia Power during the summer months.

Furthermore, despite the fact that only Buford and Gainesville were authorized to withdraw water, both Gwinnett County and the City of Cumming contracted with the Corps to withdraw water in the 1970s. In 1981, a U.S. Senate-directed Atlanta water study was completed. It found that Lake Lanier and the Chattahoochee River provided more than 90 percent of the total water supply for metro Atlanta, and it recommended a new dam below Lake Lanier.

Alternatively in 1989, the Corps determined that the most economical solution was reallocation of storage of Lake Lanier to water supply. The Corps' report included a draft Water Control Plan. However, the Corps determined that the Water Supply Act of 1958 did not require it to seek congressional authorization for the reallocation of significant amounts of Lake Lanier's storage to water supply.

This Act requires congressional approval if modifications would involve major structural or operational changes. The draft Water Control Plan was never formalized or adopted because in 1990, Alabama filed suit challenging the plan and the water supply contracts. This is the lawsuit that began the "water wars."

Litigation was "stayed" to allow for negotiations between the states. Formal interstate compacts on water management in ACT and ACF basins were ratified by each state and by the U.S. Congress in 1997. However, the ACF compact expired in 2003 when Florida refused to extend the compact; and, the ACT compact expired in 2004 when Alabama refused to extend the compact. The "stay" was then lifted, allowing litigation to resume.

Both Florida and Alabama record higher yearly rainfall averages that put Georgia at a clear disadvantage in attracting many job-creating businesses and industries, the majority of which rank the availability of water for operations as a top factor in where they choose to invest or expand. The long-term annual average rainfall in Alabama is 55 inches, Florida receives an average of 54.02 inches of rainfall a year, and Georgia's 30-year average (1981-2010) rainfall per year was 49.68 inches. Based on the fact that water supply contracts reallocated more than 20 percent of Lake Lanier storage, Judge Magnuson's ruling in July of this year, states that the Corps' actions to support water supply constitute a "major operational change" and "seriously affects" Lake Lanier's authorized purpose.

Georgia insists that the Court take into account return flows, which are water the municipalities return to the lake and the Chattahoochee River in the form of highly treated wastewater. In recent years, metro Atlanta's average net water use from the Chattahoochee is roughly 1 percent of the average annual flow at the Florida state line during non-drought periods, and less than 3 percent during drought periods. However, Judge Magnuson ruled that the Corps does not require the municipalities to return water; the only requirement in their water contracts is that the Corps allows them to withdraw water. Therefore, the Corps' obligation remains the same.”