Updated

Federal biologists signed off on a plan Friday to reduce the flow of water from Lake Lanier, the main water source for Atlanta and the focal point of a three-state water fight as the Southeast contends with a historic drought.

The U.S. Fish and Wildlife Service decided that federally protected mussels can live with less water from Lanier, which could allow drought-stricken Georgia to keep more water in the drying lake.

Georgia Gov. Sonny Perdue has criticized the federal government for continuing what he calls excessive water releases from north Georgia reservoirs even as the drought threatens Atlanta's water supplies.

The fast-growing Atlanta region relies on the lake for drinking water. But power plants in Florida and Alabama depend on healthy river flows, as do farms, commercial fisheries, industrial users and municipalities. The corps also is required to release adequate flows to ensure habitats for species protected by the Endangered Species Act, such as the mussels.

Florida and Alabama have balked at Georgia's effort to keep more water, arguing that its demands were unreasonable and that reducing the flows downstream could cripple their economies.

More than a quarter of the Southeast is covered by an "exceptional" drought — the National Weather Service's worst drought category.

Earlier this month, at a three-state water meeting in Washington, the Corps of Engineers said it wanted to temporarily cut the flow of water to Florida by 16 percent until the drought breaks, but needed the approval of Fish and Wildlife.

It made for a temporary truce in a tug-of-war that has pitted the states against each other for the better part of two decades, but has intensified as record drought descended over much of the region.

However, Florida backed away from the agreement last week, saying the reductions could cause a "catastrophic collapse of the oyster industry" and "displace the entire economy" in the Florida Panhandle.

Meanwhile in Washington, a panel of federal appeals judges questioned whether the Army Corps of Engineers has the authority to divvy up portions of the lake for drinking water instead of producing power.

In one of seven active lawsuits in the water wars, attorneys for all three states argued before the panel over a 2003 settlement in which the Corps agreed to allow Georgia to use nearly 25 percent of Lanier for drinking water storage.

The long-term agreement, which has not yet been implemented, is a linchpin of Georgia's water plans for the coming decades. Currently, the state gets water from Lanier under smaller, short-term contracts.

Florida and Alabama have fought the agreement, arguing that Lanier was built to produce hydropower and that under federal law only Congress has authority to significantly alter the functions of federal reservoirs.

The three judges presiding over the case appeared to sympathize with Florida and Alabama during oral arguments, sharply questioning attorneys for Georgia and the Corps over claims that the shift is not significant enough to trigger congressional involvement.

At one point, an attorney for the Corps acknowledged that the agency has never made such a large change without first getting congressional approval.

The court is expected to issue a decision in the coming months.