The Army Corps of Engineers sidestepped the governor's demand to stop draining reservoirs Wednesday, setting up a legal showdown between the federal government and state officials who blame the policy for intensifying a record drought.

The Corps said in a letter to the state's environmental commissioner that it was abiding by federal guidelines but that officials were now "exploring possible drought contingency options." Corps officials say state and federal regulations require them to send water downstream.

Gov. Sonny Perdue said he will sue.

"The Corps' nonsensical action to further release vital water from Georgia's already depleted federal reservoirs must not stand," he said. "There is simply no scientific justification to operate these reservoirs in this manner during a historic drought like the one we are experiencing."

Millions of gallons of water are sent downstream to Florida and Alabama. The drought has heightened tensions among the three states, which already disagree on how to manage the region's limited water supply.

Florida has complained the state is not sending enough water downstream to protect mussels, and the state's environmental chief sent a letter to the Corps on Wednesday that warned reducing the water flow "would severely impact Florida's natural resources." Alabama Gov. Bob Riley has urged the Corps to release more water from Georgia's lakes to help his state cope with the dry conditions.

"We are not unilaterally opposed to changing the flows," said Maj. Daren Payne, the deputy commander of the Corps' office in Mobile, Ala. "But we'd be in violation of the law if we did now.

"People in Georgia have been hurting. They've lost businesses, jobs and income. And we don't want to see any more harm come to anyone, but we have obligations to manage this basin."

State officials have said they were unprepared for the severity of the drought, compounded by scorching heat and a drier-than-normal hurricane season. As the drought worsened, Georgia politicians claimed the Corps' stubborn agenda intensified the water shortage.

Carol Couch, environmental commissioner, warned Wednesday that the Corps would be "abandoning the people of the state of Georgia" and setting the stage for a "potential disaster" if it refused the deadline of the end of the business day.

But environmentalists contend the state should have been better prepared for a water shortage, which they say is an inevitable result of decades of pro-growth policy that led to metro Atlanta's sprawl.

"Whether you've lived in Georgia for five months or 50 years, it's easy to see the huge numbers of people moving to the state was going to put the squeeze on our water resources," said Jill Johnson, the interim director of Georgia Conservation Voters.

"The Corps has become a scapegoat for a lack of political leadership over the issue of water," she said. "It's been massive unchecked development that's put further strain on our water supply."

More than a quarter of the Southeast is covered by an "exceptional" drought — the National Weather Service's worst drought category — and Georgia is taking extreme measures to conserve water.

Officials last month banned virtually all outdoor watering across the northern half of the state, restaurants are being asked to serve water only at customer request and the governor has called on Georgians to take shorter showers.

With a dry winter in the forecast and an estimated 81 days of stored water left in Lake Lanier, the north Georgia reservoir that supplies water to about 3 million residents, the state is considering more restrictions regardless of the Corps' decision.

"The crisis will not end anytime soon," Couch said. "So now is the time for all Georgians to come together as families and communities to be good stewards and be mindful of how they use water."