ATLANTA — Georgia’s legal fight to continue using Lake Lanier as a water supply is still alive.

A Wednesday ruling by the 11th Circuit Court of Appeals clears the way for Georgia’s attorneys to challenge last year’s federal court decision that could limit North Georgia’s water supply if a long-running water squabble with Alabama and Florida isn’t settled by 2012.

U.S. District Judge Paul Magnuson ruled in July that Georgia has little legal rights to the 38,000-acre reservoir that supplies water to Gainesville, Hall County and most of metro Atlanta.

The judge gave Georgia, Alabama and Florida three years to reach an accord. If not, access to Lake Lanier water for the cities and counties that use it could be reduced to mid-1970s levels.

The state has been negotiating with its neighbor states for an agreement to share water, pending congressional approval. But Thursday’s ruling keeps the state’s legal options open during those negotiations.

Bert Brantley, communications director for Georgia Gov. Sonny Perdue, said that the three-judge panel’s unanimous ruling "will only help" in negotiating with Alabama and Florida on how to share water in the states’ common river systems.

"Our focus is still on negotiations and on getting a deal done with Alabama and Florida that will solve this once and for all for the long term," Brantley said. "But it is important to keep the legal options open. The (July) ruling was such a big change that we need to make sure it would stand up to scrutiny. … Fortunately, the 11th Circuit is on board with that and agreed with the arguments we made with the appeal."

Clyde Morris, the attorney for the Lake Lanier Association, a lake advocacy group, applauded the Thursday decision.

"This is a very significant ruling, and hopefully will be a harbinger of positive change for Georgia in the course of this litigation, but there is a lot of work yet to be done," Morris said. "We continue to believe that Congress intended for Lake Lanier to support both recreation and water supply, and we will pursue our appeals to protect the Lake and the interests of our members, as the Association has for over four decades."

Lake Lanier Association President Jackie Joseph called the ruling "good news."

"That was a concern that we had, that perhaps the ruling would not allow (the appeal) to happen," she said. "Very possibly, I think this gives us an opportunity to really present our case."

Hall County Board of Commissioners Chairman Tom Oliver said while it is good news that the ruling can be appealed, he worries that a more restrictive ruling could result.

"I don’t think it’s a surprise that the Magnuson ruling can be challenged," Oliver said. "However it’s going to be interesting to see who wants to sit down and write up the guidelines."

"I just think there’s still a lot of variables."

Attorneys representing Florida and Alabama could not immediately be reached for comment.

Brantley said the appeal process now will move forward with briefings scheduled to begin in March. He said at this time no further meetings between the states’ governors is scheduled, but that their staff members are discussing the water issue on a weekly basis.

"We’re optimistic at their cooperation and willingness to negotiate," he said.

The appeals panel found the judge’s decision was a "final judgment," which means that the ruling can be immediately appealed. If Georgia had lost the argument, the state may have been forced to wait years to challenge the case, said Todd Silliman, a McKenna, Long & Aldridge attorney who represents Georgia.

"It was important to Georgia that we be able to appeal as soon as possible," Silliman said. "Judge Magnuson’s order has an immediate effect on Georgia and we did not want to defer for several years."

Georgia’s best option is likely jump-starting negotiations between the three leaders of the three states, who emerged from a private meeting in Alabama in December sounding optimistic that they will broker a solution. The states have said in court filings that at least five meetings have been scheduled since then.

But Georgia also is pressing a legislative and legal battle to preserve the state’s rights to rely on Lanier. To that end, Perdue has hired a former U.S. solicitor general to lead the high-stakes legal battle and urged Georgia’s federal delegation to unite behind a proposal that solves the state’s quandary.