WASHINGTON -- A federal appeals court Tuesday threw out an agreement that Georgia reached with the Army Corps of Engineers for water rights to Lake Lanier, handing Alabama and Florida a major victory in the states' years-long water wars.

The agreement, which would give Georgia about a quarter of the lake's capacity over the coming decades for drinking water, is the foundation of Georgia's long-term plans.

Alabama and Florida challenged the pact reached in 2003, arguing that the withdrawals would dry up river flows into their states that support smaller municipalities, power plants, commercial fisheries and industrial users like paper mills.

A district court earlier ruled in Georgia's favor. But the U.S. Court of Appeals in Washington overturned that decision. It said the agreement constituted a major operational change at the reservoir that requires congressional approval.

"It is the most consequential legal ruling in the 18-year history of the water war," said Alabama Gov. Bob Riley.

Riley said the ruling establishes that Atlanta cannot continue to take more and more water from the federal reservoirs in the Coosa and Chattahoochee River basins.

The three states had reached a tentative agreement at a water summit in Tallahassee in November. But a few weeks later, Florida pulled out of the agreement.

The news comes as Lake Lanier has been slowly rising over the past few weeks, after recent rains. But even with the rainfall, January's rainfall was still below average.

Georgia currently uses about 10 to 15 percent of the capacity in Lake Lanier, a huge federal reservoir outside Atlanta initially built for hydropower.