ATLANTA, Georgia (CNN) -- The state of Georgia, stricken by months of drought, confirmed Friday that it will sue the Army Corps of Engineers.

A view of the East Point Reservoir in Lithia Springs, Georgia, in 2006 ...

Georgia Gov. Sonny Perdue had said Wednesday the state would seek an injunction forcing the Corps to stem the flow of water from Lake Lanier, Atlanta's primary water source.

The Corps administers the lake, which supplies most of the water to Georgia's capital and feeds the Chattahoochee River, which winds through three states.

Rainfall in the area is about 15 inches below normal for the year.

Atlanta Mayor Shirley Franklin said, "This is dire, severe, extreme drought."

In the city of Atlanta and surrounding counties, outdoor watering is banned except for a few commercial uses. The state is looking into which businesses would be forced to cut back water use if the drought worsens.

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The Army Corps of Engineers says there is about a three-month supply of water left in Lake Lanier, which is 15 feet below its capacity. The corps -- under an agreement reached in the 1980s with U.S. Fish and Wildlife Service, the state and downstream users -- releases 5,000 feet of water per second from the dam between the man-made lake and the river.

The figure was based on a Florida hydroelectric power plant's needs, as well as concern for endangered species in the river, including mussels and sturgeon.

But officials from the U.S. Fish and Wildlife officials told CNN that no one knows exactly what flow is needed to keep the mussels or the sturgeon alive.

Perdue calls the current water flow policy a "nonsensical action."

"We shouldn't have to fight this out in court," Franklin said Thursday. "We don't want to hurt [the cities and businesses] downstream but we'd like to see some middle ground and hope people would join with us." Watch Franklin describe how bad the problem might become »

Don't Miss Corps considers limiting discharges

Corps considers limiting discharges Drought spreads

But even if an agreement is reached soon, the mayor said her city, which has doubled in population since 1980, needs to do a better job of conserving water.

Franklin also admitted that the Atlanta area did little to add to storage facilities during years of recent explosive growth, but says the city has now purchased a stone quarry to be developed into a new reservoir.

Atlanta is spending $4 billion to fix the city's water infrastructure. According to Franklin, 14 percent of the city's pipes, many of which date back to the 1890s, leak. Though the mayor says the percentage of leaky pipes has dropped each of the last six years.

But the remaining repairs will take four to five years and won't address the current crisis. Atlanta may soon have to resort to drastic action like some other Southeastern towns have already taken.

In Siler City, North Carolina, residents and businesses have been ordered to cut water use by 50 percent or face penalties. Many restaurants and schools are serving meals on paper plates so they don't have to wash dishes. Two poultry plants have cut production by one day a week to curtail water use and are also trucking water in for other uses.

The town of Orme, Tennessee, also trucks in water, three times a week -- for everybody.

"We are high and dry," Mayor Tony Ream said.

Meanwhile, Franklin has enacted her own personal measures.

"I've cut the time in the shower," she said. "I don't wait for the water to get hot. I kinda shiver for a few minutes.

"I put a bucket in it and I use that collected water to water the two flowers I would like to save." E-mail to a friend

Rusty Dornin contributed to this report.