(Reuters) - Michigan must deliver bottled water or provide in-home filtration to all qualified residents in the city of Flint, where lead contamination sparked a public health crisis, a U.S. appellate panel ruled on Friday upholding a lower-court order.

The Flint Water Plant tower is seen in Flint, Michigan, U.S. on February 7, 2016. REUTERS/Rebecca Cook/File Photo

The state argued that door-to-door deliveries to all Flint households exposed to lead-tainted tap water would be financially crippling and was unnecessary because bottled water was available to residents at government-run distribution sites, or by delivery upon request.

But a three-judge panel of the 6th U.S. Circuit Court of Appeals, in a 2-1 ruling, refused the state’s plea to set aside the blanket water-delivery order imposed on Nov. 10 by U.S. District Judge David Lawson.

“Although there may be no known precedent for the door-to-door delivery of bottled water, there is also no precedent for the systematic infrastructure damage to a water delivery system that has caused thousands of people to be exposed to poisonous water,” circuit judges Damon Keith and Bernice Donald wrote in Friday’s opinion.

The appeals court disputed the state’s cost projection for blanket home deliveries - $10.5 million a month - as “disingenuous” and “not supported by the record.”

Under Lawson’s order, city and state officials must provide in-home filtration or deliver four cases of bottled water per affected household each week, except where they can prove a water filter is installed and properly maintained, or to residents opting out.

Governor Rick Snyder’s office said that bottled water had been furnished by delivery for months to those residents who requested it.

“The state and city are in agreement that bottled water deliveries to residents who do not require them will reduce the progress made in the city’s recovery,” a statement said.

Michigan has been at the center of a public health crisis since last year, when tests found high levels of lead in blood samples taken from children in Flint, a predominantly black city of 100,000.

The contamination was linked to an April 2014 decision by a state-appointed emergency manager to switch Flint’s water source to the Flint River from Lake Huron to save money. The more corrosive river water caused lead to leach from city pipes into the drinking water.

Flint switched back in October 2015, but the water has not fully returned to normal. The city has been replacing lead pipes running to homes, and state officials have said the water is safe to drink if properly filtered.