"This case, at first sight, seems to be about little more than a child and his father," the panel wrote in their decision.
Until about 30 years ago, the panel wrote, growing demands for water were met through building dams and reservoirs.
"In our view her decision was clearly wrong and should be set aside," the panel wrote.
The panel then wrote a report, published it and the government subsequently changed the law to legalise such systems.
The panel wrote: "The co-authors represent the first line of defense against misconduct.
"We recognize that this is a strong indictment," the panel wrote.
In 2000, a panel of experts wrote an explanation of the memorial to satisfy the public.
"It would create chaos," the panel wrote in its ruling.
"This could include much 'core' political and religious speech," the panel wrote.
"State and local governments can no longer afford the current Medicaid program without substantive reforms," the panel wrote.