Griffith City Council will ask the state's local government minister for an exemption for councillor's declared interests due to no quorum in the meeting.
During the closed section of council's April 28 meeting, a report on the volumetric water contributions policy was presented to councillors.
That report lapsed and no action was taken as less than a majority of the 12 councillors had not declared a pecuniary interest.
The NSW Office of Local Government's latest model code of conduct allows for an exemption to be granted, or the matter can be escalated to Minister for Local Government Shelley Hancock to consider.
"A letter will be written to the Minister for Local Government this week seeking her authority for councillors to deliberate and decide on this issue not withstanding the fact that six of our 12 councillors have declared a pecuniary interest," Griffith City Council's general manager Brett Stonestreet said.
The volumetric water policy required developers to contribute water entitlements, or provide their monetary value, for land when preparing residential subdivisions.
When the policy began in 1994 it was designed so those entitlements were later added to the city's water entitlements to ensure sufficient water for residents. Those water entitlements council collected are estimated to be worth millions.
In June last year, the policy was repealed as council was advised there was "no legal standing" to maintain the policy.
Following the repeal council received demands to return the water at the going market rate or face legal action.
"Should the minister provide authority for the matter to be considered by councillors, it will be deliberated in closed session as provided for under the Local Government Act due to the potential for litigation," Mr Stonestreet said.
It's believed it will be first time such an exemption has been sought by Griffith City Council.