TAMWORTH Regional Council (TRC) faces a hefty fine, or even prosecution, after it admitted it took more than its fair share of water from the Peel alluvium.
At an extraordinary meeting on Tuesday night, the council voted to report the breach to the Premier, the Natural Resource Access Regulator (NRAR) and to stop pumping immediately from the Scott Road Drift Wells after it was revealed it had taken "well in excess" of its allocation.
The council knew in February there was a chance it had taken too much, and tried to solve the problem with the Department of Planning, Industry and Environment (DPIE) by buying it back on the open water market.
The wells provide up to 10ML of water each day for Tamworth, Moonbi and Kootingal but TRC water and waste director Bruce Logan refused to reveal the amount of water that was taken illegally.
"We don't have a very high allocation at the four drift wells and we are well in excess of our allocation at the moment," he said.
"It's a matter between us and NRAR at the moment as they consider what action they might like to take with the council and we are leaving that with them to sort it out. We have stopped pumping at the moment and we won't be exceeding our allocation anymore.
"We would say that there are mitigating circumstances given we are in the worst drought on record and Tamworth is running out of water."
There are six wells at the Scott Road Drift Wells and four of those remove groundwater from the alluvium.
All licence holders are given an entitlement for the water year, which runs from July 1 to June 30 of the next.
Out of that users are given an allocation, which for TRC in the drought is 51 per cent of what it is entitled to.
NRAR has the power to enforce water laws in a severity-based system, with anything from a caution to a fine, or at worst, prosecution.
The council knows how much water it is taking from the Scott Road Drift Wells at any given time, it asked DPIE for the maximum amount of water it could buy but Mr Logan said it was not provided with the information.
Given councillors have ordered no more water will be pumped from the wells, the entire city's water supply will be taken from Chaffey and Dungowan Dams instead.
It means residents will face harsher 100L per person, per day restrictions sooner, as the dam falls closer to 10 per cent, Mr Logan said.
"We definitely thought that we could address this issue as it was unfolding, but it didn't turn out that way," he said.
"It's not an ideal situation to be in, but there is some mitigation and reasons why we did that. It's up to NRAR now to decide what action they take against us."
The council has also contacted Premier Gladys Berejiklian's office in an attempt to expedite the NRAR investigation to lessen the negative impact on Chaffey Dam while it cannot pump from the wells.
No water will be bought at the wells until June 30, when a revised allocation will be given on July 1 for the new water year.
There is no indication of how long the NRAR investigation into the breach will take.