The Niagara County Legislature voted in favour of asking New York's attorney general to investigate on Thursday.
The local water authority said the colour was caused by residue from black carbon filters used to clean the water.
The water authority says July's treatment process was necessary and the discharge within "permitted limits".
An inky and foul-smelling cloud of water appeared at the base of Niagara Falls on 29 July 2017.
Some initially suspected an oil spill, but the Niagara Falls Water Board (NFWB) said it was caused by a "routine" water treatment and apologised for causing alarm to residents and tourists.
In a statement the board said the "inky water" was the result of a "necessary and short term change in the waste water treatment process" at its plant near the city of Buffalo.
Officials say the plant had the correct paperwork to release the discharge - which came from one of its five sediment filtration basins and was being flushed out over the weekend in preparation for contractors to begin upgrade work.

Sevilla, winners of the tournament in 2014 and 2015, led early on through Vitolo's close-range strike.
Marlos equalised with a composed finish from 18 yards before Taras Stepanenko headed the Ukrainian side in front before half-time.
But Kevin Gameiro's late penalty earned the Spaniards a draw.
The French attacker showed no signs of nerves, converting confidently from the spot after Facundo Ferreyra fouled Vitolo just inside the area.
The result leaves Sevilla on course for a third consecutive Europa League success, with the two away goals making them firm favourites to advance to the final in Basel.
No team has won three consecutive European titles since Bayern Munich achieved the feat 40 years ago, and if Unai Emery's side progress from next Thursday's second leg in Spain, only Liverpool or Villarreal stand between them and a piece of history. The first leg of that tie ended 1-0 to Villarreal.
Sevilla have not won away from home all season in La Liga and have managed just one victory on their travels in this competition, so a draw in Lviv represents a fine achievement.
But their home form is excellent - they have won 14 of 18 league games at their Ramon Sanchez Pizjuan Stadium - meaning their bid to become the first team to win the Europa League three times in a row remains very much alive.

19 June 2017 Last updated at 08:45 BST
But what if your pooch doesn't understand what you're saying? Well, how about, if your dog understood a different language altogether?
Ricky has been finding out about one dog who was having some language issues.
The discharge of black smelly wastewater at the base of Niagara Falls has prompted calls for a criminal inquiry.
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Holders Sevilla came from behind to earn a draw against Shakhtar Donetsk in the first leg of their Europa League semi-final in Lviv.
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Fetch, sit and roll over - all the kinds of normal things that you would say to your dog.