The Attorney General has told the Parades Commission that it has no legal powers to prevent bands from marching on The Twelfth.
A letter, seen by the Belfast Telegraph, was sent to the watchdog from the Attorney General's Office earlier this month.
It states that the coronavirus health regulations do not "ban parades of any nature" and as such, the Commission has "no enforcement powers".
The intervention by John Larkin QC comes as Coleraine's Pride of the Bann Flute Band said it is proceeding with a planned march on July 13 after it was informed by the body that it couldn't proceed due to the lockdown regulations.
The band's application said that two bands and 80 participants would be involved.
As July 12 falls on a Sunday this year, the main parades were originally scheduled to take place on the Monday.
Loyalist blogger and activist Jamie Bryson wrote to the commission on behalf of a number of bands who had been ordered to withdraw their applications or have yet to receive a response from the body.
Last week it was reported that Dervock Flute Band had contacted the commission, insisting that the body cannot legally order it to withdraw its application, claiming it must instead issue a determination.
The letter from Mr Larkin acknowledged the Orange Order has voluntarily cancelled the main parades due to the pandemic.
However, he said it is only the Secretary of State who has power to ban parades under the Public Processions Act 1998.
Addressing Dervock specifically, Mr Larkin urged the commission to review its decision to reject the band's notification, adding that neither the coronavirus regulations nor the Executive's recovery ban provide any basis for its decision not to process the application.
"No enforcement powers are conferred on the commission by the regulations," the letter stated.
On Monday, the Executive announced gatherings of up to 30 people will be allowed here under the latest plans to ease the coronavirus lockdown.
Regulations will be laid before the Assembly on Monday.
Currently the limit is 10 and at the time when the letter was written legislation stipulated only gatherings of up to six people were lawful.
"A larger parade would, in all likelihood, fall foul of the regulations - and may well attract enforcement action by the PSNI - but the Commission can only exercise the powers that it has," the letter stated.
"It would, for example, be open to the Commission to impose a condition as to numbers, but not, as noted above to reject the notification."
The letter added: "The Attorney would therefore invite the Commission to review its decision to reject the notification given by Dervock Young Defenders for a parade on 13 July 2020 without delay."
In response, the Parades Commission said: "Under Health Protection (Coronavirus, Restrictions) Regulations (Northern Ireland) 2020, parades are not permitted at this stage.
"In addition, gatherings are also restricted (under Regulation 6).
"The Commission has received notifications for parades on the 11th-13th July, with the majority of organisers subsequently withdrawing their notifications.
"However, a number of organisers of band parades have not agreed to withdraw their notifications.
"They have been informed that their notifications have not been processed, with information copied to the PSNI."
The commission added: "All organisers have been advised to submit new notifications when the regulations are updated, which will provide a clearer understanding of what public health restrictions may apply."