Prescott seeks new review of Pure Wafer ruling

PRESCOTT — A 4-year-old lawsuit that pitted a local silicon-wafer reclamation company against the City of Prescott could be headed back to the 9th Circuit Court of Appeals.

The Prescott City Council unanimously agreed last week to file a petition for an “en banc” review (rehearing) of a recent ruling by the 9th Circuit in the Pure Wafer v. City of Prescott lawsuit. (The item was on the council’s “consent agenda” of routine items, which was approved by a single vote).

A city memo explained that the Court of Appeals recently ruled in favor of the city in the lawsuit’s contract clause matter, but in a two-judge majority, ruled against the city on a breach-of-contract matter.

The case involves a lawsuit filed against the city by the Pure Wafer company over pre-treatment standards for wastewater from the Pure Wafer plant.

Pure Wafer, which is located near the Prescott Airport, sued the city in 2013 over a difference of interpretation of a 1997 development agreement between the company and the city.

Earlier in 2013, the city had approved a consent order from the Arizona Department of Environmental Quality, agreeing to deal with the high levels of fluoride that had been detected in Prescott’s treated sewage. The city attributed the problem to Pure Wafer, which uses hydrofluoric acid to scrub wafers for recycling.

At about the same time, the city also approved an ordinance imposing a wastewater pre-treatment program that requires stricter standards on wastewater emissions.

Pure Wafer’s lawsuit sought an injunction against the pre-treatment ordinance, maintaining that the design and construction of the improvements required under the new rules would cost $1 million or more, and that the cost of operating the new facilities would exceed $325,000 per year.

Pure Wafer has maintained that although the company fulfilled its side of the original development agreement, the city balked when it came time to make the needed infrastructure improvements to deal with the wastewater.

In April 2014, U.S. Senior District Court Judge James Teilborg granted a permanent injunction against the city. The city later appealed the decision to the 9th Circuit.

Based on the issues raised by the dissenting 9th Circuit judge in the breach of contract matter, the city’s legal department recommended and en banc review, which would involve a rehearing.

City Attorney Jon Paladini said the en banc petition was filed by the city’s contract legal firm Dickinson Wright last week. He maintained that the city is asking to be allowed to enforce its pre-treatment ordinance.

A city memo stated that the en banc petition would cost about $25,000 to $35,000, which will come from the city’s wastewater treatment fund.

A decision on the en banc review petition could be months away, Paladini said.