Cheshire's unitary councils are to seek a judicial review against the Government's decision to withdraw £100m of PFI credit for the scheme to handle Cheshire's household waste.
Cheshire West & Chester and Cheshire East Councils said the decision followed advice from leading counsel and meetings with Defra. The councils will next week apply to the High Court for permission to issue judicial review proceedings.
Viridor is the preferred developer for the 25-year, £850m PFI and a mechanical and biological treatment plant at the former Ineos chemical works at Griffiths Road, Northwich.
To date the two councils have spent over £4.5m on the procurement process, inherited from Cheshire County Council, which led to the appointment of Viridor.
Cllr Mike Jones, leader of Cheshire West & Chester, said: "We have decided to take this joint action because we believe that the methodology used by Defra to assess the merit of our scheme was seriously flawed.
"Also, it is our opinion that the assessment process has under-estimated the benefits which would accrue from that scheme.
"We recognise the very real need for Government to make cuts to put this country back on a firm financial footing.
"However, a considerable amount of public money has been spent on a four-year process and I believe we have a duty to our council taxpayers pursue this issue with Defra."
Cheshire East leader, Cllr Wesley Fitzgerald, said: "Both councils believed that there was Government support for this scheme right up to the announcement that PFI credits were being withdrawn.
"Not only has much time, effort and money been wasted believing that we were approaching this issue in a manner which had government approval but this decision would take us back to square one.
"We are still in the position of having to find a sustainable method of disposing of Cheshire's household waste over the next 25 years."