A Judicial Review opens in the High Court on Thursday into the government's decision to withdraw £100m of private finance initiative credits for Cheshire's proposed household waste disposal scheme.
Mr Justice Longstaff, sitting in Manchester, will hear the case brought by Cheshire West & Chester and Cheshire East councils following meetings with Defra and advice from counsel.
Last June, both councils agreed on an affordability ceiling of £847m for the 25-year joint waste treatment contact, to dispose of around 180,000 tonnes of waste annually, under PFI.
But with both councils having finalised a lengthy procurement process at a cost of £4.5m, leading to the appointment of Viridor as the provisional preferred bidder, the Government pulled the plug on a key part of the promised funding.
The hearing is expected to last for two days, with a decision announced in the near future. London-based QC, Nigel Giffin, will appear for the Cheshire authorities.
Cllr Mike Jones, Conservative leader of Cheshire West & Chester, said: "We decided to take joint action because we believe that the methodology used by Defra to assess the merit of our scheme was seriously flawed.
"It is also our opinion that Defra's assessment process has under-estimated the benefits which would accrue from that scheme."