The city of Prescott violated its contract with a silicon wafer reclamation service by declaring it would no longer accept fluoride-laden wastewater from the plant, a federal appeals court held Tuesday.
The 9th U.S. Circuit Court of Appeals said that while Prescott did not violate the U.S. Constitution as the company asserted, it did impair the contract with Pure Water Inc. by enacting an ordinance that imposed limits on fluoride concentrations, then refused to accept wastewater to its sewage treatment plant.
The vote on the contract impairment claim was 2-1.
Pure Water operates a 36,000-square-foot facility 24-hours a day and generates up to 195,000 gallons of wastewater daily. The company signed a contract with the city in 1997 and the city agreed to provide sewage infrastructure for the firm’s reclamation of silicon wafers used to build microprocessors and computer chips for IBM, Intel and Motorola.
The company polishes the wafers in a process that removes oxide nitrites on wafers that range from a few inches to one-foot in diameter. The city’s wastewater, once treated, is used either on golf courses or into basins to replenish the city’s aquifer.
In 2013, the city passed a law that limits pollutants that industrial users are permitted to discharge in the city’s sewer system. The city found it expensive to clean water to meet water purification levels to meet fluoride limits.
Pure Water challenged the law change as a violation of the Constitution’s contracts clause and a violation of its own contract.
Judge Diarmuid O’Scannlain, joined by Judge Richard Clifton, found that Pure Water had the ability to pursue claims of breach of contract, but that the law did not violate the Constitution. It went on to hold that the city action had impaired the contract with Pure Water, although the dissent said that issue should be sent back to the trial judge.
The panel did order the case back to the trial court to decide what the appropriate remedy is for Pure Water. Judge N. Randy Smith dissented in part.
Case: Pure Water v. Prescott, No. 14-15940