The project objective is to design, construct, install provide operator training and start-up a circulating fluidized bed combustion system at the Lebanon Pennsylvania Veteran`s Affairs Medical Center. This unit will co-fire coal and hospital waste providing lower cost steam for heating and possibly cooling (absorption chiller) and operation of a steam turbine-generator for limited power generation while providing efficient destruction of both general and infectious hospital waste. The steam generated is as follows: steam = 20,000 lb/hr; temperature = 353 F (saturated,3124 ); pressure = 125 psig; and steam quality = {approximately}98.5%. During this reporting period: structural corrections have been made to make the facility meet the required building costs; and refractory bakeout was successfully completed during April 23-25, 1996 over a 54 -hour period. Operating permits will be obtained after construction has been completed.