Construction of the process research unit (PRU) was completed. Installation of the high-pressure boiler for the PRU was essentially completed, except for a few pieces of equipment. During boiler shake down tests, steam condensation shorted out the level probes causing the boiler to shut down. Several methods of remedying the problem were being investigated. During pressure testing of the PRU, several leaks were found. After they were repaired, the PRU was pressure tested successfully to over 2000 psig. Both the feed and discharge conveyors were calibrated with lump-size North Dakota Indianhead lignite. Calibration of instruments and testing of controls were initiated. The results of thermophilic batch anaerobic biogasification potential assays with filtered wet-carbonization product water showed a methane yield of 4.2 SCF/lb COD (chemical oxygen demand) added. This methane yield was achieved with an inoculum from an existing digester being fed product water from wet carbonization of peat. Bench-scale tests were continued in complete mixed, upflow, and attached-film digesters to evaluate performance and to determine the best reactor configuration for treating the product water. A new expanded-bed digester was installed.