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This is the second in a series of technical reports evaluating the economic and technical feasibility of wet systems for residential refuse collection. The major focus of this report is the economic and technical feasibility of sludge handling and disposal at wastewater treatment facilities modified to accept up to 0.5 percent by weight of ground residential refuse in their sewage influents. Using computer simulation techniques, the sensitivity of sludge handling and disposal operations to operating parameters and input conditions is examined. A substantial decrease in the unit cost of sludge handling (on a per ton of dry solids basis) over plants treating sewage alone can be expected, and suitable process chains include gravity thickening, vacuum filtration and either landfill or incineration. Energy recovery by way of anaerobic digestion is also considered.