A yearlong legal battle by Lorton area residents to stop Fairfax County from building a $200 million incinerator near their homes ended yesterday when the Supreme Court let stand an appeals court ruling permitting the project to go forward.

The high court declined to hear an appeal by the Federation of Lorton Communities to overturn a decision by the 4th U.S. Circuit Court of Appeals in July saying that the District of Columbia government, which owns the site, has the right to use its property any way it sees fit.

The 23-acre incinerator site is part of the 3,000-acre Lorton Reservation that houses the District's main prison, Lorton Reformatory. Fairfax County is leasing the incinerator parcel from the city.

A county official said yesterday that the sale of bonds to finance the incinerator is set for December and that construction, which will take about 33 months, should begin early next year.

The incinerator will serve Arlington and Alexandria as well as Fairfax County and will be the largest in the area. Steam-generated electricity from the facility will be sold to Virginia Power.

Lorton area residents charged that fumes from the incinerator would be a health hazard, but state pollution control officials rejected these charges.