''The payment of damages in and of itself can create a stigma and adverse perception of property value,'' Mr. Stanton said, ''and that can trigger additional claims by additional people who were in proximity to the original claims. That is the danger: what other towns are hiring attorneys?''

Sprawled along the Ohio River, the Gen. James M. Gavin Power Plant has two of the world's largest coal-fired generating units. Each is big enough to contain the Statue of Liberty. The plant burns 25,000 tons of coal a day, enough to power 2.6 million homes. It was built in 1974 and had major renovations in the mid-1990's. For $616 million, the company installed scrubbers to reduce carbon dioxide and replaced the single 1,100-foot-high stack with two 830-foot stacks. With these changes, the plant could still burn its high-sulfur coal, which is dirtier but cheaper than low-sulfur coal, but it also meant that emissions fell closer to home.

''The scrubbers meant no more acid rain,'' Mr. Hemlepp said, adding that the Gavin plant was now one of the cleanest-burning coal plants in the country. ''It was applauded in the Northeast. It was a great success story. But unfortunately the people next door have to move.''

Last year, the plant undertook another renovation, installing a $195 million system to reduce the nitrogen oxide emissions. That is when the blue plume made its debut.

An analysis of the plant's emissions published in January by the Agency for Toxic Substances and Disease Registry, a division of the federal Centers for Disease Control and Prevention, found that the levels of sulfur dioxide and sulfuric acid in the town ''pose a public health hazard to some residents, particularly residents with asthma.'' While the levels were not life-threatening, the report said, they were high enough to cause breathing problems and ''adverse effects on the lungs.''

Mr. Hemlepp said those problems had been fixed and the emissions were well within federal limits.

In any case, before the town and company agreed to the buyout, federal regulators had threatened to force the plant to burn low-sulfur coal. But in an agreement reached last week, the regulators dropped that very costly requirement and essentially withdrew from the scene, leaving the plant to monitor its emissions itself. The plant said it would keep some low-sulfur coal on hand to burn if the blue plume reappeared.

Mr. Hemlepp said the company still had a strong incentive to fix its antipollution controls. ''We've already spent the money on it,'' he said. ''And since we have other plants that may end up with the same combination of technologies, it's important for us to get the fix.''