One of the biggest users of the toxic waste dump on the edge of this small town was Joseph Coors, the Colorado brewery and mining magnate who is a friend of President Reagan.

The dump was managed for its last two years by the largest and richest waste-disposal firm in the country. Its lawyer had a pipeline to the top of the Environmental Protection Agency, nationwide watchdog of toxic waste dumps.

But, despite its powerful patrons, the Lowry Landfill is idle today, an expanse of prairie pockmarked by pits of chemical waste.

Lowry is an example of the industrial waste landfills of the past, a reeking legacy of the not-so-distant period when business, the government and the public paid little attention to the dangers of the chemical leftovers of an ever-advancing industrial society. Chemicals dumped at Lowry throughout the 1970s have poisoned underground water formations, threatening the drinking water of the Denver area.

Lowry is also a study in the persistence of landfill problems despite new laws and technologies intended to solve them. Lowry, a known health hazard for a decade, was brought down not by federal regulators but by terrified neighbors who organized so much opposition that business leaders decided they could no longer afford to be associated with it.

The powerful Colorado Association of Commerce and Industry, largest industry group in the region, announced last month that almost all of its members would boycott Lowry even if Chemical Waste Management Inc., the company that took it over in 1980 with a promise to end the problems, manages to get it reopened.

"We made a great effort to improve the quality of disposal in the Denver area, and we did in fact improve it," said Don Reddicliffe, spokesman for Waste Management Inc. in Oakbrook, Ill., the parent company of Chemical Waste. "Obviously it didn't turn out as we hoped."

The farmers who live beside the Lowry dump, just over a sloping hill that hides it from view, said they believed until recently it was a regular city landfill. They said no one told them that Denver authorities were taking in more than 15 million gallons a year of industrial wastes believed to cause health problems from headaches to cancer, pouring them into unlined trenches atop heaps of household garbage.

"The theory back then was that garbage would soak up liquid waste like a sponge and it wouldn't move," said Ken Waesche, then a Colorado Health Department geologist. "But they failed to follow through the analogy of the sponge, which is that it gets saturated. It's really unbelievable when you look back on it. There's no way a paper bag was going to soak up organic chemicals."

The farmers said huge fires raged at the site, sending foul-smelling smoke across their land. The air had an "oily feel," they said, sometimes smelling like rotten cabbage, sometimes like a gas leak. They complained of nosebleeds and asthma, of migraine headaches and other health problems.

By 1976 state health officials had documented extensive chemical poisoning--benzene, toluene, nitrate, trichloroethane and more--of water formations beneath the dump. They wrote worried letters to Denver authorities, warning that the geology at Lowry was dangerously unstable. Chemicals could pass easily through the soil, and the drinking water supply of the Denver area could be jeopardized, the officials warned.

Still, the dumping continued. State officials said they had no power to stop it, and federal regulations on hazardous waste dumps were barely on the drawing board. City and business officials now say they were unaware of dangers.

"Like so many things, waste disposal being in its infancy, we just didn't realize how much damage could be done," said an official of Hewlett-Packard, a major user of the Lowry dump site and one of the first companies to speak out against it. "We look back now and wonder how we could do as much damage as we did. It was basically just not knowing any better."

Change finally came in 1980, when new federal laws and rules forced Denver to upgrade Lowry or close it. By then, the dump was considered essential to the region's economy, used extensively by such major companies as the Coors brewery, mining, manufacturing and chemical firms and the booming energy industry.

Denver turned to Chemical Waste, a subsidiary of Waste Management Inc., the largest waste disposal firm in the world, and it seemed to have the answers.

Executives of the firm flew to Denver and gave local officials and business leaders a slide show on their celebrated facility in Emelle, Ala., the world's largest toxic waste disposal site, and displayed their impressive balance sheet showing working capital of more than $100 million. They promised to convert the archaic Lowry Landfill into a "state-of-the-art" dump.

Within months, officials of Denver and Chemical Waste had signed a contract. The old toxic waste dump was closed. In its place, Chemical Waste dug a new, clay-lined pit the size of a football field to be used for burying drums of hazardous wastes. Evaporation ponds were built nearby and a solidification plant was in the planning stages to take care of the problem of liquid toxic wastes.

"We really believed government and industry could solve the problem," Waesche said. "In retrospect we were shortsighted. We saw it as an improvement over the past. We failed to see what we needed for the future."

But problems began almost immediately. Chemical Waste dug its burial pit in what state geologists said was a natural drainage basin that dipped below the water table, increasing the threat of contamination of underground water and setting off the first of many confrontations with state authorities.

"The state did not have the authority to tell us where to put it," Reddicliffe said, acknowledging that the company initially told state regulators the pit would be located on higher ground. Environmental Protection Agency officials said they had no jurisdiction under federal rules at the time.

But the pit's problems increased. In early 1982, Chemical Waste buried 1,500 drums of flammable solvents there, according to state and federal officials, taking advantage of an EPA decision to lift a nationwide ban on the burial of liquid toxic wastes.

The ban was reimposed less than a month later after a public uproar, with scientists and industry leaders condemning the change as a health threat because liquids are more likely than solids to eat through drums and leak into water supplies.

Several months later, in May, 1982, state and federal inspectors discovered several feet of standing water in the pit, with some barrels submerged under two to three feet of water, according to their inspection report. The water increased the threat of corrosion and leaks, and Colorado and EPA jointly ordered Chemical Waste to shut the burial pit until it was pumped dry.

In July, the state supreme court ordered a complete shutdown of Chemical Waste's facilities, finding them in violation of the state solid waste act, which requires local county commissions to approve dumping operations. Chemical Waste agreed, but vowed to obtain county approval and reopen.

This might have been possible, several officials said, had it not been for a feisty group of farmers and suburbanites who call themselves the Citizens Against Lowry Landfill. About 70,000 people had moved to the Lowry area, 15 miles east of Denver, since the mid-1970s, and, like the farmers, the newcomers said no one bothered to tell them about the toxic waste dumping down the road.

"We'd been so victimized for so long," said Bonnie Exner, who lives two miles from Lowry and works as a waitress in a nearby Veterans of Foreign Wars post. "We'd had nights where we had to jump out of the bed to catch our breath because the fumes got so bad. They always told us there was nothing wrong. Well, finally we had something we could do. We could shut down that dump."

The group became schooled in the lingo of toxic waste dumps, badgering state and federal officials for detailed data on Lowry's geology, hydrology and other technical matters. They held meetings, lobbied local officials, hired a lawyer and learned to use the press, leaking news stories about problems at the site just as national concern about toxic waste was peaking.

Last September, a state inspector discovered that Chemical Waste had kept two sets of books on an apparent leak in one of the evaporation ponds, never showing state or federal inspectors the log that documented the problem. The double books became front-page news across the state.

Chemical Waste contended that there was not a leak and that 18,000 gallons of liquid found beneath the pond were from rainwater trapped there during construction.

But an EPA inspector who toured the site called this explanation "ridiculous," and the agency filed a civil action under the federal hazardous waste law seeking $48,500 in fines. Chemical Waste has contested the action, but by then the dump had become ensnared in the national controversy over the ties of EPA officials to firms they regulate.

Chemical Waste is represented here by James W. Sanderson, who worked part time as a consultant to then-EPA Administrator Anne M. Burford, and is now under FBI investigation for continuing to represent Chemical Waste while working at the agency that regulates it.

The EPA regional administrator, Steven J. Durham, is a political ally of Sanderson. Durham and Burford, as state legislators, belonged to a conservative caucus whose members received campaign contributions from Coors.

Congressional investigators are looking into whether the EPA was lax on Chemical Waste, particularly whether the firm had advance notice of the lifting of the liquid dumping ban. Durham and company officials said there were no improprieties, but business leaders appear to have run out of patience.

"The more allegations you hear and the closer these god-awful connections appear to be, that's reason enough to get out of any possible association," said an official of a chemical firm that was once among the biggest users of Lowry Landfill.

"We have our credibility to worry about as Colorado citizens. Not to mention our liability under federal hazardous waste laws if there is any contamination. The Citizens Against Lowry Landfill have done a service in educating a lot of people. Industry is hearing what they're saying and they're not ignoring them any longer."

Now, industries throughout the Rockies have begun "Lowry-proofing" their facilities, treating or recycling their own wastes rather than paying to send them out of state. The Colorado Association of Commerce and Industry, largest industry group in the region, announced last month that virtually all of its members will refuse to use Lowry even if it reopens.

At the time of the announcement, Chemical Waste was lobbying the Colorado Legislature for passage of a bill--drafted by Sanderson's law firm--that would have reopened Lowry by legislative fiat, overriding the state supreme court and the local county commission. Now, Colorado politicians say the bill's chances are bleak.

Many business leaders said they fear that the Lowry controversy has doomed their chances of winning approval for a hazardous waste dump anywhere in Colorado. But for now, most have thrown their support to a Chemical Waste competitor, Browning Ferris Industries, which proposes to build a new dump about 70 miles from Denver.

The name of the town: Last Chance.