PROVIDENCE — A federal judge imposed $18 million in penalties against the Southern Union gas company for illegally storing mercury in a rundown building where vandals stole containers of the hazardous waste and contaminated a nearby apartment complex in Pawtucket.

U.S. District Court Judge William E. Smith ordered the company to pay a $6-million fine for its mishandling of the highly toxic material, plus $12 million that would go toward various organizations that benefit environmental efforts in Pawtucket and throughout the state.

Calling the crime serious, Smith said he found the Texas-based company’s neglectful attitude toward managing the mercury — which allowed the heavy metal to be released into a densely populated community — “appalling.”

Assistant U.S. Attorney Terrence P. Donnelly praised Smith’s decision as well thought-out and said it would go a long way in deterring other companies from hiding “dangerous waste behind closed doors.”

“We want companies to comply with environmental law,” Donnelly said.

The company, which sold its Rhode Island holdings to National Grid in 2006, promised a challenge. “We disagree with the court’s ruling and intend to appeal,” Southern Union spokesman Jonathan Gasthalter said.

It was the second blow to Southern Union in a matter of months. About 100 Tiverton residents in August won an $11.5-million settlement after suing the company for contaminating their neighborhood with cyanide, lead, arsenic and other probable carcinogens.

In the Pawtucket case, prosecutors say a group of young vandals in September 2004 broke into a building at 91 Tidewater St. where the company had been storing mercury as part of its program to remove obsolete gas regulators from residences.

The company had been disassembling the regulators at the site and shipping the mercury, a highly toxic metal that affects the central nervous system, to Pennsylvania for recycling. The program ended after less than a year, but employees continued to bring regulators to the property, storing them in plastic kiddie pools, an old paint can and a gallon milk jug.

Vandals found the liquid mercury in a locked cabinet in one of the vacant buildings. They smashed jars on the property and dumped a container on a floor of the nearby Lawn Terrace Apartments.

The spill at Tidewater facility was discovered three weeks later by a company official. The police discovered the spill at the apartment complex days later, and 150 residents were evacuated for two months as the company cleaned the building.

Southern Union was charged with illegally storing liquid mercury without a permit, illegally storing mercury-containing gas regulators, and failing to notify local authorities when it discovered the on-site spill.

Last October, a jury found the company guilty of one count of illegally storing a hazardous waste, but acquitted it of two other charges.

Southern Union faced a maximum fine of $38.1 million — or $500,000 for each day the mercury was stored without a permit.

The company’s lawyer, John A. Tarantino, asked for leniency, noting that it had already paid $6.6 million to clean the site, including providing temporary housing and new clothes and furniture for the residents.

“The company absolutely regrets that it stands before you,” Tarantino said.

About 90 residents recently settled a civil lawsuit over the spill for undisclosed terms.

Donnelly asked that Southern Union be fined more than $20 million and be placed on probation for four years. Without a sizeable fine, he said, the company, which doles out millions in bonuses, will “just laugh its way out of the courtroom.”

Smith said he factored in deterrence and a desire to protect the community into the sentencing, noting “who knows how many other dangerous sites” people pass by unknowingly every day.

He placed the company on two years’ probation, during which it must prove it has an environmental-compliance program and perform an environmental audit.

In addition to imposing a $6-million fine, Smith ordered that the company create an $11-million endowed fund at the Rhode Island Foundation that would dispense grants for environmental education, remediation and programs that look at childhood exposure to toxins.

Another $1 million would be divided equally among the Rhode Island chapter of the American Red Cross, the state Department of Environmental Management’s hazardous waste program, Hasbro Children’s Hospital, a fund to develop recreation projects in Pawtucket, and the Pawtucket Fire Department for equipment to handle toxic spills.

Smith explained that the sentence aimed to “pay it forward” for the damage that was done in the community. He agreed to stay the sentence, pending Southern Union’s appeal. He ordered that the penalties not be passed on to consumers.

Southern Union’s Web site says it is one of the nation’s leading diversified natural-gas companies and owns and operates one of the nation’s largest natural-gas pipeline systems, with more than 20,000 miles of pipeline.

kmulvane@projo.com