PROVIDENCE — A limited cleanup of toxic soil on 50 acres in North Tiverton is expected to begin in September and wind up by the end of the year, according to the state Department of Environmental Management.

The remediation will mark an end to a major legal battle triggered by sewer workers’ discovery of streaks of cobalt blue, a marker of cyanide, as they dug under Bay Street in August 2002.

The case, settled in U.S. District Court in May, also inspired legislation signed by Governor Carcieri on Tuesday that raises maximum fines against corporate polluters, from $1,000 a day to $25,000.

The defendant in the federal court case, the Texas-based utility Southern Union, has agreed to pay a total of $9 million in damages to some 100 affected property owners and an additional $3 million for the actual cleanup.

Environmental consultants for the residents have filed notice with the DEM of their intention to remove toxic soil in the area to a depth of 2 feet and seal off contaminants that remain in the ground below that level.

Property owners have agreed to land-use restrictions to prevent disturbance of contaminated soil that is not removed.

More than 2,000 soil samples have been collected from 1,000 borings and 75 test pits in the Bay Street neighborhood, according to the consultants, EnviroLogic of Londonderry, N.H.

Cleanup crews will excavate soil where tests have detected lead, arsenic, cyanide, and polycyclic aromatic hydrocarbons, a collection of more than a dozen toxic compounds which result from the incomplete burning of coal, wood, oil, or other organic material.

The culprit in the contamination is waste from the burning of coal to generate gas, which the consultants said is “the primary route of exposure and risk to human health.”

The wastes came from residue cleaned out periodically from ovens at the former Fall River Gas Co. and dumped in North Tiverton as fill decades ago.

In 2003, the DEM identified Southern Union as the party responsible for cleaning up the contamination. In 2000, Southern Union bought New England Gas Co., of which Fall River Gas was a subsidiary.

But an administrative enforcement action aimed at getting Southern Union to follow through became buried in an avalanche of legal pleadings by nearly two dozen lawyers representing the utility.

At one point, Southern Union sued the DEM in Superior Court, claiming the agency didn’t understand its own regulations and had no authority to enforce them. But a judge threw the case back to the agency’s administrative adjudication division.

In the meantime, fines accrued against Southern Union at the rate of $1,000 a day under provisions of a law that officials said was out of sync with other enforcement measures that set maximum penalties for recalcitrant polluters at $25,000 daily.

For three years, Southern Union paid powerful lobbyists to oppose a hike in fines under terms of the Industrial Property Remediation and Reuse Act, although DEM officials gave assurances that the change would never apply retroactively to the North Tiverton case.

Once the federal lawsuit was settled, in May, with the DEM agreeing to hold Southern Union harmless, opposition to the environmental legislation disappeared.

Companion bills sponsored by Sen. Walter S. Felag Jr., D-Warren, , and Rep. John G. Edwards, D- Tiverton, cleared the General Assembly during the last two weeks of the 2009 session and Governor Carcieri signed them both into law on Tuesday.

In the end, the heavy lifting in the case was done by the working-class residents of Tiverton’s Bay Street neighborhood and their lawyers, who bankrolled the lawsuit in U.S. District Court that led to a mediated settlement.

Various terms of the settlement have become public knowledge, but the agreement itself has not been put on the record while lawyers secure the individual approval of all 100 plaintiffs, or the estates of affected property owners who have died since the suit was filed in 2005.

Robert J. McConnell, of Motley Rice, one of the lead lawyers for the plaintiffs, would say only that “things are progressing in a positive fashion.”

The settlement agreement has been signed by lawyers for the plaintiffs, the Town of Tiverton, the DEM and Southern Union, according to DEM Director W. Michael Sullivan.

gmacris@projo.com