Settlement also requires $40 million in pipeline upgrades
The proposed decree, filed in U.S. district court in Kansas, resolves allegations from the Environmental Protection Agency and the state of Kansas that South Bow violated federal and state clean water laws. The spill occurred in December 2022 when a section of the pipeline ruptured, releasing heavy crude oil that spread across a rural pasture and into a creek.
“The oil spill blanketed land and water, rendering the waterway lifeless and useless and requiring extensive cleanup and remediation,” said Jeffrey Hall, the EPA’s assistant administrator for its enforcement office, in a statement. “The substantial penalty reflects the seriousness of the environmental harm.”
The total amount of oil spilled, approximately 13,000 barrels, would have nearly filled an Olympic-sized swimming pool, according to the Government Accountability Office. The accident was the largest onshore crude pipeline spill in the U.S. in nine years and surpassed all 22 previous spills on the same pipeline system combined, a 2021 GAO report found.
South Bow spokesperson Sara Hunter said in an emailed statement Sunday that the company “proactively” launched its spill response before receiving formal government directives, including “comprehensive environmental remediation” completed in February 2024. Since the spill, Hunter said, the company has conducted more than 12,000 miles of pipeline inspections and 400 excavations to examine pipe and make repairs.
“This work reflects our ongoing commitment to the safe, reliable operation of our pipeline system and to continuously strengthening pipeline integrity,” she said.
No pipeline workers or area residents were injured in the spill, and officials said public water supplies were not affected. However, a complaint filed Friday by the U.S. government along with the proposed settlement said more than 2,700 animals were harmed or killed. The area is home to an endangered species, the long-eared bat.
A May 2023 engineering report for the U.S. government found that a bend in the Keystone system where the spill occurred had been “overstressed” since its installation in December 2010 — likely because construction activity itself altered the land around the pipe. The complaint filed Friday said soil under the pipe had been “improperly compacted” and that while the company re-excavated the site in 2013, it did not replace that section of pipe.
The company that built the pipeline, TC Energy, spun off South Bow as a separate firm in 2024, after the Kansas cleanup was completed. The 2,689-mile Keystone system carries thick Canadian tar sands oil to refineries in Illinois, Oklahoma and Texas.
In April, President Donald Trump gave the go-ahead for South Bow and another company to build a second pipeline from Canada to Wyoming, a smaller version of the $8 billion Keystone XL project that the Biden administration had blocked in 2021 over environmental concerns.
The proposed settlement is subject to a 30-day public comment period and final approval by a federal judge.