Settlement terms

  • South Bow, the Canadian operator of the Keystone pipeline system, agreed to pay a $26.9 million civil penalty and invest $40 million in safety upgrades to resolve Clean Water Act violations stemming from a 2022 oil spill in Kansas.
  • The December 2022 rupture released nearly 13,000 barrels of heavy crude into a creek in Washington County, making it the largest onshore crude pipeline spill in the U.S. in nine years, according to a Government Accountability Office report.
  • A federal complaint alleges more than 2,700 animals were harmed or killed, and that a section of the pipeline had been “overstressed” since its 2010 installation due to improperly compacted soil.
  • The proposed settlement, filed Friday in U.S. District Court, requires judicial approval after a 30-day public comment period; South Bow also agreed to pay Kansas over $3 million for environmental restoration projects.

Company also commits $40m for safety improvements

The proposed legal settlement, filed Friday in U.S. District Court in Kansas, would require South Bow to pay a $26.9 million civil penalty and spend about $40 million on additional measures to prevent future accidents. The agreement resolves allegations from the U.S. Environmental Protection Agency and the state of Kansas that the company violated the Clean Water Act and state water laws during the spill, according to court documents.

The rupture occurred in December 2022 when a section of the Keystone pipeline in Washington County, about 150 miles northwest of Kansas City, failed and released nearly 13,000 barrels of thick Canadian crude oil into a nearby creek. The spill spread across pastureland and waterways, forcing a large-scale cleanup that was completed in February 2024, according to South Bow.

In a statement, EPA Assistant Administrator Jeffrey Hall said the spill “blanketed land and water, rendering the waterway lifeless and useless and requiring extensive cleanup and remediation.” He added, “The substantial penalty reflects the seriousness of the environmental harm.”

U.S. government lawyers filed a formal complaint alongside the proposed decree, alleging that more than 2,700 animals were harmed or killed. The area is home to an endangered species, the long-eared bat, according to the complaint. No pipeline workers or area residents were injured, and officials said public water supplies were not affected.

An engineering report commissioned by the government in May 2023 found that a bend in the pipeline where the spill occurred had been “overstressed” since its installation in December 2010, likely because construction activity altered the surrounding soil. The complaint filed Friday said soil beneath the pipe had been “improperly compacted” and that the company re-excavated the site in 2013 but did not replace the damaged section of pipe.

South Bow spokesperson Sara Hunter said in an emailed statement that the company “proactively” launched its spill response before receiving formal directives from regulators. She said that since the spill, South Bow has conducted more than 12,000 miles of pipeline inspections and completed 400 excavations to examine pipe and make necessary repairs. “This work reflects our ongoing commitment to the safe, reliable operation of our pipeline system and to continuously strengthening pipeline integrity,” Hunter said.

The company that originally 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 Canadian tar sands oil to refineries in Illinois, Oklahoma and Texas. In April, President Donald Trump gave South Bow and another company approval to build a second pipeline from Canada to Wyoming — a smaller version of the $8 billion Keystone XL project that the Biden administration blocked in 2021 over environmental concerns.

The settlement is subject to a 30-day public comment period and final approval by a federal judge.