Keystone pipeline operator agrees to pay $26.9m penalty over Kansas oil spill

Proposed legal settlement over 2022 oil spill would resolve allegations that South Bow violated clean water laws

A proposed legal settlement with the US government would require the Keystone pipeline system’s operator to pay a $26.9m civil penalty over a large oil spill in Kansas in December 2022 and spend about $40m more to prevent future accidents.

The agreement would resolve allegations from the US Environmental Protection Agency (EPA) and Kansas that South Bow, based in Canada, violated US and state clean water laws. The rupture dumped nearly 13,000 barrels of heavy crude oil into a creek running through a rural pasture in Washington county, Kansas, about 150 miles (241km) north-west of Kansas City.

The accident was the largest onshore crude pipeline spill in the US in nine years and surpassed all 22 previous ones on the same pipeline system combined, according to a 2021 report from the US Government Accountability Office. The total amount of oil spilled would have nearly filled an Olympic-sized swimming pool.

South Bow also would pay Kansas more than $3m for environmental restoration projects under a proposed decree filed on Friday in US district court in Kansas. A judge would have to approve the proposed decree after a 30-day public comment period.

“The oil spill blanketed land and water, rendering the waterway lifeless and useless and requiring extensive cleanup and remediation,” said a statement from Jeffrey Hall, the EPA’s assistant administrator for its enforcement office. “The substantial penalty reflects the seriousness of the environmental harm.”

A South Bow spokesperson, Sara Hunter, said in an emailed statement on Sunday that the company “proactively” launched its response to the spill before receiving formal directives from government officials, including “comprehensive environmental remediation” completed in February 2024. She also said that since the spill, the company had done more than 12,000 miles (19,312km) of pipeline inspections and 400 excavations to examine pipe and make repairs where necessary.

“This work reflects our ongoing commitment to the safe, reliable operation of our pipeline system and to continuously strengthening pipeline integrity,” she said.

The company that built the pipeline, TC Energy, spun off South Bow as a separate firm in 2024, after the Kansas cleanup was done.

No pipeline workers or area residents were injured in the spill, and officials said public water supplies were not affected. However, a complaint filed on Friday by the US 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.

In a May 2023 report for the US government, an engineering consulting firm said that a bend in the Keystone system where the spill occurred had been “overstressed” since its installation in December 2010 – probably because construction activity itself altered the land around the pipe. The complaint filed on Friday in court 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 2,689-mile (4,327km) Keystone system carries thick, Canadian tar sands oil to refineries in Illinois, Oklahoma and Texas.

In April, Donald Trump gave the go-ahead for South Bow and another company to build a second pipeline from Canada to Wyoming. That second pipeline aimed to be a smaller version of a large $8bn pipeline project known as Keystone XL that had previously been blocked by former president Joe Biden’s administration in 2021 over environmental concerns.