Keystone Pipeline operator to pay $26.9 million over Kansas spill

South Bow, the owner and operator of the Keystone Pipeline system, agreed to pay more than $26.8 million in civil penalties and carry out about $40 million in spill-prevention work after the 2022 rupture in Washington County, Kansas. The settlement also calls for more than $3 million in payments to Kansas for natural resource restoration projects.

The rupture sent nearly 13,000 barrels of crude oil, about 543,000 gallons, into Mill Creek. Federal officials called the spill one of the largest inland oil spills in recent history and the largest discharge ever from the Keystone system.

The leak happened on Dec. 7, 2022, when a ruptured section of pipe released oil over land and into the creek in rural Washington County, about 150 miles northwest of Kansas City. The pipeline carries Canadian crude from Alberta to the U.S. Midwest and Gulf Coast. The release was the biggest U.S. oil spill in nine years, and a 2021 Government Accountability Office report said it exceeded all 22 previous spills on the same pipeline system combined.

The Environmental Protection Agency said the rupture created an imminent and substantial threat to human health and the environment, and the Justice Department said the settlement is intended to resolve alleged violations of the Clean Water Act and Kansas state clean water laws. The complaint alleges years of undetected stress on the pipeline. The failure was traced to a crack in a weld that worsened under pressure and temperature fatigue.

South Bow said it had already begun cleanup before receiving directives from U.S. officials, and the cleanup was finished in early 2024. The company was spun off from TC Energy in 2024, after the Kansas response was complete. The settlement still has to clear a 30-day public comment period and win final court approval before it becomes final.