South Bow, the Canada-based operator of the Keystone pipeline system, faces a proposed $26.9 million civil penalty following a massive oil spill in Kansas in December 2022.
The settlement with the US government also requires the company to spend approximately $40 million on preventive measures to avoid future accidents.
The agreement resolves allegations from the US Environmental Protection Agency (EPA) and Kansas state officials regarding violations of federal and state clean water laws.
Largest Onshore Spill in Nine Years
The pipeline rupture discharged nearly 13,000 barrels of heavy crude oil into a rural pasture creek in Washington County, about 150 miles northwest of Kansas City.
According to a 2021 report by the US Government Accountability Office, this incident is the largest onshore crude pipeline spill in the United States in nine years.
The volume surpassed all 22 previous accidents combined on the same pipeline system, nearly filling an Olympic-sized swimming pool.
Under the proposed decree filed in the US District Court in Kansas, South Bow will also pay the state more than $3 million for environmental restoration initiatives.
The decree awaits approval from a federal judge after a mandatory 30-day public comment period.
EPA Assistant Administrator Jeffrey Hall stated that the spill blanketed land and water, rendering the waterway lifeless and requiring extensive cleanup.
South Bow spokesperson Sara Hunter said the company proactively initiated its response before receiving formal government directives and completed comprehensive environmental remediation in February 2024.
Hunter noted that the operator has since conducted over 12,000 miles of pipeline inspections and 400 excavations to examine pipes and implement necessary repairs.
TC Energy, the original builder, spun off South Bow as an independent firm in 2024 after the Kansas cleanup.
Government officials confirmed that public water supplies remained unaffected, and no workers or residents suffered injuries.
A formal complaint revealed that more than 2,700 animals were harmed or killed in the habitat of the endangered long-eared bat.
An engineering report from May 2023 indicated that a specific bend in the Keystone system had been overstressed since its December 2010 installation due to construction land alterations.
The court complaint detailed that soil beneath the structure was improperly compacted, and the section was not replaced during a 2013 excavation.
The 2,689-mile Keystone system transports heavy Canadian tar sands oil to refineries in Illinois, Oklahoma, and Texas.
Donald Trump authorized South Bow and another firm to build a second pipeline connecting Canada to Wyoming, a scaled-down version of the canceled $8 billion Keystone XL project.
