Keystone Pipeline system’s operator agrees to pay a $26.9M penalty over a major Kansas oil spill

TOPEKA, Kan. (AP) — A proposed legal settlement with the U.S. government would require the Keystone Pipeline system’s operator to pay a $26.9 million civil penalty over a major oil spill in Kansas in December 2022 and spend about $40 million more to prevent future accidents.

The agreement would resolve allegations from the U.S. Environmental Protection Agency and Kansas that South Bow, based in Canada, violated U.S. 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 (241 kilometers) northwest of Kansas City.

The accident was the largest onshore crude pipeline spill in the U.S. in nine years and surpassed all 22 previous ones on the same pipeline system combined, according to a 2021 report from the U.S. 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 $3 million for environmental restoration projects under a proposed decree filed Friday in U.S. District Court in Kansas. A judge would have to approve the proposal after a 30-day public comment period.

South Bow has disputed the government’s allegations and does not acknowledge any legal liability. The proposed agreement said both parties are avoiding litigation and the settlement would be “fair, reasonable and in the public interest.”

South Bow also would pay Kansas more than $3 million for environmental restoration projects under a proposed decree filed Friday in U.S. 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,” Jeffrey Hall, the EPA’s assistant administrator for its enforcement office, said in a statement. “The substantial penalty reflects the seriousness of the environmental harm.”

South Bow officials did not respond immediately Sunday to a phone message and email seeking comment, but the company told The Canadian Press that it “proactively” began cleaning up the area before receiving directives from U.S. officials. The cleanup was completed early in 2024.

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, and officials said public water supplies weren’t affected by the spill. 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.

In a May 2023 report for the U.S. 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 — likely because construction activity itself altered the land around the pipe. The complaint filed 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 (4,327-kilometer) 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 a massive $8 billion pipeline project known as Keystone XL blocked by former President Joe Biden’s administration in 2021 over environmental concerns.