The U.S. pipeline industry has faced increased scrutiny over aging infrastructure, spill prevention and whether operators move quickly enough when known risks appear on critical oil lines. That debate sharpened again in Kansas after federal officials said a long-stressed section of the Keystone Pipeline ruptured in December 2022, releasing crude oil into a creek and killing or harming more than 2,700 animals.
South Bow agrees to pay $26.9 million over the Keystone rupture
The U.S. Department of Justice said on July 10, 2026, that it filed a complaint and proposed consent decree against South Bow (USA) LP and South Bow Infrastructure Operations Inc., the owner and operator of the Keystone Pipeline, over the December 7, 2022 rupture in Washington County, Kansas. Under the proposed settlement, the companies would pay a civil penalty of $26,867,789 and complete prevention work the company estimates will cost about $40 million. The Justice Department said the case was filed on behalf of the Environmental Protection Agency and the state of Kansas.
Federal officials said the rupture released nearly 13,000 barrels of heavy crude oil into Mill Creek and surrounding pastureland. According to the Justice Department and Associated Press reporting on the filing, that made it the largest spill in Keystone system history and the biggest onshore U.S. crude pipeline spill in nine years at the time. The government’s complaint also said the spill killed or impacted more than 2,700 animals.
The operator has not yet received final court approval for the settlement. The proposed decree is subject to a public comment period and review by a federal judge in Kansas. South Bow, which was spun off from TC Energy in 2024 after the cleanup was completed, told Canadian media in comments cited by the Associated Press that it began cleanup work before receiving formal federal directives.
The rupture happened near Washington in north-central Kansas, about 150 miles northwest of Kansas City, and sent oil into Mill Creek, a waterway running through rural pastureland. Federal officials said no residents or pipeline workers were injured and public drinking water supplies were not affected. Even so, the Environmental Protection Agency said the spill coated land and water and required an extensive cleanup and remediation effort.
The proposed settlement includes more than $3 million for environmental restoration projects in Kansas, according to reporting by the Kansas City Star and the Associated Press. That money is separate from the civil penalty and the company’s promised prevention spending. The government has not released a full public accounting in the settlement announcement of every affected parcel, water segment or species impacted beyond the total count of more than 2,700 animals.
What is confirmed is that the spill was large enough to become a defining environmental event for the area. Officials have said the affected landscape includes habitat used by wildlife, and court filings referenced the presence of the endangered northern long-eared bat in the region. Cleanup at the site continued into 2024 before regulators said active remediation had largely wrapped up.
The most important finding in the case is not only that the pipe failed, but that investigators said the vulnerable section had been under unusual stress for years. A May 2023 engineering report prepared for the federal government found that a bend in the Keystone line had been “overstressed” since its installation in December 2010, according to the Associated Press and prior public reporting by KCUR. The report said construction activity likely changed the land around the pipe.
Court filings described the soil beneath that section as improperly compacted. The government said the company re-excavated the site in 2013 but did not replace the section of pipe that later ruptured. PHMSA, the federal Pipeline and Hazardous Materials Safety Administration, later said its investigation found the 2022 failure was caused by bending stress from soil loading concentrated at the affected section of pipeline.
For Kansas residents, the latest development is legal and regulatory rather than operational: a proposed federal settlement that ties a large environmental penalty to a failure investigators say had roots going back more than a decade. If approved, the decree would require South Bow to fund additional prevention and detection measures, while the underlying case stands as a documented example of how a construction-era weakness can remain embedded in a major crude oil system for years.