Pipeline Company Fined $69 Million for Major 2022 Oil Spill in Kansas

South Bow, the Canadian company that operates the Keystone pipeline, has agreed to pay $26.9 million in fines and spend about $40 million more on safety improvements. This settlement resolves federal charges that the company violated clean water laws when a pipeline ruptured in December 2022 near Washington County, Kansas The Guardian.

The Environmental Protection Agency values the entire settlement at roughly $69 million EPA. The fine money will go into a federal fund that pays for oil spill cleanups across the country EPA.

The EPA and the Department of Justice reached the agreement together. It now enters a 30-day public comment period before a federal judge can approve it. This is standard for large settlements but leaves room for objections before the terms become final The Guardian.

What happened and why it mattered

The rupture released nearly 13,000 barrels of heavy crude oil into a creek about 150 miles northwest of Kansas City. It was the largest onshore crude pipeline spill in the United States in nine years. In fact, that single spill released more oil than all 22 previous spills from the entire Keystone system combined, according to a 2021 government report The Guardian.

An EPA official said the spill "blanketed land and water," leaving the affected waterway "lifeless and useless" The Guardian. The government's complaint noted that more than 2,700 animals were harmed or killed, including endangered long-eared bats in the area. No pipeline workers or residents nearby were injured, and public water supplies were not affected The Guardian.

Why the pipe broke

An engineering report from May 2023 found that the section of pipe where the rupture occurred had been under stress since it was installed in December 2010. The most likely cause: construction work that disturbed the soil around it The Guardian.

The government went further in its complaint. It alleged that soil beneath the pipe was not properly compacted when the pipeline was built, and that the company dug up the same spot in 2013 without replacing the weakened pipe section. That detail is significant — the company knew about the problem nearly a decade before it caused a major failure.

South Bow says it began cleanup work immediately after the spill, before regulators formally ordered it. The company also says it has inspected more than 12,000 miles of pipeline and dug up 400 sections to examine and repair them since the rupture The Guardian. Under the settlement, South Bow will also pay Kansas more than $3 million for environmental restoration The Guardian.

The fact that the company knew about soil compaction problems at that exact location in 2013, only to leave the pipe in place, will likely draw scrutiny during the public comment period. Environmental groups may question whether the $40 million in new safety spending actually fixes the underlying engineering failures, or simply checks off a compliance box.

A complicated corporate picture

South Bow did not exist when the spill occurred. TC Energy built and operated the Keystone system at the time. In 2024, after the cleanup was already done, TC Energy spun off South Bow as a separate company. South Bow now legally inherits responsibility for an incident that happened before the company existed.

This kind of corporate split is common in pipeline ownership transfers, but it raises a basic fairness question: a new company is paying a large penalty for problems created by its predecessor. Regulators did not treat this as grounds for reducing the settlement.

The Keystone pipeline itself stretches 2,689 miles and carries Canadian crude oil to refineries in Illinois, Oklahoma, and Texas The Guardian.

South Bow's expansion plans suggest this settlement will not slow the company's growth. In April 2026, the Trump administration approved South Bow and a partner to build a second, smaller pipeline from Canada into Wyoming. This effectively revives a scaled-down version of the Keystone XL project that the Biden administration blocked in 2021 over environmental concerns The Guardian.

The contrast here is worth watching: the same company is paying a nine-figure penalty for a construction failure on one pipeline system while simultaneously getting approval to build new pipeline capacity on the same corridor. Pipeline supporters will likely cite the settlement as proof that the system works — the company pays for its mistakes and the problems get fixed. Critics will focus on the contradiction: South Bow faces major new infrastructure approvals despite a catastrophic spill caused in part by known engineering problems that the company ignored for years.

The real test will come when inspection results from the newly required safety program are made public. Whether the $40 million actually solves the soil-compaction and pipe-stress issues identified in the 2023 report, or simply meets a regulatory requirement, will only become clear once that data is available.

The Department of Justice's Environmental Enforcement Section handled the case. The public has 30 days to submit comments on the settlement, after which a federal judge in Kansas will decide whether to approve it DOJ.