The federal government and the state of Kansas have reached a major settlement agreement with the owner and operator of the Keystone Pipeline, forcing the company to pay tens of millions of dollars after a 2022 pipe rupture triggered one of the largest inland oil spills in recent U.S. history.
Under the terms of the newly announced deal, South Bow (USA) LP and South Bow Infrastructure Operations Inc. will pay a civil penalty of more than $26.8 million for violating the Clean Water Act. In addition, the company must spend an estimated $40 million on systemic upgrades designed to prevent future leaks, and pay an additional $3 million directly to the state of Kansas to fund local natural resource restoration projects.
The legal action stems from a disaster on December 7, 2022, in Washington County, Kansas. On that day, a section of the 2,687-mile pipeline system burst, sending nearly 13,000 barrels—approximately 543,000 gallons—of crude oil pouring over local land and directly into Mill Creek. The incident stands as the largest single discharge of oil in the history of the Keystone Pipeline system.
The environmental impact on the rural area was immediate and severe. According to the formal complaint, thick crude oil measuring an inch deep blanked Mill Creek from bank to bank, stretching for three and a half miles downstream from the break. The Kansas Department of Health and Environment had to issue an emergency advisory warning residents to keep themselves, livestock, and pets completely out of the water. The suffocating oil slick fouled vegetation and soil across 35 surrounding acres, ultimately killing or impacting more than 2,700 animals.
“This case demonstrates why the oil pipelines crossing our heartland must be maintained properly. The oil spill blanketed land and water, rendering the waterway lifeless and useless and requiring extensive cleanup and remediation,” said Jeffrey A. Hall, Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance. “The substantial penalty reflects the seriousness of the environmental harm, and the other requirements of the settlement reflect the need to prioritize pipeline integrity and maintenance for this critical infrastructure.”
Following an initial emergency cleanup order from the EPA in 2023, South Bow staff removed the bulk of the oil from the water and surrounding terrain. The company has since finished restoring the damaged aquatic habitats, shorelines, and stream banks along Mill Creek.
“Dedicated EPA staff logged many thousands of hours cleaning up Mill Creek and were supported by multiple federal and state agencies,” said EPA Region 7 Administrator Jim Macy. “This fair and comprehensive settlement represents a federal-state partnership commitment to protect our nation’s waters and prevent future oil spills.”
Government officials noted that while pipelines generally operate without incident, the scale of this rupture required a heavy enforcement response to ensure accountability.
“Pipelines are the safest means of transporting large quantities of oil and other liquids and gases over long distances,” said Principal Deputy Assistant Attorney General Adam Gustafson of the Justice Department’s Energy and Natural Resources Division. “However rare, when a pipeline leaks, it can quickly escalate. That’s why an important part of this proposed settlement is the work the company has committed to do to help prevent future leaks.”
U.S. Attorney Ryan A. Kriegshauser for the District of Kansas echoed the sentiment regarding local recovery. “It is important that we are all good stewards of the environment,” Kriegshauser said. “The incident had a massive impact on the State of Kansas, and we are happy that this settlement will mitigate that damage.”
The specific section of the pipeline that failed sits between Steele City, Nebraska, and Cushing, Oklahoma. Clean Water Act regulations strictly prohibit the discharge of oil and other pollutants into federally protected U.S. waterways.
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