DOJ proposes $26.8 million penalty and $40 million cleanup plan over Keystone Pipeline rupture

The Justice Department on July 10, 2026, filed a complaint and proposed consent decree against the owner and operator of the Keystone Pipeline over alleged Clean Water Act violations tied to a December 2022 rupture in Washington County, Kansas.

The proposed resolution would require South Bow (USA) LP and South Bow Infrastructure Operations Inc. to pay more than $26.8 million in civil penalties. It also calls for an estimated $40 million in additional prevention and restoration work, plus a separate $3 million payment to the State of Kansas.

The filing is a proposed federal enforcement action, not a final settlement or a final court finding of liability. The consent decree must first go through a 30-day public-comment period, and its terms could change after public input or court review.

What the government alleges

The case concerns a Keystone Pipeline rupture on Dec. 7, 2022. According to the complaint, nearly 13,000 barrels of crude oil — approximately 543,000 gallons — entered land and Mill Creek.

The complaint says the oil covered about 3.5 miles of the creek bank-to-bank downstream from the rupture. It also reports that more than 2,700 animals were killed or affected.

Those figures come from the federal complaint. They describe the government’s allegations and reported damage connected to the incident; they are not presented here as findings independently established beyond the complaint.

The proposed defendants are South Bow (USA) LP and South Bow Infrastructure Operations Inc. The Justice Department’s action addresses alleged federal Clean Water Act liability arising from the Washington County rupture. The packet does not indicate that the proposal resolves unrelated incidents involving the Keystone system.

Money and restoration obligations

The proposed civil penalty exceeds $26.8 million. In addition, the agreement estimates that South Bow would undertake about $40 million in prevention and restoration work. That work is intended to reduce the risk of future discharges and address damage associated with the rupture.

The proposed decree also directs a $3 million payment to Kansas. The payment is separate from the proposed federal civil penalty and from the estimated cost of prevention and restoration work.

The financial figures therefore describe several different parts of the proposed resolution: a federal civil penalty, work intended to prevent future discharges and restore affected areas, and a payment to the state. None of those proposed terms has become a final judgment.

Cleanup began before the proposed agreement

A 2023 cleanup order from the Environmental Protection Agency preceded the proposed consent decree. According to the Justice Department’s account, that order led to the removal of oil and restoration work involving aquatic habitat, stream banks and shorelines.

The proposed agreement follows that earlier cleanup action but adds the broader financial and prevention terms described in the filing. The packet does not provide a final accounting of the cleanup work already completed or say that all restoration has concluded.

The incident involved the Keystone system, an interstate pipeline network that extends 2,687 miles. The federal case is tied to one rupture in Kansas, but its significance extends beyond the immediate location because it concerns federal environmental requirements for a major pipeline system.

What happens next

The proposed consent decree will be available for public comment for 30 days. That process gives members of the public an opportunity to respond before the agreement can proceed toward final court review.

The packet does not provide an exact closing date for comments. Until the comment period and court review are complete, the proposed penalty, Kansas payment and prevention and restoration obligations remain subject to change.

The July 10 filing establishes the next procedural step, but it does not end the case. The ultimate settlement terms and whether the proposed decree is entered as a final judgment remain unsettled.

Sources

• Justice Department Files Proposed Settlement with Owner and Operator of Keystone Pipeline, U.S. Department of Justice

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