DOJ’s proposed Keystone settlement sets safeguards, comment deadline

The Justice Department has filed a proposed settlement with the owner and operator of the Keystone Pipeline over a December 2022 rupture in Kansas, but the agreement is not final. Written public comments are being accepted through August 14, 2026, before the proposed consent decree can take effect.

The complaint and lodged decree were filed July 10 in the U.S. District Court for the District of Kansas by the United States, on behalf of the Environmental Protection Agency, and the State of Kansas through the Kansas Department of Health and Environment. The defendants are South Bow (USA) LP and South Bow Infrastructure Operations Inc., formerly known as TransCanada Keystone Pipeline LP and TC Oil Pipeline Operations Inc.

What the proposed settlement would require

The proposed agreement separates the financial and compliance obligations into three parts. South Bow would pay a federal civil penalty of $26,867,789, with the money deposited into the federal Oil Spill Liability Trust Fund.

The company would also complete prevention and detection work that it estimates will cost approximately $40 million. Separately, the proposed decree requires a $3,080,000 contribution to Kansas for natural-resource restoration projects. Those amounts are not one combined cash penalty.

The proposed safeguards include acoustic leak-detection inspections at least annually, inertial-measurement-unit and bending-strain assessments at least every two years, and ultrasonic circumferential-crack-tool reinspections at least every five years. The decree also calls for annual integrity-threat assessment updates, limits on pressure and thermal cycling, engineering assessments before significant operating changes or flow increases, and expanded reporting and training procedures.

Other provisions address construction-inspector certification, girth-weld reliability, digital inspection records, automatic deficiency flagging, real-time exception reporting, geotagged photographs and procedures for recording and evaluating pipe movement when a section is excavated. South Bow would submit semiannual compliance reports and face stipulated penalties for certain violations of the decree.

These would be case-specific obligations for South Bow and entities bound by the decree. They would not create a new nationwide pipeline rule. The decree also says it is not a permit or a modification of a permit, and that South Bow must continue complying with other applicable federal, state and local requirements.

What happened in Washington County

The rupture occurred December 7, 2022, near Washington, Kansas, on the Keystone segment running from Steele City, Nebraska, to Cushing, Oklahoma. According to the complaint, at least 12,937 barrels, or 543,354 gallons, of diluted bitumen escaped from the pipeline and reached Mill Creek, a tributary connected to the Kansas River.

The complaint alleges that oil contaminated approximately 35 acres and affected a 3.65-mile segment of Mill Creek. It says oil covered the creek bank to bank in a layer about an inch thick for roughly three miles downstream of the rupture. More than 2,700 animals, including fish, birds, mammals, reptiles and invertebrates, were killed or impacted, according to the filing.

Cleanup lasted more than 10 months. The complaint says crews treated more than 54 million gallons of contaminated water, recovered about 655,000 gallons of oil, including oil remaining in the pipeline, and removed approximately 200,000 tons of impacted soil, sediment and debris. The filing also says South Bow continues long-term environmental monitoring and remediation under KDHE oversight.

What the documents allege about the failure

The complaint says the oil exited through a circumferential crack near a girth weld in a bend assembly known as TAG 98. It alleges that construction stress and inadequately compacted soil caused the assembly to ovalize, or deform from a circular shape.

The complaint cites a post-spill investigation by the federal Pipeline and Hazardous Materials Safety Administration that attributed the bending stress to inadequately compacted soil beneath the pipe. The filing says a construction-caliper inspection was completed before replacement fittings were installed in 2010 but was not repeated afterward.

The complaint also says ovality was identified as a potential concern during internal pipe-monitoring inspections in December 2012. The segment was excavated in March 2013, but the filing says it was not replaced and no analysis was performed at that time to understand the integrity effects of the ovality. The complaint further alleges that flow rates began increasing in 2016 and that ramp-up testing to increase flow began December 5, 2022, two days before the rupture.

Those statements are allegations, not adjudicated findings. South Bow does not admit the complaint’s allegations or liability under the proposed decree.

How to comment

Written comments are due by August 14, 2026. The Federal Register notice says comments may be submitted by email to pubcomment-ees.enrd@usdoj.gov or by mail to the Assistant Attorney General, U.S. DOJ—ENRD, P.O. Box 7611, Washington, DC 20044-7611. Comments should identify United States and the State of Kansas v. South Bow (USA) LP and South Bow Infrastructure Operations Inc. and DOJ reference number 90-5-1-1-12906.

The notice warns that written comments may be filed in whole or in part on the public court docket without additional notice to the commenter. The proposed decree must remain lodged for at least 30 days for public notice and comment. The decree says the United States may withdraw or withhold its consent if comments disclose facts or considerations showing that the agreement is inappropriate, improper or inadequate.

What happens next

After the comment period, the Justice Department will decide whether to continue supporting entry of the proposed decree, and the District of Kansas court will determine whether to enter it. Under the decree, its effective date would be the date the court enters it or grants a motion to enter it, whichever occurs first.

If approved, the court would retain jurisdiction to resolve disputes and enforce compliance. The settlement would resolve the civil claims described in the complaint through the date of lodging, while the United States and Kansas would retain certain other legal and equitable remedies.

Sources

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