A group of Alberta landowners is taking the province’s energy watchdog to court, arguing that a levy the regulator charges oil and gas companies is so low that it chronically underfunds a program that cleans up old wells with no owners.

The levy in question bankrolls the Orphan Well Association (OWA), which steps in to close wells, oil and gas facilities, and pipelines when companies can no longer meet their cleanup obligations, for example, in the case of a bankruptcy. The Alberta Energy Regulator (AER) sets the levy, collects it from industry and passes it to the OWA.

Alberta has for years grappled with a rising number of orphan wells. Those on the OWA’s books increased by 13 per cent in the 2025/26 fiscal year, yet funding through the levy grew by just 7 per cent, to $141.3-million, according to the AER’s annual report.

The application for a judicial review of the levy, filed Tuesday in the Court of King’s Bench, says that the 2026/27 levy on fossil-fuel companies set by the AER is “unreasonable.”

The complainants argue that the levy is insufficient for several reasons. Firstly, they say that it fails to take into account the OWA’s actual costs for the fiscal year or deficiencies from previous years. They also say that the regulator improperly considers a ream of factors in setting the levy, including industry finances and commodity prices.

Alberta oil well report updated after concerns over taxpayer backstop recommendation

“As of July 2026, the OWA has $1.66-billion in estimated closure liabilities, while the orphan levy for fiscal year 2026/2027 was set at just $154.56-million – illustrating that the OWA is badly underfunded,” their filing says.

Although the OWA is funded by the levy on producers, in recent years it has also received hundreds of millions in loans from the Alberta and federal governments.

The AER said in an e-mail it was unable to comment publicly on matters before the courts.

Dwight Popowich, one of the landowners involved in Tuesday’s action, said he has spent a decade raising concerns, participating in consultations and trying to work through the proper channels to get an orphaned well on his property cleaned up. But those worries have been dismissed and ignored, while the problem just kept getting worse, he said.

The court application comes 18 months after Mr. Popowich and others filed an internal regulatory appeal against the AER on the same grounds. The regulator’s dismissal of his internal appeal last year prompted the Two Hills, Alta., farmer to turn to the courts.

“We need to get a regulator that actually regulates, that actually follows the law. That’s what the issue has been along,” he told media Tuesday.

Coalition files appeals against Alberta Energy Regulator over orphan well clean-up costs

“This isn’t complicated. Even my grandkids know that if you make a mess, you clean it up.”

There are currently 7,956 sites for decommissioning on the OWA’s books, including 7,370 wells. (To be decommissioned, wells are plugged, cut and capped at least one metre below the surface, and all equipment is removed.) After being decommissioned, sites are reclaimed to return the land to a state similar to its original one. The OWA holds 9,151 sites that need that work.

Susanne Calabrese, one of the lawyers who filed the application for the Ecojustice Canada Society, said Tuesday that the OWA’s inventory is reaching “unsustainable levels,” and that funding continues to fall short.

“It is unreasonable and unlawful to allow this to continue,” Ms. Calabrese said.

This orphan-well levy on oil and gas companies is Alberta’s main safety net when operators walk away from their liabilities, she said, but it is falling behind.

Ms. Calabrese pointed to the influx of orphan sites to the OWA from the insolvency of a company called Long Run Exploration Ltd. – which nearly doubled OWA’s inventory – as an example.

“The number of orphan sites continues to grow, while the funding available to clean them up is not keeping pace. And when the levy falls short, the risk and ultimately the cost doesn’t disappear – it gets pushed onto Albertans.”