Thank you very much for the question.
It's a very good question in the sense that, when one is establishing the limits for things such as liability, there are a number of factors to take into account. In doing so the department looked very carefully at the offshore regime in Canada and in other countries with respect to liability provisions. I think it's fair to say, starting out, that each country has its unique elements of how it manages its regulatory system in its legal context. In our case we set out to look at our peer countries, countries we would consider to have the same set of interests as Canada. We looked at the United Kingdom, Norway, the United States, Australia, and Greenland, being a number of partners that either touch closely to our own jurisdiction or are very similar.
In the case of the United States and the U.K., we looked at their models in which they use strict liability as the regime behind the liability. The amounts in both of those countries are $75 million and $250 million respectively, each of which is backed by some form of pooling of resources.
In the United States there is a large spill fund that is a levy that goes on every barrel of oil that's produced, consumed, or imported. That fund is paid and is capitalized, which essentially says that companies are responsible for $75 million, and then it's back-stopped by a fund for everything else.
In the United Kingdom, it's a pooled insurance fund that's provided for. In each of those cases they use strict liability.
In our context we had absolute liability in the original legislation, so we set out to maintain that absolute liability was a preferable form of liability. We compared that to Norway and Greenland, which both have absolute liability as well. In both of those countries they have what is termed unlimited absolute liability. In the case of Norway, the regulatory regime and the development regime is one based on which the state-owned company, Statoil, is the majority owner in most of the projects and the backing of the taxpayer or the crown in Norway is implicit in all of the project undertakings. So unlimited absolute liability is essentially back-stopped by the Government of Norway and the citizens of Norway.
Greenland and Denmark have a copy of Norway's regulatory system. In both of these cases they require that the companies provide a $1 billion assurance that they are able to deal with a spill or an incident.
In the Canadian context we felt that the establishment of $1 billion was a very favourable benchmark when compared to other countries, that it certainly was world leading and world-class among our peers.
At the same time the Canadian legislation requires that a deposit be registered with the regulator, whether that's the National Energy Board or the Atlantic Canada boards. That is a unique feature in that the regulator has access directly to a deposit that does not require the approval of the company. In our instance we provided that to be $100 million, or $250 million in pooled funding.
Our feeling was that we had a very stable regime with absolute liability, a deposit requirement, and a fiscal assurance requirement. When we benchmarked and looked at all the examples we had, we established what we felt was a fairly robust and quite significant amount. That put us well within our peers to remain competitive but, by the same token, to provide for assurance that companies have the wherewithal to deal with an oil spill incident, should one ever occur.