A project must comply with all current legal, policy and regulatory requirements associated with providing the contracted services (regardless of who bears the compliance cost).
A change in law risk is the risk that the agreed legal, policy and regulatory framework will change during the contract term in a way not contemplated when the contract was signed and which disadvantages or has a negative financial impact on the project.
A change in law may impact on the form of required modifications to the facility works (for example, changes in vent stacks in freeway tunnels or air filtration equipment). This in turn can have flow-on effects on capital expenditure, operating requirements (for example, in requirements to undertake additional performance monitoring) and/or the way a service is required to be delivered. The critical question then becomes who is to bear the cost of such compliance.