MANAGING EPC RISK | NEW BUILD
rule, regulation, guidance, or change in interpretation that may subsequently emerge during the project execution phase. Adding to this unpredictability is the impact that
global events may have on the NRC regulatory regime in the US. For example, after a 9.0-magnitude earthquake and an associated tsunami struck Japan on 11 March 2011, four of six reactors at the Fukushima Daiichi nuclear plant lost power. Three of these reactors eventually overheated causing leaks of radioactive gas and hydrogen explosions, which then released more radioactive material. In the aftermath of this disaster, the NRC issued orders in 2012 and 2013 requiring US reactors to obtain, install and protect additional equipment, as well as improve venting systems. The NRC also required all US reactors to re-analyse their flooding and earthquake preparedness and risk assessments. Accordingly, although the Fukushima Daiichi accident occurred thousands of miles away from US shores, it created knock-on regulatory impacts in the US for ongoing nuclear construction projects and operations. Due to the potential project delays and cost overruns
that result from new NRC regulations, EPC contractors with the know-how to implement “first-of-a-kind” nuclear projects are increasingly demanding cost-plus or target price models with negotiated pain share and gain share mechanisms into their EPC contracts instead of a fixed-price turnkey EPC contract. Contractors are also tailoring change in law clauses to provide clear
entitlement to schedule relief and cost recovery to account for new or amended regulatory requirements. Disputes commonly arise where change in law
language is ambiguous as to whether new NRC guidance, licensing conditions or interpretive shifts qualify as compensable changes in law. Contractors should therefore focus on the inclusion of contractual provisions that capture both formal rulemaking and less formal regulatory actions or changes in interpretation, and that provide for both cost and schedule relief.
Liability allocation and nuclear indemnity under the Price-Anderson Act Nuclear EPC contracts must be carefully aligned with the Price-Anderson Nuclear Industries Indemnity Act (PAA). The PAA establishes a system of mandatory financial protection and government-backed indemnification for public claims against reactor owners or licensees and operators resulting from a nuclear incident. Under the PAA, reactor owners/licensees and certain
contractors/operators must maintain specified levels of nuclear liability insurance, and public claims arising from a nuclear incident are channelled exclusively through the PAA regime and subject to an aggregate liability cap. EPC contractors should ensure that the insurance requirements in their EPC contracts conform to PAA requirements. However, separate from insurance, EPC contracting parties are free to negotiate private contractual
www.neimagazine.com | July 2026 | 17
Nuclear EPC contracts must be carefully aligned with the Price- Anderson Nuclear Industries Indemnity Act (PAA) for public claims resulting from a nuclear incident. Source: Bechtel
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