What Is an Administrative Order-on-Consent (AOC)?
An administrative order-on-consent (AOC) is an agreement between an individual, business, or other entity and a regulatory body in which the offender agrees to pay for damages caused by violations and to cease activities that caused them to occur.
Administrative orders-on-consent, or AOCs, are most often associated with environmental damages, such as pollution. In a business context, the Environmental Protection Agency (EPA) generally issues an AOC to clean up or fix environmental damages. The AOC can then be enforced in court if the business does not comply.
- An administrative order-on-consent (AOC) is an agreement between an individual, business, or other entity and a regulatory body in which they agree to pay for damages caused by violations and to cease the activities that caused the damages to occur.
- AOCs are most often associated with environmental damage like pollution.
- In a business context, the Environmental Protection Agency (EPA) generally issues an AOC to clean up or fix environmental damages.
- Governments and businesses voluntarily enter into AOCs, but they are binding once they are entered into, and nonperformance may result in litigation.
- In most cases, both the government and the business are jointly liable for the components of the agreement that apply to them, so both the business and the government have an interest in mitigating the environmental damage.
Understanding an Administrative Order-on-Consent
Administrative orders-on-consent (AOCs) are used by state and federal governments to compel individuals and businesses to pay for environmental damages caused by their activities.
Damages may be limited, such as a small spill that can be cleaned up relatively quickly and easily, or they may be extensive, such as a Superfund cleanup or a major oil spill. The AOC compels the individual or business to take action.
The administrative order-on-consent outlines what damages were caused and what steps need to be taken to mitigate the damage and cleanup.
AOCs can be enforced in court if a business doesn’t comply.
The AOC also provides for a comment period that allows the public, the business, and interested parties to weigh in on the proposed actions that the business is expected to take. During the comment period, the business, for example, may say that the cost of cleanup is too expensive, while community members may say that the actions required of the business are not extensive enough.
Governments and businesses voluntarily enter into administrative orders-on-consent. This does not mean, however, that the agreement is not binding once it is entered into. However, nonperformance by the entity may result in litigation.
In most cases, both the government and the business are jointly and severally liable for the components of the agreement that specifically apply to them. Both the business involved in the administrative order-on-consent and the government issuing the AOC has an interest in ensuring that environmental damages are taken care of in a cost-effective and timely manner.
Example of an Administrative Order-on-Consent
As an example of an AOC, the University of Hawaii in 2021 agreed to upgrade the Waikiki Aquarium's water system (which the University oversees) due to waste runoff that exceeded pollution limits, per an agreement with the Hawaii Department of Health. The AOC agreed upon allows the University to keep the aquarium open for research and public education purposes while it upgrades the facilities and rectifies the environmental issues that had been identified.
According to the deputy director of environmental health, Keith Kawaoka, “The terms of the AOC ensure the Waikiki Aquarium remains in compliance with the terms of the permit and help prevent potential water pollution that jeopardizes nearshore waters in the future.”
AOC and Superfund Settlement Agreements
A superfund site is a U.S. designation for a highly-polluted location that is considered hazardous for people. It thus requires special decontamination and cleanup efforts, funded in part by the federal government (especially when no single entity can be held liable).
A superfund settlement agreement is an administrative order-on-consent (AOC) reached between a potentially responsible party and the government to begin the cleanup process of a Superfund site. Such AOCs do not require approval by a court, but if an AOC cannot be reached, the EPA may seek a judicial consent decree.
When one or more potentially responsible parties (PRPs) are identified with a superfund site, an AOC can be drafted in one of four ways:
- Administrative Agreement: PRPs agree to repay costs already incurred by the government and for future costs to be incurred by government contractors.
- Agreement for "Work": PRPs do the cleanup work and pay all expenses.
- Cost Recovery Agreement: Similar to an Administrative Agreement, the PRP only repays the government for costs it incurred in the past.
- "Cashout" Agreement: PRPs pay an "appropriate amount" of estimated site costs in advance of the work to be done in the future.
Frequently Asked Questions
What Is a Consent Order?
A consent order is an order made by a judge with the consent of all parties involved in a dispute or action. The administrative order-on-consent is a consent order made by regulatory body on consent of all parties involved.
What Is a Consent Order in Banking?
A bank issued a consent order consents to follow the instructions issued by a regulatory authority or judge.
What Is the Purpose of a Consent Order?
A consent order is an action taken to settle a dispute between parties, approved by legal or regulartory authority.