Administrative Order-on-Consent (AOC) Explained

An administrative order-on-consent (AOC) is an agreement between individuals, businesses, or entities and a regulatory body to stop damaging activities and pay for the harm caused by violations. The Environmental Protection Agency (EPA) commonly uses AOCs to address and fix environmental harm caused by businesses. AOCs are voluntary but legally binding, and noncompliance may lead to litigation. The government and businesses share liability and aim to minimize environmental damage.

Basics

An AOC is an agreement between an individual, business, or entity and a regulatory body. Its purpose is for the offender to accept responsibility for damages caused by violations and commit to stopping the activities that led to the damages. AOCs primarily deal with environmental damages, particularly pollution. In the business world, the EPA commonly issues AOCs to address and rectify environmental harm. If a business fails to comply with the AOC, it can be enforced in court.

AOCs for Environmental Damages

AOCs are used by state and federal governments to ensure that individuals and businesses take financial responsibility for environmental damages caused by their activities. These damages can range from minor spills to major incidents like Superfund cleanups or large-scale oil spills. AOCs outline the specific damages incurred and the required steps for mitigation and cleanup. Non-compliance with an AOC by a business can lead to legal enforcement of the order.

Public Participation and Liability

The AOC allows the public, businesses, and interested parties to provide comments on proposed actions a business must take. During this period, the business may express concerns about cleanup costs, while community members may argue that the required actions are insufficient.

Governments and businesses voluntarily enter into AOCs, which are legally binding agreements. Failure to comply may result in litigation. In most cases, both the government and the business are jointly and severally liable for the specific components of the agreement that apply to them. Both parties have a vested interest in effectively addressing environmental damages in a timely and cost-efficient manner.

Superfund Settlement Agreements

A superfund site is a highly-polluted location in the United States that is considered hazardous for people. These sites require special decontamination and cleanup efforts, which are partially funded by the federal government, especially when no single entity can be held liable. To begin the cleanup process of a superfund site, a superfund settlement agreement is reached through an AOC between the government and a potentially responsible party. AOCs do not require court approval, but if an agreement cannot be reached, the EPA may seek a judicial consent decree.

Four Ways to Draft an AOC for Superfund Sites

When dealing with a superfund site and identifying one or more potentially responsible parties (PRPs), there are four ways to draft an AOC:

1. Administrative Agreement: PRPs agree to repay both the costs already incurred by the government and the future costs to be incurred by government contractors.
2. Agreement for "Work": PRPs take on the responsibility of performing the cleanup work and covering all associated expenses.
3. Cost Recovery Agreement: Similar to an Administrative Agreement, the PRP only reimburses the government for the costs it previously incurred.
4. "Cashout" Agreement: PRPs make an upfront payment of an estimated amount to cover the future site costs to be undertaken.

A Real-Life Example of AOC

In 2021, the University of Hawaii agreed to upgrade the Waikiki Aquarium's water system under an AOC with the Hawaii Department of Health. The AOC was prompted by excessive waste runoff that exceeded pollution limits. The University is now required to improve its facilities and address environmental issues. Importantly, the AOC allows the aquarium to remain open for research and public education while the upgrades take place. The agreement ensures compliance with permit terms and prevents potential water pollution that could harm the nearby coastal waters.

What is a Consent Order?

A consent order is an order issued by a judge when all parties involved in a dispute or action agree to its terms. Similarly, an administrative order-on-consent is a consent order issued by a regulatory body with the agreement of all parties involved. It is a way to settle a dispute between parties and is authorized by a legal or regulatory authority. In the case of a bank, when a consent order is issued, the bank agrees to comply with the instructions given by a regulatory authority or judge.

Conclusion

Administrative Order-on-Consent is a legally binding agreement between businesses and regulatory bodies to minimize environmental damage. It allows the public and interested parties to provide comments on proposed actions, and both parties have a vested interest in effectively addressing environmental damages in a timely and cost-efficient manner. AOCs are used to ensure that individuals and businesses take financial responsibility for environmental damages caused by their activities, and failure to comply may result in litigation.