Administrative Order On Consent (AOC)

Investopedia

What is an ‘Administrative Order On Consent (AOC)’

An Administrative Order on Consent (AOC) is an agreement between an individual or business and a regulatory body in which the individual or business agrees to pay for damages caused by violations and to cease activities that caused the damages 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 cleanup or remedy environmental damages.

BREAKING DOWN ‘Administrative Order On Consent (AOC)’

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.

AOCs can be enforced in court if a business doesn’t comply. The AOC outlines what damages were caused, and what steps need to be taken in order to mitigate the damage and cleanup. The AOC can be enforced in court.

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 nonperformance may result in litigation. In most cases, both the government and the business is jointly and severally liable for the components of the agreement that specifically apply to them. Both the business involved in the AOC and the government issuing the AOC have an interest in ensuring that environmental damages are taken care of in a cost-effective and timely manner.

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