American Businesses - Federal Regulation Of Business

Most U.S. politicians and government officials believe that it is in the best interests of the public and the U.S. economy as a whole for government to let the market operate with a minimum of interference. This does not mean, however, that American businesses go unregulated. Many local, state, and federal laws exist to protect the public and the economy from dangerous, unfair, or fraudulent activities by businesses. Local and state laws and regulations are too numerous and varied in their effects to list here, but some major federal regulators are described below.

Consumer Product Safety Commission

The Consumer Product Safety Commission (CPSC) was established in 1973 to protect the American public from unreasonable risks of serious injury or death from consumer products. Through a combination of voluntary and mandatory safety standards, the CPSC tries to prevent dangerous products from entering the market. If a product is found to be dangerous after it has already been sold to consumers, the CPSC has the duty to inform the public, and the power to force a recall of the product if it is deemed necessary. In 2005 the CPSC had regulations covering over 15,000 products, including toys, power tools, children's clothing, window blinds, garden equipment, and household chemicals.

Employment Standards Administration

The Employment Standards Administration (ESA) is one of the largest branches of the Department of Labor (DOL) and is charged with enforcing a wide variety of labor laws. Some of its many duties are:

Enforcement of the Fair Labor Standards Act of 1938. One of the most far reaching laws to come out of the New Deal, this law established a federal minimum wage, over-time pay standards, and child labor protections.
Administration of the Family and Medical Leave Act of 1993 (FMLA), which requires most employers to give their employees up to 12 weeks of unpaid leave if they have a child, adopt or foster a child, or need to care for a sick family member or are ill themselves. The FMLA also protects workers benefits while they are on leave and requires that they be restored to a position equivalent to their old one when they return from leave.
Assuring that federal contractors comply with the equal opportunity employment and affirmative action clauses of their contracts.

Environmental Protection Agency

The Environmental Protection Agency (EPA) is the federal organization that handles regulations related to environmental issues. In addition to developing and enforcing environmental regulations, the EPA keeps track of industrial pollutants and regularly updates its compliance codes for individual sectors and industries. The EPA offers resources to companies to help them comply with environmental standards, which identify common pollutants and recommend alternative operations and materials to cut down on industrial pollution. Its "sector notebooks" include environmental and industry profiles, pollution prevention techniques and data, compliance and enforcement statistics, program lists, and contact information. Some of the major environmental legislation that pertains to the way American businesses conduct operations include the following:

The Clean Air Act (CAA) was signed into law in 1970 and regulates air emissions of everything from factories to automobiles. It allows the EPA to set National Ambient Air Quality Standards (NAAQS), the goals of which are periodically updated with amendments to the CAA. The 1990 amendments covered acid rain, air toxins, ground-level ozone, and stratospheric ozone depletion.
The Endangered Species Act (ESA) was passed in 1973. Its list of endangered trees, flowers, grasses, mammals, fish, birds, reptiles, insects, and crustaceans is maintained by the U.S. Fish and Wildlife Service. The ESA protects all species on the list, as well as their habitats, from any action by an individual, a group, or a business that adversely affects them.
The Safe Drinking Water Act (SDWA), passed in 1974, safeguards the American water supply by requiring all owners and operators of public water facilities to comply with health standards.
The Toxic Substances Control Act (TSCA) of 1976 allows the EPA to monitor the thousands of industrial chemicals used or imported, and it also gives the EPA the authority to ban any chemical from use or import that is found to pose too great a risk to public health.
The Clean Water Act (CWA) was passed in 1977. It regulates the amount and type of pollutants that are released by industry into U.S. waters and authorizes the EPA to set wastewater standards for American businesses. In 2002 the CWA was amended to include the Great Lakes Legacy Act, which identified toxins that are commonly dumped into the Great Lakes and set a timeline for their reduction.
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA; also known as the Superfund) of 1980 established a tax on the chemical and petroleum industries and allowed federal authorities to take action against companies that release or threaten to release substances that may be a danger to public health or the environment. In 1986 CERCLA was amended with the Superfund Amendments and Reauthorization Act (SARA), which increased the size of the fund from $1.6 billion to $8.5 billion and further stressed the effects of hazardous materials on human health, with a revision of the Hazardous Ranking System (HRS) of chemicals and placement of uncontrolled hazardous waste sites on a National Priorities List (NPL).
The Emergency Planning and Community Right to Know Act (EPCRA) of 1986 is actually Title III of SARA and is the national legislation on community safety in regards to hazardous chemicals accidentally or deliberately released from industrial facilities.
The Oil Pollution Act (OPA) was passed in 1990 and uses Superfund money from CERCLA and SARA to pay for the cleanup of oil spills in the event that the responsible company is unwilling or unable to do so. The OPA also allows the government to set safety standards for oil storage facilities and vessels.
The Pollution Prevention Act (PPA), signed into law in 1990, focuses on offering alternatives to the sources of pollution in industry rather than on cleaning up pollution after it has entered the environment. The PPA also provides guidelines to companies to increase energy efficiency.
The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) of 1996 allows the federal government to control the sale, use, and distribution of these substances and requires registration of large-scale users (for example, farmers) who buy them. Amendments to FIFRA also required that all pesticides be licensed by the EPA and that all pesticide users must take certification exams to become "applicators of pesticides." Amendments to FIFRA are the Federal Food, Drugs, and Cosmetic Act (FFDCA) and the Food Quality Protection Act (FQPA), both of which strengthened the EPA's approach to pesticide use on food.

According to the EPA's table "Two-Year Enforcement and Compliance Summary, National, by Industry Sector Notebooks" (http://www.epa.gov/cgi-bin/ideaotis.cgi), in 2003 and 2004 the industries with the greatest number of EPA violations in their facilities were metal fabrication (1,636 facilities with one or more violations), rubber and plastic (648 facilities with one or more violations), lumber and wood products (544 facilities), and dry cleaning (455 facilities).

Equal Employment Opportunity Commission

Established in 1965, the Equal Employment Opportunity Commission (EEOC) is the primary federal agency responsible for preventing discrimination in the workplace. Its original purpose was to investigate violations of the Civil Rights Act of 1964, which prohibited discrimination in the workplace on the basis of race, color, national origin, sex, and religion. Over the years, its powers have been expanded and it has been given responsibility to enforce other antidiscrimination laws, including:

The Equal Pay Act of 1963—which prohibits sex-based wage discrimination.
Age Discrimination in Employment Act of 1967—prohibiting workplace discrimination against those age 40 or older.
Sections 501 and 505 of the Rehabilitation Act of 1973—prohibiting discrimination in the federal workplace against people with disabilities.
Titles I and V of the Americans with Disabilities Act of 1990—which requires most workplaces to make themselves accessible to individuals with disabilities and prohibits discrimination against them by employers.
Civil Rights Act of 1991—which amended and expanded the laws listed above.

Federal Trade Commission

The Federal Trade Commission (FTC) was created in 1914 with the passage of the Federal Trade Commission Act. Originally intended to combat the rise of business monopolies (see section below), the FTC grew to become the U.S. government's consumer protection agency, addressing consumer issues such as identity theft, false advertising, telemarketing and Internet scams, and anticompetition moves by businesses.

The FTC's Bureau of Consumer Protection is organized into six divisions:

The Division of Advertising Practices enforces federal truth-in-advertising laws, focusing specifically on such issues as advertising to children, health and weight-loss claims made in ads about food and dietary supplements, and alcohol and tobacco advertising.
The Division of Enforcement is the legal arm of the FTC, enforcing consumer protection laws by investigating claims and prosecuting civil suits against companies that have been found to be in violation of the regulations.
The Division of Financial Practices regulates financial and lending institutions and the FTC's consumer privacy program, including the Fair Credit Reporting Act, the Truth in Lending Act, the Consumer Leasing Act, and the Fair Debt Collection Practices Act.
The Division of Marketing Practices enforces consumer protection laws that relate to fraudulent marketing, including Internet, direct mail, and telephone marketing, as well as fraudulent investment schemes.
The Division of Planning and Information provides information to consumers and to FTC attorneys during lawsuits.
The Consumer and Business Education Program produces educational materials and campaigns for the public and businesses and maintains a consumer education Web site.
The International Division of Consumer Protection protects consumer interests in the international marketplace and represents the FTC abroad.

The FTC's Bureau of Competition enforces antitrust laws (see below) to discourage anticompetitive business practices, monitoring the activities of companies involved in mergers as well as those not undergoing mergers who still are at risk of violating antitrust regulations. The Bureau of Economics evaluates how the FTC's actions, antitrust legislation, and consumer protection rulings will affect the overall economy. According to the Quarterly Federal Court Litigation Status Report (Federal Trade Commission Office of the General Counsel, Bureau of Competition, Bureau of Consumer Protection, and Regional Offices, December 31, 2004, http://www.ftc.gov/ogc/status/status), in the fourth quarter of 2004 the FTC had a total of 141 outstanding cases in district, appellate, and states courts, 106 of which were for injunctions and consumer redress. (An injunction is a court order to cease a particular action; consumer redress is repayment by a company to a consumer for a wrong done to the consumer.)

Federal Communications Commission

The Federal Communications Commission (FCC)—which regulates all television, radio, satellite, cable, and wire services in the United States and its territories—was established in 1934 with the passage of the Communications Act. In 1996 the Communications Act was amended to include the Telecommunications Act, which encouraged more competition in the communications industry. The FCC is organized into six different bureaus:

The Consumer and Governmental Affairs Bureau handles consumer complaints about businesses in the communications industry, develops educational information for distribution, and acts as a liaison between the FCC and other government offices.
The Enforcement Bureau upholds the regulations of the Communications Act, oversees the licensing of communications companies, and handles public safety functions, such as the national emergency alert system.
The International Bureau's main functions are to promote competition in the global communications marketplace, monitor ownership of foreign companies that provide communications services to U.S. consumers, and prevent radio interference along U.S. borders. It also advises the FCC on international communications issues.
The Media Bureau oversees the large-scale transition to digital television and radio, implements public-service programs such as closed captioning for the hearing impaired and educational and government programming, and enforces the provisions of the Children's Television Act of 1990, which requires that broadcasters feature a certain number of hours of educational programming for children per week.
The Wireless Telecommunications Bureau deals with all aspects of wireless telecommunications programs and policies, including those related to pagers, cellular telephones, and personal communications and public safety services.
The Wireline Competition Bureau handles all features of landline service, including monitoring telephone companies for efficiency and fair rates.

Food and Drug Administration

By enforcing over 40 different federal laws, the Food and Drug Administration (FDA) works to ensure that the food, drugs, and cosmetics sold in the United States are safe and effective. To this end it establishes safety and sanitation standards for manufacturers of these goods, and quality standards that the goods themselves must meet. FDA scientists must approve certain products, most notably drugs, as safe and effective before they can be sold in the United States, and it can force products off the market if they are later discovered to be dangerous. And the FDA ensures that the labeling of food, drugs, and cosmetics is complete and truthful. For example, the nutrition labels found on American foodstuffs are regulated by the FDA.

Occupational Safety and Health Administration

The Occupational Safety and Health Administration (OSHA) was created by the Occupational Safety and Health (OSH) Act of 1970. OSHA's duty is to establish and enforce workplace safety standards. Its goal is to protect workers from exposure to hazardous chemicals, extremes of temperature, mechanical dangers, excessive noise levels, and unsanitary conditions in the workplace. One or more of OSHA's regulations covers almost every type of workplace in the United States. According to OSHA's Web site (http://www.osha.gov) occupational deaths dropped 62% between 1971 and 2004, while injuries have dropped by 42%.

Other Agencies

Besides the organizations listed above, there are a number of other government agencies that regulate specific industries or aspects of the economy. Some of them are well known, while many others are seldom heard of by people outside the fields they regulate. A few examples are:

The Federal Energy Regulatory Commission (FERC) regulates the national transmission network for oil, natural gas, and electricity.
The Federal Maritime Commission regulates the waterborne foreign commerce of the United States.
The National Highway Traffic Safety Administration regulates automobile design and safety.
The Office of Surface Mining regulates surface coal mining.
The Securities and Exchange Commission (SEC) regulates the stock market. See Chapter 4 for more information on the SEC.