Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors

SIC 9651

Companies in this industry

Industry report:

This category covers government establishments primarily engaged in regulation, licensing, and inspection of other commercial sectors, such as retail trade, professional occupations, manufacturing, mining, construction, and services. Also covered are physical standards, regulating hazardous conditions not elsewhere classified, and alcoholic beverage control.

Organization and Structure

The primary purpose of regulation is to prevent harm--either physical, pecuniary, or restrictive--to persons or entities. It follows that statistical data on harm, damage, or injury is necessary to amend, delete, or provide regulatory structure to an industry. Analysis and application of data provide justification for agencies and regulatory boards to exercise jurisdiction over private and public sectors in order to reduce such injuries. Examples include vehicular safety belt and speeding laws; minimum age requirements for tobacco and alcohol products; maximum weight loads in elevators, airplanes, and freight trucks; nutritional analysis on food packages; and control of pharmaceuticals by prescription only.

From the federal regulations commercial truck drivers must meet to the deposit requirements banks must follow, government agencies--at both the state and national level--present a mosaic of requirements that promote safety and stability for the general public and for the employees in regulated industries. Regulatory responsibilities are assigned to a wide range of federal agencies. The following are some of the most active and high-profile agencies.

The U.S. Occupational Safety and Health Administration (OSHA).
This agency, part of the U.S. Department of Labor, came into being in 1970. Its stated mission is "to assure so far as possible every working man and woman in the nation safe and healthful working conditions."

As of 2010, the OSHA utilizes 2,043 inspectors and additional complaint-discrimination investigators, engineers, physicians, educators, standards writers, and other technical and support personnel throughout the country. Twenty-two states also had state-run workplace health and safety agencies. Although the OSHA covers private sector workers and state, local, and federal government workers, the agency's regulations generally do not apply to miners, transportation workers, the self-employed, and some public employees.

Through its investigations and its enforcement of regulations and standards, and through its public outreach and training efforts, OSHA works to reduce workplace injuries and deaths. In the late 1990s an estimated 6,000 Americans died annually from injuries sustained at their places of work. An additional 50,000 people died from illnesses brought on by chemical exposures in the workplace, and an estimated 6 million people suffered nonfatal workplace injuries.

OSHA strictly monitors: asbestos in the workplace, bloodborne pathogens, and carbon monoxide poisoning, as well as control of hazardous energy sources, cotton dust, employee rights and responsibilities, lead exposure, exposure to formaldehyde, safety of video display terminals, and workplace fire safety.

A late 1990s study of the impact of OSHA inspections showed the positive impact such regulation efforts have had. According to the study, in the three years following an OSHA inspection, penalties, injuries, and illnesses fell an average of 22 percent. In addition, overall injury and illness rates dropped in industries where OSHA has concentrated its attention but remained unchanged or actually increased in industries where OSHA had less presence. OSHA's 2010 budget was estimated at $559 million.

The Federal Deposit Insurance Corporation (FDIC).
This agency is an independent organization created by Congress as part of the 1933 Banking Act. Along with its related regulatory agency, the Federal Savings and Loan Insurance Corporation (and, to a lesser degree, the Federal Reserve), the FDIC's mission is "to maintain stability and public confidence" in the nation's banking system.

Issues connected to banking have played integral roles in American history: the stock market collapse of 1929 and its effect on banks prompted the establishment of the FDIC. During Franklin D. Roosevelt's first 100 days in office, legislation establishing the FDIC was passed by Congress as a way to stave off the collapse of banks and the loss of depositor savings.

Following a record-breaking stock market boom in 1999 that lasted for several months, the U.S. government restructured banking law. Intended to dissolve restrictions placed on banks, insurance companies, and stockbrokerages by the Glass-Steagall Act of 1933, the new legislation was promoted as an offensive rather than defensive measure to meet the rising global economy. It essentially allowed integration of commerce and banking--mutually exclusive industries following the market collapse of the Great Depression. Banks and financial firms could engage in commercial activities such as the marketing of insurance and investment portfolios, and commercial firms were allowed to purchase banks and financial entities.

The FDIC requires banks and other financial institutions included in its regulatory purview to protect their money supplies through the provision of insurance coverage for bank deposits. Accounts are protected up to $250,000. The FDIC also conducts periodic examinations of banks that do not belong to the Federal Reserve System. Periodically, the Department of the Treasury's Bureau of Engraving and Printing issues new paper currency for all but the dollar bill, intended to ensure the continued containment of high-tech counterfeiting, which costs billions of dollars each year.

Following the financial meltdown in the late 2000s, the FDIC was preparing to undergo major changes in the second decade of the twenty-first century. The Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Obama on July 21, 2010, called for a massive overhaul of financial services regulation. The legislation was "expected to result in at least 243 new formal rulemakings by at least 11 federal agencies, including some new entities," according to Iowa Banking Law. Some of the changes included the creation of a Financial Stability Oversight Council and an Office of Financial Research, meant to oversee large bank holding companies; the establishment of a Consumer Financial Protection Bureau, to enhance and oversee consumer rights issues; the reduction of total Troubled Asset Relief Program (TARP) spending from $700 billion to $475 billion; and new record-keeping requirements, among many other provisions.

The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).
This agency, which was originally part of the U.S. Treasury Department, was transferred to the Department of Justice in 2003 based on the Homeland Security bill. While the portion of its mission dealing with the reduction of crime and provision of law enforcement assistance to local entities receives the greatest public attention, ATF also enforces regulations dealing with the sale of alcohol, tobacco, and firearms; in particular, ATF is concerned with the fair and proper collection of revenues and taxes on those items.

The history of ATF goes back to the beginnings of U.S. history. The taxing of alcohol has generally been seen as a way to generate needed revenue. But not surprisingly, those required to pay the tax weren't always supportive of those efforts. The Whiskey Rebellion of 1794 (when farmers vigorously protested the imposition of a federal excise tax on whiskey) was only one in a continuing series of episodes in which the federal government met the resistance of general citizens. With the end of Prohibition, alcohol was once again seen as a possible revenue source. In 1934, the Alcohol Tax Unit within the Bureau of Internal Revenue was created. In 1935, the Federal Alcohol Administration Act was passed, creating licensing and permit requirements and establishing regulations to ensure an open and fair marketplace for the legal manufacturers of distilled spirits and their customers. In 1940, the Federal Alcohol Administration merged with ATF; that merger combined law enforcement and regulatory authority into one agency. Firearms became a part of the organization's responsibilities, and oversight of tobacco taxes was added in 1951. From the mid-1960s into the 1980s, ATF's mission came to include law enforcement duties.

While it may appear that its regulatory functions have taken a back seat to its law enforcement activities, ATF, which regulates some of the most important and controversial industries in the country, also conducts seminars to ensure the market and product integrity of alcoholic beverages. Consistent with its history, the ATF expanded into the area of electronic commerce. A 1995 test project that allowed industries to electronically submit and monitor applications for nonbeverage alcohol formula was deemed successful and was expanded to include other areas under ATF jurisdiction.

Federal appropriations for the ATF increased significantly during the 2000s. For example, in 2008 the budget for the ATF was just over $1 billion. This represented an increase of 87 percent since 1999. The requested budget for 2011 was $1.1 billion.

The issue of industry regulation in general has prompted considerable political debate. A key theme of the Clinton administration was the need to get rid of regulations and requirements that are "burdensome" to U.S. industry, particularly to small businesses. The movement from regulation to deregulation or self-regulation came to a head during the Reagan administration. This was reversed in the mid-2000s with the election of Barack Obama, as the federal government's regulatory role increased.

One example of increased regulation in the late 1990s was when the OSHA increased its efforts to require workplace ergonomic standards in order to reduce back injuries and problems resulting from repetitive stress syndrome. In addition, the National Highway Traffic Safety Administration developed new standards for automobile airbags, and the Food and Drug Administration offered new regulations to prevent a U.S. outbreak of mad-cow disease.

Current Conditions

According to the National Safety Council's (NSC) 2009 annual report, Report on Injuries in America, there were 120,000 unintentional injury deaths in 2007. Unintentional injuries represented the fifth leading cause of death in the United States, with the top four being heart disease, cancer, stroke, and chronic lower respiratory diseases. The leading causes of unintentional injury death were motor vehicle accidents, poisoning, falls, drowning, choking, fire, mechanical suffocation, and firearms. Nonfatal injuries for which people sought medical attention totaled about 36 million that year. The NSC reported that the economic impact of all fatal and nonfatal unintentional injuries in 2007 totaled $684.4 billion, or about $2,300 per capita--an increase of more than $200 million from a decade earlier. It is from statistical data such as this that regulatory entities decide whether to further regulate, deregulate, or leave intact the controlling laws and rules that govern major industries across the nation.

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