Regulatory agency
A regulatory agency is an independent government body established to create and enforce rules and standards within specific sectors or activities. Common in the United States and increasingly found in other countries, these agencies are typically formed through legislation and operate autonomously, setting their own policies while being accountable to the central government. The U.S. Securities and Exchange Commission (SEC) and the U.S. Interstate Commerce Commission (ICC) are notable examples of such agencies, with the ICC being the first established in 1887 to regulate railroads.
Regulatory agencies perform both legislative and judicial functions; they create regulations and also conduct public hearings to gather input on relevant issues. Their authority can vary widely, with some agencies overseeing broad areas and others focusing on specific sectors, such as telecommunications or environmental protection. The structure of these agencies typically involves a board of appointed members serving staggered terms, ensuring a mix of political representation. As global governance evolves, many countries have adopted similar regulatory frameworks, with agencies often addressing health, telecommunications, and consumer safety, reflecting diverse national priorities and regulatory needs.
Regulatory agency
Regulatory agencies, common in the United States and growing in prevalence in other countries, are often created by government legislature. By design, the appointed bodies serve as independent commissions, and members create specific laws and standards pertaining to an activity or particular business sector. Although the government creates them, regulatory agencies are typically autonomous, and officials at the helm of each body set their own policies.
In many countries, including the United States, regulatory agencies carry out judicial and legislative functions. On the legislative side, many agencies adopt specific regulations and laws pertaining to their area of focus. The judicial end of the agency’s function consists of holding public hearings and similar activities to gauge input on a particular topic.
While regulatory agencies are usually afforded a degree of authority by a country’s central government, there are limitations in the bodies’ oversight. A regulatory agency’s actions are usually open to legal review from an outside source, and a higher authority can overturn a decision.
Background
The first regulatory agency created in the United States was the Interstate Commerce Commission (ICC), which Congress established in 1887 to oversee railroads and other forms of infrastructure. Before the enactment of the ICC, lawmakers reviewed industry-specific issues on a case-by-case basis. The rationale behind creating the ICC, and other regulatory agencies that would follow it, was a goal of having specialists in a particular field or area of study making policy-related decisions. In the early days of regulating railroads, for example, few members of Congress knew the intrinsic details associated with the country’s earliest form of nationwide transportation. In the twentieth century, the United States government sought a growing number of expert opinions as part of the process of drafting new legislation. Eventually, the ICC became responsible for overseeing oil companies, motor carriers, and various types of waterways throughout the country.
The role of regulatory agencies in the United States expanded over time. In the example of the ICC, the agency’s first members merely served as an advisory panel to Congress and, to a lesser extent, the courts. Both branches of government still carried out all of the laws. However, not long after creating the ICC, Congress decided to expand the appointed body’s role and gave the commission the authority to enforce laws on its own. Depending upon the specific agency, members can assess fines against companies found in violation of laws.
In some cases, regulatory agencies became an outgrowth of specific legislation. One such example in the United States was the Stockyards and Packers Act, which was adopted in 1938 as part of President Franklin D. Roosevelt’s New Deal program. The Department of Agriculture was created as part of the legislation.
Other countries have since adopted their own regulatory agencies, though the specific oversight from one country to the next varies, depending on the overarching form of central governance. In most instances outside the United States, a country’s administrative department has oversight of regulatory agencies.
Overview
Regulatory agencies grew exponentially in the United States in the latter half of the twentieth century and into the twenty-first century. There are many in operation, including the Consumer Product Safety Commission (1972), Environmental Protection Agency (1970), Equal Employment Opportunity Commission (1964), Federal Aviation Administration (1958), Federal Communications Commission (1934), Federal Deposit Insurance Corporation (1933), Federal Election Commission (1975), Federal Energy Regulatory Commission (1977), Federal Reserve System (1913), Federal Trade Commission (1914), Food and Drug Administration (1906), Interstate Commerce Commission (1887-1996), National Labor Relations Board (1935), Nuclear Regulatory Commission (1975), Occupational Safety and Health Administration (1971), and the Securities and Exchange Commission (1934).
Each agency's responsibilities vary depending on the specific legislation that established it. Some of the appointed bodies oversee a wide range of issues, while others are more singularly focused. As technology and matters related to its mission evolve, an agency's role might expand.
This is especially true of the Federal Communications Commission (FCC), which was established in 1934 as the Federal Radio Commission (FRC)—an outgrowth of Congress’s Communications Act of 1927. As technological advancements were made with television and the Internet, the purview of the FCC has expanded. Its name was changed from the FRC to the FCC to reflect the growing responsibilities. The Federal Trade Commission (FTC) is another example of an agency with a role that has expanded since its creation in 1914. In addition to overseeing the packaging, labeling, and advertising of consumer goods, the FTC has gained added responsibility in related areas, including issues of importing and exporting assorted items.
While some agencies are expanded to take on new roles, new agencies are also created as society evolves. The Consumer Financial Protection Bureau, established in 2010, protects consumers from unfair, deceptive, or abusive acts or business practices. In 2018, the Cybersecurity and Infrastructure Security Agency was established to combat the increasing cybersecurity threat.
In the United States, the overall administrative structure of each regulatory agency is common. Each agency consists of five members. Terms in office vary, with some lasting as long as seven years, but appointments within each body are staggered. An act of Congress and a subsequent executive order by the president completes an appointment. Appointees do serve in a partisan capacity, but representation in an agency is mixed, often with a close-to-equal number of Democrats and Republicans that may be mandated by legislation. Because the terms are staggered, a sitting president does not have the ability to dramatically alter the composition of a regulatory agency.
Like in the United States, the number of regulatory agencies across the globe has increased. In some instances, the agencies serve more than one country through a cooperative arrangement. Member nations of the European Union, for example, are given legislative assistance through the European Medicines Agency and the European Commission.
Health-related regulatory agencies are among the most common type from one nation to the next. A sampling includes the Agency of Medicines (Estonia), Finnish Medicines Agency, Federal Ministry of Health (Germany), State Institute for Drug Control (Slovakia), Medical Products Agency (Sweden), and Ministry of Health (Turkey).
Many countries also have specific agencies modeled after the FCC in the United States and overseeing radio, television, and the Internet. The Telecom Regulatory Authority of India, for example, serves as that country’s independent governing body of all telecommunications-related business. The United Kingdom also has a similar agency, the Office of Communications, which has been handed oversight of the broadcasting, postal, and telecommunications industries throughout England, Ireland, Scotland, and Wales.
Bibliography
"Agencies." Regulations, www.regulations.gov/agencies. Accessed 18 Dec. 2024.
Gilardi, Fabrizio. Delegation in the Regulatory State: Independent Regulatory Agencies in Western Europe. Elgar, 2009.
Lijphart, Arend. Patterns of Democracy: Government Forms and Performance in Thirty-Six Countries. 2nd ed., Yale UP, 2012.
Maverick, J.B. "What Agencies Oversee U.S. Financial Institutions?" Investopedia, 30 Sept. 2024, www.investopedia.com/ask/answers/063015/what-are-some-major-regulatory-agencies-responsible-overseeing-financial-institutions-us.asp. Accessed 18 Dec. 2024.
Meltzer, Allan H. Why Capitalism? Oxford UP, 2012.
Pollitt, Christopher, et al. Agencies: How Governments Do Things through Semi-Autonomous Organizations. Palgrave, 2004.
United States. National Archives and Records Administration. Code of Federal Regulations 2013. GPO, 2013.
Vogel, Steven Kent. Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries. Cornell UP, 1998.
Watson, Travis F., and Leroy Gibson. Benefits and Costs of Federal Regulations and Unfunded Mandates. Nova, 2012.
White House. “Campaign to Cut Waste.” White House, obamawhitehouse.archives.gov/goodgovernment/actions/campaign-cut-waste. Accessed 18 Dec. 2024.