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At the federal level, all the agencies derive their power from Congress, which created them under its constitutional authority to regulate interstate commerce. Congress long ago—after the Civil War—began delegating this authority when it became clear that the job was too complex and technical to be handled entirely by legislation in the amount of time available and with the limited expertise of the lawmakers. As economic activity became more complex as the nation became more industrialized, legislative bodies were unable or unwilling to prescribe detailed guidelines for regulation. Traditional agencies of government could no longer regulate big businesses (Friedman, 2005). Agencies were established and given considerable discretion in determining the applicability of often vaguely written legislation to specific situations such as mass transport and communication. These agencies were expected to provide certain advantages over the courts in the instrumentation of public policy. These advantages included speed, informality, flexibility, expertise in technical areas, and continuous surveillance of an industry or an economic problem.

There is substantial variation in the responsibilities, functions, and operations of the various agencies. Some, such as the EPA and the FTC, are concerned with only a few activities of a large number of firms, while others, such as the ICC, oversee a great many matters involving a relatively small number of firms (in this case, transportation). Many agencies in the first category have the official mission of protecting the interests of the general public in regard to health, safety, and activities in the marketplace. Most of the agencies in the second category are expected not only to perform public protection functions but also to safeguard and promote the health of specific occupations, industries, or segments of the economy subject to their jurisdiction.

Both conservatives and liberals criticize administrative agencies (Box, 2005). Conservatives say that administrative agencies represent the worse of “big government” by threatening the civil liberties of businesspeople and the proper functioning of the economic system. Liberals say that administrative agencies fail to exert sufficient control over the harmful practices of large corporations.

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