for every action, there's a rule

Back in the day, when no one had heard of "supply chains" and physical distribution was considered a revolutionary new concept, the buying and selling of transportation service was governed by federal regulation. The railroads and motor carriers operated under the purview of the Interstate Commerce Commission, while air carriers were overseen by the Civil Aeronautics Board (and later, the Federal Aviation Administration).

But in the later part of the 20th century, the deregulatory winds began to blow through the land. The first to feel the effects was the airline industry, which was deregulated in 1978. Two years later, the Staggers Act loosened some of the restrictions on railroads, while the Motor Carrier Act of 1980 did the same for truckers.

It would be a mistake to think that supply chain operations have been thrown into an economic freefor-all, however. Deregulated does not mean unregulated—far from it. Airline deregulation is considered by many to be an unfinished business. And the 1980 Motor Carrier Act was really only partial deregulation. Some 30 years later, the Department of Transportation retains control over the licensing of drivers and carriers, training, drug and alcohol testing, and more.

Fact is, there are still a host of agencies, programs, regulations, and laws that define, direct, and/or limit what we can do in supply chain management. What follows is a brief look at just a few of the activities that are affected; there are, of course, dozens—no, hundreds—more that we could talk about.

Financial reporting
Though not aimed directly at supply chains, the Sarbanes-Oxley Act, the law passed in 2002 to tighten corporate accounting standards, may well have implications for many supply chain operations. Commonly known as SOX, the Sarbanes-Oxley Act was designed to rein in abuses of accounting rules that resulted in misleading financial statements and reports, the socalled "Enron Effect." It established protocols for implementing and documenting accounting controls.

SOX also deals with issues of ethical transactions, whether domestic or international, and has implications for import/export operations. For example, the law restricts overseas payments of bonuses, finder's fees, and other emoluments that might be construed as baksheesh. Though Sarbanes-Oxley technically applies only to public companies, the reality is that public companies' partners and suppliers are often drawn into the compliance web as well. And under SOX, you are responsible for the actions of your suppliers as well as your own.

Importing and exporting
Mention import/export regulation, and we immediately think of Customs and Border Protection (CBP). But that's only the starting point. Import and export operations are governed by a complex tangle of laws and regulations overseen by as many as 12 agencies or divisions of the federal government, including the Department of State; Directorate of Defense Controls; Bureau of Alcohol, Tobacco, and Firearms; Nuclear Regulatory Commission; and Department of Energy.

The situation on the foreign trade regulatory front has been in flux for the past five years. The terrorist attacks of Sept. 11, 2001, prompted both an organizational reshuffling—Customs, long an arm of the Department of the Treasury, is now part of the Department of Homeland Security—and a spate of new security-related legislative initiatives. These include the Container Security Initiative (CSI), the Trade Act of 2002, the Bioterrorism Act of 2002, and C-TPAT (Customs-Trade Partnership Against Terrorism). Just recently, Congress adopted new legislation that demands closer inspection of both air and ocean cargo.

Workplace safety and labor practices
In the workplace, the Occupational Safety and Health Administration (OSHA) has oversight of all things related to safety. Established in 1970, OSHA was initially seen as an uninvited guest making new demands on management, and its relationship with industry got off to a rocky start. Things have quieted down since, and today OSHA is seem more as a working partner than a mindless tattletale.

OSHA oversees a wide range of workplace practices, from industrial hygiene to hazardous materials, to material handling and building operations. The agency also works closely with universities and other educational organizations on the establishment of standards and training. By the way, OSHA has counterparts in many states.

Beyond OSHA, the Department of Labor (DOL) covers almost every imaginable aspect of life in the workplace, from the minimum wage to pensions and benefits, including workers compensation, progressive discipline, and overtime. (These, too, are also covered by agencies in the individual states.) The DOL also oversees provisions of the Family and Medical Leave Act and the Americans With Disabilities Act.

In addition, the Immigration and Naturalization Service (INS) governs how you can employ—or not employ—people who are not U.S. citizens. And the Equal Employment Opportunity Commission (EEOC) enforces the federal laws prohibiting discrimination in hiring and firing.

Air, water, and food
Supply chain operations are also affected by a wide range of environmental regulations, which are overseen at the federal level by the Environmental Protection Agency (EPA). Today, there are regulations governing not just the kinds of terrain on which you may construct a facility, but also such matters as waste disposal, emissions, soil, ground water, rivers, and air quality. In recent years, the agency has turned its attention to recycling as well.

The EPA and other agencies also keep a close watch on hazardous materials. There are rules for hazmat storage, for hazmat transportation, for hazmat disposition, and for hazmat clean-up. A cottage industry has grown up around the need to provide hazmat training for emergency and incident response, site clean-ups, decontamination, testing and sampling, and almost anything else you might imagine.

Supply chain activities at companies that handle foodstuffs may also fall under the purview of the Food and Drug Administration (FDA). That agency has rules for the transport, handling, and storage of foodstuffs—linked to the Preparedness and Response (Bioterrorism) Act of 2002. Those rules are particularly likely to affect third-party warehouses, brokerage deals, imported goods, cross-docking transactions, and vertically integrated trucking subsidiaries.

So this is deregulation?
There may be enough regulation to go around in this deregulated economy, even looking only at the national level. When state requirements are layered on, there's apparently more than enough for everyone. We could debate all night whether there's still too much, or whether we need more to protect workers, satisfy consumers, and meet community—including global community—needs. But when we approach the level of detail that demands that wood pallets originating outside the United States be fumigated or sterilized to prevent the importation of pests along with products, it seems unlikely that too many gaps have yet to be filled.

How can you keep up with all this? You can't. That's why it's smart to get connected with the accountants and lawyers who do. They really aren't nerds, but dedicated specialists whose passion for the arcane minutiae of regulation saves our collective bacon in an ever-changing regulatory landscape.