1. When Governments Regulate Governments: Protection of Drinking Water in the United States

2. Outline for today The basis for regulatory policy.
How drinking water protection operates in the U.S.
A discussion of how this system may break down.

3. Regulation
Classic model: governments set regulations to meet certain policy objectives.
Classic definition of regulation is an “attempt by government to control the behavior of citizens, corporations or sub governments.” Meier 1985

4. Regulation
Private firms respond rationally by modifying their behavior to comply.
However, health, safety and environmental regulations apply to government agencies as well as private sector firms.

5. Regulation: Reasons for Difficulties in Controlling Governments: Number One Profit-maximizing assumptions
Private firms: the incentive is to maximize profits.
Government: entirely different incentives and constraints.
Governments often have contested and ambiguous missions.
Governments are often politically constrained from raising revenue for regulatory compliance.

6. Regulation: Reasons for Difficulties in Controlling Governments: Number One Profit-maximizing assumptions
Government managers report to elected officials.
No clear standard to follow, meaning profitability.
Result: managers in the public sector balance regulatory compliance against other competing priorities and political concerns.

7. Regulation: Reasons for Difficulties in Controlling Governments: Number Two Costs of Compliance
Private firms can pass the costs onto consumers (reinforcement by penalty policies).
Public managers must seek political support for rate increases and making expenditures for both capital improvements and continued operation.

8. Result is an underpricing for services.
Regulation: Reasons for Difficulties in Controlling Governments: Number Two Costs of Compliance
Cost of compliance greater in the public sector as there are political costs and also compliance costs.
Result is an underpricing for services.
There is no way out for government providers of services: everyone needs drinking water and sewage services.

9. Regulation: Reasons for Difficulties in Controlling Governments: Number Three Enforcement Limitations
Legal and policy limitations on penalties, if penalties can be collected at all.
Courts most often impose lower penalties on private entities.

10. Regulation: Reasons for Difficulties in Controlling Governments: Number Three Enforcement Limitations
Imposing excessive costs on a public entity might harm the same public the regulator must serve.
The public entity is most often the sole provider for a particular service so its existence can not be threated.

11. In Summary
Governments do not face direct competition: financial system does not operate as in the private sector.
Do not face elimination and must exist.
May have sympathetic political allies.
Limitations on enforcement levers.
Result may be they are less likely to comply with regulations.

12. Regulation
A corollary to the lack of incentive to comply and a political scheme to protect governments is that regulators are less likely to enforce against public entities as compared to private firms.
One U.S. example is compliance with the 1994 Combined Sewer Overflow Control Police which was ratified by the Congress in Section 402(q) of the Clean Water Act.

13. Let’s take a look at the program most protective of public health: drinking water regulation.

14. Drinking water comes from a ‘watershed’ which is the land area over which water flows into the river, lake, or reservoir; not just the part of the river or lake that you can see

16. Overview Safe Drinking Water Act enacted in 1974
Protect public health by regulating the nation’s public drinking water supply.
Amended in 1986 and 1996
1986: Establish NPDWS for 83 specified contaminants.
1996: Emphasis on public involvement and public right to know (i.e., annual reports). Identified need for funding.

17. Who is regulated? Public water systems
“System for the provision of water to the public for human consumption through pipes or other constructed conveyances, if such system has at least 15 service connections or regularly serves at least 25 individuals”1
Chain of command with differing responsibilities
EPA State Local water supplier
1 SDWA § 1401(4)(A)

18. Guiding Regulations
National Primary Drinking Water Regulations (NPDWR)
Set enforceable maximum contaminant levels for particular contaminants in drinking water or required ways to treat water to remove contaminants.
National Secondary Drinking Water Regulations (NSDWR)
Relate to the aesthetics of water, not health effects (i.e., color, taste, odor).

19. National Primary Drinking Water Regulations
Standards set through a 3-step process:
EPA ID’s contaminants that may affect public health.
EPA sets a health goal (MCLG).
EPA determines a maximum contaminant level (MCL) or a required treatment technique.

20. National Secondary Drinking Water Regulations
Non-enforceable guidelines.
Focuses on cosmetics and aesthetics of water. .

21. Category of
Contaminants
Potential Health Effects from Ingestion of Water
Microorganisms
Gastrointestinal illness
(ex. Diarrhea, vomiting, cramps)
Legionnaire’s disease, a type of pneumonia
Disinfectants
Increased risk of cancer
Anemia
Liver, kidney or central nervous system problems
Disinfection
Byproducts
Eye/nose irritation
Stomach discomfort
Radionuclides
Kidney toxicity

22. Category of
Contaminants
Potential Health Effects from Ingestion of Water
Inorganic Chemicals
Skin damage
Circulatory system problems
Nervous system effects
Bone disease/mottled teeth of children
Infants and children- delays in physical or mental development
Kidney problems
High blood pressure
Hair or fingernail loss
Organic
Chemicals
Increase risk of cancer
Cardiovascular system or reproductive problems
Anemia
Liver, kidney, spleen problems
Weight loss

23. Summary of Major Components to the SDWA
EPA sets standards to help ensure consistent quality in our Nation’s water supply.
Contaminants are prioritized by risk along with cost benefit analysis.
National Primary Drinking Water Regulations set enforceable maximum contaminant levels & require ways to treat water to remove contaminants.
Treatment techniques are also imposed through regulation.

24. How this System Operates
The federal government establishes protective measures through regulation and oversees the state programs.
The states adopt these measures and oversee implementation of the measures by local drinking water authorities.
The local authorities actually apply and implement those measures.

25. How Enforcement Operates
Public notice requirements: self implementing.
State enforcement: the first means to achieve compliance.
EPA enforcement: a secondary means, but only after states are given ample opportunity to cure.
EPA emergency order authority: the ultimate backstop.
Citizen suits.

26. Consumer Confidence Reports (CCR)
Some information gathered in reports include:
Identification of source water
Information on detected contaminants
Violations of requirements.
Explanations of variances/exemptions
Explanation of expected contaminants

27. Funding to the States
The EPA provides grants to implement state drinking water programs
Small water systems get special consideration because of their limitations on financing system improvements and monitoring.

28. How this System May Fail: What We have Learned Through Recent Experience

29. Financial
Lack of appropriation from the federal government (State Revolving Fund).
Economic strain on state and local governments.
In extreme cases, smaller communities may lose control of their finances and resources.

30. The Regulatory Scheme The example of the lead and copper rule.
Self implementing scheme.
False sense of security.
May be gamed.
May be controlled by those “not in the know” regarding how to comply.

31. Confusion of the Roles of Multiple Governmental Entities
Remember the scheme: federal government knows the science and develops a national baseline for all communities.
State government implements and enforces.
Local government runs the systems and must comply with requirements.
Federal government is the overseer and backstop.

32. Confusion of the Roles of Multiple Governmental Entities
Major problem areas include development of a costly regulatory program and achieving a protective balance of risks across the U.S.
Level of competency and retaining knowledge at all levels of government.
State oversight.

33. Confusion of the Roles of Multiple Governmental Entities
Adequate federal oversight.
Data (and gaming).
Statutory construction limiting federal response.
Limited leverage over small communities as enforcement is a blunt force instrument.

34. Discussion