Regulations: Love ’em or Hate ’em, Common Sense or Overreach

Written by: Heather Himmelberger, Director of the Southwest Environmental Finance Center. 

Regulations are in the cross hairs right now. Regulations of all kinds, but especially environmental regulations, are hated by politicians, companies, regulated entities of all types, including public entities, and the general public. It is tempting to assume that all regulations are costly and unnecessary and that we would be better off without them. The question is, is this reputation deserved? Should we be supportive of the quest to reduce regulations?

To address these questions, we probably need to go back to why we have regulations in the first place. And more importantly, why the regulations go beyond “common sense” into what has become branded as “regulatory overreach.” To understand why we have regulations, we must go back to a time before regulations, or imagine what it would be like if they were not there. For simplicity’s sake, let’s focus on drinking water regulations but the same thought process would apply to most regulations, environmental or otherwise. If there were no regulatory requirements, say no Environmental Protection Agency (EPA) or no state environmental regulatory department, what would water utilities do?

Some percentage of water utilities, probably around 10 to 20 percent, would still treat their water to a very high quality and would police themselves by taking samples, adjusting treatment, replacing assets, and employing highly trained operators. The percentage of utilities above has the required technical expertise to accomplish these goals. A much larger percentage, probably 60 to 80 percent would generally have the desire to serve safe, high-quality water, but would not really know how to do that and would not have the technical expertise to determine what needs to be done or how to accomplish the required tasks. In those cases, safe drinking water would be mostly based on happenstance. (e.g. if the groundwater were clean and the piping were relatively new, the water would be of decent quality. If the groundwater were contaminated or the infrastructure were aging, it would be of lesser quality.) The remaining group of water utilities, the final 10 to 20 percent, would not strive to serve good water and would be more focused on providing the bare minimum service to their customers. They would focus much more on the cost than the quality of the water they provide.

Understanding this grouping of water utilities helps understand how regulations get started and how they end up evolving the way that they do. If all systems were in the first category, we would not need regulations. However, that is not the case. To meet the needs of the second group of systems, regulations are written and implemented to provide the information of how safe water is defined and how it can be delivered to customers. These regulations are of the “common sense” variety.

Unfortunately, it is the set of water utilities in the final category (the 10 to 20 percent of utilities that would focus more on the cost than the quality) that lead regulations to move beyond the “common sense” label. This 10 to 20 percent will ignore regulations or look for ways around the regulations. They will look for every loophole and push the boundaries as far as they can. As the systems ignore the regulations or actively try to avoid them, their customers are put at risk. In order to protect the public, regulatory agencies have to increase the regulations, add more complexity, close loopholes, increase enforcement or increase penalties. As these systems push boundaries, they end up in enforcement or judicial proceedings. As a result, regulations tighten and “regulatory overreach” is born.

So, the question is: are the regulations really “overreaching” or just protecting the customers served by these 10 to 20 percent of systems? Do the customers of these systems deserve to drink unsafe water or put their health at risk? I hope the answer is no. Let’s consider some numbers. There are approximately 50,000 to 60,000 community water systems in the United States. Let’s say that only 10 percent of those community water systems fall into this latter category. That would still be 5,000 to 6,000 water systems across the nation. If each one serves 500 people on average, that means that somewhere between 2.5 and 3.0 million people would potentially be impacted. If 20 percent of the 50,000 to 60,000 national community water systems were part of that last category and each system served 1,000 people on average, we could be looking at 10 to 12 million Americans drinking unsafe water on a daily basis!

You might ask, are there really water utilities out there who would behave this way? I would love to say no, but the truth is, the answer is yes. Even with strict regulations, such as currently exist, there are numerous water systems, who for one reason or another, do not comply. I have sat across the table from water system owners who say “I’m not removing that (fill in the blank for a particular contaminant, I’ve heard several over the years) from the water. The state can just shut me down.” Or “I’m not complying, I’ll gladly give the state my system.” Or some version of “That rule (fill in the blank as there are several unpopular rules) is not necessary and we’re not going to comply.”

Regulations also have a role in the financial side of water utilities. If there were no regulations, how would water system managers and operators ever convince elected officials to invest in what is necessary to keep the system running over the long term while protecting public health? Even with regulations, we are grossly underfunding our utilities. How would rolling back regulations make this better? When we make trade-offs of finance over public health you set up situations like Flint, Michigan where the primary driver was not public health but economics. The regulations are intended to prevent this type of decision-making where economics go too far and public health is compromised.  Clearly, decision makers did not do their jobs in Flint. Removing the regulations would not make these types of situations better: removing regulations would only lead to more customers in more cities facing high levels of lead or any number of other contaminants.

If we think about regulations in this context, it becomes easier to understand that one person’s overreach is another person’s health or, possibly, their life. Unfortunately, I do not think we are ever going to solve the conundrum of the bottom 10 to 20 percent or find a way to stop at the “common sense” level of regulation. We are either going to have to have rules that may appear to be stricter and more onerous than we would like or we are going to have to face a risk that is simply too high. As a result, the best approach for us is to change our attitude about the regulations and see them as the reason for almost no one in the U.S. dying from water borne illness while over 3 million people die from poor quality water around the world. Rolling back the regulations would leave us vulnerable and as much as we may hate regulations, the alternative is far worse.

*Image courtesy of Stuart Miles at FreeDigitalPhotos.net