Organization of U.S. drinking water utilities in a few simple figures
Here are some graphs that convey a few key things about the organization of drinking water utilities in the United States.*
There's a lot of important information in those graphs, but these are the most important for policymaking purposes:
- Fragmentation. There are nearly 50,000 community water systems in the United States, an order of magnitude more than electrical and gas utilities combined.
- Ownership & governance. The overwhelming majority of Americans (84%) get their drinking water service from local government utilities, rather than investor-owned utilities. This proportion is opposite from the energy sector, where investor-owned firms hold the lion's share of the market.
- Size. The distribution of systems is highly skewed in size: over half of American community water systems are very small, serving populations of less than 500; the largest 434 systems serve nearly half of the U.S. population.
These three realities inform virtually every aspect of water system management, operations, finance, and regulation. Any successful effort to improve or reform American drinking water utilities must account for the political and administrative challenges that these realities present.
Organizations are human creations, so we can change them if we want to. But we can’t ignore them.
*Feel free to copy and use; please link to this page.
Sovereignty isn’t what’s on paper, it’s what flows through taps and rivers
America is slowly awakening to the dire state of tribal water and sewer systems. Access to drinking water and sanitation services are severely limited on many reservations, and where such systems exist, many are in poor shape. A couple years ago the first systematic study of Safe Drinking Water Act (SDWA) and Clean Water Act (CWA) implementation for tribal facilities yielded alarming results: tribal systems violated the SDWA 57% more and the CWA 23% more than similar non-tribal facilities. The disparities extended to enforcement, too: formal SDWA enforcement was 12% lower and CWA inspections 44% less frequent for tribal facilities. Evidence of systemic environmental injustice is seldom so glaring.
But there is hope. A new study offers promising evidence for a way to tackle the daunting challenge of tribal water systems. This time instead of comparing tribal and non-tribal systems, Mellie Haider and I looked at differences across tribal facilities to see whether regulatory institutions might hold the key to better environmental management in Indian Country. To understand why, we have to start with the foundations of federal environmental regulation and the peculiar legal status of Indian nations.
Environmental federalism & tribal governance
The landmark laws of the 1970s that form the core of American environmental protection (e.g., the Clean Air Act, Resource Conservation & Recovery Act, SDWA, CWA) were built with a system of federal-state cooperative implementation. Under these laws, the U.S. Environmental Protection Agency (EPA) sets rules, and states are responsible for implementation and enforcement of those rules for the facilities operating in their jurisdictions.
Thing is, tribes are sovereign nations under the U.S. Constitution, and so they—and, by extension, their water/sewer systems—are not subject to state laws. Oddly, the major environmental laws of the 1970s made no explicit provision for regulation of tribal facilities. As a result, tribal water and sewer systems operated in a regulatory vacuum well into the 1980s.
Introducing tribal primacy
Beginning in the Reagan Administration, a series of amendments and executive orders extended federal environmental laws to tribal lands and gave EPA direct implementation authority over them. Some tribal officials successfully lobbied Congress to treat tribes as states for regulatory purposes. With these new rules, tribes may apply to take primary implementation responsibility, or “primacy,” under federal environmental laws. Tribes applying for primacy authority must demonstrate to EPA that they have the administrative capacity to handle regulatory enforcement.
What difference would implementation primacy make to tribal environmental regulation?
On one hand, tribes might engage in a “race to the bottom,” loosening or neglecting environmental rules in order to avoid regulatory costs and improve economic output. But a race‐to‐the‐bottom logic makes little sense for American Indian tribes with respect to environmental regulation. Already occupying the proverbial “bottom,” tribes have little reason to shirk regulatory compliance in a race there.
On the other hand, tribal primacy might lead to more rigorous enforcement, as tribes seek to improve health while maintaining their traditions and cultures. Federal regulators have few political incentives for devoting scarce resources to enforcement on tribal land, especially when tribes may lack the political strength to demand strict enforcement. At the same time, many tribal governments serve sparsely populated communities under poor economic conditions, leaving tribes with limited access to the human and financial capital necessary to maintain compliance. Regulatory neglect might be the unfortunate (though understandable) result. Tribes with primacy have more control over their own environmental fates. Moreover, primacy can give tribes an important lever in their environmental conflicts with neighboring firms and jurisdictions.*
What difference does primacy make?To understand the impact of implementation primacy on tribal clean water enforcement, we analyzed CWA records for 474 tribal wastewater treatment plants in the United States from 2016-2019. About 15% of these facilities operate under tribal regulatory primacy; the rest are regulated directly by the EPA.** After adjusting for facility size, we found that facilities operated by tribes with primacy were inspected more than twice as often as those regulated by the EPA.†
The enforcement gap between tribal and EPA enforcement is greatest for smaller facilities and declines as facility size grows. Over our three-year period of analysis, a very small facility (design capacity 5,000 gallons per day) received an average of 2.75 more inspections under tribal primacy than under EPA oversight. At a moderately large facility (2.5 million GPD), the difference fell to just 0.24, statistically indistinguishable from zero.
The fact that the biggest differences are in the smallest systems underscores the impact of tribal primacy as an administrative phenomenon: it stands to reason that EPA officials spend their limited resources on larger tribal facilities. But in the water sector, the greatest environmental injustices are often in the smallest, most isolated communities. Our evidence shows that tribal primacy has its greatest impact in those small, isolated communities that are otherwise easily neglected.
Implementation authority over environmental regulation gives tribal governments effective sovereignty. Sovereignty turns from mere legal assertion to real, practical impact when tribal officials have greater control over their own destinies. Along with money for pipes and plants, efforts to improve tribal water systems must build human capital and organizational capacity to operate and regulate those facilities. Recognizing this reality, the EPA and the Indian Health Service, along with Indian organizations like Native American Water Association and Intertribal Council of Arizona, run programs aimed at building tribal capacity. In the long run, empowering and building tribal governance capacity offers perhaps the most promising avenue for improving the environment in Indian Country.
*In fact, we found that tribes with a history of frequent federal litigation were more likely to seek primacy. A history of litigation indicates tribal independence, nationalism, and other political factors related to assertions of sovereignty.
**At the time of our study, only one tribe (the Navajo Nation) held SDWA primacy, so we couldn’t analyze variation in drinking water regulation.
†Our analysis also adjusted for differences in the characteristics of tribes with and without primacy.
to win not to lose in water utility management
Warning: strained sports metaphor coming.
It’s late January, and the National Football League season soon reaches its climax with the Super Bowl. Both of last weekend’s conference championship games saw a high-octane home team take the lead. By late in the game, the winning teams’ strategies shifted from trying to score to trying to run out the clock. That meant lots of prevent defense, a tactic familiar to any reasonably attentive American football fan.
Prevent defense is an ultra-conservative strategy, designed to use up time and avoid disastrous, long passing plays—the goal is not really to stop the opposing team, but rather to manage moderate losses. A coach who deploys a prevent defense isn’t so much trying to win as he is trying to avoid losing. That works fine when the team that’s ahead has a comfortable lead. But when the lead is tenuous, prevent defense courts disaster because it can allow a quarterback to lead a heroic comeback. Legendary NFL coach John Madden famously declared that: “All a prevent defense does is prevent you from winning.”
Naturally, all of this makes me think about water utility management.
Compliance as performance
A few years ago I took a water operator training class through Texas A&M Engineering Extension. The course covered principles of safe operations, along with the basic math, chemistry, and physics that operators need. What really stood out to me was how virtually everything about our training involved regulatory compliance. Treatment plant operations, distribution system maintenance, even safety protocols, were all framed in terms of following rules and avoiding violations.
Things don’t seem much different in utilities’ executive suites or board rooms. Although the rhetoric of excellence abounds in water management circles, real policy decisions and capital investments tend to follow regulatory requirements. Treatment plant upgrades happen when the EPA formulates a new rule. Sewer capacity expansions come when overflows become so frequent and egregious that regulators force a consent decree.
A water system’s strategic goal might be public health, environmental quality, citizen trust, and economic prosperity, but the utilities’ management tactics often boil down to regulatory compliance. The practical goal is not so much to achieve good things, but to avoid bad ones.
The main reason is money. One of the challenges of managing great water and sewer systems is that the price of a water is much more visible than quality of water. Customers—who are also voters—know for sure what they pay for it when they get the bill each month. Water systems are literally buried. Unless quality is egregiously awful, the only marker of a system’s quality is regulatory compliance. It’s hard for utilities to demonstrate their real value in terms of anything but monthly bills and disasters.
Utility leaders are thus stuck between a rate increase rock and a regulatory hard place. For many, “success” means avoiding rate increases and regulatory violations as long as possible. The folks who operate these essential systems don’t like running them to the brink of failure, but as one city utility executive told me: “It’s hard to get anything done without a regulatory boot to your backside.”
That’s a fundamentally negative way to think about performance. Is it any wonder that utility managers often run a prevent defense?
From loss avoidance to winning
There are some creative, dynamic, and courageous leaders in the water sector who have found ways to build achievement cultures in their utilities. But hoping for the serendipitous arrival of an exceptional leader isn’t really a strategy. What would it take to change the game? How can we get utility leaders to think about seeking success, rather than avoiding failure?
What’s needed is a comprehensive, independent, and visible system for monitoring and reporting water and sewer utility performance. What if there were monthly box scores for utilities? What if they received a report card and grade point average every year, with results reported publicly?
Aquam cum laude
This isn’t really a radical idea; Congress had transparency in mind when it required utilities systems to provide water quality reports, and the State of New Jersey was thinking about political accountability when it launched the Water Quality Accountability Act. Too often we forget that public information about water system performance also creates a credit-claiming opportunity. But reporting under those laws is complicated and in many ways opaque.
Anyone who has been to high school understands grades and GPAs. A simple, comprehensive report card would give a utility’s leaders a way to communicate progress. A new management team could set clear improvement targets and show how their efforts moved the system’s GPA from 2.7 to 3.5. Mayors and councilmembers could trumpet the improvements, helping to demonstrate the value of those unpleasant rate increases. Water systems that achieve and maintain consistent excellence across the board would qualify for the Dean’s List.
I’m a big believer in the power of measurement and incentives. If we keep score correctly, our utility leaders can do more than avoid disaster—they can play to win health, environmental quality, and economic prosperity for our communities.
© 2020 Manny P. Teodoro