Cultivating effective utility-regulator relationships around innovation: Lessons from four case studies in the U.S. municipal wastewater sector

Abstract

Regulation is critical for protecting public and environmental health but is often perceived as a barrier to innovation in the U.S. municipal wastewater sector. Before a wastewater utility can implement a new technology, it must navigate applicable regulatory processes and obtain necessary approvals, often including obtaining an updated wastewater discharge permit. While all regulatory processes involve interactions between regulators and regulated entities, innovative projects may require them to engage in new ways, heightening the importance of the relationships between them. We investigated four case studies to examine how regulatory relationships affect municipal wastewater utilities’ efforts to adopt new technologies. Through cross-case analysis, we identified five interconnected characteristics of regulatory relationships that appear to facilitate innovation, and whose absence could impede it: clarity, capacity building, continuity, trust, and bounded flexibility. Appropriately applied bounded flexibility—such as using regulatory discretion to tailor permits to reflect the particular risks, benefits, and information needs of the technology at issue—may be key for enabling socially and environmentally beneficial innovation. Yet all five characteristics play important and mutually reinforcing roles in supporting innovation. By cultivating these characteristics in their relationships, both utilities and regulators can take responsibility for enabling appropriate implementation of innovative technologies. However, some parties, particularly small and under-resourced utilities, may find cultivating these characteristics difficult. Therefore, sector-wide support for effective utility-regulator relationships, including coordinated regulatory and funding programs targeted to meet small utilities’ needs, may be needed to bring beneficial innovation within reach for many wastewater utilities and the communities they serve.