Heterogeneous effects of distressed utilities policy on wastewater compliance

Many rural and small urban communities in the United States struggle to maintain wastewater compliance because of aging infrastructure and limited managerial capacity. This paper evaluates West Virginia’s Distressed and Failing Utilities Improvement Act using compliance data from the U.S. Environmental Protection Agency’s Enforcement and Compliance History Online system for 2016–2024 and a synthetic difference-in-differences design. We find that the policy reduced the share of non-major facilities operating under general permits with at least one newly recorded Clean Water Act violation by approximately 12.6 percentage points. In contrast, we detect no statistically significant effects for major facilities or non-major facilities operating under individual permits. The results indicate that remediation-oriented policies emphasizing administrative coordination, technical assistance, and capacity building can improve recorded regulatory compliance, particularly among facilities operating under standardized permitting arrangements. More broadly, the findings highlight the importance of institutional capacity and permit structure in shaping environmental compliance responses.