The Transaction Costs of the Administrative Presidency: Evidence From a Trump-Era Clean Water Act Enforcement Reduction

• Published date: 01 May 2024
• DOI: http://doi.org/10.1177/02750740241229763
• Author: Jesse L. Barnes,Jayce L. Farmer
• Date: 01 May 2024
• Subject Matter: Articles

The Transaction Costs of the

Administrative Presidency: Evidence

From a Trump-Era Clean Water Act

Enforcement Reduction

Jesse L. Barnes

1

and Jayce L. Farmer

2

Abstract

Over the last two decades, political polarization has gridlocked federal congressional capacity to meet environmental regula-

tory demands. As a result, presidential authority has expanded to overcome this legislative impediment leading to a new era of

“administrative presidency.”In this new era, presidents have increasingly used their administrative authority to meet politically

driven environmental goals. Yet, we still know little about how federal-level executive political actions impact the outcomes

and operations of local regulatory environmental systems. This study f‌ills this scholarly void by empirically testing the effect of

a federal COVID-19 Clean Water Act (CWA) enforcement reduction on Safe Drinking Water Act (SDWA) implementation

outcomes for local community water systems (CWSs) sourcing from surface waters (SWs). Using a framework grounded in

transaction cost federalism, we argue that a politically motivated executive reduction in federal CWA enforcement is asso-

ciated with poor local SDWA implementation outcomes. We test this assumption with a differences-in-differences economet-

ric approach using data drawn from the federal Safe Drinking Water Information System database. Our f‌indings suggest that

the CWA enforcement reduction resulted in an over 50% increase in SDWA health violations by CWSs sourcing from SWs.

The implications of this study extend to U.S. water policy and environmental federalism, highlighting the need for better coor-

dination between the CWA and SDWA and the potential risks associated with relying on broadened executive actions to drive

U.S. environmental policy. Further research is warranted to understand the consequences of administrative policy changes on

U.S. environmental governance.

Keywords

administrative presidency, CWA, SDWA, environmental policy, federalism

Introduction

Political polarization has stymied federal congressional

capacity to update federal environmental policies that could

address critical 21st-century water challenges (Dunlap &

McCright, 2008; Kim & Urpelainen, 2017; Rabe, 2022;

Roberts, 2021). This stagnation has inadvertently expanded

presidential power over environmental governance in what

has been referred to as the “administrative presidency”to

f‌ill this federal environmental policy void (Lowande &

Milkis, 2014; Moore, 2018; Roberts, 2021; Vig, 2022).

Since the 1990s, presidents have increasingly used executive

authority to enhance or weaken the implementation of envi-

ronmental policy (Hejny, 2018; Shaf‌ie, 2020). The stark con-

trast in environmental policy agendas between the

Democratic and Republican parties has raised concerns

about whether the administrative presidency has detrimental

effects on environmental policy implementation and its eff‌i-

cacy in fostering environmental innovations (Fiorino, 2022;

Rabe, 2022; Shaf‌ie, 2020; Turner, 2018). Given these

concerns, it is important to understand the top-down effects

of the Trump administrative presidency on environmental

governance. It is well documented that this administration

used its executive authority to reduce or eliminate nearly

every Obama-era environmental policy rule, which some

scholars have claimed broadly undermined the

Environmental Protection Agency’s (EPA) ability to

enforce environmental policy implementation (Bomberg,

2017, 2021; Goodsell, 2019; Vig, 2022; Wentz & Gerrard,

2019).

1

Political Science Department, University of Nevada, Reno, Reno Nevada,

USA

2

School of Public Policy and Leadership, Universityof Nevada Las Vegas, Las

Vegas, Nevada, USA

Corresponding Author:

Jesse L. Barnes, Political Science Department, University of Nevada, Reno,

1664 N Virginia St, Reno Nevada, United States.

Email: jessebarnes@unr.edu

Article

American Review of Public Administration

2024, Vol. 54(4) 307–322

© The Author(s) 2024

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/02750740241229763

journals.sagepub.com/home/arp

Although these executive actions have been argued to have

a wide-reaching impact on federal environmental governance,

we narrow our focus on water policy and its implementation,

as this has been a key policy area of political scrutiny since

the late 1990s (Keiser et al., 2021; Konisky & Woods,

2018). In the United States, water resources are primarily reg-

ulated under two separate policies, the 1974 Safe Drinking

Water Act (SDWA) and the 1972 Clean Water Act (CWA).

The SDWA gives the EPAthe authority to set water treatment

standards for community water systems (CWSs) (Tiemann,

2014). The CWA gives the EPA the authority to protect

surface water (SW) by setting pollutant discharge standards

for regulated f‌irms, such as oil ref‌ineries and industrial farms

(Mehan, 2022; Woods, 2021). Historically, CWA implemen-

tation has complemented SDWA implementation by improv-

ing SW quality and thus reducing treatment costs for CWSs

sourcing from lakes, rivers, and other SWs (Anica, 2022).

However, the lack of formal coordination between the CWA

and the SDWA presents a dilemma that could be problematic

if the federal government adopts CWA enforcement reduc-

tions without considering the potential second-order effects a

reduction could have on CWSs sourcing from SWs.

The purpose of this article is to explore this CWA–SDWA

policy dilemma within the context of the Trump administra-

tion’s 2020 executive action that temporarily reduced federal

CWA enforcement from March 26, 2020 to August 31, 2020.

Therefore, we ask the following question: Do federal reduc-

tions in CWA enforcement lead to poor SDWA implementa-

tion outcomes at the local government level? To explore this

question, we advance a theoretical understanding using a

transaction cost perspective of federalism (Farmer 2022a,

2022b; Feiock, 2008; Rabe, 2011; Youm & Feiock, 2019)

to explain how the policy misalignment between the CWA

executive order and SDWA implementation led to distinct

transaction costs for local government CWSs. The lack of

enforcement of CWA standards can pose political transaction

costs that can give rise to agency problems that derive from

expost opportunistic behavior (Feiock, 2008). Because the

2020 executive action called for a reduction in federal

CWA enforcement, local government-owned CWSs sourcing

from SWs may have been at a greater risk of bearing the costs

of CWA-related moral hazard dilemmas that could lead to

poor SDWA implementation outcomes.

In the following section, we provide an overview of the

governance and implementation of the CWA and SDWA,

and what the 2020 COVID-19 executive order meant for

these policies. Thereafter, we use a transaction cost federal-

ism theoretical framework to explain the connection

between the Trump-era CWA enforcement reduction and

the outcomes of local government-owned CWSs sourcing

from SWs. Drawing on data from the federal Safe Drinking

Water Information System (SDWIS) database, we employ a

difference-in-difference quasi-experimental technique to

empirically assess whether the executive order correlated

with increased instances of SDWA health violations among

local government CWSs sourcing from SWs. Using this anal-

ysis, we identify a signif‌icant increase in local SDWA viola-

tions after the federal CWA enforcement reduction. These

f‌indings suggest that local governments may face higher

SDWA compliance-based transaction costs if environmental

policy is left in the hands of the administrative presidency.

Background

Administrative Presidency and Environmental Policy

In recent decades, a dominant trend has emerged in federal

environmental governance: “the expansion of presidential

powers in def‌ining national environmental priorities and pol-

icies”in response to “the growing partisan divide over

climate change and other environmental issues”(Vig, 2022,

p. 87). As the administrative presidency has increased in

power, due to congressional environmental policy stagnation,

presidents have increasingly attempted to use executive

actions to enhance or reduce federal environmental legisla-

tion to meet political, environmental policy goals (i.e., the

administrative presidency; Fiorino & Weted, 2020; Rabe,

2022). Since the Clinton administration, presidents have

increasingly used their authority to meet their environmental,

and political agenda through (a) changing internal agency

rules, (b) appointing political allies to agency leadership posi-

tions, and (c) using executive mandates to circumvent con-

gress (Vig, 2022). Interestingly, the Trump administration

relied predominantly on executive actions to meet political

goals, including rolling back environmental regulations and

repealing Obama’s executive actions targeted at environmen-

tal issues, particularly policies pertaining to SW protection

(Goelzhauser & Konisky, 2019; Goelzhauser & Rose,

2017; Konisky & Woods, 2016, 2018; Yozwiak et al., 2021).

Though the Trump administration sought to weaken SW

protection at the federal level, several of these executive

actions were stayed in federal court, which suggests that

many of the attempted CWA changes failed and therefore

maintained the CWA status quo of enforcement levels as

set by prior administrations (Noll, 2021; Rabe, 2022).

However, the 2020 COVID-19 EPA response did effectively,

albeit temporarily, reduce federal enforcement of the CWA

(Persico & Johnson, 2021).

Temporary EPA Enforcement Discretion Policy

In March 2020, in response to the COVID-19 pandemic, the

EPA issued a temporary compliance enforcement mandate

easing penalties against regulated entities for violating mon-

itoring and reporting requirements over environmental pol-

lutant discharges to air, land, and water contending that the

“consequences of the pandemic may constrain the ability of

regulated entities to perform routine compliance monitoring,

integrity testing, sampling, laboratory analysis, training,

reporting or certif‌ication”due to worker shortages or other

308 American Review of Public Administration 54(4)