Waterborne diseases, such as cryptosporidiosis, cause many cases of serious illness in the United States annually. Water quality is regulated by a complex system of federal and state legal provisions and agencies, which has been poorly studied. The authors surveyed state and territorial agencies responsible for water quality about their laws, regulations, policies, and practices related to water quality and surveillance of cryptosporidiosis related to drinking water. In this commentary they review the development and current status of federal drinking water regulations, identify conflicts or gaps in legal authority between federal agencies and state and territorial agencies, and describe court-imposed limitations on federal authority with regard to regulation of water quality. Recommendations are made for government actions that would increase the efficiency of efforts to ensure water quality; protect watersheds; strengthen waterborne disease surveillance; and protect the health of vulnerable populations.