It’s not often a businessman has good things to say about new government regulations. But for Chris Carlin, owner of C. Carlin Plumbing in Erie, Pennsylvania, new ordinances that made Erie-area homeowners responsible for repairing their own sewer laterals thrust his company into a completely different — and more profitable — direction.

The ordinances went into effect during the mid-to-late 1990s as municipalities realized they couldn’t afford to fix all the inflow and...