We argue that the imposition of administrative boundaries on a policy domain has the potential to exacerbate cooperation and coordination dilemmas conditional on the extent to which these boundaries either dissect natural environmental borders or introduce heterophily (i.e., the extent to which stakeholders are different from each other in a policy domain). We test our expectations using a newly constructed dataset of U.S. state regional offices charged with water pollution control responsibilities. The subjects of the analysis are about 6,000 major water pollution sources regulated under the U.S. Clean Water Act for which we have detailed historical data on compliance and regulatory activity.