Because the local governments were strongly incentivized to let industry do whatever it wanted. If they required tight standards, the jobs would move to Wyoming or Pennsylvania or Ohio or West Virginia, where the state didn't require it. If there's a national standard, enforceable by fine, then the option is fix it or leave the country altogether. In the 70's, more corporations were national than multi-national, so it was a compelling argument.
And as mentioned, you have the "downstream" problems. Town X is choking and has water full of lead because it's downwind from Town Y; if the state or local government is reluctant, Town X is SOL.
Flint still has dirty water; if the EPA goes, it probably will always have it.