If you are connected to a public system, the government certainly has a right to say something about it and regulate it. It's not private when the water and waste leaves your property.
The government even has a right to say something about your waste disposal even if you are not connected to a public system. Whatever you put onto or into the earth can potentially affect public water systems, both underground and above ground, well beyond your property.
That is a ridiculous statement. First, the Federal government only has the right to regulate those activities specifically delineated in the Constitution. Toilet size is not included.
Second, telling me how much water can flow through my toilet, is absurd. The amount of water that I use at my house is my business, not the governments, particularly because I pay a water bill, as well as a sewer bill. If I want to use more water, and am willing to pay for it, again, it is none of the governments business. I am PAYING for a service...they are not dictators who get to run everyone's lives. I am guaranteed the right to "pursue happiness" by the constitution, which certainly includes what kind of toilet to buy, or to sell.
Third, even if the government had some say in it, it would not be the FEDERAL government, but the LOCAL, CITY government. The feds have absolutely nothing to do with it (or shouldn't!). It is a City, county, and (perhaps) state issue.
The idea that because something affects other people, that the government gets to tell you what you can or cannot do, make, sell, buy, or install, is absolutely a communist idea. EVERYTHING that you do affects someone else...does that mean that the government gets to regulate everything? Can they tell me what I get to eat, since my bodily functions might affect those around me? Do they get to tell me what I can drive, since some people are bothered by certain colors, or by the fact that they can't afford the kind of car I drive? Does the government get to tell me I can't preach about sin, because some are "offended"?
Wake up, Mr. Khrushchev. This is America. We believe in freedom here. And that freedom includes picking your own toilet, even if it takes 50 gallons to flush.