Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
Rural communities face heavy burdens under uniform federal drinking water standards that force them to make considerable sacrifices. The executive director of the Maine Rural Water Association provides some examples:
Tiny Hebron Water Company, with all of its 26 customers, must spend $350,000 to meet this rule [the Surface Water Treatment Rule (SWTR)]. Milo Water District’s 700 customers have spent $7.3 million to meet the SDWA [Safe Drinking Water Act] and SWTR requirements. This cost puts the viability of the town in jeopardy. There is a tax lien on one out of ten homes. We are rapidly approaching a time when people on fixed incomes can expect to pay 10 percent of their income for just water and sewer.
Controlling costs is critical because standards can produce net negative benefits. A U.S. Congressional Budget Office (CBO) study notes that uniform federal standards translate into what CBO calls “welfare costs”––which basically means that a regulation costs more than the benefits it returns. The reason for using the word welfare is to remind us that those financial losses translate into reductions in quality of life. As the law is now written, the U.S. Environmental Protection Agency (EPA) considers costs to large systems when conducting cost-benefit analyses, but because of the economies of scale, the costs to households in small systems are far higher than those of the large systems on which the standards are based. Heavy burdens on rural communities have not disappeared under the 1996 law:
• According to the General Accounting Office, now the Government Accountability Office, the annual existing compliance cost (not the total water bill, just compliance) of systems serving 100 to 250 people is $145 a year, and that number is expected to multiply as new rules come out.
• A representative from the National Rural Water Association noted to Congress that the some households must pay as much as $50 per month to receive water service. Such costs are not affordable for many rural Americans who are living on fixed incomes.
• Systems must spend thousands of dollars every year to test water for the presence of contaminants that pose very little risk or that are very rare. Yet many systems might find it more logical to test for those contaminants less often and to use the funds that would have gone to testing to address pressing needs.
• A 1994 National Rural Water Association survey found that monitoring regulations would prevent 80 percent of small communities from devoting resources to hook up more families, to provide routine maintenance and systems improvements, to engage in pollution prevention activities, to pay for additional training for systems operators, and to make improvements in water treatment and in operation and maintenance activities.