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Angela Logomasini - Rural Drinking Water

Angela Logomasini - Rural Drinking Water

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Published by: Competitive Enterprise Institute on Dec 07, 2010
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202-331-1010 www.cei.org Competitive Enterprise Institute
Rural communities face heavy burdensunder uniform federal drinking water stan-dards that force them to make considerablesacrifices. The executive director of the MaineRural Water Association provides someexamples:
Tiny Hebron Water Company, with all of its 26 customers, must spend $350,000 tomeet this rule [the Surface Water Treat-ment Rule (SWTR)]. Milo Water District’s700 customers have spent $7.3 millionto meet the SDWA [Safe Drinking WaterAct] and SWTR requirements. This costputs the viability of the town in jeopardy.There is a tax lien on one out of ten homes.We are rapidly approaching a time whenpeople on fixed incomes can expect to pay10 percent of their income for just waterand sewer.
Controlling costs is critical because stan-dards can produce net negative benefits. A U.S.Congressional Budget Office (CBO) study notesthat uniform federal standards translate intowhat CBO calls “welfare costs”––which basi-cally means that a regulation costs more thanthe benefits it returns. The reason for using theword
is to remind us that those financiallosses translate into reductions in quality of life.As the law is now written, the U.S. Environ-
1. Statement of Steve Levy, executive director of theMaine Rural Water Association, on behalf of the Na-tional Rural Water Association, before the Subcommitteeon Health and the Environment, Commerce Committee,U.S. House of Representatives, January 31, 1996.
Rural Drinking Water
 Angela Logomasini
The Environmental SourceCompetitive Enterprise Institute www.cei.org 202-331-1010
mental Protection Agency (EPA) considers coststo large systems when conducting cost-benefitanalyses, but because of the economies of scale,the costs to households in small systems are farhigher than those of the large systems on whichthe standards are based. Heavy burdens onrural communities have not disappeared underthe 1996 law:According to the General Accounting Of-
fice, now the Government AccountabilityOffice, the annual existing compliance cost(not the total water bill, just compliance) of systems serving 100 to 250 people is $145 ayear, and that number is expected to multi-ply as new rules come out.
 A representative from the National Rural
Water Association noted to Congress thatthe some households must pay as much as$50 per month to receive water service.
 Such costs are not affordable for many ru-ral Americans who are living on fixed in-comes.Systems must spend thousands of dollars
every year to test water for the presence of contaminants that pose very little risk orthat are very rare. Yet many systems mightfind it more logical to test for those con-taminants less often and to use the fundsthat would have gone to testing to addresspressing needs.
2. General Accounting Office,
Safe Drinking Water:Progress and Future Challenges in Implementing the1996 Amendments
(Washington, DC: General Account-ing Office, January 1999), 7.3. Statement of Steve Levy, executive director of theMaine Rural Water Association, on behalf of the Na-tional Rural Water Association before the Subcommitteeon Fisheries, Wildlife, and Drinking Water of the SenateEnvironment and Public Works Committee, March 3,1999.
A 1994 National Rural Water Association
survey found that monitoring regulationswould prevent 80 percent of small commu-nities from devoting resources to hook upmore families, to provide routine mainte-nance and systems improvements, to engagein pollution prevention activities, to pay foradditional training for systems operators,and to make improvements in water treat-ment and in operation and maintenanceactivities.
Regulatory Relief or Mirage?
The law gives the EPA specific author-ity to provide some regulatory relief to smallsystems. Systems that cannot afford to meetthe rule can request variances, exemptions, orboth. Variances allow a system to delay meetinga standard if the system uses EPA-designated“variance technologies.The EPA has a processto directly grant variances to communities serv-ing 3,300 households or fewer when a standardis not deemed affordable. States can also issuevariances—provided that they obtain EPA ap-proval—to systems serving between 3,300 and10,000 customers. Communities can also applyfor exemptions to a rule if they do not have thefinancial resources to meet it and if they havetaken “all practical steps” to meet the rule.
Yet EPA implementation of the law makesthese provisions practically useless. For example,even though the EPA is supposed to consider af-fordability to small systems, these criteria arebased on what the agency deems acceptable costsfor the typical American household—which is
4. Statement of Dan Keil on behalf of the National Ru-ral Water Association before the Environment and PublicWorks Committee, U.S. Senate, October 19, 1995.5. Scott Rubin,
Affordability of Water Service
(Duncan,OK: National Rural Water Association, 2001).
Safe Drinking Water Act202-331-1010 www.cei.org Competitive Enterprise Institute
not particularly relevant to the low-income ru-ral Americans served by small systems. The EPAdeems that a standard passes the affordability testif it keeps the total water bill costs at 2.5 percentof a
family income. This amount seemshigh even for median income Americans. Withan estimated median family income at about$40,000 a year, 2.5 percent amounts to $1,000a year per household.
EPA has proposed morereasonable standards, but they will only to fu-ture rules, keeping the unreasonable standard inplace for all existing regulations. EPA has yet tofinalize its proposal.
 In theory, the affordability test means that if households are estimated to spend $500 a yearfor water, the EPA could add a total of $500 inregulatory costs. However, it is not clear thatEPA fully considers existing regulatory costswhen adding new ones.In any case, $1,000 might be affordable forsome Americans, but it is not affordable for thefamilies that the affordability provisions aresupposed to benefit. This amount is too muchfor low-income Americans, and it is certainlymore than 2.5 percent of their incomes.
Givensuch ridiculous affordability assumptions, it isnot surprising that the EPA issues few variancesor exemptions.On top of that, procedures for obtainingvariances and exemptions are so bureaucratic
6. Personal conversation with Mike Keegan, NationalRural Water Association, July 27, 2004. See also the Ru-ral Water Washington News Blog at http://www.rural-water.org, which posts letters documenting EPA variancerejections, and Scott Rubin,
Economic Characteristics of Small Systems
(Duncan, OK: National Rural Water As-sociation, 2001).7.
Federal Register
71, no. 41, (March 4, 2006):10671-10685; For more information see EPA’s website:http://epa.gov/OGWDW/smallsys/affordability.html.8. Rubin,
Economic Characteristics of Small Systems
that few communities ever benefit, and stategovernment find the process too complex toimplement well.
The CBO notes that between1990 and 1994, public water systems obtainedno variances and only 15 exemptions. “Giventhat approximately 200,000 public water sys-tems are subject to federal regulations (of whichover 85 percent are small), that is a strikinglysmall number,”
noted the CBO.
Little haschanged since the passage of the 1996 amend-ments. In a compliance report published in 2000,the EPA stated that “few public water systemswere operating under a variance or exemption,and only 8 new variances or exemptions weregranted.”
Legislative Bias against Rural America
In addition to the high costs of uniformstandards to existing systems, the law hasseveral provisions that actually prevent manycommunities from gaining access to pipedwater. Allegedly, these provisions are designedto help systems come on line, but instead theyerect high hurdles:One of these provisions specifies that states
may use federal drinking water loans onlyto assist “public water systems,” denying
9. EPA,
Report to Congress: Small Systems ArsenicImplementation Issues
(Washington, DC: EPA, 2002), 7,http://www.epa.gov/OGWDW/arsenic/pdfs/congr_ars_mar_02.pdf.10. CBO,
Federalism and Environmental Protection:Case Studies for Drinking Water and Ground-Level Ozone
(Washington, DC: CBO, 1997), 20, http://www.cbo.gov/ftpdocs/2xx/doc250/drinkwat.pdf.11. EPA, Office of Enforcement and Compliance Assur-ance,
Providing Safe Drinking Water in America: 1998National Public Water Systems Compliance Report 
 (Washington, DC: U.S. EPA, 2000), 4.

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