Federal Water Requirements:

Challenges to Estimating the Cost Impact on Local Communities

GAO-06-151R: Published: Nov 30, 2005. Publicly Released: Nov 30, 2005.

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John B. Stephenson
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Under the Safe Drinking Water Act and the Federal Water Pollution Control Act, commonly referred to as the Clean Water Act, the Environmental Protection Agency (EPA) has responsibility for protecting public health and welfare, as well as the integrity of our nation's waters. Federal water requirements under these acts affect facilities providing the most basic services at the local level, including drinking water treatment plants and distribution systems; wastewater treatment plants and collection systems; and storm sewer systems, which collect storm water, or the runoff created by rainfall and other types of wet weather. For example, depending on the circumstances, local communities may have to pay for installing new treatment technologies or taking other measures so that community-based or regional facilities can meet applicable water quality standards. Nationwide, there are roughly 53,000 community drinking water systems, 17,000 municipal wastewater treatment plants, and 7,000 communities served by municipal storm sewer collection systems that may be affected by federal water requirements. While recognizing the public health and environmental benefits of federal water requirements, communities are increasingly voicing concerns about the financial burden imposed by these requirements--in particular, the projected costs of more recent regulations and their cumulative costs over time. Over the years, EPA, water and community associations, and other parties have developed various estimates of some of the different costs related to ensuring clean water and safe drinking water. Additionally, the Unfunded Mandates Reform Act of 1995 requires EPA to prepare a written statement identifying the costs and benefits of federal mandates contained in certain regulations. However, the act does not require EPA to identify the cumulative costs and benefits of multiple regulations. As the Congress considers legislation to provide more resources to communities to address regulatory costs and aging water infrastructure, it is seeking a more complete understanding of the federal water requirements affecting local communities and the cumulative costs associated with implementing them. In this context, Congress asked us to determine the cumulative cost of federal water requirements. In conducting this work, we identified some major methodological challenges to developing complete and reliable cost information. This report summarizes the information provided Congress during our November 17, 2005, briefing and formally transmits the charts presented during that briefing. As requested, this report provides information on (1) key federal water requirements that local communities are subject to under the Safe Drinking Water Act and the Clean Water Act, (2) the extent to which existing studies provide information on the cumulative cost of such requirements to communities, and (3) the methodological challenges to developing reliable cumulative cost estimates attributable to federal water requirements.

The key requirements of the Safe Drinking Water Act and the Clean Water Act that communities must meet focus on limiting the exposure of customers to contaminants in water supplied by community drinking water systems and ensuring that communities prevent pollutants from sewage and diffuse sources, such as streets and construction sites, from reaching surrounding water bodies. Under the Safe Drinking Water Act, EPA currently regulates over 90 contaminants, such as arsenic and lead, and is developing regulations on several more. Other regulations require water systems to notify the public when contaminant levels exceed established limits and provide annual reports summarizing the results of all water quality testing. The Clean Water Act requires wastewater treatment plants to meet minimum technology-based effluent limitations. Plants also may need to implement additional, more stringent limitations, including those necessary to meet water quality standards. In addition, EPA requires municipalities to develop and implement management programs that help prevent pollutants in runoff from reaching surrounding bodies of water. In developing these plans, communities must adopt certain minimum practices, such as controls to reduce or eliminate pollution that collects on streets. While many parties, including EPA, various water and community associations, and private consulting firms, have developed cost estimates for different aspects of maintaining safe, clean water, these estimates have not provided information on the cumulative costs of complying with federal water requirements, primarily because they were not intended to do so. Some studies focus on developing a broad estimate of the costs of providing safe drinking water or clean water, but do not attempt to separate the costs associated with meeting regulatory requirements from other costs. In addition, many studies have a narrower scope, focusing on estimating costs for a subset of regulatory requirements and particular time periods, or estimate costs to different entities (e.g., states, private sector). Several methodological challenges hinder new efforts to develop reliable cumulative cost estimates, including obtaining accurate and complete cost data, particularly for older requirements; accurately allocating costs (e.g., among jurisdictions that share costs); and establishing a causal link between community investments and federal water requirements. Information on the cumulative cost of federal water requirements is critical in determining the nature and extent of the financial burden on local communities. However, given the methodological challenges of obtaining accurate and complete cost data, accurately allocating costs, and establishing a causal link between community investments and federal water requirements, researchers face formidable obstacles in developing a reliable cumulative cost estimate.

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