Based on the benefit-cost analysis of the Clean Water Act presented in the text, Total Social Benefits (TSB) exceed Total Social Costs (TSC) and hence U.S. water quality standards are set at the allocatively efficient level.

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The statement assumes that the Clean Water Act's regulations lead to an allocatively efficient level of water quality, but this is not necessarily true as the benefit-cost analysis can vary, and achieving allocative efficiency depends on whether the marginal social benefits equal the marginal social costs, which is not guaranteed by the Act's implementation alone.

Based on the Benefit-Cost Analysis of the Clean Water Act