INSTITUTIONAL COST FACTORS: PERVERSE INCENTIVES, PRIVATE CONTRACTORS, AND COST-SHARE AGREEMENTS

Congressional Blank Check for Suppression

Several critics have focused on the funding system that Congress has set up for emergency wildfire suppression, charging that it has nurtured a “blank check” or “open checkbook” attitude among federal fire managers, and this institutional arrangement is a major driver of the rising costs of suppression.48 This attitude began with the Forest Fires Emergency Act in 1908 that was repealed in 1978 when the Forest Service changed its philosophy from fire control to “fire management,” and Congress switched to a system of providing annual appropriations for suppression (around $110 to $125 million annually).49 Back then, commercial timber extraction was the main focus of the agency, most wildfires were still easily controllable, and the agency rarely exceeded its appropriated suppression budget. When an occasional large fire season exceeded those funds, the Forest Service “borrowed” funds from its reforestation fund, and sought extra or supplemental appropriations from Congress to pay back the account later.

But then a surge in wildfire activity occurred in the late 1980s, and the Forest Service began to rack up an accumulating deficit that was rapidly depleting its reforestation fund. Congress tripled the agency’s appropriation for fire suppression (averaging over $300 million annually) in the 1990s, but suppression costs continued to rise, busting the agency’s suppression budget. Indeed, the Forest Service has exceeded its suppression account nearly every year since 1990, causing the agency to transfer hundreds of millions of dollars from all kinds of management programs and accounts to pay for firefighting.50 For example, from 1999 to 2003, the Forest Service transferred over $2.2 billion to fund firefighting expenses.51

Ironically, some of these transfers came from programs such as hazardous fuels reduction and firefighter training that theoretically would reduce suppression costs over the long-term.52 For example, in 2003, approximately 120,000 acres of National Forest lands that had scheduled fuels reduction projects were left untreated because these project funds were transferred to pay for firefighting expenses.53 Transfers have come from other non-fire management programs too, such as recreation, wildlife habitat improvement, and land acquisition accounts. Firefighting is quickly becoming the dominant mission in the Forest Service, consuming nearly half of its total annual appropriated budget.

Congress used to repay almost 100% of these budget transfers through supplemental appropriations, but these have fallen short during the huge billion-dollar-plus fire seasons of the last decade. This has put many land management programs and responsibilities at risk, leading to an unusual coalition of forest conservation organizations, resource extraction interests, and county governments to lobby Congress to change the institutional mechanisms for funding fire suppression so it will stop the continual transfer of funds from unrelated land management programs. In 2009, Congress passed the FLAME Act as part of the FY2010 Interior Appropriations Act, and this set up a special multi-million dollar reserve account to pay for suppression costs that exceed normal appropriations. This is a positive step towards honest budgeting and fiscal accountability, but it does nothing to create incentives for containing suppression costs, nor will it prevent future budget transfers or supplemental appropriations if and when firefighting costs exceed the FLAME fund. Given predictions of ever-greater number of large wildfires and acres burned in the near future, it should be expected that the FLAME fund will eventually become exhausted and the fiscal crisis of suppression spending will continue unabated.

The truth is that there is essentially no budgetary or fiscal constraint limiting what the agency can spend to fight fires as long as wildfire suppression trumps all other economic or ecological concerns. Knowing that Congress will never refuse to pay for the “war” on wildfire, there is little motivation among managers to contain suppression costs or utilize economic efficiency.54 There is a clear disincentive to invest in proactive fire management activities like prescribed burning because these projects must be paid through normal appropriations which are shrinking as part of the wider fiscal crisis of the federal government.55 On the contrary, some critics charge that the system of deficit spending, budget borrowing, and Congressional reimbursements has created a system of “perverse incentives” for the Forest Service to suppress nearly every wildfire.56 Bureaucratic inertia continues to reward these perverse incentives even in the face of changing scientific understandings and social values that make alternative fire use strategies ecologically or economically wiser, particularly for backcountry wildfires in fire-dependent ecosystems. Unless and until this institutional bias towards unquestioned fiscal support for firefighting is challenged and changed, the “open checkbook” attitude will continue to be rewarded and suppression costs will continue to climb.

Private Firefighting Contractors

Ever since the Reagan-Bush Administration there has been a concerted effort to privatize more aspects and elements of wildland firefighting. This privatization of firefighting has been driven largely by conservative Republican ideology’s professed desire to shrink the size of government, but it has been sustained by both political parties based on the claims that private businesses can perform services cheaper and more efficiently than government agencies, thus reducing suppression costs over time. According to this theory, instead of hiring government crews that have to be paid, housed, and equipped for the whole fire season, private contract firefighters only need to be paid while they are actually fighting a wildfire, and when the fire is out their contract and pay is over. Thus, one of the main arguments for downsizing the federal firefighting workforce and divesting federal agencies of their own firefighting vehicles, aircraft, and equipment over the last 20 years was the promise that privatization would reduce suppression costs.57

Unfortunately, that false promise has led to its exact opposite: suppression costs have increased with the extensive and growing use of private contractors. A new “fire industrial complex” has developed that actually promotes more spending for suppression due to the premium prices that contractors get for their services.58 Contractors now represent the major cost center in firefighting, accounting for an average 56% of suppression costs on large wildfires.59 During the $1.6 billion dollar 2002 fire season, two-thirds of suppression costs on large wildfires went to contractors.60 Equipment such as bulldozers, low-boys, and water tenders used in firefighting are provided by private contractors who can charge high prices because government agencies do not own many of these items. Contractors are used mostly on large wildfires where over the long duration of these fires the cumulative daily rental costs for some of these vehicles or equipment can exceed the purchase price of these items.61

Private contract aircraft are typically one of the highest costs of suppression, making up nearly a third of all expenses on a large wildfire.62 A single airtanker costs up to $14,000 a day to keep on standby, and up to $4,200 per hour for flight time, while the Type I heavy-duty helicopters can cost $32,000 a day for standby status plus $6,300 per hour for flight time.63 Aircraft use on large wildfires can cost over a quarter million dollars in a single day!

Private contract firefighting crews are generally more costly per hour or per unit than agency resources.64 Studies from the Pacific Northwest, for example, have shown that federal firefighting crews cost approximately 70% that of a private contract crew.65 Assuming a 14-hour workday on wildfires, and continuous work throughout the fire season, agency crews cost on average $5,539 per day compared to private crews that cost $7,791 per day.66 This cost advantage is reduced if agency crews are not kept busy doing other management projects when fires are not burning, or if higher pay grade employees are used in fire crews. But in addition to cost differences, there is a perceived difference in quality of the work output by contract crews. A qualitative study interviewing IMTs revealed that, in the perspective of federal fire managers, many private firefighting contractors are poorly trained, unqualified, and unmotivated, and thus, their work is generally substandard or inferior compared to public agency crews.67 For example, the GAO determined that one of the reasons the 2002 Biscuit Fire in Oregon grew so large and cost so much was due to the poor quality and performance of contractors.68 At $155 million, the lightning-caused Biscuit fire that burned almost entirely in designated wilderness and inventoried roadless areas was likely the most expensive suppression effort in human history! Thus, the higher prices and lower quality of contract crews compared to government crews also contributes to the increasing cost of fire suppression.

Private contractors generally require more oversight, but there is a shortage of contract officers in the Forest Service to provide fiscal and operational oversight.69 Indeed, federal agencies are not sufficiently staffed or trained to manage the thousands of private contract employees and equipment that can staff a large, long-duration wildfire.70 Sending a contract firefighting crew home for safety violations or poor performance raises transportation costs, requires a new crew to be hired, and the delays in work output prolongs operations which affects total suppression costs. Some contractors have become sophisticated in working the system to provide overpriced but substandard crews or equipment, and there is a lack of accountability when they fail to perform as promised.71

Despite the increased costs and decreased performance of contract firefighting resources, there is lots of pressure by Congress and local communities to hire private contractors.72 IMTs have disclosed that this political pressure compels agency administrators to insist that agencies hire local contract resources even when they are unnecessary, unqualified, or overly costly.73 The downsizing and aging of the Forest Service workforce to some extent compels the agency to employ private contractors as long as the model of large fire suppression prevails. Thus, the increasing privatization of fire suppression has turned firefighting into a hugely profitable big business, and the Forest Service into a very large contracting business.74 This is precisely what previous Administrations and members of Congress intended, and is another major factor in the increasing costs of federal fire suppression.

Federal-State Cost-Share Agreements

Another reason suppression costs are rising is due to the various cost-share agreements between federal agencies and state governments that leaves federal agencies paying most of the bill for fighting multi- jurisdictional wildfires.75 This raises equity issues for it is particularly unfair to taxpayers across the nation to pay the bill for costly suppression actions that are taken on federal lands primarily to protect adjacent private property.76 The bill not only includes direct firefighting expenses, but also environmental damage to public lands from those suppression actions that degrade the resource values or require expensive rehabilitation and restoration projects to mitigate the damage caused by firefighting. Post-fire rehabilitation projects that occur after a wildfire is contained and controlled are actually charged to the suppression incident, paid for by taxpayers.

Because federal agencies are willing to fight fires on public lands to protect private lands, and have agreed to pay most of the costs of fire suppression, critics argue that this allows private homebuilders, local governments, and the states to evade responsibility or accountability for approving new housing development in fire-prone lands.77 Local and state governments receive all of the benefits of suburban/exurban sprawl (e.g. building permit fees, property taxes, etc.) but do not pay the full costs for WUI fire protection–or face the consequences when wildfire disasters strike. In effect, providing public agency wildfire protection for private property owners represents a subsidy and partial incentive for suburban and exurban sprawl into wildlands, exacerbating the issue of high-cost WUI wildfires.

State governments argue that the federal government is responsible for preventing wildfires starting on federal lands from spreading onto private/state lands, and thus federal agencies should pay the majority of the costs of fighting multi-jurisdictional wildfires. State governments are particularly concerned about fuel hazards on federal lands, and are opposed to wildland fire use policies that might increase the risk of fires escaping onto state/private lands or producing more smoke emissions. Yet, there needs to be recognition of the ecological fact that wildfires are inevitable natural processes, and when conditions are right they can and will burn across jurisdictional or property boundaries regardless of human efforts to stop them.

Accordingly, those who own property need to assume more financial responsibility for wildfire preparation, and local, county, and state governments who gain economic benefits from private property must pay more of the costs for fire suppression in the WUI.

Greater equity in cost-share agreements would not necessarily reduce suppression spending, but it would reduce federal spending by transferring more of these costs onto state and local governments. If state, county, and local governments are forced to pay more of the costs of private land and WUI fire protection, this might create economic incentives for them to prevent or mitigate new home construction in wildfire-prone lands through zoning regulations, building codes, vegetation management ordinances, and other similar measures. It would also provide a rationale and create new economic incentives for private property owners and local/county/state governments to better prepare rural communities for fire, thereby reducing the need for costly suppression actions.