Cost Recovery for Hazmat Incidents

By Richard Marinucci

Any organization responsible for responding to hazmat incidents is well aware of the challenges to develop and sustain the program. For fire departments that accept this as part of their core responsibilities, or even if they are resigned to the fact that they are likely to be the ones called to respond, the pursuit of competence is never ending and constantly evolving. Personnel must be recruited and trained, and equipment must be acquired and maintained.

Hazmat Team Models

Just as the fire service has many different models for organization, the same applies to hazmat response teams. They could be part of a single, usually larger, county or metropolitan department or a regional team. With respect to funding for a team, it does not matter how it is formed and organized. To initiate and sustain a team, a department needs money. Response to hazmat incidents requires the appropriate equipment. This has evolved in that there are more requirements for specialty items specific to potential hazards that are found. So in addition to the equipment needed, departments must obtain more varieties of it.

Organizations need to ramp up teams for response. There is an initial investment that provides for basic capabilities. Once a team is established, there are regular and routine requirements to preserve the resources at hand and to acquire additional tools as hazards and technology change. This should be funded through the normal budget process and can be supplemented with grants and other funding sources such as private donations. If an organization or group of organizations elects to prepare to respond to hazmat incidents, they must do so in accordance with an acceptable standard such as those published by the National Fire Protection Association (NFPA). The point here is that the startup and operational costs must be borne by the organization.

Cost Recovery

From this point on, it is possible to maintain the capabilities of the team through user fees or cost recovery. Once a department establishes the core skills and services, a vast majority of the funding can be acquired through a billing system that requires those that created the incident to pay for the response. In essence, any equipment that was used can be replaced, personnel costs can be recovered, and administrative fees can be included. The team’s capabilities can be maintained by recovering from the responsible party all that contributed to the response.

Cost recovery is as much about making a policy decision as it is about developing a procedure as to how it will work. As such, it is a political issue that elected bodies must decide. With the recent financial pressures on local governments, most people are looking to alternative funding methods, including cost recovery. Yet, some communities are not philosophically on board with charging for service. They believe that taxes should pay for anything government does and if there are no funds then the service isn’t provided. The purpose here is not to debate the merits but to reinforce that a community’s policymakers must make this decision. Obviously, organizations can influence the decision and must understand their role in offering opinions and engaging in the necessary political issues.

Becoming Apolitical

Once this political issue is resolved, cost recovery must become apolitical. Response must be consistent and unbiased. Everyone gets the same level of service and everyone must pay accordingly. Being friends with the mayor should not exempt anyone from cost recovery efforts. No matter their connections, they should be treated the same way all the way through the incident to the final resolution of cost recovery. As such, teams must establish a policy for pursuing outstanding invoices. The simplest approach is to require payment unless the legal system says otherwise. This means that organizations will need to pursue legal action on collections as far as legally possible on all outstanding bills.

If the decision is to require legal action, consult legal counsel. There may be state or local laws or ordinances to consider. Immediately after a significant event occurs is not the time to learn of restrictions or other items that could affect your ability to collect. There may be differences between fixed facility events and those that happen on public property, including the roadways. You may also need to consider insurance availability and incidents where the responsible party cannot be identified. Know your options upfront.

Almost certainly, a local ordinance will be needed. There are many good examples available for consideration. Adopting an ordinance must be done in accordance with local policies and under legal counsel’s direction. For organizations that include multiple communities such as a regionally structured hazmat response team, each individual community must have the appropriate legal authority to pursue cost recovery. Teams such as these must make this a requirement for membership if they decide this is the best option. You cannot have members with different positions on this. Everyone must be consistent in their approach to legal requirements.

Cost Recovery Schedule

Establish a cost recovery schedule and ensure all participants agree on it. Conduct research to create a fee schedule that is fair, consistent, and reasonable. This would include costs for personnel, equipment, supplies, and administration. Cost for personnel should be based on reasonable salaries and benefits that are within the norm for the area. Obviously a single team assigned to a single department, such as in a metro department, would have this already established. For regional teams, it may be a bit trickier. There could be different pay and benefit schedules and, in some cases, the use of paid on call or volunteer firefighters causes other issues. Should volunteers who don’t usually get paid be included in requests for reimbursement? This issue has occurred and it must be resolved within the organization.

Regarding equipment and supplies, there should be a current cost list always available. It should include the entire acquisition cost, including any required shipping. Another consideration would be any tools, such as calibration gases, that may be part of maintenance. Disposable supplies may be the easiest thing to consider. These are tracked and replaced. Repair costs are another part of the response to consider. If something is damaged, teams need a way to recover the expenses of fixing equipment.

Departments need a published document that includes personnel costs along with equipment and supplies. Review it frequently and keep it up to date. It must be in line with industry standards. Those paying, frequently insurance companies, will challenge anything perceived to be unreasonable or arbitrary. If the numbers seem to be within normal expectations, they will ask fewer questions.

Bill Promptly

As with most bills, the sooner you generate the invoice and send it, the better the chance of payment. As part of a team’s policies and procedures, there should be a methodology to create an invoice based on personnel costs and equipment used. Those with some basic computer skills can create a spreadsheet that is relatively easy to use and simplifies this process. It is appropriate at this time to include a reasonable administrative fee as part of the invoice. Somewhere between 15 and 25 percent may be acceptable, but research your area to see what is most common.

Continuing to operate hazmat teams can be an expensive venture. One way to provide finances is to assess the cost to those that caused the incident. In many localities, the number of incidents is low. Yet, there is an expectation that fire departments will have the resources and training to handle hazmat incidents. A couple of costly events can devastate a team unless a plan is in place for sustainability.

RICHARD MARINUCCI is chief of the Northville Township (MI) Fire Department. He retired as chief of the Farmington Hills (MI) Fire Department in 2008, a position he had held since 1984. He is a Fire Apparatus & Emergency Equipment editorial advisory board member, a past president of the International Association of Fire Chiefs (IAFC), and past chairman of the Commission on Chief Fire Officer Designation. In 1999, he served as acting chief operating officer of the U.S. Fire Administration for seven months. He has a master’s degree and three bachelor’s degrees in fire science and administration and has taught extensively.

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