Unclear Guidance and Inconsistent Application of Cost- Sharing Methods Can Have Significant Financial Consequences for Entities Involved

Federal and nonfederal entities included in our review used a variety of  methods to share the costs of fighting fires that burned or threatened both  federal and nonfederal lands and resources. Although master agreements  between federal and nonfederal entities provided the framework for cost  sharing and, typically, listed several cost-sharing methods, the agreements  often lacked clear guidance for officials to follow in deciding which cost- sharing method to apply to a specific fire. Master Agreements Provided Cost-Sharing Framework, but Those We Reviewed Lacked Clear Guidance

Master agreements provide the framework for federal and nonfederal  entities to work together and share the costs of fighting wildland fires. As a  result, federal entities will bear the total increase. Methods used to share suppression costs for fires with similar  characteristics also varied among states. In  contrast, federal and state officials in Colorado shared suppression costs  for both of the fires we reviewed in that state using guidance they had  developed and officially adopted in 2005, called “fire cost share  principles.” Under these principles, aviation costs for fires burning in the  wildland-urban interface are shared equally for 72 hours, and other fire  suppression costs, such as firefighting personnel and equipment, are  shared on the basis of acres burned. The Cost-Sharing Method Used Can Lead to Significantly Different Financial Outcomes

Having clear guidance as to when particular cost-sharing methods should  be used is important because the type of method ultimately agreed upon  for any particular fire can have significant financial consequences for the  firefighting entities involved. According to federal and state officials, the  nonfederal entities bore a larger share of the cost than they would have  under an acres-burned method because (1) substantial aircraft, fire  engines, and personnel were used to protect nonfederal lands and  resources, primarily in the wildland-urban interface, and (2) the costs for  protecting these nonfederal lands and resources were assigned to the  nonfederal entities. Finally, some federal officials expressed concern  that the current framework for sharing costs insulates state and local  governments from the cost of protecting the wildland-urban interface,  thereby reducing their incentive to take steps that could help mitigate fire  risks and reduce suppression costs in the wildland-urban interface. Nonfederal Officials Were Concerned about Increased Costs and Equity among States

While federal officials expressed the need for further guidance on how to  share costs, nonfederal officials were concerned that the emergence of  alternative cost-sharing methods was leading state and local entities to  bear a greater share of suppression costs than in the past, and they  questioned whether such an increase was appropriate. Cost-Sharing Framework May Reduce Incentives to Mitigate Fire Risks in the Wildland-Urban Interface

In addition to the concerns raised about obtaining equitable cost-sharing  agreements and about the increased costs to nonfederal entities, federal  officials said that the current cost-sharing framework insulates state and  local governments from the cost of protecting the wildland-urban  interface. Both federal  and nonfederal officials noted, however, that greater use of fire-resistant  building materials and landscaping could help reduce the cost of  protecting the wildland-urban interface. Officials’ Concerns May Reflect Ambiguity over Financial Responsibilities

On the basis of our review of previous federal reports and interviews with  federal and nonfederal officials, we believe that the concerns we identified  may reflect a more fundamental issue—that federal and nonfederal  firefighting entities have not clearly defined their financial responsibilities  for wildland fire suppression, particularly those for protecting the  wildland-urban interface. We agree that a certain amount of flexibility  is needed. Because we were primarily interested in the relative  proportions of fire costs borne by federal and nonfederal entities using  different cost-sharing methods, we determined that these data were  sufficiently reliable for the purposes of this study.
Why GAO Did This Study

Wildland fires burn millions of acres each year, requiring substantial investments of firefighting assets. Since 2000, federal suppression costs alone have averaged more than $1 billion annually. Wildland fires can burn or threaten both federal and nonfederal lands and resources, including homes in or near wildlands, an area commonly called the wildland-urban interface. Cooperative agreements between federal and nonfederal firefighting entities provide the framework for working together and sharing costs. GAO was asked to (1) review how federal and nonfederal entities share the costs of suppressing wildland fires that burn or threaten both of their lands and resources and (2) identify any concerns that these entities may have with the existing cost-sharing framework.

What GAO Found

Federal and nonfederal entities used a variety of methods to share the costs of fighting wildland fires affecting both of their lands and resources. Cooperative agreements between federal and nonfederal firefighting entities--which are developed and agreed to by the entities involved--provide the framework for cost sharing and typically list several cost-sharing methods available to the entities. The agreements GAO reviewed, however, often lacked clear guidance for federal and nonfederal officials to use in deciding which method to apply to a specific fire. As a result, cost-sharing methods were applied inconsistently within and among states, even for fires with similar characteristics. For example, GAO found that in one state, the costs for suppressing a large fire that threatened homes were shared solely according to the proportion of acres burned within each entity's area of fire protection responsibility. Yet, costs for a similar fire within the same state were shared differently. For this fire, the state agreed to pay for certain aircraft and fire engines used to protect the wildland-urban interface, while the remaining costs were shared on the basis of acres burned. In contrast to the two methods used in this state, officials in another state used yet a different cost-sharing method for two similar large fires that threatened homes, apportioning costs each day for personnel, aircraft, and equipment deployed on particular lands, such as the wildland-urban interface. The type of cost-sharing method ultimately used is important because it can have significant financial consequences for the entities involved, potentially amounting to millions of dollars. Both federal and nonfederal agency officials raised a number of concerns about the current cost-sharing framework. First, some federal officials were concerned that because guidance is unclear about which cost-sharing methods are most appropriate in particular circumstances, it can be difficult to reach agreement with nonfederal officials on a method that all parties believe distributes suppression costs equitably. Second, some nonfederal officials expressed concerns that the emergence of alternative cost-sharing methods is causing nonfederal entities to bear a greater share of fire suppression costs than in the past. In addition, both federal and nonfederal officials believed that the inconsistent application of these cost-sharing methods has led to inequities among states in the proportion of costs borne by federal and nonfederal entities. Finally, some federal officials also expressed concern that the current framework for sharing costs insulates state and local governments from the increasing costs of protecting the wildland-urban interface. Therefore, nonfederal entities may have a reduced incentive to take steps that could help mitigate fire risks, such as requiring homeowners to use fire-resistant materials and landscaping. On the basis of a review of previous federal reports and interviews with federal and nonfederal officials, GAO believes that these concerns may reflect a more fundamental issue--that federal and nonfederal entities have not clearly defined their financial responsibilities for wildland fire suppression, particularly those for protecting the wildland-urban interface.