Traffic Incident Management Cost Management and Cost Recovery Primer

Chapter 3. State of the Practice

The high profile development of the NUG for TIM and the subsequent outreach efforts by the National Traffic Incident Management Coalition (NTIMC), the FHWA as well as other agencies, associations, and organizations has led to a renewed and intensified focus on TIM. Increased attention has particularly focused on promoting best practices to improve responder safety, promoting safe quick clearance policies and legislation, and improving the interoperability of incident communications and performance measurement. However, to date efforts to promote best practices and discussions about performance measurement have not identified long-term funding streams that agencies may use to pay for services.

To understand the state of the practice with regard to funding TIM programs, the study team conducted an extensive search for and evaluation of documents available in the public domain. This evaluation documents the legislation related to TIM cost recovery, advocacy group positions, and how individual TIM disciplines approach funding for TIM. The search yielded valuable information upon which to base the synthesis of current suggested or implemented practices.

Overall, the study team identified and reviewed 39 documents to determine their applicability and gather any relevant follow-up documentation or specific practices deemed worthy of replication. The majority of published material dealt with the topic of cost recovery, which was typically described:

• As it applies to infrastructure damage repair costs;
• In terms of hazardous materials incident response and mitigation;
• Relative to EMS transport costs; or
• As it is associated with fire service response for performing life-saving actions.

A summary table and the document abstracts are included in the Appendix.

Legislation

Legal considerations are an important part of any decision that TIM agencies face because the risk of litigation and the possibility of negligence can cause negative publicity and hurt the ability of the agency to deliver services.

Cost Management

Research did not reveal any evidence of legislation that requires agencies to manage the costs associated with TIM.

Cost Recovery

Figure 5 shows the levels of government where legislation has been enacted to address TIM. As the figure shows, the authority to seek reimbursement for TIM can be granted from almost every level of government; however, the type of costs that can be recovered can be as specific as the exact type of actions taken at the scene.

The Federal Government, through Federal law and rulemaking, has enacted legislation designed to safeguard the environment and overall public safety. State legislation is enacted by State Legislatures and is assigned to an agency for policy development and enforcement. These policies have been aimed at providing guidance to local governments regarding their latitude for implementing ordinances. Finally, ordinances enacted by local governments define from whom costs may be recovered, the types of costs that may be recovered, and the applicable fee structures.

Figure 5 – Sources that may enable TIM cost recovery statutes

TIM Cost Recovery: Federal Legislation

The best documented type of TIM cost recovery is related to the release of chemicals from vehicles. The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980 (amended in 1986) and the Oil Pollution Act of 1990 provide the basis for authorization to recover costs associated with the release of hazardous materials into the environment. Each Act specifically addresses the authority of jurisdictions to respond to emergencies with impending or actual substance release, and each Act also addresses the responding agencies' right to reimbursement. An excerpt from the CERCLA Chapter 103 in Figure 6 outlines local authority parameters. The Oil Pollution Act has wording similar to that in the example below. Notably, no Federal legislation exists to recover costs associated with TIM when the environment is not at risk.

CERCLA Chapter 103 Section 9623 (a) Application Any general purpose unit of local government of a political subdivisions which is affected by a release of threatened release at any facility may apply to the President for reimbursement under this section. (b) Reimbursement (1) Temporary emergency measures The President is authorized to reimburse local community authorities for expenses incurred (before or after October 17, 1986) in carrying out temporary emergency measures necessary to prevent or mitigate injury to human health or the environment associated with the release or threatened release of any hazardous substance of pollutant to contaminant. Such measure may included, where appropriate, security fencing to limit access, response to fires or explosions, and other measures which require immediate response at the local level. (2) Local funds not supplanted Reimbursement under this section shall not supplant local funds normally provided for response. (c) Amount The amount of any reimbursement to any local authority under subsection (b)(1) of this section may not exceed $25,000 for a single response. The reimbursement under this section with respect to a single facility shall be limited to the units of local government having jurisdiction over the political subdivision in which the facility is located. (d) Procedure Reimbursement authorized pursuant to this section shall be in accordance with rules promulgated by the Administrator within one year after October 17, 1986.

Figure 6 – Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (As Amended in 1986)

TIM Cost Recovery: State Legislation

A number of States have enacted legislation addressing TIM cost recovery. The two types of laws that jurisdictions at the State and local level must abide by are either enacted laws or common law doctrine. Enacted laws are those which are introduced by elected officials of the legislative branch of government and are signed by the chief executive (Governor or Mayor). Common law doctrine embodies precedents that have been set based on decisions made by courts. When a court makes a decision, if a similar case comes before the same court or a lower court in the same jurisdiction in the future, the court is bound by the precedent set by the earlier case.

Common law doctrine is applicable to TIM cost recovery because of the municipal cost recovery model or free public services doctrine,⁶ which has been defined by court cases dating back to the 1970s. Opponents of TIM-related cost recovery argue in support of this doctrine, which states that public expenditures made in the performance of governmental functions are not recoverable because this would represent a form of double taxation. Proponents of TIM cost recovery argue that the doctrine is only applicable for situations where the jurisdiction would sue for recovery. If user fees are instead implemented, this would not be a form of double taxation as only those who choose to use the roadway and operate a vehicle in a way that causes a crash would be charged the fee. Proponents further argue that these fees are needed to supplement depleted emergency responder budgets and that the allocation of tax money to support them is solely for the purpose of making the service available and sustaining the infrastructure to support it.

The free public services doctrine does not apply in cases where damage to public property occurs because of the crash. In this case, the doctrine allows States to recover the cost to repair the infrastructure. A summary of the way States have interpreted this doctrine and addressed it with legislation is summarized in the Appendix.

The types of cost recovery different States have allowed include:

• Emergency Medical Services – the ability to recover costs associated with response and patient transport.
• Fire – the ability to recover the cost associated with response and recovery activities. Items that are deemed medically necessary are typical exempt if this type of recovery is prohibited. "Medically necessary" has been defined in some contexts as actions that are essential to the survival of the vehicle occupants, such as extrication.
• HAZMAT – The legal right to recover costs associated with the emergency response and recovery efforts due to the release of hazardous materials from responsible parties.
• Infrastructure – The ability to recover costs associated with the repair or replacement of the roadway or roadway components from liable drivers.
• Law Enforcement – the ability to recover costs associated with response and/or crash investigation from involved parties or insurance companies.
• Transportation – the ability to recover costs associated with response and traffic control.

Many States have not enacted legislation either permitting or prohibiting specific types of cost recovery. This means that in these States the free public services doctrine governs, and allowable procedures are dictated by local court decisions. Where legislation exists, it can be classified into the categories shown below:

• All drivers can be charged by all responding agencies.
• The at-fault driver can be charged by all responding agencies.
• The at-fault driver can be charged by all responding agencies, except DOTs.
• If the at-fault driver is under the influence of drugs or alcohol they can be charged by all responding agencies, except the DOTs.
• Drivers can be charged by all agencies except law enforcement.
• Drivers can be charged by all agencies except fire departments.

Advocacy Groups on TIM Cost Recovery

There are both proponents and opponents to legislation that allows agencies involved with TIM to recover costs. The most often stated arguments focus on the enactment of ordinances by local jurisdictions that allow response agencies to charge a fee for response. Table 5 shows common arguments used by both the opponents and proponents of accident recovery fees.

Table 5 – Viewpoints on TIM Cost Recovery by Means of User Fees

Proponent Viewpoints	Opponent Viewpoints
The alternative is to reduce service Represents a true user fee Taxes are for making the resource available only The reduction in property and other tax revenues has placed additional stress on the emergency response community Education can change the view point of the public Responder and motorist safety can be compromised There are no alternatives	Constitutes double taxation Increases insurance rates Is ineffective Increases citizen financial stress Re-victimizes those affected by vehicle crashes Could cause motorists not to seek emergency services Is not successful Creates a negative public opinion of government

Fire Services and EMS

Fire departments bear a significant amount of cost when it comes to traffic incidents. They purchase and maintain some of the most expensive equipment at the crash scene, have rigid training requirements, and are often put in harm's way for the longest duration. Firefighters often experience many of the same costs whether they are career or volunteer personnel.

The U.S. Fire Administration (USFA) developed a publication that identifies sources of funding from Federal and local revenue sources with potential to supplement EMS agencies and fire departments budgets, including the Firefighter Investment and Response Enhancement (FIRE) Act, the Staffing for Adequate Fire and Emergency Response (SAFER) Act grant program(s), as well as other important grant programs.⁷ Many of these sources identified by the USFA may be applicable to TIM response resource needs.

Cost Management

According to the U.S. Fire Administration, emergency medical incidents comprise two-thirds to three-quarters of fire department calls.⁸ As described in the sample of a rural volunteer fire company shown at the right,⁹ there is no effort or emphasis placed on cost forecasting and tracking costs related to TIM because in many cases there is a large discrepancy between the costs to do business versus the amount that can be recovered. Similarly, at career fire departments where salaries are a major portion of costs, the emphasis is not usually placed on the type of call being responded to but on the pure volume of calls. In both the case of volunteer fire departments and career fire departments, the knowledge of how much of their operating budget is dedicated to TIM is seen as being of little benefit. Instead, the emphasis is on paying salaries (in career departments) and determining what the needs will be for gear and equipment.

The accurate assessment of costs associated with a fire company's TIM responses could, in fact, be useful in working with local and State officials to help identify not only fire company funding sources and levels, but the importance of a coordinated overall TIM approach.

Cost Recovery

The U.S. Fire Administration's publication on funding alternatives offers 10 different ways that fire departments can recover costs:¹⁰

1. Taxes – property, local income, and general sales;
2. Borrowing – such as bonds and certificates of participation;
3. Leasing – to avoid large capital costs;
4. Benefit assessment charges – designed to supplement policies allowable by property tax laws, these fees assign values to conveniences or benefits such as having the fire station near a property or having special services;
5. Fees – costs imposed on users for the purpose of building small amounts of revenue based on services provided;
6. Fines and citations – revenue generated by penalizing individuals for code violations;
7. Cost sharing – working with other jurisdictions to share common costs;
8. Strategic alliances – joining together with other jurisdictions to service other areas;
9. Consolidation – reducing the amount of individual resources in an area for covering the same geographical area; and
10. Sales of assets and services – including the sale or auctioning of equipment, training services, facility rental, and delinquent tax certificates.

While none of the 10 cost recovery methods mentioned above is directly linked to TIM, these methods are all ways that fire departments can recover costs in general. This recovery allows them to offer their services in their jurisdictions and can be enacted at the local government level.

In addition to the local cost recovery methods mentioned above, the U.S. Fire Administration's publication also highlighted eight methods that individual States can use to help fire departments offset operating costs.¹¹

1. Low interest loans;
2. Insurance surcharges (fire only);
3. Driving related fees and fines (EMS only);
4. Surplus vehicles and equipment;
5. Special purpose grants;
6. Matching grants;
7. Technical assistance/support; and
8. Subsidized training.

The services associated with TIM are included in the recovery methods shown above since they are all efforts to recover the cost of providing service.

Since many fire departments also provide EMS service, the cost of operating the ambulance service is included in annual budget planning. Below is an example of fees being implemented for responding to emergencies by Madison County, Virginia.¹²

The example from Madison County, Virginia, shows that jurisdictions see the need to implement these types of fees but are very careful to be explicit in describing how the fees will be imposed, how and when they will be collected, and how much will be charged.

Overall, the state of the practice for TIM cost recovery within public safety groups such as volunteer and career fire departments and EMS providers is based on local ordinances and is typically not divided into a separate category for TIM.

Law Enforcement Agencies

As with fire and EMS services, law enforcement agencies provide staffing on a 24/7 basis regardless of the specific needs of citizens. For that reason, no significant emphasis is placed on cost management of TIM activities at law enforcement agencies unless the costs are being managed for a specific reason, such as grant reimbursement or targeted enforcement.

For cost recovery the experience is similar. Some States have enacted legislation that prohibits cost recovery associated with incident response while others are silent on the matter. The practice of recovering costs associated with TIM is not widespread among law enforcement agencies. The Florida Highway Patrol provided the following example of a cost management tool. Figure 7 shows an example of the system they use to record the agency's time spent dealing with a crash. This system combines the need to track time spent at crashes with elements that are usable as performance measures for elements on the standard incident timeline. Key data points collected include time of event, report, dispatch, arrival on scene, roadway clearance, and scene clearance.

Figure 7 – Example of Cost Tracking Tool at the Florida Highway Patrol¹³

Transportation Agencies

To determine the extent to which TIM cost management and cost recovery is taking place at State transportation agencies, the Research Team conducted a survey of practitioners who belong to the NTIMC's TIM Network. The TIM Network is comprised of practitioners from all disciplines of traffic incident management. With responses received from 21 separate agencies, 15 respondents indicated that their agency performs at least one type of cost management while 9 agencies attempt to recover costs.

Cost Management

According to the agencies that indicated they manage TIM costs, the most frequently used type of cost management is planning. These agencies plan for TIM costs in a variety of categories, but the most common type of cost that is managed is for personnel overtime. Those costs are seen as most controllable when costs are being managed or eliminated. The most common types of TIM operational costs tracked are equipment time and personnel overtime.

Some discrepancy exists in the current practice between the costs that are planned for versus the costs that are tracked. As discussed in previous sections, most of the costs that are tracked fall under the tactical portion of a traffic incident. Costs for strategic and support activities are less documented.

TIM cost planning and tracking information were examined by asking three questions relative to how TIM cost information is collected and reflected through transportation agencies:

• At what budget level is the cost of TIM reflected?
• Are employees required to record TIM activities individually?
• Does the agency budget management procedure or software show costs for TIM as a separate category?

In most cases, the amount budgeted for TIM is typically only known at the local level, where employees are usually not required to record TIM activities individually. This indicates that it would be very difficult for many transportation agencies to determine total annual TIM expenditures. Only three of the responding agencies have specified areas within their budget management process or system that show a breakdown of these costs.

The solution for TIM cost management appears to coincide with the larger issues that face TIM regarding organizational visibility. As mid-level managers search for ways to express the overall benefit of a TIM program, a way to identify resources is needed to demonstrate the value of cost management and show how the knowledge of cost management activities can translate into a better understanding of the true return on investment.

As previously mentioned, the survey indicated that cost tracking is taking place at agencies. Figure 8 shows an example of cost tracking by the Kansas Department of Transportation for a crash where a truck hauling a backhoe struck a bridge. This event resulted in a long-term closure for at least a portion of the roadway while repairs were made to the bridge. As the image in Figure 8 shows, costs are tracked for four categories: direct labor, travel expense, equipment usage and materials. A hand-written note indicates that the majority of the labor costs were for traffic control.

Figure 8 – Sample of Cost Tracking¹⁴

It is unclear if there is a true demarcation point between TIM costs and the costs associated with repairing the infrastructure as described in the material category of the tracking sheet. However, for Kansas, the total cost was captured as being due to the crash.

Finally, survey respondents were asked to specify the methods that their agency uses to analyze and evaluate the costs associated with TIM. Respondents indicated performance measurements were the most frequently used method followed by cost-benefit ratios and a comparison of revenues and expenses.

Cost Recovery

The most common type of cost recovery employed by State transportation agencies is the recovery of those costs related to infrastructure damage. Many States have enacted legislation that allows for the transportation agency to submit claims to individuals or insurance companies for damages to infrastructure. Figure 9 shows an example of this type of legislation from Alabama.¹⁵

Alabama Code - Section 32-5-9 — Liability for damage to highway or structure. (a) Any person driving any vehicle, object or contrivance upon any highway or highway structure shall be liable for all damage which said highway or structure may sustain as a result of any illegal or careless operation, driving or moving of such vehicle, object or contrivance, or as a result of operating, driving or moving any vehicle, object or contrivance weighing in excess of the maximum weight prescribed by law but authorized by a special permit issued as provided in Section 32-9-29. (b) Whenever such driver is not the owner of such vehicle, object or contrivance, but is so operating, driving or moving the same with the express or implied permission of said owner, then said owner and driver shall be jointly and severally liable for any such damage. (c) Such damage may be recovered in a civil action brought by the authorities in control of such highway or highway structures.

Figure 9 – Alabama Law for Highway Damage Liability

Another example of cost recovery can be found in California, where public agencies are allowed to collect fees from drivers that crash, require emergency response, and are found to be driving under the influence of drugs or alcohol. The applicable sections of the law are summarized in Figure 10.¹⁶

California Code: Government Code Article 8. Costs of Emergency Response 53150. Any person who is under the influence of an alcoholic beverage or any drug, or the combined influence of an alcoholic beverage and any drug, whose negligent operation of a motor vehicle caused by that influence proximately causes any incident resulting in an appropriate emergency response, and any person whose intentionally wrongful conduct proximately causes any incident resulting in an appropriate emergency response, is liable for the expense of an emergency response by a public agency to the incident. 53153.5. (a) Any person 18 years of age or older who is convicted of making a false police report, in violation of Section 148.3 of the Penal Code, and that false police report proximately causes an appropriate emergency response by a public agency, is liable for the expense of the emergency response made by the responding public agency to the incident. 53154. The expense of an emergency response shall be a charge against the person liable for expenses under this article. The charge constitutes a debt of that person and is collectible by the public agency incurring those costs in the same manner as in the case of an obligation under a contract, expressed or implied, except that liability for the expenses provided for in this article shall not be insurable and no insurance policy shall provide or pay for the expenses. 53155. In no event shall a person's liability under this article for the expense of an emergency response exceed twelve thousand dollars ($12,000) for a particular incident. 53156. As used in this article: (a) "Expense of an emergency response" means reasonable costs incurred by a public agency in reasonably making an appropriate emergency response to the incident, but shall only include those costs directly arising because of the response to the particular incident. Reasonable costs shall include the costs of providing police, firefighting, rescue, and emergency medical services at the scene of the incident, as well as the salaries of the personnel responding to the incident. (b) "Public agency" means the state and any city, county, municipal corporation, district, or public authority located, in whole or in part, within this state which provides or may provide firefighting, police, ambulance, medical, or other emergency services.

Figure 10 – California Emergency Response Law

6. Lytton, Timothy D. "Should Government Be Allowed to Recover the Costs of Public Services from Tortfeasors?: Tort Subsidies, the Limits of Loss Spreading, and the Free Public Services Doctrine," Tulane Law Review (76 Tul. L. Rev. 727) February 2002.
7. Federal Emergency Management Agency, United States Fire Administration, Funding Alternatives for Fire and Emergency Services. Available online at: http://www.usfa.fema.gov/downloads/pdf/publications/fa_331.pdf
8. Ibid.
9. Personal interview with Thomas Schofield, May 14, 2011.
10. FEMA, Funding Alternatives for Fire and Emergency Services, pp. 1-2 – 1-3.
11. FEMA, Funding Alternatives for Fire and Emergency Services, p. 3-1.
12. Madison County Virginia Website, "EMS Cost Recovery" page, accessed June 2011. Available at: http://www.madisonco.virginia.gov/index.php?option=com_content%26view=article%26id=320:ems-cost-recovery%26catid=63:emergency-medical-services%26Itemid=62
13. Provided by Chief Grady Carrick of the Florida Highway Patrol
14. Provided by Wayne Nelson of the Kansas Department of Transportation.
15. Find Law Website, "ALA CODE § 32-5-9 : Alabama Code - Section 32-5-9: Liability For Damage To Highway Or Structure." Available at: http://codes.lp.findlaw.com/alcode/32/5/1/32-5-9
16. Justia US Law Website, "2009 California Government Code - Section 53150-53159: Article 8. Costs of Emergency Response." Available at: http://law.justia.com/codes/california/2009/gov/53150-53159.html

Previous | Next