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I just had one break out, and the requirements for the HazMat garage are enormously expensive. Is this the only way to quench those special flames?

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Yes. This is the only way to put out HazMat fires. Even though the requirements are quite expensive, there is good news...

  • To be able to build the HazMat garage, you need a university with the school of engineering improvement. Which also means you need the prerequisite department of education add-on for the city hall. However, once ANY city in your region has a university with the engineering school, ALL cities will be able to build the HazMat garage.
  • The school of engineering improvement boosts the profits of all low and medium income industry in the entire region, which will significantly boost the earning potential of new cities and cities with low tech knowledge.
  • The benefits of having a university in your region and having the various schools added to them far outweigh the costs of implementing such structures, as education increases happiness, tech level of industry, and indirectly land value by educating sims and keeping them out of trouble.

Getting a university and the appropriate school is certainly a grind, but it's a grind you'll only need to do once per region.

The best thing to do with regards to industry prior to being able to extinguish HazMat fires is to keep the density down by lowering the density capacity of the connected streets in the zone. I have found that these fires can happen quite often if you don't have the HazMat garage, and when they do, they will repeatedly knock out very large factories and lose you quite a bit of tax income while they rebuild and restaff.

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+1 for the industry density tip. –  David B Mar 8 '13 at 18:43
    
Additionally, it turns out that they also occasionally burn themselves out instead of spreading. –  yincrash Mar 12 '13 at 15:50
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