Fire Hydrants can be found throughout Evans City. The highway and parks, however, do not have fire hydrants.
Shooting a fire hydrant enough will destroy it, resulting in a geyser of water to explode into the air. This water geyser can then put out any fires your vehicle may have by simply driving through it. It will also cool down a smoking engine.
Driving over a fully intact fire hydrant won't have the same effect because the water geyser is delayed.