The history of funeral bagpipes is a fairly simple (though very sad) one. In traditional Celtic cultures, including both the Irish and Scottish cultures, bagpipes were an important part of a traditional funeral. After the Great Potato Famine of the mid-1840s, Irish immigrants came to the United States in huge numbers. Due primarily to racism and xenophobia, Irish people were often allowed to apply for only the most dangerous and difficult jobs, including the jobs of fire fighter and police officer.
Work-related deaths for fire fighters and police officers were not uncommon, and when one or more of these deaths would occur, the Irish community would hold a traditional Irish funeral, including the mournful bagpipes. Over the years, this tradition spread to fire fighters and police officers who were not of Irish descent.
So if it's an Irish tradition, why are the Scottish bagpipes used?
In short, it's because the Scottish highland bagpipes are significantly louder than the traditional Irish uillean pipes. Though it's likely that either or both types of pipes were used at funerals in the 1800s, the Scottish highland pipes are now almost universally used.
IAFF affiliated Pipe & Drum Bands and Honor Guards throughout the United States and Canada, have participated in every IAFF Fallen Fire Fighter Memorial in Colorado Springs, Colorado.