Gulf Stream Coach -- the politically connected company handed a $500 million federal contract to manufacture trailers for Hurricane Katrina victims -- knew its product was contaminated with dangerous levels of cancer-causing formaldehyde in early 2006. But it failed to notify residents or take any action to protect them.

That was one of the revelations that emerged from yesterday's hearing on Katrina trailer manufacturers held by the House Committee on Oversight and Government Reform. Led by Rep. Henry Waxman of California, the committee has been investigating health problems related to toxic trailers that the Federal Emergency Management Agency provided to storm survivors at a total cost to taxpayers of more than $2 billion. The hearing came a week after the Centers for Disease Control and Prevention released a report assessing in detail trailers' formaldehyde levels.

"FEMA failed by ignoring the dangers of formaldehyde and resisted testing. Gulf Stream's problem is different," Waxman said in his opening statement. "The company did test trailers after hearing the first reports of high formaldehyde levels. It found pervasive formaldehyde contamination in its trailers. And it did not tell anyone."

The Department of Homeland Security gave the first piece of the limited-competition contract for 50,000 travel trailers to Gulf Stream of Nappanee, Ind. four days after Katrina came ashore in August 2005 -- even before New Orleans' Superdome shelter was evacuated. The second half of the deal, the largest DHS awarded to a private company in 2005, was in place by Sept. 9. While problems with trailers' air quality have long been known, the federal government has been slow to come up with a disaster housing plan that avoids their use. Last month FEMA unveiled a plan that calls for
trailers to be deployed only as a last resort, with the approval of the affected state's governor, and for use only on private property where the owners can repair damaged homes within six months. The agency said it would instead promote permanent construction of new housing units, use of vacant rental units, and alternative housing such as the prefab "Katrina cottages."

SOURCE: Institute for Southern Studies