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Nearly $43 million settlement proposed over FEMA trailers

Story highlights

  • An estimated 60,000 people could share in the settlement, a lawyer says
  • The deal must be approved by a federal judge in September
  • FEMA trailers housed more than 100,000 households after Hurricane Katrina

Companies that made and set up trailers used as emergency housing after Hurricane Katrina have agreed to a nearly $43 million settlement with people who say they were hurt by formaldehyde in the units.

The settlement has been submitted to a federal judge in New Orleans, said Gerald Meunier, a lawyer for plaintiffs in the class-action lawsuit. A hearing has been set for September for final approval, but a preliminary OK could come this week, he said.

An estimated 60,000 people are believed eligible for a share of the settlement, he said.

As many as 114,000 households were lodged in "FEMA trailers" after the disaster, which killed more than 1,700 people when it struck near the Louisiana-Mississippi state line in August 2005. More trailers were deployed after Hurricane Rita, which struck southwestern Louisiana and southeast Texas a month later.

But as CNN first reported in 2007, the units -- built originally as campers -- led to widespread complaints that high levels of formaldehyde were causing respiratory ailments and irritation for those living in them.

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Formaldehyde is an industrial chemical that is linked to nasal cancer, respiratory problems and leukemia. It was used to make particle board and plywood in the campers, which the government later banned for long-term housing.

More than $37 million of the settlement will come from seven companies that made travel trailers that the Federal Emergency Management Agency deployed across the hurricane-stricken Gulf Coast after Katrina, Meunier said. The amount is a significant extension of a preliminary deal struck in April, which involved fewer manufacturers, he said.

The remainder of the settlement will come from contractors who installed the units, Meunier said.

A lawyer for the manufacturers and contractors declined comment on the settlement Wednesday.

Six smaller manufacturers have already agreed to separate settlements, most of which remain under seal. Another settlement, in 2011, saw mobile-home builders paying more than $2.6 million over the claims.

The amount each plaintiff receives will depend on how many people participate, a number Meunier said can't be calculated at this time. Lawyers who represented them will receive a portion of the settlement -- to be determined by the court -- as payment, he said.