Companies that manufactured mobile homes for Hurricane Katrina victims will pay $2.6 million to settle claims that the shelters exposed the storm victims to potentially dangerous, carcinogenic fumes.

In 2005, following the hurricane that ravaged the Gulf coast, several storm survivors lived in mobile homes provided by the Federal Emergency Management Agency. Hundreds of the FEMA trailers in Louisiana and Mississippi later tested positive for formaldehyde, which on average were about five times higher than what people are exposed to in most modern homes.

The chemical, classified as a carcinogen, is often found in building materials and can cause breathing problems.

The $2.6 million class action settlement was proposed late last week and awaits federal judge approval. This would be the second mass settlement over claims of formaldehyde exposure in the FEMA mobile homes and could benefit several thousand families in Louisiana, Mississippi, Texas, and Alabama who had lived in the FEMA homes following the storm.

However, in three previous cases against companies that manufactured FEMA trailers, juries have sided with the companies, failing to award any damages to storm survivors.

In May 2009, U.S. District Judge Kurt Engelhardt dismissed some of the state law claims filed against mobile home makers, saying that it was barred under federal law. The judge said that Congress never intended to allow states to set higher safety standards for mobile homes than those by the Department of Housing and Urban Development.

Source: $2.6M Deal to Settle FEMA Mobile Home Claims, The Associated Press (Jan. 21, 2011)