Katrina trailer contractor failed to act on known health risks

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. In the decade leading up to the disaster, Gulf Stream's founding family and employees contributed at least $81,650 to political candidates and groups, with all but $5,250 of that going to Republicans.

In March 2006, the first media reports appeared documenting FEMA trailer dwellers' health complaints, including headaches, nosebleeds and respiratory problems. After communicating with FEMA officials, the company agreed to send someone to a Louisiana trailer staging area to test the units' air quality. Between March 26 and May 15, Gulf Stream employees tested about 50 trailers, finding dangerously elevated levels in many of them. Some of the units registered formaldehyde at levels above 500 parts per billion -- a level that triggers mandatory medical monitoring under federal workplace safety rules.

However, when the company summarized its findings with FEMA in a May 2006 letter, it downplayed their seriousness, according to a staff analysis prepared for the committee:

Gulf Stream did not inform FEMA that all of the 11 occupied units it tested had levels about 100 ppb. It did not inform FEMA that four of the 11 occupied units had levels about 500 ppb, which is the OSHA action level for mandatory medical monitoring. And it did not inform FEMA that over 20 of the approximately 40 unoccupied trailers it tested had formaldehyde levels about the 750 ppb OSHA standard.

Though Gulf Stream offered to make its test results available to FEMA, the agency apparently did not pursue that offer, the analysis found. Meanwhile, Gulf Stream Chairman Jim Shea blamed FEMA for the company's inaction in his prepared testimony:

On May 17, 2006, FEMA specifically advised us NOT to directly contact occupants. The agency told us it had the means to address occupant concerns and that it would let us know if it wanted our assistance.

Other manufacturers addressed in yesterday's hearing were Forest River of Elkhart, Ind.; Keystone RV of Goshen, Ind.; and Pilgrim International of Middlebury, Ind. The trailers made by those companies and used to house Katrina's displaced were all found by the Centers for Disease Control and Prevention to have significantly higher levels of formaldehyde than other brands. However, the other companies apparently did not have as much detailed knowledge of the potential health risks as Gulf Stream.

Last year, Gulf Stream voluntarily converted to wood products that meet the formaldehyde emission levels proposed by the California Air Resources Board. The Recreational Vehicle Industry Association has also set that standard for all its members. However, there are still no federal formaldehyde standards for travel trailers.

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."

But U.S. Sen. Mary Landrieu of Louisiana said FEMA's plan represented a case of too little, too late. As she told the New Orleans Times-Picayune:

"Nearly three years after Katrina and Rita, FEMA submitted to Congress a six-page document that regurgitates FEMA's typical housing strategy. ... The only new strategy in FEMA's 2008 plan is to call upon governors of impacted states to sign off on the use of trailers, which would allow FEMA to give them to disaster survivors responsibility-free."

(In this FEMA photo by Mark Wolfe, Bobby Keyes of Mississippi moves his belongings into a new FEMA travel trailer on Thanksgiving Day 2005)

Scandal-plagued HUD chief quits, but affordable housing crisis continues in the Gulf

This week brought the news that Housing and Urban Development Secretary Alphonso Jackson would resign effective April 18 to "attend more diligently to personal and family matters." Those personal matters probably include staying out of jail, since Jackson is currently under investigation for political favoritism and corruption in the awarding of contracts as well as for lying to Congress.

President Bush, a longtime friend and former neighbor of Jackson, accepted the resignation with regret. "I have known Alphonso Jackson for many years, and I have known him to be a strong leader and a good man," he said.

Jackson's legal troubles started two years ago with a remark made at a minority real estate forum in Dallas. He told the story of an African-American man who finally won a HUD contract after years of trying -- but when the man thanked Jackson, he also mentioned he didn't like President Bush. The secretary nixed the deal. "Why should I reward someone who doesn't like the president, so they can use funds to try to campaign against the president?," he said. "Logic says they don't get the contract. That's the way I believe."

Apparently, Jackson was unaware (or unconcerned) that awarding contracts based on partisan politics is a violation of federal law. His remarks led to an investigation by HUD's Inspector General, which found that Secretary Jackson personally intervened against prospective contractors with Democratic affiliations. The IG also examined the political contributions of 29 companies that got HUD contracts and found that officers and key staff members at the winning firms gave more than twice as much to Republican candidates as Democrats.

When hauled before a Senate panel, Jackson testified, "I don't touch contracts." From there the investigation broadened, with the IG's investigators joining forces with the FBI, Justice Department, and a federal grand jury to examine improprieties in a number of HUD contracting decisions -- including several involving the controversial redevelopment of public housing in New Orleans.

Long itching to tear down New Orleans' traditional public housing complexes and replace them with mixed-income developments with less space for the poor [PDF], HUD and the HUD-controlled Housing Authority of New Orleans used Hurricane Katrina to fast-track those plans. This was no quiet conspiracy, however: Soon after the storm, Jackson announced publicly that New Orleans was "not going to be as black as it was for a long time, if ever again." His agency then championed a plan to reduce the number of public housing units in four complexes across the city from more than 5,000 before Katrina -- most of them occupied by African-American families -- to only 2,000.

Residents filed a class-action lawsuit to stop HUD's demolition plans, but a federal court denied all legal challenges. The lawyers have appealed to the U.S. Fifth Circuit, but a decision isn't expected for months. Officials from the United Nations have criticized the teardowns, saying they would force mostly black residents into homelessness. Sen. David Vitter of Louisiana, who has been blocking House-approved legislation to replace demolished public housing units, responded by denouncing the U.N. as a "wasteful international organization" hell-bent on "expanding the dependency of people on government." With Vitter's blessing as well as the New Orleans City Council's, HUD has already begun demolition at three of the complexes, with work at the fourth expected to begin soon.

HUD has also chosen the firms to carry out the redevelopment -- and one of them is now implicated in the scandal surrounding Jackson. As it turns out, the $127 million contract to rebuild the St. Bernard complex in New Orleans was awarded to Atlanta-based Columbia Residential, a company that owes Jackson somewhere between $250,000 and $500,000 for past work. Columbia has been one of the few private developers to land significant HUD contracts in recent years, including a major public housing redevelopment project in Atlanta. Investigators are now looking at Jackson's involvement in the Columbia deal in New Orleans, as well as whether he arranged high-paying contract work for two friends -- one of whom ended up with a $485,000 gig at HANO.

As the various probes of Jackson continue, there's still no word on who might replace him at HUD. The Advancement Project, a civil rights organization that filed a lawsuit against HUD on behalf of New Orleans public housing residents, said the secretary's resignation "should be a call to action for HUD to reverse decisions made in New Orleans and the Gulf Coast. With the change in leadership, HUD now has the opportunity to fulfill its mission and provide affordable housing for families who are still in desperate need."

And the need is clearly desperate: A PolicyLink analysis [PDF] of HUD's progress in restoring subsidized housing in post-Katrina New Orleans found that the agency has approved resources to rebuild just over a third of those homes. Meanwhile, rents in many parts of the city have doubled, with affordable rentals that once were common now almost impossible to find. At the same time, federal recovery programs are projected to restore only 43 percent of the city's total rental losses, which includes everything from public housing for the poor to market-rate rentals. It's no wonder the city's homeless population has doubled since the storm.

But addressing the dire housing situation in New Orleans will take more than just a change in the top leadership at HUD -- it will also require deeper policy changes. For one thing, if HUD and other government agencies are going to continue to rely on private contractors, then they must strengthen oversight of contracting decisions to prevent improprieties and abuses, since the problem is much larger than Jackson. To date, the House Committee on Oversight and Government Reform has identified at least 25 federal contracts related to Hurricane Katrina -- and 187 federal contracts in total, many relating to Iraq -- that involve significant waste, fraud, abuse or mismanagement. And the problem is not limited to the federal government or one political party: Former Louisiana Gov. Kathleen Blanco is currently under investigation for secretly increasing payments to Road Home contractor ICF International shortly before she left office, while New Orleans Mayor Ray Nagin has come under fire because his family business landed a contract installing countertops for a new Home Depot at the same time it was negotiating tax breaks with the city.

Even more fundamentally, though, a solution to the housing crisis in New Orleans and elsewhere across the storm-ravaged Gulf Coast will demand a new approach at all levels of government that treats affordable housing as what it really is: a basic human right that must not be denied, come hell or high water.

(HUD photo of Secretary Alphonso Jackson and New Orleans Mayor Ray Nagin)