FEMA's sale of Katrina trailers sparks criticism

By Spencer S. Hsu
Saturday, March 13, 2010

In a giant auction, the federal government has agreed to sell for pennies on the dollar most of the 120,000 formaldehyde-tainted trailers it bought nearly five years ago for Hurricane Katrina victims. But the sale of the units, perhaps the most visible symbol of the government's bungled response to the hurricane, has triggered a new round of charges that it is endangering future buyers for years to come.

Consumer advocates and environmentalists are outraged that the government resold products it deemed unsafe to live in, saying warning stickers attached to the units will not keep people from misusing them.

Besides formaldehyde, units might be plagued by mold, mildew and propane gas leaks, FEMA acknowledged.

"Proceed with caution, extreme caution, if you are tempted to respond to what appears to be an attractive offer for a travel trailer or manufactured home," Arkansas Attorney General Dustin McDaniel wrote in a consumer alert. He and others cautioned that the FEMA units could be resold many times, including over the Internet, and that unscrupulous sellers could remove warning labels or withhold information about the dangers.

This year, for example, building inspectors in Missouri discovered damaged FEMA units sold as scrap in a Fenton, Mo., mobile home park. The units were billed as housing even though their paperwork specified they were not to be occupied.

"What if Toyota ordered a recall, then simply put a sticker on its vehicles saying they were unfit to drive before reselling them?" said Becky Gillette, a spokeswoman for the Sierra Club in Mississippi, which helped uncover the formaldehyde problem. "There's a double standard for the government."

The sale of the units will be completed by April 3, pending an antitrust review by the Justice Department, which has rarely reversed government auctions. In the meantime, the sale has drawn criticism from lawmakers upset about the loss of taxpayer dollars and from industry groups that say the fire sale is hurting their business.

FEMA officials defended the sale, noting that Congress has complained that the government has spent $220 million over three years to store vacant units. Wholesale buyers from the auction must sign contracts attesting that trailers will not be used, sold or advertised as housing, they said, and that trailers will carry a sticker saying, "Not to be used for housing."

Officials said that although formaldehyde could still be present in some units, they would be safe for occasional recreational use rather than round-the-clock living. They also say that, because most units are in such poor condition, people will not choose to live in them.

"I'm certainly hopeful we're approaching the end of the story for the Katrina units, which we have been maintaining in the hundreds and thousands of units, at the expense of taxpayers," said FEMA Associate Deputy Administrator David Garratt. "I'm hopeful we can reduce the inventory of units which we can no longer use, and actively maintain the units we can use in actual disasters."

But Marty Horine, a retired teacher from Clinton, Mo., cannot relate to FEMA's decision to resell flawed units. In summer 2007, days before congressional hearings publicized the formaldehyde problems, Horine paid about $6,000 for a 32-foot Gulfstream Cavalier FEMA trailer for her son to live in. Now she doesn't want him in it, but she worries that selling it "would be nothing but being mean to the next person."

"This is like history repeating itself," Horine said. "People are all going to buy them, move into them and then start getting sick."

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