Lawyers for victims of hurricanes Katrina and Rita accuse FEMA of negligence for sheltering them in trailers with elevated levels of formaldehyde, a preservative used in construction materials that can cause health problems.
But a government attorney told U.S. District Judge Kurt Engelhardt that the FEMA's decisions in responding to a disaster,including its use of travel trailers after Katrina, are legally protected from "judicial second-guessing."
"It is what the legislative branch is supposed to second guess, and they are doing that," Department of Justice attorney Henry Miller said, referring to a series of congressional hearings on formaldehyde concerns.
Plaintiffs attorney Gerald Meunier said FEMA can be held liable for providing hurricane victims with trailers that didn't meet federal safety standards and weren't designed to be long-term housing.
"You're not entitled under the law to assert immunity when you have failed to clear the government mandate to provide these people safe and inhabitable housing," Meunier told CBS News. "Some of these people are still living in these trailers almost three years later."
Earlier this month CBS News aired an exclusive story about a mother and son who worked for months making travel trailers at a Gulf Stream Coach plant in Etna Green, Indiana, and how they felt, first-hand, the effects of formaldehyde.
"The sinus infections, headaches, fatigue, was a big problem," said Lynda Esparza, an inspector at the plant.
"All of sudden I was sick every day," said her son, Tommy Yager, who worked on the production line. "It would be cold, flu-like symptoms."
Several current and former Gulf Stream employees told CBS News the company knew it had a problem with formaldehyde but was more focused on cranking out more than 100 trailers a day than any serious health issues. In a statement to CBS News, the company denied any wrongdoing, adding it "met all FEMA manufacturing specifications and passed all product inspections."
Engelhardt took FEMA's request for immunity under advisement and
didn't indicate how soon he will rule.
The judge is presiding over several consolidated cases filed against the federal government and the companies that supplied FEMA with tens of thousands of trailers after Katrina made landfall on Aug. 29, 2005, and Rita struck about a month later.
FEMA spent more than $2.5 billion to purchase more than 140,000 new trailers from recreational vehicle dealers and trailer manufacturers after the storms.
The lawsuits accuse trailer makers of providing FEMA with shoddily built units in a rush to meet the agency's unprecedented demand for emergency housing. Plaintiffs lawyers also claim FEMA ignored concerns about formaldehyde levels in trailers for months after Katrina.
"At what point do you say, 'We know there's a crisis here, but there is a minimal standard where people have got to be protected against danger,"' Meunier said.
Earlier this year, federal officials announced that tests on hundreds of occupied FEMA trailers and mobile homes detected formaldehyde levels that were, on average, about five times higher than what people are exposed to in most modern homes.
Miller said FEMA fielded its first formaldehyde complaint from a trailer occupant in March 2006 and only had seven or eight complaints by June 2006.
"What was the alternative (to using trailers)?" Miller asked. "To move them to Baton Rouge, to move them to Arkansas, to movethem to Texas?"
Lawyers for the plaintiffs want the cases certified as a class action on behalf of tens of thousands of current and former trailer occupants in Alabama, Louisiana, Mississippi and Texas. Engelhardt hasn't ruled on that request yet.
CBS News Chief Investigative Correspondent Armen Keteyian and Associate Producer Ariel Bashi contributed to this report.