The "demonstration program" is said to be the first step in establishing a global remediation program, according to the PSC and Judge Eldon E. Fallon in U.S. District Court in New Orleans.

The remediation includes replacement of electrical wiring, fire safety equipment, home equipment and other fixtures damaged by the drywall, which is said to corrode copper. The drywall will be replaced and compensation will be provided for living expenses during the remediation, the PSC said. Homeowners will receive $8.50 per square foot of the house as compensation, according to the settlement.

Each homeowner will get a certificate from environmental engineers at the completion of the work.

Fort Lauderdale-based Moss & Associates has been chosen as lead contractor.

To be eligible homes must have all or substantially all Knauf drywall, but the manufacturer can waive that requirement.

Homeowners who have already fixed the problem at their own expense will have to wait. Compensation for these people will be negotiated separately, according to the settlement.

As part of the agreement Knauf admits no liability or fault. Knauf denied liability and has entered into the agreement to avoid the expenses and uncertainty of litigation, the settlement said.

Government agencies, collectively called the "Interagency Drywall Task Force," have been studying homes containing imported drywall from China after homeowners reported health problems and structural degradation after living in homes that used Chinese drywall from 2004-2007, when domestic drywall was in short supply.