The federal ban against urea formaldehyde foam insulation has been struck down by the 5th Circuit Court of Appeals, but questions about the safety of this controversial product continue to haunt regulators, manufacturers, lawmakers and, of course, consumers who want to know if the insulation is safe or unsafe.

The answer depends on whom you ask--and whom you want to believe.

The Consumer Product Safety Commission banned UF-foam insulation on Feb. 23, 1982, saying it posed a significant health threat to consumers because formaldehyde had been shown to cause cancer in animals and had been linked to a variety of health problems in humans. These include nausea, headaches, dizziness and respiratory ailments.

But the three-judge appeals panel said on April 8 the commission failed to produce the "substantial evidence necessary" to support a nationwide ban on the insulation. However, the ban remains in effect pending the outcome of the appeals process.

UF-foam has been used in an estimated 500,000 homes since the mid-1970s, as part of an energy conservation effort by homeowners. But it has not been sold or manufactured since the ban was imposed last year.

The court decision overruling the ban was hailed by the industry groups, particularly the Formaldehyde Institute, a trade group and one of the plaintiffs in the lawsuit challenging the federal ban, as proof that the insulation is safe.

"As far as we can see, properly installed, the urea formaldehyde foam insulation is safe," said John F. Murray, president of the institute.

But the CPSC is telling consumers who call for information that a hazard still exists from the insulation.

"Although the court found that the commission didn't adequately quantify the risk, the court recognized that the insulation 'is not completely innocent,' " said Lou Brott, a CPSC spokesman. "The court also agreed that 'taken as a whole, that complaints received by the commission do identify a real problem.' "

While the formaldehyde industry has been celebrating its victory and while the CPSC has been weighing its chances for winning an appeal in the federal court system, one state court has ruled in favor of a state ban on formaldehyde insulation.

The Massachusetts Supreme Judicial Court upheld a statewide insulation ban based on data nearly identical to that used by the CPSC when it issued the federal ban.

In the meantime, 23 congressional members have written CPSC Chairman Nancy Harvey Steorts, urging her and the CPSC to do everything possible to fight the court ruling because "of the dangerous health effects caused by formaldehyde."

Consumer advocates have been equally outspoken.

David Greenberg of the Consumer Federation of America said, "The commission lost a court decision, but Americans could be losing their health."

Still another group voicing concern about the UF-foam insulation question is the the National Association of Realtors, which recommends that its members ask home sellers if their homes contained the insulation at any time and, if so, that that information be disclosed to buyers.

"We are recommending that because the court didn't say that the insulation was innocent," said Laurene Janik, an attorney with the realtor group.

"And also," Janik said, "we believe that the UF-foam insulation is of concern to the consuming public and that they should be aware of its use in any property. We feel it could cause difficulties not only for the seller, but for the realtor, if the buyer finds out after the fact that the house contained the insulation. We feel that problem can be averted by disclosure."