The move follows a U.S. Environmental Protection Agency agreement reached with the wood-treating industry to prohibit the use of CCA-treated wood on patios, play structures, fencing or other residential projects by January 2004.

Chromated copper arsenate has been used for decades to protect lumber from rotting and insect damage. Laura Chapin, a spokeswoman for the Environmental Working Group, a Washington-based research group, estimated it is used in about 90 percent of pressure-treated lumber.

Environmental groups have been up in arms about CCA-treated wood for years, saying arsenic can remain on wood surfaces for years. The EPA is currently studying whether children who repeatedly encounter CCA-treated wood face a greater risk of developing cancer.

In a statement, the agency said it has not concluded that existing CCA-treated wood used around homes or sold in stores poses unreasonable risks. "EPA does not believe there is any reason to remove or replace CCA-treated structures, including decks or playground equipment," it said.

PROBLEMS FOR SELLERS

But some said the wood treatment industry's voluntary phase-out of CCA-treated wood poses problems for Home Depot, Lowe's and other retailers.

"The problem they're going to have is getting access to a replacement," said Gary Donnelly, president of the National Lumber and Building Material Dealers Association in Washington. "If they stopped selling CCA-treated lumber tomorrow, they wouldn't have anything to replace it with."

Lumber accounts for about 7 percent of Home Depot's revenues and 9 percent of Lowe's.

Donnelly also pointed out that home-improvement retailers and makers of CCA-treated wood have been named in lawsuits that contend people unknowingly bought lumber containing harmful chemicals. He said the phase-out could spur more suits.

Home Depot spokesman Don Harrison said the firm does not comment on current litigation. He added that the retailer sells "a great deal" of CCA-treated wood, but was not more specific.

Both Home Depot and Lowe's expect to halt the sale of CCA-treated wood well ahead of the EPA deadline, the companies said.

The phase-out is "dependent on how quickly manufacturers are able to transition their treatment facilities," said Lowe's spokeswoman Chris Ahearn.

Donnelly worried that the phase-out could stall sales of CCA-treated wood already stocked in stores.

"Our concern is that there are going to be a number of people who misunderstand what the EPA has said and make up their minds that this is somehow overnight not a good product," Donnelly said. In that case, Home Depot and Lowe's could have trouble selling current supplies of the treated wood, he said.

Home Depot and Lowe's said they sell CCA-treated wood alternatives, including untreated lumber and composite decking. Donnelly estimated that those alternatives now cost 20 percent to 30 percent more than CCA-treated wood.

In New York Stock Exchange trading this week, Home Depot shares climbed 93 cents to close at $51.24. Lowe's shares were up 63 cents at $46.16, also on the NYSE.