It was an embarrassing moment.

On Oct. 16, 1995, Lawrence Livermore National Laboratory had just released a comprehensive $450,000 study that said leaks from underground gas storage tanks were not as bad as was once believed. If the leaked gasoline is left alone in the ground, the study said, most of the leaks will degrade naturally without the need for millions of dollars in clean-ups.

The next day, the gas additive MTBE showed up in Santa Monica's second drinking water well, alerting the city that it was facing a serious contamination problem with no means of cleaning it up.

"We just didn't have any data (on MTBE) to work with," said David Rice, the Livermore lab's project leader, defending his team's research. It was a perfect example of how MTBE, once considered a solution to the nation's air pollution problem, has blindsided much of the scientific and environmental communities.

In 1990, when Congress ordered refiners to start mixing large amounts of oxygenates like MTBE into gasoline to help clean the air, no one in government stopped to take a hard look at what would happen to the nation's groundwater.

At that point, critics contend, some one certainly should have thought about it.

A federal program had been under way for years to clean up more than 300,000 contaminated sites across the country where gas was found leaking from storage tanks, most of them under gas stations. A second program had set a 1998 deadline for removal or upgrading of the old tanks or replacing them with new double-wall models.

In the 1980s, some scientists and the federal EPA had warned of the growing potential of MTBE water contamination. Oil industry research in the early 1990s also confirmed that MTBE was highly soluble in water, resistant to biodegradation in soil and very difficult to clean up.

In February 1995, the EPA warned the Lawrence lab to look at MTBE in its research on tank clean-ups.

But the chemical was not even mentioned when the lab issued its report eight months later. The report dealt only with the well- known toxic gas components benzene, toluene, ethylbenzene and xylenes, together known as BTEX.

Worse, the report appeared so intent on debunking the need for expensive cleanups that it said: "Existing cleanup goals are derived from policies that have not kept pace with current knowledge and experience."

The report prompted the State Water Resources Control Board to order cleanup agencies "to proceed aggressively to close low-risk soil only cases," a move that drew howls of protest by water managers and environmentalists up and down the state.

Then Santa Monica began shutting down well after well, and a short time later, a flood of test samples showed extremely high concentrations of MTBE in monitoring wells near leaking tanks all over the state.

"From my perspective, MTBE is a nightmare," said James Giannopoulos, the state water official who oversees California's underground tank cleanup program. "A new policy is now under review." He explained that under the draft policy, if MTBE is found at a site, the site cannot be considered low- risk.

Giannopoulos said it is too soon to gauge the extent of MTBE contamination. Even if it does not seriously affect the state's drinking water, it is going to cost tank owners, oil companies, consumers and taxpayers a lot of money to pay for monitoring systems and costly cleanups.

Why didn't the Livermore lab see the problems with MTBE coming?

A number of water experts claimed the lab was following the agenda of the state water board: to minimize the threat of gas leaks so the cases could be quickly closed.

Rice denied there was any such agenda. He insisted that the researchers did not ignore MTBE and that the information provided by the state just didn't include any data on MTBE.

For the record, Rice's lab has been given another contract, this time for $600,000, to study how MTBE reacts in soil and how it can be cleaned up.