As the authorities taking ample time acknowledging and identifying the problem of formaldehyde detected at water purification plants along the Tone River that runs through Gunma, Saitama, and Chiba Prefectures, people have started to form their own hypothesis.
First, the timeline of the events: The first detection of formaldehyde may have been on May 15, 4 days before the authorities stopped the water intake. The following timeline is from a popular message board (as quoted by the Portirland blog), so this could also be part of the "baseless rumors". But it has been verified (see Mainichi Shinbun article on 5/19/2012; in Japanese) that the first detection of formaldehyde was on May 15 in Kasukabe City, as this timeline suggests.
Formaldehyde leaked from a factory sometime, somewhere along the Tone River
May 15: Formaldehyde detected at the water plant in Kasukabe City in Saitama Prefecture
May 17: Saitama Prefecture notified the Water Department of Gunma Prefecture of the detection
May 17 evening: Gunma Water Department had a party (newspaper article copy also at Portirland blog)
May 18: The news of formaldehyde detection was leaked to the press
May 19: Some water purification plants stopped water intake, affecting residents and businesses
May 19 afternoon: Gunma Water Department started investigation
May 20: Gunma Water Department's partying on May 17 was reported in the press
May 20: Misato Water Purification Plant in Saitama Prefecture stopped water intake. Gunma Prefecture still cannot identify the source of formaldehyde.
Nature abhors a vacuum, and this information vacuum is being filled by some fantastic stories that circulate on the net in Japan. Here are some I noticed:
It is an act of sabotage by a foreign element.
It is not formaldehyde, but it is plutonium.
It is not formaldehyde, but it is cesium.
It is not formaldehyde but it is strontium.
They were using some resin that contains formaldehyde to remove cesium.
It is not formaldehyde, but something in the water reacted with the reagent (to test the water quality) and turned into formaldehyde.
The last one is supposedly a quote from an unnamed official in a water department of an unnamed city along the Tone River. It looks plausible, but then the blog that quoted this information and people who read the information concluded this "something in the water" must be a radioactive material (plutonium, cesium, strontium, or any other radioactive material of choice).
Sankei Shinbun (5/20/2012) says it will be impossible to identify the source (and therefore it won't be done) because there are hundreds of chemical substances that react and generate formaldehyde. Sankei Shinbun also quotes the partying Gunma Water Department, who says:
"It is possible that the flow of the substance that caused contamination has stopped already. At this point, we don't know exactly where the contamination first started."
which is not really true. According the same Sankei article, Saitama Prefecture has narrowed down the source of contamination along the Karasugawa River, a tributary of the Tone River, near Takasaki City in Gunma Prefecture. Instead of partying and hiding the contamination, the Gunma Water Department could have started visiting the factories along the river.