Kentucky's Whiskey Fungus Problem Is Out of Control

If there's a downside to whiskey, it's in Shively, Kentucky.

A low-income suburb of Louisville, Shively is home to five whiskey distilleries and one of the nastiest cases of whiskey fungus in America. Driving down its residential streets, you'll notice that just about everything is covered in an ugly black patina: houses, cars, swing sets, street signs, fire hydrants, and even trees. Some people clean it off every few months with industrial-strength soap and a pressure-washer, but others quit this Sysiphean task long ago, surrendering their outdoor possessions to the unsightly black stuff that always seems to grow back.

For years, the residents of Shively took this black soot as a given. They didn't know it was a preventable fungus caused by the nearby whiskey distilleries and they didn't make much of a fuss about it. It was just another neighborhood complaint that wasn't getting addressed by the local councilmen.

That changed in 2007, when University of Toronto mycologist James Scott published an academic paper about the fungus, which got attention not only for re-naming and re-classifying it based on DNA analysis, but also for pinning it on the whiskey industry. Dr. Scott discovered that this fungus—which he named Baudoinia, after the man who first studied it in 1872, Anton Baudoin—feeds on the ethanol vapor released by liquor as it ages. (Not surprisingly, you'll find Baudoinia near scotch, brandy, and rum distilleries as well, since they also off-gas ethanol.)

Dr. Scott's discoveries were the subject of a 2011 Wired article, which was responsible for making whiskey fungus go mainstream and bringing it to the attention of local residents.

When he heard that the black stuff in his neighborhood was likely the same fungus, Shively resident Joe Billy contacted William F. McMurry, a personal-injury lawyer in Louisville. Billy remembers how surprised he was when he first found out about Baudoinia. "Before the articles came out, I blamed it on the community garden," he tells me. "No one had any idea." Within a few months, they filed a class-action suit against the three major distilleries near Shively—Diageo, Brown-Forman, and Heaven Hill—claiming that they were negligent and responsible for the town's property damage.

Shortly after Billy and his attorney filed suit in Louisville, Michael Mills of nearby Frankfort called McMurry with the same problem. Mills is now one of three lead plaintiffs in a suit against Jim Beam and Buffalo Trace in Frankfort. A retired biologist who studied pollution in the Ohio River for the state of Kentucky, Mills knows a thing or two about corporate negligence. "I used to advise people against fishing in the Ohio River because of the water pollution," he says. "Now I'm dealing with pollution in the air." He points out where the fungus has pitted and embedded itself into his aluminum siding.

What the town of Shively and Mills' area of Frankfort have in common is that they are both within a mile radius of distillery warehouses, where at any given moment millions of gallons of whiskey are aging.

This aging process is what gives it those distinctive charred oak and caramel flavors that we love, but it's also what causes whiskey fungus. When it's aging—expanding and contracting in and out of the barrels' oak panels—a significant portion of the alcohol evaporates into the air, about two percent every year. In Kentucky alone, that amounts to five million gallons' worth of evaporated bourbon per year. (That doesn't count all the evaporated whiskey in Tennessee, Scotland, and Japan—which is a lot.) In the magical language that distillers use to talk about their products, this alcohol vapor is called the "angel's share," because it legendarily floats up to alcoholic angels in the sky.

Where the evaporated alcohol actually goes, though, is another story—a more scientific one that explains why neighborhoods like Shively have had to deal with this black fungus for so many years. Since ethanol is denser than air, the evaporated angel's share doesn't float up into the sky at all, but rather down into surrounding communities. It is the people's share. When this airborne ethanol meets the slightest bit of moisture—which is common because distilleries and towns are usually near water sources—you get whiskey fungus all over the place.

The whiskey fungus requires frequent cleaning and causes damage to the physical property (almost every resident we spoke to has replaced their aluminum siding at some point in time), but the major damage has been to people's property values. Even if people keep their houses impeccably clean, they are required by law to inform prospective home-buyers about the Baudoinia blight. Who would want to buy a house with hard-to-remove fungus growing all over it?

The extent of this property damage is impressive. If you multiply the average reduction in property value by the number of households affected, you can easily get to a figure in the hundreds of millions of dollars. Let's say someone claims that their $200,000 home has lost a quarter of its value, or $50,000 worth. Paying that one person is not a big deal for a big whiskey company. But in a class-action suit, where thousands of people can claim similar damages, that dollar figure can quickly escalate. If 5,000 people claimed $50,000 in damages—which isn't a crazy number considering all the people who could be affected—the whiskey companies would hypothetically owe $250 million. That's Erin Brockovich dough.

The whiskey companies deny that their ethanol emissions are causing whiskey fungus, having previously claimed that it is "a naturally occurring common mold that is found widely throughout the environment, including in areas unrelated to the production of whiskey." (Calls to each of the companies—except for Buffalo Trace, which did not wish to comment—went unreturned.) But their main argument, which so far one judge has agreed with and one has not, is that federal law should preempt state law, and that federal law allows them to release ethanol into the air. Ironically, this federal law is called the Clean Air Act, and it has a clause in it allowing whiskey companies to release so-called "fugitive emissions" into the air, as long as retaining those emissions would hurt the flavor of the whiskey.

The plaintiffs' counter-argument is two-fold: 1) that there's a clause in the Clean Air Act inviting nuisance suits from people negatively affected by these emissions, and 2) that retaining the ethanol would not actually affect the flavor of the whiskey. If the courts side with the plaintiffs on this federal preemption argument, the debate will then turn to the whiskey distillers' negligence: do ethanol emissions cause whiskey fungus, do the distillers know that these emissions cause whiskey fungus, and should they be responsible for damages?

Whiskey distillers could ameliorate the situation and stop more whiskey fungus from growing, but it'll take a lot of money—about $400,000 per warehouse, to be exact. For that price, they can install thermal oxidizers in all of their warehouses, as brandy distillers currently do in California. These machines decompose ethanol vapor into smaller compounds like water and carbon dioxide that won't feed the whiskey fungus. In court, the whiskey distillers claim that this process will affect the taste of the whiskey, but brandy makers like E & J Gallo have publicly disagreed.

What the two sides are not debating, though, is whether the fungus (or the airborne ethanol) is harmful to human health.Though it's a black-colored mold, Baudoinia isn't as bad for us as Stachybotrys, commonly known as toxic black mold. "Genetically speaking, Baudoinia is as similar to black mold as we are to chickens," Dr. Scott stresses. Given the species of fungus, he doesn't think it's especially harmful to humans, but he can't say for certain until it's been researched further.

Another concern, which makes McMurry's face turn an angry shade of red, is the possibility that evaporated ethanol is converting into ethanal, AKA acetyldehyde, which is considered a known carcinogen by the International Agency for Research on Cancer. There's a chance people are breathing in acetyldehyde without knowing it.

One reason why this is worth studying now is the rising popularity of whiskey. Worldwide demand for whiskey is increasing rapidly, bourbon in particular. According to the Associated Press, the number of licensed distilling companies in Kentucky has more than tripled since 2012, going from 10 to 31. The number of employees has almost doubled over the same time, going from 8,690 to 15,400. That means more whiskey will be made, more warehouses will be built to age it, and more whiskey fungus will crop up in more neighborhoods.

Unless Baudoinia turns out to be an amazing alternative source of fuel or the next superfood, this is a bad thing. More whiskey fungus will cause more property damage—most likely in the areas where people can least afford it.