Short answer: Fuel pressure regulator failed. Remove vacuum line from regulator and inspect for fuel escaping while pump is running.
Some more on the subject of fuel pressure...
How the fuel pressure regulator works
Revised 5-Jan-2014 to add how to set fuel pressure,
Step 1.) Check fuel pressure:
The local auto parts store may rent or loan a fuel pressure test gauge if you don't have one.
Disconnect the vacuum line from the fuel pressure regulator. Check it for evidence of fuel present in the line by removing it and blowing air through it. If you find fuel, the fuel pressure regulator has failed. Reinstall the line; leave the fuel pressure regulator end of the vacuum line disconnected. Then cap or plug the open end of the vacuum line and stow it out of the way.
Connect the fuel pressure test gauge to the Schrader port located just behind the alternator.
Turn the ignition switch on & start the engine. Observe the pressure: you should see 37-41 PSI at idle.
Turn the ignition off; reconnect the vacuum line to the fuel pressure regulator. Then disconnect the fuel pressure test gauge. Watch out for squirting gas when you do this.
Step 2 .) How the fuel pressure regulator works
The fuel pressure regulator in 5.0 pushrod Mustangs is a shunt regulator that works in parallel with the fuel injection system. The regulator bypasses fuel back to the tank to maintain a constant 39 PSI to the injector tips. A constant pressure insures that the computer will always have the same flow rate to base its calculations on.
The 39 PSI pressure is measured at 29.92 inches of atmospheric pressure to get the proper flow rate. But the pressure inside the intake manifold may be higher or lower than the atmospheric pressure outside the intake manifold. These differences would cause the flow rate to change and mess up the computer’s air/fuel calculations.
As the vacuum inside the intake manifold increases, the effective pressure at the injector tips increases. Conversely, as vacuum inside the manifold decreases, the effective pressure at the injector tip decreases.
Some math to illustrate the effect:
39 PSI at 20” of vacuum inside the manifold works out to be 49 PSI,
since the 20 “ vacuum/2 = 10 PSI that you add to the base fuel pressure.
That gives you 49 PSI at the injector tip.
39 PSI at 5” of vacuum inside the manifold works out to be 41.5 PSI,
Since 5” vacuum/2 = 2.5 PSI that you add to the base fuel pressure
That gives you 41.5 PSI at the injector tip
39 PSI with 10 lbs of boost inside the manifold works out to be 29 PSI.
That gives you 29 PSI at the injector tip
That reduces the flow rate and explains the need for higher pressures on engines with pressurized induction.
Since intake manifold vacuum and pressure plays havoc with the pressure at the injector tips, what has to be done to get it back in the magic 39 PSI range? That’s where vacuum applied to the back side of the fuel pressure regulator comes in. Remember this: unless you have some really poorly designed or trick plumbing, vacuum is the same throughout the engine’s vacuum system.
Apply 20” of vacuum to the back of the regulator and the 49 PSI pump pressure with 20” of vacuum at the injector tips drops to 39 PSI.
Apply 5” of vacuum to the back of the regulator and the 41.5 PSI pump pressure with 5” of vacuum at the injector tips drops to 39 PSI.
Here’s another side effect: apply 10 PSI boost pressure to the back of the regulator and the normal 39 PSI at the injector tips increases to 49 PSI. That overcomes the 10 PSI in the intake manifold to give you 39 PSI at the injector tips. Pretty clever of these engineers to use intake manifold vacuum and pressure that way.
Simply stated, intake manifold vacuum adds to the effective fuel pressure at the injector tips. Apply the same vacuum to the back side of the fuel pressure regulator, and everything balances out. Add pressure to the intake manifold and the effective fuel pressure at the injector tip decreases. Apply the same pressure to the back side of the fuel pressure regulator, and everything balances out.
Now you know why to disconnect the vacuum when making fuel pressure measurements.
Go back and reread the Tech note. It seems that you saw the 29 PSI and the word boost in the same paragraph and quit reading. This is a lot more that you either didn’t read or understand. "The regulator bypasses fuel back to the tank to maintain a constant 39 PSI to the injector tips.... The 39 PSI pressure is measured at 29.92 inches {or 14.7 PSI} of atmospheric pressure to get the proper flow rate. "
The key thing to keep in mind is the term
effective pressure
As the pressure inside the intake manifold changes so does the effective fuel pressure at the injector tips. Less than 14.7 PSI in the intake manifold increases the effective fuel pressure. Greater than 14.7 PSI the intake manifold decreases the effective fuel pressure. Now that we know that vacuum or pressure changes the effective pressure at the injector tips, let's proceed onward.
I'm going to introduce a new term
PISD. That stands for
Pounds per Square Inch Differential. The proper definition is:
"The difference in pressure between two points in a fluid-flow system, measured in pounds per square inch. Abbreviated PSID or psid" (McGraw-Hill Dictionary of Scientific & Technical Terms, 6E, Copyright © 2003 by The McGraw-Hill Companies, Inc.).
The term PSID perfectly describes the situation we have here. In order to preserve the injector flow characteristics, we need to maintain the 39 PSID at the injector tips. That is done by applying pressure or vacuum to the back of the fuel pressure regulator. Pressure applied to the fuel pressure regulator increases the fuel pressure. Vacuum applied to the fuel pressure regulator decreases the fuel pressure. Keep that in mind along with the idea of effective pressure or PSID and you will have a better understanding.
When you connect a pressure gauge to the fuel pressure regulator, you are seeing PSIG. That letter
"G" needs some explanation, so I will borrow a very good explanation from
https://www.quora.com/Air-Pressure/What-is-the-difference-between-the-units-psi-and-psig
Kim Aaron, Spacecraft Mechanical Engineer writes
When you stick a pressure gage on the valve stem of a tire on a car or a bicycle, the needle is reading the pressure difference between the air inside the tire and the air outside the tire. That's called gage pressure. The units of psig (pounds per square inch, gage) remind us that we are talking about this *difference* in pressure. The absolute air pressure at sea level is about 14.7 psi. Suppose the air pressure in your car tire is 30 psig. Then the absolute pressure inside is 30+14.7 = 44.7 psi. Sometimes, we write that as 44.7 psia (pounds per square inch, absolute) to remind us we are talking about an absolute pressure. In either case, we could just use psi. It just helps avoid confusion to use the psig or psia as appropriate to be clear which we are talking about.