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Intermediate Ethanol Blends' which was released on July 8, 2011. 

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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

June 2011: 

Biofuels: 

Challenges to the Transportation, Sale, and Use of Intermediate 
Ethanol Blends: 

GAO-11-513: 

GAO Highlights: 

Highlights of GAO-11-513, a report to congressional requesters. 

Why GAO Did This Study: 

U.S. transportation relies largely on oil for fuel. Biofuels can be an 
alternative to oil and are produced from renewable sources, like corn. 
In 2005, Congress created the Renewable Fuel Standard (RFS), which 
requires transportation fuel to contain 36 billion gallons of biofuels 
by 2022. The most common U.S. biofuel is ethanol, typically produced 
from corn in the Midwest, transported by rail, and blended with 
gasoline as E10 (10 percent ethanol). Use of intermediate blends, such 
as E15 (15 percent ethanol), would increase the amount of ethanol used 
in transportation fuel to meet the RFS. The Environmental Protection 
Agency (EPA) recently allowed E15 for use with certain automobiles. 
GAO was asked to examine (1) challenges, if any, to transporting 
additional ethanol to meet the RFS, (2) challenges, if any, to selling 
intermediate blends, and (3) studies on the effects of intermediate 
blends in automobiles and nonroad engines. GAO examined government, 
industry, and academic reports; interviewed Department of Energy 
(DOE), EPA, and other government and industry officials; and visited 
research centers. 

What GAO Found: 

According to government and industry officials, the nation’s existing 
rail, truck, and barge infrastructure should be able to transport an 
additional 2.4 billion gallons of ethanol to wholesale markets by 2015—
enough to meet RFS requirements. Later in the decade, however, a 
number of challenges and costs are projected for transporting 
additional volumes of ethanol to wholesale markets to meet peak RFS 
requirements. According to EPA estimates, if an additional 9.4 billion 
gallons of ethanol are consumed domestically by 2022, several billion 
dollars would be needed to upgrade rail, truck, and barge 
infrastructure to transport ethanol to wholesale markets. 

GAO identified three key challenges to the retail sale of intermediate 
blends: 

* Compatibility. Federally sponsored research indicates that 
intermediate blends may degrade or damage some materials used in 
existing underground storage tank (UST) systems and dispensing 
equipment, potentially causing leaks. However, important gaps exist in 
current research efforts—none of the planned or ongoing studies on UST 
systems will test actual components and equipment, such as valves and 
tanks. While EPA officials have stated that additional research will 
be needed to more fully understand the effects of intermediate blends 
on UST systems, no such research is currently planned. 

* Cost. Due to concerns over compatibility, new storage and dispensing 
equipment may be needed to sell intermediate blends at retail outlets. 
The cost of installing a single-tank UST system compatible with 
intermediate blends is more than $100,000. In addition, the cost of 
installing a single compatible fuel dispenser is over $20,000. 

* Liability. Since EPA has only allowed E15 for use in model year 2001 
and newer automobiles, many fuel retailers are concerned about 
potential liability issues if consumers misfuel their older 
automobiles or nonroad engines with E15. Among other things, EPA has 
issued a proposed rule on labeling to mitigate misfueling. 

DOE, EPA, and a nonfederal organization have provided about $51 
million in funding for ten studies on the effects of intermediate 
blends on automobiles and nonroad engines—such as weed trimmers, 
generators, marine engines, and snowmobiles—including effects on 
performance, emissions, and durability. Of these studies, five will 
not be completed until later in 2011. Results from a completed study 
indicate that such blends reduce a vehicle’s fuel economy (i.e., fewer 
miles per gallon) and may cause older automobiles to experience higher 
emissions of some pollutants and higher catalyst temperatures. Results 
from another completed study indicate that such blends may cause some 
nonroad engines to run at higher temperatures and experience 
unintentional clutch engagement, which could pose safety hazards. 

What GAO Recommends: 

GAO recommends, among other things, that EPA determine what additional 
research is needed on the effects of intermediate blends on UST 
systems. EPA agreed with the recommendation after GAO revised it to 
clarify EPA's planned approach. 

View [hyperlink, http://www.gao.gov/products/GAO-11-513] or key 
components. For more information, contact Frank Rusco at (202) 512-
3841 or ruscof@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Challenges to Transporting Additional Volumes of Ethanol to Wholesale 
Markets May Require Large Investments in Infrastructure over the Next 
Decade: 

Challenges Due to Regulations, Technical Issues, and Cost Could Slow 
the Retail Sale of Intermediate Ethanol Blends: 

Federally Sponsored Studies Are Evaluating Effects of Using 
Intermediate Ethanol Blends in Automobiles and Nonroad Engines: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Studies by Nonfederal Organizations on the Effects of 
Intermediate Ethanol Blends in Automobiles: 

Appendix III: Comments from the Environmental Protection Agency: 

Appendix IV: Comments from the Occupational Safety and Health 
Administration: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Federal Fuel Requirements that Affect the Introduction of New 
Fuels: 

Table 2: Status of DOE-and EPA-Sponsored Research on Effects of 
Intermediate Ethanol Blends in Automobiles and Nonroad Engines: 

Table 3: Published CRC Reports on Effects of Intermediate Ethanol 
Blends in Automobiles: 

Figures: 

Figure 1: Volume Requirements Established by the Renewable Fuel 
Standard under the Energy Independence and Security Act: 

Figure 2: Primary Transportation of Petroleum Products and Ethanol 
from Refineries to Retail Fueling Outlets: 

Figure 3: Examples of Typical Components and Materials in Retail 
Dispensing and Underground Storage Equipment: 

Figure 4: Distribution Patterns for Gasoline and Ethanol: 

Abbreviations: 

CRC: Coordinating Research Council, Inc. 

DOE: Department of Energy: 

DOT: Department of Transportation: 

E10: fuel blend containing approximately 10 percent ethanol: 

E15: fuel blend containing approximately 15 percent ethanol: 

E20: fuel blend containing approximately 20 percent ethanol: 

E85: fuel blend containing 70 percent to 83 percent ethanol: 

EISA: Energy Independence and Security Act: 

EPA: Environmental Protection Agency: 

NIST: National Institute of Standards and Technology: 

NREL: National Renewable Energy Laboratory: 

ORNL: Oak Ridge National Laboratory: 

OSHA: Occupational Safety and Health Administration: 

RFS: Renewable Fuel Standard: 

UL: Underwriters Laboratories: 

USDA: Department of Agriculture: 

UST: underground storage tank: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

June 3, 2011: 

The Honorable Fred Upton: 
Chairman: 
The Honorable Joe Barton: 
Chairman Emeritus: 
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable Cliff Stearns: 
Chairman: 
Subcommittee on Oversight and Investigations: 
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable Michael C. Burgess: 
The Honorable Greg Walden: 
House of Representatives: 

The U.S. transportation sector is almost entirely dependent on 
petroleum products refined from crude oil--primarily gasoline and 
diesel fuels. In 2009, this sector consumed the equivalent of about 14 
million barrels of oil per day, or over 70 percent of total U.S. 
consumption of petroleum products. To meet the demand for crude oil 
and petroleum products, the nation imported, on a net basis, about 52 
percent of the petroleum products consumed in 2009.[Footnote 1] 

Biofuels can be an alternative to petroleum-based transportation fuels 
and are produced from renewable sources, primarily corn, sugar cane, 
and soybeans. The United States is the world's largest producer of 
biofuels. The federal government has promoted the domestic production 
and use of biofuels through tax incentives since the 1970s and, more 
recently, through a Renewable Fuel Standard (RFS). The Energy Policy 
Act of 2005, which created the RFS, generally required transportation 
fuels in the United States to contain renewable fuels, such as ethanol 
and biodiesel.[Footnote 2] The Energy Independence and Security Act 
(EISA) of 2007 expanded the RFS by requiring that U.S. transportation 
fuels contain 9 billion gallons of renewable fuels in 2008, with 
renewable fuels increasing annually to 36 billion gallons in 2022. 
[Footnote 3] The Environmental Protection Agency (EPA) is responsible 
for administering the RFS. 

Ethanol is the most commonly produced biofuel in the United States. In 
2010, the nation produced 13.2 billion gallons of ethanol, the vast 
majority of which came from corn. Most U.S. corn is grown in the 
Midwest, and ethanol is generally produced in relatively small 
biorefineries near corn-producing areas. Unlike petroleum products, 
which are primarily transported to wholesale terminals by pipelines, 
ethanol is transported to wholesale terminals by a combination of 
rail, tanker truck, and barge. At the terminals, most ethanol is 
currently blended as an additive in gasoline to make fuel blends 
containing up to 10 percent ethanol (called E10). Finally, the blended 
fuel is transported via tanker truck to retail fueling outlets. 

In a 2009 report, we identified fuel-blending limits as a challenge to 
expanded ethanol consumption.[Footnote 4] We stated that the nation 
may soon reach a "blend wall"--the upper limit to the total amount of 
ethanol that can be blended into U.S. gasoline, given current 
constraints. At the time, the blend wall existed partly because under 
EPA's implementation of the Clean Air Act, fuels containing more than 
10 percent ethanol were prohibited from being introduced for use with 
the vast majority of U.S. automobiles.[Footnote 5] This created a 
blend wall at approximately 10 percent of total U.S. fuel consumption. 
If the volume of renewable fuels required by the RFS increased above 
this 10 percent threshold, the fuel industry would not be able to meet 
the RFS using only E10. We noted that one option to address the blend 
wall is to use "intermediate" ethanol blends such as E15 or E20 
(generally 15 percent or 20 percent ethanol).[Footnote 6] 

In March 2009, a group of ethanol manufacturers petitioned EPA to 
allow E15 into commerce. The Clean Air Act prohibits the introduction 
of fuels that are not substantially similar to gasoline. However, the 
Act authorizes EPA to grant a waiver of this prohibition for a fuel if 
it does not cause vehicles or engines to exceed emission standards 
over their useful life. EPA issued two decisions on E15. The first, 
issued in October 2010, allowed E15 for use in model year 2007 and 
newer automobiles. The second, issued in January 2011, allowed E15 for 
use in model years 2001 through 2006 automobiles. EPA did not allow 
E15 for use in older automobiles or nonroad engines (such as lawn 
mowers, chainsaws, and boats), motorcycles, or heavy-duty gasoline 
engines. EPA cited insufficient test data to support the use of E15 in 
these engines, as well as engineering concerns that older vehicles and 
nonroad engines may not maintain compliance with emission standards if 
operated on E15.[Footnote 7] 

In light of the potential use of intermediate ethanol blends, you 
asked us to review their potential effects. Our objectives were to (1) 
determine the challenges, if any, associated with transporting 
additional volumes of ethanol to wholesale markets to meet RFS 
requirements; (2) determine the challenges, if any, associated with 
selling intermediate ethanol blends at the retail level; and (3) 
examine research by federal agencies into the effects of intermediate 
ethanol blends on the nation's automobiles and nonroad engines. 

To determine the challenges associated with transporting additional 
volumes of ethanol to wholesale markets to meet RFS requirements, we 
reviewed relevant literature and reports from federal government 
agencies--including EPA, the Department of Energy (DOE), and the 
Department of Transportation (DOT)--industry associations, and 
academic organizations and interviewed their relevant officials and 
representatives. To determine the challenges associated with selling 
intermediate ethanol blends at the retail level, we reviewed relevant 
literature and reports from federal and state government agencies-- 
including EPA, DOE, the Department of Labor's Occupational Safety and 
Health Administration (OSHA), and the California Air Resources Board-- 
government laboratories, and industry associations and interviewed 
their relevant officials and representatives. To examine research by 
federal agencies into the effects of intermediate ethanol blends on 
the nation's automobiles and nonroad engines, we reviewed relevant 
reports and studies from government and private laboratories, 
including DOE's National Renewable Energy Laboratory (NREL) in 
Colorado and Oak Ridge National Laboratory (ORNL) in Tennessee and 
interviewed their relevant officials. We also conducted site visits to 
NREL, ORNL, and a private laboratory to discuss testing results. Due 
to ongoing litigation over EPA's decision to allow E15 for use in 
certain automobiles, we did not make any determination in this report 
of the adequacy of federal testing efforts for automobiles. In 
addition, we interviewed officials from EPA, DOE, and representatives 
from relevant industry associations. A more detailed description of 
our scope and methodology is presented in appendix I. 

We conducted this performance audit between April 2010 and June 2011 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

The RFS, as defined by EISA, distinguishes between ethanol derived 
from corn starch (known as corn ethanol) and advanced biofuels--
defined as a renewable fuel other than corn ethanol that meets certain 
criteria. For example, to qualify as an advanced biofuel, a biofuel 
must reduce lifecycle greenhouse gas emissions by at least 50 percent 
compared to the gasoline or diesel fuel it displaces.[Footnote 8] 
According to the RFS, most advanced biofuels must be produced from 
cellulosic materials, which can include perennial grasses, crop 
residue, and the branches and leaves of trees. In addition, some 
advanced biofuels must be produced from biomass-based diesel, which 
generally includes any diesel made from biomass feedstocks, such as 
soybeans. As shown in figure 1, the volume of corn ethanol included 
under the RFS is capped at 15 billion gallons by 2015 and is fixed 
thereafter. However, the volume of advanced biofuels continues to grow 
to a total of 21 billion gallons by 2022. By comparison, the U.S. 
transportation sector consumed about 14 million barrels of oil per day 
in 2009, which translates to more than 99 billion gallons of gasoline 
consumed for the entire year. 

Figure 1: Volume Requirements Established by the Renewable Fuel 
Standard under the Energy Independence and Security Act: 

[Refer to PDF for image: stacked vertical bar graph] 

Year: 2011; 
Corn ethanol: 12.6 billion gallons; 
Advanced biofuels: 1.35 billion gallons. 

Year: 2012; 
Corn ethanol: 13.2 billion gallons; 
Advanced biofuels: 2 billion gallons. 

Year: 2013; 
Corn ethanol: 13.8 billion gallons; 
Advanced biofuels: 2.75 billion gallons. 

Year: 2014; 
Corn ethanol: 14.4 billion gallons; 
Advanced biofuels: 3.75 billion gallons. 

Year: 2015; 
Corn ethanol: 15 billion gallons; 
Advanced biofuels: 5.5 billion gallons. 

Year: 2016; 
Corn ethanol: 15 billion gallons; 
Advanced biofuels: 7.25 billion gallons. 

Year: 2017; 
Corn ethanol: 15 billion gallons; 
Advanced biofuels: 9 billion gallons. 

Year: 2018; 
Corn ethanol: 15 billion gallons; 
Advanced biofuels: 11 billion gallons. 

Year: 2019; 
Corn ethanol: 15 billion gallons; 
Advanced biofuels: 13 billion gallons. 

Year: 2020; 
Corn ethanol: 15 billion gallons; 
Advanced biofuels: 15 billion gallons. 

Year: 2021; 
Corn ethanol: 15 billion gallons; 
Advanced biofuels: 18 billion gallons. 

Year: 2022; 
Corn ethanol: 15 billion gallons; 
Advanced biofuels: 21 billion gallons. 

Source: EISA, Pub. Law No. 110-140 § 202 (2007). 

[End of figure] 

The RFS generally requires that U.S. transportation fuels in 2022 
contain 36 billion gallons of biofuels. In addition, at least 16 
billion of the 36 billion gallons of biofuels must be cellulosic 
biofuels--including ethanol and diesel derived from cellulosic 
materials. However, under EISA, EPA is required to determine the 
projected available volume of cellulosic biofuel production for the 
year, and if that number is less than the volume specified in the 
statute, EPA must lower the standard accordingly. Pursuant to this 
provision, EPA has already lowered the RFS requirements for cellulosic 
biofuel, from 250 million gallons to 6.6 million gallons for 2011, 
mostly due to the small number of companies with the potential to 
produce cellulosic biofuel on a commercial scale.[Footnote 9] 

As shown in figure 2, the infrastructure used to transport petroleum 
fuels from refineries to wholesale terminals in the United States is 
different from that used to transport ethanol. Petroleum-based fuel is 
primarily transported from refineries to terminals by pipeline. 
[Footnote 10] In contrast, ethanol is transported to terminals via a 
combination of rail cars, tanker trucks, and barges.[Footnote 11] 
According to DOE estimates, there are approximately 1,050 terminals in 
the United States that handle gasoline and other petroleum products. 
At the terminals, most ethanol is currently blended as an additive in 
gasoline to make E10 fuel blends. A relatively small volume is also 
blended into a blend of between 70 percent to 83 percent ethanol (E85) 
and the remainder gasoline. E85 has a more limited market, primarily 
in the upper Midwest, and can only be used in flexible-fuel vehicles, 
which are vehicles that have been manufactured or modified to accept 
it.[Footnote 12] After blending, the fuel is moved to retail fueling 
locations in tanker trucks. 

Figure 2: Primary Transportation of Petroleum Products and Ethanol 
from Refineries to Retail Fueling Outlets: 

[Refer to PDF for image: illustration] 

Petroleum refinery: 
Pipeline to Wholesale terminals (fuel blending and storage). 

Ethanol biorefinery: 
Railroad and Tanker trucks to Wholesale terminals (fuel blending and 
storage). 

Wholesale terminals (fuel blending and storage): 
Tanker trucks to Retail fueling outlets. 

Source: GAO. 

Note: Other means of transportation are also used to move petroleum 
and ethanol products to wholesale terminals. For example, for ethanol, 
barges are also used to a limited extent. 

[End of figure] 

There are approximately 159,000 retail fueling outlets in the United 
States, according to 2010 industry data.[Footnote 13] This total 
included more than 115,000 convenience stores, which sold the vast 
majority of all the fuel purchased in the United States, according to 
industry estimates; a number of large retailers that sell fuel, such 
as Walmart, Costco, and several grocery chains; and some very low-
volume retailers, such as marinas. In terms of ownership, single-store 
businesses--that is, businesses that own a single retail outlet-- 
account for about 56 percent of the convenience stores selling fuel in 
the United States. 

There are three primary supply arrangements between fuel retailers and 
their suppliers: 

* Major oil owned and operated. About 1 percent (or 1,175) of 
convenience stores selling fuel in the United States are owned and 
operated by four major integrated oil companies--ExxonMobil, Chevron, 
BP, and Shell.[Footnote 14] 

* Branded independent retailer. About 52 percent of retail fueling 
outlets are operated by independent business owners who sell fuel 
under the brand of one of the major oil companies or refineries (such 
as CITGO, Sunoco, or Marathon).[Footnote 15] These retailers sign a 
supply and marketing contract with their supplier to sell fuel under 
the brand of that supplier. 

* Unbranded independent retailer. The remaining retail fueling outlets 
(about 48 percent) are operated by independent business owners who do 
not sell gasoline under a brand owned or controlled by a refining 
company. These retailers purchase gasoline from the unbranded 
wholesale market, which is made up of gallons not dedicated to fulfill 
a refiner's contracts with branded retailers. 

Federal safety and environmental regulations govern the dispensing and 
storage of fuel at retail fueling locations. First, OSHA requires that 
equipment used to dispense gasoline--including hoses, nozzles, and 
other related aboveground components, shown in figure 3--be certified 
for safety by a nationally recognized testing laboratory.[Footnote 16] 
According to OSHA officials, OSHA recognizes 17 laboratories, although 
Underwriters Laboratories (UL) is the main one that currently 
certifies equipment sold for dispensing gasoline.[Footnote 17] In 
addition, under the Solid Waste Disposal Act, EPA requires that 
underground storage tank (UST) systems--including storage tanks, 
piping, pumps, and other related underground components, shown in 
figure 3--must be compatible with the substance stored in them to 
protect groundwater from releases from these systems. Historically, UL 
certification has been the primary method for determining the 
compatibility of USTs with EPA requirements.[Footnote 18] EPA also 
requires fuel retailers to install equipment to detect leaks from UST 
systems. In total, EPA regulates approximately 600,000 active USTs at 
about 215,000 sites in the United States. 

Figure 3: Examples of Typical Components and Materials in Retail 
Dispensing and Underground Storage Equipment: 

[Refer to PDF for image: illustration] 

Dispensing equipment: 

Breakaway-valve: (nylon, high density polyethylene, nitrile rubber, 
fluorosilicone, fluorocarbon). 

Nozzle: (nylon, aluminum, fluorocarbon, silicone rubber, nitrile rubber,
fluorosilicone, high-density polyethylene). 

Swivel: (stainless steel, fluorocarbon, nitrile rubber). 

Hose: (nitrite rubber). 

Vapor-line shear valve: (iron, fluorocarbon, polyurethane). 

Emergency shear valve protector: (iron, stainless steel, brass, steel,
Teflon®, polyurethane). 

Underground storage equipment: 

Piping: (nylon, polyvinylidene fluoride, polyphenylene sulfide, 
polyketone). 

Submersible turbine pump: (brass, steel). 

Extractor fitting: (polyurethane, iron, zinc alloy). 

Ball float vent valve: (steel, stainless steel). 

Tank bottom protector: (stainless steel, aluminum). 

Source: GAO analysis of DOE and EPA information. 

[End of figure] 

State and local governments also play a role in regulating the safety 
of dispensing equipment and in implementing EPA's requirements for 
USTs. For example: 

* The Occupational Safety and Health Act allows states to develop and 
operate their own job safety and health programs. OSHA approves and 
monitors state programs and plans, which must adopt and enforce 
standards that are at least as effective as comparable federal 
standards. According to OSHA officials, there are currently 21 states 
with approved plans covering the private sector that enforce health 
and safety standards over the dispensing of gasoline within their 
respective states. Four additional states operate approved state plans 
that are limited in coverage to the public sector. 

* Various state and local fire-safety codes--which aim to protect 
against fires--also govern the dispensing of fuel at retail fueling 
outlets. While state fire marshals or state legislatures are usually 
responsible for developing the fire code for their respective states, 
some states allow local municipalities to develop their own fire 
codes. Fire codes normally reference or incorporate standards 
developed by recognized standards-development organizations, such as 
the National Fire Protection Association and the International Code 
Council.[Footnote 19] State, county, and local fire marshals are 
responsible for enforcing the applicable fire code within their 
respective jurisdictions. Local officials, such as fire marshals, 
typically inspect dispensing equipment for compliance with both state 
and local fire codes. 

* States are largely responsible for implementing EPA's requirements 
under its UST program. EPA has approved 36 states, plus the District 
of Columbia and Puerto Rico, to operate programs in lieu of the 
federal program. The remaining states have agreements with EPA to be 
the primary implementing agency for their programs. Typically, states 
rely on UL certification as the primary method for determining the 
compatibility of UST systems with EPA requirements. Some states also 
allow compatibility to be demonstrated in other ways, including 
through the manufacturer's approval or a professional engineering 
certification. 

Consumers in the United States use retail fueling locations to fuel 
hundreds of millions of automobiles and nonroad products with gasoline 
engines. According to DOT data, Americans owned or operated almost 256 
million automobiles, trucks, and other highway vehicles in 2008, while 
about 91 percent of all households owned at least 1 automobile the 
same year, according to U.S. Census data. Americans also owned and 
operated over 400 million products with nonroad engines in 2009, 
according to one industry association estimate. According to EPA 
documentation, nonroad engines are typically more basic in their 
engine design and control than engines and emissions control systems 
used in automobiles, and commonly have carbureted fuel systems 
[Footnote 20] and air cooling, whereby extra fuel is used in 
combustion to help control combustion and exhaust temperatures. 
According to representatives from industry associations for nonroad 
engines, most of the small nonroad engines manufactured today rely on 
older technologies and designs to keep retail costs low, and all of 
the small nonroad engines currently being produced are designed to 
perform successfully on fuel blends up to E10. According to industry 
representatives, while it is possible to design small nonroad engines 
to run on a broad range of fuels, such designs would not be cost 
effective and could add hundreds of dollars to the price. 

Challenges to Transporting Additional Volumes of Ethanol to Wholesale 
Markets May Require Large Investments in Infrastructure over the Next 
Decade: 

Existing ethanol infrastructure should be sufficient to transport the 
nation's ethanol production through 2015, according to DOT officials 
and industry representatives, but large investments in transportation 
infrastructure may be needed to meet 2022 projected consumption, 
according to EPA documentation. One option for doing so may be to 
construct a dedicated ethanol pipeline, but this option presents 
significant challenges. 

Investments in Transportation Infrastructure May Be Needed to Meet 
2022 Ethanol Consumption Levels: 

According to knowledgeable DOT officials and industry representatives 
we met with, the existing rail, truck, and barge transportation 
infrastructure for shipping corn ethanol to wholesale markets should 
be sufficient through 2015, when the volume of corn ethanol in the RFS 
is effectively capped at 15 billion gallons annually. This volume 
represents roughly a 2.4 billion gallon increase from 2011 RFS 
consumption targets for corn ethanol. Specifically, for rail, which 
transports about 66 percent of corn ethanol to wholesale markets, 
several DOT officials and representatives from the Association of 
American Railroads told us that the addition of a few billion gallons 
of ethanol over the near term is not expected to have a significant 
impact. Railroads hauled more than 220,000 rail carloads of ethanol in 
2008 (the most recent year for which data are available)--which was 
about 0.7 percent of all the rail carloads and about 1 percent of the 
total rail tonnage transported that year in the United States, 
according to data from the Association of American Railroads. 
Similarly, knowledgeable DOT officials and industry representatives 
said there is sufficient capacity in the short term to transport 
additional volumes of corn ethanol via trucks, which transport about 
29 percent of corn ethanol to wholesale markets, and barges, which 
transport roughly 5 percent, to meet RFS requirements. 

In contrast, the existing infrastructure may not be sufficient to 
handle the ethanol production that is projected after 2015. The RFS 
generally requires transportation fuels in the United States to 
contain 21 billion gallons of advanced biofuels, including a large 
quantity of cellulosic ethanol, by 2022. In a 2010 regulatory impact 
analysis, EPA assessed the impacts of an increase in the production, 
distribution, and use of ethanol and other biofuels sufficient to meet 
this requirement.[Footnote 21] In its assessment, EPA used three 
scenarios or "control cases" to project the amounts and types of 
renewable fuels to be produced domestically and imported from 2010 
through 2022.[Footnote 22] Under its "primary" control case, EPA 
projected that by 2022, the United States would produce and import 
over 22 billion gallons of ethanol, comprising 15 billion gallons of 
domestically produced corn ethanol, almost 5 billion gallons of 
domestically produced cellulosic ethanol, and over 2 billion gallons 
of imported ethanol.[Footnote 23] EPA also estimated the number of 
facilities that would need to be built or modified, as well as the 
number of additional vehicles that would need to be purchased. Under 
its primary control case, EPA estimated that the necessary spending on 
transportation infrastructure due to increased ethanol consumption 
would be approximately $2.6 billion. According to EPA's analysis: 

* For rail. EPA estimated that approximately $1.2 billion would be 
needed for an additional 8,450 rail tanker cars ($760 million) and the 
construction of new train facilities ($446 million). EPA projected 
that biofuels transport will constitute approximately 0.4 percent of 
the total tonnage for all commodities transported by the freight rail 
system through 2022. Sixteen percent of the nation's freight rail 
system would be affected by biofuels shipments, and that portion 
(mostly along rail corridors radiating out of the Midwest) would see a 
2.5 percent increase in traffic. 

* For trucks. EPA estimated that approximately $87 million would be 
needed for an additional 480 tank trucks. 

* For barges. EPA estimated that approximately $198 million would be 
needed for an additional 32 barges ($45 million), and the 
configuration of barge facilities (a projected $153 million). EPA 
stated that it does not anticipate a substantial fraction of biofuels 
will be transported via barge over the inland waterway system. In 
addition, the agency projected that a total of 30 ports will receive 
significant quantities of imported ethanol from Brazil and Caribbean 
Basin Initiative countries by 2022. 

* For wholesale terminals. EPA estimated that $1.15 billion in 
investments would be needed, primarily to modify vapor recovery 
equipment (at a cost of $1 million for each terminal that does not 
already handle ethanol). Other modifications would include the 
installation of new storage tanks, modification of existing tanks, and 
modification of tank-truck unloading facilities. 

EPA stated that the United States will face significant challenges in 
accommodating the projected increases in biofuels production by 2022, 
but it concluded that the task would be achievable at the wholesale 
level. For example, the agency stated that it believed overall freight-
rail capacity would not be a limiting factor to the successful 
implementation of RFS requirements. 

However, while this task may be achievable, it is likely to be 
increasingly difficult because of congestion on U.S. transportation 
networks. We and others have reported that congestion is constraining 
the capacity and increasing the costs of U.S. rail and highway 
transportation. For example, we reported in 2008 that neither rail nor 
highway capacity had kept pace with recent increases in demand, 
leading to increased costs.[Footnote 24] We also cited a study by the 
Association of American Railroads, which predicted that without system 
improvements, the expected increases in rail volume by 2035 will cause 
30 percent of primary rail corridors to operate above capacity and 
another 15 percent at capacity. The study stated the resulting 
congestion might affect the entire country and could shut down the 
national rail network. In addition, we noted that many of the highways 
used heavily by trucks to move freight are already congested, and 
congestion is expected to become a regular occurrence on many 
intercity highways. Finally, we noted that ports are likely to 
experience greater congestion in the future as more and larger ships 
compete for limited berths. 

One Option for Transporting Additional Volumes of Ethanol--
Constructing a Dedicated Pipeline--Presents Significant Challenges: 

If overall ethanol production increases enough to fully meet the RFS 
over the long term, one option to transport it to wholesale markets 
would be through a dedicated ethanol pipeline. Over many decades, the 
United States has established very efficient networks of pipelines 
that move large volumes of petroleum-based fuels from production or 
import centers on the Gulf Coast and in the Northeast to distribution 
terminals along the coasts. However, the existing networks of 
petroleum pipelines are not well suited for the transport of billions 
of gallons of ethanol. Specifically, as shown in figure 4, ethanol is 
generally produced in the Midwest and needs to be shipped to the 
coasts, flowing roughly in the opposite direction of petroleum-based 
fuels. The location of renewable fuel production plants (such as 
biorefineries) is often dictated by the need to be close to the source 
of the raw materials and not by proximity to centers of fuel demand or 
existing petroleum pipelines. 

Figure 4: Distribution Patterns for Gasoline and Ethanol: 

[Refer to PDF for image: 2 illustrated U.S maps] 

Gasoline consumption and distribution: 

States are depicted in two categories: 
Gasoline consumption less than 3,000 million gallons; 
Gasoline consumption greater than 3,000 million gallons, including the 
following states: 
California; 
Florida; 
Georgia; 
Illinois; 
Indiana; 
Michigan; 
Missouri; 
New Jersey; 
New York; 
North Carolina; 
Ohio; 
Pennsylvania; 
Tennessee; 
Texas; 
Virginia. 

Gasoline distribution direction is also depicted: from off-shore to 
higher consuming states; within higher consuming states; and from 
higher consuming to lower consuming states. 

Ethanol production and distribution: 

States are depicted in two categories: 
Ethanol production less than 700 million gallons; 
Ethanol production greater than 700 million gallons, including the 
following states: 
Illinois; 
Indiana; 
Iowa; 
Minnesota; 
Nebraska; 
South Dakota. 

Ethanol distribution direction is also depicted: from off-shore to 
lower production states; from higher production to lower production 
states. 

Source: DOE, Report to Congress: Dedicated Ethanol Pipeline 
Feasibility Study (Washington, D.C., March 2010). 

[End of figure] 

Existing petroleum pipelines can be used to ship ethanol in some areas 
of the country. For example, in December 2008, the U.S. pipeline 
operator Kinder Morgan began transporting commercial batches of 
ethanol along with gasoline shipments in its 110-mile Central Florida 
Pipeline from Tampa to Orlando. However, pipeline owners would face 
the same technical challenges and costs that Kinder Morgan 
representatives reported facing, including the following:[Footnote 25] 

* Compatibility. Ethanol can dissolve dirt, rust, or hydrocarbon 
residues in a petroleum pipeline and degrade the quality of the fuel 
being shipped. It can also damage critical nonmetallic components, 
including gaskets and seals, which can cause leaks. In order for 
existing pipelines to transport ethanol, pipeline operators would need 
to chemically remove residues and replace any components that are not 
compatible with ethanol. According to DOT officials, the results from 
two research projects sponsored by that agency have identified 
specific actions that must be taken on a wide variety of nonmetallic 
components commonly utilized by the pipeline industry.[Footnote 26] 

* Stress corrosion cracking. Tensile stress and a corrosive 
environment can combine to crack steel. The presence of ethanol 
increases the likelihood of this in petroleum pipelines. Over the past 
2 decades, approximately 24 failures due to stress corrosion cracking 
have occurred in ethanol tanks and in production-facility piping 
having steel grades similar to those of petroleum pipelines. According 
to DOT officials, the results from nine research projects sponsored by 
that agency have targeted these challenges and produced guidelines and 
procedures to prevent or mitigate stress corrosion cracking. As a 
result, pipelines can safely transport ethanol after implementing the 
identified measures, according to DOT officials.[Footnote 27] 

* Attraction of water. Ethanol attracts water. If even small amounts 
of water mix with gasoline-ethanol blends, the resulting mixture 
cannot be used as a fuel or easily separated into its constituents. 
The only options are additional refining or disposal. 

Some groups have proposed the construction of a new pipeline dedicated 
to the transportation of ethanol. For example, in February 2008, 
Magellan Midstream Partners, L.P. (Magellan) and Buckeye Partners, 
L.P. (Buckeye) proposed building a new pipeline from the Midwest to 
the East Coast.[Footnote 28] According to this proposal, the pipeline 
would gather ethanol from three segments: (1) Iowa, Nebraska, and 
South Dakota; (2) Illinois, Michigan, and Minnesota; and (3) Indiana 
and Ohio. Ethanol would be transported to demand centers in New 
England, the Mid-Atlantic, Virginia, and West Virginia. 

The federal government has studied the feasibility of building a 
pipeline similar to the one proposed by Magellan. Specifically, under 
section 243 of EISA, DOE (in collaboration with DOT) issued a study in 
March 2010 that examined the feasibility of constructing an ethanol 
pipeline linking large East Coast demand centers with refineries in 
the Midwest.[Footnote 29] The report identified a number of 
significant challenges to building a dedicated ethanol pipeline, 
including the following: 

* Construction costs. Using recent trends in and generally accepted 
industry estimates for pipeline construction costs, DOE estimated that 
an ethanol pipeline from the Midwest to the East Coast could cost 
about $4.5 million per mile. While DOE assumed that the construction 
of 1,700 miles of pipeline would cost more than $3 billion, it did not 
model total project costs beyond $4.25 billion in the report. 

* Higher transportation rates. Based on the assumed demand for ethanol 
in the East Coast service area and the estimated cost of construction, 
DOE estimated the ethanol pipeline would need to charge an average 
tariff of 28 cents per gallon, substantially more than the current 
average rate of 19 cents per gallon, for transporting ethanol using 
rail, barge, and truck along the same transportation corridor. 

* Lack of eminent domain authority. DOE estimated that siting a new 
ethanol pipeline of any significant length will likely require federal 
eminent domain authority, which currently does not exist for ethanol 
pipelines. 

DOE's report concluded that a dedicated ethanol pipeline can become a 
feasible option if there is (1) adequate demand for the ethanol 
(approximately 4.1 billion gallons per year for the hypothetical 
pipeline assessed) and (2) government financial incentives to help 
defray the large construction costs. 

Challenges Due to Regulations, Technical Issues, and Cost Could Slow 
the Retail Sale of Intermediate Ethanol Blends: 

We identified several challenges to selling intermediate ethanol 
blends at the retail level. First, federal and state regulations 
governing health and environmental concerns must be met before these 
blends are allowed into commerce, and fuel-testing requirements to 
meet these regulations may take 1 year or more to complete. Second, 
according to knowledgeable federal officials and UL representatives, 
federal safety standards do not allow ethanol blends over E10 to be 
dispensed at most retail fueling locations, and federally sponsored 
research has indicated potential problems with the compatibility of 
intermediate ethanol blends with existing dispensing equipment. Third, 
according to EPA and several industry representatives, the 
compatibility of many UST systems with these fuels is uncertain, and 
retailers will need to replace any components that are not compatible 
if they choose to store intermediate blends. Fourth, industry 
associations representing various groups, such as fuel retailers and 
refiners, are concerned that, in selling intermediate ethanol blends, 
fuel retailers may face significant costs and risks, such as upgrading 
or replacing equipment. 

Federal and State Regulations Need to Be Met Prior to the Introduction 
of Intermediate Blends: 

According to knowledgeable EPA officials within the Office of 
Transportation and Air Quality, the regulatory process for allowing an 
intermediate ethanol blend into commerce could take 1 year or more. As 
described in table 1, the Clean Air Act, among other things, 
establishes a comprehensive regulatory program aimed at reducing 
harmful emissions from on-and off-road vehicles and engines and the 
fuels that power them. According to EPA officials, this regulatory 
program would apply to the introduction of new fuels, including E15 
and other intermediate blends. 

Table 1: Federal Fuel Requirements that Affect the Introduction of New 
Fuels: 

Type of requirement: Fuel waiver; 
Description: Under the Clean Air Act, the introduction into commerce 
of new fuels and fuel additives that are not substantially similar to 
the fuels and fuel additives specified by EPA regulations for testing 
the compliance of vehicles and engines with EPA emission standards is 
prohibited. However, EPA may waive this prohibition if a demonstration 
is made that the fuel or fuel additive will not cause or contribute to 
vehicles and engines failing to meet emission standards over their 
useful lives. 

Type of requirement: Detergent certification; 
Description: EPA regulations implementing the Clean Air Act require 
fuel manufacturers to certify any detergent added to gasoline to 
prevent the accumulation of deposits in engines and fuel systems. Fuel 
manufacturers must use EPA-approved test fuels to certify the 
effectiveness of new detergents. EPA regulations currently require 
these test fuels to contain 10 percent ethanol by volume. 

Type of requirement: Fuel registration and health-effects testing; 
Description: The Clean Air Act and EPA regulations require fuel 
manufacturers and importers to register new fuels and fuel additives 
prior to introducing them into commerce. Registration involves 
providing a chemical description of the product and certain technical, 
marketing, emissions, and health-effects information, which EPA uses 
to identify likely combustion and evaporative emissions that may pose 
concerns about health risk. However, EPA regulations allow registrants 
to submit evidence that prior health-effects testing is reasonably 
comparable to the results expected for a new fuel or fuel additive. 

Type of requirement: Reformulated gasoline certification; 
Description: The Clean Air Act requires reformulated gasoline to be 
sold in areas of the country with the worst smog pollution, which 
include large areas of California and the Northeast. Reformulated 
gasoline must meet specific EPA emission standards. Fuel manufacturers 
must use an EPA-approved model to certify that new reformulated fuels 
meet applicable standards. 

Source: GAO analysis of EPA information. 

[End of table] 

Although intermediate ethanol blends higher than E15 would need to 
meet all of these requirements, E15 has already partly met the first 
two. EPA partially granted a fuel waiver allowing E15 for use in model 
year 2001 and newer automobiles, and EPA officials told us the agency 
has no plans to revise its regulations for certifying detergents for 
E15 because it currently has not determined any detergent-related 
issues different from E10. According to EPA officials, the remaining 
two requirements have not yet been completed for E15 but are in the 
process of being addressed, specifically: 

* Health-effects testing similar to that performed for E10 could take 
2 years or more to register intermediate ethanol blends, depending on 
variables such as the availability of testing laboratories. According 
to EPA officials, EPA received information on February 18, 2011, from 
an ethanol industry representative contending that the health-effects 
testing previously performed for E10 is an adequate substitute for 
E15. According to recent Congressional testimony, EPA expects to 
finish reviewing the information by the middle of 2011.[Footnote 30] 

* EPA would have to update the regulations for its reformulated 
gasoline program, which do not currently allow fuel manufacturers to 
certify batches of gasoline containing greater than 10 percent ethanol 
by volume. In November 2010, EPA proposed a rule that would, among 
other things, update the model to allow for reformulated gasoline 
containing up to 15 percent ethanol by volume.[Footnote 31] According 
to EPA officials, EPA expects to issue a final rule sometime in 2011. 

In addition to federal regulations, many states have established 
regulations or statutes related to transportation fuels, according to 
a 2010 industry report.[Footnote 32] In particular, many state 
regulations or statutes contain references to specific industry 
standards for fuel published by a recognized standards development 
organization, including ASTM International and the National Institute 
of Standards and Technology (NIST), according to the report and 
knowledgeable NIST officials we interviewed. These standards, however, 
are only relevant to E10, and neither organization has published any 
standards related to the use of intermediate ethanol blends up to E85. 
Therefore, before allowing intermediate ethanol blends into commerce, 
the states that reference existing ASTM International or NIST 
standards would have to either (1) enact new statutes or regulations 
that no longer reference the existing standards or (2) wait for ASTM 
International or NIST to update their standards related to 
intermediate ethanol blends. Either option could take more than a year 
to implement, according to knowledgeable officials from NIST and the 
California Air Resources Board. 

OSHA Regulations Prohibit Using Most Existing Dispensing Equipment 
with Intermediate Blends, and Research Suggests Compatibility Issues: 

In general, federal safety standards do not allow ethanol blends over 
E10 to be dispensed with existing equipment at most retail fueling 
locations. Specifically, OSHA requires that all equipment used to 
dispense gasoline be certified for safety by a nationally recognized 
testing laboratory. UL, the only such laboratory that has developed 
standards for certifying dispensing equipment, did not publish safety 
standards specifically for intermediate ethanol blends until August 
2009,[Footnote 33] and no UL-certified dispensing equipment was 
available for use with these blends until 2010.[Footnote 34] 
Dispensing equipment manufactured earlier has been certified for 
blends up to E10, and UL does not recertify equipment that has already 
been certified to an existing UL standard, according to several UL 
representatives. Moreover, UL does not retroactively certify 
manufactured or installed equipment to new safety standards because it 
cannot monitor whether the equipment has been modified by, for 
example, aging or maintenance. As a result, according to knowledgeable 
OSHA officials and several UL representatives, the vast majority of 
existing retail dispensers in the United States are not approved for 
use with intermediate ethanol blends under OSHA's safety regulations. 

Until recently, UL and OSHA were each exploring ways to allow fuel 
retailers to use existing dispensing equipment with intermediate 
ethanol blends while still meeting OSHA's safety regulations. For 
example, in a February 2009 announcement, UL stated that existing 
dispensing equipment--certified for use with E10--could be used with 
blends containing up to 15 percent ethanol, based on data the company 
had collected. According to the announcement, UL did not find any 
significant incremental risk of damage to existing equipment between 
E10 and fuels with a maximum of 15 percent ethanol. In addition, 
several OSHA officials told us in November 2010 that the agency was at 
the early stages of evaluating several options--such as implementing a 
grace period on planned enforcement activities or developing an 
enhanced inspection and maintenance program for a limited time--that 
would allow existing dispensing equipment to be approved for use with 
E15. 

However, results from federally sponsored research indicate potential 
problems with the use of intermediate ethanol blends with some 
existing dispensing equipment. A DOE-commissioned report prepared by 
UL was issued in November 2010 on the compatibility of intermediate 
blends with new and used dispensing equipment certified for blends up 
to E10.[Footnote 35] According to the report, although various 
components generally performed well with the testing fluid, some of 
the components tested (including valve assemblies and nozzles) 
demonstrated a reduced level of safety, performance, or both when 
exposed to the testing fluid. This was mostly due to the failure of 
certain nonmetal components, such as gaskets and seals. In March 2011, 
DOE's ORNL published a report stating that, although metal samples 
experienced very little corrosion, all elastomer samples (such as 
fluorocarbon, nitrile rubber, and polyurethane) exhibited some level 
of swelling and the potential to leak when exposed to testing fluids. 
[Footnote 36] 

This research has led UL and OSHA to reconsider support for the use of 
existing dispensing equipment with intermediate ethanol blends. In a 
December 2010 announcement based on this research, UL stated that it 
advised against the use of intermediate ethanol blends with dispensing 
equipment certified for E10 and, instead, recommended the use of new 
equipment designed and certified for use with intermediate ethanol 
blends. The announcement stated that UL was particularly concerned 
that blends over E10 could lead to the degradation of gaskets, seals, 
and hoses and could cause leaks. In addition, several OSHA officials 
told us that, as a result of this research, the agency is re-
evaluating its plan to explore ways to allow fuel retailers, under 
certain conditions, to use existing dispensing equipment with 
intermediate blends. 

However, OSHA's position on this issue remains unclear, and it is 
uncertain when the agency will establish a definitive position. On the 
one hand, according to several OSHA officials we talked with, the vast 
majority of existing retail dispensers in the United States are not 
approved for use with intermediate ethanol blends under OSHA's safety 
regulations. On the other hand, these officials also stated that OSHA 
is still developing its position on the use of existing dispensing 
equipment with intermediate blends. While these officials said that 
strict enforcement of current OSHA requirements for dispensing 
equipment seems more like an option now, they did not provide any time 
frames for when OSHA would finalize its position, nor how it planned 
on communicating a decision to fuel retailers and other interested 
parties. 

The Compatibility of Many UST Systems with Intermediate Blends Is 
Unclear: 

According to our discussions with knowledgeable federal officials and 
several industry association representatives, the compatibility of 
many existing UST systems with intermediate ethanol blends is unclear 
for two main reasons--many fuel retailers have older equipment and 
lack records, and recent federally sponsored research indicates 
potential problems with the use of intermediate blends. Retail fueling 
outlets generally have two or more UST systems, according to industry 
association representatives, and each system contains a large number 
of components and materials. According to EPA documentation and 
knowledgeable EPA officials within the Office of Underground Storage 
Tanks, many existing USTs range in age from 1 to 40 years and contain 
components certified to a range of UL standards, which typically have 
evolved over time, or have been approved by the manufacturer for 
varying uses.[Footnote 37] Because these systems are buried 
underground, visually inspecting some components for compatibility is 
impossible without excavating them. Thus, fuel retailers, along with 
state and federal inspectors, primarily rely on recordkeeping to 
verify UST system compatibility with the fuel stored in them. 

However, inadequate recordkeeping may make it difficult for retailers 
with older stations to verify UST system compatibility with 
intermediate ethanol blends. For example, according to EPA 
documentation, knowledgeable EPA officials, and a representative from 
the Society of Independent Gasoline Marketers of America, many fuel 
retailers do not have complete records of all their UST equipment, 
particularly those with stations having several previous owners. 
Furthermore, many installation companies and component manufacturers 
may have gone out of business, according to EPA documentation, which 
could make verification particularly challenging. Recognizing this 
issue, EPA announced in November 2010 that it plans to issue guidance 
that would clarify its compatibility requirements for UST systems 
storing ethanol blends higher than 10 percent.[Footnote 38] In its 
announcement, EPA also solicited public feedback on the extent of the 
challenges fuel retailers face in demonstrating existing UST systems' 
compatibility with intermediate ethanol blends and on alternatives 
that would sufficiently protect human health and the environment. EPA 
officials said the agency expects to issue guidance sometime in 2011. 

Determining compatibility may be important because ongoing federal 
research indicates potential problems with the use of intermediate 
ethanol blends with some UST components. For example, according to a 
recent DOE report and additional results from DOE research, certain 
elastomers, rubbers, and other materials used in UST systems may 
degrade or swell excessively when exposed to intermediate ethanol 
blends, becoming ineffective as gaskets or seals.[Footnote 39] DOE 
testing also indicates that a pipe-thread sealant commonly used in UST 
piping in the past is not compatible with any ethanol blends, which 
raises concerns that these components may leak when exposed to ethanol-
-even in lower blends, such as E10. According to the report, DOE 
expects to conclude this research in the near future. In addition, DOE 
officials said they do not expect to conduct additional research on 
UST components or equipment. 

However, important gaps exist in current federal research efforts in 
this area. For example, several officials within EPA's Office of 
Underground Storage Tanks told us that DOE's research efforts to date 
have focused only on testing materials (e.g., elastomers and rubbers) 
and not actual components and equipment (e.g., valves and tanks) found 
in UST systems. In addition, according to EPA officials, while the 
agency plans to study the compatibility of E15 with UST systems, this 
research will be based on interviews with experts and not on actual 
testing of materials, components, or equipment. Moreover, EPA 
officials characterized this research effort as more of a "modeling" 
or scoping effort to determine the extent of any potential problems. 
EPA officials stated that the ability to determine the compatibility 
of legacy equipment with intermediate blends is limited. Nevertheless, 
they acknowledged that additional research will be necessary to 
facilitate a transition to storing intermediate ethanol blends in UST 
systems, including the suitability of specific UST components with 
intermediate blends. EPA officials told us that they are working with 
industry officials and federal partners to understand the impact of 
intermediate blends in UST systems. However, to date EPA has not 
developed a plan to undertake such research. 

It is also unclear whether leak-detection equipment will properly 
detect leaks of intermediate ethanol blends. According to 
knowledgeable EPA officials and UL representatives, UL has not 
developed performance standards for leak-detection equipment used in 
UST systems. EPA officials explained that, while some leak-detection 
equipment has been approved by the manufacturer for the compatibility 
of its materials with intermediate ethanol blends, EPA is not certain 
whether the ethanol content of the fuel, in general, would affect the 
operability of this equipment. To address this potential problem, EPA 
is sponsoring research, in collaboration with manufacturers and other 
stakeholders, to determine which of these devices works properly with 
ethanol. EPA officials currently expect test results to be available 
by the end of 2011. 

Retailers May Face Significant Costs and Risks in Selling Intermediate 
Blends: 

According to several industry associations representing various 
groups, such as fuel retailers and refiners, many fuel retailers may 
face significant costs and risks in selling intermediate ethanol 
blends. According to these industry representatives, retailers make 
very little money selling fuel--for example, the national average 
profit from selling gasoline last year was 9 cents per gallon, 
according to industry data. Most retailers make most of their profit 
selling merchandise such as food, beverages, and tobacco products, 
according to these industry representatives, and gasoline is sold 
below cost in some markets to attract customers to buy more profitable 
goods. As a result, according to several industry representatives, 
most retailers do not upgrade their fuel-storage and -dispensing 
equipment without a significant market opportunity. 

For these fuel retailers, the prospect of selling intermediate ethanol 
blends presents several potential challenges. The first is cost. Some 
fuel retailers may have to spend hundreds of thousands of dollars to 
upgrade their equipment to store and dispense intermediate ethanol 
blends, for the following reasons: 

* Under current OSHA regulations, most fuel retailers will need to 
replace at least one dispenser system to sell intermediate ethanol 
blends. According to estimates from EPA and several industry 
associations, installing a new dispenser system compatible with 
intermediate ethanol blends will cost over $20,000.[Footnote 40] 
According to some industry association representatives, a typical fuel 
retailer has four dispensers and, therefore, would face costs 
exceeding $80,000 to upgrade an entire retail facility. 

* Fuel retailers with inadequate records of their UST systems may have 
to upgrade certain UST components to demonstrate compatibility with 
intermediate ethanol blends. According to some industry association 
representatives and information from DOE's NREL, upgrading some 
components would be less expensive than installing an entirely new UST 
system. Taking this into consideration, EPA estimated an average cost 
of $25,000 per retail facility to make the needed changes to 
underground storage components.[Footnote 41] However, EPA cautioned 
that this cost scenario is very speculative, given that the costs of 
modifying underground components could vary greatly. According to EPA 
officials, most tank owners will be able to demonstrate compatibility 
by replacing certain portions of the UST system that are easily 
accessible (such as submersible pumps, tank probes, pipe dope, and 
overfill valves). The costs for these upgrades, including labor, can 
be as low as a few thousand dollars but may increase if more extensive 
upgrades are required. 

* According to EPA and industry estimates, the total cost of 
installing a new single-tank UST system compatible with intermediate 
ethanol blends is more than $100,000. In addition to the high costs, 
some industry association representatives stated that fuel retailers 
who have recently installed new UST systems may be particularly 
reluctant to replace them, especially since UST warranties can last 
for several decades, and the useful life of these systems can be even 
longer. In Florida, for example, fuel retailers were required to 
replace or upgrade all single-wall USTs by December 31, 2009. 

A second potential challenge consists of financial and logistical 
limitations on the types of fuel a retailer may be able to sell. 
According to representatives from several industry associations, most 
retail fueling locations have only two UST systems, and many fuel 
retailers cannot install additional UST systems due to space 
constraints, permitting obstacles, or cost.[Footnote 42] Currently, 
fuel retailers with two UST systems can sell three grades of gasoline: 
regular, midgrade, and premium. To accomplish this, they typically use 
one of their tanks to store regular gasoline and the other for 
premium, both of which are preblended with up to 10 percent ethanol. 
They then use their dispensing equipment to blend fuel from both tanks 
into midgrade gasoline. If fuel retailers with two UST systems want to 
sell intermediate ethanol blends, however, they may face certain 
limitations. For example, fuel retailers with two UST systems who want 
to sell regular, midgrade, and premium gasoline could use the tanks to 
store regular and premium grades of an intermediate blend, such as 
E15. However, since EPA has only allowed E15 for use in model year 
2001 and newer automobiles, these retailers would not be able to sell 
fuel to consumers for use in older automobiles and nonroad engines. 

A third potential challenge relates to legal uncertainty among 
industry groups, who are concerned they could be held liable for 
selling intermediate ethanol blends. For example, according to 
representatives we interviewed from several industry associations, 
fuel retailers have received conflicting or confusing messages from 
different authorities as to whether existing dispensing equipment can 
be lawfully used with intermediate ethanol blends. According to these 
industry representatives, this confusion is partly the result of UL's 
2009 announcement supporting the use of blends containing up to 15 
percent ethanol with existing dispensing equipment.[Footnote 43] 
However, even if state or local officials--such as fire marshals--
approve the use of intermediate blends with existing dispensers, the 
retailers selling these blends would still be effectively ignoring 
OSHA's regulations, which require the use of equipment that has been 
certified for safety by a nationally recognized testing laboratory, 
such as UL. As a result, several industry representatives raised 
concerns that fuel retailers could expose themselves to lawsuits for 
negligence and invalidate important business agreements that may 
reference these safety requirements, such as tank insurance policies, 
state tank-fund policies, and business loan agreements. 

In addition, according to representatives from several industry 
associations we interviewed, many fuel retailers are concerned that 
consumer misfueling--using intermediate ethanol blends in nonapproved 
engines--could raise liability issues, especially if the misfueling is 
associated with negative outcomes, such as diminished engine 
performance and safety problems. Because EPA has only allowed E15 for 
use in model year 2001 and newer automobiles, representatives from 
several industry associations stated that consumers may not be aware 
of the distinction between approved and nonapproved engines, or they 
may be confused about which fuel to use, thus complicating their 
experience at retail fueling outlets and increasing opportunities for 
misfueling. According to some industry and state government 
representatives, since many automobile manufacturer warranties do not 
cover the use of intermediate ethanol blends, even for the model year 
vehicles approved by EPA for E15, consumers could be held responsible 
for the cost of any repairs attributed to the use of E15. 

One proposed method of mitigating the potential for misfueling is to 
label fuels at retail outlets. In November 2010, EPA issued proposed 
labeling requirements for ethanol blends as high as E15.[Footnote 44] 
According to its proposed requirements, EPA is coordinating with the 
Federal Trade Commission, which in March 2010 proposed labeling 
requirements for ethanol blends containing greater than 10 percent and 
less than 70 percent ethanol by volume.[Footnote 45] However, 
representatives from several industry associations have raised 
concerns that labeling will not adequately address potential 
misfueling. For example, some industry association representatives 
stated that some consumers will not understand the label, or the label 
might get lost among the other labels commonly found on dispensers. 
Furthermore, industry association representatives said some consumers 
will intentionally misfuel their automobiles if intermediate ethanol 
blends are cheaper. For example, industry association representatives 
stated some of their members have witnessed consumers using E85 in 
nonflex-fuel vehicles, presumably because E85 is cheaper than E10. 

Federally Sponsored Studies Are Evaluating Effects of Using 
Intermediate Ethanol Blends in Automobiles and Nonroad Engines: 

With the possibility of introducing intermediate ethanol blends in the 
nation's motor-fuel supply, DOE began to study the effects of these 
fuels in automobiles and nonroad engines in 2007. Specifically, in 
March 2007, DOE's Office of Energy Efficiency and Renewable Energy 
convened a workshop of experts to evaluate progress and develop a 
strategy for meeting the Bush Administration's "20 in 10" initiative. 
The goal of the initiative was to reduce U.S. gasoline usage by 20 
percent over the next 10 years through increased use of alternative 
fuels and improved fuel economy. One conclusion from the workshop was 
that increasing the ethanol content in motor fuel to E15 or E20 would 
be the most effective strategy over the short term. However, based on 
a review of existing research, DOE's ORNL found that almost no data 
existed on the effects of E15 on automobiles, while only limited data 
existed on the effects of E20.[Footnote 46] 

To address this data gap, DOE began working with EPA, the Coordinating 
Research Council, Inc. (CRC), and other groups in 2007 to develop a 
list of research projects to test the effects of E15 and E20 on 
automobiles and nonroad engines.[Footnote 47] DOE, EPA, and CRC have 
provided about $51 million in funding (for fiscal years 2007 through 
2010) for ten research projects (see table 2).[Footnote 48] 

Table 2: Status of DOE-and EPA-Sponsored Research on Effects of 
Intermediate Ethanol Blends in Automobiles and Nonroad Engines: 

Research on automobiles: 

DOE project number[A]: V1; 
Description: Short-term "quick-look" emissions study; 
Status (as of March 1, 2011): Completed. Published reports: 
* NREL, ORNL, Effects of Intermediate Ethanol Blends on Legacy 
Vehicles and Small Non-Road Engines, Report 1 - Updated (Golden, 
Colo., February 2009); 
* Keith Knoll, et al., "Effects of Mid-Level Ethanol Blends on 
Conventional Vehicle Emissions" (paper presented at SAE 2009 
Powertrains Fuels and Lubricants Meeting, San Antonio, Tex., November 
2009). 

DOE project number[A]: V2; 
Description: Detailed exhaust emissions study; 
Status (as of March 1, 2011): Ongoing. Expected date for completion of 
testing is May 2011. Expected date for issuing a report is October 
2011. 

DOE project number[A]: V3; 
Description: Evaporative emissions study; 
Status (as of March 1, 2011): Completed. Published reports: 
* Harold Haskew & Associates, Inc., Evaporative Emissions from In-Use 
Vehicles: Test Fleet Expansion (CRC E-77-2b) Final Report EPA-420-R-10-
025, a technical report prepared for the EPA, October 2010; 
* CRC, Study to Determine Evaporative Emission Breakdown, Including 
Permeation Effects and Diurnal Emissions, Using E20 Fuels on Aging 
Enhanced Evaporative Emissions Certified Vehicles (Alpharetta, Ga., 
December 2010). 

DOE project number[A]: V4; 
Description: Full-life emissions study; 
Status (as of March 1, 2011): Ongoing. Testing completed in December 
2010. Expected date for issuing a report is summer 2011. 

DOE project number[A]: V5; 
Description: Drivability study; 
Status (as of March 1, 2011): Ongoing. Expected date for completion of 
testing is March 2011. Expected date for issuing a report is August 
2011. 

DOE project number[A]: V6; 
Description: Fuel-system materials compatibility study; 
Status (as of March 1, 2011): Ongoing. Expected date for issuing a 
report is summer 2011. 

Research on nonroad engines: 

DOE project number[A]: SE1; 
Description: "Quick-look" emissions and temperature study; 
Status (as of March 1, 2011): Completed. Published report: NREL, ORNL, 
Effects of Intermediate Ethanol Blends. 

DOE project number[A]: SE2; 
Description: Full useful-life emissions and durability study; 
Status (as of March 1, 2011): Completed. Published report: NREL, ORNL, 
Effects of Intermediate Ethanol Blends. 

DOE project number[A]: SE3; 
Description: Chainsaw safety study; 
Status (as of March 1, 2011): Canceled. 

DOE project number[A]: SE4; 
Description: Marine and snowmobile durability, emissions, and 
drivability study; 
Status (as of March 1, 2011): Ongoing. Expected date for completion of 
testing is March 2011 (for marine engines) and August 2011 (for 
snowmobiles). Expected date for issuing a report is October 2011. 

Source: GAO analysis of DOE, EPA, and CRC information. 

[A] CRC project numbers associated with these efforts include E-77 
(for V3), E-87 (for V4), E-89 (for V2), CM-138 (for V5), and AVFL-15 
(for V6). 

[End of table] 

Of the six federally sponsored projects on automobiles, four projects 
are ongoing and are expected to be completed in 2011. Two projects 
have been completed--Project V1, which looked primarily at the effects 
of E15 and E20 on tailpipe emissions from automobiles, and Project V3, 
which looked primarily at the effects of E20 on evaporative emissions 
from automobiles. According to published reports, project findings 
included the following: 

* Exhaust emissions. According to the 2009 DOE report for Project V1, 
regulated tailpipe emissions from 16 automobiles (including model 
years ranging from 1999 to 2007) remained largely unaffected by the 
ethanol content of the fuel.[Footnote 49] Increasing the ethanol 
content of the fuel, however, resulted in increased emission of 
ethanol and acetaldehyde. DOE has also released all of the testing 
data from Project V4, which is looking at emissions testing and aging 
on 82 automobiles (including model years ranging from 2000 to 2009). 
EPA based its decision to allow E15 for use in certain automobiles 
partly on these results. According to EPA's decision, model year 2000 
and older automobiles do not have the sophisticated emissions control 
systems of more recently manufactured automobiles, and there is an 
engineering basis to believe they may experience emissions increases 
if operated on E15. 

* Fuel economy. According to DOE's report for Project V1, ethanol has 
about 67 percent of the energy density of gasoline on a volumetric 
basis. As a result, automobiles running on intermediate ethanol blends 
exhibited a loss in fuel economy commensurate with the energy density 
of the fuel. Specifically, when compared to using gasoline containing 
no ethanol, the average reduction in fuel economy was 3.7 percent 
using E10, 5.3 percent using E15, and 7.7 percent using E20. 

* Catalyst temperatures. According to the 2009 report for Project V1, 
9 of the 16 automobiles adjusted their air-to-fuel ratio at full power 
to compensate for the increased oxygen content in the ethanol-blended 
fuel. In these cases, the catalyst temperatures at equivalent 
operating conditions were lower or unchanged with ethanol. Seven of 
the 16 tested automobiles failed to adequately adjust their air-to-
fuel ratio for the increase in oxygen with E20 fuel compared with 100 
percent gasoline at full power. As a result, catalyst temperatures for 
these automobiles at full power were between 29ºC and 35ºC higher with 
E20 relative to gasoline. According to the report, the long-term 
effect of this temperature increase on catalyst durability is unknown 
and requires further study. 

* Evaporative emissions. According to its 2010 report for Project V3, 
CRC found that intermediate ethanol blends may increase evaporative 
permeation emissions--fuel-related emissions that do not come from the 
tailpipe--in older automobiles. CRC's report was not based on 
statistically significant comparisons, but it noted certain trends--
for example, compared to pure gasoline, E10 and E20 were associated 
with increased evaporative emissions. 

Of the four federally sponsored projects on nonroad engines, one (SE4) 
is ongoing, and one (SE3) has been canceled. According to DOE, the 
objective of Project SE4 is to determine the effects of E15 on the 
safety, performance, and emissions of several popular marine and 
snowmobile engines. The objective of Project SE3 was to assess the 
effects of intermediate ethanol blends, including E15, on the safety 
and performance of handheld small nonroad engines, including 
chainsaws. However, according to DOE officials, the department decided 
in the summer of 2010 to defer Project SE3 indefinitely because the 
Outdoor Power Equipment Institute--an industry association 
representing small nonroad engine manufacturers and DOE's major 
partner on the project--declined to submit a proposal for conducting 
the testing. According to one official with the Institute, this 
decision was based, in part, on EPA's indication that it would not 
allow E15 for use in small nonroad engines. 

The two federally sponsored projects on nonroad engines that have been 
completed--SE1 and SE2--were not conclusive, but indicated potential 
problems with the use of intermediate ethanol blends in small nonroad 
engines. Project SE1 was a pilot study of six commercial and 
residential small nonroad engines, and Project SE2 tested 22 engines 
over their full useful lives. According to the 2009 DOE report, the 
projects found that with increasing levels of ethanol:[Footnote 50] 

* For all engines tested, exhaust and engine temperatures generally 
increased. 

* Three handheld trimmers had higher idle speeds and experienced 
unintentional clutch engagement, which DOE laboratory officials 
identified as a potential safety concern that can be mitigated in some 
engines by adjusting the carburetor. 

* For all engines tested, emissions of nitrogen oxides increased and 
emissions of carbon monoxide decreased, while emissions of 
hydrocarbons decreased in most engines, but increased for some. 

EPA cited results from Projects SE1 and SE2 in its decision to not 
allow the use of E15 in nonroad engines and other equipment. 
Specifically, in its October 2010 decision, EPA stated that the 
results of these projects indicated reasons for concern with the use 
of E15 in nonroad engines, particularly regarding long-term exhaust 
and evaporative emissions durability and materials compatibility. 
Moreover, the agency stated that the application for use of E15 did 
not provide information to broadly assess the nonroad engine and 
vehicle sector. EPA concluded that since there are important 
differences in design between the various types of nonroad engines, 
and since the agency was not aware of other information that would 
allow it to fully assess the potential impacts of E15 on the emission 
performance of nonroad products, it could not allow the use of E15 in 
these engines. 

Due to ongoing litigation, we did not evaluate the adequacy of these 
federally sponsored projects. In November 2010, several trade groups 
representing the oil and gas sector and the food and livestock 
industries filed a lawsuit with the U.S. Court of Appeals for the 
District of Columbia Circuit challenging EPA's E15 waiver decision. 
According to the plaintiffs' statement filed in January 2011, one key 
issue in the lawsuit is whether EPA acted arbitrarily, capriciously, 
and in excess of its statutory authority by relying on data that do 
not provide adequate support for its conclusions, while ignoring 
extensive data contradicting its position. In addition, in December 
2010, several trade groups representing automobile and small-engine 
manufacturers filed another lawsuit with the U.S. Court of Appeals for 
the District of Columbia Circuit challenging EPA's E15 waiver 
decision. The initial court documents did not provide details on these 
groups' rationale for challenging EPA's waiver decision. 

In addition to these federally sponsored projects, some nonfederal 
organizations are conducting research on the effects of intermediate 
ethanol blends in automobiles. Appendix II provides a description of 
these organizations and a list of some of their published research. We 
did not evaluate the results of these studies. 

Conclusions: 

The RFS calls for increasing amounts of biofuels to be blended in the 
nation's transportation fuel supply, including up to 15 billion 
gallons of ethanol made from corn starch and potentially billions of 
gallons of additional ethanol made from cellulosic sources. EPA is 
responsible for establishing and implementing regulations to ensure 
that the nation's transportation fuel supply contains the volumes of 
biofuels required by the RFS. The agency is also tasked with ensuring 
that new fuels do not cause or contribute to noncompliance with 
existing emissions standards when used in automobiles and nonroad 
products. EPA recently allowed an intermediate ethanol blend, E15, for 
use in model year 2001 and newer automobiles, after determining that 
it would not cause these automobiles to be out of compliance with 
emissions standards. 

EPA, along with OSHA, is also responsible for ensuring that fuels are 
compatible and safe for use with infrastructure at fueling locations. 
However, the effects of intermediate ethanol blends on key components 
of the nation's retail fueling infrastructure--such as gaskets and 
seals in dispensing equipment and UST systems--are not fully 
understood. A recently published DOE report found that materials 
commonly used in these gaskets and seals can swell when exposed to 
certain intermediate ethanol blends, potentially causing leaks. 

In the case of fuel-dispensing equipment, some newer equipment meets 
OSHA safety regulations for use with intermediate ethanol blends, as 
this equipment has been tested and certified by UL for compatibility. 
Most existing equipment at retail fueling locations in the United 
States, however, is not approved for use with intermediate blends. 
Until recently, OSHA had been exploring ways to allow fuel retailers 
to use existing equipment with intermediate blends while still meeting 
OSHA's safety requirements. In light of the recent DOE-sponsored 
research, OSHA officials are re-evaluating the use of existing 
equipment with intermediate blends. However, the agency has not 
clarified when it will make an official decision. Without 
clarification from OSHA on how its safety regulations on fuel-
dispensing equipment should be applied to fuel retailers selling 
intermediate ethanol blends, the retail fuel industry faces 
uncertainty in how it can provide such blends to consumers while 
meeting OSHA safety regulations. 

In the case of UST systems, fuel retailers can purchase new equipment--
certified by UL or the equipment manufacturer for use with 
intermediate ethanol blends--to meet EPA regulations for 
compatibility. However, many existing UST systems may not be fully 
compatible with intermediate blends, and inadequate records may make 
it difficult for many retailers to verify the compatibility of their 
UST systems. Due to these concerns, and in light of the recent DOE-
sponsored research, EPA is in the process of issuing guidance to 
clarify how its UST regulations apply to the use of intermediate 
blends. While DOE is conducting studies on the compatibility of UST 
materials with intermediate blends, and while EPA plans to conduct a 
study limited to experts' views on the subject, EPA officials have 
acknowledged that additional research, including research on the 
suitability of specific UST components with intermediate blends, will 
be needed to facilitate a transition to storing intermediate ethanol 
blends. Without this effort, the retail fuel industry faces 
uncertainty in how it can provide intermediate blends to consumers. 

Recommendations for Executive Action: 

We are making the following two recommendations: 

* To reduce uncertainty about the applicability of federal safety 
regulations, we recommend that the Secretary of Labor direct the 
Assistant Secretary for Occupational Safety and Health to issue 
guidance clarifying how OSHA's safety regulations on fuel-dispensing 
equipment should be applied to fuel retailers selling intermediate 
ethanol blends. 

* To reduce uncertainty about the potential environmental impacts of 
storing intermediate ethanol blends at retail fueling locations, we 
recommend that the Administrator of EPA determine what additional 
research, such as research on the suitability of specific UST 
components, is necessary to facilitate a transition to intermediate 
ethanol blends, and work with other federal agencies to develop a plan 
to undertake such research. 

Agency Comments and Our Evaluation: 

We provided copies of our draft report to EPA, the Department of 
Labor, DOE, and DOT for comment. In written comments, EPA generally 
agreed with the information and findings but expressed concern about 
our recommendation (as worded in the draft report). Specifically, EPA 
stated that while it believed a targeted approach to conducting 
additional research will be important to accommodate the move to 
higher ethanol blends, there will always be uncertainty concerning the 
compatibility of legacy UST equipment with intermediate ethanol blends 
given the multitude of factors involved (e.g., the age and prior use 
of UST equipment, and the number of UST system components). EPA stated 
that it planned to continue to work with other federal agencies and 
stakeholders to assist tank owners in safely transitioning to new 
fuels, and that additional research may be necessary to facilitate 
that transition. We agree with this characterization of the issue and 
have revised the draft recommendation to reflect EPA's suggestions. In 
addition, in written comments, the Department of Labor concurred with 
our findings and our recommendation. EPA's written comments are 
reprinted in appendix III, and the Department of Labor's written 
comments are reprinted in appendix IV. EPA and the Department of Labor 
also provided technical clarifications, which we incorporated as 
appropriate. DOE and DOT did not provide formal written comments but 
provided technical clarifications, which we incorporated as 
appropriate. 

As agreed with your offices, unless you publicly announce the contents 
of the report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies to the 
appropriate congressional committees; the Administrator of EPA; 
Secretaries of Energy, Transportation, and Labor; and other interested 
parties. In addition, this report will be available at no charge on 
the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff members have any questions about this report, 
please contact me at (202) 512-3841 or ruscof@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix V. 

Signed by: 

Frank Rusco: 
Director, Natural Resources and Environment: 

[End of section] 

Appendix I: Scope and Methodology: 

To determine the challenges associated with transporting additional 
volumes of ethanol to wholesale markets to meet Renewable Fuel 
Standard (RFS) requirements, we interviewed relevant government, 
industry, academic, and research officials. We also reviewed relevant 
government reports and studies, industry reports, and academic and 
research literature. In particular, we asked a nonprobability sample 
of knowledgeable stakeholders, among other things, to discuss the 
challenges, if any, associated with transporting additional volumes of 
ethanol to wholesale markets. We also asked these stakeholders to 
identify key studies and other knowledgeable stakeholders on this 
topic. We selected these stakeholders using a "snowball sampling" 
technique, whereby each stakeholder we interviewed identified 
additional stakeholders and stakeholder organizations for us to 
contact. Specifically, based, in part, on our recent work, we first 
interviewed stakeholders from the Environmental Protection Agency 
(EPA); the Departments of Agriculture (USDA), Energy (DOE), and 
Transportation (DOT); the Renewable Fuels Association; the American 
Petroleum Institute; the Alliance of Automobile Manufacturers; the 
Association of Oil Pipe Lines; and the Outdoor Power Equipment 
Institute.[Footnote 51] We then used feedback from these interviews to 
identify additional stakeholders to interview.[Footnote 52] Over the 
course of our work, we interviewed officials from the following 
federal agencies: DOE Office of the Biomass Program, DOE Office of 
Vehicle Technologies Program, DOT Research and Innovative Technology 
Administration, DOT Pipeline and Hazardous Materials Safety 
Administration, DOT Federal Railroad Administration, DOT Federal Motor 
Carrier Safety Administration, DOT Maritime Administration, EPA Office 
of Research and Development, EPA Office of Solid Waste and Emergency 
Response, EPA Office of Transportation and Air Quality, USDA 
Agricultural Research Service, and USDA Economic Research Service. We 
also interviewed state officials from the Minnesota State Fire Marshal 
Division and the Office of North Carolina State Fire Marshal. We 
interviewed industry representatives from the following organizations: 
the American Petroleum Institute, the Association of American 
Railroads, the Association of Oil Pipe Lines, Growth Energy, 
Independent Fuel Terminal Operators Association, Kinder Morgan, the 
National Petrochemical and Refiners Association, the National Tank 
Truck Carriers, American Trucking Associations, and the Renewable 
Fuels Association. We also made several attempts to speak with 
representatives from an industry association representing barge 
operators but were not able to schedule an interview during the time 
frame of our audit. Finally, we interviewed academic and research 
stakeholders from Carnegie Mellon University, the Energy Policy 
Research Foundation, the James A. Baker III Institute for Public 
Policy of Rice University, the Pipeline Research Council 
International, and TRC Energy Services. During these interviews, 
knowledgeable stakeholders identified a number of studies related to 
our work. Of these studies, we identified the following three studies 
as being directly relevant to our scope of analysis: (1) the National 
Commission on Energy Policy's Task Force on Biofuels Infrastructure, 
(2) EPA's Renewable Fuel Standard Program (RFS2) Regulatory Impact 
Analysis, and (3) DOE's Report to Congress: Dedicated Ethanol Pipeline 
Feasibility Study.[Footnote 53] We examined these three studies and 
determined that they are sufficiently reliable for our purposes based 
on interviews with contributors to these studies, comparisons of 
estimates with other sources, and checking selected calculations. 

To determine the challenges associated with selling intermediate 
ethanol blends at the retail level, we reviewed relevant 
presentations, analyses, reports, and other documents from various 
federal and state agencies, federal research laboratories, and 
industry associations, including the American Petroleum Institute and 
the National Association of Convenience Stores. We also selected a 
nonprobability sample of knowledgeable stakeholders to interview using 
the same "snowball sampling" technique described for our first 
objective. In particular, we asked these stakeholders, among other 
things, to discuss the challenges, if any, associated with selling 
intermediate ethanol blends at the retail level. We also asked these 
stakeholders to identify key studies and other knowledgeable 
stakeholders on this topic. Over the course of our work, we 
interviewed officials from the following federal laboratories and 
agencies: DOE National Renewable Energy Laboratory (NREL), DOE Oak 
Ridge National Laboratory (ORNL), DOE Office of the Biomass Program, 
DOE Office of Vehicle Technologies Program, EPA Office of Research and 
Development, EPA Office of Transportation and Air Quality, EPA Office 
of Underground Storage Tanks, the Department of Labor's Occupational 
Safety and Health Administration, the National Institute of Standards 
and Technology, USDA Agricultural Research Service, and USDA Economic 
Research Service. We also interviewed state officials from the 
California Air Resources Board, the Minnesota State Fire Marshal 
Division, Northeast States for Coordinated Air Use Management, 
[Footnote 54] and the Office of North Carolina State Fire Marshal. We 
interviewed representatives from the following industry associations: 
Growth Energy, the Renewable Fuels Association, the American Petroleum 
Institute, the National Association of Convenience Stores, the Society 
of Independent Gasoline Marketers of America, the National Association 
of Truck Stop Operators, the Petroleum Marketers Association of 
America, and the National Petrochemical and Refiners Association. 
Finally, we interviewed stakeholders from the following research and 
standards development organizations: ASTM International, Sierra 
Research, Inc., and Underwriters Laboratories (UL). We also conducted 
site visits to the research centers responsible for coordinating 
federal studies on the effects of intermediate ethanol blends on 
materials and components used in retail fuel storage and dispensing 
equipment. Specifically, we visited NREL facilities in Golden, 
Colorado; and ORNL facilities near Knoxville, Tennessee. During these 
site visits, we interviewed researchers conducting studies on the 
effects of intermediate ethanol blends on materials and components 
used in retail fuel-storage and -dispensing equipment. We asked these 
researchers to discuss available test results and the status of their 
testing efforts for these studies. We also toured some of the research 
facilities where testing was being conducted for these studies. 

To examine research by federal agencies into the effects of 
intermediate ethanol blends on the nation's automobiles and nonroad 
engines, we reviewed relevant presentations, analyses, reports, and 
other documents from various federal and state agencies; NREL; ORNL; 
and industry associations, including the American Coalition for 
Ethanol, the National Marine Manufacturers Association, and the 
Outdoor Power Equipment Institute. In addition, we reviewed relevant 
studies and reports from academic groups and private research 
organizations, including the Coordinating Research Council, Inc., 
Minnesota State University, Mankato; and the Rochester Institute of 
Technology. We also selected a nonprobability sample of knowledgeable 
stakeholders to interview using the same "snowball sampling" technique 
described for our first objective. In particular, we asked these 
stakeholders, among other things, to identify research by federal 
agencies and others into the effects of intermediate ethanol blends on 
the nation's automobiles and nonroad engines. Over the course of our 
work, we interviewed officials from the following federal agencies and 
laboratories: DOE Office of Vehicle Technologies Program, NREL, ORNL, 
EPA Office of Research and Development, and EPA Office of 
Transportation and Air Quality. We also interviewed state officials 
from the California Air Resources Board and Northeast States for 
Coordinated Air Use Management. We interviewed representatives from 
the following industry associations: the American Petroleum Institute, 
Growth Energy, the Renewable Fuels Association, the Alliance of 
Automobile Manufacturers, the Association of International Automobile 
Manufacturers, Inc.,[Footnote 55] the Outdoor Power Equipment 
Institute, the Engine Manufacturers Association, the National Marine 
Manufacturers Association, and the International Snowmobile 
Manufacturers Association. Finally, we interviewed stakeholders from 
the following academic and research organizations: the Coordinating 
Research Council, Inc.; the Rochester Institute of Technology; and 
Minnesota State University, Mankato. We also conducted site visits to 
the research centers responsible for coordinating federal studies on 
the effects of intermediate ethanol blends on automobiles and nonroad 
engines. Specifically, we visited NREL facilities in Golden, Colorado; 
and ORNL facilities near Knoxville, Tennessee. We also visited a 
private research facility in Aurora, Colorado, where some of the 
automobile testing for federal studies has taken place. During these 
site visits, we interviewed researchers conducting studies on the 
effects of intermediate ethanol blends on automobiles and nonroad 
engines. We asked these researchers to discuss available test results 
and the status of their testing efforts for these studies. We also 
toured some of the research facilities where testing was being 
conducted for these studies. Due to ongoing litigation over EPA's 
decision to allow ethanol blends with 15 percent ethanol (E15) for use 
with certain automobiles, we did not evaluate any research by federal 
agencies and others into the effects of intermediate ethanol blends on 
automobiles and nonroad engines. 

We conducted this performance audit from April 2010 to June 2011, in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Studies by Nonfederal Organizations on the Effects of 
Intermediate Ethanol Blends in Automobiles: 

Nonfederal organizations are conducting research on the effects of 
intermediate ethanol blends in automobiles. For example, in addition 
to the research the Coordinating Research Council, Inc. (CRC) is 
conducting, in coordination with DOE and EPA, it has both ongoing and 
completed research projects on a range of related topics, including 
evaporative and exhaust emissions for various intermediate ethanol 
blends. A CRC representative told us that it expects to complete these 
projects by early 2012. Based on this research, CRC has published 10 
reports as of March 2011 (see table 3). 

Table 3: Published CRC Reports on Effects of Intermediate Ethanol 
Blends in Automobiles: 

Research topic: Catalyst durability; 
Reports: 
* Mid-Level Ethanol Blends Catalyst Durability Study Screening, June 
2009. 

Research topic: Drivability performance; 
Reports: 
* 2006 CRC Hot-Fuel-Handling Program, January 2007; 
* 2008 CRC Cold-Start and Warmup E85 and E15/E20 Driveability Program, 
October 2008; 
* 2010 CRC Altitude Hot-Fuel-Handling Program, January 2011. 

Research topic: Evaporative emissions; 
Reports: 
* Fuel Permeation from Automotive Systems, September 2004; 
* Fuel Permeation from Automotive Systems: E0, E6, E10, E20 and E85, 
December 2006; 
* Vehicle Evaporative Emission Mechanisms: A Pilot Study, June 2008; 
* Enhanced Evaporative Emission Vehicles, March 2010. 

Research topic: Exhaust emissions; 
Reports: 
* Effects of Vapor Pressure, Oxygen Content, and Temperature on CO 
Exhaust Emissions, May 2009. 

Research topic: Onboard diagnostic systems; 
Reports: 
* Impact of E15/E20 Blends on OBDII Systems - Pilot Study, March 2010. 

Source: GAO analysis of CRC information. 

[End of table] 

Two academic organizations have also conducted research on 
intermediate ethanol blends in automobiles. Specifically, the 
Minnesota Center for Automotive Research at Minnesota State 
University, Mankato, has issued five studies looking at the effects of 
ethanol blends containing 20 percent ethanol (E20) on fuel system 
components.[Footnote 56] These studies received funding from the 
Minnesota Department of Agriculture and appear on the department's Web 
site.[Footnote 57] In addition, the Center for Integrated 
Manufacturing Studies at Rochester Institute of Technology in New York 
has studied the effects of E20 on automobile exhaust, drivability, and 
maintenance, with funding from DOT. To date, the center has published 
one report and expects to publish at least two more later in 2011, 
along with a final summary report to DOT.[Footnote 58] 

[End of section] 

Appendix III: Comments from the Environmental Protection Agency: 

United States Environmental Protection Agency: 
Washington, DC 20460: 
[hyperlink, http://www.epa.gov] 

May 20 2011: 

Mr. Frank Rusco: 
Director, Natural Resources and Environment: 
Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Rusco: 

Thank you for the opportunity to comment on the draft report entitled 
"Biofuels: Challenges to the Transportation, Sale, and Use of 
Intermediate Ethanol Blends (GAO-11-513)." I am responding on behalf 
of the Office of Solid Waste and Emergency Response (OSWER) as well as 
the Office of Air and Radiation (OAR). Their comments have been 
incorporated into this consolidated Environmental Protection Agency 
(EPA or Agency) response. Below are our most significant comments on 
the report's one recommendation for EPA and on the information 
provided in the report itself. Other technical comments are included 
in the Enclosure. 

Recommendation: 

To reduce uncertainty about the potential environmental impacts of 
storing intermediate ethanol blends at retail refueling locations, we 
recommend that the Administrator of EPA determine what additional 
research is necessary to better understand the compatibility of 
intermediate ethanol blends with UST systems, including the 
compatibility of specific UST components, and develop a plan to 
undertake such research. 

EPA agrees with the importance of ensuring that the owners and 
operators of underground storage tank (UST) systems, when and if they 
choose to move to store higher blends of ethanol, are able to 
demonstrate that their USE systems are compatible with the stored 
fuel. Efforts are underway to evaluate the suitability of current UST 
systems to store new fuels. One project involves evaluating the 
functionality of current UST leak detection technologies when used 
with ethanol-blended fuels. We are also working with Department of 
Energy labs to understand the impacts of mid-level ethanol blends on 
materials used in tank systems. In addition, EPA is working to assess 
the impact of hiofuel releases to the environment, and to adapt 
remediation tools to account for the differences in ethanol-blended 
fuels. 

While EPA believes that a targeted approach to research will he 
important to accommodate the move to higher ethanol blends, we also 
acknowledge that there will always be uncertainty concerning the 
compatibility of legacy equipment with these fuel blends. Due to a 
multitude of factors, including age and prior use of equipment, number 
of UST system components, variation of products available on the 
market over time, and the sheer multitude of possible configurations 
of UST systems, the ability to determine compatibility with the 
approximately 600,000 UST systems currently in use is limited. 

After carefully weighing the need to fully understand the 
compatibility issues of the higher blends of ethanol against a 
realistic appraisal of the ability of research to address all the 
permutations of UST configurations, EPA has chosen a policy approach 
to provide certainty to the UST market. Those UST owners, who cannot 
demonstrate compatibility of their systems with the higher blends of 
ethanol, cannot store those fuels. We are in the final stages of 
developing guidance for UST owners on how to determine the 
compatibility of their tank systems if they wish to store higher 
blends of ethanol. We have had extensive conversations with UST 
stakeholders, including the equipment industry, states, and the 
regulated community. in developing this guidance. This guidance will 
provide the certainty the industry' needs to safely store higher 
ethanol blends, while meeting the federal requirement for 
compatibility and ensuring protection of human health and the 
environment. 

Rather than developing a plan to undertake additional compatibility 
research, EPA will continue to work with other federal agencies, 
industry and other stakeholders to assist tank owners to safely 
transition to new fuels. We anticipate that additional, targeted 
research may be necessary to facilitate that transition. The Agency, 
will consider how to best partner with these groups to advance that 
research. 

General Comments: 

There is a great deal of interest in alternative fuels, prompted by 
federal law (i.e., the Renewable Fuel Standard), by the concern of the 
impact of the continued use of petroleum based fuels and by the rise 
in the price at the pump, It is, however, not mandatory for a tank 
owner to move to the intermediate blends of ethanol (such as E15). If 
a tank owner chooses to sell E15, and therefore store that blend in 
their UST system, they may need to upgrade certain components in order 
to ensure that their UST system is compatible. Tank owners who are 
unable to prove their UST systems are compatible also have the option 
to not store E15 — that is to continue to store El0. As E15 is only 
legal for use in a subset of motor vehicles, we believe there will be 
a continued demand for E10. 

We believe most tank owners will be able to demonstrate compatibility 
for the major components of their UST systems, including tanks and 
piping, and will only need to upgrade smaller components such as the 
submersible pump, tank probes, seals, and gaskets. These components 
are typically accessible under sump covers. For that reason, the 
references to "excavation" in the draft report are not accurate. 
Further, most owners, who wish to upgrade their systems. will need to 
make less costly targeted upgrades to readily accessible components, 
at a cost substantially less than the cost of an entire tank system 
replacement. 

In closing, WC believe that providing owners and operators of UST 
systems clarity on the implementation of existing federal regulations 
with emerging biofuels, including higher blends of ethanol, is 
critical as we continue to transition to these fuels. It is clear that 
close collaboration with our federal and state partners and working 
with our stakeholders in industry will lead to the most comprehensive 
and useful approach in assisting with the transition to biofuels.	 

If you have any questions or concerns regarding our comments or 
response to the recommendation, EPA would be happy to meet with you 
prior to GAO finalizing this report. Please feel free to contact me or 
Mark Barolo at 703-603-7141 if there is any additional follow up 
required.	 

Sincerely, 

Signed by: 

Lisa Leidt, for: 
Mathy Stanislaus: 
Assistant Administrator: 

Enclosure:	 

cc: Gina McCarthy. OAR:	
Karl Simon, OAR:	
Bob Trent, OCFO: 
Carolyn Hoskinson, OSWER:	
Mark Barolo, OSWER:	
Linda Gerber, OSWER:	
Johnsie Webster, OSWER:	 

[End of section] 

Appendix IV: Comments from the Occupational Safety and Health 
Administration: 

U.S. Department of Labor: 
Assistant Secretary for Occupational Safety and Health: 
Washington, DC 20210: 

May 13, 2011: 

Mr. Frank Rusco, Director: 
Natural Resources and Environment: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Mr. Rusco: 

Thank you for the opportunity to comment on the Government 
Accountability Office's (GAO) proposed report, B1ofuels: Challenges to 
the Transportation, Sale, and Use of Intermediate Ethanol Blends. OSHA 
appreciates the time and effort that GAO took in its evaluation of the 
ethanol industry. 

OSHA is addressing the worker safety-related uncertainties that are 
attached to the complex issues surrounding biofuels and will address 
GAO's recommendation in depth in its Statement of Executive Action. We 
anticipate that the many challenges associated with the use, sale and 
transportation of biofuels can be addressed by our agency working in 
conjunction with the Environmental Protection Agency. the Department 
of Transportation. the Department of Energy and all other relevant 
organizations. We appreciate the opportunity to review and respond to
GAO's draft report. 

Sincerely, 

Signed by: 

David Michaels, PhD, MPH: 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Frank Rusco, (202) 512-3841or ruscof@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Tim Minelli (Assistant 
Director), Nirmal Chaudhury, Cindy Gilbert, Chad M. Gorman, Jason 
Holliday, Michael Kendix, Ben Shouse, Barbara Timmerman, and Jack Wang 
made key contributions to this report. 

[End of section] 

Footnotes: 

[1] The United States consumed about 18.8 million barrels of petroleum 
and petroleum products per day in 2009. The nation imported about 11.7 
million barrels of petroleum and petroleum products per day in 2009-- 
primarily crude oil but also petroleum products such as refined 
gasoline and jet fuel. The United States exported roughly 2 million 
barrels of petroleum and petroleum products per day in 2009--primarily 
refined products such as diesel fuel, residual fuel oil, and petroleum 
coke. Only 2 percent of exports were crude oil. Net imports (total 
imports minus exports) equaled 9.7 million barrels of petroleum and 
petroleum products per day in 2009. 

[2] Pub. L. No. 109-58, § 1501 (2005). The act authorizes the 
Administrator of the EPA, in consultation with the Secretaries of 
Agriculture and Energy, to waive the RFS levels established in the 
act, by petition or on the Administrator's own motion, if meeting the 
required level would severely harm the economy or environment of a 
state, a region, or the United States, or there is an inadequate 
domestic supply. Throughout this report, the RFS levels established in 
the act are referred to as requirements, even though these levels 
could be waived by the Administrator. 

[3] Pub. L. No. 110-140, § 201 (2007). 

[4] GAO, Biofuels: Potential Effects and Challenges of Required 
Increases in Production and Use, [hyperlink, 
http://www.gao.gov/products/GAO-09-446] (Washington, D.C.: Aug. 25, 
2009). 

[5] In this report, we use the terms "automobiles" and "motor 
vehicles" to refer to (1) light-duty vehicles, including passenger 
cars; (2) light-duty trucks, including pickup trucks, minivans, 
passenger vans, and sport-utility vehicles; and (3) medium-duty 
passenger vehicles, including large sport-utility vehicles and 
passenger vans. 

[6] According to DOE's Office of Energy Efficiency and Renewable 
Energy, intermediate ethanol blends include E15 and E20 and are 
defined as having an ethanol content greater than 10 percent and less 
than 85 percent. 

[7] In this report, we use the term "nonroad engines" to refer to 
nonroad products with gasoline engines, including (1) lawn and garden 
equipment, such as lawn mowers, weed trimmers, leaf blowers, 
chainsaws, and snowblowers; (2) recreational engines and vehicles, 
such as all-terrain vehicles, dirt bikes, and snowmobiles; (3) 
recreational marine vehicles; (4) construction and industrial 
equipment and vehicles, such as forklifts and paving equipment; (5) 
commercial equipment, such as generators and air compressors; (6) farm 
equipment, such as tractors and combines; and (7) logging equipment. 

[8] The advanced biofuel category includes ethanol imported from some 
member nations of the Caribbean Basin Initiative and Brazil, which 
primarily use sugarcane to make ethanol. 

[9] 75 Fed. Reg. 76790 (Dec. 9, 2010). 

[10] Terminals on the East Coast are large integrated facilities with 
marine, pipeline, and tanker truck receiving and dispatching 
capabilities. Although some terminals have rail access, they were not 
originally designed to support rail as a major mode for transporting 
fuel. 

[11] Ethanol transported for fuel is referred to as fuel-grade ethanol 
and typically contains 2 percent denaturant, such as gasoline, to 
render it unfit for human consumption. 

[12] According to DOE documentation, there were more than 8 million 
light-duty flexible-fuel vehicles on U.S. roads as of May 2010 and 
2,051 retail fueling locations offering E85 as of June 2010. Because a 
gallon of ethanol contains only about two-thirds the energy of a 
gallon of gasoline, the use of E85 results in an approximately 25 
percent reduction in fuel economy. 

[13] As reported in NPN, MarketFacts 2010, (Park Ridge, Ill., 2010) 
[hyperlink, http://www.npnweb.com]. 

[14] The Nielsen Company (Washington, D.C., May 2010) [hyperlink, 
http://www.nielsen.com]. 

[15] As reported in NPN's MarketFacts 2010. 

[16] 29 C.F.R § 1910.106(g)(3)(iv). 

[17] UL is a standards development organization that certifies (e.g., 
tests and approves) equipment based on standards it develops. 
According to OSHA officials, two other laboratories--CSA International 
and Intertek Testing Services NA, Inc.--also certify dispensing 
equipment based on UL's standards. However, representatives from these 
two laboratories told us that they are currently conducting little, if 
any, certification activities for dispensing equipment. 

[18] According to EPA and OSHA officials, OSHA's requirements for 
dispensing equipment and EPA's requirements for UST systems overlap at 
the submersible turbine pump, which delivers fuel from the UST to the 
dispenser. Therefore, along with meeting EPA's compatibility 
requirements, these pumps must also be certified for safety by a 
nationally recognized testing laboratory, such as UL, per OSHA 
requirements. OSHA also has compatibility requirements for UST 
systems, but unlike its requirements for dispensing equipment, OSHA 
does not require UST equipment to be certified by a nationally 
recognized testing laboratory. 

[19] The mission of the international nonprofit National Fire 
Protection Association is to reduce the worldwide burden of fire and 
other hazards on the quality of life by providing and advocating 
consensus codes and standards, research, training, and education. The 
International Code Council is a membership association dedicated to 
building safety and fire prevention. The council develops the codes 
and standards used to construct residential and commercial buildings, 
including homes and schools. 

[20] In a carbureted fuel system, the air-to-fuel ratio is preset at 
the factory based on the expected operating conditions of the engine 
such as ambient temperature, atmospheric pressure, speed, and load. 

[21] EPA, Renewable Fuel Standard Program (RFS2) Regulatory Impact 
Analysis, EPA-420-R-10-006 (Washington, D.C., February 2010). 

[22] EPA used three control cases--high-ethanol, primary or mid- 
ethanol, and low-ethanol--to account for different levels of projected 
cellulosic biofuel production. EPA then compared each of its control 
cases against a "reference" case based on estimates made by the Energy 
Information Administration in its 2007 Annual Energy Outlook for 
ethanol production by 2022. EPA focused on scenarios in which ethanol 
consumption increased greatly in all 50 states. While not discussed in 
EPA's report, an additional option would be increased use of E85, 
primarily in the Midwest. However, additional E85 fueling stations in 
the Midwest would be needed for this option. 

[23] According to EPA's analysis, there is significant uncertainty 
regarding its estimate for the production of cellulosic biofuels by 
2022. 

[24] GAO, Freight Transportation: National Policy and Strategies Can 
Help Improve Freight Mobility, [hyperlink, 
http://www.gao.gov/products/GAO-08-287] (Washington, D.C.: Jan. 7, 
2008). 

[25] According to company representatives, Kinder Morgan invested 
approximately $10 million to modify its Central Florida Pipeline for 
ethanol shipments, which included chemically cleaning the pipeline, 
replacing equipment that was incompatible with ethanol, and expanding 
storage capacity at its Orlando terminal. 

[26] This research can be found at [hyperlink, 
http://primis.phmsa.dot.gov/matrix/] after typing "ethanol" into the 
search feature. 

[27] This research can be found at [hyperlink, 
http://primis.phmsa.dot.gov/matrix/] after typing "ethanol" into the 
search feature. 

[28] Since the February 2008 announcement, Buckeye has discontinued 
its role in the proposal. In March 2009, Magellan and POET signed a 
joint development agreement to continue assessing the feasibility of a 
dedicated 1,700 mile pipeline moving ethanol from the Midwest to the 
major Northeastern markets. Pipeline costs were estimated to exceed 
$3.5 billion. A revised press release, issued in January 2010, 
increased the estimated length of the pipeline to 1,800 miles and the 
cost estimate to $4 billion. 

[29] DOE, Report to Congress: Dedicated Ethanol Pipeline Feasibility 
Study (Washington, D.C., March 2010). 

[30] EPA, Testimony of Lisa Jackson, Administrator, U.S. Environmental 
Protection Agency, before the Committee on Agriculture, United States 
House of Representatives (Washington, D.C., Mar. 10, 2011). 

[31] 75 Fed. Reg. 68044 (Nov. 4, 2010). 

[32] Sierra Research, Inc., Identification and Review of State/Federal 
Legislative and Regulatory Changes Required for the Introduction of 
New Transportation Fuels, Report No. SR2010-08-01 (Sacramento, Calif., 
Aug. 4, 2010), prepared for the American Petroleum Institute. 

[33] These standards cover blends with up to 25 percent ethanol (E25). 
UL published safety standards for certifying dispensing equipment for 
blends up to E85 in October 2007. 

[34] UL certified dispensers from two manufacturers in March 2010 for 
use with blends up to E25, and in June 2010 for blends up to E85. 
According to knowledgeable OSHA officials, if employees covered by 
OSHA used or worked on unapproved equipment dispensing higher ethanol 
blends, it would likely constitute a violation of OSHA requirements. 
However, these officials said that OSHA is not aware of any 
complaints, referrals, or notifications of serious accidents involving 
this equipment. 

[35] According to DOE officials, this research used a testing fluid 
containing 17 percent ethanol, acids, water, and minerals to represent 
worst-case scenarios for fuel. See UL, Dispensing Equipment Testing 
With Mid-Level Ethanol/Gasoline Test Fluid (Washington, D.C., November 
2010), prepared for DOE. 

[36] This research was on the exposure of common dispenser materials 
to testing fluids containing 17 and 25 percent ethanol, plus acids, 
water, and minerals. See ORNL, Intermediate Ethanol Blends 
Infrastructure Materials Compatibility Study: Elastomers, Metals, and 
Sealants, ORNL/TM-2010/326 (Oak Ridge, Tenn., March 2011). According 
to DOE, elastomers are a class of polymers widely used in fuel 
dispenser systems as o-rings and gasket-type seals. 

[37] According to knowledgeable EPA officials, it is possible to 
purchase a new UST system meeting EPA requirements for compatibility 
with all ethanol blends. However, according to EPA officials, most 
tank owners still purchase some components that are only approved for 
use with E10. 

[38] 75 Fed Reg. 70241 (Nov. 17, 2010). 

[39] ORNL, ORNL/TM-2010/326. 

[40] DOE recently estimated that modifying fuel pumps to make them 
compatible with E15 should cost $1,000 or less per pump, depending on 
pump-specific variables. See DOE, Statement of Dr. Henry Kelly, Acting 
Assistant Secretary For Energy Efficiency, U.S. Department of Energy, 
Before the Committee on Environment and Public Works, United States 
Senate (Washington, D.C., Apr. 13, 2011). 

[41] EPA, Office of Transportation and Air Quality, EPA-420-R-10-006. 

[42] EPA officials told us that it does not collect data on tank 
configurations at retail locations. As a result, we relied on 
information from industry representatives to illustrate this potential 
challenge. 

[43] Several UL representatives told us that the announcement did not 
mean that UL was recertifying existing equipment for use with 
intermediate blends or that existing equipment could be used with E15 
(because the ethanol content of a specific blend, like E15, may vary 
and potentially could exceed 15 percent under normal business 
conditions). 

[44] 75 Fed. Reg. 68044 (Nov. 4, 2010). 

[45] 75 Fed. Reg. 12470 (Mar. 16, 2010). 

[46] See ORNL, Technical Issues Associated with the Use of 
Intermediate Ethanol Blends (>E10) in the U.S. Legacy Fleet: 
Assessment of Prior Studies (Oak Ridge, Tenn., August 2007). 

[47] CRC is a nonprofit organization supported by the petroleum and 
automotive equipment industries. CRC operates through committees made 
up of technical experts from industry and government who voluntarily 
participate. 

[48] Of this total amount, DOE has provided about $45 million, 
including less than $65,000 for NREL and ORNL to review studies 
conducted by the Minnesota Center for Automotive Research at Minnesota 
State University, Mankato; and the Center for Integrated Manufacturing 
Studies at Rochester Institute of Technology. These efforts are not 
included in table 2. 

[49] EPA regulates the emissions of air pollutants--which are known or 
reasonably anticipated to endanger public health or welfare--from 
mobile sources such as automobiles. These pollutants include 
hydrocarbons (such as benzene and acetaldehyde), carbon monoxide, 
nitrogen oxides, and volatile organic compounds. 

[50] NREL, ORNL, Effects of Intermediate Ethanol Blends. 

[51] [hyperlink, http://www.gao.gov/products/GAO-09-446]. 

[52] The information gathered from these interviews cannot be used to 
generalize findings or make inferences about the entire population of 
knowledgeable stakeholders on intermediate ethanol blends and related 
topics. Although the sample provides some variety, it is unlikely to 
capture the full variability of knowledgeable stakeholders, and it 
cannot provide comprehensive insight into the views of any one group 
of knowledgeable stakeholders. This is because, in a nonprobability 
sample, some elements of the population being interviewed have no 
chance, or an unknown chance, of being selected as part of the sample. 
However, the information gathered during these interviews allows us to 
discuss various stakeholder views on intermediate ethanol blends, and 
it provides important context overall. It also helps us interpret the 
documentation and other testimonial evidence we have collected. 

[53] National Commission on Energy Policy, Task Force on Biofuels 
Infrastructure; EPA-420-R-10-006; and DOE, Report to Congress: 
Dedicated Ethanol Pipeline Feasibility Study. 

[54] Northeast States for Coordinated Air Use Management is an 
association of the state air quality agencies from Connecticut, Maine, 
Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and 
Vermont. 

[55] The Association of International Automobile Manufacturers, Inc. 
is now known as the Association of Global Automakers, Inc. 

[56] Bruce Jones, et al., The Effects of E20 on Elastomers Used in 
Automotive Fuel System Components, (Mankato, Minn., Feb. 22, 2008); 
Bruce Jones, et al., The Effects of E20 on Plastic Automotive Fuel 
System Components, (Mankato, Minn., Feb. 21, 2008); Bruce Jones, et 
al., The Effects of E20 on Metals Used in Automotive Fuel System 
Components, (Mankato, Minn., Feb. 22, 2008); Nathan Hanson, et al., 
The Effects of E20 on Automotive Fuel Pumps and Sending Units, 
(Mankato, Minn., Feb. 21, 2008); and Gary Mead, et al., An Examination 
of Fuel Pumps and Sending Units During a 4000 Hour Endurance Test in 
E20, (Mankato, Minn., Mar. 25, 2009). 

[57] E20 Test Results, in the Minnesota Department of Agriculture 
database, [hyperlink, 
http://www.mda.state.mn.us/en/renewable/ethanol/e20testresults.aspx] 
(accessed Apr. 4, 2011). 

[58] B. Hilton and B. Duddy, "The Effect of E20 Ethanol Fuel on 
Vehicle Emissions," Proceedings of the Institute of Mechanical 
Engineers, Part D: Journal of Automobile Engineering, vol. 223 no. 12 
(2009). 

[End of section] 

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