Report to Congressional Requesters

June 2011 BIOFUELS

Challenges to the 

Transportation, Sale, 

and Use of 

Intermediate Ethanol 

Blends 

GAO-11-513 

United States Government Accountability Office

GAO 
 United States Government Accountability Office 

Accountability • Integrity • Reliability 

Highlights of GAO-11-513, a report to 

congressional requesters 

June 2011 

BIOFUELS 

Challenges to the Transportation, Sale, and Use of 

Intermediate Ethanol Blends 

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 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. 

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 

View GAO-11-513 hazards. or key components. 

For more information, contact Frank Rusco at 

(202) 512-3841 or ruscof@gao.gov. 
Page i GAO-11-513 Biofuels 

Letter 1

Background 4 

Challenges to Transporting Additional Volumes of Ethanol to 

Wholesale Markets May Require Large Investments in 

Infrastructure over the Next Decade 12 

Challenges Due to Regulations, Technical Issues, and Cost Could 

Slow the Retail Sale of Intermediate Ethanol Blends 20 

Federally Sponsored Studies Are Evaluating Effects of Using 

Intermediate Ethanol Blends in Automobiles and Nonroad 

Engines 31 

Conclusions 36 

Recommendations for Executive Action 37 

Agency Comments and Our Evaluation 38 

Appendix I Scope and Methodology 40 

Appendix II Studies by Nonfederal Organizations on the Effects 

of Intermediate Ethanol Blends in Automobiles 45 

Appendix III Comments from the Environmental Protection 

Agency 47 

Appendix IV Comments from the Occupational Safety and Health 

Administration 50 

Appendix V GAO Contact and Staff Acknowledgments 51 

Tables 

Table 1: Federal Fuel Requirements that Affect the Introduction of 

New Fuels 21 

Contents 
Page ii GAO-11-513 Biofuels 

Table 2: Status of DOE- and EPA-Sponsored Research on Effects of 

Intermediate Ethanol Blends in Automobiles and Nonroad 

Engines 32 

Table 3: Published CRC Reports on Effects of Intermediate Ethanol 

Blends in Automobiles 45 

Figures 

Figure 1: Volume Requirements Established by the Renewable Fuel 

Standard under the Energy Independence and Security 

Act 5 

Figure 2: Primary Transportation of Petroleum Products and 

Ethanol from Refineries to Retail Fueling Outlets 7 

Figure 3: Examples of Typical Components and Materials in Retail 

Dispensing and Underground Storage Equipment 10 

Figure 4: Distribution Patterns for Gasoline and Ethanol 17 
Page iii GAO-11-513 Biofuels 

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 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately. 
Page 1 GAO-11-513 Biofuels 

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 2009.1

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, 

 

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. 

 
 

Page 2 GAO-11-513 Biofuels 

which created the RFS, generally required transportation fuels in the 

United States to contain renewable fuels, such as ethanol and biodiesel.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 2022.3

 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 cornproducing 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.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.5

 This created a blend wall at approximately 10 percent of 

 

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, 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) lightduty 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. 
 

Page 3 GAO-11-513 Biofuels 

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).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 E15.7

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. 

 

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. 
 

Page 4 GAO-11-513 Biofuels 

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. 

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 

Background 
 

Page 5 GAO-11-513 Biofuels 

greenhouse gas emissions by at least 50 percent compared to the gasoline 

or diesel fuel it displaces.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 

 

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. 

0

5

10

15

20

25

30

35

40

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Billions of gallons

Year

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

Advanced biofuels

Corn ethanol
 

Page 6 GAO-11-513 Biofuels 

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.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.10 In contrast, ethanol 

is transported to terminals via a combination of rail cars, tanker trucks, 

and barges.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.12 After blending, the fuel is moved to retail fueling locations in 

tanker trucks. 

 

9

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

10Terminals 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. 

11Ethanol 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. 

12According 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. 
 

Page 7 GAO-11-513 Biofuels 

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

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. 

There are approximately 159,000 retail fueling outlets in the United States, 

according to 2010 industry data.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 

 

13As reported in NPN, MarketFacts 2010, (Park Ridge, Ill., 2010) www.npnweb.com. 

Petroleum refinery

Ethanol biorefinery

Pipeline

Railroad

Tanker truck 

Wholesale terminals

(fuel blending and storage)

Retail fueling outlets

Tanker truck

Tanker truck

Source: GAO.
 

Page 8 GAO-11-513 Biofuels 

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.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).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.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.17 In addition, under the Solid Waste Disposal Act, 

 

14The Nielsen Company (Washington, D.C., May 2010) www.nielsen.com. 

15As reported in NPN’s MarketFacts 2010. 

1629 C.F.R § 1910.106(g)(3)(iv). 

17UL 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. 
 

Page 9 GAO-11-513 Biofuels 

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.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. 

 

18According 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. 
 

Page 10 GAO-11-513 Biofuels 

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

Underground Storage Equipment 

Source: GAO analysis of DOE and EPA information.

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)

Vapor-line shear valve

(iron, fluorocarbon, polyurethane)

Emergency shear valve protector

(iron, stainless steel, brass, steel,

Teflon®, polyurethane)

Piping (nylon, polyvinylidene fluoride,

polyphenylene sulfide, polyketone)

Submersible turbine pump (brass, steel)

Tank bottom protector (stainless steel, aluminum)

Ball float vent valve (steel, stainless steel)

Extractor fitting (polyurethane, iron, zinc alloy)

Underground storage equipment

Dispensing equipment

Hose

(nitrile rubber)
 

Page 11 GAO-11-513 Biofuels 

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 standardsdevelopment organizations, such as the National Fire Protection 

Association and the International Code Council.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. 

 

19The 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. 
 

Page 12 GAO-11-513 Biofuels 

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 systems20 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. 

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. 

 

20In 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. 

Challenges to 

Transporting 

Additional Volumes of 

Ethanol to Wholesale 

Markets May Require 

Large Investments in 

Infrastructure over 

the Next Decade 
 

Page 13 GAO-11-513 Biofuels 

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.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 2022.22 Under its “primary” control case, EPA projected that by 

 

21EPA, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis, EPA-420-

R-10-006 (Washington, D.C., February 2010). 

22EPA 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. 

Investments in 

Transportation 

Infrastructure May Be 

Needed to Meet 2022 

Ethanol Consumption 

Levels 
 

Page 14 GAO-11-513 Biofuels 

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.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. 

 

23According to EPA’s analysis, there is significant uncertainty regarding its estimate for the 

production of cellulosic biofuels by 2022. 
 

Page 15 GAO-11-513 Biofuels 

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.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. 

 

24GAO, Freight Transportation: National Policy and Strategies Can Help Improve Freight 

Mobility, GAO-08-287 (Washington, D.C.: Jan. 7, 2008). 
 

Page 16 GAO-11-513 Biofuels 

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. 

One Option for 

Transporting Additional 

Volumes of Ethanol—

Constructing a Dedicated 

Pipeline—Presents 

Significant Challenges 
 

Page 17 GAO-11-513 Biofuels 

Figure 4: Distribution Patterns for Gasoline and Ethanol 

Gasoline consumption and distribution

Ethanol production and distribution

< 3,000

> 3,000

Gasoline consumption (millions of gallons) Gasoline distribution

< 700

> 700

Ethanol production (million of gallons) Ethanol distribution

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

Page 18 GAO-11-513 Biofuels 

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: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.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.27

 

25According 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. 

26This research can be found at http://primis.phmsa.dot.gov/matrix/ after typing “ethanol” 

into the search feature. 

27This research can be found at http://primis.phmsa.dot.gov/matrix/ after typing “ethanol” 

into the search feature. 
 

Page 19 GAO-11-513 Biofuels 

• 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.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.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 

 

28Since 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. 

29DOE, Report to Congress: Dedicated Ethanol Pipeline Feasibility Study (Washington, 

D.C., March 2010). 
 

Page 20 GAO-11-513 Biofuels 

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. 

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. 

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. 

Challenges Due to 

Regulations, 

Technical Issues, and 

Cost Could Slow the 

Retail Sale of 

Intermediate Ethanol 

Blends 

Federal and State 

Regulations Need to Be 

Met Prior to the 

Introduction of 

Intermediate Blends 
 

Page 21 GAO-11-513 Biofuels 

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

Type of requirement Description 

Fuel waiver 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. 

Detergent certification 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. 

Fuel registration and health-effects testing 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. 

Reformulated gasoline certification 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. 

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 
 

Page 22 GAO-11-513 Biofuels 

Congressional testimony, EPA expects to finish reviewing the information 

by the middle of 2011.30

• 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.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.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. 

 

30EPA, 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). 

3175 Fed. Reg. 68044 (Nov. 4, 2010). 

32Sierra 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. 
 

Page 23 GAO-11-513 Biofuels 

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 2009,33 and no UL-certified 

dispensing equipment was available for use with these blends until 2010.34

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. 

 

33These 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. 

34UL 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. 

OSHA Regulations Prohibit 

Using Most Existing 

Dispensing Equipment 

with Intermediate Blends, 

and Research Suggests 

Compatibility Issues 
 

Page 24 GAO-11-513 Biofuels 

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 E10.35

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.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 

 

35According 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. 

36This 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. 
 

Page 25 GAO-11-513 Biofuels 

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. 

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.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 

 

37According 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. 

The Compatibility of Many 

UST Systems with 

Intermediate Blends Is 

Unclear 
 

Page 26 GAO-11-513 Biofuels 

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.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.39 DOE testing also indicates that a pipethread 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 

 

3875 Fed Reg. 70241 (Nov. 17, 2010). 

39ORNL, ORNL/TM-2010/326. 
 

Page 27 GAO-11-513 Biofuels 

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. 

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 

Retailers May Face 

Significant Costs and Risks 

in Selling Intermediate 

Blends 
 

Page 28 GAO-11-513 Biofuels 

to estimates from EPA and several industry associations, installing a new 

dispenser system compatible with intermediate ethanol blends will cost 

over $20,000.40 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.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 

 

40DOE 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). 

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

Page 29 GAO-11-513 Biofuels 

locations have only two UST systems, and many fuel retailers cannot 

install additional UST systems due to space constraints, permitting 

obstacles, or cost.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.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 

 

42EPA 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. 

43Several 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). 
 

Page 30 GAO-11-513 Biofuels 

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 E15.44 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.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. 

 

4475 Fed. Reg. 68044 (Nov. 4, 2010). 

4575 Fed. Reg. 12470 (Mar. 16, 2010). 
 

Page 31 GAO-11-513 Biofuels 

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 E20.46

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.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).48

 

46See 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). 

47CRC 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. 

48Of 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. 

Federally Sponsored 

Studies Are 

Evaluating Effects of 

Using Intermediate 

Ethanol Blends in 

Automobiles and 

Nonroad Engines 
 

Page 32 GAO-11-513 Biofuels 

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

Nonroad Engines 

DOE project numbera Description Status (as of Mar. 1, 2011) 

Research on automobiles 

V1 Short-term “quick-look” emissions study 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). 

V2 Detailed exhaust emissions study Ongoing. Expected date for completion of 

testing is May 2011. Expected date for issuing a 

report is October 2011. 

V3 Evaporative emissions study 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).

V4 Full-life emissions study Ongoing. Testing completed in December 2010. 

Expected date for issuing a report is summer 

2011. 

V5 Drivability study Ongoing. Expected date for completion of 

testing is March 2011. Expected date for issuing 

a report is August 2011. 

V6 Fuel-system materials compatibility study Ongoing. Expected date for issuing a report is 

summer 2011. 

Research on nonroad engines 

SE1 “Quick-look” emissions and temperature study Completed. Published report: NREL, ORNL, 

Effects of Intermediate Ethanol Blends.

SE2 Full useful-life emissions and durability study Completed. Published report: NREL, ORNL, 

Effects of Intermediate Ethanol Blends.

SE3 Chainsaw safety study Canceled. 
 

Page 33 GAO-11-513 Biofuels 

DOE project numbera Description Status (as of Mar. 1, 2011) 

SE4 Marine and snowmobile durability, emissions, and 

drivability study 

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). 

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.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. 

 

49EPA 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. 
 

Page 34 GAO-11-513 Biofuels 

• 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 
 

Page 35 GAO-11-513 Biofuels 

useful lives. According to the 2009 DOE report, the projects found that 

with increasing levels of ethanol: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 

 

50NREL, ORNL, Effects of Intermediate Ethanol Blends. 
 

Page 36 GAO-11-513 Biofuels 

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. 

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 

Conclusions 
 

Page 37 GAO-11-513 Biofuels 

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. 

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. 

Recommendations for 

Executive Action 
 

Page 38 GAO-11-513 Biofuels 

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 

http://www.gao.gov. 

Agency Comments 

and Our Evaluation 
 

Page 39 GAO-11-513 Biofuels 

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. 

Frank Rusco 

Director, Natural Resources and Environment 
Appendix I: Scope and Methodology 

Page 40 GAO-11-513 Biofuels 

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.1

 We then used feedback from 

these interviews to identify additional stakeholders to interview.2

 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 

 

1

GAO-09-446. 

2

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. 

Appendix I: Scope and Methodology 
Appendix I: Scope and Methodology 

Page 41 GAO-11-513 Biofuels 

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.3

 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 

 

3

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. 
Appendix I: Scope and Methodology 

Page 42 GAO-11-513 Biofuels 

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,4

 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 

 

4

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. 
Appendix I: Scope and Methodology 

Page 43 GAO-11-513 Biofuels 

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.,5

 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 

 

5

The Association of International Automobile Manufacturers, Inc. is now known as the 

Association of Global Automakers, Inc. 
Appendix I: Scope and Methodology 

Page 44 GAO-11-513 Biofuels 

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. 
Appendix II: Studies by Nonfederal 

Organizations on the Effects of Intermediate 

Ethanol Blends in Automobiles 

Page 45 GAO-11-513 Biofuels 

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 Reports 

Catalyst durability • Mid-Level Ethanol Blends Catalyst Durability Study Screening, June 2009. 

Drivability performance • 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

Evaporative emissions • 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 

Exhaust emissions • Effects of Vapor Pressure, Oxygen Content, and Temperature on CO Exhaust 

Emissions, May 2009. 

Onboard diagnostic systems • Impact of E15/E20 Blends on OBDII Systems – Pilot Study, March 2010. 

Source: GAO analysis of CRC information. 

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.1

 These studies 

received funding from the Minnesota Department of Agriculture and 

 

1

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). 

Appendix II: Studies by Nonfederal 

Organizations on the Effects of Intermediate 

Ethanol Blends in Automobiles 
Appendix II: Studies by Nonfederal 

Organizations on the Effects of Intermediate 

Ethanol Blends in Automobiles 

Page 46 GAO-11-513 Biofuels 

appear on the department’s Web site.2 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.3

 

2

E20 Test Results, in the Minnesota Department of Agriculture database, 

http://www.mda.state.mn.us/en/renewable/ethanol/e20testresults.aspx (accessed Apr. 4, 

2011). 

3

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). 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 47 GAO-11-513 Biofuels 

Appendix III: Comments from the 

Environmental Protection Agency 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 48 GAO-11-513 Biofuels 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 49 GAO-11-513 Biofuels 
Appendix IV: Comments from the 

Occupational Safety and Health 

Administration 

Page 50 GAO-11-513 Biofuels 

Appendix IV: Comments from the 

Occupational Safety and Health 

Administration 
Appendix V: GAO Contact and Staff 

Acknowledgments 

Page 51 GAO-11-513 Biofuels 

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

 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. 

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Staff 

Acknowledgments 

(361191) 
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