Biofuels
Challenges to the Transportation, Sale, and Use of Intermediate Ethanol Blends Gao ID: GAO-11-513 June 3, 2011U.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.
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: (1) 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. (2) 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. (3) Liability. Since EPA has only allowed E15 for use in model year 2001 and newer automobiles, many fuel retailers are concerned about potential liability issues if consumers misfuel their older automobiles or nonroad engines with E15. Among other things, EPA has issued a proposed rule on labeling to mitigate misfueling. DOE, EPA, and a nonfederal organization have provided about $51 million in funding for ten studies on the effects of intermediate blends on automobiles and nonroad engines--such as weed trimmers, generators, marine engines, and snowmobiles--including effects on performance, emissions, and durability. Of these studies, five will not be completed until later in 2011. Results from a completed study indicate that such blends reduce a vehicle's fuel economy (i.e., fewer miles per gallon) and may cause older automobiles to experience higher emissions of some pollutants and higher catalyst temperatures. Results from another completed study indicate that such blends may cause some nonroad engines to run at higher temperatures and experience unintentional clutch engagement, which could pose safety hazards. 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.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Franklin W. Rusco Team: Government Accountability Office: Natural Resources and Environment Phone: (202) 512-4597GAO-11-513, Biofuels: Challenges to the Transportation, Sale, and Use of Intermediate Ethanol Blends
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United States Government Accountability Office:
GAO:
Report to Congressional Requesters:
June 2011:
Biofuels:
Challenges to the Transportation, Sale, and Use of Intermediate
Ethanol Blends:
GAO-11-513:
GAO Highlights:
Highlights of GAO-11-513, a report to congressional requesters.
Why GAO Did This Study:
U.S. transportation relies largely on oil for fuel. Biofuels can be an
alternative to oil and are produced from renewable sources, like corn.
In 2005, Congress created the Renewable Fuel Standard (RFS), which
requires transportation fuel to contain 36 billion gallons of biofuels
by 2022. The most common U.S. biofuel is ethanol, typically produced
from corn in the Midwest, transported by rail, and blended with
gasoline as E10 (10 percent ethanol). Use of intermediate blends, such
as E15 (15 percent ethanol), would increase the amount of ethanol used
in transportation fuel to meet the RFS. The Environmental Protection
Agency (EPA) recently allowed E15 for use with certain automobiles.
GAO was asked to examine (1) challenges, if any, to transporting
additional ethanol to meet the RFS, (2) challenges, if any, to selling
intermediate blends, and (3) studies on the effects of intermediate
blends in automobiles and nonroad engines. GAO examined government,
industry, and academic reports; interviewed Department of Energy
(DOE), EPA, and other government and industry officials; and visited
research centers.
What GAO Found:
According to government and industry officials, the nation‘s existing
rail, truck, and barge infrastructure should be able to transport an
additional 2.4 billion gallons of ethanol to wholesale markets by 2015”
enough to meet RFS requirements. Later in the decade, however, a
number of challenges and costs are projected for transporting
additional volumes of ethanol to wholesale markets to meet peak RFS
requirements. According to EPA estimates, if an additional 9.4 billion
gallons of ethanol are consumed domestically by 2022, several billion
dollars would be needed to upgrade rail, truck, and barge
infrastructure to transport ethanol to wholesale markets.
GAO identified three key challenges to the retail sale of intermediate
blends:
* Compatibility. Federally sponsored research indicates that
intermediate blends may degrade or damage some materials used in
existing underground storage tank (UST) systems and dispensing
equipment, potentially causing leaks. However, important gaps exist in
current research efforts”none of the planned or ongoing studies on UST
systems will test actual components and equipment, such as valves and
tanks. While EPA officials have stated that additional research will
be needed to more fully understand the effects of intermediate blends
on UST systems, no such research is currently planned.
* Cost. Due to concerns over compatibility, new storage and dispensing
equipment may be needed to sell intermediate blends at retail outlets.
The cost of installing a single-tank UST system compatible with
intermediate blends is more than $100,000. In addition, the cost of
installing a single compatible fuel dispenser is over $20,000.
* Liability. Since EPA has only allowed E15 for use in model year 2001
and newer automobiles, many fuel retailers are concerned about
potential liability issues if consumers misfuel their older
automobiles or nonroad engines with E15. Among other things, EPA has
issued a proposed rule on labeling to mitigate misfueling.
DOE, EPA, and a nonfederal organization have provided about $51
million in funding for ten studies on the effects of intermediate
blends on automobiles and nonroad engines”such as weed trimmers,
generators, marine engines, and snowmobiles”including effects on
performance, emissions, and durability. Of these studies, five will
not be completed until later in 2011. Results from a completed study
indicate that such blends reduce a vehicle‘s fuel economy (i.e., fewer
miles per gallon) and may cause older automobiles to experience higher
emissions of some pollutants and higher catalyst temperatures. Results
from another completed study indicate that such blends may cause some
nonroad engines to run at higher temperatures and experience
unintentional clutch engagement, which could pose safety hazards.
What GAO Recommends:
GAO recommends, among other things, that EPA determine what additional
research is needed on the effects of intermediate blends on UST
systems. EPA agreed with the recommendation after GAO revised it to
clarify EPA's planned approach.
View [hyperlink, http://www.gao.gov/products/GAO-11-513] or key
components. For more information, contact Frank Rusco at (202) 512-
3841 or ruscof@gao.gov.
[End of section]
Contents:
Letter:
Background:
Challenges to Transporting Additional Volumes of Ethanol to Wholesale
Markets May Require Large Investments in Infrastructure over the Next
Decade:
Challenges Due to Regulations, Technical Issues, and Cost Could Slow
the Retail Sale of Intermediate Ethanol Blends:
Federally Sponsored Studies Are Evaluating Effects of Using
Intermediate Ethanol Blends in Automobiles and Nonroad Engines:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Studies by Nonfederal Organizations on the Effects of
Intermediate Ethanol Blends in Automobiles:
Appendix III: Comments from the Environmental Protection Agency:
Appendix IV: Comments from the Occupational Safety and Health
Administration:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Federal Fuel Requirements that Affect the Introduction of New
Fuels:
Table 2: Status of DOE-and EPA-Sponsored Research on Effects of
Intermediate Ethanol Blends in Automobiles and Nonroad Engines:
Table 3: Published CRC Reports on Effects of Intermediate Ethanol
Blends in Automobiles:
Figures:
Figure 1: Volume Requirements Established by the Renewable Fuel
Standard under the Energy Independence and Security Act:
Figure 2: Primary Transportation of Petroleum Products and Ethanol
from Refineries to Retail Fueling Outlets:
Figure 3: Examples of Typical Components and Materials in Retail
Dispensing and Underground Storage Equipment:
Figure 4: Distribution Patterns for Gasoline and Ethanol:
Abbreviations:
CRC: Coordinating Research Council, Inc.
DOE: Department of Energy:
DOT: Department of Transportation:
E10: fuel blend containing approximately 10 percent ethanol:
E15: fuel blend containing approximately 15 percent ethanol:
E20: fuel blend containing approximately 20 percent ethanol:
E85: fuel blend containing 70 percent to 83 percent ethanol:
EISA: Energy Independence and Security Act:
EPA: Environmental Protection Agency:
NIST: National Institute of Standards and Technology:
NREL: National Renewable Energy Laboratory:
ORNL: Oak Ridge National Laboratory:
OSHA: Occupational Safety and Health Administration:
RFS: Renewable Fuel Standard:
UL: Underwriters Laboratories:
USDA: Department of Agriculture:
UST: underground storage tank:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
June 3, 2011:
The Honorable Fred Upton:
Chairman:
The Honorable Joe Barton:
Chairman Emeritus:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Cliff Stearns:
Chairman:
Subcommittee on Oversight and Investigations:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Michael C. Burgess:
The Honorable Greg Walden:
House of Representatives:
The U.S. transportation sector is almost entirely dependent on
petroleum products refined from crude oil--primarily gasoline and
diesel fuels. In 2009, this sector consumed the equivalent of about 14
million barrels of oil per day, or over 70 percent of total U.S.
consumption of petroleum products. To meet the demand for crude oil
and petroleum products, the nation imported, on a net basis, about 52
percent of the petroleum products consumed in 2009.[Footnote 1]
Biofuels can be an alternative to petroleum-based transportation fuels
and are produced from renewable sources, primarily corn, sugar cane,
and soybeans. The United States is the world's largest producer of
biofuels. The federal government has promoted the domestic production
and use of biofuels through tax incentives since the 1970s and, more
recently, through a Renewable Fuel Standard (RFS). The Energy Policy
Act of 2005, which created the RFS, generally required transportation
fuels in the United States to contain renewable fuels, such as ethanol
and biodiesel.[Footnote 2] The Energy Independence and Security Act
(EISA) of 2007 expanded the RFS by requiring that U.S. transportation
fuels contain 9 billion gallons of renewable fuels in 2008, with
renewable fuels increasing annually to 36 billion gallons in 2022.
[Footnote 3] The Environmental Protection Agency (EPA) is responsible
for administering the RFS.
Ethanol is the most commonly produced biofuel in the United States. In
2010, the nation produced 13.2 billion gallons of ethanol, the vast
majority of which came from corn. Most U.S. corn is grown in the
Midwest, and ethanol is generally produced in relatively small
biorefineries near corn-producing areas. Unlike petroleum products,
which are primarily transported to wholesale terminals by pipelines,
ethanol is transported to wholesale terminals by a combination of
rail, tanker truck, and barge. At the terminals, most ethanol is
currently blended as an additive in gasoline to make fuel blends
containing up to 10 percent ethanol (called E10). Finally, the blended
fuel is transported via tanker truck to retail fueling outlets.
In a 2009 report, we identified fuel-blending limits as a challenge to
expanded ethanol consumption.[Footnote 4] We stated that the nation
may soon reach a "blend wall"--the upper limit to the total amount of
ethanol that can be blended into U.S. gasoline, given current
constraints. At the time, the blend wall existed partly because under
EPA's implementation of the Clean Air Act, fuels containing more than
10 percent ethanol were prohibited from being introduced for use with
the vast majority of U.S. automobiles.[Footnote 5] This created a
blend wall at approximately 10 percent of total U.S. fuel consumption.
If the volume of renewable fuels required by the RFS increased above
this 10 percent threshold, the fuel industry would not be able to meet
the RFS using only E10. We noted that one option to address the blend
wall is to use "intermediate" ethanol blends such as E15 or E20
(generally 15 percent or 20 percent ethanol).[Footnote 6]
In March 2009, a group of ethanol manufacturers petitioned EPA to
allow E15 into commerce. The Clean Air Act prohibits the introduction
of fuels that are not substantially similar to gasoline. However, the
Act authorizes EPA to grant a waiver of this prohibition for a fuel if
it does not cause vehicles or engines to exceed emission standards
over their useful life. EPA issued two decisions on E15. The first,
issued in October 2010, allowed E15 for use in model year 2007 and
newer automobiles. The second, issued in January 2011, allowed E15 for
use in model years 2001 through 2006 automobiles. EPA did not allow
E15 for use in older automobiles or nonroad engines (such as lawn
mowers, chainsaws, and boats), motorcycles, or heavy-duty gasoline
engines. EPA cited insufficient test data to support the use of E15 in
these engines, as well as engineering concerns that older vehicles and
nonroad engines may not maintain compliance with emission standards if
operated on E15.[Footnote 7]
In light of the potential use of intermediate ethanol blends, you
asked us to review their potential effects. Our objectives were to (1)
determine the challenges, if any, associated with transporting
additional volumes of ethanol to wholesale markets to meet RFS
requirements; (2) determine the challenges, if any, associated with
selling intermediate ethanol blends at the retail level; and (3)
examine research by federal agencies into the effects of intermediate
ethanol blends on the nation's automobiles and nonroad engines.
To determine the challenges associated with transporting additional
volumes of ethanol to wholesale markets to meet RFS requirements, we
reviewed relevant literature and reports from federal government
agencies--including EPA, the Department of Energy (DOE), and the
Department of Transportation (DOT)--industry associations, and
academic organizations and interviewed their relevant officials and
representatives. To determine the challenges associated with selling
intermediate ethanol blends at the retail level, we reviewed relevant
literature and reports from federal and state government agencies--
including EPA, DOE, the Department of Labor's Occupational Safety and
Health Administration (OSHA), and the California Air Resources Board--
government laboratories, and industry associations and interviewed
their relevant officials and representatives. To examine research by
federal agencies into the effects of intermediate ethanol blends on
the nation's automobiles and nonroad engines, we reviewed relevant
reports and studies from government and private laboratories,
including DOE's National Renewable Energy Laboratory (NREL) in
Colorado and Oak Ridge National Laboratory (ORNL) in Tennessee and
interviewed their relevant officials. We also conducted site visits to
NREL, ORNL, and a private laboratory to discuss testing results. Due
to ongoing litigation over EPA's decision to allow E15 for use in
certain automobiles, we did not make any determination in this report
of the adequacy of federal testing efforts for automobiles. In
addition, we interviewed officials from EPA, DOE, and representatives
from relevant industry associations. A more detailed description of
our scope and methodology is presented in appendix I.
We conducted this performance audit between April 2010 and June 2011
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Background:
The RFS, as defined by EISA, distinguishes between ethanol derived
from corn starch (known as corn ethanol) and advanced biofuels--
defined as a renewable fuel other than corn ethanol that meets certain
criteria. For example, to qualify as an advanced biofuel, a biofuel
must reduce lifecycle greenhouse gas emissions by at least 50 percent
compared to the gasoline or diesel fuel it displaces.[Footnote 8]
According to the RFS, most advanced biofuels must be produced from
cellulosic materials, which can include perennial grasses, crop
residue, and the branches and leaves of trees. In addition, some
advanced biofuels must be produced from biomass-based diesel, which
generally includes any diesel made from biomass feedstocks, such as
soybeans. As shown in figure 1, the volume of corn ethanol included
under the RFS is capped at 15 billion gallons by 2015 and is fixed
thereafter. However, the volume of advanced biofuels continues to grow
to a total of 21 billion gallons by 2022. By comparison, the U.S.
transportation sector consumed about 14 million barrels of oil per day
in 2009, which translates to more than 99 billion gallons of gasoline
consumed for the entire year.
Figure 1: Volume Requirements Established by the Renewable Fuel
Standard under the Energy Independence and Security Act:
[Refer to PDF for image: stacked vertical bar graph]
Year: 2011;
Corn ethanol: 12.6 billion gallons;
Advanced biofuels: 1.35 billion gallons.
Year: 2012;
Corn ethanol: 13.2 billion gallons;
Advanced biofuels: 2 billion gallons.
Year: 2013;
Corn ethanol: 13.8 billion gallons;
Advanced biofuels: 2.75 billion gallons.
Year: 2014;
Corn ethanol: 14.4 billion gallons;
Advanced biofuels: 3.75 billion gallons.
Year: 2015;
Corn ethanol: 15 billion gallons;
Advanced biofuels: 5.5 billion gallons.
Year: 2016;
Corn ethanol: 15 billion gallons;
Advanced biofuels: 7.25 billion gallons.
Year: 2017;
Corn ethanol: 15 billion gallons;
Advanced biofuels: 9 billion gallons.
Year: 2018;
Corn ethanol: 15 billion gallons;
Advanced biofuels: 11 billion gallons.
Year: 2019;
Corn ethanol: 15 billion gallons;
Advanced biofuels: 13 billion gallons.
Year: 2020;
Corn ethanol: 15 billion gallons;
Advanced biofuels: 15 billion gallons.
Year: 2021;
Corn ethanol: 15 billion gallons;
Advanced biofuels: 18 billion gallons.
Year: 2022;
Corn ethanol: 15 billion gallons;
Advanced biofuels: 21 billion gallons.
Source: EISA, Pub. Law No. 110-140 § 202 (2007).
[End of figure]
The RFS generally requires that U.S. transportation fuels in 2022
contain 36 billion gallons of biofuels. In addition, at least 16
billion of the 36 billion gallons of biofuels must be cellulosic
biofuels--including ethanol and diesel derived from cellulosic
materials. However, under EISA, EPA is required to determine the
projected available volume of cellulosic biofuel production for the
year, and if that number is less than the volume specified in the
statute, EPA must lower the standard accordingly. Pursuant to this
provision, EPA has already lowered the RFS requirements for cellulosic
biofuel, from 250 million gallons to 6.6 million gallons for 2011,
mostly due to the small number of companies with the potential to
produce cellulosic biofuel on a commercial scale.[Footnote 9]
As shown in figure 2, the infrastructure used to transport petroleum
fuels from refineries to wholesale terminals in the United States is
different from that used to transport ethanol. Petroleum-based fuel is
primarily transported from refineries to terminals by pipeline.
[Footnote 10] In contrast, ethanol is transported to terminals via a
combination of rail cars, tanker trucks, and barges.[Footnote 11]
According to DOE estimates, there are approximately 1,050 terminals in
the United States that handle gasoline and other petroleum products.
At the terminals, most ethanol is currently blended as an additive in
gasoline to make E10 fuel blends. A relatively small volume is also
blended into a blend of between 70 percent to 83 percent ethanol (E85)
and the remainder gasoline. E85 has a more limited market, primarily
in the upper Midwest, and can only be used in flexible-fuel vehicles,
which are vehicles that have been manufactured or modified to accept
it.[Footnote 12] After blending, the fuel is moved to retail fueling
locations in tanker trucks.
Figure 2: Primary Transportation of Petroleum Products and Ethanol
from Refineries to Retail Fueling Outlets:
[Refer to PDF for image: illustration]
Petroleum refinery:
Pipeline to Wholesale terminals (fuel blending and storage).
Ethanol biorefinery:
Railroad and Tanker trucks to Wholesale terminals (fuel blending and
storage).
Wholesale terminals (fuel blending and storage):
Tanker trucks to Retail fueling outlets.
Source: GAO.
Note: Other means of transportation are also used to move petroleum
and ethanol products to wholesale terminals. For example, for ethanol,
barges are also used to a limited extent.
[End of figure]
There are approximately 159,000 retail fueling outlets in the United
States, according to 2010 industry data.[Footnote 13] This total
included more than 115,000 convenience stores, which sold the vast
majority of all the fuel purchased in the United States, according to
industry estimates; a number of large retailers that sell fuel, such
as Walmart, Costco, and several grocery chains; and some very low-
volume retailers, such as marinas. In terms of ownership, single-store
businesses--that is, businesses that own a single retail outlet--
account for about 56 percent of the convenience stores selling fuel in
the United States.
There are three primary supply arrangements between fuel retailers and
their suppliers:
* Major oil owned and operated. About 1 percent (or 1,175) of
convenience stores selling fuel in the United States are owned and
operated by four major integrated oil companies--ExxonMobil, Chevron,
BP, and Shell.[Footnote 14]
* Branded independent retailer. About 52 percent of retail fueling
outlets are operated by independent business owners who sell fuel
under the brand of one of the major oil companies or refineries (such
as CITGO, Sunoco, or Marathon).[Footnote 15] These retailers sign a
supply and marketing contract with their supplier to sell fuel under
the brand of that supplier.
* Unbranded independent retailer. The remaining retail fueling outlets
(about 48 percent) are operated by independent business owners who do
not sell gasoline under a brand owned or controlled by a refining
company. These retailers purchase gasoline from the unbranded
wholesale market, which is made up of gallons not dedicated to fulfill
a refiner's contracts with branded retailers.
Federal safety and environmental regulations govern the dispensing and
storage of fuel at retail fueling locations. First, OSHA requires that
equipment used to dispense gasoline--including hoses, nozzles, and
other related aboveground components, shown in figure 3--be certified
for safety by a nationally recognized testing laboratory.[Footnote 16]
According to OSHA officials, OSHA recognizes 17 laboratories, although
Underwriters Laboratories (UL) is the main one that currently
certifies equipment sold for dispensing gasoline.[Footnote 17] In
addition, under the Solid Waste Disposal Act, EPA requires that
underground storage tank (UST) systems--including storage tanks,
piping, pumps, and other related underground components, shown in
figure 3--must be compatible with the substance stored in them to
protect groundwater from releases from these systems. Historically, UL
certification has been the primary method for determining the
compatibility of USTs with EPA requirements.[Footnote 18] EPA also
requires fuel retailers to install equipment to detect leaks from UST
systems. In total, EPA regulates approximately 600,000 active USTs at
about 215,000 sites in the United States.
Figure 3: Examples of Typical Components and Materials in Retail
Dispensing and Underground Storage Equipment:
[Refer to PDF for image: illustration]
Dispensing equipment:
Breakaway-valve: (nylon, high density polyethylene, nitrile rubber,
fluorosilicone, fluorocarbon).
Nozzle: (nylon, aluminum, fluorocarbon, silicone rubber, nitrile rubber,
fluorosilicone, high-density polyethylene).
Swivel: (stainless steel, fluorocarbon, nitrile rubber).
Hose: (nitrite rubber).
Vapor-line shear valve: (iron, fluorocarbon, polyurethane).
Emergency shear valve protector: (iron, stainless steel, brass, steel,
TeflonŽ, polyurethane).
Underground storage equipment:
Piping: (nylon, polyvinylidene fluoride, polyphenylene sulfide,
polyketone).
Submersible turbine pump: (brass, steel).
Extractor fitting: (polyurethane, iron, zinc alloy).
Ball float vent valve: (steel, stainless steel).
Tank bottom protector: (stainless steel, aluminum).
Source: GAO analysis of DOE and EPA information.
[End of figure]
State and local governments also play a role in regulating the safety
of dispensing equipment and in implementing EPA's requirements for
USTs. For example:
* The Occupational Safety and Health Act allows states to develop and
operate their own job safety and health programs. OSHA approves and
monitors state programs and plans, which must adopt and enforce
standards that are at least as effective as comparable federal
standards. According to OSHA officials, there are currently 21 states
with approved plans covering the private sector that enforce health
and safety standards over the dispensing of gasoline within their
respective states. Four additional states operate approved state plans
that are limited in coverage to the public sector.
* Various state and local fire-safety codes--which aim to protect
against fires--also govern the dispensing of fuel at retail fueling
outlets. While state fire marshals or state legislatures are usually
responsible for developing the fire code for their respective states,
some states allow local municipalities to develop their own fire
codes. Fire codes normally reference or incorporate standards
developed by recognized standards-development organizations, such as
the National Fire Protection Association and the International Code
Council.[Footnote 19] State, county, and local fire marshals are
responsible for enforcing the applicable fire code within their
respective jurisdictions. Local officials, such as fire marshals,
typically inspect dispensing equipment for compliance with both state
and local fire codes.
* States are largely responsible for implementing EPA's requirements
under its UST program. EPA has approved 36 states, plus the District
of Columbia and Puerto Rico, to operate programs in lieu of the
federal program. The remaining states have agreements with EPA to be
the primary implementing agency for their programs. Typically, states
rely on UL certification as the primary method for determining the
compatibility of UST systems with EPA requirements. Some states also
allow compatibility to be demonstrated in other ways, including
through the manufacturer's approval or a professional engineering
certification.
Consumers in the United States use retail fueling locations to fuel
hundreds of millions of automobiles and nonroad products with gasoline
engines. According to DOT data, Americans owned or operated almost 256
million automobiles, trucks, and other highway vehicles in 2008, while
about 91 percent of all households owned at least 1 automobile the
same year, according to U.S. Census data. Americans also owned and
operated over 400 million products with nonroad engines in 2009,
according to one industry association estimate. According to EPA
documentation, nonroad engines are typically more basic in their
engine design and control than engines and emissions control systems
used in automobiles, and commonly have carbureted fuel systems
[Footnote 20] and air cooling, whereby extra fuel is used in
combustion to help control combustion and exhaust temperatures.
According to representatives from industry associations for nonroad
engines, most of the small nonroad engines manufactured today rely on
older technologies and designs to keep retail costs low, and all of
the small nonroad engines currently being produced are designed to
perform successfully on fuel blends up to E10. According to industry
representatives, while it is possible to design small nonroad engines
to run on a broad range of fuels, such designs would not be cost
effective and could add hundreds of dollars to the price.
Challenges to Transporting Additional Volumes of Ethanol to Wholesale
Markets May Require Large Investments in Infrastructure over the Next
Decade:
Existing ethanol infrastructure should be sufficient to transport the
nation's ethanol production through 2015, according to DOT officials
and industry representatives, but large investments in transportation
infrastructure may be needed to meet 2022 projected consumption,
according to EPA documentation. One option for doing so may be to
construct a dedicated ethanol pipeline, but this option presents
significant challenges.
Investments in Transportation Infrastructure May Be Needed to Meet
2022 Ethanol Consumption Levels:
According to knowledgeable DOT officials and industry representatives
we met with, the existing rail, truck, and barge transportation
infrastructure for shipping corn ethanol to wholesale markets should
be sufficient through 2015, when the volume of corn ethanol in the RFS
is effectively capped at 15 billion gallons annually. This volume
represents roughly a 2.4 billion gallon increase from 2011 RFS
consumption targets for corn ethanol. Specifically, for rail, which
transports about 66 percent of corn ethanol to wholesale markets,
several DOT officials and representatives from the Association of
American Railroads told us that the addition of a few billion gallons
of ethanol over the near term is not expected to have a significant
impact. Railroads hauled more than 220,000 rail carloads of ethanol in
2008 (the most recent year for which data are available)--which was
about 0.7 percent of all the rail carloads and about 1 percent of the
total rail tonnage transported that year in the United States,
according to data from the Association of American Railroads.
Similarly, knowledgeable DOT officials and industry representatives
said there is sufficient capacity in the short term to transport
additional volumes of corn ethanol via trucks, which transport about
29 percent of corn ethanol to wholesale markets, and barges, which
transport roughly 5 percent, to meet RFS requirements.
In contrast, the existing infrastructure may not be sufficient to
handle the ethanol production that is projected after 2015. The RFS
generally requires transportation fuels in the United States to
contain 21 billion gallons of advanced biofuels, including a large
quantity of cellulosic ethanol, by 2022. In a 2010 regulatory impact
analysis, EPA assessed the impacts of an increase in the production,
distribution, and use of ethanol and other biofuels sufficient to meet
this requirement.[Footnote 21] In its assessment, EPA used three
scenarios or "control cases" to project the amounts and types of
renewable fuels to be produced domestically and imported from 2010
through 2022.[Footnote 22] Under its "primary" control case, EPA
projected that by 2022, the United States would produce and import
over 22 billion gallons of ethanol, comprising 15 billion gallons of
domestically produced corn ethanol, almost 5 billion gallons of
domestically produced cellulosic ethanol, and over 2 billion gallons
of imported ethanol.[Footnote 23] EPA also estimated the number of
facilities that would need to be built or modified, as well as the
number of additional vehicles that would need to be purchased. Under
its primary control case, EPA estimated that the necessary spending on
transportation infrastructure due to increased ethanol consumption
would be approximately $2.6 billion. According to EPA's analysis:
* For rail. EPA estimated that approximately $1.2 billion would be
needed for an additional 8,450 rail tanker cars ($760 million) and the
construction of new train facilities ($446 million). EPA projected
that biofuels transport will constitute approximately 0.4 percent of
the total tonnage for all commodities transported by the freight rail
system through 2022. Sixteen percent of the nation's freight rail
system would be affected by biofuels shipments, and that portion
(mostly along rail corridors radiating out of the Midwest) would see a
2.5 percent increase in traffic.
* For trucks. EPA estimated that approximately $87 million would be
needed for an additional 480 tank trucks.
* For barges. EPA estimated that approximately $198 million would be
needed for an additional 32 barges ($45 million), and the
configuration of barge facilities (a projected $153 million). EPA
stated that it does not anticipate a substantial fraction of biofuels
will be transported via barge over the inland waterway system. In
addition, the agency projected that a total of 30 ports will receive
significant quantities of imported ethanol from Brazil and Caribbean
Basin Initiative countries by 2022.
* For wholesale terminals. EPA estimated that $1.15 billion in
investments would be needed, primarily to modify vapor recovery
equipment (at a cost of $1 million for each terminal that does not
already handle ethanol). Other modifications would include the
installation of new storage tanks, modification of existing tanks, and
modification of tank-truck unloading facilities.
EPA stated that the United States will face significant challenges in
accommodating the projected increases in biofuels production by 2022,
but it concluded that the task would be achievable at the wholesale
level. For example, the agency stated that it believed overall freight-
rail capacity would not be a limiting factor to the successful
implementation of RFS requirements.
However, while this task may be achievable, it is likely to be
increasingly difficult because of congestion on U.S. transportation
networks. We and others have reported that congestion is constraining
the capacity and increasing the costs of U.S. rail and highway
transportation. For example, we reported in 2008 that neither rail nor
highway capacity had kept pace with recent increases in demand,
leading to increased costs.[Footnote 24] We also cited a study by the
Association of American Railroads, which predicted that without system
improvements, the expected increases in rail volume by 2035 will cause
30 percent of primary rail corridors to operate above capacity and
another 15 percent at capacity. The study stated the resulting
congestion might affect the entire country and could shut down the
national rail network. In addition, we noted that many of the highways
used heavily by trucks to move freight are already congested, and
congestion is expected to become a regular occurrence on many
intercity highways. Finally, we noted that ports are likely to
experience greater congestion in the future as more and larger ships
compete for limited berths.
One Option for Transporting Additional Volumes of Ethanol--
Constructing a Dedicated Pipeline--Presents Significant Challenges:
If overall ethanol production increases enough to fully meet the RFS
over the long term, one option to transport it to wholesale markets
would be through a dedicated ethanol pipeline. Over many decades, the
United States has established very efficient networks of pipelines
that move large volumes of petroleum-based fuels from production or
import centers on the Gulf Coast and in the Northeast to distribution
terminals along the coasts. However, the existing networks of
petroleum pipelines are not well suited for the transport of billions
of gallons of ethanol. Specifically, as shown in figure 4, ethanol is
generally produced in the Midwest and needs to be shipped to the
coasts, flowing roughly in the opposite direction of petroleum-based
fuels. The location of renewable fuel production plants (such as
biorefineries) is often dictated by the need to be close to the source
of the raw materials and not by proximity to centers of fuel demand or
existing petroleum pipelines.
Figure 4: Distribution Patterns for Gasoline and Ethanol:
[Refer to PDF for image: 2 illustrated U.S maps]
Gasoline consumption and distribution:
States are depicted in two categories:
Gasoline consumption less than 3,000 million gallons;
Gasoline consumption greater than 3,000 million gallons, including the
following states:
California;
Florida;
Georgia;
Illinois;
Indiana;
Michigan;
Missouri;
New Jersey;
New York;
North Carolina;
Ohio;
Pennsylvania;
Tennessee;
Texas;
Virginia.
Gasoline distribution direction is also depicted: from off-shore to
higher consuming states; within higher consuming states; and from
higher consuming to lower consuming states.
Ethanol production and distribution:
States are depicted in two categories:
Ethanol production less than 700 million gallons;
Ethanol production greater than 700 million gallons, including the
following states:
Illinois;
Indiana;
Iowa;
Minnesota;
Nebraska;
South Dakota.
Ethanol distribution direction is also depicted: from off-shore to
lower production states; from higher production to lower production
states.
Source: DOE, Report to Congress: Dedicated Ethanol Pipeline
Feasibility Study (Washington, D.C., March 2010).
[End of figure]
Existing petroleum pipelines can be used to ship ethanol in some areas
of the country. For example, in December 2008, the U.S. pipeline
operator Kinder Morgan began transporting commercial batches of
ethanol along with gasoline shipments in its 110-mile Central Florida
Pipeline from Tampa to Orlando. However, pipeline owners would face
the same technical challenges and costs that Kinder Morgan
representatives reported facing, including the following:[Footnote 25]
* Compatibility. Ethanol can dissolve dirt, rust, or hydrocarbon
residues in a petroleum pipeline and degrade the quality of the fuel
being shipped. It can also damage critical nonmetallic components,
including gaskets and seals, which can cause leaks. In order for
existing pipelines to transport ethanol, pipeline operators would need
to chemically remove residues and replace any components that are not
compatible with ethanol. According to DOT officials, the results from
two research projects sponsored by that agency have identified
specific actions that must be taken on a wide variety of nonmetallic
components commonly utilized by the pipeline industry.[Footnote 26]
* Stress corrosion cracking. Tensile stress and a corrosive
environment can combine to crack steel. The presence of ethanol
increases the likelihood of this in petroleum pipelines. Over the past
2 decades, approximately 24 failures due to stress corrosion cracking
have occurred in ethanol tanks and in production-facility piping
having steel grades similar to those of petroleum pipelines. According
to DOT officials, the results from nine research projects sponsored by
that agency have targeted these challenges and produced guidelines and
procedures to prevent or mitigate stress corrosion cracking. As a
result, pipelines can safely transport ethanol after implementing the
identified measures, according to DOT officials.[Footnote 27]
* Attraction of water. Ethanol attracts water. If even small amounts
of water mix with gasoline-ethanol blends, the resulting mixture
cannot be used as a fuel or easily separated into its constituents.
The only options are additional refining or disposal.
Some groups have proposed the construction of a new pipeline dedicated
to the transportation of ethanol. For example, in February 2008,
Magellan Midstream Partners, L.P. (Magellan) and Buckeye Partners,
L.P. (Buckeye) proposed building a new pipeline from the Midwest to
the East Coast.[Footnote 28] According to this proposal, the pipeline
would gather ethanol from three segments: (1) Iowa, Nebraska, and
South Dakota; (2) Illinois, Michigan, and Minnesota; and (3) Indiana
and Ohio. Ethanol would be transported to demand centers in New
England, the Mid-Atlantic, Virginia, and West Virginia.
The federal government has studied the feasibility of building a
pipeline similar to the one proposed by Magellan. Specifically, under
section 243 of EISA, DOE (in collaboration with DOT) issued a study in
March 2010 that examined the feasibility of constructing an ethanol
pipeline linking large East Coast demand centers with refineries in
the Midwest.[Footnote 29] The report identified a number of
significant challenges to building a dedicated ethanol pipeline,
including the following:
* Construction costs. Using recent trends in and generally accepted
industry estimates for pipeline construction costs, DOE estimated that
an ethanol pipeline from the Midwest to the East Coast could cost
about $4.5 million per mile. While DOE assumed that the construction
of 1,700 miles of pipeline would cost more than $3 billion, it did not
model total project costs beyond $4.25 billion in the report.
* Higher transportation rates. Based on the assumed demand for ethanol
in the East Coast service area and the estimated cost of construction,
DOE estimated the ethanol pipeline would need to charge an average
tariff of 28 cents per gallon, substantially more than the current
average rate of 19 cents per gallon, for transporting ethanol using
rail, barge, and truck along the same transportation corridor.
* Lack of eminent domain authority. DOE estimated that siting a new
ethanol pipeline of any significant length will likely require federal
eminent domain authority, which currently does not exist for ethanol
pipelines.
DOE's report concluded that a dedicated ethanol pipeline can become a
feasible option if there is (1) adequate demand for the ethanol
(approximately 4.1 billion gallons per year for the hypothetical
pipeline assessed) and (2) government financial incentives to help
defray the large construction costs.
Challenges Due to Regulations, Technical Issues, and Cost Could Slow
the Retail Sale of Intermediate Ethanol Blends:
We identified several challenges to selling intermediate ethanol
blends at the retail level. First, federal and state regulations
governing health and environmental concerns must be met before these
blends are allowed into commerce, and fuel-testing requirements to
meet these regulations may take 1 year or more to complete. Second,
according to knowledgeable federal officials and UL representatives,
federal safety standards do not allow ethanol blends over E10 to be
dispensed at most retail fueling locations, and federally sponsored
research has indicated potential problems with the compatibility of
intermediate ethanol blends with existing dispensing equipment. Third,
according to EPA and several industry representatives, the
compatibility of many UST systems with these fuels is uncertain, and
retailers will need to replace any components that are not compatible
if they choose to store intermediate blends. Fourth, industry
associations representing various groups, such as fuel retailers and
refiners, are concerned that, in selling intermediate ethanol blends,
fuel retailers may face significant costs and risks, such as upgrading
or replacing equipment.
Federal and State Regulations Need to Be Met Prior to the Introduction
of Intermediate Blends:
According to knowledgeable EPA officials within the Office of
Transportation and Air Quality, the regulatory process for allowing an
intermediate ethanol blend into commerce could take 1 year or more. As
described in table 1, the Clean Air Act, among other things,
establishes a comprehensive regulatory program aimed at reducing
harmful emissions from on-and off-road vehicles and engines and the
fuels that power them. According to EPA officials, this regulatory
program would apply to the introduction of new fuels, including E15
and other intermediate blends.
Table 1: Federal Fuel Requirements that Affect the Introduction of New
Fuels:
Type of requirement: Fuel waiver;
Description: Under the Clean Air Act, the introduction into commerce
of new fuels and fuel additives that are not substantially similar to
the fuels and fuel additives specified by EPA regulations for testing
the compliance of vehicles and engines with EPA emission standards is
prohibited. However, EPA may waive this prohibition if a demonstration
is made that the fuel or fuel additive will not cause or contribute to
vehicles and engines failing to meet emission standards over their
useful lives.
Type of requirement: Detergent certification;
Description: EPA regulations implementing the Clean Air Act require
fuel manufacturers to certify any detergent added to gasoline to
prevent the accumulation of deposits in engines and fuel systems. Fuel
manufacturers must use EPA-approved test fuels to certify the
effectiveness of new detergents. EPA regulations currently require
these test fuels to contain 10 percent ethanol by volume.
Type of requirement: Fuel registration and health-effects testing;
Description: The Clean Air Act and EPA regulations require fuel
manufacturers and importers to register new fuels and fuel additives
prior to introducing them into commerce. Registration involves
providing a chemical description of the product and certain technical,
marketing, emissions, and health-effects information, which EPA uses
to identify likely combustion and evaporative emissions that may pose
concerns about health risk. However, EPA regulations allow registrants
to submit evidence that prior health-effects testing is reasonably
comparable to the results expected for a new fuel or fuel additive.
Type of requirement: Reformulated gasoline certification;
Description: The Clean Air Act requires reformulated gasoline to be
sold in areas of the country with the worst smog pollution, which
include large areas of California and the Northeast. Reformulated
gasoline must meet specific EPA emission standards. Fuel manufacturers
must use an EPA-approved model to certify that new reformulated fuels
meet applicable standards.
Source: GAO analysis of EPA information.
[End of table]
Although intermediate ethanol blends higher than E15 would need to
meet all of these requirements, E15 has already partly met the first
two. EPA partially granted a fuel waiver allowing E15 for use in model
year 2001 and newer automobiles, and EPA officials told us the agency
has no plans to revise its regulations for certifying detergents for
E15 because it currently has not determined any detergent-related
issues different from E10. According to EPA officials, the remaining
two requirements have not yet been completed for E15 but are in the
process of being addressed, specifically:
* Health-effects testing similar to that performed for E10 could take
2 years or more to register intermediate ethanol blends, depending on
variables such as the availability of testing laboratories. According
to EPA officials, EPA received information on February 18, 2011, from
an ethanol industry representative contending that the health-effects
testing previously performed for E10 is an adequate substitute for
E15. According to recent Congressional testimony, EPA expects to
finish reviewing the information by the middle of 2011.[Footnote 30]
* EPA would have to update the regulations for its reformulated
gasoline program, which do not currently allow fuel manufacturers to
certify batches of gasoline containing greater than 10 percent ethanol
by volume. In November 2010, EPA proposed a rule that would, among
other things, update the model to allow for reformulated gasoline
containing up to 15 percent ethanol by volume.[Footnote 31] According
to EPA officials, EPA expects to issue a final rule sometime in 2011.
In addition to federal regulations, many states have established
regulations or statutes related to transportation fuels, according to
a 2010 industry report.[Footnote 32] In particular, many state
regulations or statutes contain references to specific industry
standards for fuel published by a recognized standards development
organization, including ASTM International and the National Institute
of Standards and Technology (NIST), according to the report and
knowledgeable NIST officials we interviewed. These standards, however,
are only relevant to E10, and neither organization has published any
standards related to the use of intermediate ethanol blends up to E85.
Therefore, before allowing intermediate ethanol blends into commerce,
the states that reference existing ASTM International or NIST
standards would have to either (1) enact new statutes or regulations
that no longer reference the existing standards or (2) wait for ASTM
International or NIST to update their standards related to
intermediate ethanol blends. Either option could take more than a year
to implement, according to knowledgeable officials from NIST and the
California Air Resources Board.
OSHA Regulations Prohibit Using Most Existing Dispensing Equipment
with Intermediate Blends, and Research Suggests Compatibility Issues:
In general, federal safety standards do not allow ethanol blends over
E10 to be dispensed with existing equipment at most retail fueling
locations. Specifically, OSHA requires that all equipment used to
dispense gasoline be certified for safety by a nationally recognized
testing laboratory. UL, the only such laboratory that has developed
standards for certifying dispensing equipment, did not publish safety
standards specifically for intermediate ethanol blends until August
2009,[Footnote 33] and no UL-certified dispensing equipment was
available for use with these blends until 2010.[Footnote 34]
Dispensing equipment manufactured earlier has been certified for
blends up to E10, and UL does not recertify equipment that has already
been certified to an existing UL standard, according to several UL
representatives. Moreover, UL does not retroactively certify
manufactured or installed equipment to new safety standards because it
cannot monitor whether the equipment has been modified by, for
example, aging or maintenance. As a result, according to knowledgeable
OSHA officials and several UL representatives, the vast majority of
existing retail dispensers in the United States are not approved for
use with intermediate ethanol blends under OSHA's safety regulations.
Until recently, UL and OSHA were each exploring ways to allow fuel
retailers to use existing dispensing equipment with intermediate
ethanol blends while still meeting OSHA's safety regulations. For
example, in a February 2009 announcement, UL stated that existing
dispensing equipment--certified for use with E10--could be used with
blends containing up to 15 percent ethanol, based on data the company
had collected. According to the announcement, UL did not find any
significant incremental risk of damage to existing equipment between
E10 and fuels with a maximum of 15 percent ethanol. In addition,
several OSHA officials told us in November 2010 that the agency was at
the early stages of evaluating several options--such as implementing a
grace period on planned enforcement activities or developing an
enhanced inspection and maintenance program for a limited time--that
would allow existing dispensing equipment to be approved for use with
E15.
However, results from federally sponsored research indicate potential
problems with the use of intermediate ethanol blends with some
existing dispensing equipment. A DOE-commissioned report prepared by
UL was issued in November 2010 on the compatibility of intermediate
blends with new and used dispensing equipment certified for blends up
to E10.[Footnote 35] According to the report, although various
components generally performed well with the testing fluid, some of
the components tested (including valve assemblies and nozzles)
demonstrated a reduced level of safety, performance, or both when
exposed to the testing fluid. This was mostly due to the failure of
certain nonmetal components, such as gaskets and seals. In March 2011,
DOE's ORNL published a report stating that, although metal samples
experienced very little corrosion, all elastomer samples (such as
fluorocarbon, nitrile rubber, and polyurethane) exhibited some level
of swelling and the potential to leak when exposed to testing fluids.
[Footnote 36]
This research has led UL and OSHA to reconsider support for the use of
existing dispensing equipment with intermediate ethanol blends. In a
December 2010 announcement based on this research, UL stated that it
advised against the use of intermediate ethanol blends with dispensing
equipment certified for E10 and, instead, recommended the use of new
equipment designed and certified for use with intermediate ethanol
blends. The announcement stated that UL was particularly concerned
that blends over E10 could lead to the degradation of gaskets, seals,
and hoses and could cause leaks. In addition, several OSHA officials
told us that, as a result of this research, the agency is re-
evaluating its plan to explore ways to allow fuel retailers, under
certain conditions, to use existing dispensing equipment with
intermediate blends.
However, OSHA's position on this issue remains unclear, and it is
uncertain when the agency will establish a definitive position. On the
one hand, according to several OSHA officials we talked with, the vast
majority of existing retail dispensers in the United States are not
approved for use with intermediate ethanol blends under OSHA's safety
regulations. On the other hand, these officials also stated that OSHA
is still developing its position on the use of existing dispensing
equipment with intermediate blends. While these officials said that
strict enforcement of current OSHA requirements for dispensing
equipment seems more like an option now, they did not provide any time
frames for when OSHA would finalize its position, nor how it planned
on communicating a decision to fuel retailers and other interested
parties.
The Compatibility of Many UST Systems with Intermediate Blends Is
Unclear:
According to our discussions with knowledgeable federal officials and
several industry association representatives, the compatibility of
many existing UST systems with intermediate ethanol blends is unclear
for two main reasons--many fuel retailers have older equipment and
lack records, and recent federally sponsored research indicates
potential problems with the use of intermediate blends. Retail fueling
outlets generally have two or more UST systems, according to industry
association representatives, and each system contains a large number
of components and materials. According to EPA documentation and
knowledgeable EPA officials within the Office of Underground Storage
Tanks, many existing USTs range in age from 1 to 40 years and contain
components certified to a range of UL standards, which typically have
evolved over time, or have been approved by the manufacturer for
varying uses.[Footnote 37] Because these systems are buried
underground, visually inspecting some components for compatibility is
impossible without excavating them. Thus, fuel retailers, along with
state and federal inspectors, primarily rely on recordkeeping to
verify UST system compatibility with the fuel stored in them.
However, inadequate recordkeeping may make it difficult for retailers
with older stations to verify UST system compatibility with
intermediate ethanol blends. For example, according to EPA
documentation, knowledgeable EPA officials, and a representative from
the Society of Independent Gasoline Marketers of America, many fuel
retailers do not have complete records of all their UST equipment,
particularly those with stations having several previous owners.
Furthermore, many installation companies and component manufacturers
may have gone out of business, according to EPA documentation, which
could make verification particularly challenging. Recognizing this
issue, EPA announced in November 2010 that it plans to issue guidance
that would clarify its compatibility requirements for UST systems
storing ethanol blends higher than 10 percent.[Footnote 38] In its
announcement, EPA also solicited public feedback on the extent of the
challenges fuel retailers face in demonstrating existing UST systems'
compatibility with intermediate ethanol blends and on alternatives
that would sufficiently protect human health and the environment. EPA
officials said the agency expects to issue guidance sometime in 2011.
Determining compatibility may be important because ongoing federal
research indicates potential problems with the use of intermediate
ethanol blends with some UST components. For example, according to a
recent DOE report and additional results from DOE research, certain
elastomers, rubbers, and other materials used in UST systems may
degrade or swell excessively when exposed to intermediate ethanol
blends, becoming ineffective as gaskets or seals.[Footnote 39] DOE
testing also indicates that a pipe-thread sealant commonly used in UST
piping in the past is not compatible with any ethanol blends, which
raises concerns that these components may leak when exposed to ethanol-
-even in lower blends, such as E10. According to the report, DOE
expects to conclude this research in the near future. In addition, DOE
officials said they do not expect to conduct additional research on
UST components or equipment.
However, important gaps exist in current federal research efforts in
this area. For example, several officials within EPA's Office of
Underground Storage Tanks told us that DOE's research efforts to date
have focused only on testing materials (e.g., elastomers and rubbers)
and not actual components and equipment (e.g., valves and tanks) found
in UST systems. In addition, according to EPA officials, while the
agency plans to study the compatibility of E15 with UST systems, this
research will be based on interviews with experts and not on actual
testing of materials, components, or equipment. Moreover, EPA
officials characterized this research effort as more of a "modeling"
or scoping effort to determine the extent of any potential problems.
EPA officials stated that the ability to determine the compatibility
of legacy equipment with intermediate blends is limited. Nevertheless,
they acknowledged that additional research will be necessary to
facilitate a transition to storing intermediate ethanol blends in UST
systems, including the suitability of specific UST components with
intermediate blends. EPA officials told us that they are working with
industry officials and federal partners to understand the impact of
intermediate blends in UST systems. However, to date EPA has not
developed a plan to undertake such research.
It is also unclear whether leak-detection equipment will properly
detect leaks of intermediate ethanol blends. According to
knowledgeable EPA officials and UL representatives, UL has not
developed performance standards for leak-detection equipment used in
UST systems. EPA officials explained that, while some leak-detection
equipment has been approved by the manufacturer for the compatibility
of its materials with intermediate ethanol blends, EPA is not certain
whether the ethanol content of the fuel, in general, would affect the
operability of this equipment. To address this potential problem, EPA
is sponsoring research, in collaboration with manufacturers and other
stakeholders, to determine which of these devices works properly with
ethanol. EPA officials currently expect test results to be available
by the end of 2011.
Retailers May Face Significant Costs and Risks in Selling Intermediate
Blends:
According to several industry associations representing various
groups, such as fuel retailers and refiners, many fuel retailers may
face significant costs and risks in selling intermediate ethanol
blends. According to these industry representatives, retailers make
very little money selling fuel--for example, the national average
profit from selling gasoline last year was 9 cents per gallon,
according to industry data. Most retailers make most of their profit
selling merchandise such as food, beverages, and tobacco products,
according to these industry representatives, and gasoline is sold
below cost in some markets to attract customers to buy more profitable
goods. As a result, according to several industry representatives,
most retailers do not upgrade their fuel-storage and -dispensing
equipment without a significant market opportunity.
For these fuel retailers, the prospect of selling intermediate ethanol
blends presents several potential challenges. The first is cost. Some
fuel retailers may have to spend hundreds of thousands of dollars to
upgrade their equipment to store and dispense intermediate ethanol
blends, for the following reasons:
* Under current OSHA regulations, most fuel retailers will need to
replace at least one dispenser system to sell intermediate ethanol
blends. According to estimates from EPA and several industry
associations, installing a new dispenser system compatible with
intermediate ethanol blends will cost over $20,000.[Footnote 40]
According to some industry association representatives, a typical fuel
retailer has four dispensers and, therefore, would face costs
exceeding $80,000 to upgrade an entire retail facility.
* Fuel retailers with inadequate records of their UST systems may have
to upgrade certain UST components to demonstrate compatibility with
intermediate ethanol blends. According to some industry association
representatives and information from DOE's NREL, upgrading some
components would be less expensive than installing an entirely new UST
system. Taking this into consideration, EPA estimated an average cost
of $25,000 per retail facility to make the needed changes to
underground storage components.[Footnote 41] However, EPA cautioned
that this cost scenario is very speculative, given that the costs of
modifying underground components could vary greatly. According to EPA
officials, most tank owners will be able to demonstrate compatibility
by replacing certain portions of the UST system that are easily
accessible (such as submersible pumps, tank probes, pipe dope, and
overfill valves). The costs for these upgrades, including labor, can
be as low as a few thousand dollars but may increase if more extensive
upgrades are required.
* According to EPA and industry estimates, the total cost of
installing a new single-tank UST system compatible with intermediate
ethanol blends is more than $100,000. In addition to the high costs,
some industry association representatives stated that fuel retailers
who have recently installed new UST systems may be particularly
reluctant to replace them, especially since UST warranties can last
for several decades, and the useful life of these systems can be even
longer. In Florida, for example, fuel retailers were required to
replace or upgrade all single-wall USTs by December 31, 2009.
A second potential challenge consists of financial and logistical
limitations on the types of fuel a retailer may be able to sell.
According to representatives from several industry associations, most
retail fueling locations have only two UST systems, and many fuel
retailers cannot install additional UST systems due to space
constraints, permitting obstacles, or cost.[Footnote 42] Currently,
fuel retailers with two UST systems can sell three grades of gasoline:
regular, midgrade, and premium. To accomplish this, they typically use
one of their tanks to store regular gasoline and the other for
premium, both of which are preblended with up to 10 percent ethanol.
They then use their dispensing equipment to blend fuel from both tanks
into midgrade gasoline. If fuel retailers with two UST systems want to
sell intermediate ethanol blends, however, they may face certain
limitations. For example, fuel retailers with two UST systems who want
to sell regular, midgrade, and premium gasoline could use the tanks to
store regular and premium grades of an intermediate blend, such as
E15. However, since EPA has only allowed E15 for use in model year
2001 and newer automobiles, these retailers would not be able to sell
fuel to consumers for use in older automobiles and nonroad engines.
A third potential challenge relates to legal uncertainty among
industry groups, who are concerned they could be held liable for
selling intermediate ethanol blends. For example, according to
representatives we interviewed from several industry associations,
fuel retailers have received conflicting or confusing messages from
different authorities as to whether existing dispensing equipment can
be lawfully used with intermediate ethanol blends. According to these
industry representatives, this confusion is partly the result of UL's
2009 announcement supporting the use of blends containing up to 15
percent ethanol with existing dispensing equipment.[Footnote 43]
However, even if state or local officials--such as fire marshals--
approve the use of intermediate blends with existing dispensers, the
retailers selling these blends would still be effectively ignoring
OSHA's regulations, which require the use of equipment that has been
certified for safety by a nationally recognized testing laboratory,
such as UL. As a result, several industry representatives raised
concerns that fuel retailers could expose themselves to lawsuits for
negligence and invalidate important business agreements that may
reference these safety requirements, such as tank insurance policies,
state tank-fund policies, and business loan agreements.
In addition, according to representatives from several industry
associations we interviewed, many fuel retailers are concerned that
consumer misfueling--using intermediate ethanol blends in nonapproved
engines--could raise liability issues, especially if the misfueling is
associated with negative outcomes, such as diminished engine
performance and safety problems. Because EPA has only allowed E15 for
use in model year 2001 and newer automobiles, representatives from
several industry associations stated that consumers may not be aware
of the distinction between approved and nonapproved engines, or they
may be confused about which fuel to use, thus complicating their
experience at retail fueling outlets and increasing opportunities for
misfueling. According to some industry and state government
representatives, since many automobile manufacturer warranties do not
cover the use of intermediate ethanol blends, even for the model year
vehicles approved by EPA for E15, consumers could be held responsible
for the cost of any repairs attributed to the use of E15.
One proposed method of mitigating the potential for misfueling is to
label fuels at retail outlets. In November 2010, EPA issued proposed
labeling requirements for ethanol blends as high as E15.[Footnote 44]
According to its proposed requirements, EPA is coordinating with the
Federal Trade Commission, which in March 2010 proposed labeling
requirements for ethanol blends containing greater than 10 percent and
less than 70 percent ethanol by volume.[Footnote 45] However,
representatives from several industry associations have raised
concerns that labeling will not adequately address potential
misfueling. For example, some industry association representatives
stated that some consumers will not understand the label, or the label
might get lost among the other labels commonly found on dispensers.
Furthermore, industry association representatives said some consumers
will intentionally misfuel their automobiles if intermediate ethanol
blends are cheaper. For example, industry association representatives
stated some of their members have witnessed consumers using E85 in
nonflex-fuel vehicles, presumably because E85 is cheaper than E10.
Federally Sponsored Studies Are Evaluating Effects of Using
Intermediate Ethanol Blends in Automobiles and Nonroad Engines:
With the possibility of introducing intermediate ethanol blends in the
nation's motor-fuel supply, DOE began to study the effects of these
fuels in automobiles and nonroad engines in 2007. Specifically, in
March 2007, DOE's Office of Energy Efficiency and Renewable Energy
convened a workshop of experts to evaluate progress and develop a
strategy for meeting the Bush Administration's "20 in 10" initiative.
The goal of the initiative was to reduce U.S. gasoline usage by 20
percent over the next 10 years through increased use of alternative
fuels and improved fuel economy. One conclusion from the workshop was
that increasing the ethanol content in motor fuel to E15 or E20 would
be the most effective strategy over the short term. However, based on
a review of existing research, DOE's ORNL found that almost no data
existed on the effects of E15 on automobiles, while only limited data
existed on the effects of E20.[Footnote 46]
To address this data gap, DOE began working with EPA, the Coordinating
Research Council, Inc. (CRC), and other groups in 2007 to develop a
list of research projects to test the effects of E15 and E20 on
automobiles and nonroad engines.[Footnote 47] DOE, EPA, and CRC have
provided about $51 million in funding (for fiscal years 2007 through
2010) for ten research projects (see table 2).[Footnote 48]
Table 2: Status of DOE-and EPA-Sponsored Research on Effects of
Intermediate Ethanol Blends in Automobiles and Nonroad Engines:
Research on automobiles:
DOE project number[A]: V1;
Description: Short-term "quick-look" emissions study;
Status (as of March 1, 2011): Completed. Published reports:
* NREL, ORNL, Effects of Intermediate Ethanol Blends on Legacy
Vehicles and Small Non-Road Engines, Report 1 - Updated (Golden,
Colo., February 2009);
* Keith Knoll, et al., "Effects of Mid-Level Ethanol Blends on
Conventional Vehicle Emissions" (paper presented at SAE 2009
Powertrains Fuels and Lubricants Meeting, San Antonio, Tex., November
2009).
DOE project number[A]: V2;
Description: Detailed exhaust emissions study;
Status (as of March 1, 2011): Ongoing. Expected date for completion of
testing is May 2011. Expected date for issuing a report is October
2011.
DOE project number[A]: V3;
Description: Evaporative emissions study;
Status (as of March 1, 2011): Completed. Published reports:
* Harold Haskew & Associates, Inc., Evaporative Emissions from In-Use
Vehicles: Test Fleet Expansion (CRC E-77-2b) Final Report EPA-420-R-10-
025, a technical report prepared for the EPA, October 2010;
* CRC, Study to Determine Evaporative Emission Breakdown, Including
Permeation Effects and Diurnal Emissions, Using E20 Fuels on Aging
Enhanced Evaporative Emissions Certified Vehicles (Alpharetta, Ga.,
December 2010).
DOE project number[A]: V4;
Description: Full-life emissions study;
Status (as of March 1, 2011): Ongoing. Testing completed in December
2010. Expected date for issuing a report is summer 2011.
DOE project number[A]: V5;
Description: Drivability study;
Status (as of March 1, 2011): Ongoing. Expected date for completion of
testing is March 2011. Expected date for issuing a report is August
2011.
DOE project number[A]: V6;
Description: Fuel-system materials compatibility study;
Status (as of March 1, 2011): Ongoing. Expected date for issuing a
report is summer 2011.
Research on nonroad engines:
DOE project number[A]: SE1;
Description: "Quick-look" emissions and temperature study;
Status (as of March 1, 2011): Completed. Published report: NREL, ORNL,
Effects of Intermediate Ethanol Blends.
DOE project number[A]: SE2;
Description: Full useful-life emissions and durability study;
Status (as of March 1, 2011): Completed. Published report: NREL, ORNL,
Effects of Intermediate Ethanol Blends.
DOE project number[A]: SE3;
Description: Chainsaw safety study;
Status (as of March 1, 2011): Canceled.
DOE project number[A]: SE4;
Description: Marine and snowmobile durability, emissions, and
drivability study;
Status (as of March 1, 2011): Ongoing. Expected date for completion of
testing is March 2011 (for marine engines) and August 2011 (for
snowmobiles). Expected date for issuing a report is October 2011.
Source: GAO analysis of DOE, EPA, and CRC information.
[A] CRC project numbers associated with these efforts include E-77
(for V3), E-87 (for V4), E-89 (for V2), CM-138 (for V5), and AVFL-15
(for V6).
[End of table]
Of the six federally sponsored projects on automobiles, four projects
are ongoing and are expected to be completed in 2011. Two projects
have been completed--Project V1, which looked primarily at the effects
of E15 and E20 on tailpipe emissions from automobiles, and Project V3,
which looked primarily at the effects of E20 on evaporative emissions
from automobiles. According to published reports, project findings
included the following:
* Exhaust emissions. According to the 2009 DOE report for Project V1,
regulated tailpipe emissions from 16 automobiles (including model
years ranging from 1999 to 2007) remained largely unaffected by the
ethanol content of the fuel.[Footnote 49] Increasing the ethanol
content of the fuel, however, resulted in increased emission of
ethanol and acetaldehyde. DOE has also released all of the testing
data from Project V4, which is looking at emissions testing and aging
on 82 automobiles (including model years ranging from 2000 to 2009).
EPA based its decision to allow E15 for use in certain automobiles
partly on these results. According to EPA's decision, model year 2000
and older automobiles do not have the sophisticated emissions control
systems of more recently manufactured automobiles, and there is an
engineering basis to believe they may experience emissions increases
if operated on E15.
* Fuel economy. According to DOE's report for Project V1, ethanol has
about 67 percent of the energy density of gasoline on a volumetric
basis. As a result, automobiles running on intermediate ethanol blends
exhibited a loss in fuel economy commensurate with the energy density
of the fuel. Specifically, when compared to using gasoline containing
no ethanol, the average reduction in fuel economy was 3.7 percent
using E10, 5.3 percent using E15, and 7.7 percent using E20.
* Catalyst temperatures. According to the 2009 report for Project V1,
9 of the 16 automobiles adjusted their air-to-fuel ratio at full power
to compensate for the increased oxygen content in the ethanol-blended
fuel. In these cases, the catalyst temperatures at equivalent
operating conditions were lower or unchanged with ethanol. Seven of
the 16 tested automobiles failed to adequately adjust their air-to-
fuel ratio for the increase in oxygen with E20 fuel compared with 100
percent gasoline at full power. As a result, catalyst temperatures for
these automobiles at full power were between 29ēC and 35ēC higher with
E20 relative to gasoline. According to the report, the long-term
effect of this temperature increase on catalyst durability is unknown
and requires further study.
* Evaporative emissions. According to its 2010 report for Project V3,
CRC found that intermediate ethanol blends may increase evaporative
permeation emissions--fuel-related emissions that do not come from the
tailpipe--in older automobiles. CRC's report was not based on
statistically significant comparisons, but it noted certain trends--
for example, compared to pure gasoline, E10 and E20 were associated
with increased evaporative emissions.
Of the four federally sponsored projects on nonroad engines, one (SE4)
is ongoing, and one (SE3) has been canceled. According to DOE, the
objective of Project SE4 is to determine the effects of E15 on the
safety, performance, and emissions of several popular marine and
snowmobile engines. The objective of Project SE3 was to assess the
effects of intermediate ethanol blends, including E15, on the safety
and performance of handheld small nonroad engines, including
chainsaws. However, according to DOE officials, the department decided
in the summer of 2010 to defer Project SE3 indefinitely because the
Outdoor Power Equipment Institute--an industry association
representing small nonroad engine manufacturers and DOE's major
partner on the project--declined to submit a proposal for conducting
the testing. According to one official with the Institute, this
decision was based, in part, on EPA's indication that it would not
allow E15 for use in small nonroad engines.
The two federally sponsored projects on nonroad engines that have been
completed--SE1 and SE2--were not conclusive, but indicated potential
problems with the use of intermediate ethanol blends in small nonroad
engines. Project SE1 was a pilot study of six commercial and
residential small nonroad engines, and Project SE2 tested 22 engines
over their full useful lives. According to the 2009 DOE report, the
projects found that with increasing levels of ethanol:[Footnote 50]
* For all engines tested, exhaust and engine temperatures generally
increased.
* Three handheld trimmers had higher idle speeds and experienced
unintentional clutch engagement, which DOE laboratory officials
identified as a potential safety concern that can be mitigated in some
engines by adjusting the carburetor.
* For all engines tested, emissions of nitrogen oxides increased and
emissions of carbon monoxide decreased, while emissions of
hydrocarbons decreased in most engines, but increased for some.
EPA cited results from Projects SE1 and SE2 in its decision to not
allow the use of E15 in nonroad engines and other equipment.
Specifically, in its October 2010 decision, EPA stated that the
results of these projects indicated reasons for concern with the use
of E15 in nonroad engines, particularly regarding long-term exhaust
and evaporative emissions durability and materials compatibility.
Moreover, the agency stated that the application for use of E15 did
not provide information to broadly assess the nonroad engine and
vehicle sector. EPA concluded that since there are important
differences in design between the various types of nonroad engines,
and since the agency was not aware of other information that would
allow it to fully assess the potential impacts of E15 on the emission
performance of nonroad products, it could not allow the use of E15 in
these engines.
Due to ongoing litigation, we did not evaluate the adequacy of these
federally sponsored projects. In November 2010, several trade groups
representing the oil and gas sector and the food and livestock
industries filed a lawsuit with the U.S. Court of Appeals for the
District of Columbia Circuit challenging EPA's E15 waiver decision.
According to the plaintiffs' statement filed in January 2011, one key
issue in the lawsuit is whether EPA acted arbitrarily, capriciously,
and in excess of its statutory authority by relying on data that do
not provide adequate support for its conclusions, while ignoring
extensive data contradicting its position. In addition, in December
2010, several trade groups representing automobile and small-engine
manufacturers filed another lawsuit with the U.S. Court of Appeals for
the District of Columbia Circuit challenging EPA's E15 waiver
decision. The initial court documents did not provide details on these
groups' rationale for challenging EPA's waiver decision.
In addition to these federally sponsored projects, some nonfederal
organizations are conducting research on the effects of intermediate
ethanol blends in automobiles. Appendix II provides a description of
these organizations and a list of some of their published research. We
did not evaluate the results of these studies.
Conclusions:
The RFS calls for increasing amounts of biofuels to be blended in the
nation's transportation fuel supply, including up to 15 billion
gallons of ethanol made from corn starch and potentially billions of
gallons of additional ethanol made from cellulosic sources. EPA is
responsible for establishing and implementing regulations to ensure
that the nation's transportation fuel supply contains the volumes of
biofuels required by the RFS. The agency is also tasked with ensuring
that new fuels do not cause or contribute to noncompliance with
existing emissions standards when used in automobiles and nonroad
products. EPA recently allowed an intermediate ethanol blend, E15, for
use in model year 2001 and newer automobiles, after determining that
it would not cause these automobiles to be out of compliance with
emissions standards.
EPA, along with OSHA, is also responsible for ensuring that fuels are
compatible and safe for use with infrastructure at fueling locations.
However, the effects of intermediate ethanol blends on key components
of the nation's retail fueling infrastructure--such as gaskets and
seals in dispensing equipment and UST systems--are not fully
understood. A recently published DOE report found that materials
commonly used in these gaskets and seals can swell when exposed to
certain intermediate ethanol blends, potentially causing leaks.
In the case of fuel-dispensing equipment, some newer equipment meets
OSHA safety regulations for use with intermediate ethanol blends, as
this equipment has been tested and certified by UL for compatibility.
Most existing equipment at retail fueling locations in the United
States, however, is not approved for use with intermediate blends.
Until recently, OSHA had been exploring ways to allow fuel retailers
to use existing equipment with intermediate blends while still meeting
OSHA's safety requirements. In light of the recent DOE-sponsored
research, OSHA officials are re-evaluating the use of existing
equipment with intermediate blends. However, the agency has not
clarified when it will make an official decision. Without
clarification from OSHA on how its safety regulations on fuel-
dispensing equipment should be applied to fuel retailers selling
intermediate ethanol blends, the retail fuel industry faces
uncertainty in how it can provide such blends to consumers while
meeting OSHA safety regulations.
In the case of UST systems, fuel retailers can purchase new equipment--
certified by UL or the equipment manufacturer for use with
intermediate ethanol blends--to meet EPA regulations for
compatibility. However, many existing UST systems may not be fully
compatible with intermediate blends, and inadequate records may make
it difficult for many retailers to verify the compatibility of their
UST systems. Due to these concerns, and in light of the recent DOE-
sponsored research, EPA is in the process of issuing guidance to
clarify how its UST regulations apply to the use of intermediate
blends. While DOE is conducting studies on the compatibility of UST
materials with intermediate blends, and while EPA plans to conduct a
study limited to experts' views on the subject, EPA officials have
acknowledged that additional research, including research on the
suitability of specific UST components with intermediate blends, will
be needed to facilitate a transition to storing intermediate ethanol
blends. Without this effort, the retail fuel industry faces
uncertainty in how it can provide intermediate blends to consumers.
Recommendations for Executive Action:
We are making the following two recommendations:
* To reduce uncertainty about the applicability of federal safety
regulations, we recommend that the Secretary of Labor direct the
Assistant Secretary for Occupational Safety and Health to issue
guidance clarifying how OSHA's safety regulations on fuel-dispensing
equipment should be applied to fuel retailers selling intermediate
ethanol blends.
* To reduce uncertainty about the potential environmental impacts of
storing intermediate ethanol blends at retail fueling locations, we
recommend that the Administrator of EPA determine what additional
research, such as research on the suitability of specific UST
components, is necessary to facilitate a transition to intermediate
ethanol blends, and work with other federal agencies to develop a plan
to undertake such research.
Agency Comments and Our Evaluation:
We provided copies of our draft report to EPA, the Department of
Labor, DOE, and DOT for comment. In written comments, EPA generally
agreed with the information and findings but expressed concern about
our recommendation (as worded in the draft report). Specifically, EPA
stated that while it believed a targeted approach to conducting
additional research will be important to accommodate the move to
higher ethanol blends, there will always be uncertainty concerning the
compatibility of legacy UST equipment with intermediate ethanol blends
given the multitude of factors involved (e.g., the age and prior use
of UST equipment, and the number of UST system components). EPA stated
that it planned to continue to work with other federal agencies and
stakeholders to assist tank owners in safely transitioning to new
fuels, and that additional research may be necessary to facilitate
that transition. We agree with this characterization of the issue and
have revised the draft recommendation to reflect EPA's suggestions. In
addition, in written comments, the Department of Labor concurred with
our findings and our recommendation. EPA's written comments are
reprinted in appendix III, and the Department of Labor's written
comments are reprinted in appendix IV. EPA and the Department of Labor
also provided technical clarifications, which we incorporated as
appropriate. DOE and DOT did not provide formal written comments but
provided technical clarifications, which we incorporated as
appropriate.
As agreed with your offices, unless you publicly announce the contents
of the report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to the
appropriate congressional committees; the Administrator of EPA;
Secretaries of Energy, Transportation, and Labor; and other interested
parties. In addition, this report will be available at no charge on
the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff members have any questions about this report,
please contact me at (202) 512-3841 or ruscof@gao.gov. Contact points
for our Offices of Congressional Relations and Public Affairs may be
found on the last page of this report. GAO staff who made major
contributions to this report are listed in appendix V.
Signed by:
Frank Rusco:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Scope and Methodology:
To determine the challenges associated with transporting additional
volumes of ethanol to wholesale markets to meet Renewable Fuel
Standard (RFS) requirements, we interviewed relevant government,
industry, academic, and research officials. We also reviewed relevant
government reports and studies, industry reports, and academic and
research literature. In particular, we asked a nonprobability sample
of knowledgeable stakeholders, among other things, to discuss the
challenges, if any, associated with transporting additional volumes of
ethanol to wholesale markets. We also asked these stakeholders to
identify key studies and other knowledgeable stakeholders on this
topic. We selected these stakeholders using a "snowball sampling"
technique, whereby each stakeholder we interviewed identified
additional stakeholders and stakeholder organizations for us to
contact. Specifically, based, in part, on our recent work, we first
interviewed stakeholders from the Environmental Protection Agency
(EPA); the Departments of Agriculture (USDA), Energy (DOE), and
Transportation (DOT); the Renewable Fuels Association; the American
Petroleum Institute; the Alliance of Automobile Manufacturers; the
Association of Oil Pipe Lines; and the Outdoor Power Equipment
Institute.[Footnote 51] We then used feedback from these interviews to
identify additional stakeholders to interview.[Footnote 52] Over the
course of our work, we interviewed officials from the following
federal agencies: DOE Office of the Biomass Program, DOE Office of
Vehicle Technologies Program, DOT Research and Innovative Technology
Administration, DOT Pipeline and Hazardous Materials Safety
Administration, DOT Federal Railroad Administration, DOT Federal Motor
Carrier Safety Administration, DOT Maritime Administration, EPA Office
of Research and Development, EPA Office of Solid Waste and Emergency
Response, EPA Office of Transportation and Air Quality, USDA
Agricultural Research Service, and USDA Economic Research Service. We
also interviewed state officials from the Minnesota State Fire Marshal
Division and the Office of North Carolina State Fire Marshal. We
interviewed industry representatives from the following organizations:
the American Petroleum Institute, the Association of American
Railroads, the Association of Oil Pipe Lines, Growth Energy,
Independent Fuel Terminal Operators Association, Kinder Morgan, the
National Petrochemical and Refiners Association, the National Tank
Truck Carriers, American Trucking Associations, and the Renewable
Fuels Association. We also made several attempts to speak with
representatives from an industry association representing barge
operators but were not able to schedule an interview during the time
frame of our audit. Finally, we interviewed academic and research
stakeholders from Carnegie Mellon University, the Energy Policy
Research Foundation, the James A. Baker III Institute for Public
Policy of Rice University, the Pipeline Research Council
International, and TRC Energy Services. During these interviews,
knowledgeable stakeholders identified a number of studies related to
our work. Of these studies, we identified the following three studies
as being directly relevant to our scope of analysis: (1) the National
Commission on Energy Policy's Task Force on Biofuels Infrastructure,
(2) EPA's Renewable Fuel Standard Program (RFS2) Regulatory Impact
Analysis, and (3) DOE's Report to Congress: Dedicated Ethanol Pipeline
Feasibility Study.[Footnote 53] We examined these three studies and
determined that they are sufficiently reliable for our purposes based
on interviews with contributors to these studies, comparisons of
estimates with other sources, and checking selected calculations.
To determine the challenges associated with selling intermediate
ethanol blends at the retail level, we reviewed relevant
presentations, analyses, reports, and other documents from various
federal and state agencies, federal research laboratories, and
industry associations, including the American Petroleum Institute and
the National Association of Convenience Stores. We also selected a
nonprobability sample of knowledgeable stakeholders to interview using
the same "snowball sampling" technique described for our first
objective. In particular, we asked these stakeholders, among other
things, to discuss the challenges, if any, associated with selling
intermediate ethanol blends at the retail level. We also asked these
stakeholders to identify key studies and other knowledgeable
stakeholders on this topic. Over the course of our work, we
interviewed officials from the following federal laboratories and
agencies: DOE National Renewable Energy Laboratory (NREL), DOE Oak
Ridge National Laboratory (ORNL), DOE Office of the Biomass Program,
DOE Office of Vehicle Technologies Program, EPA Office of Research and
Development, EPA Office of Transportation and Air Quality, EPA Office
of Underground Storage Tanks, the Department of Labor's Occupational
Safety and Health Administration, the National Institute of Standards
and Technology, USDA Agricultural Research Service, and USDA Economic
Research Service. We also interviewed state officials from the
California Air Resources Board, the Minnesota State Fire Marshal
Division, Northeast States for Coordinated Air Use Management,
[Footnote 54] and the Office of North Carolina State Fire Marshal. We
interviewed representatives from the following industry associations:
Growth Energy, the Renewable Fuels Association, the American Petroleum
Institute, the National Association of Convenience Stores, the Society
of Independent Gasoline Marketers of America, the National Association
of Truck Stop Operators, the Petroleum Marketers Association of
America, and the National Petrochemical and Refiners Association.
Finally, we interviewed stakeholders from the following research and
standards development organizations: ASTM International, Sierra
Research, Inc., and Underwriters Laboratories (UL). We also conducted
site visits to the research centers responsible for coordinating
federal studies on the effects of intermediate ethanol blends on
materials and components used in retail fuel storage and dispensing
equipment. Specifically, we visited NREL facilities in Golden,
Colorado; and ORNL facilities near Knoxville, Tennessee. During these
site visits, we interviewed researchers conducting studies on the
effects of intermediate ethanol blends on materials and components
used in retail fuel-storage and -dispensing equipment. We asked these
researchers to discuss available test results and the status of their
testing efforts for these studies. We also toured some of the research
facilities where testing was being conducted for these studies.
To examine research by federal agencies into the effects of
intermediate ethanol blends on the nation's automobiles and nonroad
engines, we reviewed relevant presentations, analyses, reports, and
other documents from various federal and state agencies; NREL; ORNL;
and industry associations, including the American Coalition for
Ethanol, the National Marine Manufacturers Association, and the
Outdoor Power Equipment Institute. In addition, we reviewed relevant
studies and reports from academic groups and private research
organizations, including the Coordinating Research Council, Inc.,
Minnesota State University, Mankato; and the Rochester Institute of
Technology. We also selected a nonprobability sample of knowledgeable
stakeholders to interview using the same "snowball sampling" technique
described for our first objective. In particular, we asked these
stakeholders, among other things, to identify research by federal
agencies and others into the effects of intermediate ethanol blends on
the nation's automobiles and nonroad engines. Over the course of our
work, we interviewed officials from the following federal agencies and
laboratories: DOE Office of Vehicle Technologies Program, NREL, ORNL,
EPA Office of Research and Development, and EPA Office of
Transportation and Air Quality. We also interviewed state officials
from the California Air Resources Board and Northeast States for
Coordinated Air Use Management. We interviewed representatives from
the following industry associations: the American Petroleum Institute,
Growth Energy, the Renewable Fuels Association, the Alliance of
Automobile Manufacturers, the Association of International Automobile
Manufacturers, Inc.,[Footnote 55] the Outdoor Power Equipment
Institute, the Engine Manufacturers Association, the National Marine
Manufacturers Association, and the International Snowmobile
Manufacturers Association. Finally, we interviewed stakeholders from
the following academic and research organizations: the Coordinating
Research Council, Inc.; the Rochester Institute of Technology; and
Minnesota State University, Mankato. We also conducted site visits to
the research centers responsible for coordinating federal studies on
the effects of intermediate ethanol blends on automobiles and nonroad
engines. Specifically, we visited NREL facilities in Golden, Colorado;
and ORNL facilities near Knoxville, Tennessee. We also visited a
private research facility in Aurora, Colorado, where some of the
automobile testing for federal studies has taken place. During these
site visits, we interviewed researchers conducting studies on the
effects of intermediate ethanol blends on automobiles and nonroad
engines. We asked these researchers to discuss available test results
and the status of their testing efforts for these studies. We also
toured some of the research facilities where testing was being
conducted for these studies. Due to ongoing litigation over EPA's
decision to allow ethanol blends with 15 percent ethanol (E15) for use
with certain automobiles, we did not evaluate any research by federal
agencies and others into the effects of intermediate ethanol blends on
automobiles and nonroad engines.
We conducted this performance audit from April 2010 to June 2011, in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Studies by Nonfederal Organizations on the Effects of
Intermediate Ethanol Blends in Automobiles:
Nonfederal organizations are conducting research on the effects of
intermediate ethanol blends in automobiles. For example, in addition
to the research the Coordinating Research Council, Inc. (CRC) is
conducting, in coordination with DOE and EPA, it has both ongoing and
completed research projects on a range of related topics, including
evaporative and exhaust emissions for various intermediate ethanol
blends. A CRC representative told us that it expects to complete these
projects by early 2012. Based on this research, CRC has published 10
reports as of March 2011 (see table 3).
Table 3: Published CRC Reports on Effects of Intermediate Ethanol
Blends in Automobiles:
Research topic: Catalyst durability;
Reports:
* Mid-Level Ethanol Blends Catalyst Durability Study Screening, June
2009.
Research topic: Drivability performance;
Reports:
* 2006 CRC Hot-Fuel-Handling Program, January 2007;
* 2008 CRC Cold-Start and Warmup E85 and E15/E20 Driveability Program,
October 2008;
* 2010 CRC Altitude Hot-Fuel-Handling Program, January 2011.
Research topic: Evaporative emissions;
Reports:
* Fuel Permeation from Automotive Systems, September 2004;
* Fuel Permeation from Automotive Systems: E0, E6, E10, E20 and E85,
December 2006;
* Vehicle Evaporative Emission Mechanisms: A Pilot Study, June 2008;
* Enhanced Evaporative Emission Vehicles, March 2010.
Research topic: Exhaust emissions;
Reports:
* Effects of Vapor Pressure, Oxygen Content, and Temperature on CO
Exhaust Emissions, May 2009.
Research topic: Onboard diagnostic systems;
Reports:
* Impact of E15/E20 Blends on OBDII Systems - Pilot Study, March 2010.
Source: GAO analysis of CRC information.
[End of table]
Two academic organizations have also conducted research on
intermediate ethanol blends in automobiles. Specifically, the
Minnesota Center for Automotive Research at Minnesota State
University, Mankato, has issued five studies looking at the effects of
ethanol blends containing 20 percent ethanol (E20) on fuel system
components.[Footnote 56] These studies received funding from the
Minnesota Department of Agriculture and appear on the department's Web
site.[Footnote 57] In addition, the Center for Integrated
Manufacturing Studies at Rochester Institute of Technology in New York
has studied the effects of E20 on automobile exhaust, drivability, and
maintenance, with funding from DOT. To date, the center has published
one report and expects to publish at least two more later in 2011,
along with a final summary report to DOT.[Footnote 58]
[End of section]
Appendix III: Comments from the Environmental Protection Agency:
United States Environmental Protection Agency:
Washington, DC 20460:
[hyperlink, http://www.epa.gov]
May 20 2011:
Mr. Frank Rusco:
Director, Natural Resources and Environment:
Government Accountability Office:
Washington, DC 20548:
Dear Mr. Rusco:
Thank you for the opportunity to comment on the draft report entitled
"Biofuels: Challenges to the Transportation, Sale, and Use of
Intermediate Ethanol Blends (GAO-11-513)." I am responding on behalf
of the Office of Solid Waste and Emergency Response (OSWER) as well as
the Office of Air and Radiation (OAR). Their comments have been
incorporated into this consolidated Environmental Protection Agency
(EPA or Agency) response. Below are our most significant comments on
the report's one recommendation for EPA and on the information
provided in the report itself. Other technical comments are included
in the Enclosure.
Recommendation:
To reduce uncertainty about the potential environmental impacts of
storing intermediate ethanol blends at retail refueling locations, we
recommend that the Administrator of EPA determine what additional
research is necessary to better understand the compatibility of
intermediate ethanol blends with UST systems, including the
compatibility of specific UST components, and develop a plan to
undertake such research.
EPA agrees with the importance of ensuring that the owners and
operators of underground storage tank (UST) systems, when and if they
choose to move to store higher blends of ethanol, are able to
demonstrate that their USE systems are compatible with the stored
fuel. Efforts are underway to evaluate the suitability of current UST
systems to store new fuels. One project involves evaluating the
functionality of current UST leak detection technologies when used
with ethanol-blended fuels. We are also working with Department of
Energy labs to understand the impacts of mid-level ethanol blends on
materials used in tank systems. In addition, EPA is working to assess
the impact of hiofuel releases to the environment, and to adapt
remediation tools to account for the differences in ethanol-blended
fuels.
While EPA believes that a targeted approach to research will he
important to accommodate the move to higher ethanol blends, we also
acknowledge that there will always be uncertainty concerning the
compatibility of legacy equipment with these fuel blends. Due to a
multitude of factors, including age and prior use of equipment, number
of UST system components, variation of products available on the
market over time, and the sheer multitude of possible configurations
of UST systems, the ability to determine compatibility with the
approximately 600,000 UST systems currently in use is limited.
After carefully weighing the need to fully understand the
compatibility issues of the higher blends of ethanol against a
realistic appraisal of the ability of research to address all the
permutations of UST configurations, EPA has chosen a policy approach
to provide certainty to the UST market. Those UST owners, who cannot
demonstrate compatibility of their systems with the higher blends of
ethanol, cannot store those fuels. We are in the final stages of
developing guidance for UST owners on how to determine the
compatibility of their tank systems if they wish to store higher
blends of ethanol. We have had extensive conversations with UST
stakeholders, including the equipment industry, states, and the
regulated community. in developing this guidance. This guidance will
provide the certainty the industry' needs to safely store higher
ethanol blends, while meeting the federal requirement for
compatibility and ensuring protection of human health and the
environment.
Rather than developing a plan to undertake additional compatibility
research, EPA will continue to work with other federal agencies,
industry and other stakeholders to assist tank owners to safely
transition to new fuels. We anticipate that additional, targeted
research may be necessary to facilitate that transition. The Agency,
will consider how to best partner with these groups to advance that
research.
General Comments:
There is a great deal of interest in alternative fuels, prompted by
federal law (i.e., the Renewable Fuel Standard), by the concern of the
impact of the continued use of petroleum based fuels and by the rise
in the price at the pump, It is, however, not mandatory for a tank
owner to move to the intermediate blends of ethanol (such as E15). If
a tank owner chooses to sell E15, and therefore store that blend in
their UST system, they may need to upgrade certain components in order
to ensure that their UST system is compatible. Tank owners who are
unable to prove their UST systems are compatible also have the option
to not store E15 ” that is to continue to store El0. As E15 is only
legal for use in a subset of motor vehicles, we believe there will be
a continued demand for E10.
We believe most tank owners will be able to demonstrate compatibility
for the major components of their UST systems, including tanks and
piping, and will only need to upgrade smaller components such as the
submersible pump, tank probes, seals, and gaskets. These components
are typically accessible under sump covers. For that reason, the
references to "excavation" in the draft report are not accurate.
Further, most owners, who wish to upgrade their systems. will need to
make less costly targeted upgrades to readily accessible components,
at a cost substantially less than the cost of an entire tank system
replacement.
In closing, WC believe that providing owners and operators of UST
systems clarity on the implementation of existing federal regulations
with emerging biofuels, including higher blends of ethanol, is
critical as we continue to transition to these fuels. It is clear that
close collaboration with our federal and state partners and working
with our stakeholders in industry will lead to the most comprehensive
and useful approach in assisting with the transition to biofuels.
If you have any questions or concerns regarding our comments or
response to the recommendation, EPA would be happy to meet with you
prior to GAO finalizing this report. Please feel free to contact me or
Mark Barolo at 703-603-7141 if there is any additional follow up
required.
Sincerely,
Signed by:
Lisa Leidt, for:
Mathy Stanislaus:
Assistant Administrator:
Enclosure:
cc: Gina McCarthy. OAR:
Karl Simon, OAR:
Bob Trent, OCFO:
Carolyn Hoskinson, OSWER:
Mark Barolo, OSWER:
Linda Gerber, OSWER:
Johnsie Webster, OSWER:
[End of section]
Appendix IV: Comments from the Occupational Safety and Health
Administration:
U.S. Department of Labor:
Assistant Secretary for Occupational Safety and Health:
Washington, DC 20210:
May 13, 2011:
Mr. Frank Rusco, Director:
Natural Resources and Environment:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548:
Dear Mr. Rusco:
Thank you for the opportunity to comment on the Government
Accountability Office's (GAO) proposed report, B1ofuels: Challenges to
the Transportation, Sale, and Use of Intermediate Ethanol Blends. OSHA
appreciates the time and effort that GAO took in its evaluation of the
ethanol industry.
OSHA is addressing the worker safety-related uncertainties that are
attached to the complex issues surrounding biofuels and will address
GAO's recommendation in depth in its Statement of Executive Action. We
anticipate that the many challenges associated with the use, sale and
transportation of biofuels can be addressed by our agency working in
conjunction with the Environmental Protection Agency. the Department
of Transportation. the Department of Energy and all other relevant
organizations. We appreciate the opportunity to review and respond to
GAO's draft report.
Sincerely,
Signed by:
David Michaels, PhD, MPH:
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Frank Rusco, (202) 512-3841or ruscof@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, Tim Minelli (Assistant
Director), Nirmal Chaudhury, Cindy Gilbert, Chad M. Gorman, Jason
Holliday, Michael Kendix, Ben Shouse, Barbara Timmerman, and Jack Wang
made key contributions to this report.
[End of section]
Footnotes:
[1] The United States consumed about 18.8 million barrels of petroleum
and petroleum products per day in 2009. The nation imported about 11.7
million barrels of petroleum and petroleum products per day in 2009--
primarily crude oil but also petroleum products such as refined
gasoline and jet fuel. The United States exported roughly 2 million
barrels of petroleum and petroleum products per day in 2009--primarily
refined products such as diesel fuel, residual fuel oil, and petroleum
coke. Only 2 percent of exports were crude oil. Net imports (total
imports minus exports) equaled 9.7 million barrels of petroleum and
petroleum products per day in 2009.
[2] Pub. L. No. 109-58, § 1501 (2005). The act authorizes the
Administrator of the EPA, in consultation with the Secretaries of
Agriculture and Energy, to waive the RFS levels established in the
act, by petition or on the Administrator's own motion, if meeting the
required level would severely harm the economy or environment of a
state, a region, or the United States, or there is an inadequate
domestic supply. Throughout this report, the RFS levels established in
the act are referred to as requirements, even though these levels
could be waived by the Administrator.
[3] Pub. L. No. 110-140, § 201 (2007).
[4] GAO, Biofuels: Potential Effects and Challenges of Required
Increases in Production and Use, [hyperlink,
http://www.gao.gov/products/GAO-09-446] (Washington, D.C.: Aug. 25,
2009).
[5] In this report, we use the terms "automobiles" and "motor
vehicles" to refer to (1) light-duty vehicles, including passenger
cars; (2) light-duty trucks, including pickup trucks, minivans,
passenger vans, and sport-utility vehicles; and (3) medium-duty
passenger vehicles, including large sport-utility vehicles and
passenger vans.
[6] According to DOE's Office of Energy Efficiency and Renewable
Energy, intermediate ethanol blends include E15 and E20 and are
defined as having an ethanol content greater than 10 percent and less
than 85 percent.
[7] In this report, we use the term "nonroad engines" to refer to
nonroad products with gasoline engines, including (1) lawn and garden
equipment, such as lawn mowers, weed trimmers, leaf blowers,
chainsaws, and snowblowers; (2) recreational engines and vehicles,
such as all-terrain vehicles, dirt bikes, and snowmobiles; (3)
recreational marine vehicles; (4) construction and industrial
equipment and vehicles, such as forklifts and paving equipment; (5)
commercial equipment, such as generators and air compressors; (6) farm
equipment, such as tractors and combines; and (7) logging equipment.
[8] The advanced biofuel category includes ethanol imported from some
member nations of the Caribbean Basin Initiative and Brazil, which
primarily use sugarcane to make ethanol.
[9] 75 Fed. Reg. 76790 (Dec. 9, 2010).
[10] Terminals on the East Coast are large integrated facilities with
marine, pipeline, and tanker truck receiving and dispatching
capabilities. Although some terminals have rail access, they were not
originally designed to support rail as a major mode for transporting
fuel.
[11] Ethanol transported for fuel is referred to as fuel-grade ethanol
and typically contains 2 percent denaturant, such as gasoline, to
render it unfit for human consumption.
[12] According to DOE documentation, there were more than 8 million
light-duty flexible-fuel vehicles on U.S. roads as of May 2010 and
2,051 retail fueling locations offering E85 as of June 2010. Because a
gallon of ethanol contains only about two-thirds the energy of a
gallon of gasoline, the use of E85 results in an approximately 25
percent reduction in fuel economy.
[13] As reported in NPN, MarketFacts 2010, (Park Ridge, Ill., 2010)
[hyperlink, http://www.npnweb.com].
[14] The Nielsen Company (Washington, D.C., May 2010) [hyperlink,
http://www.nielsen.com].
[15] As reported in NPN's MarketFacts 2010.
[16] 29 C.F.R § 1910.106(g)(3)(iv).
[17] UL is a standards development organization that certifies (e.g.,
tests and approves) equipment based on standards it develops.
According to OSHA officials, two other laboratories--CSA International
and Intertek Testing Services NA, Inc.--also certify dispensing
equipment based on UL's standards. However, representatives from these
two laboratories told us that they are currently conducting little, if
any, certification activities for dispensing equipment.
[18] According to EPA and OSHA officials, OSHA's requirements for
dispensing equipment and EPA's requirements for UST systems overlap at
the submersible turbine pump, which delivers fuel from the UST to the
dispenser. Therefore, along with meeting EPA's compatibility
requirements, these pumps must also be certified for safety by a
nationally recognized testing laboratory, such as UL, per OSHA
requirements. OSHA also has compatibility requirements for UST
systems, but unlike its requirements for dispensing equipment, OSHA
does not require UST equipment to be certified by a nationally
recognized testing laboratory.
[19] The mission of the international nonprofit National Fire
Protection Association is to reduce the worldwide burden of fire and
other hazards on the quality of life by providing and advocating
consensus codes and standards, research, training, and education. The
International Code Council is a membership association dedicated to
building safety and fire prevention. The council develops the codes
and standards used to construct residential and commercial buildings,
including homes and schools.
[20] In a carbureted fuel system, the air-to-fuel ratio is preset at
the factory based on the expected operating conditions of the engine
such as ambient temperature, atmospheric pressure, speed, and load.
[21] EPA, Renewable Fuel Standard Program (RFS2) Regulatory Impact
Analysis, EPA-420-R-10-006 (Washington, D.C., February 2010).
[22] EPA used three control cases--high-ethanol, primary or mid-
ethanol, and low-ethanol--to account for different levels of projected
cellulosic biofuel production. EPA then compared each of its control
cases against a "reference" case based on estimates made by the Energy
Information Administration in its 2007 Annual Energy Outlook for
ethanol production by 2022. EPA focused on scenarios in which ethanol
consumption increased greatly in all 50 states. While not discussed in
EPA's report, an additional option would be increased use of E85,
primarily in the Midwest. However, additional E85 fueling stations in
the Midwest would be needed for this option.
[23] According to EPA's analysis, there is significant uncertainty
regarding its estimate for the production of cellulosic biofuels by
2022.
[24] GAO, Freight Transportation: National Policy and Strategies Can
Help Improve Freight Mobility, [hyperlink,
http://www.gao.gov/products/GAO-08-287] (Washington, D.C.: Jan. 7,
2008).
[25] According to company representatives, Kinder Morgan invested
approximately $10 million to modify its Central Florida Pipeline for
ethanol shipments, which included chemically cleaning the pipeline,
replacing equipment that was incompatible with ethanol, and expanding
storage capacity at its Orlando terminal.
[26] This research can be found at [hyperlink,
http://primis.phmsa.dot.gov/matrix/] after typing "ethanol" into the
search feature.
[27] This research can be found at [hyperlink,
http://primis.phmsa.dot.gov/matrix/] after typing "ethanol" into the
search feature.
[28] Since the February 2008 announcement, Buckeye has discontinued
its role in the proposal. In March 2009, Magellan and POET signed a
joint development agreement to continue assessing the feasibility of a
dedicated 1,700 mile pipeline moving ethanol from the Midwest to the
major Northeastern markets. Pipeline costs were estimated to exceed
$3.5 billion. A revised press release, issued in January 2010,
increased the estimated length of the pipeline to 1,800 miles and the
cost estimate to $4 billion.
[29] DOE, Report to Congress: Dedicated Ethanol Pipeline Feasibility
Study (Washington, D.C., March 2010).
[30] EPA, Testimony of Lisa Jackson, Administrator, U.S. Environmental
Protection Agency, before the Committee on Agriculture, United States
House of Representatives (Washington, D.C., Mar. 10, 2011).
[31] 75 Fed. Reg. 68044 (Nov. 4, 2010).
[32] Sierra Research, Inc., Identification and Review of State/Federal
Legislative and Regulatory Changes Required for the Introduction of
New Transportation Fuels, Report No. SR2010-08-01 (Sacramento, Calif.,
Aug. 4, 2010), prepared for the American Petroleum Institute.
[33] These standards cover blends with up to 25 percent ethanol (E25).
UL published safety standards for certifying dispensing equipment for
blends up to E85 in October 2007.
[34] UL certified dispensers from two manufacturers in March 2010 for
use with blends up to E25, and in June 2010 for blends up to E85.
According to knowledgeable OSHA officials, if employees covered by
OSHA used or worked on unapproved equipment dispensing higher ethanol
blends, it would likely constitute a violation of OSHA requirements.
However, these officials said that OSHA is not aware of any
complaints, referrals, or notifications of serious accidents involving
this equipment.
[35] According to DOE officials, this research used a testing fluid
containing 17 percent ethanol, acids, water, and minerals to represent
worst-case scenarios for fuel. See UL, Dispensing Equipment Testing
With Mid-Level Ethanol/Gasoline Test Fluid (Washington, D.C., November
2010), prepared for DOE.
[36] This research was on the exposure of common dispenser materials
to testing fluids containing 17 and 25 percent ethanol, plus acids,
water, and minerals. See ORNL, Intermediate Ethanol Blends
Infrastructure Materials Compatibility Study: Elastomers, Metals, and
Sealants, ORNL/TM-2010/326 (Oak Ridge, Tenn., March 2011). According
to DOE, elastomers are a class of polymers widely used in fuel
dispenser systems as o-rings and gasket-type seals.
[37] According to knowledgeable EPA officials, it is possible to
purchase a new UST system meeting EPA requirements for compatibility
with all ethanol blends. However, according to EPA officials, most
tank owners still purchase some components that are only approved for
use with E10.
[38] 75 Fed Reg. 70241 (Nov. 17, 2010).
[39] ORNL, ORNL/TM-2010/326.
[40] DOE recently estimated that modifying fuel pumps to make them
compatible with E15 should cost $1,000 or less per pump, depending on
pump-specific variables. See DOE, Statement of Dr. Henry Kelly, Acting
Assistant Secretary For Energy Efficiency, U.S. Department of Energy,
Before the Committee on Environment and Public Works, United States
Senate (Washington, D.C., Apr. 13, 2011).
[41] EPA, Office of Transportation and Air Quality, EPA-420-R-10-006.
[42] EPA officials told us that it does not collect data on tank
configurations at retail locations. As a result, we relied on
information from industry representatives to illustrate this potential
challenge.
[43] Several UL representatives told us that the announcement did not
mean that UL was recertifying existing equipment for use with
intermediate blends or that existing equipment could be used with E15
(because the ethanol content of a specific blend, like E15, may vary
and potentially could exceed 15 percent under normal business
conditions).
[44] 75 Fed. Reg. 68044 (Nov. 4, 2010).
[45] 75 Fed. Reg. 12470 (Mar. 16, 2010).
[46] See ORNL, Technical Issues Associated with the Use of
Intermediate Ethanol Blends (>E10) in the U.S. Legacy Fleet:
Assessment of Prior Studies (Oak Ridge, Tenn., August 2007).
[47] CRC is a nonprofit organization supported by the petroleum and
automotive equipment industries. CRC operates through committees made
up of technical experts from industry and government who voluntarily
participate.
[48] Of this total amount, DOE has provided about $45 million,
including less than $65,000 for NREL and ORNL to review studies
conducted by the Minnesota Center for Automotive Research at Minnesota
State University, Mankato; and the Center for Integrated Manufacturing
Studies at Rochester Institute of Technology. These efforts are not
included in table 2.
[49] EPA regulates the emissions of air pollutants--which are known or
reasonably anticipated to endanger public health or welfare--from
mobile sources such as automobiles. These pollutants include
hydrocarbons (such as benzene and acetaldehyde), carbon monoxide,
nitrogen oxides, and volatile organic compounds.
[50] NREL, ORNL, Effects of Intermediate Ethanol Blends.
[51] [hyperlink, http://www.gao.gov/products/GAO-09-446].
[52] The information gathered from these interviews cannot be used to
generalize findings or make inferences about the entire population of
knowledgeable stakeholders on intermediate ethanol blends and related
topics. Although the sample provides some variety, it is unlikely to
capture the full variability of knowledgeable stakeholders, and it
cannot provide comprehensive insight into the views of any one group
of knowledgeable stakeholders. This is because, in a nonprobability
sample, some elements of the population being interviewed have no
chance, or an unknown chance, of being selected as part of the sample.
However, the information gathered during these interviews allows us to
discuss various stakeholder views on intermediate ethanol blends, and
it provides important context overall. It also helps us interpret the
documentation and other testimonial evidence we have collected.
[53] National Commission on Energy Policy, Task Force on Biofuels
Infrastructure; EPA-420-R-10-006; and DOE, Report to Congress:
Dedicated Ethanol Pipeline Feasibility Study.
[54] Northeast States for Coordinated Air Use Management is an
association of the state air quality agencies from Connecticut, Maine,
Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and
Vermont.
[55] The Association of International Automobile Manufacturers, Inc.
is now known as the Association of Global Automakers, Inc.
[56] Bruce Jones, et al., The Effects of E20 on Elastomers Used in
Automotive Fuel System Components, (Mankato, Minn., Feb. 22, 2008);
Bruce Jones, et al., The Effects of E20 on Plastic Automotive Fuel
System Components, (Mankato, Minn., Feb. 21, 2008); Bruce Jones, et
al., The Effects of E20 on Metals Used in Automotive Fuel System
Components, (Mankato, Minn., Feb. 22, 2008); Nathan Hanson, et al.,
The Effects of E20 on Automotive Fuel Pumps and Sending Units,
(Mankato, Minn., Feb. 21, 2008); and Gary Mead, et al., An Examination
of Fuel Pumps and Sending Units During a 4000 Hour Endurance Test in
E20, (Mankato, Minn., Mar. 25, 2009).
[57] E20 Test Results, in the Minnesota Department of Agriculture
database, [hyperlink,
http://www.mda.state.mn.us/en/renewable/ethanol/e20testresults.aspx]
(accessed Apr. 4, 2011).
[58] B. Hilton and B. Duddy, "The Effect of E20 Ethanol Fuel on
Vehicle Emissions," Proceedings of the Institute of Mechanical
Engineers, Part D: Journal of Automobile Engineering, vol. 223 no. 12
(2009).
[End of section]
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