As I've understood it, the "E-10" blend is at 10% because that is the level that all vehicle manufactures would continue to warranty their vehicles. As you start going up in ethanol, you start losing warranty coverage from some auto manufactures. The other reason for 10% ethanol is that the Congress forced MTBE to be phased out as an oxygenate in gasoline and forced ethanol to be used instead. This applies to gasoline blends sold near/in major urban areas that fail certain clean air standards.

Now, as to why the 85% ethanol and nothing between 10% and 85%: This is yet another federal rule.

The "Energy Policy Act" of 1992 (aka "Public Law 102-486") defines what is an "alternative fuel." Alternative fuels include:

• Methanol, ethanol, and other alcohols
• Blends of 85% or more of alcohol with gasoline
• Natural gas and liquid fuels domestically produced from natural gas
• Liquefied petroleum gas (propane)
• Coal-derived liquid fuels
• Hydrogen
• Electricity
• Biodiesel (B100)*
• Fuels (other than alcohol) derived from biological materials

So there you have it. If you had E-60 (for example), that would not be an "alternative fuel" and would not meet the criteria for federal and state fleet standards to gain credit against federal requirements for fleet use of alternative fuels, nor would private operators get tax credits, etc, etc, etc.

There is no technical reason here, it is all bureaucratic blovation.