I think the trick is the "equivalent" part. If I got it right, they are using some sort of fuel which provides 1/3 of the energy regular gasoline does. Which means they are probably doing 110/3 mpg on this type of fuel.
It doesn't matter what the fuel is. You get the same amount of energy out of it, so it's no easier running 110*3/2 mpg on E85 (which is 2/3 the energy density) than 110mpg on gas.
