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Alcohol Fuel Background

Alcohol produced at an Alcohol Fuel Plant (AFP) is restricted by law to use "exclusively for fuel use" (26 U.S.C. 5181). This means that alcohol produced at an AFP may not be used on the premises, or removed from the premises, for any purpose except for use as fuel.
But what is "fuel"? TTB has received requests to use fuel alcohol in the manufacture of products such as charcoal lighter fluid, firelighter gel, and chafing dish "fuel." We must turn these requests down because these products are not within the intent of the law restricting the alcohol to "fuel use."

Although the law does not contain a definition of "fuel use," the legislative history states that AFP’s were authorized because "Congress concluded that it was important to encourage the development of energy sources other than petroleum products for use in motor fuels." Based on this statement in the Senate Finance Committee report for the Crude Oil Windfall Profit Tax Act of 1980, TTB concluded that "fuel use" in 26 U.S.C. 5181 means only the use of alcohol in motor fuel products that decrease reliance on petroleum. This includes the use of fuel alcohol to manufacture gasoline additives such as ETBE (ethyl tertiary butyl ether), which are burned in the engine of a motor vehicle.

The restriction to "exclusively for fuel use" applies as well to alcoholic byproducts produced at an AFP. Such byproducts may not be used for other than fuel purposes. For example, the residue of distillation may not be used for animal feed unless the residue contains no significant alcohol.

AFP proprietors who wish to use alcohol produced at their plants for purposes other than fuel use must requalify their plants as regular distilled spirits plants (DSP's). Information on doing this may be obtained from the National Revenue Center by calling 1-877-882-3277.

Last updated: January 17, 2019