Not long ago MOTHER EARTH NEWS asked the Bureau of Alcohol, Tobacco, and Firearms Southeast Regional Regulatory Administrator, Mr. Dee L. Flynn, if he would be willing to speak candidly with us on the subject of alcohol fuel ... to detail just what the federal government expects of people, tell us how individuals might best meet the needs of his agency, and reveal the planned regulation changes that should make things easier on the "little guy." We think you'll find the exchange both interesting and informative.
MOTHER: We knew, when we published our interview with Lance Crombie, that an experimental distilled spirits permit could allow a fuel "brewer" to take advantage of a little-known loophole in the federal laws governing alcoholic beverage production. Could you tell us approximately how many experimental permits have been issued nationally to date?
FLYNN: Our records indicate that 3,657 two-year experimental distilled spirits permits have been issued.
MOTHER: Can an experimental permit be renewed, after two years, in the name of the party that previously held it?
FLYNN: Currently qualified experimental distilled spirits permits may be renewed only if the holder gives good cause... demonstrating that he or she is indeed engaged in the operations specified and is authorized by law to do so. However, as a result of the Crude Oil Windfall Profits Tax Act passed this year, a new category has been established in addition to the experimental status. It's been set up specifically for alcohol fuel producers, and—as of July 1, 1980—anyone applying for an experimental permit with the intent to make ethanol fuel is automatically considered for an "alcohol fuel producers permit."
MOTHER: Can you describe the individual's responsibility in obtaining bonding?
FLYNN: Existing experimental small fuel producers, and new alcohol fuel producers, may make and receive up to 10,000 proof-gallons—a proof-gallon is defined as one gallon of ethanol at 100 proof—per year without a bond. The bond requirements for plants producing more than 10,000 proof-gallons per annum will be determined by the amount of alcohol manufactured and received within a calendar year.
MOTHER: Must an extremely accurate record of the corn or other raw materials used for fermentation—and their solid residue weights—be kept by a small fuel producer? In other words, will the distiller incur considerable expense for the purchase of scales or other measuring equipment?
FLYNN: Only if he or she is operating a commercial plant. Experimental producers need only keep production records showing the date, kind, and quantity of raw materials used ... and disposition reports indicating the date, quantity, and manner of the product's use or disposal.
MOTHER: We received a letter from one of our readers inquiring about the power of attorney requirement. Must power of attorney be given to a third party, and does such action place that person in any jeopardy?
FLYNN: A power of attorney may be required to authorize someone to sign or act on behalf of the proprietor. It imposes no liability on the attorney-in-fact, and thus responsibility to the federal government rests with the sole proprietor, the individual partners, or—in the case of a corporation—with the officers, directors, and principal stockholders.
MOTHER: The subject of denaturing—or "poisoning" the alcohol fuel product with toxic substances to prevent its being consumed as a beverage—has come up on many occasions. Does the ethanol product from an experimental site have to be denatured to stay within the law?
FLYNN: Fuel alcohol produced in an experimental operation can be used on the defined premises in a pure state. Alcohol used outside the premises must be either tax-paid at the rate of $10.50 per proof-gallon or completely denatured in accordance with an approved formula prior to its removal. However, if the original application describes all the farms or sites where the product is to be used, the ethanol can be distilled in one central location and then legally moved between sites without being denatured.
MOTHER: You mentioned an "approved formula." Can't a certain volume of gasoline or kerosene be added to the alcohol to make it unfit for human consumption, even though hydrated ethanol does not mix evenly with petroleum distillates?
FLYNN: At this time there are only three authorized complete-denaturing recipes available for experimental fuel use: Formulas 18, 19, and 20. Because of the fact that gasoline and kerosene don't mix well with less-than-pure alcohol, only one of these formulas—No. 20—allows the use of petroleum distillates exclusively for denaturing purposes ... and this is only if the ethanol being denatured is 190 proof or better.
MOTHER: We have a lot of tinkerers in our readership who might want to design or even build a still, but are undecided as to whether they actually want to produce fuel alcohol. Can a person design and/ or build a distillation apparatus legally without any type of license as long as he or she doesn't use it to distill alcohol, or otherwise introduce a mash into it?
FLYNN: Yes, a person may assemble a still for experimental use or fuel production without a federal permit, as long as the device isn't used for distilling alcohol prior to receipt of the permit.
MOTHER: Understandably enough, many small farmers or homesteaders aren't sure exactly how much fuel they are capable of making in a given period of time, and may not even know precisely what their liquid fuel requirements are from year to year ... since such knowledge will often come only with actual experience. Therefore, can an experimental producer legally sell, give, or swap any of his or her product ... to get rid of a surplus?
FLYNN, An experimental producer may make casual sales of completely denatured alcohol to dispose of his or her production in excess of actual needs. This ruling, however, is not to be construed as authorization for an experimental proprietor to engage in the business of selling alcohol exclusively. The Windfall Profits Tax Act includes provisions under which an alcohol fuel producer may engage in commercial operations, and anyone interested in doing that should contact his or her regional ATF office for complete information.
MOTHER: All along, we've been discussing ethanol, or alcohol derived from grains and other food crops. What about methanol ... or wood alcohol, as it's often called: Does its production come under ATF jurisdiction or that of any other federal agency?
FLYNN: The manufacture of methanol, a nonpotable alcohol product, isn't covered under any of the regulations administered by the Bureau of Alcohol, Tobacco, and Firearms. It is possible, however, that the EPA, OSHA, or some other federal agency has some area of jurisdiction within its laws.
MOTHER: One final question: Are you aware of any movements afoot that might turn the whole alcohol fuel licensing program over to another federal agency—perhaps the DOE—or is the ATF now prepared, considering the new legislation, to take the alcohol fuel movement in stride?
FLYNN: There's no known plan, at present, to transfer the alcohol fuel program to another government agency. The new legislation, signed into law on April 2 of this year, was designed specifically to eliminate many of the problems inherent in the old federal laws, since it's been "custom-fit" to the needs of our new wave of alcohol fuel—rather than beverage—producers.
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