‘‘Except in the case of the credit determined under
subsection (a)(3), the preceding sentence shall be
applied by substituting ‘1997’ for ‘2000’ and ‘1998’
for ‘2001’.’’
(b) DENIAL OF CREDIT FOR ALCOHOL USED TO
PRODUCE ETHER.—Subsection (b) of section 40 of such
Code is amended by adding at the end the following new
paragraph:
‘‘(6) DENIAL OF CREDIT FOR ALCOHOL USED
TO PRODUCE ETHER.—No credit shall be allowed
under this section for alcohol used to produce any
ether.’’
(c) CONFORMING REDUCTIONS OF OTHER INCEN-
TIVES FOR ETHANOL FUEL.—
(1) REPEAL OF REDUCED RATE ON ETHANOL
FUEL PRODUCED OTHER THAN FROM PETROLEUM
OR NATURAL GAS.—Subsection (b) of section 4041
of such Code is amended to read as follows:
‘‘(b) EXEMPTION
FOR
OFF-HIGHWAY
BUSINESS
USE.—
‘‘(1) IN GENERAL.—No tax shall be imposed by
subsection (a) or (d)(1) on liquids sold for use or
used in an off-highway business use.
‘‘(2) TAX WHERE OTHER USE.—If a liquid on
which no tax was imposed by reason of paragraph
(1) is used otherwise than in an off-highway busi-
ness use, a tax shall be imposed by paragraph
(1)(B), (2)(B), or (3)(A)(ii) of subsection (a)
(whichever is appropriate) and by the corresponding
provision of subsection (d)(1) (if any).
‘‘(3) OFF-HIGHWAY BUSINESS USE DEFINED.—
For purposes of this subsection, the term ‘off-high-
way business use’ has the meaning given to such
term by section 6421(e)(2); except that such term
shall not, for purposes of subsection (a)(1), include
use in a diesel-powered train.’’
(2) REPEAL OF REDUCED RATE ON ETHANOL
FUEL PRODUCED FROM NATURAL GAS.—Subsection
(m) of section 4041 of such Code is amended—
(A) by striking ‘‘or ethanol’’ each place it
appears (including the heading of paragraph
(2)), and
(B) by striking ‘‘, ethanol, or other alco-
hol’’ in paragraph (2) and inserting ‘‘or other
alcohol (other than ethanol)’’.
(d) CONFORMING AMENDMENTS TO EXCISE TAXES;
FUEL ALCOHOL TAXED IN SAME MANNER AS OTHER
MOTOR FUELS.—
(1) IN
GENERAL.—Paragraph (1) of section
4083(a) of such Code (defining taxable fuel) is
amended by striking ‘‘and’’ at the end of subpara-
graph (A), by striking the period at the end of sub-
paragraph (B) and inserting ‘‘, and’’, and by adding
at the end the following:
‘‘(C) fuel alcohol.’’
(2) FUEL ALCOHOL.—Subsection (a) of section
4083 of such Code is amended by adding at the end
the following new paragraph:
‘‘(4) FUEL ALCOHOL.—The term ‘fuel alcohol’
means any alcohol (including ethanol and meth-
anol)—
‘‘(A) which is produced other than from
petroleum, natural gas, or coal (including peat),
and
‘‘(B) which is withdrawn from the distillery
where produced free of tax under chapter 51 by
reason of section 5181 or so much of section
5214(a)(1) as relates to fuel use.’’
(3) RATE
OF
TAX.—Clause (i) of section
4081(a)(2)(A) of such Code is amended by inserting
‘‘or fuel alcohol’’ after ‘‘gasoline’’.
(4) SPECIAL RULES FOR IMPOSITION OF TAX.—
Paragraph (1) of section 4081(a) of such Code is
amended by adding at the end the following new
subparagraph:
‘‘(C) SPECIAL
RULES
FOR
FUEL
ALCO-
HOL.—In the case of fuel alcohol—
‘‘(i) the distillery where produced shall
be treated as a refinery, and
‘‘(ii) subparagraph (B) shall be ap-
plied by including transfers by truck or rail
in excess of such minimum quantities as
the Secretary shall prescribe.’’
(5) REPEAL OF REDUCED RATES ON ALCOHOL
FUELS.—
(A) Section 4041 of such Code is amended
by striking subsection (k).
(B) Section 4081 of such Code is amended
by striking subsection (c).
(C) Section 4091 of such Code is amended
by striking subsection (c).
(6) CONFORMING AMENDMENTS.—
(A) Section 40 of such Code is amended by
striking subsection (c).
(B) Paragraph (4) of section 40(d) of such
Code is amended to read as follows:
‘‘(4) VOLUME OF ALCOHOL.—For purposes of
determining under subsection (a) the number of gal-
lons of alcohol with respect to which a credit is al-
lowable under subsection (a), the volume of alcohol