http://www2.potsdam.edu/alcohol/Controversies/Volstead-Act.h...
It also mentions 'Denatured alcohol or denatured rum produced and used as provided by laws and regulations now or hereafter in force.', so I'm sure there is some text somewhere describing the processes.
There is often methanol in fermented mash, but if you have a working still, the sophisticated method of getting rid of it is to discard the early fraction of the distillation. It probably isn't a large amount of methanol (but there's probably other assorted things not to drink).
Edit: Here's the IRS guidance issued in association with the 1906 law that created "industrial alcohol" by not taxing denatured alcohol:
http://books.google.com/books?id=AA7ZAAAAMAAJ&lpg=PA23&ots=B...
This page talks about adding methyl alcohol "in the presence and under the direction of an authorized Government officer":
http://books.google.com/books?id=AA7ZAAAAMAAJ&lpg=PA23&ots=B...
Apparently for use in cars, because it was cheaper than gasoline.