South Dakota Farm Bureau (SDFB) applauds the recent steps taken by the state and federal government to temporarily adjust enforcement priorities surrounding the use of dyed diesel fuel.

An executive order signed by President Trump yesterday eases limits on the use of tax-exempt dyed diesel fuel on highways and public roads. South Dakota Governor Larry Rhoden issued a corresponding directive to the South Dakota Department of Public Safety (DPS) to temporarily adjust enforcement priorities surrounding the use of dyed diesel fuel. Together, these actions will provide meaningful relief for farmers and ranchers struggling with high diesel prices during the critical harvest season.

“Harvest is the most fuel-intensive time of the year for farmers. Diesel is essential input when crops are ready to harvest or livestock needs to be moved,” said SDFB President Scott VanderWal. “Every cent per gallon matters, so having the option to use dyed diesel more broadly can translate into real cost savings for farmers.”

An important feature of the diesel market is that fuel used on farms is taxed differently from fuel used on public roadways. Off-highway diesel, which is dyed red for easy identification, is commonly used by farmers and ranchers. Dyed diesel is exempt from state and federal highway taxes, but it comes with restrictions. It generally cannot be used in a truck traveling on public highways simply because that truck is being used for farm business. Federal tax and penalty provisions can apply when dyed fuel is knowingly used for a taxable purpose.

President Trump’s Executive Order temporarily allows the use of dyed diesel on highways and defers the applicable federal excise tax. Governor Rhoden’s directive instructs DPS to prioritize commercial motor vehicle inspections that present a threat to public safety rather than identifying the use of dyed diesel fuel on South Dakota highways.

“These actions will bring immediate price relief for farmers and ranchers facing record-high diesel costs. The federal highway diesel tax is currently more than 24-cents per gallon, so it’s a big deal to be able to expand use of tax-exempt diesel,” said VanderWal.

More information on the impact of diesel fuel prices on this year’s harvest can be found in this recent intel report from American Farm Bureau Federation.