A presidential executive order improves access to a fuel normally reserved for off-road uses, a potential relief and, for many, a confusion.
Larry Birgen, 65, loaded soybeans onto a truck. His combine harvester runs on fuel exempt from federal taxes. This is called red dyed diesel and is only legally allowed in off-road machines. Until a recent announcement from President Donald Trump changed the situation. Now Birgen’s truck that is filled with soybeans can also refuel with red-dyed diesel. That means he won’t have to pay the 24-cent-a-gallon federal tax to fill up his tank.
“We still have a long way to go in terms of how many times I’m going to fill in. So that would make a big difference,” Birgen said.
Dyed diesel is exactly the same as normal diesel. It is dyed to make it easier to tell the difference for tax purposes.
Diesel prices have soared, largely due to conflicts in Iran and Ukraine. President Trump announced relief measures to help ease some of this pain. The White House said it would save growers $60 on a 250-gallon tank.
For growers, every little bit helps during the busiest time of the year: harvest. But that won’t bring them back to the diesel prices of a year ago.
“It won’t make up for it. Rather, it’s the war in Iran or something else that’s causing these high prices,” Birgen said. “So it’s double from last year, I think, or close to it.”
Diesel prices are nearly twice as high as the same period a year ago, according to AAA.
Scott VanderWal is the president of the state Farm Bureau.
“I guess our attitude is that every little bit counts,” he said in an interview with SDPB.
But it’s short term.
“It’s a bit of a Band-Aid. It certainly doesn’t make a difference because fuel prices right now are about 60 to 70 percent higher than they were last spring when we planted the crops that we’re harvesting now. So that’s a huge difference,” VanderWal said. “The only cure for this is to calm the global stress and conflict, and try to get our refining capacity back to where it should be. And get back to some semblance of normalcy.”
Another producer criticizes the system as a whole.
“For years I’ve said it’s stupid to have highway diesel and dyed diesel. Everything should just be dyed. Make it work because most of your diesel comes from either truckers or farms,” said Audie Larson, who farms near Hamill. “And for a lot of truckers, it comes back to agriculture in one way or another. I think it’s silly to have this highway diesel. Let’s use tinted diesel in everything.”
Another state agriculture leader said the relief could be greater. Doug Sombke is the president of the South Dakota Farmers Union. He drew attention to the national diesel tax.
“The governor has done nothing, nor is capable of doing, to remove this tax. Now, if you remove it, it would be substantial,” Sombke said. “I mean, it would be closer to 52 cents, 50 to 52 cents total, that you would get out of a gallon of diesel in there.”
South Dakota’s undyed diesel tax is 28 cents per gallon.
Gov. Larry Rhoden said it would take legislative action to suspend the diesel tax.
“I don’t have as much authority in my emergency powers, as far as suspending the law. I can suspend administrative rules, and fuel tax laws are not an administrative rule,” Rhoden said. “It’s a law. So I didn’t have the authority.”
Rhoden signed executive orders to try to ease the burden on farmers. This includes suspending a travel permit for overweight and allowing producers to transport their products at a price 10% above the weight restrictions.
Following Trump’s announcement, Rhoden announced he was directing the Department of Public Safety not to enforce rules banning the driving of tinted diesel on highways.
The Department of Revenue followed up on a directive Thursday aimed at answering some of the questions. He said only agricultural producers with a valid agricultural exemption certificate should fill up with red-dyed diesel for on-road use.
The DOR warned that – under federal guidelines – consumers using red-dyed diesel and paying sales tax “may actually pay more than the usual diesel tax in certain circumstances.”
The guidelines also encourage anyone using dyed diesel on the road to keep accurate fuel consumption records and keep an eye on state guidelines.
Sombke noted the timing of the announcement, just before the midterm elections.
“It’s funny, as we get closer to an election, to all of a sudden see politicians coming up with solutions, I’ll just say it’s stupid,” Sombke said.
Farmers helped Trump rise to power. South Dakota, a heavily agricultural state, supported Trump with at least 60% of the vote in the last three elections.
Back at Larry Birgen’s farm, he said the relationship between farmers and government had become too complicated in general.
“Whereas if you had left things alone, we would be better off and you wouldn’t have to do all this,” Birgen said. “So sometimes it feels like farmers are being bought.”
Farmers also expressed concern that the red dye could remain in tanks and lead to potential fines beyond the next few months.
A spokesperson for Rhoden’s office said that for long-term enforcement, “DPS will validate a failed test by taking a fuel sample. Although residue may be detected for longer, a simple color check can determine whether the violation was recent or residual.”
The SDPB also asked Rhoden’s office whether he intended to provide relief at the pump beyond farmers.
“The governor is a constitutional conservative who operates within his authority – and he has no authority to unilaterally waive a tax,” the spokesperson said in a statement.
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