Ethanol Laws and Incentives in South Dakota
The list below contains summaries of all South Dakota laws and incentives related to ethanol.
Laws and Regulations
Alternative Fuel Tax
Liquefied natural gas (LNG), ethyl alcohol, and methyl alcohol are taxed at a rate of $0.14 per gasoline gallon equivalent (GGE) when used as motor fuel. Compressed natural gas (CNG) and propane used as motor fuel are taxed at a rate of $0.10 per GGE and $0.20 per GGE, respectively. For taxation purposes, the fuels are converted to GGEs as follows:
- One GGE of LNG is equal to 1.5536 volumetric gallons of LNG;
- One GGE of CNG is equal to 126.67 cubic feet of its natural service delivery line pressure;
- One GGE of propane is equal to 4.24 pounds per gallon of liquid at 60 degrees Fahrenheit.
(Reference South Dakota Statutes 10-47B-3 and 10-47B-4)
Biofuel Franchising Contract Regulations
Franchise documents may not restrict a franchisee from participating in any of the following activities:
- Installing a biofuel pump or tank, except property leased from the franchisor;
- Converting an existing tank or pump for biofuels use;
- Advertising the sale of biofuels, including listing biofuel availability or prices on signage;
- Selling biofuels;
- Purchasing biofuel from other sources if the franchisor does not offer biofuel;
- Installing or operating an ethanol blender pump, if the pump is approved for use by the appropriate jurisdictional authority; or
- Selling a biofuel in place of one grade of gasoline, if the franchisee is required to sell three grades of gasoline.
Biofuels include biodiesel, biodiesel blends, ethanol, and ethanol blends.
(Reference South Dakota Statutes 37-2-34 through 37-2-37)
Ethanol Blend Definition
An ethanol blend is defined as a blended motor fuel containing ethyl alcohol that is at least 99% pure, derived from agricultural products, and blended exclusively with gasoline.
(Reference South Dakota Statutes 10-47B-3)
Ethanol Production Facility Fee
The cost to submit an air quality permit application for an ethanol production plant is $1,000. An annual renewal fee is also required for the duration of the air quality permit. The annual renewal fee includes an administrative fee of $1,000 and an emissions fee equaling $40 per ton of particulate matter, sulfur dioxide, nitrogen oxide, volatile organic compounds, and hazardous air pollutants emitted during the previous calendar year. The annual fee must be paid to the South Dakota Department of Revenue and Regulation by July 31 following the year in which the permit is issued and annually thereafter.
(Reference South Dakota Statutes 34A-1-58.1)
Fuel Quality Standards
The South Dakota Department of Public Safety may authorize fuel quality standards and enforce fuel rules that conform to appropriate ASTM standards, including:
- Standards for the maximum volume percentages of ethanol and methanol in alcohol blended fuels;
- A program and prescribed methods for the inspection and testing of alcohol blended fuels, petroleum products, biodiesel, and biodiesel blends;
- Labeling requirements for devices dispensing alcohol blended fuels, biodiesel, and biodiesel blends;
- Standards setting the specifications and tolerance requirements for petroleum products, biodiesel, and biodiesel blends; and
- Regulations for filtering systems used on devices dispensing alcohol blended fuels.
(Reference South Dakota Statutes 37-2-6)
Volkswagen (VW) Settlement Allocation
The South Dakota Department of Environment and Natural Resources may use funds awarded to South Dakota through the VW Environmental Mitigation Trust to issue grants for the reduction of nitrogen oxide air emissions from mobile sources in the state. The funds are deposited into a Clean Air Act Settlement fund.
(Reference 34A-1-63 and 34A-1-64)
State Incentives
Diesel Emission Reduction Grants
The South Dakota Department of Environment and Natural Resources (DENR) administers the Clean Diesel Grant Program for bus diesel emission reduction projects. Projects are funded by South Dakota’s portion of the Volkswagen Environmental Mitigation Trust and the U.S. EPA’s Diesel Emission Reduction Act (DERA) Program. For more information, including how to apply, see the South Dakota DENR Clean Diesel Grant Program website.
Ethanol Blend Tax Refund
Beginning January 1, 2025, retailers that sell ethanol fuel blends containing 15% ethanol (E15) are eligible for a tax refund of $0.05 per gallon. For more information, including how to apply, see the South Dakota Department of Revenue Motor Fuel Excise Tax website.
(Reference Senate Bill 78, 2024)
More Laws and Incentives
To find laws and incentives for other alternative fuels and advanced vehicles, search all laws and incentives.