Propane Laws and Incentives in South Dakota

The list below contains summaries of all South Dakota laws and incentives related to propane.

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)

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.

Propane Tax Exemption

A licensed biodiesel producer may apply for and obtain a tax refund for state fuel taxes paid on methanol used to produce biodiesel. For more information, including how to apply, see the South Dakota Department of Revenue Motor Fuel Excise Tax website.

(Reference South Dakota Statutes 10-47B-167)

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