Natural Gas Laws and Incentives in South Dakota

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

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 Settlement Allocation

The South Dakota Department of Environment and Natural Resources may use funds awarded to South Dakota through the Volkswagen 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 South Dakota House Bill 1258, 2019)

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. Funding is available to replace model year (MY) 1996-2009 Class 4-8 school buses and MY 1996-2009 Class 5-8 shuttle or transit buses. Rebate are offered in the following amounts, dependent on the replacement engine standards:

New engine standardsTotal Rebate
EPA emission standardsUp to 25% of purchase price
California’s Low-NOx standardsUp to 35% of purchase price
Zero emissions Up to 45% of purchase price

For more information, including how to apply, see the South Dakota Diesel Grant ProgramClean website.

More Laws and Incentives

To find laws and incentives for other alternative fuels and advanced vehicles, search all laws and incentives.