South Dakota Laws and Incentives

Listed below are the summaries of all current South Dakota laws, incentives, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

State Incentives

South Dakota's National Electric Vehicle Infrastructure (NEVI) Planning

The U.S. Department of Transportation’s (DOT) NEVI Formula Program requires the South Dakota Department of Transportation (SDDOT) to submit an EV Infrastructure Deployment Plan (Plan) to the DOT and U.S. Department of Energy (DOE) Joint Office by August 1, 2022, describing how the state intends to distribute NEVI funds. Plans must be established according to NEVI guidance.

For more information about South Dakota’s NEVI planning process, see the SDDOT EV Plan website. For more information about South Dakota’s NEVI plan, see the Joint Office’s State Plans for EV Charging website.

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 Clean Diesel Grant Program website.

Biodiesel Blend Tax Credit

Licensed biodiesel blenders are eligible for a tax credit for special fuel, including diesel that is blended with biodiesel. The tax credit is granted on a per gallon basis in the amount that the rate for special fuel exceeds the rate for the biodiesel blend. The purpose of the credit is to offset any tax liability resulting from the blending of previously untaxed biodiesel. (Reference South Dakota Statutes 10-47B-121.1)

Ethanol and Biobutanol Production Incentive

Qualified and licensed ethanol and biobutanol producers are eligible for a $0.20 per gallon production incentive for ethanol and biobutanol that is fully distilled and produced in South Dakota. Ethanol must also be denatured, 99% pure, distilled from cereal grains, and blended with gasoline to create an ethanol blend. In addition, the producer must have produced ethanol on or before December 31, 2006, to be eligible. Annual production incentives paid to one facility may not exceed $1 million. Cumulative annual production incentives paid out to all facilities may not exceed $7 million per year. Funds are apportioned each month based on the claims submitted and the total funds available. This incentive expires on July 1, 2022. (Reference South Dakota Statutes 10-47B-162 and 10-47B-163)

Ethanol Infrastructure Grants

The South Dakota Governor's Office of Economic Development administers the Ethanol Infrastructure Incentive Program, providing grants to offset the cost of installing ethanol blender pumps and underground storage tanks (UST) for ethanol at retail fueling stations throughout the state. Awardees may receive up to $25,000 for the installation of the station’s first blender pump, and up to $10,000 for the installation of each additional pump. Additionally, awardees may receive up to $40,000 per station for the installation of a UST that allows for the use of ethanol blender pumps. For more information, see the Ethanol Infrastructure Incentives website. This incentive expires on July 1, 2022. (Reference South Dakota Statutes 10-47B-164.1 and 10-47B-164.2)

Tax Refund for Methanol Used in Biodiesel Production

A licensed biodiesel producer may apply for and obtain a tax refund for state fuel taxes paid on methanol used to produce biodiesel. (Reference South Dakota Statutes 10-47B-120.1)

Propane Tax Exemption

Propane is exempt from the state fuel excise tax when sold from a licensed propane vendor to a licensed propane user or a propane vehicle owner if it is delivered into a bulk storage tank that can then be used to deliver fuel into a motor vehicle. Fuel purchasers must obtain a propane user license before propane is delivered into their storage tanks. (Reference South Dakota Statutes 10-47B-167)

Utility/Private Incentives

Electric Vehicle (EV) Infrastructure Support

South Dakota utilities joined the National Electric Highway Coalition (NEHC), committing to create a network of direct current fast charging (DCFC) stations connecting major highway systems from the Atlantic Coast to the Pacific of the United States. NEHC utility members agree to ensure efficient and effective fast charging deployment plans that enable long distance EV travel, avoiding duplication among coalition utilities, and complement existing corridor DCFC sites. For more information, including a list of participating utilities and states, see the NEHC website.

Residential Electric Vehicle (EV) Charging Station Rebate

Black Hills Energy offers $500 rebates to residential customers for the purchase and installation of a Level 2 EV charging station. For more information, see the Black Hills Energy South Dakota Electric Residential Rebates website.

Laws and Regulations

Electric Vehicle (EV) Fee

EV owners must pay an annual fee of $50, in addition to standard vehicle registration fees. (Reference South Dakota Statutes 32-5-188)

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 South Dakota Statutes 34A-1-63 and 36A-1-64)

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)

Biodiesel Tax

Biodiesel and biodiesel blends are taxed at the state motor fuel excise tax rate of $0.28 per gallon. Beginning the fiscal quarter after which a biodiesel production facility in the state reaches a name plate capacity of at least 20 million gallons per year and fully produces at least 10 million gallons of biodiesel within one year, the tax on biodiesel and biodiesel blends is reduced to $0.26 per gallon. Biodiesel is defined as a fuel comprised of mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats. Biodiesel must meet the requirements of ASTM Standard D6751 and the U.S. Environmental Protection Agency registration and health effects testing program, as written January 1, 2008. Biodiesel blends are defined as blended special fuel containing a minimum of 5% biodiesel (B5). (Reference South Dakota Statutes 10-47B-3 through 10-47B-10)

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)

Public Utility Definition

An entity that owns, operates, controls, or manages a facility that supplies electricity to the public exclusively to charge electric vehicles is not defined as a public utility.

(Reference Senate Bill 80, 2022)

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)