Dyed diesel is not allowed in use of private on-road vehicles. Farm producers or others who do so risk damaging their engines, voiding their vehicles’ warranty, and, if they’re caught, a big fine.
The fuel is dyed because it’s exempted from highway taxes; it can be used in farm implements, timber harvesting and construction equipment, and other vehicles that are not licensed for highway travel. Donnie Roberson, assistant manager of the Arkansas Department of Finance and Administration’s Office of Excise Tax Administration, told Ozarks Farm and Neighbor, “If an enforcement officer stops a diesel pickup truck for an inspection, they may stick a straw down in the tank to get a sample of diesel fuel. If the fuel is red, then that means they have used the off-road dyed diesel in a motor vehicle.”
Arkansas statute provides for a $10/gallon penalty, based on the capacity of the truck; if the truck had a 35-gallon tank, then the penalty would be $350 – plus the motor fuel tax of 22.5 cents/gallon, which is assessed on top of that. “If the IRS stops you,” Roberson said, “they also have a penalty provision of their own,” which is the same amount per gallon, but a minimum of $1,000. The law in Arkansas took effect in 1995.
You may get caught even if it’s been a while since you used the illicit fuel. “Once you put dyed diesel in a vehicle’s tank, it make take a little while to wash all that dye out,” Roberson said. “If it’s an older-model vehicle, sometimes the dye might get into the pores.” Every now and then, Roberson gets reports of a few violations. The state Highway Police conduct the stops and send DFA’s Revenue Division the reports, which makes the assessments.
Why is it a threat to engines? Because dyed fuel does not necessarily have to meet the ultra-low-sulfur (ULSD) requirements for over-the-road diesel imposed by the federal EPA in 2006. Coleman Jones, manager of biofuels implementation of General Motors, told OFN in e-mailed correspondence, “Dyed fuel is typically higher sulfur, since it is cheaper and is not destined for on-road use.” ULSD is less than 15 parts per million sulfur, and is required for vehicles built since 2007; older vehicles use low sulfur, less than 500 ppm, and off road vehicles can use fuel with as much as 3,000 ppm.
Jones said fuel that is not ULSD will damage the emissions system of a newer vehicle. “This damage would not be covered under warranty as it constitutes misfueling,” he said. “This would also make one eligible for federal civil penalties of $32,500/day, in addition to the penalties for not paying the road tax.”
There is only one red dye legal for use nationwide in diesel fuel; it’s called “Solvent Red 164” or “Oil Red B,” and is a synthetic red diazo dye. This dye is used because diazo dyes are soluble in hydrocarbons like fuel and are known for their vivid colors; the IRS only requires the use of 3.9 pounds of the dye in 1,000 barrels of fuel.
Just so there’s no mistake, the IRS requires the message, “DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE” to be posted by the seller of dyed diesel fuel; if the message is not posted, the government presumes the seller knows the fuel will not be used for a nontaxable use.
