AYESHA RASCOE, HOST:
President Trump signed an executive order at a campaign rally in Nebraska earlier this month designed to appeal to rural voters - making diesel cheaper. But, turns out, it's not so simple, and it's causing a lot of confusion, as South Dakota Public Broadcasting's Jackson Dircks explains.
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JACKSON DIRCKS, BYLINE: At a farm co-op in Salem, South Dakota, population 1,300, Gerald Otte is topping off his big, white 18-wheeler full of soybeans. It burns diesel.
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GERALD OTTE: It's a lot. I mean, it's $2.50 that we're paying more. You know, we were at 3.50, and now we're at 5.89. It's a lot.
DIRCKS: This gas station is in farm country. So Otte can choose between two kinds of diesel. One dyed red is 24.4 cents a gallon cheaper. That's because it's exempt from federal highway taxes. It's the same as regular diesel, except for its color. It can only legally be used off-road, like in tractors. Trump's executive order says it's now OK to fill up highway vehicles with red diesel through the end of the year.
(SOUNDBITE OF TRUCK RUNNING)
OTTE: I think that pickup just did.
DIRCKS: But Otte says his company told him to keep using regular non-dyed diesel.
OTTE: They said I shouldn't do it because they're probably going to end up coming back and taxing us on that red fuel eventually.
DIRCKS: That's because...
MOLLY NIXON: The president really doesn't have the legal authority to say to the IRS, don't collect the tax. Don't assess the tax.
DIRCKS: Molly Nixon is a senior fellow in executive power at the Cato Institute, a libertarian-leaning think tank. Trump's order only defers payment of federal taxes. So companies like Otte's are worried if they buy the red, untaxed diesel now, they're going to get a bill for it later.
NIXON: So there's sort of a recognition here that actually getting rid of the tax might take more than any agency can do at this point - might require legislation.
DIRCKS: South Dakota's governor is also telling people not to fill up their highway vehicles on dyed diesel. He's a Republican Trump fan who's up for reelection in a very pro-Trump state. But...
LARRY RHODEN: At the end of the day, when the dust settles, we're going to take our time and make sure that nobody's caught in the backwash of unintended consequences because it is very confusing.
DIRCKS: And just like Trump is telling the IRS not to penalize people for using dyed diesel, Rhoden's directing state officials not to check gas tanks for it throughout the year. State Democrats, though, want Rhoden to call a special session to suspend the state's 28 cents per gallon diesel tax. South Dakota's state's Trucking Association sent out a flyer advising not to change fuel practices because of the uncertainty about potential tax liability.
Back at the co-op in Salem, Scott fills up a big diesel truck he's driving to a grain mill. He's not using the cheaper, red-dyed diesel either.
SCOTT: Yeah. I heard so - that Trump OK'd it, but I don't know if I totally trust on that, you know, unless they gave you a piece of paper.
DIRCKS: Scott requested we only use his first name because he said he's had negative experiences after being interviewed by the media and is concerned about his reputation in a small town. Trump has won this county by close to 70% in the last three elections, but Scott is frustrated.
SCOTT: I think it's asinine when you got to pay over a thousand dollars to fill your truck up. Yeah, I remember that happening a few years ago, but this is just ridiculous, I think.
DIRCKS: On Wednesday, the IRS said it won't inspect vehicles or impose penalties on people using cheaper dyed diesel on highways for the rest of the year. It says it, quote, "anticipates that it will offer further guidance" about postponing the tax and "explore avenues to eliminate" the requirement to pay it. For NPR News, I'm Jackson Dircks in Salem, South Dakota.
(SOUNDBITE OF OSMAN'S "LOOK AT THE SKY") Transcript provided by NPR, Copyright NPR.
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