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Gov. Sanders Suspends Dyed Diesel Penalties for Arkansas Farmers and Loggers Amid High Fuel Costs

Gov. Sanders Suspends Dyed Diesel Penalties for Arkansas Farmers and Loggers Amid High Fuel Costs

Photo: Metro Services


Little Rock, AR – Jonesboro Right Now – Arkansas Gov. Sarah Huckabee Sanders declared a state of emergency Tuesday, signing an executive order that temporarily allows Arkansas farmers and loggers to use tax-free, dyed diesel fuel in highway vehicles without facing state penalties.

The order takes effect Sept. 30 and runs through Oct. 30. A news release said it aims to provide immediate financial and logistical relief during the busy fall harvest season as agricultural operations grapple with elevated fuel prices.

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Typically, dyed diesel is restricted strictly to off-road use—such as in tractors, combines, and logging equipment. State law normally prohibits its use in on-road highway vehicles, with violations triggering a $10-per-gallon penalty plus additional taxes from the Department of Finance and Administration (DFA). Executive Order 26-15 suspends those penalties for qualified operations, allowing them to fuel their road vehicles directly from existing on-farm storage tanks.

The intervention comes as the retail price of diesel fuel in Arkansas has blown past earlier economic projections.

The 2026 crop enterprise budgets prepared by the University of Arkansas Cooperative Extension Service had anticipated diesel at $2.46 per gallon—less than half of the current prevailing prices. U.S. distillate inventories are also currently sitting 13% below the five-year seasonal average.

To qualify for the temporary penalty waiver, vehicles must meet the following criteria:

  • Vehicle Type: Must qualify as a Class 2, 3, 4, 5, 6, or 8 motor vehicle.
  • Ownership: Must be owned and operated by an individual or business actively engaged in commercial agricultural or forestry operations.
  • Usage: Must be primarily used to carry out the functions of that agriculture or forestry business.
  • Registration: Must be registered in the state of Arkansas.
  • Exclusions: Cannot be a licensed vehicle under the International Fuel Tax Agreement (IFTA).

The order officially defines an agricultural operation as a commercial business producing food, fiber, grass sod, nursery products, or livestock. Forestry operations include the entire timber harvesting process, from severing a tree to loading it into a truck for transport.

In addition to waiving state-level penalties, the governor directed the DFA Secretary to formally request federal dyed diesel penalty relief from the Internal Revenue Service by the end of the week.

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