Beginning this summer, the diesel fuel that farmers use for tractors and other off-road implements will undergo a change in order to meet new federal regulations established by the Environmental Protection Agency.

The new fuel standards mirror the change that occurred last year for on-road diesel fuel, in that off-road vehicles will now be required to utilize diesel fuel with lower sulfur content. This lower sulfur content will help reduce tractor emissions and increase air quality.

Currently farmers are allowed to utilize high-sulfur diesel fuel for their tractors and farm implements. However, in order to comply with the new regulations, this summer refineries will begin to reduce the amount of high-sulfur diesel that is available and instead replace it with the mandated low-sulfur diesel fuel.

In many cases, fuel companies may completely skip production of low-sulfur diesel and instead simply produce ultra-low sulfur diesel fuel (ULSD) which is the diesel fuel that most on-road trucks now run on.

Because there is an extra step needed to remove the sulfur from the fuel, it is likely that both the low-sulfur and ultra-low sulfur diesel will result in increased costs for diesel fuel.

Taxation issues
New York Farm Bureau has received clarification from the Department of Taxation and Finance that agriculture’s exemption for taxes on diesel fuel will still exist when purchasing low-sulfur or ULSD fuel.

It is important to recognize, however, that fuel distributors will have increased costs since they will now need to pay the tax upfront and request a refund from the Department. Some of these increased handling costs could be passed on to the farmer.

Additionally, while nothing prohibits a fuel distributor from accepting the at-the pump exemption agriculture has always been provided, fuel suppliers do have the ability to deny a tax exemption form, after which farmers will need to file for a refund. In some cases where fuel delivery companies are not able to obtain low-sulfur dyed diesel fuel, farmers may need to pay federal taxes up-front and then file for a refund.

Tractor engine issues
Sulfur actually serves an important role in diesel fuel, acting to provide lubricity to the engine.

Having such a large amount of sulfur removed could mean that the low-sulfur and ULSD fuels could have some negative impacts on certain engines. While some additives added by the fuel companies will substitute for the sulfur, it is recommended that, especially for older engines, farmers contact the equipment manufacturer to make sure that no other additives need to be considered.

Compliance
Farms that buy diesel in bulk quantities should be talking with their fuel supplier about when the change over will occur.

Farms have until early winter to make sure all of their diesel tanks are switched from high-sulfur to low-sulfur fuel. This can be accomplished either directly by emptying the tank and refilling it with low-sulfur diesel or slowly diluting the sulfur content of the existing fuel by adding low-sulfur diesel to any remaining high-sulfur fuel. For further information, contact your fuel supplier or visit online at www.nyfb.org.