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18.15.504    DYED SPECIAL FUEL

(1) The department has adopted the following provisions relating to dye color and concentration requirements for tax-exempt diesel fuel, excluding buses and governmental vehicles.

(a) In Montana red dye will be used to identify all tax-exempt special fuel, regardless of the sulfur content of that fuel. Colored special fuel from Canada will be considered tax exempt if the dye concentration has been approved by the Canadian authorities, but it may not be used on public roads.

(b) The special fuel will satisfy the federal dyeing requirement if it contains the dye solvent red 164 at a concentration spectrally equivalent to 3.9 pounds per thousand barrels of the solid dye standard solvent red 26 or contains any dye of a type and in a concentration that has been approved by the commissioner of internal revenue service. The presence of dye at a concentration of 2.0 milligrams per liter (mg/l), or greater is considered to be in violation of 15-70-441, MCA.

(2) Dyed special fuel can be purchased tax free in Montana and Canada, but it is illegal to use it on the public roads, regardless of where it was purchased, except for the movement of off-road vehicles traveling from one location to another as indicated in these administrative rules and any vehicles described in these administrative rules.

(3) The department will allow a grace period of ten days from the date of a dyed fuel inspection that resulted in a violation to remove the presence of dye from a vehicle before a subsequent violation may be issued. After the grace period, the operator of the vehicle may be cited for violation of 15-70-441, MCA.

(4) Use of high sulphur dyed special fuel on public roads is prohibited by the federal environmental protection agency (EPA), as set forth in 40 CFR 80.29.

(5) Contractors may not store or use non-taxed diesel in equipment, motor vehicles, and stationary engines used upon public roads or within any public road project limits as defined in 15-70-403, MCA, unless the fuel has been declared to the department. Contractors in violation of this section are subject to penalties upon conviction as defined in 15-70-443, MCA, and may be suspended for up to six months from participating in future department contracts.

(6) The dye must be injected by means of a mechanical injection process to diesel fuel at the terminal rack. All dyed special fuel sold in, imported to, or exported from the state of Montana shall have dye added in accordance with federal requirements of type and quantity and will be injected by mechanical injection systems or by a system approved by the department.

(7) Exceptions:

(a) If a mechanical injection system is inoperative, the terminal may "splash dye" special fuel for tax free sales. Terminals must notify the department on the first working day after the injection system becomes inoperative. The terminal shall note on each invoice and bill of lading that the fuel is splash dyed and file a separate fuel tax report for splash dyed fuel. The terminal shall keep records of the date and time the dye injection system became inoperative and when the injection system was made operational. All records shall be kept and be available for inspection upon request of the department or representative.

(b) If a mechanical injection system should inject an insufficient amount of dye to meet state and federal standards, the terminal may splash dye keeping the same records as in (a).

(c) The terminal operator or his designated representative may splash dye under the above conditions. Each terminal shall keep a record of persons conducting splash dying. Transport drivers shall not be listed as persons conducting splash dying.

(d) Special fuels splash dyed and not meeting all of the above standards shall be considered by the state as undyed fuel and the terminal responsible for splash dying the fuel shall be liable for all tax, penalty and interest on the fuel.  


History: 15-70-104, 15-70-441, 60-2-201, MCA; IMP, 15-70-443, 60-2-111, MCA; NEW, 1999 MAR p. 645, Eff. 4/9/99; TRANS and AMD, from ARM 18.9.324, 2001 MAR p. 2143, Eff. 10/26/01; TRANS & AMD from ARM 18.10.112, 2016 MAR p. 1849, Eff. 10/15/16.

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