By Howard Fischer
Capitol Media Services
PHOENIX -- Saying she's trying to cut costs for Arizonans, Gov. Katie Hobbs late Tuesday ordered state officials to temporarily stop enforcing laws that now bar farmers and ranchers from using cheaper "red dye diesel'' in the trucks they use to deliver agricultural products.
"Arizonans are feeling the squeeze at the grocery store, and we are stepping up to deliver relief,'' said the Democratic governor in a press release late Tuesday. "By cutting taxes and regulations for our farmers and ranchers, we're lowering the cost of doing business and helping Arizona families put food on the table in the face of skyrocketing costs due to the war in Iran.''
Hobbs, in her executive order, also is going to allow heavier vehicles hauling agricultural products to use state highways.
But exactly how all that would work -- and whether there actually would be any permanent financial relief -- remains unclear.
At the heart of the problem is that diesel fuel is running far north of $6 a gallon. That compares according to AAA to about $3.64 a gallon a year ago.
John Boelts, president of the Arizona Farm Bureau, said all that is driving up costs for producers of food and fiber. And that, in turn, is reflected in the costs to consumers.
Farmers and others already can buy and use red-dye fuel in for off-road use, things ranging from farm equipment and construction bulldozers to backup generators and data center power systems.
The product is virtually chemically the same as diesel sold at fuel pumps -- but without that 24.4-cent-a-gallon federal levy and 26 cent state tax.
What happens is that when fuel is picked up at a distribution hub, that red dye is added to show that the buyers did not pay those taxes based on that promise to use it only off road. More to the point, that dye allows state and federal transportation officials to determine whether those over-the-road trucks are cheating by buying fuel without paying the levy.
What the governor ordered will let agricultural operations buy and use that less expensive dyed fuel for all of their operations, including like deliveries, without fear of penalty -- at least through the end of the year.
The move by Hobbs comes more than a week after President Trump issued his own order allowing all truckers -- not just those hauling agricultural products -- to buy the specially marked diesel through 2026.
Less clear, however, is whether the actions by Trump or Hobbs will actually save farmers and truckers any money in the long run.
Trump acknowledged that all his order does is defer payment of those federal excise taxes -- the ones that truckers normally would have to pay for their on-road use -- for the remainder of the year, without penalties or interest.
He makes no mention of what happens in January to all those deferred taxes. Instead, the White House says that it wants to "explore pathways to eliminate the obligation to pay the deferred taxes.''
Hobbs is using a different tactic -- and not just because her edict about the use of red-dye fuel affects only vehicles engaged in direct agricultural operations and those that distribute agricultural products.
Her order tells the Arizona Department of Transportation, which monitors trucks, to "de-prioritize'' the enforcement of state laws that prohibit the use of red dye diesel, at least as far as those hauling agricultural products. It specifically directs them to "refrain from initiating inspections, citations, or other enforcement actions based solely upon the presence or used of dyed fuel in such vehicles'' through the end of the year.
Gubernatorial press aide Christian Slater had no immediate answers to whether truck owners will face a financial liability in January for all the diesel they will buy between now and the end of the year without paying that state levy.
Still, Boelts said, any help is welcome. "It's a temporary reprieve,'' said Boelts who raises green vegetables like iceberg and romaine lettuce, cauliflower and broccoli in the Yuma area. "The hope would be that that deferral is permanent.''
Ultimately, he said, the solution -- at least as far as the state diesel levy is concerned -- may rest with the Legislature.
Even with the governor's order, he said there's another factor that may stand in the way of farmers being able to get some relief.
Boelts said many manufacturers of new diesel fuel have told buyers that the use of red-dye fuel will void the warranty. And that, he said, may convince some farmers that the dollar savings of tax-free fuel are not worth that financial risk.
The other key element of the governor's program is designed to allow more agricultural products to be delivered in a single load.
Under current law, trucks are limited to 80,000 pounds unless the owners or operators obtain a special permit -- at a fee. Hobbs is directing ADOT to charge no fees for trucks weighing up to 90,800 pounds.
But, even here, there is a catch of sorts. Her permission applies only to "non-interstate state highways,'' roads that generally carry a state-designated number. But that still leaves the interstate highways, controlled by the federal government, off limits to those overweight trucks.
Hobbs said Tuesday she is calling on the federal government to allow the larger trucks on those roads.
Slater had no immediate answer to the question of whether that extra load could mean more damage -- and lead to the more frequent need for repairs.
There's also a political element to this.
The governor, in her prepared press release, said the high cost of fuel is "due to the war in Iran.''
Trump, for his part, said the reason for the restricted supply of diesel is "driven by the Russia-Ukraine war and a lack of refining capacity around the world.'' And that, the president said is due to "Democrat-led states that choose to shut down refineries in the name of 'Green Energy' policies.''
Boelts said that lack of capacity takes its toll. He said that there hasn't been a new refinery built in this country in the 49 years he has been alive. Several other states already have taken action to cut the cost of fuel.
Reuters reports states like North Carolina, South Dakota and Oklahoma are allowing owners of diesel vehicles to use the red-dye diesel and escape their own state taxes. But other states like Georgia and Ohio have gone farther, reducing the tax on both diesel and gasoline
Hobbs said in March, as fuel prices were soaring, she would consider suspending the state gasoline tax. It is 18 cents a gallon, with an additional penny set aside to clean up old fuel tanks.
But that was during the time she was negotiating a new state budget with the Republican-controlled Legislature. And nothing ever came of that.
In a released statement, Cory Mellon, a member of the Board of Directors for the Yuma Fresh Vegetable Association and Vice President of Mellon Farms said “Ultimately, this is more than helping Arizona farmers. Lowering unnecessary costs throughout the agricultural supply chain helps keep Arizona-grown food competitive and more affordable for consumers here in Arizona and across the United States. We appreciate the Governor’s willingness to recognize the challenges facing Arizona agriculture and take steps to lessen the burden of one of our most significant production and transportation inputs.”
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KAWC Staff contributed to this report.