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I haul a hazardous material that is diluted with water. Do I have to comply with HAZMAT regulations?

Generally the answer is yes, but your load must meet the definition of a hazardous material in 49 CFR Part 390.5.  If you still have HAZMAT in the mixture which meets the rules in the HAZMAT regulations then you will still have to comply.  If the state of the material is altered, the material may no longer pose a hazard and may not require compliance, but that decision must be made in accordance with federal regulations and cannot be decided solely because you diluted it.