Good jobs hang in the balance of Minnesota's frac sand debate

For a high school graduate who wanted nothing to do with college, Greg Stepka says, the limestone pit at Bryan Rock Products in Shakopee was a perfect refuge.

He started in 1981 at $11.36 an hour and now makes almost triple that amount — plus full health insurance and pension benefits.

"I've been in the pit for 32 years," Stepka said. "I think I've got a pretty good gig."

As activists rally at the State Capitol for a moratorium on Minnesota's emerging frac sand industry, business and labor groups say delays imposed by St. Paul could stifle the creation of hundreds of good jobs like Stepka's. The frac sand boom that has spread from Wisconsin into Minnesota, they say, should be welcomed as good news for struggling middle-class families.

"Everyone talks about the need for jobs, jobs and more jobs," said Jason George, legislative director for the International Union of Operating Engineers Local 49. "Well, here they are. What are they going to do?"

The jobs issue was close to the surface last week, when Gov. Mark Dayton signaled his opposition to a moratorium. Dayton's press secretary, Katharine Tinucci, said the governor wants a balanced approach that creates and retains good-paying jobs while also protecting citizens and the environment with "sound regulations."

A handful of Minnesota companies could soon be hiring, including three that have mined gravel and stone for decades and are now investing more than $100 million in new projects to mine and process silica sand, a critical ingredient in the nation's oil and gas "hydro-fracking" boom. A fourth company, Unimin Corp., is fully established in the frac sand business and just completed a major expansion in LeSueur County.

George said the growth of sand mining would quickly create 200 to 300 trade union jobs in small towns and rural areas, helping to fill a blue-collar employment deficit that worsened during the recession. Minnesota's construction, logging and mining sector lost 12,900 jobs from 2010 to 2011 — the most by any state in the union, according to the Associated General Contractors of America.

"We are clawing our way back, but sand mining is an opportunity that we just can't afford to miss," George said.

Sen. Matt Schmit, D-Red Wing, argues that the job opportunities won't go away if Minnesota takes its time. He has introduced a bill to halt permitting of new sand facilities until the state can assess environmental and other threats from sand mining, saying it's about "getting it right" before development spins out of control. The energy industry's demand for frac sand, he says, is a long-term proposition.

But George and others say waiting will only put Minnesota further behind Wisconsin, where nearly 100 mining, processing and transportation facilities have been permitted over the past four years without new regulation from the state. While anti-frac sand activists consider Wisconsin's gold-rush mentality something Minnesota should avoid, business and labor groups wonder if the Badger State is locking up the frac sand market by building more production capacity than the industry will need.

"The longer we wait, the further and further behind we get," George said.

Kids in college

Stepka, 50, grew up in New Prague and considers himself lucky to still live there among friends, family and the town's Czechoslovakian charms. His union seniority gives him year-round work — he plows, welds, operates commercial vehicles, repairs equipment and performs other maintenance work in a four-day, 40-hour schedule that puts him at home with his family on Fridays, Saturdays and Sundays. He works close enough to home to get to his kids' ballgames.

With two kids in college and a third headed that way, Stepka and his wife, Jean, are acutely interested in Bryan Rock's future. He has made two trips to the State Capitol to observe the debate on frac sand bills.

"These aren't meaningless jobs," Stepka said during a break at one of the hearings.

Bryan Rock is the kind of workplace where sons follow in the footsteps of their fathers and the average employee has been there 20 years. When a truck-driving job opened recently, more than 50 people applied in person at the company's office. "It was like we were running a Thanksgiving sale," said Matt Bryan, who belongs to Bryan Rock's fourth generation of family owners.

One of the company's core products is a crushed limestone playing surface for baseball and softball diamonds, but now the company is poised to expand into frac sand. Its pending application for a permit to mine frac sand on 680 acres in Scott County, including silica deposits that currently lie below its Shakopee limestone pit, will extend the life of the quarry and give rise to 50 to 70 new jobs, Matt Bryan said.

Bryan's so-called Merriam Junction Sands project will require an investment of $40 million to build a railroad yard and buy equipment to wash and sort the sand. The site borders the Minnesota Valley National Wildlife Refuge. Bryan said a lengthy environmental study required by Scott County will cost the companies about $2 million. Waiting for a statewide environmental study could delay the project without adding any value, Bryan said. And a state moratorium would simply kill certain projects, he said, because some investors will go elsewhere.

"These kinds of jobs are pretty substantial for our community," Matt Bryan said.

Empty promises?

But not everyone is convinced. Jim Drost, an engineer from Stillwater who used to work for the U.S. Bureau of Mines, said mining companies often overstate the number of jobs they will create when they apply for operating permits. And, he said, many of the roughly 2,800 new mining jobs in Wisconsin have gone to contractors, including independent operators who don't receive fringe benefits.

Others say the jobs can flicker off and on depending on the market for frac sand. In rural areas where processing centers are built, Drost said, the best jobs often go to outsiders with previous experience.

Lynn Schoen, a Wabasha City Council member, said a sand rail-loading facility now being built could kill more jobs in tourism and the town's medical services than it creates. Heavy truck traffic in the historic river town, she said, is likely to alienate visitors.

Even if the facility employed a lot of local residents, no number of new jobs could justify environmental pollution that could result from lax standards, she said.

In North Mankato, another traditional mining company has proposed a frac sand project that would create 35 new jobs paying $20 to $25 an hour, plus benefits. Scott Sustacek, CEO of Jordan Sands, said the new facility is set to open next year — if Minnesota doesn't pass a moratorium or impose other new permitting delays.

Greater Mankato Growth, the area's chamber of commerce, has estimated that the Jordan Sands project will have an immediate, local economic impact of more than $60 million and could generate an ongoing economic impact of more than $100 million a year.

Steve Hine, research director for Minnesota's Department of Employment and Economic Development, said starting wages of $20 or more for workers who hold nothing more than a high school diploma would be "very competitive" in Minnesota.

Overall in Minnesota, private-sector union jobs have been disappearing and construction jobs tanked badly in the recession. From 2011 to 2012, Minnesota lost 32,000 union jobs, while total employment in the state actually increased, according to a federal tally. But Hine said the state has recently seen steady growth in high-end blue-collar jobs and expects more this summer from new construction.

George, the union official, said the Legislature has to strike a balance that allows the industry to grow. "We're talking about hundreds of jobs right now," George said. "But it could be thousands."

Tony Kennedy • 612-673-4213