A Canadian mining company won a key battle Monday night in its quest to build a rail shipping hub in Wabasha that is likely to accelerate the region's frac-sand boom at a time when local activists are trying to slow the industry's expansion.

The proposed depot would be Minnesota's biggest dedicated rail hub for frac sand headed to North Dakota's booming Bakken oil patch. But it could give rise to as many as 600 daily truck trips in the town of 2,500 people and, local opponents say, stands to alter the quality of life in a historic Mississippi River town that has been working hard to become a tourist destination.

"It's just growing exponentially,'' said Craig Falkum, who co-led a citizens' petition drive to require a study of possible environmental risks before the project could receive a permit.

The Wabasha City Council, facing legal pressure from Superior Sand Systems Inc. of Alberta, Canada, voted 5 to 1 Monday night to deny the environmental request.

The proposed 11.5-acre truck-to-railcar loading facility is slated to be built less than a mile from Wabasha's historic district and its landmark National Eagle Center, sites that attract about 100,000 visitors a year. The only remaining issue surrounding the project is setting operating restrictions in the face of community concerns about traffic hazards, congestion, noise and control of silica dust.

Because the proposed site is located on a Canadian Pacific railroad right-of-way, Superior Sand is asserting that federal railroad law pre-empts the Minnesota law under which the citizens' group requested an environmental worksheet.

When the city of Wabasha received state designation early this month to rule on the environmental worksheet, the frac-sand company quickly announced that it needed to commence operations by Dec. 20 or lose $33,843 a day. Superior Sand also said it could lose $40 million in secured contracts if the project were delayed. Monday's City Council vote was consistent with advice from the city's attorney and a review by the city Planning Commission.

"I think the city's fear is that they are going to get sued,'' Falkum said.

"We're in a tough spot,'' said David Schmidt, Wabasha city administrator.

Shipping bottleneck

Minnesota and Wisconsin have abundant deposits of the world's best frac sand, which is used in an oil-and-gas drilling technique known has hydro-fracking, and demand has exploded in the past three years in tandem with the nation's oil and gas boom. The crush-resistant silica sand is poured into pressurized wells with water and chemicals to unleash petroleum products trapped in deep, underground rock formations.

D'Arcy Duquette, an official with Superior Sand Systems, said in an interview last week that the company hopes to move ahead soon with its rail link. In addition to North Dakota, some of the company's frac sand will be shipped to San Antonio, Texas, he said.

The Wabasha facility will be able to move 1.2 million tons of frac sand a year -- enough for Superior Sand to consider mining in Minnesota, Duquette said.

The company already has a frac sand mine in Buffalo County, Wis., across the river from Wabasha, and will seek approval for two more Buffalo County mines at sites the company hasn't yet disclosed, Duquette said.

Superior Sand employs former Buffalo County Zoning Administrator Paul van Eijl as its Minnesota and Wisconsin land acquisitions manager. Duquette, meanwhile, worked for 39 years at Canadian Pacific, where he was director of business development in the United States before retiring and joining Superior Sand. "My knowledge of the railroad industry is a huge advantage,'' Duquette said.

Several groups have received permits to mine frac sand in Buffalo and Trempeleau counties along the Mississippi River in Wisconsin, but the area lacks a good rail outlet. BNSF Corp. runs freight up and down the Wisconsin side of the Mississippi, but marshy land makes loading areas scarce and the region lacks ready railcar capacity for sand, Duquette said.

To reach the Canadian Pacific spur in Wabasha, Superior Sand Systems will route semi-trucks over the bridge that connects Wabasha to Nelson, Wis.

Falkum's group, Friends of Wabasha, is asking the city to limit traffic to no more than 400 daily truck trips. But there has been discussion among the city's planners to allow up to 600 daily truck trips, with fewer loads on designated days. Friends of Wabasha also is asking that the facility be closed on weekends from May through October and for a limit on daily operations from 8 a.m. to 6 p.m.

"We've spent a lot of money developing a tourist industry and we are trying to protect it,'' Falkum said.

Duquette said the trans-loading business will create 18 jobs when it reaches full production, not counting trucking work. But he said the facility won't increase the city's property tax base.

Tony Kennedy 612-673-4213