In a retreat from tough language that would have put much of southeastern Minnesota off limits to frac sand mining, state officials have reached a compromise that will allow mines near the region's trout streams, but only if companies follow new permitting rules.

As part of a deal announced Tuesday, Sen. Matt Schmit, DFL-Red Wing, said he'll drop his effort to ban frac sand mining within a mile of any trout stream in the southeast corner of the state. The ban was embraced by Gov. Mark Dayton until a compromise emerged at a recent meeting with Schmit, industry lobbyists, three state agency heads and organized labor.

If the deal goes as expected, the 2013 legislative session will end without sweeping statewide environmental protections sought by a throng of "fractivists" from areas around Red Wing, Wabasha, Winona and other parts of the bluff country known as Minnesota's Paleozoic Plateau.

"Senator Schmit fought as hard as he could, but there is just nothing comprehensive that will come out of it," said Bobby King of the Land Stewardship Project.

But Schmit and others say the proposed Department of Natural Resources (DNR) permitting procedure, coupled with an assortment of other new checks on the fast-growing industry, will help protect Minnesota tourism, trout streams and rural life against the spread of open-pit sand excavations and processing plants. Like Wisconsin, where sand mining has exploded in the last four years, Minnesota has vast deposits of crush-resistant sand needed for the oil and gas drilling technique known as "fracking."

"I'm not thrilled with it, but it's a good start. It's progress," said John Lenczewski, executive director of Minnesota Trout Unlimited.

Under the compromise, any company proposing to dig within a mile of a trout stream within the Paleozoic Plateau would need a special DNR permit. Site-specific studies of hydrogeological impacts also would be required, and the agency will have new power to limit where and how deep a mine can go.

"It's a clear win in protecting trout streams," Schmit said.

Jason George, legislative and political director for Local 49 of the International Union of Operating Engineers, said the deal worked out in Dayton's office last week strikes a good balance.

The "49ers" joined frac sand companies in defeating three core changes sought by environmentalists: a temporary statewide ban on new frac sand projects, an intensive study of the industry's cumulative effects, and binding new statewide standards to protect public health and the environment.

What remains is a system where sand mining, processing and transport are largely controlled by local units of government. Lobbyists argued successfully that the status quo is stringent enough to protect Minnesotans and the environment. "We're going to have an industry in Minnesota, and it will be done the right way," George said.

But King said the state lacks rules to address concerns about water depletion, water pollution, air quality and transportation raised by hundreds of citizens and dozens of local officials from southeastern Minnesota.

Dayton's spokeswoman, Katharine Tinucci, wouldn't say why the governor softened his position but said, "The governor remains committed to protecting our natural resources, especially in this sensitive area."

Schmit said the new permitting requirement is the next-best thing to a hard setback. In addition, he said, the Legislature is expected to adopt a provision mandating an environmental study for any proposed new frac sand mine of 20 or more acres; the current threshold is 40 or more acres. In addition, the state will update environmental review rules, give local governments authority to extend sand moratoriums and require the state Pollution Control Agency to create air quality rules.

Schmit said the state will also assemble a silica sand technical assistance team to provide local governments with help in regulating and monitoring sand mining and processing.

"We have not left with an empty bag, that's for sure," Schmit said.

Tony Kennedy • 612-673-4213