In a deal designed to protect sensitive groundwater and pine forests in central Minnesota, a large regional potato grower has agreed to scale back an ambitious expansion plan in exchange for state regulators dropping their demand for a broad environmental review.

The voluntary reduction by North Dakota-based R.D. Offutt Co. will take place while the company partners with the Minnesota Department of Natural Resources (DNR) to study related groundwater usage and deforestation in the Pineland Sands area, located in Becker, Cass, Hubbard and Wadena counties.

The region of permeable soil, lakes, rivers and woods is of special importance because it sits over a large aquifer that could be polluted by farm chemicals and depleted by crop irrigation. Other groups already are studying how the forest-to-farmland transformation is affecting the area's watershed, a basin that drains into the Upper Mississippi River and supplies drinking water for 1.7 million people in the Twin Cities.

"We remain concerned about the broader implications of land conversion and increased crop irrigation," said assistant DNR Commissioner Barb Naramore. "These trends are not tied to a single company."

Offutt CEO Keith McGovern said his company has agreed to sharply reduce the number of irrigation permit applications it has on file with the DNR. At one time, the company had 54 preliminary notifications and/or groundwater permit applications pending with the DNR, the agency said. And the company already had bulldozed some 4,000 acres of previously forested land into irrigated cropland.

McGovern said Offutt agreed to withdraw all but five of the water-use requests and has no intent to make further requests until the company and state learn more about the environmental effects of additional farming in the area. He also said the company has stopped purchasing new land in the region for agricultural development.

Offutt, a supplier to the McDonald's restaurant chain, currently owns 13 undeveloped parcels in the area, each about 120 acres in size.

"Our company is looking forward to the results of the study," McGovern said.

Naramore said the memorandum of understanding between the DNR and Offutt was signed recently after months of talks. Under the agreement, the agency dropped its pursuit of a time-consuming and expensive Environmental Assessment work sheet, which would have precluded Offutt from building any projects that depend on groundwater well approvals.

Naramore said the DNR will review the remaining five permit applications in normal fashion over the next few months. Approval is not assured, she said, and the agency will solicit input from local public sources before making decisions. If all five permit applications are granted in full, Offutt would be authorized to dig new wells that would pump another 191 million gallons a year for the irrigation of potatoes and other crops.

The five parcels poised for corporate farming by Offutt include two fields already cleared for production and three others that McGovern described as previously logged and patchy with various shrubs, sticks and small trees.

Rich Biske, freshwater program director for The Nature Conservancy, a nonprofit environmental group, said the agreement seems reasonable and will slow land conversions in the region. Minnesota ranks second in the country for deforestation, he said, and needs to decide how to manage land in an area previously dominated by forestry — an industry that has historically been good for water quality.

"It's not just groundwater quantity," Biske said. "What do we want for that area?"

Naramore said the DNR has preliminary plans to ask the Legislature next year for an initial $1.5 million to fund its special study. The research project will involve other state agencies and Offutt, she said.

Toxic Taters, a grass-roots group opposed to Offutt's expansion in the Pineland Sands area, issued a statement saying it is wary of the company's reduction of well permit requests "to avoid an environmental assessment." Still, the group said it is "glad to see" the DNR's study initiative at a time when there are many unanswered questions about land-use changes in the area.

Tony Kennedy • 612-673-4213