Maria Barron came to rural Minnesota 10 years ago from Mexico so her husband could work in a nearby dairy farm.

They quickly grew to love the pastoral fields in Murdock, a town of fewer than 300 people. They joined a Roman Catholic church and felt safe when their children, 12 and 14, played outside with children of Mexican and Central American families that settled nearby.

But in December, that feeling of security crumbled when Murdock’s mayor and City Council gave an organization for “ethnic European folk,” known for excluding anyone who is not white, a permit to open a church on Main Avenue, about four blocks from Ms. Barron’s church.

The group, the Asatru Folk Assembly, which describes itself as centered around a “native, pre-Christian spirituality,” has been identified as a white supremacist hate group by other Pagan believers and organizations like the Southern Poverty Law Center.

The 3-1 vote in December to approve a permit for the group has made Murdock, which was mostly known for soybeans, corn and its proximity to enormous dairy farms, the subject of intense national attention.

The decision alarmed many residents, particularly residents of color who until recently lived comfortably in the majority-white town. Ms. Barron said she and other mothers had discussed taking turns to watch their children when they play outside. When the elementary school asked Latino families to participate in a video production, Ms. Barron said, many declined.

“I don’t feel threatened right now. But I feel worried,” she said. “What worries me is losing our sense of peace.”

Many residents fear that similar groups will try “to get some sort of toehold here because they feel this is some refuge where they can come and foment this hate,” said Pete Kennedy, 59, an engineer who has lived in the town for about 50 years.

Town leaders have insisted they had no choice but to grant a conditional-use permit, or CUP, because of legal protections that forbid governments from using land-use regulations to impose a substantial burden on people trying to practice their religion.

The approval “was strictly a zoning issue the Council felt like it needed to legally abide by,” Mayor Craig Kavanagh said in a statement to residents last month.

He added, “If you think this decision was a cake walk and you jump to a conclusion that, because we approved the CUP zoning, we are racists, you are dead wrong.”

Allen Turnage, a member of the Asatru Folk Assembly who attended town hearings, did not respond to messages seeking comment. The group has about 500 members nationwide, said Lecia Brooks, chief of staff at the Southern Poverty Law Center, a nonprofit known for its analyses of hate groups.

According to its website, the Assembly believes “those activities and behaviors supportive of the white family should be encouraged while those activities and behaviors destructive of the white family are to be discouraged.”

The Anti-Defamation League has called the Assembly an “extremist group.” In 2015, the F.B.I. stopped a plot to bomb or shoot Jewish synagogues and Black churches by two men who subscribed “to a white supremacy extremist version of the Asatru faith,” an agent wrote in a federal affidavit. It is one of several like-minded groups that have adopted the imagery of Vikings, Norse mythology and medieval Europe.

While the group may be small, Ms. Brooks said, “We’re concerned about it because it continues to advance the desires of white nationalists to create a white ethno-state.” Such groups sometimes set up in largely white communities because they believe it will help them recruit more members, she said.

Mr. Turnage told The Star Tribune of Minneapolis that the Assembly was “specifically a Northern European religion, and that’s it.”

“We think our faith is worthy of honor and respect like anyone else’s,” he said.

Such explanations hide other intentions, said Karsonya Wise Whitehead, an associate professor of African and African-American Studies at Loyola University Maryland.

“They’re trying to act as if we don’t recognize racism when we see it and when we hear it,” she said. “The explanation that ‘we want to engage in and protect our heritage’ — that’s just an update on language that was used to set up Jim Crow.”

The group has said that no more than 20 to 30 members will be at the building, a wooden former Lutheran church, said Donald Wilcox, the city’s attorney.

In June, it was sold to the Assembly for $45,000, according to county records. Since then, people have been seen clearing brush and fixing up the building. None of the members live in Murdock, according to city officials.

Mr. Wilcox said residents made it clear — through letters and demonstrations — that they did not want the group to open a church.

The question for the Council, however, was whether the group was a legitimate religion with the protected right to use the building.

“We arrived at the decision that there wasn’t any sufficient evidence to say that they weren’t,” Mr. Wilcox said. The church has not opened yet and the group still needs to meet with the city’s building inspector, he said.

The city could have denied the permit by arguing that it had a compelling interest in prohibiting race discrimination, said Timothy Zick, a professor at William & Mary Law School. But it would have been a difficult fight, he said.

The group could have argued that it was protected by the same federal law that protects Muslims or Jews from discrimination by municipalities that would prevent them from opening a mosque or a synagogue, he said.

City Councilor James Diederich, who voted to approve the permit, said he did not want to see the town pulled into a protracted legal battle. He said that before the vote, residents told him they opposed the organization’s presence. Others left letters on his doorstep.

“Some nice and some not so,” Mr. Diederich said. “All anonymous.”

At a nearby church, the Catholic Church of the Sacred Heart, the Rev. Jeremy Kucera said that last month his assistant called the police after finding a profanity-laced message on the church voice mail. Apparently, the caller had confused the church with the Assembly.

“I hope someone shoots up your church,” the caller said, according to a recording of the message.

The Assembly’s opponents plan to spread information about its beliefs and prevent it from recruiting, said Victoria Guillemard, a student at the Mitchell Hamline School of Law in St. Paul, who lives in Murdock and formed the Murdock Area Alliance Against Hate.

Christian Duruji, a Black lawyer who lives in Pennock, a town about 12 miles away, said he was heartened last fall when dozens of residents challenged Mr. Turnage at a public hearing.

He attended the meeting with his wife, who grew up in Murdock and joined Ms. Guillemard’s group. The couple frequently visit Murdock to visit their 2-year-old daughter’s grandparents.

“The fact that this little itty-bitty town in the back pocket of Minnesota came out and spoke out against racism — that was really encouraging to me,” Mr. Duruji said.

Mr. Diederich, the city councilor, said he expected that residents would watch carefully for any permit violations and swiftly report them.

“Until then,” he said, “we’re going to watch and wait and see.”

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