In rails 3, there's no need for an initializer. Instead we use a

Railstie. Additionally, we now default to app/stylesheets for sass files
and public/stylesheets for css files -- though they can still be changed
after installation or on the command line during project initialization.
Compass is now a gem plugin in a rails environment.

Lastly, in a rails3 environment the compass configuration can now be
changed without restarting the rails server process.

lib/compass/app_integration/rails/actionpack3/railtie.rb

@@ -0,0 +1,17 @@
+require 'compass'
+require 'rails'
+module Compass
+  class Railtie < Rails::Railtie
+    config.to_prepare do
+      # putting this here allows compass to detect
+      # and adjust to changes to the project configuration
+      Compass.reset_configuration!
+      Compass::AppIntegration::Rails.initialize!
+    end
+
+    # Might need to do this...
+    # initializer "compass/railtie.configure_rails_initialization" do |app|
+    #   puts "Initializing compass"
+    # end
+  end
+end

lib/compass/app_integration/rails/installer.rb

@@ -23,8 +23,10 @@ module Compass
             directory File.dirname(config_file)
             write_file config_file, config_contents
           end
-          directory File.dirname(targetize('config/initializers/compass.rb'))
-          write_file targetize('config/initializers/compass.rb'), initializer_contents
+          unless rails3?
+            directory File.dirname(targetize('config/initializers/compass.rb'))
+            write_file targetize('config/initializers/compass.rb'), initializer_contents
+          end
         end
 
         def rails3?
@@ -73,26 +75,34 @@ NEXTSTEPS
         end
 
         def prompt_sass_dir
-          recommended_location = separate('app/stylesheets')
-          default_location = separate('public/stylesheets/sass')
-          print %Q{Compass recommends that you keep your stylesheets in #{recommended_location}
-  instead of the Sass default location of #{default_location}.
-  Is this OK? (Y/n) }
-          answer = $stdin.gets.downcase[0]
-          answer == ?n ? default_location : recommended_location
+          if rails3?
+            nil
+          else
+            recommended_location = separate('app/stylesheets')
+            default_location = separate('public/stylesheets/sass')
+            print %Q{Compass recommends that you keep your stylesheets in #{recommended_location}
+    instead of the Sass default location of #{default_location}.
+    Is this OK? (Y/n) }
+            answer = $stdin.gets.downcase[0]
+            answer == ?n ? default_location : recommended_location
+          end
         end
 
         def prompt_css_dir
-          recommended_location = separate("public/stylesheets/compiled")
-          default_location = separate("public/stylesheets")
-          puts
-          print %Q{Compass recommends that you keep your compiled css in #{recommended_location}/
-  instead the Sass default of #{default_location}/.
-  However, if you're exclusively using Sass, then #{default_location}/ is recommended.
-  Emit compiled stylesheets to #{recommended_location}/? (Y/n) }
-          answer = $stdin.gets
-          answer = answer.downcase[0]
-          answer == ?n ? default_location : recommended_location
+          if rails3?
+            nil
+          else
+            recommended_location = separate("public/stylesheets/compiled")
+            default_location = separate("public/stylesheets")
+            puts
+            print %Q{Compass recommends that you keep your compiled css in #{recommended_location}/
+    instead the Sass default of #{default_location}/.
+    However, if you're exclusively using Sass, then #{default_location}/ is recommended.
+    Emit compiled stylesheets to #{recommended_location}/? (Y/n) }
+            answer = $stdin.gets
+            answer = answer.downcase[0]
+            answer == ?n ? default_location : recommended_location
+          end
         end
 
         def config_contents

lib/compass/app_integration/rails/runtime.rb

@@ -4,6 +4,9 @@ unless defined?(Compass::RAILS_LOADED)
     require 'action_pack/version'
     if ActionPack::VERSION::MAJOR >= 3
       # TODO figure something out so image_path works with rails integration
+      %w(railtie).each do |lib|
+        require "compass/app_integration/rails/actionpack3/#{lib}"
+      end
     else
       %w(action_controller sass_plugin urls).each do |lib|
         require "compass/app_integration/rails/actionpack2/#{lib}"

lib/rails/init.rb

@@ -0,0 +1,2 @@
+require 'compass'
+require 'compass/app_integration/rails'