Okay. This is a new problem caused by a gem update. Calling bundle update breaks my rails application. Here are the gems that changed:
# Gemfile.lock -
I fixed this problem with:
gem 'sass-rails', '~> 4.0.2' gem 'sass', '3.2.19' gem 'sprockets', '2.11.0' gem 'sprockets-rails', '2.0.1' gem 'compass-rails', '~> 2.0'