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A group of environmentalists has sued over a planned housing development along the Mississippi River in Cottage Grove, arguing the city should have done a more stringent environmental review.

The development by national homebuilder PulteGroup at the former Mississippi Dunes Golf Course is notable because it could put hundreds of homes on open space along the river. The course closed in 2017 and is next to the Grey Cloud Dunes Scientific and Natural Area, a state-maintained property that's a haven for rare species.

Lisa Mueller is one of three people challenging the city in the case before the Minnesota Court of Appeals. She said that the development around Grey Cloud Dunes will put pressure on plants and animals within it. She said more fertilized lawns, roaming pets or human visitors can all degrade natural areas.

"What that level of encroachment will do is essentially shrink the nature preserve or the protected area that's being surrounded," said Mueller, who lives in western Wisconsin and previously worked in land preservation in nearby Dakota County.

One of the people joining her in the lawsuit lives in Cottage Grove; the other lives in adjacent Grey Cloud Township.

But Cottage Grove Mayor Myron Bailey said the development will set aside protected space, including 12 acres to buffer the scientific and natural area, and that the city has done its due diligence on environmental protection.

"We've done all of the environmental work, and matter of fact, we've gone above and beyond," he said.

A project representative for Pulte declined to comment. The company's full proposal includes up to 239 single-family homes, 130 townhomes for people age 55 or older and a 130-unit senior living facility. It would also include trails and a park along the river.

At issue in the case is the city's Environmental Assessment Worksheet completed for the project. The suit argues that the city should have done a more detailed Environmental Impact Statement instead. It also seeks to pause the housing project until one is completed.

The city responded in court filings that it was right to determine that the project wouldn't have significant environmental effects and thus does not need to do the deeper study.

The area has long been at the center of hopes for a riverfront park that could attract visitors from around the region. Since the mid-1990s, Washington County has planned a regional park on nearby Grey Cloud Island, which is in the middle of the section of the Mississippi River that the proposed development borders. That reality is still far away, in part because of a decades-old gravel mine on the island that's looking to expand.

The site is also within the 72-mile Mississippi River Corridor Critical Area, a protected stretch through the Twin Cities where development is regulated to protect river habitat and water quality.

On the Mississippi Dunes property, "what some people wanted was for us to take that entire property, to leave it natural [or] make the entire property a park," Bailey said. "Financially and feasibly, that doesn't work."

But others have shown interest in the past, including the Minnesota Department of Natural Resources (DNR), which maintains the Grey Dunes area. Liz Harper, an assistant regional manager at the DNR, said in an email that the agency had studied buying the land several times and had set aside the money to do it.

DNR still has money budgeted to buy some smaller parcels on the edges of the development, which Bailey also noted was a possibility.

The Grey Cloud Dunes Scientific and Natural Area and surrounding land are home to many rare species, such as the federally endangered rusty patched bumblebee. Prescribed fires are used to maintain this prairie landscape, and the DNR has told the city about its concern that new homeowners might be exposed to smoke from those burns, Harper said.

"Protecting remaining prairie remnants in Minnesota is critically important," Harper wrote.

The court case over Cottage Grove's environmental review will be argued before a panel of appellate judges on Oct. 5.