Minnesota pollution regulators will do a deeper inquiry into Enbridge's permit applications for its controversial new oil pipeline, a move that would push back most construction until 2021.

The Minnesota Pollution Control Agency (MPCA) said Wednesday it will conduct a "contested case" hearing on a "401" water permit needed for the $2.6 billion project, which would replace Enbridge's deteriorating Line 3.

The hearing, to be scheduled later this summer, will focus on Enbridge's pipeline construction at water crossings and on wetlands.

"The MPCA is committed to ensuring its 401 water quality certification provides robust and comprehensive protections to Minnesota's waters and that the agency follows all permitting requirements under the law," the agency's commissioner, Laura Bishop, said in a statement.

The MPCA had an Aug. 15 deadline to decide on water-quality permits for construction of the 340-mile pipeline across northern Minnesota. That deadline will be moved to Nov. 14 because of the "contested" status.

Enbridge said Wednesday it expects the majority of the new Line 3 in Minnesota to be built next year, missing the summer construction season for the second consecutive year.

"While the contested case has caused a delay to the permitting process, we believe this additional step will strengthen the MPCA's decision record," said Vern Yu, Enbridge's president of liquid pipelines, in a statement.

The Minnesota Public Utilities Commission (PUC) is the primary regulator of oil pipelines in Minnesota, including determining the risk of oil-spill hazards. The PUC reapproved Line 3 in February after an appeals court kicked it back to the panel.

But Enbridge also must get permits from the MPCA, the U.S. Army Corps of Engineers and other agencies.

The MPCA in February released "draft permits" for Line 3's construction. In April, a petition for a "contested case" was filed by three environmental groups — Friends of the Headwaters, Sierra Club and Honor the Earth — and two Ojibwe bands, White Earth and Red Lake.

The petition raised "issues of fact" that the MPCA said require it to open a contested case. The MPCA has not granted such a contested case in at least 10 years.

The agency said its decision was guided by a recent Minnesota Court of Appeals decision on PolyMet, a controversial proposed copper-nickel mine in northeastern Minnesota.

In January, Chief Judge Edward Cleary, now retired, said the Department of Natural Resources (DNR) erred in not holding contested case hearings on PolyMet permits in order to vet objections by environmental groups and Indian bands. He ordered the DNR to do so.

The MPCA's 401 water-quality review for Line 3 goes in tandem with the Army Corps' "404" review.

The state was supposed to complete the 401 by Aug. 15, or the Army Corps could simply go ahead and issue its 404 permit. The Army Corps approved extending the deadline. Both water-quality permits are necessary as the new pipeline would cross 212 waterways, and construction would affect over 700 acres of wetlands.

Environmental groups mostly praised the MPCA's decisions.

"We're glad to see Laura Bishop and the PCA recognize the critical need for more analysis," said Sierra Club North Star Chapter director Margaret Levin in a statement.

"If the PCA truly listens to public input and follows the science, it will be clear that the only responsible course of action is for the PCA to reject this pipeline permit once and for all."

Pipeline proponents called the contested case unnecessary, saying it will only lead to needless delays.

"Northern Minnesota's economy struggled before COVID, and today faces a full-scale depression with mines shutting down and thousands out of work, including many of our members," Joel Smith, president of the Laborers Union in Minnesota and North Dakota, said in a statement.

"We were hopeful construction of Line 3 would begin in July and provide a lifeline for area workers."

Line 3, which Enbridge said will employ more than 4,000 trades workers, would be one of the largest construction projects in Minnesota in recent years. Enbridge's new pipeline would replace its aging Line 3, transporting crude from Alberta, Canada, to Superior, Wis.

Calgary-based Enbridge has said the pipeline is a critical safety enhancement. The current Line 3 is corroding and therefore running at only half capacity. The new pipeline would restore full oil flow.

Environmental groups and some Indian bands have said the pipeline — which follows a new route — would open a new region of pristine waters to the prospect of oil spills, as well as abetting increased greenhouse gas emissions.

Line 3 has been winding through the state's regulatory process for five years.

The PUC originally approved the project in June 2018. But its decision was essentially unwound in 2019 when an appellate court shot down the PUC's blessing of the project's environmental impact statement (EIS).

The PUC approved a retooled EIS in February, along with the project itself.