COMMUTER FLYING VFR DUE INOP NAV EQUIP DSNDS BELOW ASSIGNED ALT TO KEEP CLOUD CLRNC. NMAC.

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WE WERE REQUIRED TO RETURN FROM BRAINARD TO MINNEAPOLIS ON A VFR FLT PLAN BECAUSE OF AN INOP NAVIGATIONAL INST ON MY SIDE (COPLT). OBVIOUSLY WE WERE TO STAY CLR OF CLOUDS AT ALL TIMES AND DURING THE FLT THAT WAS NO PROBLEM. UPON RECEIVING OUR CLRNC TO ENTER THE TCA WE WERE GIVEN VECTORS AND ALTS TO MAINTAIN. DURING OUR DSCNT WE WERE ISSUED AN ALT OF 3500 FT. INITIALLY THIS WAS NO PROBLEM BUT AS WE PROCEEDED; WE ENCOUNTERED AN AREA OF SCATTERED CLOUDS AT OUR ALT. I UPON INSTRUCTIONS FROM THE CAPT; ADVISED ATC WE NEEDED A LOWER ALT TO REMAIN VFR. APCH THEN ISSUED 3000 FT AND ADVISED HE WOULD HAVE LOWER IN A FEW MI DUE TO TFC. WHILE AT 3000 FT IT WAS CLR THAT WE STILL WOULD BE ENCOUNTERING THE SCATTERED CLOUDS. BEING PREOCCUPIED WITH REMAINING VFR THE CAPT CONTINUED TO DSND. AS I ADVISED THE CAPT WE WERE TO REMAIN AT OUR ASSIGNED ALT OF 3000 FT (TWICE) HE (CAPT) TOLD ME (FO) TO ASK FOR LOWER. WE WERE NOW 2700 FT AND DSNDING. UPON CALLING ATC FOR LOWER; HE (ATC) ADVISED TFC 10 O'CLOCK; LESS THAN 1 MI -- 2500 FT. (OUR ALT AT THIS TIME -- 2500 FT). THE CAPT THEN PULLED UP HARD TO 3000 FT. ATC ASKED US TO VERIFY LEVEL 3000 FT. AT THE TIME HE (ATC) ASKED; WE WERE; AND I SAID 'LEVEL 3000.' WE PROCEEDED TO MSO AND LANDED. UPON CLRING RWY 29R; GND ADVISED WE COPY APCH TELEPHONE NUMBER AND CALL. CAPT CALLED.