In the review and consideration of applications for a loan, the Arkansas Natural Resources Commission shall give consideration to the following general and nonexclusive criteria for application approval:

1. (1) Compliance with laws.

   1. (A) The applicant and proposed project must be found to be in compliance with all applicable and relevant federal (see Appendix), state, and local laws and regulations (including the Arkansas Water Plan, 15 CAR pt. 29, where applicable), and applicant must possess all necessary and incidental legal rights and privileges necessary to project commencement and operation.
   2. (B) The appropriate state agencies must have had adequate opportunity to review and comment on the proposed project;

2. (2) Eligibility. The applicant and proposed project must be determined to be eligible for a loan from the Safe Drinking Water Fund as follows:

   1. (A) Projects generally considered eligible include but are not limited to the following:

      1. (i) Needed for compliance and public health except monitoring, operation, and maintenance expenditures;
      2. (ii) To replace aging infrastructure if needed to maintain compliance or further public health protection goals;
      3. (iii) To consolidate water supplies;
      4. (iv) For land if integral to the project and needed to meet or maintain compliance and further public health protection;
      5. (v) Planning and design of a project; and

      6. (vi)

         1. (a) (a) Restructuring systems that are in noncompliance or that lack the technical, managerial, and financial capacity to maintain the system.
         2. (b) (b) Only if the loan will ensure compliance or if the owner or operator agrees to undertake appropriate changes in operations; and

   2. (B) Loans cannot be made for:

      1. (i) Dams, or rehabilitation of dams;
      2. (ii) Water rights, except if the water rights are owned by a system that is being purchased through consolidation as part of a capacity development strategy;
      3. (iii) Reservoirs, except for finished water reservoirs and those reservoirs that are part of the treatment process and are located on the property where the treatment facility is located;
      4. (iv) Laboratory fees for monitoring;
      5. (v) Operation and maintenance expenses;
      6. (vi) Projects needed mainly for fire protection;
      7. (vii) Projects for systems that lack adequate technical, managerial, and financial capability, unless assistance will ensure compliance;
      8. (viii) Projects for systems in significant noncompliance, unless funding will ensure compliance; or
      9. (ix) Projects primarily intended to serve future growth;
3. (3) Availability of or combination with other assistance. The commission shall consider the feasibility and availability of alternative or additional sources of revenue that could be obtained and utilized by applicant for project financing either apart from or in conjunction with the commission loan; and

4. (4) Priority and availability of funds.

   1. (A) The commission must give maximum priority to those projects:

      1. (i) Needed for Safe Drinking Water Act compliance;
      2. (ii) That provide the greatest protection to public health; and
      3. (iii) That assist systems most in need on a per household basis.
   2. (B) Projects will be considered in the order established by the Department of Health in the CPPL.
   3. (C) If a project is determined to be eligible, it will then be prioritized for funding.

   4. (D) The commission may bypass a project under any of the following conditions:

      1. (i) The applicant lacks fiscal capacity;
      2. (ii) It is not ready to proceed;
      3. (iii) It is not an eligible entity;
      4. (iv) The applicant has not submitted a letter of intent with a supporting resolution;
      5. (v) The applicant has not entered into a memorandum of agreement with the commission;
      6. (vi) The applicant has requested that it be withdrawn from further consideration for funding; or
      7. (vii) Other conditions established by the Director of the Arkansas Natural Resources Commission in the annual Intended Use Plan.

   5. (E)

      1. (i) The commission may waive any of the above conditions except the first on a case-by-case basis.
      2. (ii) However, each of these waivers may become a special condition of a resulting loan.

Codification Notes: "CPPL" means Comprehensive Project Priority List. The Safe Drinking Water Act is codified primarily at 42 U.S.C. § 300f et seq.