(a) With the exception of category G projects, all completed pre-applications received by the department will be evaluated and assigned a score based on the priority ranking scoring system described in section 53.4 of this Part, provided, however, that:

1. (1) the department will not assign a score to any project it has determined to be ineligible for assistance; and
2. (2) after review of a pre-application the department may determine that one or more proposed project components are not essential to addressing critical public water system deficiencies. In that event, the department will sever any non-essential components from the essential project component and score them as separate projects.

(b) Projects receiving scores will additionally be assigned to one of three categories:

1. (1) Category A: Public water systems serving a population of 10,000 or fewer.
2. (2) Category B: Public water systems serving a population exceeding 10,000.
3. (3) Category C: Public water systems which have been qualified by the corporation for financial hardship assistance.

(c) The department shall prepare annually an intended use plan that describes how the department and the corporation intend to allocate fund resources available for that annual funding cycle. The intended use plan will list all potentially eligible projects for assistance from the fund. A project must be listed in an intended use plan to be eligible for fund assistance. The intended use plan will also include the following:

1. (1) Multi-year list: The multi-year list shall include all proposed projects which have been reviewed by the department and received a numerical score pursuant to subdivision (a) of this section. New projects may be added to this list on a continuous basis.
2. (2) Project readiness list: The project readiness list shall include all projects from the multi-year list which the department has determined are sufficiently developed to proceed with long-term fund assistance during the funding cycle covered by the intended use plan. Applicants for these projects are expected to make applications for fund assistance to the corporation during that annual funding cycle. Projects shall be listed in descending order of their priority ranking system score.
3. (3) Funding list: The funding list shall include all projects from the project readiness list and all projects from the hardship list expected to qualify for long-term loans within the annual funding cycle covered by the intended use plan.
4. (4) Hardship list: Upon written confirmation from the corporation that a project qualifies for financial hardship assistance, that project will be placed on the hardship list. Such written confirmation shall remain valid for two consecutive annual funding cycles. If a project has not received funding during this period, it shall be removed from the hardship list and relisted on the multi-year List unless the project receives another written confirmation from the corporation that the project qualifies for financial hardship.
5. (5) Category G list: The category G list shall include projects or portions thereof that address green infrastructure including, without limitation, water and energy efficiency improvements or other environmentally innovative activities or that qualify as a demonstration project of new green infrastructure technology as provided in the IUP. Such projects or portions thereof shall be determined based on an evaluation of benefits to the public and positive (or least negative) impacts on the environment and that shall include, without limitation: economic benefits generated; public health and safety; protection of water quality and the environment; demonstrated readiness; green energy production and/or reduction in energy consumption; regional distribution of projects, or water conservation as provided in the IUP.

(e) The department shall develop the intended use plan subject to the following requirements:

1. (1) A minimum of 15 percent of the annual Federal capitalization funds credited to the fund in any fixed year, shall be allocated to public water systems serving populations of 10,000 or fewer. The actual fund assistance rendered to such systems will occur to the extent there are sufficient allowable project costs to finance in a given annual funding cycle.
2. (2) No more than 30 percent of the annual Federal capitalization funds shall be used to give loan subsidies to disadvantaged systems as determined by the corporation, except a greater percent of the annual Federal capitalization funds may be used to give additional subsidization to eligible recipients when required or authorized by Federal laws or regulations. Such additional subsidization shall be provided in accordance with the act and shall include forgiveness of principal, a negative interest loan or a grant.
3. (3) No more than 50 percent of fund resources shall be received annually by a particular applicant. In addition, the corporation may, on its own initiative or at the direction of the department, limit fund assistance to the demonstrated annual cash flow needs of any single applicant.

(f) Projects shall be selected for placement on the funding list in the following manner:

1. (1) Any category C project which receives a score greater than or equal to the project with the lowest score (excluding additional points awarded pursuant to section 53.4 of this Part) receiving fund assistance in the annual funding cycle in which the category C project received its current financial hardship qualification shall be placed on the funding list.
2. (2) Category A projects from the project readiness list shall be selected in priority order and placed on the funding list until 15 percent of funds available for the period covered by the IUP have been allocated.
3. (3) All remaining projects on the project readiness list shall be selected in priority order and placed on the funding list until all remaining annual fund resources have been encumbered. Final project funding selection is subject to the restrictions and project by-pass criteria in subdivision (g) of this section.

(g) Projects on the project readiness list may be by-passed, upon written notice to the applicant from the department or the corporation, if any of the following occurs:

1. (1) the department or corporation receives written notice from the applicant that the project is withdrawn;
2. (2) the applicant fails to fulfill expectations, perform duties, or conform to deadlines or conditions established in the project schedule or the applicant will not be able to satisfy any other conditions precedent to obtaining funding during the period specified in the IUP;
3. (3) the applicant has reached the 50 percent annual fund resources cap for fundable projects on the project readiness list. All projects of an applicant that would cause the applicant to exceed the 50 percent cap will be by-passed for that annual funding cycle; or
4. (4) the department determines that another project better addresses water savings/conservation, or energy efficiency improvements or other environmentally innovative activities that meet green infrastructure mandates of the ARRA.