(1) The project priority list is established for rating and ranking possible projects for fund assistance.

(2) The department shall list all potential eligible projects on the project priority list, including projects proposed by project applicants and projects that the department determines are needed.

(3) The project priority list must include:

(a) a category assignment for each project based on the type of construction anticipated;

(b) an assignment of a numerical score for each project through use of the department's ranking criteria and ranking system, which must rate and rank projects according to:

(i) water quality impairment as it relates to:

(A) surface water; and

(B) ground water;

(ii) effectiveness of the proposed project in improving water quality;

(iii) activity-specific criteria; and

(iv) the applicant's readiness to proceed; and

(c) a system by which limited funds are allocated on an annual basis.

(4) The priority list must be revised at least annually to consider new projects and changes in project status, and to allocate available revenues from the fund for eligible uses.