(a) In the event that the amount of Federal pollution abatement assistance allotted to the State is insufficient to provide funding for all State projects for which applications are expected to be approved in any year or other period as the applicable Federal law allows, a State priority system meeting the requirements of Federal law and regulation will be applied.

(b) Projects are approved by the State prior to submission to the United States Environmental Protection Agency of the application for Federal pollution abatement assistance for the project. After approval of the application by the Environmental Protection Agency, the project will be eligible for State assistance in accordance with this Part.