[Code of Federal Regulations]
[Title 7, Volume 10]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1423.7]

[Page 466]
 
                          TITLE 7--AGRICULTURE
 
  CHAPTER XIV--COMMODITY CREDIT CORPORATION, DEPARTMENT OF AGRICULTURE
 
PART 1423_COMMODITY CREDIT CORPORATION APPROVED WAREHOUSES--Table of Contents
 
Sec.  1423.7  Net worth alternatives.

    Warehouse operators with net worth equal to or greater than the 
minimum net worth required, but less than the total net worth for the 
commodity involved in the particular agreement, may satisfy the net 
worth deficiency by furnishing one of the following:
    (a) A bond which:
    (1) Is executed by a surety approved by the U.S. Department of the 
Treasury so long as the surety maintains someone authorized to accept 
service of legal process in the State where the warehouse is located.
    (2) Is executed on either a bond form obtained from CCC, or which is 
furnished under State law or operational rules for non-governmental 
supervisory agencies, if approved by CCC, so long as CCC determines that 
such alternative bond:
    (i) Provides adequate protection to CCC;
    (ii) Has been executed by a surety approved by the U.S. Department 
of the Treasury or has an acceptable blanket rider and endorsement 
executed by such a surety with the liability of the surety under such 
rider or endorsement being the same as that of the surety under the 
original bond; and
    (iii) Is effective for at least 1 year and cannot be canceled 
without 120 days notice to CCC. Excess coverage on a bond for one 
warehouse will not be accepted by CCC against insufficient bond coverage 
on other warehouses;
    (b) Cash and negotiable securities. Any such cash or negotiable 
securities accepted by CCC will be returned to the warehouse operator 
when the period for which coverage was required has ended and CCC 
determines there is no liability under the storage agreement;
    (c) An irrevocable letter of credit meeting CCC requirements that is 
effective for at least 1 year and cannot be canceled without 120 days 
notice to CCC. The issuing bank must be a commercial bank insured by the 
Federal Deposit Insurance Corporation or a financial institution subject 
to the Farm Credit Act, or
    (d) Other alternative instruments and forms of financial assurance 
as the Deputy Administrator determines appropriate to secure the 
warehouse operator's compliance with this section.