(1) If an applicant has not established cover in accordance with his CRP plan, the board may still allow the applicant to participate in the CRP program. In order, however, to limit board exposure to the potential reseeding costs, the board may hold back a portion of the borrower's loan proceeds pending the establishment of cover. A holdback of $20 per acre for introduced grasses and $30 per acre for native grasses will be held back for all CRP contracts which have not received certification by the SCS as having an established cover. The board may periodically adjust the holdback amount per acre required to reflect changes in reseeding costs. Amounts held back, and earnings thereon, will be disbursed to borrowers as soon as an SCS certification is issued and received by the board.
(2) If an emergency occurs, such a drought or other naturally occurring event, the board, at its sole discretion, may authorize the use of the cover. The borrower prior to such use occurring shall be obligated to compensate the board for that portion of the CRP payment deducted by the USDA for such use.