President Clinton signed into law this week a bill thatestablishes a multimillion dollar federal loan-guarantee program tohelp independent oil and natural gas producers recover from theeffects of depressed crude oil prices. The measure was passed bythe House earlier this month, and approved by the Senate in June.

The program will set aside $500 million for emergency loans tosmall producers and service companies, which will be able to borrowup to $10 million each until the funds for the program run out. Itwill provide a government-backed repayment guarantee for 85% ofeach loan, which means that commercial lenders would be able tooffer more lenient terms to producers than they would otherwise.

It’s “hard to determine” when the loan-guarantee program willbegin, but the Independent Petroleum Association of America (IPAA)is urging that it be implemented “swiftly,” said Craig Ward, theIPAA’s director of oil policy. It is proposing the program bemodeled after a similar one for the agriculture industry.

Commerce Department Secretary William M. Daley, SEC ChairmanArthur Levitt and Federal Reserve Board Chairman Alan Greenspanwill serve on the board overseeing the loan program. Greenspan willbe chairman.

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