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Rule

Clearing of the 740-806 MHz Band; Conversion to Digital Television

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AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

In this document, the Commission adopts mechanisms and makes determinations intended to facilitate the clearing of the 740-806 MHz band to allow for the introduction of new wireless services, and to promote the early transition of analog television licensees to digital television service (“DTV”). The Commission adopts rules and policies that allow the private sector to determine the band-clearing mechanisms that will best suit broadcasters' and potential new 700 MHz licensees' needs. By this action, the Commission also builds upon the policies adopted in the Memorandum Opinion and Order and Further Notice of Proposed Rule Making in this proceeding (“700 MHz MO&O and FNPRM”) in which it provided guidance regarding its review of regulatory requests filed in connection with voluntary private agreements that would accelerate the DTV transition and open the 700 MHz band for new uses.

DATES:

Effective February 14, 2001.

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FOR FURTHER INFORMATION CONTACT:

Nese Guendelsberger or Bill Huber of the Auctions and Industry Analysis Division at (202) 418-0660 (voice), (202) 418-7233 (TTY), or Martin Liebman or Stanley Wiggins of the Policy Division at (202) 418-1310 (voice), (202) 418-7233 (TTY), Wireless Telecommunications Bureau.

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SUPPLEMENTARY INFORMATION:

This is a summary of a Third Report and Order (“Third R&O”) in WT Docket No. 99-168, adopted on January 18, 2001, and released on January 23, 2001. The complete text of the Third R&O is available for inspection and copying during normal business hours in the FCC Reference Center (Room CY-A257), 445 12th Street, SW, Washington, DC. It may also be purchased from the Commission's copy contractor, International Transcription Services, Inc. (ITS, Inc.), 445 12th Street, SW, Room CY-B400, Washington, DC 20554, (202) 314-3070. The Third R&O is also available on the Internet at the Commission's web site: http://www.fcc.gov/​Bureaus/​Wireless/​Orders/​2001/​fcc01025. Alternative formats (computer diskette, large print, audio cassette and Braille) are available to persons with disabilities by contacting Martha Contee at (202) 418-0260, TTY (202) 418-2555, or at mcontee@fcc.gov.

Synopsis of the Third Report and Order

1. By this Third R&O, the Commission adopts mechanisms and makes determinations intended to facilitate the clearing of the 740-806 MHz band to allow for the introduction of new wireless services, and to promote the early transition of analog television licensees to DTV. The 746-806 MHz band at issue has historically been used exclusively by television stations (Channels 60-69). The incumbent television broadcasters are permitted by statute to continue operations until their markets are converted to digital television, which is not scheduled to occur until December 31, 2006, and that date may be extended under certain circumstances. Congress has, however, mandated that the Commission commence competitive bidding for the commercial licenses well before the scheduled termination date of the DTV transition. In the 700 MHz MO&O and FNPRM, (65 FR 42879 and 65 FR 42960, July 12, 2000), the Commission provided guidance on its review of applications for approval of regulatory requests associated with voluntary agreements accelerating the transition of incumbent analog television licensees and opening these bands for new 700 MHz licensee use. The Third R&O announces additional policies to facilitate voluntary band clearing agreements among incumbent broadcasters and new wireless licensees.

2. Cost-Sharing Rules. The Commission concludes that it is not necessary or appropriate to adopt cost-sharing rules to assist in clearing the 700 MHz band. Based on the record, the Commission finds that the new 700 MHz commercial wireless licensees should be able to enter into cost-sharing agreements without Commission rules. Therefore, the Commission leaves all cost-sharing arrangements to negotiations among successful auction bidders in this band.

3. Three-Way Voluntary Transition Agreements. The Commission adopts a general presumption, standards of review, and policies for three-way agreements among incumbent Channel 59-69 broadcasters and new 700 MHz wireless licensees that are similar to those adopted in the 700 MHz MO&O and FNPRM for bilateral agreements between broadcasters and new 700 MHz wireless licensees. Three-way band clearing agreements would provide for TV incumbents in the 700 MHz band to relocate their operations to lower band TV channels that would be voluntarily cleared by the lower band TV incumbents. The Commission finds that adopting guidelines for three-way agreements similar to those established for bilateral agreements should help negotiating parties and serve the public interest by providing a measure of certainty regarding the conditions under which a regulatory request to implement a three-way agreement may be approved. The presumption the Commission will apply to three-way agreements will be the same as the presumption adopted for bilateral agreements. Thus, the Commission will presume that the public interest is substantially furthered when an applicant demonstrates that the grant of its request will both result in certain specific benefits and avoid specific detriments. To obtain this presumption, an applicant must first demonstrate that grant of its request would result in one of the following: (i) Make new or Start Printed Page 10205expanded wireless service, such as “2.5G” or “3G” services, available to consumers; (ii) clear commercial frequencies that enable provision of public safety services; or (iii) result in the provision of wireless service to rural or other underserved communities. To obtain the presumption, the applicant must also show that grant of its request would not result in any one of the following: (i) The loss of any of the four stations in the designated market area with the largest audience share; (ii) the loss of the sole service licensed to the local community; or (iii) the loss of a community's sole service on a channel reserved for noncommercial educational broadcast service.

4. As was stated in the 700 MHz MO&O and FNPRM, the presumption is not conclusive or dispositive. In specific cases where the presumption applies, for instance, the Commission will consider whether special or unique factors involving loss of broadcast service are sufficient to rebut the presumption. When the presumption is not established or is rebutted, the Commission will review regulatory requests by weighing the loss of service and the advent of new wireless service on a case-by-case basis. In conducting this analysis, the Commission will consider all relevant public interest factors regarding the provision of wireless services, the acceleration of the DTV transition, and the loss of broadcast service. The Commission will consider as a relevant factor in its public interest determination, for instance, the extent to which a station's signal will remain available, after implementation of the agreement, to a significant number of its viewers in the licensee's service area.

5. The standards adopted in the Third R&O for reviewing regulatory requests made in connection with three-way voluntary agreements will enable the Commission to weigh both the benefits associated with recovery of the spectrum for new wireless uses and any loss of service to the broadcast community. The same loss of service analysis will be applied to both bilateral and three-way band clearing agreements in light of the fact that they will contribute to the same process of facilitating the transition to DTV and clearing the 700 MHz band for new services.

6. Although the factors involved in a loss-of-service analysis will be the same for three-way and bilateral agreements, their application to three-way agreements may in some circumstances require two loss-of-service analyses to assure that effectuation of the agreement would be consistent with the public interest. In those cases, the Commission will do such an analysis separately for: (i) People in the service area of the relocation channel that is temporarily suspending service, and (ii) people in the service area of the Channel 59-69 incumbent. If the two signals— i.e., the relocation channel's signal (Channel 2-58 range) and the relocating channel's signal (Channel 59-69 range)—have been provided from the same location with the same coverage characteristics, the loss-of-service analysis would appear to be identical to that for a bilateral agreement, but with the focus on the loss of the relocation signal rather than the Channel 59-69 signal. Because the Channel 59-69 signal would continue to be available within approximately the same service area, the only loss the Commission would need to focus on would be that of the signal of the relocation channel. In other words, the Commission would need to ascertain that the presumption is met only for the relocation channel. In other circumstances, however, the Commission would need to conduct two separate loss-of-service analyses and each station involved should separately satisfy the requirements set forth to qualify for the favorable presumption. If one of the channels involved does not qualify for the presumption, then the Commission will make a public interest determination on a case-by-case basis. A three-way agreement may also, in some cases, expand a service area. Such expansion, which would generally tend to promote the public interest, would have to be considered in conjunction with any interference issues. The Commission will consider as relevant factors in its public interest determination the extent to which a station's signal remains available to viewers located within its previous service area, as well as the substitution of a relocating station's programming for the programming previously available to viewers of the relocation channel.

7. Interference Issues. Interference issues may arise under a three-way agreement that do not arise under a bilateral agreement. Specifically, while a bilateral agreement contemplates that a broadcaster relinquish one of its two TV allotments, a three-way agreement involves the relocation of a Channel 59-69 operation into a lower band allotment, which may potentially give rise to interference issues with respect to neighboring TV stations.

8. The Third R&O finds that no interference issues should arise if the relocating station's signal is to be broadcast in the same mode (i.e., the relocation involves an analog operation moving into an analog allotment or a digital operation relocating into a digital allotment) from the same location as the lower band incumbent's signal using the same or lower power and the same or lower antenna height. In all other situations the proposed change must satisfy the Commission's prescribed interference protection standards for digital or analog operations, as applicable, and the Commission will address each such proposed assignment on a case-by-case basis.

9. A modification could, for instance, involve either the relocation of an analog operation or the relocation of a digital operation. If the modification involves the relocation of a digital operation either (i) into an analog allotment; or (ii) into a digital allotment, where the relocated station does not operate at the same location or with the same or lower power and the same or lower antenna height as the lower band incumbent, the Commission will require such modification to comply with the provisions of § 73.623(c) of its rules. That rule section spells out technical criteria for DTV modifications, including minimum desired-to-undesired (“D/U”) signal ratios, which protect co- and adjacent channel DTV and analog assignments from interference. If the modification involves the relocation of an analog operation either (i) into a digital allotment; or (ii) into an analog allotment, where the relocated station does not operate at the same location or with the same or lower power and the same or lower antenna height as the lower band incumbent, the Commission will require such modification to comply with the provisions of §§ 73.610 and 73.698 of its rules in instances where an analog operation may affect the operation of another analog allotment, and the provisions of § 73.623(c) in instances where an analog operation may affect the operation of a digital allotment.

10. The Commission declines to adopt a new “no interference” standard that would prohibit any new involuntary interference to existing licensees. The Commission believes that relocation proposals that can be achieved in a manner consistent with its existing interference protection standards should be encouraged so as to facilitate the congressional intent underlying the allocation of these bands for new wireless uses.

11. The Commission will entertain negotiated interference agreements pursuant to § 73.623(g) of its rules, which is limited to possible agreements between relocating DTV stations and any existing TV stations that are entitled to interference protection under the Start Printed Page 10206Commission's rules. Pursuant to that section, parties may reach negotiated agreements, notwithstanding the fact that the agreements would result in increased interference to a DTV or analog television station above the minimum technical criteria for DTV allotments, provided that the station agrees in writing to accept the interference and/or to implement an exchange of channel allotments in the same community, same market, or adjacent markets. Under § 73.623(g), the grant of such applications must be consistent with the public interest. These cases will be reviewed on a case-by-case basis. As with interference agreements negotiated under § 73.623(g) in other contexts, the Mass Media Bureau will evaluate these cases in the first instance, and it is the Commission's intent that the significance of any service gains and losses should be considered seriously in the evaluation of whether the negotiated interference agreement should be approved.

12. The Third R&O also confirms that broadcasters may file applications for exchanges of DTV allotments on an intra-community, intra-market, or inter-market basis, provided that the exchanges do not result in additional interference beyond the Commission's de minimis standard to other stations or that all affected stations agree to accept any additional interference that would result from the exchange, and that all other requirements of the DTV allotment rules are satisfied with respect to the application(s).

13. The Third R&O notes that any interference-related requests in connection with a voluntary band clearing agreement will be considered together with the other regulatory requests to implement that agreement.

14. Procedural Issues. In the Third R&O, the Commission makes clear its commitment to processing all regulatory requests associated with band clearing agreements as expeditiously as possible. The Commission also clarifies the procedures that will apply to such requests and adopts certain procedural changes designed to streamline the review process. Requests that require a change to the DTV Table of Allotments will generally be subject to existing procedures found in § 73.622 of the Commission's rules. Under certain circumstances, however, the Commission will not use a rulemaking proceeding to make a DTV allotment change. Moreover, the following principles will govern whether the Commission will employ routine part 73 application procedures or rulemaking proceedings, regardless of whether a DTV assignment is being exchanged with another DTV assignment, an analog TV assignment is being exchanged with another analog TV assignment, a DTV assignment is being moved to an analog TV allotment, or an analog TV assignment is being moved to a DTV allotment. Proposals submitted in connection with three-way band clearing agreements where both broadcasters are licensed to the same community and the result will not be the dereservation of a noncommercial educational allotment, will be processed under routine application procedures (i.e., a rulemaking proceeding would not be necessary) and will be subject to public notice and comment procedures. In addition, proposals to change the community of license will be processed under routine application procedures so long as the relocating broadcaster complies with all community-of-license obligations and coverage requirements for both communities, and the situation for the community that is losing a station is consistent with the 700 MHz band-clearing presumptions. In both such cases, the Mass Media Bureau will evaluate these proposals in the first instance, and it is the Commission's intent that the significance of any service gains and losses should be considered seriously in the evaluation of whether the proposal should be approved. The Commission also delegates to the Mass Media Bureau authority to make minor, administrative changes to the analog or DTV Table to reflect changes authorized by the grant of applications, such as changing an analog TV allotment to a DTV allotment. In addition, consistent with the Commission's existing rules, broadcasters will be permitted to negotiate swaps of DTV channel allotments pursuant to application procedures, provided that they comport with existing policies (i.e., exchanges of DTV allotments on an intra-community, intra-market, or adjacent-market basis will be entertained, provided that the exchanges do not result in additional interference beyond the Commission's de minimis standard to other stations or that all affected stations agree to accept any additional interference that would result from the exchange, and that all other requirements of the DTV allotment rules are satisfied with respect to the application(s)). The Third R&O does note, however, that a rulemaking proceeding will be required in situations in which a broadcaster proposes to add a new channel allotment, to change the community of license of an existing allotment (except in the circumstances mentioned), or to dereserve an existing noncommercial educational allotment, and existing Commission allotment policies will be applied. The Third R&O also clarifies that in such rulemaking proceedings to modify the DTV Table of Allotments in conjunction with band clearing agreements, the proposals would not be subject to counterproposals from other parties, as is usually the case in broadcast allotment rulemaking proceedings.

15. In managing the transition to DTV, the Commission has, as a general matter, prohibited broadcasters from terminating their analog service early, and has determined that analog television and DTV facilities should be licensed under a single, paired license. In the 700 MHz MO&O and FNPRM, the Commission decided to allow early termination of analog service to accommodate voluntary agreements. To effectuate that policy, the Third R&O clarifies that a broadcaster will not be jeopardizing its license by agreeing to relinquish one of the two allotments under its license, subject to prior Commission authorization, to effectuate a band clearing agreement. This is a narrow departure from the general principle that the DTV/analog license is a single license and thus that neither channel can be transferred separately. The Commission believes that this approach will, without an undue adverse effect on the public's overall receipt of broadcasting service, expedite the full commercial and public safety use of the 700 MHz spectrum specified in section 337 of the Communications Act of 1934, as amended, and the transition to DTV. The Third R&O also clarifies that if as a result of a three-way agreement a broadcaster is left with only an analog television channel, it must convert to DTV by the applicable date set forth in § 73.624(d) of the Commission's rules.

16. Temporary Relocation to Channels 52-58. The Third R&O does not prohibit voluntary agreements that would result in TV stations currently operating on Channels 60-69 relocating temporarily into Channels 52-58, which will be subject to future licensing for wireless services. The Commission recognizes that there are potential benefits and costs associated with temporary relocation to Channels 52-58 resulting from voluntary agreements. The potential benefit includes allowing the incumbent broadcasters the opportunity to continue operating, while clearing the spectrum for new wireless licensees. The Commission will consider any public interest costs in its review of any requests submitted in connection with voluntary agreements to relocate temporarily into Channels Start Printed Page 1020752-58 under the standards that have been set out in this proceeding.

17. Secondary Auctions. A secondary band clearing auction would be a mechanism to determine the price that would be paid by 700 MHz licensees to TV incumbents who agree to clear their channels in the 700 MHz band. The Commission recognized in the 700 MHz MO&O and FNPRM that a secondary auction mechanism may produce significant benefits, and does not depart from that finding in the Third R&O. The Commission also finds that the private sector is better suited to determine what mechanisms interested parties might demand and to implement a secondary auction in a manner that is most responsive to broadcasters' and potential bidders' needs. The Commission does not therefore intend at this time to conduct a secondary auction.

18. The Commission will rely on private secondary auctions and any other such voluntary, comprehensive band clearing arrangements among new 700 MHz licensees and incumbent broadcasters that would result in the voluntary early transition of this band to new services. The Commission cannot know whether individually negotiated arrangements or private auctions will be the more effective voluntary clearing mechanism and supports giving parties a choice, so long as the approach is consistent with Commission policies and rules. Based on the record, the Commission finds that a privately conducted secondary auction may be conducted in a manner that would not interfere with the integrity and operations of the Commission's spectrum auction process. The Third R&O reminds parties that where a secondary auction leads to private band clearing agreements, the Commission must approve any regulatory requests necessary to the effectuation of such agreements.

19. Collusion Issues. The Third R&O clarifies that the Commission's anti-collusion rules, set forth at § 1.2105(c), do not prohibit participation in a secondary auction or band clearing agreements, but that parties need to keep those requirements in mind. For instance, to the extent that negotiating a band clearing agreement or the terms of participation in a secondary auction conveys information about bids, bidding strategies, or settlements to other applicants for licenses in the same geographic license areas in the Commission's auction, such communications would be prohibited while the anti-collusion rule is in effect, unless the parties have identified each other on their short-form applications as parties to a bidding arrangement under § 1.2105(a)(2)(viii). However, to the extent that such negotiations are not with other “applicants” for licenses in the same geographic license areas or do not convey prohibited information, such communications would not be prohibited under the anti-collusion rule and negotiations could continue after the short-form deadline. Many of the parties conducting and participating in private secondary band clearing auctions are not likely to be “applicants” subject to the Commission's prohibition on collusion.

20. Accordingly, the Commission reminds parties participating in secondary auctions or entering into three-way agreements to remain mindful of their obligations under the Commission's anti-collusion rules. In this regard, the Commission notes that with respect to auctions of licenses in the 700 MHz band, a band clearing agreement or contract to participate in a secondary auction constitutes an agreement that relates to licenses being auctioned, and is covered by the disclosure requirement of § 1.2105(a)(2)(viii). Disclosure of the parties to any agreements on short-form auction applications also provides a “safe harbor” against allegations that communications in connection with such agreements constitute communications prohibited under the anti-collusion rules. Where agreements are not reached before the short-form filing deadline, participants in secondary auctions or parties entering into three-way agreements should educate all involved in such activities about these obligations, and might consider establishing procedures to insulate individuals from others' auction-related communications or taking other precautionary steps to prevent collusive conduct from occurring.

21. Proposal to Cap Clearing Costs. The Commission will not adopt cost recovery guidelines at this time. The Commission believes that both voluntary clearing agreements and a private secondary auction plan would be more likely to succeed without the use of cost guidelines. Further, the record of this proceeding contains little detail about how to structure any such guidelines.

22. Digital Must-Carry. Although the Commission did not seek comment in the 700 MHz MO&O and FNPRM on the digital must-carry issue, a number of commenters urge the Commission to adopt DTV must-carry rules in order to encourage band clearing. The Commission finds in the Third R&O that the requests of commenters in this proceeding for adoption of various DTV must-carry rules have in most respects been resolved in Carriage of Digital Television Broadcast Signals, CS Docket No. 98-120, First Report and Order and Further Notice of Proposed Rulemaking, FCC 01-22, ¶¶52-56 (released January 23, 2001), as well as in WHDT-DT Channel 59, Stuart, Florida, Petition for Declaratory Ruling that Digital Broadcast Stations Have Mandatory Carriage Rights, CSR-5562-Z, Memorandum Opinion and Order, FCC 01-23, ¶¶12-15 (released January 23, 2001). The Commission also defers consideration of other issues raised by commenters, such as the mandatory dual carriage of a station's digital and analog signals during the digital television transition, pending development of an improved record in the DTV Must-Carry proceeding.

23. Other Relocation Proposals. Certain commenters argue that, should there be a “lone holdout” of an incumbent broadcaster in a market where substantial clearing has occurred, it might well threaten the success of the transition to DTV and the ability of new 700 MHz licensees to deploy rapidly new wireless technologies in this spectrum. Holdouts may be a sign of a market imperfection or failure that might impede the proper functioning of the market, and may prevent efficient outcomes of secondary auctions and band clearing negotiations among new 700 MHz wireless licensees and incumbent Channel 59-69 broadcasters.

24. In the Third R&O, the Commission cites its previous observation that in the majority of cases efficient spectrum markets will lead to use of spectrum for the highest value end use, and states its belief that voluntary agreements between broadcasters and licensees should result in the effective clearing of the 700 MHz band. The Commission notes that this view is broadly shared by most commenters, which advocate a voluntary, market-based approach to clearing incumbent broadcast operations from Channels 59-69. However, the Commission will revisit this issue in the future if necessary.

25. Other Proposals to Accelerate the DTV Transition. In light of the limited scope of comments on proposals regarding sharing of spectrum, the Commission concludes that there is insufficient interest to warrant adoption of rules of general applicability at this time.

26. Band Clearing Relating to the Auction of Channels 52-59. The Commission finds that it is appropriate to gain additional experience with innovative, voluntary band clearing mechanisms before making judgments Start Printed Page 10208about whether to extend them for use in bands other than those used for Channels 60-69. Thus, the Commission defers the issue of employing such mechanisms in conjunction with the auction of spectrum used for Channels 52-59 to its upcoming proceeding on service rules for this spectrum.

Procedural Matters

Regulatory Flexibility Act and Paperwork Reduction Act

27. Section 213 of the Consolidated Appropriations Act, 2000, Public Law 106-113, 113 Stat. 2502, states that the Regulatory Flexibility Act (as well as certain provisions of the Contract With America Advancement Act of 1996 and the Paperwork Reduction Act) shall not apply to the rules and competitive bidding procedures governing the frequencies in the 746-806 MHz band (currently used for television broadcasts on channels 60-69). Because the policies and rules adopted in the Third R&O relate only to assignments of those frequencies, no Final Regulatory Flexibility Analysis or Paperwork Reduction Analysis is necessary.

Ordering Clauses

28. Authority for issuance of this Third R&O is contained in sections 1, 2, 4(i), 5(c), 7(a), 301, 302, 303, 307, 308, 309(j), 309(k), 311, 316, 319, 324, 331, 332, 333, 336, 337, 614, and 615 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 155(c), 157(a), 301, 302, 303, 307, 308, 309(j), 309(k), 311, 316, 319, 324, 331, 332, 333, 336, 337, 614, and 615, the Consolidated Appropriations Act, 2000, Public Law 106-113, 113 Stat. 2502, and § 1.425 of the Commission's rules, 47 CFR 1.425.

29. Accordingly, it is ordered that part 73 of the Commission's rules is amended as specified. Pursuant to section 213 of the Consolidated Appropriations Act, 2000, these rule amendments are effective February 14, 2001. It is further ordered that the Petition for Rulemaking filed by Spectrum Exchange Group, LLC on April 24, 2000 is granted to the extent discussed in the Third R&O.

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List of Subjects in 47 CFR Part 73

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Federal Communications Commission.

William F. Caton,

Deputy Secretary.

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Rule Changes

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For the reasons discussed in the preamble, the Federal Communications Commission amends

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PART 73—RADIO BROADCAST SERVICES

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1. The authority citation for part 73 continues to read as follows:

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Authority: 47 U.S.C. 154, 303, 334 and 336.

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2. Section 73.607 is amended by redesignating the undesignated text as paragraph (a) and adding new paragraph (b) to read as follows:

Availability of channels.
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(b) Notwithstanding paragraph (a) of this section, an application may be filed for a channel or community not listed in the TV Table of Allotments if it is consistent with the rules and policies established in the Third Report and Order in WT Docket 99-168 (FCC 01-25), adopted January 18, 2001. Where such a request is approved, the Mass Media Bureau will change the Table of Allotments to reflect that approval.

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3. Section 73.622 is amended by redesignating paragraph (c) as paragraph (c)(1) and adding new paragraph (c)(2) to read as follows:

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Digital television table of allotments.
* * * * *

(c) * * *

(2) Notwithstanding paragraph (c)(1) of this section, an application may be filed for a channel or community not listed in the DTV Table of Allotments if it is consistent with the rules and policies established in the Third Report and Order in WT Docket 99-168 (FCC 01-25), adopted January 18, 2001. Where such a request is approved, the Mass Media Bureau will change the DTV Table of Allotments to reflect that approval.

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[FR Doc. 01-3711 Filed 2-13-01; 8:45 am]

BILLING CODE 6712-01-U