Preview:

Rutgers School of Law
N.J.S.A. 48:2-21.16 to -21.21, by the Board of Public Utilities (Board), and implicate similar issues. We have
considered them together and now consolidate them for the purposes of rendering an opinion.
"> Original WP 5.1 Version
This case can also be found at 342 N.J. Super. 439.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-6018-98T2
IN THE MATTER OF THE APPLICATION
OF BELL ATLANTIC-NEW JERSEY, INC.
FOR APPROVAL OF AN EXTENSION OF
ITS PLAN FOR AN ALTERNATIVE FORM
OF REGULATION
A-1059-99T3
IN THE MATTER OF THE FILING OF
BELL ATLANTIC-NEW JERSEY, INC. FOR
THE RECLASSIFICATION OF EXISTING
RATE REGULATED SERVICES_DIRECTORY
ASSISTANCE SERVICES AS COMPETITIVE
SERVICES
Submitted October 24, 2000 - Decided July 13, 2001
Before Judges Kestin, Ciancia and Alley.
On appeal from the Board of Public Utilities.
Blossom A. Peretz, Ratepayer Advocate, attorney
for appellant Division of the Ratepayer Advocate in
both appeals (Ms. Peretz, of counsel; Carl Wolf
Billek, Assistant Deputy Ratepayer Advocate, and
Heikki Leesment, Deputy Ratepayer Advocate, on
the brief in A-6018-98; Ms. Leesment and
Lawanda R. Gilbert, Assistant Deputy Ratepayer
Advocate, on the brief in A-1059-99).
Gary A. Greene, attorney for cross-appellant
AT&T Communications of New Jersey, Inc. in
A-6018-98.
John J. Farmer, Jr., Attorney General, attorney for
respondent Board of Public Utilities in both appeals
(Andrea M. Silkowitz, Assistant Attorney General,
file:///C|/Users/Peter/Desktop/Opinions/a6018-98.opn.html[4/20/2013 8:27:31 PM]




Rutgers School of Law
of counsel; Eugene P. Provost, Deputy Attorney
General, on the respective briefs).
Wilentz, Goldman & Spitzer and Barry S. Abrams,
attorneys for respondent Bell Atlantic-New Jersey,
Inc. in both appeals (Anne S. Babineau and Hesser G.
McBride, Jr., of counsel and, with Daniel A. Hagan,
on the brief in A-6018-98 and, with Matthew M.
Weissman, on the brief in A-1059-99).
The opinion of the court was delivered by
KESTIN, J.A.D.
These appeals both involve the administration of the Telecommunications Act of 1992 (Act), N.J.S.A. 48:2-21.16 to
-21.21, by the Board of Public Utilities (Board), and implicate similar issues. We have considered them together and
now consolidate them for the purposes of rendering an opinion.
A-1059-99
A provision of the Act authorizes the Board "to determine, after notice and hearing, whether a telecommunications
service is a competitive service." N.J.S.A. 48:2-21.19b. See generally In re Application of New Jersey Bell Tel. Co.
(now Bell Atl.-N.J., Inc.) for Approval of its Plan for An Alternative Form of Regulation, 291 N.J. Super. 77 (App.
Div. 1996). In A-1059-99, the Board approved a petition filed by Bell Atlantic-New Jersey, Inc. (BA-NJ), for the
reclassification of its Directory Assistance Services (DAS) from rate regulated to competitive services.
The Division of the Ratepayer Advocate (Advocate) contends that the Board should have conducted a plenary
hearing prior to acting on BA-NJ's petition. In a related vein, the Advocate argues (1) that the Board's approval
violated BA-NJ's original alternative regulation plan, resulting in an improper degradation of services for residential
customers, and (2) that the Board made its decision without proper fact finding.
We do not consider additional issues the Advocate raises for the first time in its reply brief, including those
addressing asserted failures by the Board to promulgate regulations for reviewing a reclassification petition and to
"provide proper notice . . . as to how it would decide the case." It is improper to introduce new issues in a reply brief.
State v. Smith, 55 N.J. 476, 488, cert. denied, 400 U.S. 949, 91 S. Ct. 232, 27 L. Ed.2d 256 (1970); Selective Ins. Co.
of Am. v. Hojnoski, 317 N.J. Super. 331, 335 (App. Div. 1998); Interchange State Bank v. Veglia, 286 N.J. Super. 164,
188 (App. Div. 1995), certif. denied, 144 N.J. 377 (1996). See also R. 2:6-5; Warren Twp. v. Suffness, 225 N.J. Super.
399, 412 (App. Div.), certif. denied, 113 N.J. 640 (1988). In the context presented, the issues raised do not warrant
departure from customary principles of appellate practice. See, e.g., Coastal Group v. Planned Real Estate Dev.
Section, 267 N.J. Super. 49, 56 (App. Div. 1993) (addressing the issue of a state agency's authority to order recission,
even though improperly raised for the first time in a reply brief, because we considered it to be a matter of public
importance); Hojnoski, supra, 317 N.J. Super. at 335 (addressing an apparent conflict between a statute and a
regulation even though the issue was raised for the first time in an appellate reply brief).
In partial response to the Advocate's argument, advanced in respect of the Act for the first time in this appeal, that a
plenary hearing was required before the determination contemplated in N.J.S.A. 48:2-21.19b could be made, the Board
argues that, in the past, it has reclassified existing rate-regulated services as competitive services without trial-type
hearings when, after notice and an opportunity to be heard, it had determined there were no material facts in dispute.
Recitation of those reclassifications accomplished without evidentiary hearings, but rather after notice to the public and
a comment period much as in rule promulgations, see N.J.S.A. 52:14B-4, seems intended to suggest the Advocate
knew the Board might conduct its reclassification determination of BA- NJ's DAS without formal evidentiary hearings.
The Board's argument misses an essential point. The governing statute unambiguously requires a hearing before the
determination can rightfully be made. It is not a requirement that can be ignored. Yet, the question remains what the
nature of that hearing must be.
The term "hearing" does not have a fixed meaning in the field of administrative law; it varies with the types of
issues considered. Compare, e.g., N.J.S.A. 52:14B-4, -8, -9 and -10. Thus, when a statute requires a hearing, the
file:///C|/Users/Peter/Desktop/Opinions/a6018-98.opn.html[4/20/2013 8:27:31 PM]




Rutgers School of Law
question is not whether a hearing should be held, but rather what type of proceeding is appropriate to the nature of the
case. See generally, Henry J. Friendly, "Some Kind of Hearing", 123 U. Pa. L. Rev. 1267 (1975).
Administrative agencies function in several realms simultaneously. Two of these involve matters calling for
determinations based on adjudicative fact, on the one hand, and legislative fact, on the other. In Cunningham v.
Department of Civil Serv., 69 N.J. 13 (1975), the Supreme Court succinctly described the distinction between the two
concepts:
Adjudicative facts are facts about the parties and their activities, businesses, and properties, usually answering the
questions of who did what, where, when, how, why, with what motive or intent; adjudicative facts are roughly the kind
of facts that go to a jury in a jury case. Legislative facts do not usually concern the immediate parties but are general
facts which help the tribunal decide questions of law, policy and discretion.
[Id. at 22 (quoting Kenneth Culp Davis, The Requirement of a Trial-Type Hearing, 70 Harv. L. Rev. 193, 199
(1956)).]
It is entirely too facile to suggest, however, that just because a determination involves legislative fact an evidentiary
hearing of any kind is excluded as an appropriate and fair requirement of the procedure designed to lead to that
determination. Concomitantly, but only beside the point in this matter, the fact that a proceeding involves adjudicative
fact does not mandate a particular type of evidentiary proceeding, either. See Friendly, supra.
What is required in each instance, as a hearing appropriate to the nature of the case, is a proceeding that promotes
fundamental fairness and fosters the integrity of governmental processes. The idea embodies concepts which go
beyond whether a contested case hearing under the Administrative Procedure Act (APA) is required and focuses on
how governmental functions can best be discharged to engender confidence that the processes used are suitable to the
end to be achieved.
In High Horizons Dev. Co. v. Department of Transp., 120 N.J. 40 (1990), the Supreme Court noted that, where there
is no specific statutory or rule requirement that a hearing be held, see id. at 42, the need for a trial-type hearing tends to
be influenced by whether the agency is acting in a quasi-judicial or quasi- legislative capacity. Id. at 50. If the agency
is exercising its administrative expertise to make a policy determination not involving the adjudication of disputed
facts, a trial-type hearing is ordinarily not required. Id. at 51. Manifestly, however, if the question turns on a factual-
type determination, including expert opinion submitted for the agency's evaluation and reliance, an interested party
with the requisite standing must be able, in some effective way, to contest the bases offered. Therefore, if the issues
require the agency to consider material facts and to apply the law and the agency's understanding of public policy to
the facts found, a hearing suitable to a discharge of those functions is necessary. Id. at 50 (citing Cunningham, supra,
69 N.J. at 21); see Bally Mfg. Corp. v. New Jersey Casino Control Comm'n, 85 N.J. 325, 334 ("Only where the
proposed administrative action is based on disputed adjudicative facts is an evidentiary hearing mandated."), appeal
dismissed, 454 U.S. 804, 102 S. Ct. 77, 70 L. Ed.2d 74 (1981).
It will be seen at once that these guidelines do not provide an unerring solution to the question of when a
hearing is required . . . or what type of hearing is required.
*
If, as [Kenneth Culp] Davis [author of Administrative Law Treatise (2d ed. 1979)] says, "a trial is a process for
taking evidence subject to cross-examination," and the only evidence bearing on [the issue] consists of . . . various
diagrams and plans . . . , the question is: "What does one cross-examine?" * * * If the [agency] is exercising "policy or
discretion" . . . a clear requirement for a trial-type hearing is not present. On the other hand, if the question turns on
expert opinion relied on by the agency, one must be able in some way to contest the bases of the opinion.
[High Horizons, supra, 120 N.J. at 50-51 (quoting Davis, supra, §12.1 at 406).]
It is clear, therefore, from the underlying rationales employed in the cases and other authorities which have addressed
the question, that the precise characteristics of a required hearing are dictated not so much by the type of exercise in
which the agency is engaged, but more so by the nature of the questions presented.
We are mindful of the inherent limitations of High Horizons. The Court there, in the absence of a statutory
requirement for a hearing, was expressly searching for a benchmark to aid in determining whether a hearing was
nevertheless required and, if so, what type of hearing would satisfy the needs of the particular case. The Court
file:///C|/Users/Peter/Desktop/Opinions/a6018-98.opn.html[4/20/2013 8:27:31 PM]




Rutgers School of Law
concluded, "[i]n sum, it is the presence of disputed adjudicative facts, not the vital interests at stake, that requires the
protection of formal trial procedure." Id. at 53.
Here, we need not determine whether a hearing is required. The Legislature has expressly provided for one. The
only question before us is what the nature of that hearing ought to be. To resolve that issue, the questions before the
Board in this matter must be viewed in their full context and understood discretely.
The issues before us stem from the Board's determination, in 1993, to approve a plan for an alternative form of
regulation proposed by New Jersey Bell Telephone Company, which became BA-NJ. The Board found that the
proposed plan, as it had been modified, met all of the criteria established by the Act.
The Division of Rate Counsel, now the Advocate, and various others appealed from the Board's decision. In re
Application of N.J. Bell Tel. Co. (now Bell Atl.-N.J., Inc.) for Approval of its Plan for an Alternative Form of
Regulation, 291 N.J. Super. 77 (App. Div. 1996). The appellants essentially questioned the adequacy and permissibility
under the prevailing law of the modified plan as approved by the Board. Id. at 84. There was no dispute "as to the
elements of the approved plan as outlined in the Board's decision and orders." Ibid.
We affirmed the Board's actions, stating:
Our review of the extensive record in the light of the arguments advanced by the parties discloses that the
Board's action approving, in modified form, the plan proposed by petitioner was a proper exercise of the regulatory
discretion committed to the Board's authority in the Act and other enabling legislation. We discern the Board's action
to have been a fair implementation of the new regulatory regime embodied in the Act. The Board, in its decision,
addressed each of the approval criteria recited in N.J.S.A. 48:2-21.19b before the Board could reclassify BA-NJ's
DAS. The Advocate stated that a "mere exchange of correspondence" did not satisfy the hearing requirement in that
statute, and that the record here was not an adequate basis upon which the Board could make factual findings regarding
the statutory reclassification requirements. The Advocate also stated that BA-NJ had provided no information about the
degree to which other services could effectively substitute for the DAS BA-NJ already had in place, and contended
that the removal of free DAS from residential local exchange services would "materially reduce" the value received by
consumers. Finally, the Advocate renewed its request that the Board defer its consideration of this matter until it had
evaluated BA-NJ's alternative- regulation-plan petition.
BA-NJ responded to the Advocate's comments by asserting that the statute did not compel the Board to conduct a
trial-type hearing, and that the Board could use discretion in selecting the type of proceeding "so long as the selection
is responsive to the purpose and function of the agency." BA-NJ further contended that the Board could consider its
petition based on the documents submitted, since no party proffered evidence to contradict that petition. BA-NJ also
argued that evidentiary hearings were not required because the Board would be considering legislative facts and not
adjudicative facts; that is, questions relating to the likelihood of market entry and the existence of substitute services
did not present "'jury-type' questions" where the credibility and veracity of witnesses were at issue. Finally, BA-NJ
asserted that the Board should not delay this matter as the Advocate and AT&T had had more than nineteen months to
review and comment on the petition and supporting materials.
At its public agenda meeting on August 31, 1999, the Board considered the submissions of the parties and the
position of its staff. During the meeting, the Board's staff stated: (1) that only three states offered more free directory
assistance calls than New Jersey, and (2) that even if the Board required the reduction of free calls from six to four, the
number of free residential directory assistance calls in New Jersey would be greater than in forty other states, and that
about 78% of residential customers who made four or fewer calls would not be impacted at all. The Board then
approved the reclassification of BA-NJ's DAS to competitive services, memorializing its decision in an order dated
September 14, 1999.
In its order, the Board initially noted that BA-NJ had given newspaper notice to the public and had mailed notice to
the Advocate and others. With regard to the statutory requirement for a hearing in N.J.S.A. 48:2-21.19b, the Board
stated that "the statute does not require an evidentiary hearing when the facts at issue are in the nature of legislative
facts." The Board declared that its task was to apply the statutory facts already in evidence relating to "the ease of
market entry, [the] presence of other competitors, and the availability of like or substitute services." The Board
explained that its function involved only the exercise of its own discretion. The Board stated:
Moreover, although the Advocate may disagree with BA-NJ's analysis regarding the application of the statutory
standards, an analysis which BA-NJ would have the Board adopt, and may disagree with the conclusions which we
herein reach, the Advocate does not contradict the evidence of market entry, presence of competitors or availability of
substitute services which is in the record. In this situation, an evidentiary hearing is not required by the Act.
The Board further noted that precedent existed to forego a public hearing when no party objected to the service
offering. It cited three previous reclassification cases in which the Advocate had failed to assert that the Act required
file:///C|/Users/Peter/Desktop/Opinions/a6018-98.opn.html[4/20/2013 8:27:31 PM]




Rutgers School of Law
an evidentiary hearing prior to the approval of reclassifications. Consequently, the Board concluded that, because BA-
NJ had fully addressed all the issues raised by AT&T and the Advocate and had provided all requested information, no
adjudicatory facts remained at issue and a hearing was not required. Then, noting the lengthy opportunity for comment,
the Board rejected the Advocate's request to delay the matter further by deferring it into the proceeding to review BA-
NJ's plan filing.
The Board determined that BA-NJ's DAS met the required statutory standards in N.J.S.A. 48:2-21.19b and should
be reclassified as competitive services. It found that there was sufficient ease of market entry to declare BA-NJ's DAS
competitive, because "the 'facilities' necessary for DAS market entry"__dialing method, database access, and a
workforce__were universally available and not limited to established competitors. The Board cited to the existence of
a number of smaller and start-up competitors already providing DAS-like functions and to a number of competitive
alternatives. It also noted that it had previously directed BA-NJ to make access to its directory assistance database
universally available to competitors.
The Board found additionally that the record contained sufficient evidence of the existence of other competitors for
directory assistance services to declare BA-NJ's DAS competitive. The Board noted that an assortment of DAS
provided by several competitors were "readily available throughout New Jersey[,]" including interexchange carriers,
alternative directory assistance providers, and wireless service providers. The Board stated:
IXC competitive offerings now include such services as AT&T's "1-800-CALL ATT" and "00" INFO and MCI
WorldCom's "10-10-9000." These directory assistance services, which provide both local and national directory listing
information, are available to AT&T's and MCI/WorldCom's calling card and intra and interLATA toll customers, as
well as casual dialers. These services also offer customers the option of having their requested telephone numbers
connected. Alternative directory assistance providers, such as INFONXX, also compete with BA-NJ to provide
directory assistance to large business customers. Wireless service providers also compete with BA-NJ's DAS by
offering directory assistance services to their own customers. These wireless service providers (e.g., Bell Atlantic
Mobile, AT&T Wireless, Sprint, Omnipoint, etc.) do not route their directory assistance calls to BA-NJ. Instead, they
route the calls to their own DAS or alternative directory assistance providers, such as INFONXX and Metro-One.
Wireless providers' directory assistance services include local and national listings nationwide and automatic call
completion, and may offer to customers Yellow Page search and other specialized services.
The Board found further that there was sufficient evidence in the record of the existence of like or substitute services
to declare BA-NJ's DAS competitive. The Board explained that "like or substitute directory assistance services are
readily available to the residential and business customers in BA-NJ's service territory, the relevant geographic area."
These services were provided by
IXCs, wireless service providers, telephone directories provided by BA-NJ and others (e.g., Yellow Booktm), on-
line Internet directory services (e.g., America On-Line ("AOL"), CompuServe and WebTV), and CD-ROM telephone
books (e.g., MetroMail, American Business Information, and Pro-CD, Inc.).
Finally, the Board determined that BA-NJ had demonstrated that its DAS did not incorporate any non-competitive
service components, since BA-NJ had provided data to its competitors for a fee and since competitors were currently
creating alternative database products. Thus, the Board announced in sum, it was satisfied that BA-NJ had satisfied the
Act's competitive safeguards.
Notwithstanding that determination, the Board also believed that a "transition period" was appropriate with regard to
residential directory assistance services. During that period, BA- NJ (1) would not increase the $.20 residential local
directory assistance call rate per chargeable call until the expiration of the current plan, including the one-year
extension of the current plan, (2) would reduce the monthly residential free call allowance per line from six to four
local directory assistance calls per month; (3) would continue the monthly residential allowance of four free calls along
with the $.20 rate per chargeable call until December 31, 2000; (4) would include in its bills an insert advising that the
residential monthly free directory assistance call allowance had been reduced from six to four per line; and (5) would
continue to provide the exemption from imposition of directory assistance charges for physically or visually disabled
persons.
"[A]fter a thorough review of the entire record[,]" the Board found "that the proposed tariff revisions are reasonable,
in the public interest and in accordance with law." It thus approved, with the conditions outlined above, the
reclassification of BA-NJ's DAS from rate regulated services to competitive services.
In the context of the Board's responsibility to determine whether BA-NJ's proposal to reclassify DAS met a realistic
standard of competitiveness, see N.J.S.A. 48:2-21.18a.
By the time the appeal was perfected and submitted for our review, the one-year extension period had almost come
file:///C|/Users/Peter/Desktop/Opinions/a6018-98.opn.html[4/20/2013 8:27:31 PM]




Rutgers School of Law
to an end. It has now expired, rendering this appeal moot. The general concepts we have discussed in relation to the
companion appeal regarding the need for a hearing appropriate to the nature of the case are equally applicable in this
matter, however.
In A-1059-99T3, we reverse and remand for reconsideration in a proceeding satisfying the requirements we have
articulated. A- 6018-98T2 is dismissed as moot.
Footnote: 1 * On May 24, 1999, the Board granted BA-NJ's request to extend the plan for an additional year. That
Board order is the subject of the companion appeal, A-6018-98.
This archive is a service of Rutgers School of Law - Camden.
file:///C|/Users/Peter/Desktop/Opinions/a6018-98.opn.html[4/20/2013 8:27:31 PM]

Download a6018-98.opn.pdf

New Jersey Law