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IN RE BELL ATL. - NEW JERSEY

April 18, 1997

Re: Bell Atlantic - New Jersey, Inc.
v.
Herbert H. Tate, Jr., President, and Carmen J. Armenti, Commissioner of the New Jersey Board of Public Utilities, AT&T Communications of New Jersey, Inc., MCI Telecommunications Corporation, and the New Jersey Division of the Ratepayer Advocate



The opinion of the court was delivered by: POLITAN

 Dear Counsel:

 This matter comes before the Court on application by plaintiff, Bell Atlantic-New Jersey, Inc., for judgment awarding declaratory relief and permanent injunction of the enforcement of an order entered by the defendants, President Herbert H. Tate, Jr., and Commissioner Carmen J. Armenti of the New Jersey Board of Public Utilities. AT&T Telecommunications of New Jersey, Inc., MCI Telecommunications Corporation, and the New Jersey Division of the Ratepayer Advocate were permitted to intervene in this action. Oral argument was heard in this matter on April 14, 1997. Based upon a thorough review of the record, and as set forth more fully below, plaintiff's request for relief is DENIED and plaintiff's complaint is DISMISSED WITH PREJUDICE.

 STATEMENT OF FACTS

 A rather exhaustive statement of the history of this matter is necessary in order to address it completely. Plaintiff, Bell Atlantic-New Jersey ("BA-NJ"), is a local operating company of Bell Atlantic. Since the 1982 divestiture of American Telephone & Telegraph Company ("AT&T"), Bell Atlantic, through its local operating companies, has been authorized in the Mid-Atlantic states to provide telephone service to businesses and residents within certain defined geographic regions dubbed "local access transport areas" ("LATAs"). *fn1"

 This service, called "intraLATA," includes "local calls" -- typically calls within a city or town and its immediate surrounding areas -- as well as "intraLATA toll calls" -- calls covering a distance beyond local calls. There are three LATAs in New Jersey. Bell Atlantic is presently prohibited by the consent decree from providing service between LATAs, or "interLATA" service. Generally, when a customer dials a toll call, the call is carried by BA-NJ if the call is intraLATA and by the long distance carrier selected by the customer if the call is interLATA.

 AT&T and other long distance companies provide interLATA service for residents and businesses in the Mid-Atlantic states and throughout the country. These companies urged the New Jersey Board of public Utilities ("BPU") *fn2" to allow them to compete in the intraLATA on an access code basis, whereby a long distance company could carry intraLATA toll calls if a customer dialed a five-digit access code (e.g., 10XXX) to identify a carrier other than BA-NJ.

 On June 30, 1994, the BPU issued an order permitting the long distance carriers to provide intraLATA toll service in New Jersey on an access code basis. If a customer did not utilize the access code, then BA-NJ would carry the call. This regulatory approval to offer intraLATA toll service in New Jersey did not, however, give AT&T equal access to customers, as Bell Atlantic does not provide AT&T (or any other intraLATA competitors) equal access through presubscription. *fn3"

 The BPU's 1994 order and the surrounding hearings also contemplated that the BPU would conduct further proceedings to determine whether to require intraLATA presubscription in New Jersey. On January 24, 1995, the BPU initiated a proceeding to determine whether it should approve intraLATA toll competition on a presubscription basis in each of New Jersey's LATAs.

 After receiving exhaustive comments from all parties involved (which included BA-NJ, AT&T, MCI, and the Ratepayer Advocate, among others), the BPU conducted sixteen days of evidentiary hearings between May 1, 1995, and June 21, 1995. The parties in the case sub judice participated fully in the hearings, and filed detailed post-hearing initial and reply briefs.

 The BPU voted at its December 8, 1995 Agenda Meeting to order presubscription in New Jersey. On December 14, 1995, the BPU issued an Order Approving Presubscription and Proposal of Rules. I/M/O The Investigation of IntraLATA Toll Competition for Telecommunications Services on a presubscription Basis, Dkt. No. TX94090388 (Dec. 14, 1995) ("BPU Order"). More specifically, the Order states that "the [BPU], by this Order, approves intraLATA toll competition on a presubscription basis, and . . . the [BPU] herewith approves for publication in the New Jersey Register proposed rules which would implement intraLATA toll competition on a presubscription basis." Id. at 1. *fn4" The BPU unequivocally stated that presubscription "shall be the policy of this State." Id. at 39.

 The BPU was aware of pending federal legislation, the Federal Telecommunications Act of 1996 ("the Act"), but stated that it would be irresponsible for the BPU to wait for "uncertain federal legislation." The BPU stated that it would adjust its regulations if required by the still-pending legislation. Id. at 39. The BPU made it clear that presubscription should be implemented as rapidly as possible, and it attached proposed rules regarding various details of implementation, such as a schedule, cost allocation, and business office practices.

 The BPU published rules regarding presubscription in the New Jersey Register on January 16, 1996, and those rules were adopted with some modifications on August 5, 1996. One modification made was to the date of implementation, which was eventually moved to May 5, 1997. *fn5" BA-NJ had commented extensively on these proposals, and it was in large part at its urging that the implementation date was modified.

 BA-NJ had claimed during the comment period that the BPU Order was merely a "preliminary" determination of the presubscription issue. The BPU rejected that contention and stated that it was not preliminary, but "an affirmative determination that presubscription shall be the policy of the State of New Jersey." 28 N.J.R. 3827 (Aug. 5, 1996).

 Moreover, by August 1996, the Act had been passed, and the BPU stated that the Act had no impact on what it had done:

 
The [BPU] disagrees that the Act has a direct impact on intraLATA toll presubscription. As the Advocate correctly suggested in its comments . . . "the [BPU] issued its Order requiring intraLATA Toll Presubscription prior to the cut-off date stated in the Act (December 19, 1995)." As such, the Order is "grandfathered" and these rules would not be prohibited by the Act. . . . Therefore, since the [BPU's] Decision and Order . . . is grandfathered under the Federal Act, it has no impact on the implementation of that policy decision and these rules are thus unaffected by any provision in the Act.

 Id. at 3828.

 BA-NJ filed this action alleging that the BPU's rule fixing May 5, 1997, as the commencement date for full statewide presubscription is void and unenforceable. BA-NJ seeks to permanently enjoin the action because it is preempted by the Act, which limits a state's ability to order presubscription unless it had issued an order by ...


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