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In re Application of Bell Atlantic-New Jersey

July 13, 2001


Before Judges Kestin, Ciancia and Alley.

The opinion of the court was delivered by: Kestin, J.A.D.


Submitted October 24, 2000

On appeal from the Board of Public Utilities.

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 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 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 . . . ...

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