                 IN THE COURT OF APPEALS OF TENNESSEE
                             AT NASHVILLE
                                      July 9, 2004 Session

   OFFICE OF THE ATTORNEY GENERAL, CONSUMER ADVOCATE
     AND PROTECTION DIVISION v. TENNESSEE REGULATORY
                       AUTHORITY


                       Appeal from the Tennessee Regulatory Authority
                                        No. 03-00060



                  No. M2003-01363-COA-R12-CV - Filed December 21, 2005



WILLIAM C. KOCH , JR., P.J., M.S., delivered the opinion of the court, in which WILLIAM B. CAIN and
PATRICIA J. COTTRELL, JJ., joined.


                    OPINION ON PETITION FOR REHEARING

        On November 29, 2005, this court issued an opinion finding that the Tennessee Regulatory
Authority (Authority) failed to follow the requirements of then-existing law when it declined to
convene a contested case proceeding with regard to BellSouth Telecommunications, Inc.’s
“Welcoming Reward Program” tariff. Both the Authority and BellSouth have filed timely petitions
for rehearing in accordance with Tenn. R. App. P. 39 with regard to portions of that opinion.

                                                I.
                                      SCOPE OF THE REMAND

         The Authority has expressed doubt with regard to the significance of our remand instructions
in light of our conclusion that the dispute regarding the “Welcoming Reward Program” tariff is moot
because the program expired before the appellate record was filed with this court. Notwithstanding
the expiration of the program, we remanded the case to the Authority “for further proceedings
consistent with this opinion.” This standard instruction does not require any particular action by the
Authority with regard to the “Welcoming Reward Program.” It is intended to allow the Authority
to take whatever actions it deems necessary to conclude this matter consistent with this court’s
opinion. Depending on the facts of the particular case, these actions may be nothing more than
taxing costs or collecting any applicable fees.
                                                       II.
                THE APPLICATION OF TENN . CODE ANN . § 65-5-101(c) (SUPP. 2005)

        Both the Authority and BellSouth assert that we overlooked Tenn. Code Ann. § 65-5-101(c)
in the portion of our opinion discussing the standards for determining whether it should convene a
contested case proceeding to review a proposed tariff. This statute supplies specific standards and
gives the Authority broad discretion with regard to convening a contested case proceeding.
However, the statute was not in effect when the Authority considered the tariff at issue in this case.1
Our opinion measured the Authority’s actions at issue in this case against the law in effect at the
time. Proceedings occurring after July 1, 2004 will, of course, be measured against Tenn. Code Ann.
§ 65-5-101(c) to the extent it is applicable.

                                         III.
         THE RIGHT OF THE CAPD AND THE BELLSOUTH COMPETITORS TO A HEARING
                                IN THIS PROCEEDING

       As a final matter, both the Authority and BellSouth express concern with Section IV of our
November 29, 2005 opinion in which we concluded that the CAPD and BellSouth’s competitors had
not waived their right to take issue on this appeal with the denial of their petitions for a contested
case hearing. They assert that instead of making a waiver argument, they were arguing that the
CAPD and BellSouth’s competitors simply failed to present sufficient evidence to the Authority to
warrant convening a contested case proceeding.

        We adhere to our conclusion that the CAPD and BellSouth’s competitors did not waive their
right to insist on appeal that the Authority should have granted them a contested case hearing. We
likewise adhere to our conclusions (1) that both the CAPD and BellSouth’s competitors presented
particularized allegations alleging the illegality of the proposed tariff, (2) that they demonstrated
specifically how they would be injured by the proposed tariff, and (3) that these matters had not been
addressed by the Authority in earlier proceedings. As the law stood at the time, these showings
should have been sufficient to trigger a contested case hearing. As Director Jones pointed out in his
April 25, 2003 dissent to the order denying the petitions for suspension of the tariff and for a
contested case hearing:

                         The record here shows that as a result of the aggrieved entities
                 in this docket expressing concerns that affected their interests, the
                 majority ordered the Petitioner to make amendments to its original
                 filing. The majority’s very actions of ordering amendments
                 consistent with the pleadings of the aggrieved entities rendered this
                 proceeding a de facto contested case proceeding. Here, substance
                 over form is crucial. Nevertheless, the majority disregarded the


        1
          The Authority’s final order denying the petitions to suspend the tariff and to convene a contested case
proceeding was filed on April 14, 2003. The effective date of Tenn. Code Ann. § 65-5-101(c) was July 1, 2004. Act
of April 7, 2004, ch. 545, § 2, 2004 Tenn. Pub. Acts. 1335, 1336.

                                                      -2-
                  administrative consequences of its actions in favor of erecting a
                  standard for the convening of a contested case that apparently requires
                  an entity to prosecute its entire case on the front end in order to secure
                  the judicial rights contemplated in Tennessee’s Uniform
                  Administrative Procedures Act.

The filings of the CAPD and BellSouth’s competitors, coupled with their presentations and
arguments during the proceedings before the Authority, provided ample basis for convening a
contested case proceeding.2

                                                        IV.

        The petitions for rehearing filed by the Authority and BellSouth are denied. We tax the costs
related to these petitions in equal proportions to the Tennessee Regulatory Authority and to
BellSouth Telecommunications, Inc.



                                                               _______________________________
                                                               WILLIAM C. KOCH, JR., P.J., M.S.




         2
          This result could conceivably have been different had this proceeding taken place after July 1, 2004 because
Tenn. Code Ann. § 65-5-101(c)(3)(C)(i) would have required the complaining party to demonstrate a “substantial
likelihood of prevailing on the merits of its complaint. . . .”

                                                         -3-
