                  NOT FOR PUBLICATION WITHOUT THE
                 APPROVAL OF THE APPELLATE DIVISION

                                    SUPERIOR COURT OF NEW JERSEY
                                    APPELLATE DIVISION
                                    DOCKET NO. A-2477-13T4
                                                A-0107-14T1

IN THE MATTER OF
COUNTY OF ATLANTIC,

      Respondent-Respondent,            APPROVED FOR PUBLICATION

and                                          March 9, 2016

                                          APPELLATE DIVISION
PBA LOCAL 243,

      Charging Party,

and

FOP LODGE 34 and PBA LOCAL 77,

     Charging Parties-Appellants.
_____________________________________

IN THE MATTER OF
TOWNSHIP OF BRIDGEWATER,

      Petitioner-Respondent,

and

PBA LOCAL 174,

     Respondent-Appellant.
______________________________________

          Argued October 28, 2015 – Decided March 9, 2016

          Before Judges Alvarez, Haas, and Manahan.

          On appeal from the State of New Jersey
          Public   Employment   Relations   Commission,
          P.E.R.C. Nos. 2014-40 and 2015-11.
Ira W. Mintz and Steven R. Cohen argued the
cause for appellants FOP Lodge 34, and PBA
Local 77 in A-2477-13, and amici curiae
Lodge 34, PBA Local 77, and Communications
Workers of America AFL-CIO in A-0107-14
(Weissman & Mintz, LLC, and Selikoff &
Cohen, P.A., attorneys; Mr. Mintz and Mr.
Cohen, on the briefs).

James M. Mets and David M. Bander argued the
cause for appellant PBA Local 174 in A-0107-
14    and    amicus    curiae     Professional
Firefighters Association of New Jersey in A-
2477-13   (Mets  Schiro   &   McGovern,   LLP,
attorneys; Mr. Mets, of counsel and on the
briefs; Mr. Bander and Brian J. Manetta, on
the briefs).

James F. Ferguson, Atlantic County Counsel,
argued the cause for respondent County of
Atlantic in A-2477-13.

Don Horowitz, Acting General Counsel, argued
the cause for respondent New Jersey Public
Employment    Relations    Commission    (Mr.
Horowitz,   attorney;   Martin  R.   Pachman,
formerly General Counsel, and Mr. Horowitz,
on the briefs).

Eric M. Bernstein argued the cause for
Township of Bridgewater respondent in A-
0107-14 and amicus curiae in A-2477-13 (Eric
M. Bernstein & Associates, LLC, attorneys;
Mr. Bernstein, of counsel and on the brief;
Philip G. George, on the brief).

John J. Hoffman, Acting Attorney General,
attorney for amicus curiae Governor's Office
of Employee Relations in A-2477-13 (Michelle
Lyn Miller, Assistant Attorney General, of
counsel; Todd A. Wigder, Deputy Attorney
General, on the brief).

Oxfeld Cohen, P.C., attorneys for amicus
curiae     International   Federation    of
Professional and Technical Engineers, Local



                      2                          A-2477-13T4
         195 in A-2477-13 (Arnold S. Cohen, of
         counsel and on the brief; Samuel Wenocur, on
         the brief).

         Bucceri & Pincus, attorneys for amicus
         curiae New Jersey Education Association in
         A-2477-13 (Louis P. Bucceri, of counsel and
         on the brief; Albert J. Leonardo, on the
         brief).

         Cynthia J. Jahn, General Counsel, attorney
         for amicus curiae New Jersey School Boards
         Association in A-2477-13 (Patrick Duncan, on
         the brief).

         Law   Offices  of   Craig  S.   Gumpel  LLC,
         attorneys for amicus curiae New Jersey State
         Firefighters Mutual Benevolent Association
         (Craig S. Gumpel, of counsel and on the
         brief).

         Genova Burns LLC, attorneys for amici curiae
         New Jersey State League of Municipalities,
         New Jersey Association of Counties, and New
         Jersey Council of County Colleges (Joseph M.
         Hannon, of counsel and on the brief; Allison
         B. Gotfried, on the brief).

         Markowitz and Richman, attorneys for amicus
         curiae New Jersey State Lodge of the
         Fraternal   Order  of  Police  (Matthew  D.
         Areman, on the brief).

         Zazzali,   Fagella,   Nowak,    Kleinbaum &
         Friedman, attorneys for amicus curiae New
         Jersey State PBA in A-2477-13 (Paul L.
         Kleinbaum, of counsel and on the brief;
         Marissa A. McAleer, on the brief).

    The opinion of the court was delivered by

ALVAREZ, P.J.A.D.




                              3                         A-2477-13T4
       Oral argument was conducted on these two matters back-to-

back, and they are consolidated for purposes of this opinion.

We reverse both Public Employment Relations Commission (PERC)

final agency decisions because PERC's abandonment of the dynamic

status    quo      doctrine       was    action        outside     the    scope     of     its

legislative        mandate,      which    is     the    implementation        of    the    New

Jersey Employer-Employee Relations Act (Act), N.J.S.A. 34:13A-1

to -39.

       PERC   is    charged       with    safeguarding       the     rights    of    public

employees.         Galloway Twp. Bd. of Educ. v. Galloway Twp. Ass'n

(NJ Galloway), 78 N.J. 25, 36 (1978).                         It "bear[s] the dual

responsibilities           of    adjudicating           violations       of   the    unfair

practice provisions and the Act and taking all steps necessary

to enforce that which the Legislature has declared to be the

public    policy      of        this     State     in     public     employment          labor

relations."        Ibid.

       In the first appeal, the Atlantic County matters, FOP Lodge

34 and PBA Local 771 filed separate unfair practice charges with

PERC.2    The unions alleged that Atlantic County violated the Act

by,      after       the        expiration         of      collective         negotiation


1
  The organizations are the designated collective                              bargaining
units for officers below the rank of sergeant.
2
    A third union, PBA Local 243, is not involved in the appeal.



                                               4                                    A-2477-13T4
agreements3 (CNAs), failing to pay salary/step increments to unit

members      while   negotiations   were   ongoing    and      the    employment

contract disputes were in interest arbitration.                PERC dismissed

the charges, disavowing the dynamic status quo doctrine, which

would have required payment of the salary increments.                  Had PERC

adhered      to   the   longstanding   doctrine,     it   would       have   held

Atlantic County's decision not to pay salary/step increments an

unfair labor practice.       See N.J.S.A. 34:13A-5.4.

       In the second appeal, the Bridgewater Township case, PERC

restrained binding arbitration of Local 174's grievance, relying

on its decision in the Atlantic County cases.4            The grievance was

filed   to    challenge    the   Township's   failure     to    pay    automatic

salary increments to unit members after the expiration of their

CNA.    PERC held that, since it had abandoned the dynamic status

quo doctrine, the issue of automatic salary increments after the

expiration of a negotiated agreement was no longer mandatorily

negotiable nor legally arbitrable.            Had PERC adhered to the




3
  New Jersey typically employs the terms "collective negotiation"
and   "collective   negotiation   agreements,"  not   "collective
bargaining" or "collective bargaining agreements."       Twp. of
Franklin v. Franklin Twp. PBA Local 154, 424 N.J. Super. 369,
373 n.1 (App. Div. 2012).
4
  Local 174 is a collective bargaining unit for officers below
the rank of sergeant.



                                       5                                A-2477-13T4
doctrine, since salary is a mandatory subject of negotiation, it

would have held Local 174's grievance to be arbitrable.

                                               I.

       PERC    has      had    exclusive       jurisdiction            over       unfair      labor

practice      charges      since      1974.          See    L.    1974,      c.    123    (1974),

codified at N.J.S.A. 34:13A-5.4; See In re Galloway Twp. Bd. of

Educ. (PERC Galloway), P.E.R.C. No. 76-32, 2 N.J.P.E.R. ¶ 122B,

1976 N.J. PERC LEXIS 23 (1976), rev'd, 149 N.J. Super. 352 (App.

Div.   1977),       rev'd,       NJ   Galloway,            supra,      78   N.J.        25.         The

following year, PERC adopted the dynamic status quo doctrine.

See    In   re    Piscataway          Twp.     Bd.    of     Educ.,         PERC    No.       91,    1

N.J.P.E.R. 49, 50 (1975).

       In Piscataway, PERC found that the employer had engaged in

an    unfair      labor       practice    by    unilaterally            dropping         employee

hospitalization and medical coverage, a condition of employment,

after the expiration of a CNA while negotiations were ongoing.

PERC stated:            "It is the generally accepted view in both the

public      and    private       sectors       that         an    employer         is    normally

precluded        from     altering       the     status          quo    while       engaged         in

collective negotiations . . . ."                      Ibid.         PERC defined the term

"status quo" to include scheduled pay increments.                                       Moreover,

such dynamic status quo was within the scope of mandatory fair

labor practices even where no CNA was in effect.




                                                6                                         A-2477-13T4
       Two years later, in 1976, PERC again held that refusal to

pay salary increments in accordance with an expired agreement,

pending the negotiation of a successor agreement, was an unfair

labor   practice     in    violation      of   N.J.S.A.    34:13A-5.4(a)(1)        and

(5).     PERC   Galloway,        supra,   2    N.J.P.E.R.      at    8-9.    In   PERC

Galloway, PERC observed that a level playing field for labor

negotiations     between     a    government        employer    and    the   employee

bargaining unit requires that "the status quo is predictable and

constitutes the terms and conditions under which the parties

have been operating[.]"            PERC Galloway, supra, 2 N.J.P.E.R. at

7.

       Our Supreme Court affirmed the PERC Galloway decision in

part    based   on   the    application        of   N.J.S.A.        18A:29-14.     The

statute bound school boards to salary schedules "for a period of

two years from the effective date of such policy[,]" and in that

case the second year fell in the school term in which the Board

was refusing to pay salary increments.                    Because the Board did

not pay salary increments for the second year, it violated the

"statutory compulsion."           Id. at 52.        NJ Galloway, supra, 78 N.J.

at 51-52.       The Court, by way of dictum, also endorsed PERC's

reliance on the doctrine of dynamic status quo in its decision.

Id. at 50-51.




                                           7                                 A-2477-13T4
    In its discussion, the Court cited NLRB v. Katz, 369 U.S.

736, 743-47, 82 S. Ct. 1107, 8 L. Ed. 2d 230 (1962), for the

proposition     that   unilateral        change     in    the    status     quo

"frustrate[s] the 'statutory objective of establishing working

conditions through bargaining.'"         Id. at 48 (citing Katz, supra,

369 U.S. at 744, 84 S. Ct. at 1112, 8 L. Ed. 2d at 236).                    The

Court   drew   a   parallel   between     that     principle    and   N.J.S.A.

34:13A-5.3.     The statute stated then as it does now, that "new

rules   or   modifications    of   existing       rules   governing   working

conditions" should only be implemented when they are the product

of negotiations:

             Our Legislature has also recognized that the
             unilateral imposition of working conditions
             is the antithesis of its goal that the terms
             and conditions of public employment be
             established through bilateral negotiation
             and, to the extent possible, agreement
             between the public employer and the majority
             representative of its employees.     It has
             incorporated a rule similar to that of Katz
             in . . . N.J.S.A. 34:13A-5.3.

             [NJ Galloway, supra, 78 N.J. at 48.]

Since compensation is an important condition of employment,

             the unilateral denial of that increment
             would constitute a modification thereof
             without the negotiation mandated by N.J.S.A.
             34:13A-5.3 and would thus violate N.J.S.A.
             34:13A-5.4(a)(5).  Such conduct by a public
             employer would also have the effect of
             coercing its employees in their exercise of
             the organizational rights guaranteed them by
             the Act because of its inherent repudiation



                                     8                                A-2477-13T4
             of and chilling effect on the exercise of
             their statutory right to have such issues
             negotiated on their behalf by their majority
             representative.

             [Id. at 49.]

       Eighteen years later, in Board of Education Township of

Neptune v. Neptune Township Educational Association, 144 N.J. 16

(1996), the Court acknowledged PERC's longstanding adherence to

the    dynamic     status   quo     doctrine,          and    the    adherence      to   the

doctrine in "most jurisdictions[.]"                   Id. at 22-23.

       The Court observed, however, that "there is less unanimity

in    applying     that   rule     to    the       public    sector."      Ibid.         When

Galloway     was    written,       N.J.S.A.         18A:29-4.1       authorized     school

boards to adopt salary schedules for full-time teaching staff

for a maximum of two years.                At the time Neptune was written,

the statute had been amended to allow increments in "one, two or

three year" steps.          Supra, 144 N.J. at 30.                  The Court found the

statute effectively preempted labor law.                      Id. at 29.

       In   Neptune,      the    Court    clarified          that    salary   increments

could not be paid to teachers after the expiration of the salary

schedule     negotiated         between    the       school    board    and   the     union

because it was prohibited by statute, id. at 30-31, and because

no recoupment could be obtained from a tenured public employee,

id. at 33-34.       The latter point was important because recoupment

could be obtained from other non-tenured public employees, thus



                                               9                                   A-2477-13T4
limiting the potential impact of payments of increments during

periods in which a CNA was not in effect on a governmental

entity's     budget.         Should        the    parties         ultimately     negotiate       a

different schedule of payments that resulted in an overpayment

during the time the CNA was expired but increments paid, the

overpayments could be "recouped."

       In the context of the newly decided Abbott v. Burke, 136

N.J.   444    (1994),     which       mandated             the   equalization      of    school

funding      across    the    state,        the       Neptune      Court     concluded      that

N.J.S.A. 18A:29-4.1 was enacted "to allow schools to properly

manage     their      budgets        in    conformance            with     the   New     Jersey

Constitution and current economic realities."                               Supra, 144 N.J.

at 28-29.       The Court disavowed a reading of NJ Galloway that

relied on the dynamic status quo doctrine.                           Id. at 31-32.

       Despite the disavowal, the Court also specified that the

salary schedule limit found in N.J.S.A. 18A:29-4.1 did not apply

to non-teaching staff members.                    Neptune, supra, 144 N.J. at 34.

In   other    words,     despite          the    weighty         school    funding     concerns

addressed      in     Abbott,    and       the        potential      negative     effect       of

automatic      increases        on    a     school         budget,    the    Neptune       Court

allowed      non-teaching       employees             to    benefit       from   the    dynamic

status quo doctrine and collect increments in salaries at the

expiration of their CNAs.                 See ibid.




                                                 10                                     A-2477-13T4
      PERC      thereafter    decided    that   because   of    the    potential

negotiating difficulties resulting from mixed bargaining units,

in which members would be subject to different rules depending

on whether they were teachers or non-teachers, Neptune's holding

would     be    extended     to   non-teaching    members      included      in    a

bargaining unit with teachers.           In re East Hanover Bd. of Educ.,

PERC No. 99-71, 25 N.J.P.E.R. ¶ 30052 1999 N.J. PERC LEXIS 12

(1999), aff'd, No. A-4226-98 (App. Div. Apr. 10, 2000), certif.

denied, 165 N.J. 489 (2000).

      Appellate review of agency decisions is deferential.                   In re

Hunterdon Cnty. Bd. of Chosen Freeholders, 116 N.J. 322, 328

(1989).        Our inquiries are limited to:        (1) whether the agency

followed the law; (2) whether the agency's decision is supported

by   substantial     evidence     in    the   record;   and    (3)    whether     in

applying the law to the facts, the agency reached a supportable

conclusion.       City of Jersey City v. Jersey City Police Officers

Benev. Ass'n, 154 N.J. 555, 567 (1998); Morris Cnty. Sheriff's

Office v. Morris Cnty. Policeman's Benev. Ass'n, Local 298, 418

N.J. Super. 64, 74-75 (App. Div. 2011).

      As to the review of PERC decisions, we have said:

               PERC is charged with administering the New
               Jersey   Employer-Employee   Relations   Act
               (Act), N.J.S.A. 34:13A-1 to -29, and its
               interpretation of the Act is entitled to
               substantial deference.     Appellate courts
               "'will   not   upset    a   State   agency's



                                        11                                A-2477-13T4
           determination in the absence of a showing
           that   it   was   arbitrary,   capricious   or
           unreasonable, or that it lacked fair support
           in the evidence, or that it violated a
           legislative policy expressed or implicit in
           the governing statute.'"        "Although an
           agency's 'interpretation of the statute it
           is charged with administering . . . is
           entitled to great weight,' . . . [appellate
           courts] will not yield to PERC if its
           interpretation   is   'plainly   unreasonable,
           contrary to the language of the Act, or
           subversive of the Legislature's intent.'"

                PERC's   interpretation   of  the   law
           outside of its charge is entitled to "no
           special deference."   Moreover, deference is
           not afforded when PERC's interpretation
           gives a provision of the Act greater reach
           than the Legislature intended, and PERC must
           follow judicial precedents interpreting the
           Act.

           [Commc'ns Workers of Am., Local 1034 v.
           State Policemen's Benev. Ass'n, Local 203,
           412 N.J. Super. 286, 291 (App. Div. 2010)
           (alteration    in   original)    (citations
           omitted).]

    The   issue   presented    in    these    appeals   is   one   of   law:

whether   PERC   can   summarily    reverse    the   dynamic   status    quo

doctrine in order to advance the legislative goal embodied in

the two percent tax levy cap, N.J.S.A. 40A:4-45.44 to -45.47.

Our review is de novo.        Maeker v. Ross, 219 N.J. 565, 574-75

(2014); Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140

N.J. 366, 378 (1995).




                                    12                             A-2477-13T4
                                            II.

       In   the     Atlantic         County        matters,     PERC    adopted     and

incorporated the hearing examiner's findings of fact.                       However,

because     it    abandoned     the        dynamic    status     quo   doctrine,    it

rejected the examiner's decision in favor of both bargaining

units.

       It was undisputed that the County's practice for many years

had been to pay salary increments while a new agreement was

negotiated, pursuant to the schedule contained in the expired

CNA.     It is common for contracts between public employers and

employees to expire long before new ones are negotiated.                          Local

77's CNA explicitly provided for this eventuality by stating:

"All provisions of this Agreement will continue in effect until

a successor Agreement is negotiated."                     Article XIX, "Duration

and Termination."

       During     the    course       of     the     hearing,    County    employees

testified that law enforcement salary increments were between

approximately five and six percent per year.                     If paid, in order

to meet the two percent tax levy cap, some adjustment would have

to be made to other budget items.

       Despite adopting the hearing examiner's findings of fact,

PERC   disagreed        with   his    conclusion        that    the    parties'    CNAs

compelled salary step increments beyond the expiration of the




                                             13                              A-2477-13T4
agreements.    PERC found instead that "there is not one word in

any of the agreements by which the parties agreed to continue to

provide incremental increases beyond the termination date of the

agreements."       PERC   made   no    mention     that   both   CNAs    were

negotiated assuming the dynamic status quo doctrine applied.

    PERC began the analysis in its decision by discussing the

2010 tax levy cap.    It observed that the County had demonstrated

a decrease in its ratable base, as a result of which it had been

compelled to cut expenditures by reducing public services and

projects, by employee furloughs, and similar measures.

    PERC further observed that the County's efforts had enjoyed

great success, and that it carried actual budget surpluses in

2010 and 2011, maintained its good bond rating, and limited its

overall   budget   growth   to   under     two    percent.       After   this

discussion, PERC proceeded to consider the "continuing propriety

of what is known as the dynamic status quo doctrine."

    PERC's analysis also referenced Piscataway, PERC Galloway,

and Neptune, acknowledging adherence to the doctrine since 1975.

The opinion then stated that PERC had the authority to modify,

or even abandon doctrines it created.            It identified two earlier




                                      14                            A-2477-13T4
cases,   one   decided   in   2011    and    other    in    2012,      in    which   it

deviated from the dynamic status quo doctrine.5

     Without    reference     to     the    record,    and      contrary       to    the

rationale it had employed since Piscataway in 1974 that the

dynamic status quo doctrine maintained a level playing field for

labor    negotiations,    PERC       continued:            "a   post        expiration

requirement that employers continue to pay and fund a prior

increment      system    creates       myriad        instabilities           in      the

negotiations process."        PERC next referred to changing economic

conditions, and asserted that governmental budgetary constraints

trump labor considerations.            PERC's opinion closed with this

statement:

            [W]e find that the dynamic status quo no
            longer fulfills the needs of the parties in
            that it serves as a disincentive to the
            prompt settlement of labor disputes, and
            disserves rather than promotes the prompt
            resolution of labor disputes.  While public
            employers will continue to be bound by the

5
  Bloomfield Bd. of Educ., P.E.R.C. No. 2011-055, 37 N.J.P.E.R.
¶ 2 2011 N.J. PERC LEXIS 79 (2011); State Operated School Dist.
of Paterson, P.E.R.C. No. 2012-3, 38 N.J.P.E.R. ¶ 33 2011 N.J.
PERC LEXIS 118 (2011). Both opinions relate to interim relief.
In the first, PERC declined to compel salary increments during
negotiations because the payments could not be recouped. In the
second case, PERC declined to apply the dynamic status quo
doctrine to a dispute in a financially struggling school
district because "after weighing the relative hardship to the
parties and the harm to the public interest, interim relief is
not appropriate and the dynamic status quo should not be applied
in this case."    State Operated School Dist. of Paterson, 2011
N.J. PERC LEXIS at 9.



                                       15                                     A-2477-13T4
            strictures of maintenance of the status quo,
            that will be defined as a "static" rather
            than a dynamic status quo.

Therefore, PERC rejected the hearing examiner's decision because

he applied the dynamic status quo doctrine and "for the reasons

set forth above[,]" and dismissed the unfair practice charges.

This appeal followed.

     We    begin   our     analysis   with    N.J.S.A.    34:13A-16.7     [and

related    statutes],      enacted    in     2010,   which    cap    interest

arbitration salary growth at two percent.            The effective life of

N.J.S.A. 34:13A-16.7 was recently extended to 2017.                 This cap,

limited    to   interest    arbitration,     is   the    Legislature's    link

between the Act and the two percent tax levy cap or efforts at

controlling the size of municipal budgets.6               It is significant

because in New Jersey, interest arbitration is compulsory.                 See

N.J.S.A. 34:13A-16.        It hardly needs to be said that had the

Legislature intended to limit salary growth in other areas not

affected by the interest arbitration cap, it clearly could have

done so.    And its silence is meaningful:




6
   In   N.J.S.A.   34:13A-16(g)(6),    an  element,   among   many,
arbitrators   must   take   into   account  in   resolving   salary
negotiations is the effect of an award on the employers' budget.
Similarly,   in    N.J.S.A.    34:13A-16.8(e)(1),   the    Interest
Arbitration Task Force is directed to, as part of its charge,
"study the effect and impact of the arbitration award cap on
local property taxes."



                                      16                             A-2477-13T4
              [T]he fact that the Legislature has not
              acted    in   response    to    an   agency's
              interpretation or practice is "granted great
              weight as evidence of its conformity with
              the legislative intent."    Malone v. Fender,
              80 N.J. 129, 137, 402 A.2d 240 (1979)
              (citing Lavitz v. Civil Serv. Comm'n, 94
              N.J. Super. 260, 266, 227 A.2d 722 (App.
              Div. 1967));   see also Cedar Cove, Inc. v.
              Stanzione, 122 N.J. 202, 212, 584 A.2d 784
              (1991) ("The meaning ascribed to legislation
              by the administrative agency responsible for
              its implementation, including the agency's
              contemporaneous construction, long usage,
              and practical interpretation, is persuasive
              evidence of the Legislature's understanding
              of its enactment." (citing Malone, supra, 80
              N.J. at 137, 402 A.2d 240)).

              [Klumb v. Bd. of Educ. of Manalapan-
              Englishtown Reg'l High Sch. Dist., Monmouth
              Cnty., 199 N.J. 14, 24-25 (2009).]

      The   Legislature       could   have    enacted      additional    limits    by

further amendments.           It did not.       See, e.g., Bd. of Educ. of

Borough of Alpha, Warren Cnty. v. Alpha Educ. Ass'n, 190 N.J.

34,   47-48    (2006)    (noting      that    Legislature     overruled     Supreme

Court's ruling in Camden Bd. of Educ. v. Alexander, 181 N.J.

187, 203-07 (2004), in part, by amending N.J.S.A. 34:13A-5.3,

effective Jan. 12, 2006, to set forth a presumption in favor of

arbitration).

      PERC's     decision,     undertaken       in    an    area   in    which    the

Legislature     did     not   act,    was    driven   by    the    tax   levy    cap,

concerns regarding government budgets, and not the Act.                     The two

percent tax levy cap is beyond PERC's agency mandate.                      Concerns



                                         17                                A-2477-13T4
regarding      budgets     are      not    a    primary     consideration          when   the

agency      safeguards     the      rights      of    public      employees.        "PERC's

interpretation of the law outside of its charge is entitled to

'no special deference.'"               Local 1034, supra, 412 N.J. Super. at

291.

       PERC    is    charged        with       administering        the     Act    and    its

interpretation of the Act is entitled to substantial deference.

Its    interpretation         and     implementation         of     laws,    and    primary

consideration       of    goals       outside       its   charge,    however,       is    not.

Local 1034, supra, 412 N.J. Super. at 291.                        In these cases, PERC

filled in a gap it did not have the authority to fill.

       Contrary      to    PERC's         conclusion,       there     is     no    absolute

inconsistency between the tax levy cap statute and the dynamic

status quo doctrine because the employer is free to adjust and

balance      its    budget,      if    necessary,         from    other     expenditures.

Additionally,        employers        have      the   capacity,      with     non-tenured

employees, to recoup increments.

       In   fact,    the   interest          arbitration         statute's    legislative

history, L. 2010, c. 105, explicitly states that the Legislature

did not intend to place a cap on negotiated agreements.                                    See

Assembly Law & Public Safety Comm. Statement to Assembly Comm.

Substitute for A. 3393 (Dec. 9, 2010) ("[A]greements arrived at

through       independent        negotiation          between       the     parties,      and




                                               18                                   A-2477-13T4
agreements       reached      with    the     assistance   of      a    mediator    or

factfinder are not subject to the contractual cap.").

       Essentially, PERC found that the cost-saving impetus behind

the tax levy cap and the dynamic status quo doctrine conflicted,

and on the balance gave greater weight to the tax cap statute.

By doing so, it undermined its legislative mandate as embodied

in the Act.

       "When two statutes may stand together, each governing its

own sphere of operation, there is no inconsistency from which an

intent to repeal may be inferred."                Jackson Twp. Bd. of Educ. v.

Jackson Educ. Ass'n ex rel. Scelba, 334 N.J. Super. 162, 171

(App. Div.), certif. denied, 165 N.J. 678 (2000).                           See also

Brown v. City of Jersey City, 289 N.J. Super. 374, 379 (App.

Div.   1996)     ("It   is    well    settled     that   implied       repealers   are

disfavored by the law and will be avoided if the two enactments

can    be   read    harmoniously        and      sensibly.").          "Evidence    of

statutory incompatibility reflecting a legislative intention to

supplant a prior law must be clear and compelling."                      Grzankowski

v. Heymann, 128 N.J. Super. 563, 568 (App. Div. 1974).

       Nor do we agree with PERC that it was free to discard the

doctrine    as     an   act    of    mere   policymaking.       PERC      has   broad

authority to

            make   policy   and  establish   rules   and
            regulations   concerning   employer-employee



                                            19                               A-2477-13T4
             relations in public employment relating to
             dispute settlement, grievance procedures and
             administration   including  enforcement   of
             statutory        provisions       concerning
             representative elections and related matters
             and to implement fully all the provisions of
             this act.

             [N.J.S.A. 34:13A-5.2.]

See   also   N.J.A.C.   19:10-1.1    to    19:19-5.2   (PERC    regulations);

Galloway, supra, 78 N.J. at 33 (PERC "is given certain statutory

powers to fulfill its delegated duty as a regulatory body in the

field   of    public    employment   labor     relations.      These   include

legislation (i.e., rule making), investigation, prosecution and

adjudication.").

      And PERC may amend its regulations "to adapt to changing

circumstances and conditions," Glukowsky v. Equity One, Inc.,

180 N.J. 49, 67 (2004), cert. denied, 543 U.S. 1049, 125 S. Ct.

864, 160 L. Ed. 2d 770 (2005), subject to compliance with the

Administrative Procedure Act, N.J.S.A. 52:14B-1 to -15, and due

process requirements.      In re Provision of Basic Generation Serv.

for Period Beginning June 1, 2008, 205 N.J. 339, 347 (2011); In

re N.J.A.C. 7:1B-1.1 et seq., 431 N.J. Super. 100, 115-16 (App.

Div.), certif. denied, 216 N.J. 8 (2013).

      But the dynamic status quo doctrine is neither a regulation

nor a policy statement.          It is an interpretation of N.J.S.A.

34:13A-5.3,    which    PERC   developed    when   assessing    unfair    labor




                                     20                                A-2477-13T4
practice     charges,     in    fulfilling         its    adjudicative       function

pursuant to N.J.S.A. 34:13A-5.4(c).                     See Neptune, supra, 144

N.J. at 23 (PERC "has interpreted the Act to require a dynamic

status    quo,     including    the    payment     of    increments.")      (emphasis

added);     Galloway,    supra,       78   N.J.    at    48-49    (Legislature        has

"recognized that the unilateral imposition of working conditions

is the antithesis of its goal that the terms and conditions of

public employment be established through bilateral negotiation

and,   to    the    extent     possible,        agreement      between    the    public

employer and the majority representative of its employees"; and

"If a scheduled annual step increment . . . is an 'existing

rul[e] governing working conditions,' the unilateral denial of

that increment would constitute a modification thereof without

the negotiations mandated by N.J.S.A. 34:13A-5.3 and thus would

violate N.J.S.A. 34:13A-5.4(a)(5)") (emphasis added).

       Furthermore,      the    parties         relied    on     the     doctrine      in

negotiating their CNAs.          By altering its course, PERC undermined

the parties' legitimate expectations based on their negotiations

and, as to at least Local 77, the actual employment contract.

See, e.g., Camden Bd. of Educ., supra, 181 N.J. at 195 ("As a

general matter, legislative and other regulatory enactments are

'a silent factor in every contract[, and p]arties in New Jersey

are likewise presumed to have contracted with reference to the




                                           21                                   A-2477-13T4
existing law.'" (alteration in original) (quoting Silverstein v.

Keane, 19 N.J. 1, 13 (1955)), superseded by statute on other

grounds as explained in Bd. of Educ. of Alpha, supra, 190 N.J.

at 48).

      Finally,          PERC   wrongly    assumed       that    government          employers

cannot negotiate to avoid paying salary increments after the

lapse of CNAs.            The employer also has the option, when engaged

in   new    negotiations,          to    recoup    salary      increments           in     a   new

contract.

      An    additional         consideration       is    that       we   are    obliged         to

follow the discussion in NJ Galloway of the dynamic status quo

doctrine.     It is well-established that "an expression of opinion

on   a     point        involved    in    a     case,    argued          by    counsel         and

deliberately mentioned by the court, although not essential to

the disposition of a case . . . becomes authoritative[] when it

is   expressly          declared    by    the    court    as    a    guide      for       future

conduct."      State v. Rose, 206 N.J. 141, 183 (2011).                              In other

words, even if the Court's analysis in NJ Galloway was no more

than dictum unnecessary to the ultimate ruling applying N.J.S.A.

18A:29-4.1, we must follow it.

      "[A]s        an     intermediate          appellate       court,         we    consider

ourselves bound by carefully considered dictum from the Supreme

Court."     State v. Breitweiser, 373 N.J. Super. 271, 282-83 (App.




                                              22                                         A-2477-13T4
Div.    2004),   certif.   denied,   182     N.J.   628   (2005).     Even   in

Neptune, the Court in effect sanctioned the doctrine because it

would be applied to non-teaching staff members in the bargaining

unit.

       Here, the hearing examiner concluded in both cases that

nonpayment of the increments would constitute an unfair labor

practice under N.J.S.A. 34:13A-5.4(a)(1) and (5).               We agree.     We

therefore reverse.

                                     III.

       Once informed of PERC's decision in the matter of County of

Atlantic, the Township's administrator notified Local 174 that,

based on that opinion, "no step increases are to be granted to

any Township employee unless a contract agreement is in place."

As a result, Local 174 filed a grievance alleging the Township

violated the parties' CNA, past practice, and the covenant of

good faith and fair dealing.          Local 174 submitted a request to

PERC for grievance arbitration and the Township filed a scope of

negotiations     petition,    seeking       restraint     of   the   grievance

arbitration.

       Local 174's CNA expired December 31, 2012.              It included the

following term:     "This agreement shall remain in full force and

effect during collective negotiations between the parties beyond

the date of expiration set forth herein until the parties have




                                      23                              A-2477-13T4
mutually agreed on a new agreement."          The hearing examiner found

this provision to mean the employer agreed to salary increments

even after the expiration of a CNA.

      The grievance arbitration resulted in an award in favor of

Local   174.     That    award   was   confirmed   by   the    Law   Division,

pursuant to statute, on July 9, 2014.         See N.J.S.A. 2A:24-7.

      Over   a   month   after   the   grievance   arbitration       award   was

confirmed, on August 14, 2014, PERC decided the Township's scope

of   negotiations    petition,    belatedly    granting       the    Township's

request for restraint of binding arbitration.                 PERC held the

issue was "whether the subject matter in dispute is within the

scope of collective negotiations."          It noted that the scope of

negotiations for police and fire officials "is broader than for

other public employees because N.J.S.A. 34:13A-16 provides for a

permissive as well as a mandatory category of negotiations."

      After discussion of its Atlantic County decision, and the

contentions of each of the parties, PERC stated:

             [W]e find that the issue of automatic
             movement on a salary guide after a contract
             has expired is not a term and condition of
             employment and therefore not mandatorily
             negotiable and legally arbitrable.        We
             acknowledge that the issues of compensation
             and advancement on a salary guide are
             generally mandatorily negotiable and legally
             arbitrable issues. . . . In this case, our
             inquiry extends beyond those issues.     The
             precise issue herein concerns automatic
             advancement on a salary guide after the



                                       24                              A-2477-13T4
              expiration of a contract, and whether such
              advancement continues to be a term and
              condition of employment.    We find that the
              answer to this question is no.

Referring to its decision in Atlantic County, PERC added the

following:       "Given that the issue herein fails to qualify as a

term    and     condition        of    employment        it    is     not     mandatorily

negotiable and legally arbitrable and we grant the Township's

request for a restraint of arbitration."

       The    record      does    not      offer     any      explanation         for     the

chronology of events, i.e., that the arbitration award was made

and    confirmed    before       PERC    issued     its       scope    of    negotiations

ruling.       Theoretically, the decision is therefore moot.                            Caput

Mortuum, L.L.C. v. S&S Crown Servs., Ltd., 366 N.J. Super. 323,

330 (App. Div. 2004) ("A case is moot if the disputed issue has

been    resolved,      at   least       with      respect      to     the    parties      who

instituted the litigation.").

       We    nonetheless     address       the    issue       because       the   scope   of

negotiations       petition      may    be     viewed      independently          from    the

grievance.        PERC,     by    virtue     of    the    Township's        inquiry,      was

required to rule on whether the subject matter of dispute was

within the scope of collective negotiations.                        See Ridgfield Park

Educ. Ass'n v. Ridgfield Park Bd. of Educ., 78 N.J. 144, 154

(1978).       PERC has "primary jurisdiction to make a determination

on the merits of the question whether the subject matter of a



                                             25                                    A-2477-13T4
particular     dispute       is    within        the        scope      of     collective

negotiations."       Ibid.        This    appeal    raises       an    issue    of    some

public importance, having the potential to recur.                           See State v.

State Troopers Fraternal Ass'n, 134 N.J. 393, 397 (1993); Morris

Cnty. Sheriff's Office, supra, 418 N.J. Super. at 73-74.

      We employ the same standard of review as we did in Atlantic

County.   Our review is deferential only if PERC's interpretation

of the law relates to its charge to implement the Act.                               Local

1034, supra, 412 N.J. Super. at 291.                   We do not reverse unless

the State agency decision is shown to be arbitrary, capricious,

or   unreasonable,    lacking        fair      support      in   the    evidence,       or

violative of a legislative policy expressed or implicit in the

governing statute.        Ibid.          We ask:         (1) whether the agency

followed the law; (2) whether the agency's decision is supported

by   substantial   evidence       in     the    record;       and     (3)    whether   in

applying the law to the facts, the agency reached a supportable

conclusion.    City of Jersey City, supra, 154 N.J. at 567; Morris

Cnty. Sheriff's Office, supra, 418 N.J. Super. at 74-75.

      These   standards      apply     to   scope      of    negotiations        rulings

which are reviewed for arbitrariness or capriciousness.                              See,

e.g., City of Jersey City, supra, 154 N.J. at 567-68; In re

Hunterdon Cnty., supra, 116 N.J. at 328-30; Twp. of Franklin,

supra, 424 N.J. Super. at 377-78.




                                          26                                    A-2477-13T4
       Public employees have a constitutional right to engage in

collective negotiations.             N.J. Const., art. I, ¶ 19; Council of

N.J. State Coll. Locals v. State Bd. of Higher Educ., 91 N.J.

18, 25-26 (1982).          Their majority representative is authorized

to   negotiate       "terms   and        conditions       of   employment"     on   their

behalf.         N.J.S.A.      34:13A-5.3.                 However,    "the     scope    of

negotiations in the public sector is more limited than in the

private        sector"        due         to        the     government's        "special

responsibilities to the public" to "make and implement public

policy." In re IFPTE Local 195 v. State, 88 N.J. 393, 401-02

(1982) (citations omitted).                Salary is a mandatorily negotiable

term and condition of employment.                    In re Hunterdon Cnty., supra,

116 N.J. at 331-32; In re IFPTE Local 195, supra, 88 N.J. at

403; Twp. of Franklin, supra, 424 N.J. Super. at 379.

       In a 2012 decision, while referring to the two percent tax

levy    cap,    PERC     held       "because         issues    of    compensation       are

mandatorily negotiable and the joint employers have not shown

that paying the increments would be preempted by any specific

statute or regulation, we deny the request for a restraint of

binding arbitration."           In re Cnty. of Morris, PERC No. 2013-19,

39 N.J.P.E.R. 181 (¶ 56 2012).                      Citing to its Atlantic County

decisions      and   contrary       to    its       decision   in    In   re   County   of

Morris, PERC determined in this case that salary increments are




                                               27                                A-2477-13T4
not a negotiable term or condition of employment during a period

when no CNA is in effect.

      We reiterate that the fiscal health of municipalities and

tax rates are not within PERC's charge.                  PERC cannot abandon the

adjudicative doctrine it long ago adopted, rooted in parallel

federal law.     To the extent the dynamic status quo doctrine must

be   changed,    it     is    the       Legislature's    prerogative      to    do   so.

Absent   such    a    step,       it    remains   an   item   open   to   negotiation

between employer and bargaining unit.

      The Township argues on appeal that PERC's decision accords

with the legislative adoption of the two percent cap on police

and fire interest arbitration awards.                   See N.J.S.A. 34:13A-16.7

(extended to 2017 by L. 2014, c. 11).                     But, as we have said,

that legislation was not extended to other labor disputes.                             In

this case, the parties were attempting to negotiate a successor

agreement but had not turned to interest arbitration, the only

arena in which the Legislature acted.

      Thus,     there        is    no     basis   to    conclude     that      N.J.S.A.

34:13A-16.7 preempts negotiation over salary increments payable

during a CNA, or in the interim period between expiration of a

CNA and negotiation or arbitration of a successor agreement.

See, e.g., Council of N.J. State Coll. Locals, supra, 91 N.J. at

30 (a regulation "must fix a term and condition of employment,




                                             28                                A-2477-13T4
and     it    must        so     provide            expressly,            specifically       and

comprehensively          in     order     to        foreclose            otherwise     required

employer-employee negotiations on the subject matter"); In re

IFPTE    Local     195,       supra,    88     N.J.       at       403-04     (alteration     in

original) (quoting State v. State Supervisory Emps. Ass'n, 78

N.J.    54,   80      (1978))    ("Negotiation            is   preempted        only    if   the

'statutory       or     regulatory       provisions            .     .    .   speak    in    the

imperative and leave nothing to the discretion of the public

employer.'").

       Accordingly, we reverse PERC's decision on the scope of

negotiations       petition.            Salary       is    a       mandatory     subject      of

negotiation, and the Township's decision not to pay automatic

salary increments in accordance with the earlier CNAs and past

practice was indeed arbitrable.                     NJ Galloway, supra, 78 N.J. at

36.

       Reversed.




                                               29                                      A-2477-13T4
