COURT OF APPEALS OF VIRGINIA 

Present: Judges Baker, Annunziata and Senior Judge Cole 

Argued at Richmond, Virginia 

GROOME TRANSPORTATION, INCORPORATED AND 

 V.I.P. & CELEBRITY LIMOUSINES, INC. 

 OPINION BY 

v. Record No. 2332-97-2 JUDGE JOSEPH E. BAKER 

 JUNE 30, 1998 

VIRGINIA DEPARTMENT OF MOTOR VEHICLES AND 

 GULFSTREAM LIMOUSINE COMPANY 

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 

Melvin R. Hughes, Jr., Judge 

 Hamill D. "Skip" Jones, Jr. (Bryan W. Horn; 

Florance, Gordon and Brown, P.C., on briefs), 

for appellants. 

 Jeffrey A. Spencer, Assistant Attorney 

General, for appellee Virginia Department of 

Motor Vehicles. 

 Robert F. Pannell (Robert F. Pannell, P.C., 

on brief), for appellee Gulfstream Limousine 

Company. 

 Amicus Curiae: Virginia Motorcoach 

Association, Inc. (Donald M. Schubert; Calvin 

F. Major; Goddin, Major, Schubert & Hyman, on 

brief), for appellants. 

 Groome Transportation, Incorporated and V.I.P. & Celebrity 

Limousines, Inc. (jointly referred to herein as appellants) 

appeal from a decision of the Circuit Court of the City of 

Richmond (trial court) which affirmed the Department of Motor 

Vehicles' (DMV) award to Gulfstream Limousine Company 

(Gulfstream) of a certificate of public convenience and necessity 

as a Class A special or charter party carrier (certificate) in 

all parts of the Commonwealth of Virginia. Appellants contend 
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the trial court applied the wrong standard of review to the DMV's 

decision and erroneously found the evidence sufficient to grant 

Gulfstream's application for the certificate. Appellants assert 

(1) that existing service satisfies the "existing public need" 

for the service Gulfstream sought permission to exercise, 

(2) that the evidence fails to show Gulfstream is financially fit 

to provide economical, comfortable, and convenient service, (3) 

that the decision contravenes the established policy behind the 

certificate system, and (4) that the trial court "ignored" the 

DMV's lack of sufficient experience in the area of the subject 

matter of Gulfstream's application. For the reasons that follow, 

we affirm the trial court's approval of the DMV's issuance of the 

Class A certificate. 

 Prior to July 1, 1995, the State Corporation Commission 

(SCC), sitting as a court of record, regulated the issuance of 

certificates of public convenience and necessity to motor 

carriers. Effective July 1, 1995, the General Assembly 

transferred such regulatory power to the DMV. See Act of 

April 6, 1995, 1995 Va. Acts chs. 744, 803. Pursuant to the 

Administrative Process Act (APA), Code §§ 9-6.14:1 to 9-6.14:25, 

the DMV conducted an administrative hearing on Gulfstream's 

application. While guided by the SCC's historical treatment of 

issues raised by Gulfstream's application, we hold that the DMV's 

consideration of such applications must conform to the 

requirements of the APA. In this appeal, we review the ruling of 
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the trial court as a proceeding under the provisions of the APA, 

initiated by Gulfstream to obtain the certificate. 

 The record reveals that on March 29, 1996, Gulfstream 

applied to the DMV for a certificate as a special or charter 

party carrier to transport passengers or charter parties to and 

from all points in Virginia. Prior to that time, Gulfstream held 

a Class B certificate (issued in 1994) for operation as a special 

or charter party carrier, which permitted operation originating 

only in designated cities and counties. It also held 

certificates for operation as an executive sedan carrier (issued 

in 1993) and a limousine carrier (issued in 1994) in all parts of 

Virginia. Appellants protested the present application. 

 A formal DMV administrative hearing was held on September 4, 

1996. Gulfstream was not represented by counsel at that hearing. 

 Ms. Courtney Mustin, the sole shareholder of Gulfstream, was 

allowed to argue the facts on Gulfstream's behalf, but she was 

not allowed to examine the witnesses, object to evidence, or make 

legal argument. 

 The evidence showed that Gulfstream, formed in 1993, is an 

"S" corporation under the Internal Revenue Code. The financial 

statements attached to Gulfstream's application showed a net 

loss, not including depreciation, of $29,164.03 for 1995. 

Ms. Mustin testified that "while our financial situation may not 

look good to someone in the conventional sense . . . , I made 

some personal and management decisions that this is the way I 
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wanted . . . the financial statement to look, and it was in my 

personal interest" due to the "tax implication[s]." She decided 

to keep "[her] infusion of capital to the business as a loan from 

stock holder which makes the finances look bad in terms of profit 

or . . . income." She also represented that both "[her] own 

wealth" and the wealth of "people who are interested in investing 

in the company" were available to Gulfstream and that if 

"[opposing counsel] want[ed] to go over that at a later point," 

he was welcome to do so because "[she] [felt] that he ha[d] no 

idea what [her] personal resources are." She later emphasized as 

follows: 

 If our financial situation looks questionable 

it is because I elected to put a great deal 

of capital into building a top-quality, 

first-rate business and that included the 

improvements to that garage, trading vehicles 

every two years so that I have up-to-date 

equipment, buying uniforms for my drivers, 

requiring them to go through training at our 

expense. I have put a tremendous amount of 

money into this. And a business which has 

been in business for three years is just 

coming out of the woods in terms of finances. 

 I am not in this for the quick buck. 

 Gulfstream listed five vehicles it would use if granted a 

Class A certificate, including three fifteen-passenger vans, one 

eight-passenger Suburban, and one nine-passenger station wagon. 

Ms. Mustin denied she was seeking the Class A certificate in 

order to sell the rights to a portion of it. 

 Ralph Earnhardt, who had thirty-five years experience in 

hotel, transportation, and consulting management, testified on 
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behalf of Gulfstream. Among his many qualifications, he listed 

three years as vice president of Gray Line, the largest U.S. 

sightseeing operation, and ten years in a local package tour 

service, which eventually involved the management of "three 

thousand [motor] coaches a year." He had been working with 

Ms. Mustin to obtain Gulfstream's transportation services for 

several frequent independent traveler packages he was developing 

and had been "overwhelm[ed]" by her attitude, professional 

conduct, and equipment. He also mentioned a need for 

transportation for commercial tours from the Soviet Union in 1997 

which "[he] couldn't fill strictly in Richmond" and, further, 

that he needed transportation from the Roanoke, Dulles, and 

Norfolk airports. When he learned Ms. Mustin had an application 

pending for license expansion, he explained his reaction as 

follows: 

 I volunteered my services to speak on her 

behalf as operating a professional operation 

and one that I feel there is a need for. 

 There is plenty of equipment in 

Virginia. There [are] plenty of licenses in 

Virginia, but from my perspective as an 

operator who wants to increase tourism and 

increase my own business there is a gross 

absence of good attitude of working partners. 

 That is why I volunteered my services to be 

here. 

 Ms. Mustin testified that she found it difficult to explain 

to some of the customers for whom she provides limousine and 

sedan service on a statewide basis that she could not substitute 

a van in order to carry a larger group. In this regard, she 
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mentioned the Tides Inn and towns on the northern neck, 

Tappahanock, and Roanoke. 

 Hearsay evidence is admissible in APA hearings, see Code 

§ 9-6.14:12, and Gulfstream was allowed to submit ten letters. 

Of the letters comprising Exhibits 1 through 5, most were 

solicited and written to the Amtrak National Passenger Railway 

Corp. in support of a bid by Gulfstream for an unrelated contract 

involving taxicab equipment. Although the letters were dated in 

1995, Ms. Mustin stated that they were written by organizations 

with whom Gulfstream continues to do business. All the companies 

either were located in Richmond or required Gulfstream's services 

while visiting Richmond. All attested to Gulfstream's quality of 

staff, equipment, and service. 

 Exhibits 6 through 10 were written to the DMV in August and 

September of 1996 by current clients who were unable to attend 

the hearing. All attested to the quality of Gulfstream's 

service. 

 Exhibit 6, from a physician in Marion, indicated the 

author's preference for Gulfstream for service from Marion, 

Abingdon, and Bristol to Richmond. Exhibit 6 also recounted a 

specific instance in which Gulfstream provided transportation in 

Richmond during a snowstorm when few other transportation 

services were able to operate. 

 Exhibit 7, from The Garden Club of Virginia, confirmed 

requests for Gulfstream's service for annual garden club tours 
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which attract about 50,000 guests each April. Local garden clubs 

requesting service included those in Tappahanock, Gloucester, 

Charlottesville, Roanoke, Leesburg, Loudoun County, Martinsville, 

and Richmond. The club indicated its "hope to be able to make 

travel-related referrals to Gulfstream . . . in the future." 

 Exhibit 8, from the Garden Club of Gloucester, indicated its 

past satisfaction with Gulfstream's service and its desire to be 

able to use Gulfstream in the future "[i]f . . . we require[] 

. . . shuttle service." 

 Exhibit 9, from Old Dominion Tours and Virginia 

Destinations, indicated that the company packages tours 

"throughout the Commonwealth of Virginia" and frequently requires 

"vehicle charter/rental services in the areas of" the Dulles, 

Norfolk, Newport News, Richmond and Roanoke Airports. That 

letter indicated satisfaction with Gulfstream's services and the 

company's belief that the expansion of Gulfstream's license 

authority would be in the best interest of the DMV and Virginia's 

tourist industry. 

 Exhibit 10, from the investment company Wheat First Butcher 

Singer, indicated its satisfaction with Gulfstream's services 

"for the majority of the firm's local transportation needs over 

the past 18 months." It also indicated that it has an occasional 

need for transportation for offices outside the Richmond area and 

that it would be likely to use Gulfstream's services for these 

areas if they were available. 
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 At the close of Gulfstream's evidence, appellants moved to 

dismiss Gulfstream's application based on a failure to show 

public convenience and necessity. A DMV hearing officer denied 

the motion. 

 Appellants submitted letters from their companies' 

presidents which claimed lack of need for the additional services 

proposed by Gulfstream. V.I.P.'s president indicated that the 

Richmond-to-Tidewater market is already highly competitive, that 

no charter party has been unable to schedule a trip for lack of 

available equipment, and that existing charter party carriers 

have a significant percentage of their equipment sitting idle at 

any given time. Groome's president confirmed those assertions, 

indicating that, in his over thirty years of providing charter 

party service, he knew of "virtually no circumstances" where a 

charter party had been unable to take a trip due to lack of 

equipment and that a large percentage of equipment is sitting 

idle at any particular time. 

 Other than the letters from the respective presidents of 

appellants' companies, appellants submitted no evidence to 

contradict the evidence presented by Gulfstream. Appellants 

elected to rely on their letters and asserted weaknesses of 

Gulfstream's case. 

 By decision of November 19, 1996, the DMV granted 

Gulfstream's application and awarded a certificate of public 

convenience and necessity. The DMV held as follows: 

 The Applicant has shown a need for its 
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proposed service by introducing letters from 

current customers who state in the letters 

that each will use the proposed service in 

the proposed geographic areas and by the 

testimony of a public witness whose company 

has requested that the Applicant provide its 

service in the proposed geographical areas. 

The DMV found credible Ms. Mustin's testimony about her access to 

"considerable financial resources which can be provided to the 

Applicant by her," and held that "[t]he Applicant has provided 

sworn testimony in support of its financial fitness and its 

access to additional financial support if needed." The DMV also 

held that "[t]he Applicant has shown its ability to provide and 

maintain its service and equipment in an efficient manner for 

over two years while doing business as a special or charter party 

carrier." Based on these findings and conclusions, among others, 

the DMV awarded Gulfstream a Class A special or charter party 

certificate. 

 Appellants appealed to the circuit court. The parties made 

written submissions and argued to the court. Gulfstream was 

represented by counsel in that proceeding, and an assistant 

attorney general appeared on behalf of the DMV. By letter 

opinion of July 30, 1997, the trial court affirmed the DMV's 

decision. It noted the shift of jurisdiction from the SCC to the 

DMV and indicated that it would apply existing substantive case 

law in the context of the "new" procedural framework of the APA. 

Standard of Review

 In appellants' exceptions, petition, and memorandum, 
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appellants did not specifically address the standard of review. 

In the petition, they argued only that the DMV's decision was 

"arbitrary and capricious and without any evidence to support 

it." In oral argument before the DMV and the trial court, 

counsel for appellants acknowledged that the proceedings were to 

be conducted under the APA but did not expressly discuss the 

standard of review. Counsel merely asserted there was "no 

evidence to support" the DMV's decision. He also argued: 

 Gulfstream . . . [and DMV] talked about the 

great weight of authority that's attached to 

the D.M.V. decision. 

 Now, there's case law all over the place 

to support the Administrative Agency being 

prima facie correct and reasonable. 

 And that was the test at the S.C.C., 

too. . . . 

 But the Code section of the [APA], in 

fact, . . . references, "the experience and 

specialized competence of the Agency." 

 Well, we've got a window here that we 

can jump through on that. Because D.M.V. is 

new at this. . . . 

* * * * * * * 

 [T]hey don't have the experience and 

specialized competence that is referred to 

specifically in Section 9-6.14:17 of the 

[APA]. 

While appellants failed to specifically argue standard of review, 

we believe the issue is of sufficient significance to the 

decision to require our review. "We conclude that under the APA, 

whether the agency action is formal or informal, the sole 

determination by the reviewing court as to issues of fact before 

the agency is whether there was substantial evidence in the 
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agency record to support the agency decision." State Bd. of 

Health v. Godfrey, 223 Va. 423, 435, 290 S.E.2d 875, 881 (1982); 

see Code § 9-6.14:17. 

 In determining whether substantial evidence in the record 

supports the decisions of the DMV and trial court, we review the 

evidence and reasonable inferences it raises in the light most 

favorable to the prevailing party below. See Abbott Bus Lines, 

Inc. v. Courtesy Bus Lines, Inc., 230 Va. 181, 187, 335 S.E.2d 

818, 821 (1985). We will not substitute our judgment for that of 

the agency. 

 The "substantial evidence" standard, 

adopted by the General Assembly, is designed 

to give great stability and finality to the 

fact-findings of an administrative agency. 

The phrase "substantial evidence" refers to 

"such relevant evidence as a reasonable mind 

might accept as adequate to support a 

conclusion." 

Virginia Real Estate Comm'n v. Bias, 226 Va. 264, 269, 308 S.E.2d 

123, 125 (1983) (quoting Consolidated Edison Co. v. NLRB, 305 

U.S. 197, 229 (1938)). We find that the evidence in this record 

meets that standard. 

Proof of Public Convenience and Necessity

 Three factors are generally considered in determining 

whether a certificate of public convenience and necessity will be 

granted: (1) whether there is "an existing public need for the 

proposed carrier's service"; (2) whether the proposed carrier has 

the "ability to provide economical, comfortable and convenient 

service for the geographical area"; and (3) what "economic and 
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competitive impact . . . the proposed carrier would have upon 

existing carriers providing similar service within the same 

territory." See Atlantic Greyhound Lines of Va., Inc. v. Jones 

Bus Co., Inc., 216 Va. 255, 257-58, 217 S.E.2d 857, 859 (1975); 

see Code §§ 46.2-2303 to -2304. Appellants have not challenged 

this third factor. 

 As we construe this language, the 

General Assembly, recognizing the public 

benefits of competition in the market place, 

authorized the [SCC] to deny a charter party 

certificate only when it finds that a grant 

will create competitive pressures so intense 

that existing carriers will be unable to earn 

a reasonable profit. By protecting 

certificated carriers from such ruinous 

competition, the statute protects the public 

from loss of service. 

Abbott Bus Lines, 230 Va. at 188, 335 S.E.2d at 822 (emphasis 

added). There is no finding--nor would the evidence support 

one--that Gulfstream's entrance into statewide competition with 

appellants would "result in ruinous or unreasonable competition." 

See id.

 Regarding the first prong of the test, appellants contend 

Gulfstream failed to prove a need for the proposed service. They 

contend, in essence, that the existing quantity of service is 

sufficient and that Gulfstream's claimed higher quality of 

service is not relevant to a determination of public need. We 

disagree. In Seaboard Air Line Railroad Co. v. Commonwealth, 193 

Va. 799, 71 S.E.2d 146 (1952), the Virginia Supreme Court held as 

follows: 

 Necessity means reasonably necessary not 
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absolutely imperative. . . . The convenience 

of the public must not be circumscribed by 

holding the term "necessity" to mean an 

essential requisite . . . . It is necessary 

if it appears reasonably requisite, is suited 

to and tends to promote the accommodation of 

the public. 

Id. at 806, 71 S.E.2d at 150 (quoting Union Pacific R.R. Co. v. 

Public Serv. Comm., 135 P.2d 915, 917 (Utah 1943)). 

 The decision below is presumed to be correct and will not be 

set aside unless it is shown to be contrary to the evidence or 

without substantial evidence to support it. Viewing the evidence 

most favorable to Gulfstream as the prevailing party below, we 

find the evidence contained in this record is sufficiently 

substantial to support the award, does not contravene established 

public policy, and is "reasonably requisite, is suited to and 

tends to promote the accommodation of the public." 

 Regarding the second prong, appellants contend the evidence 

fails to show Gulfstream is financially fit to provide 

economical, comfortable and convenient service. Again, we 

disagree. Assuming, without deciding, that proof of financial 

fitness is necessary to justify the award of a certificate, we 

hold that substantial evidence in the record supports the DMV's 

decision. The DMV found credible Ms. Mustin's testimony 

regarding the structuring of Gulfstream as an "S" corporation and 

the additional financial resources available to it. The DMV also 

properly considered Gulfstream's previous operation as a Class B 

special or charter party carrier. Therefore, we hold that 
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substantial evidence supports the DMV's decision that Gulfstream 

can provide economical, comfortable and convenient service as a 

Class A special or charter party carrier. 

Established Public Policy

 Appellants contend that the Code restricts the number of 

certificates issued so as not to "diminish[] the value of 

existing certificates" and that permitting the DMV's decision to 

stand without sufficient evidence undermines legislative intent. 

 Again, we disagree. One of the purposes of the "public 

convenience and necessity" test is to prevent the issuance of too 

many certificates. As discussed above, the record contains 

substantial evidence to support the issuance of Gulfstream's 

certificate under this test. No evidence in the record intimates 

that the issuance of the certificate to Gulfstream would create 

"ruinous competition," the third prong of the "public convenience 

and necessity" test. Furthermore, substantial evidence proved 

that issuance of the certificate to Gulfstream served an 

"existing public need" for quality service, the first prong of 

the test. As a result, the diminishment in value, if any, of 

existing certificates was not inappropriate under the applicable 

test. 

DMV Experience

 Appellants further argue the trial court failed to take into 

account that the DMV lacked experience to decide the issues in 

this case and assert the trial court committed reversible error 
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in failing to consider that lack of experience in its review of 

the DMV's decision. We disagree. The APA provides that "the 

[reviewing] court shall take due account of the presumption of 

official regularity, the experience and specialized competence of 

the agency and the purpose of the basic law under which the 

agency has acted." Code § 9-6.14:17. The General Assembly 

transferred that decision-making power to the DMV. Nothing in 

this record discloses that it did so without first determining 

that the DMV was fully competent to render judgments concerning 

the issuance of certificates of public convenience and necessity. 

 Therefore, we reject appellants' contention. 

 Accordingly, the judgment of the trial court is affirmed. 

 Affirmed.