Present: All the Justices 

CROWN CENTRAL PETROLEUM 

CORPORATION, ET AL. 

v. Record No. 962601 OPINION BY JUSTICE ELIZABETH B. LACY 

 June 6, 1997 

FRANK G. HILL, T/A CEDAR 

ROAD AMOCO 

 UPON A QUESTION OF LAW CERTIFIED BY THE UNITED STATES 

 DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA 

 Pursuant to our Rule 5:42, the United States District 

Court for the Eastern District of Virginia, Norfolk Division, 

certified to this Court a question of Virginia law involving 

the application of the Virginia Petroleum Products Franchise 

Act, Code §§ 59.1-21.8 through 59.1-21.18:1 (the Act). The 

district court stated that the answer to the question will be 

determinative of a proceeding pending before it. We accepted 

the certification by order entered January 15, 1997. 

 The following facts are set forth in the district court's 

certification order. Crown Central Petroleum Corporation 

(Crown) is a petroleum refiner. It seeks to build a gasoline 

service station on property owned by its wholly-owned 

subsidiary, Fast Fare, Inc., and sell Crown gasoline at that 

station. Frank G. Hill operates a gasoline service station 

under a lease and dealer supply agreement with Amoco Oil 

Company, another petroleum refiner. Hill's station is located 

within one and one-half miles of Crown's proposed station. 

 Section 59.1-21.16:2(A) of the Act provides, in pertinent 

part, that: 

 no refiner of petroleum products shall operate any 

major brand, secondary brand, or unbranded retail 

outlet in the Commonwealth of Virginia with company 
personnel, a parent company, or under a contract with 

any person, firm, or corporation, managing a service 

station on a fee arrangement with the refiner; 

however, such refiner may operate such retail outlet 

with the aforesaid personnel, parent, person, firm, 

or corporation if such outlet is located not less 

than one and one-half miles . . . from the nearest 

retail outlet operated by any franchised dealer. 

Pursuant to 28 U.S.C. § 2201(a), Crown sought a declaratory 

judgment that this provision of the Act does not prevent Crown 

from building and operating the station on its property because 

the location prohibition applies only to retail outlets 

operated by a refiner within one and one-half miles of a retail 

outlet operated by a franchised dealer of that refiner. To 

resolve this issue, the district court certified the following 

question to us: 

 Whether the Virginia Petroleum Products Franchise 

Act, Va. Code § 59.1-21.16:2, was only intended to 

regulate intra brand competition, that is, 

competition among retailers of the same brand of 

products and representing the same company, or 

whether it was also intended to regulate interbrand 

competition, competition among retailers of different 

brands of products or representing different refiners 

as is contemplated by Crown's proposed use of its 

property. 

We conclude that § 59.1-21.16:2(A) regulates interbrand 

competition because it prohibits a refiner from operating a 

retail outlet unless that outlet is located one and one-half 

miles or more from a retail outlet operated by a franchised 

dealer, including franchised dealers that are not franchisees 

of the refiner. 

 In construing statutes, courts are charged with 

ascertaining and giving effect to the intent of the 

legislature. City of Winchester v. American Woodmark Corp., 
250 Va. 451, 457, 464 S.E.2d 148, 152 (1995). That intention 

is initially found in the words of the statute itself, and if 

those words are clear and unambiguous, we do not rely on rules 

of statutory construction or parol evidence, unless a literal 

application would produce a meaningless or absurd result. Id.; 

Allen v. Chapman, 242 Va. 94, 100, 406 S.E.2d 186, 189 (1991); 

Beach Robo, Inc. v. Crown Central Petroleum Corp., 236 Va. 131, 

134, 372 S.E.2d 144, 146 (1988). The statutory language at 

issue here is clear on its face. It prohibits a refiner from 

operating any retail outlet in Virginia unless the outlet is 

located one and one-half miles or more from a retail outlet 

operated by "any franchised dealer." Nothing in the language 

used in the Act supports an interpretation that the franchised 

dealer must be a franchisee of the refiner. 

 Crown argues, however, that this interpretation improperly 

ignores explicit legislative findings contained in § 59.1-21.9 

of the Act. That section states: 

 The General Assembly finds and declares that since 

the distribution and sales through franchise 

arrangements of petroleum products in the 

Commonwealth of Virginia vitally affect the economy 

of the Commonwealth, the public interest, welfare, 

and transportation, and since the preservation of the 

rights, responsibilities, and independence of the 

small businesses in the Commonwealth is essential to 

economic vitality, it is necessary to define the 

relationships and responsibilities of the parties to 

certain agreements pertaining thereto. 

Crown asserts that these findings demonstrate that the General 

Assembly passed the Act to address the relationships between 

parties to franchise agreements and, therefore, the location 

prohibition contained in § 59.1-21.16:2(A) applies only to a 
refiner and its franchised dealer, and not to refiners and 

franchised dealers unrelated by such an agreement. To apply 

the location prohibition to such unrelated refiners and 

franchised dealers is, Crown concludes, inconsistent with the 

clearly expressed intent of the General Assembly. We disagree. 

 A number of sections in the Act do address the franchise 

relationship, such as those prescribing certain terms of the 

agreement, requiring disclosure of information prior to the 

execution of the agreement, and setting conditions regarding 

its termination.1

 See §§ 59.1-21.11, -21.14, -21.15. The 

legislative findings, however, do not, as Crown suggests, 

compel an interpretation of the Act which restricts all 

economic regulation imposed by the Act to circumstances 

involving a refiner and its own franchisees. 

 Section 59.1-21.16:2, the section which includes the 

location restriction at issue, contains provisions that clearly 

regulate the conduct of refiners, irrespective of any franchise 

relationship. For example, the second paragraph of § 59.1-

21.16:2(A) imposed a blanket prohibition on refiners 

constructing and operating retail outlets, from July 1, 1990 

through June 30, 1991, unless the outlets were purchased, or 

under option to purchase, by March 1, 1990. This prohibition 

was not conditioned on a franchise relationship. Similarly, 

 

 1 1 We note that if the General Assembly had intended 

only to restrict a refiner/franchisor from locating near its 

own franchisee, it could have easily required that the 

franchise agreement include a provision requiring the 

refiner/franchisor to agree not to locate its retail outlet 

within the proscribed distance from the franchisee's outlet. 
subsection (B) requires refiners to apportion gasoline "among 

their purchasers" in times of shortages. Again, this 

requirement is not based on the existence of a franchise 

relationship between the refiner and purchaser. Indeed, 

"purchasers" include all parties buying product from the 

refiner, not just the refiner's franchisees. These provisions 

of § 59.1-21.16:2 simply cannot reasonably be construed to 

limit their application to circumstances involving a 

refiner/franchisor and its franchised dealer, the construction 

Crown argues is required by the legislative findings contained 

in § 59.1-21.9. 

 The specific location prohibition at issue is completely 

consistent, not only with other provisions of § 59.1-21.16:2, 

but also with the expressed legislative intent, to preserve 

"the rights, responsibilities, and independence of the small 

businesses in the Commonwealth." § 59.1-21.9. A refiner 

operating a retail outlet is an integrated business entity 

which produces its product and sells that product at both the 

wholesale and retail level. Thus, the refiner has the ability 

to allocate availability of its product and subsidize the price 

of its product sold at its retail outlets. Such control could 

injure a franchised dealer regardless of whether the refiner is 

the franchisor of the dealer. It is the refiner's integration 

and access to the product that puts the retail franchised 

dealer at a potentially competitive disadvantage. Therefore, 

to protect the rights of franchised dealers in avoiding such a 

potentially unfair price structure and thus preserve the 
independence of dealers, the General Assembly chose to require 

a minimum distance of one and one-half miles between a refinerowned-and-operated retail station and a retail station operated 

by a franchised dealer.2

 Finally, our construction of § 59.21-16:2(A) is not 

inconsistent with the regulations adopted by the Commissioner 

of Agriculture and Consumer Services, as Crown asserts. Crown 

cites to language in a regulation adopted by the Commissioner 

which allows a refiner to relocate its retail outlet "at least 

1 1/2 miles from any other franchised retail outlet of the same 

brand." 2 Virginia Administrative Code § 5-460-20(A), at 516 

(1996). This regulation, Crown argues, shows that the agency 

charged with enforcing the statute considers the prohibition to 

apply only to refiners and their franchised dealers. Crown's 

position, however, fails to consider the regulation in its full 

context. 

 Subsection (E) of § 59.1-21.16:2 is a grandfather clause 

which allows refiners to continue operating nonconforming 

retail outlets if they were operating the outlets on July 1, 

1979. Rather than simply requiring a nonconforming outlet to 

comply with the location prohibition in the event the outlet 

had to be relocated, the General Assembly instructed the 

Commissioner to adopt regulations "providing for" relocation of 

 

 2 2Other states adopted similar protective legislation, 

often broader in scope, prohibiting petroleum refiners from 

operating any retail outlets based, inter alia, on evidence 

that refiners favored company-operated stations in allocating 

gasoline. Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 

124 (1978). 
such outlets. § 59.1-21.16:2(D). The regulation adopted by 

the Commissioner limited relocations to instances in which the 

original site was lost through involuntary condemnation, nonrenewal by the owner of the property lease, or denial of a 

building permit or prohibited zoning. The relocation had to be 

within a 10-mile radius of the original site and, rather than 

imposing the full prohibition against locating within one and 

one-half miles of "any franchised dealer," the relocated, 

grandfathered retail outlet was only precluded from relocating 

within one and one-half miles of "any other franchised retail 

outlet of the same brand." 

 This regulation was not an interpretation or application 

of the statutory location prohibition, but a response to the 

legislative directive to provide for circumstances in which a 

nonconforming but legal retail outlet was forced to relocate 

through no fault of its own. In that response, the 

Commissioner struck a balance between strictly applying the 

statutory location prohibition and allowing the grandfathered 

retail outlet some relief as a result of a forced relocation. 

Nothing in the regulations promulgated by the Commissioner is 

inconsistent with the plain meaning of the statute. 

 Accordingly, because § 59.1-21.16:2(A) regulates 

interbrand competition, the certified question is answered in 

the negative. 

Certified Question Answered in the Negative.