COURT OF APPEALS OF VIRGINIA 

Present: Judges Willis, Bray and Annunziata 

Argued at Alexandria, Virginia 

MAY DEPARTMENT STORES COMPANY 

 MEMORANDUM OPINION* BY 

v. Record No. 3356-01-2 JUDGE JERE M. H. WILLIS, JR. 

 AUGUST 6, 2002 

COMMONWEALTH OF VIRGINIA, 

 DEPARTMENT OF ENVIRONMENTAL QUALITY 

 AND THOMAS L. HOPKINS (NOW 

 ROBERT G. BURNLEY), DIRECTOR 

FROM THE CIRCUIT COURT OF HENRICO COUNTY 

George F. Tidey, Judge 

 John S. Hahn (Julie Anna Potts; William C. 

Wood; Michael Ewing; Mayer, Brown, Rowe & 

Maw; Rawlings & Wood, on briefs), for 

appellant. 

 (Jerry W. Kilgore, Attorney General; Roger L. 

Chaffe, Senior Assistant Attorney General; 

John K. Byrum, Jr., Assistant Attorney 

General, on brief), for appellee. 

 May Department Stores Company ("May") appeals the judgment of 

the trial court affirming a Department of Environmental Quality 

("DEQ") denial of reimbursement for soil removal undertaken as a 

result of a petroleum release. May contends that the trial court 

erred in affirming the decision because (1) DEQ relied on post hoc

rationales on appeal, and (2) DEQ's decision was arbitrary and 

capricious and not supported by substantial evidence. For the 

 

* Pursuant to Code § 17.1-413, this opinion is not 

designated for publication.
following reasons, we reverse the judgment of the trial court and 

order the case remanded to DEQ for further consideration. 

I. BACKGROUND

 On March 30 and April 5, 1993, May reported to DEQ the 

discovery of petroleum releases at the Hecht's Distribution 

Center in Henrico County, where May's contractors were removing 

underground storage tanks. Two tanks had been removed and were 

intact. However, the surrounding soil was visibly contaminated, 

apparently from the release of fuel oil. 

 By letter dated April 2, 1993, DEQ directed May to submit 

an initial abatement measure report ("IAR") and a site 

characterization report ("SCR"). The letter explained that 

DEQ's review of the SCR would determine whether "further actions 

and/or a Corrective Action Plan" would be required. On April 5, 

1993, May's contractor sought guidance from DEQ as to the extent 

of the necessary cleanup. Without receiving a directive or site 

visit by DEQ, May's contractor began removing visibly 

contaminated soil for offsite disposal. 

 On April 21, 1993, in a teleconference with May's 

consultant, DEQ directed May to remove visibly contaminated 

soil. This directive was unqualified as to volume or scope, and 

made no reference to the water table. May's IAR and SCR 

documented the removal of visibly contaminated soils. 

Photographs of the site excavation confirmed such. In response 

to May's IAR and SCR, DEQ approved closure of the site, noting, 

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"this investigation is considered closed" and that "corrective 

action is not required." Thus, May's efforts satisfied all 

cleanup requirements and no Corrective Action Plan was required. 

 May applied for reimbursement from the Virginia Petroleum 

Storage Tank Fund ("Tank Fund") of approximately $600,000 in 

costs expended on the site cleanup. See Code § 62.1-44.34:11; 9 

VAC 25-590-210. DEQ authorized reimbursement of $76,706.30 and 

denied reimbursement of $525,592.30. Its reasons for the denial 

included: (1) May's incorrect application of DEQ's "usual and 

customary rates"; (2) DEQ's need for additional documentation 

for certain costs; and (3) May's failure to justify the 

necessity of certain actions. 

 May sought reconsideration. It reduced its claim to comply 

with DEQ's uniform customary rates and sought reimbursement of 

$420,979.63 of the $525,592.30 denied in the initial decision. 

A reconsideration panel awarded May reimbursement of an 

additional $61,891.04. The panel based its denial of further 

reimbursement on May's failure to obtain written approval for 

soil removal before April 21, 1993, and on May's excavation 

below the water table, which DEQ asserted was at 5.5 feet below 

grade. The reconsideration panel gave May credit for 

considering as sufficient the oral authorization that it 

received in the April 21, 1993 teleconference, and it allowed 

May reimbursement, in part, for the cost of excavation pursuant 

to that oral authorization. 

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 The reconsideration panel determined that May had excavated 

3,374 tons of soil prior to the April 21, 1993 authorization. 

Holding that excavation to be unauthorized, it denied 

reimbursement for its cost. It found that pursuant to the April 

21, 1993 authorization, May excavated an additional 1,675 tons 

of soil, but that this included excavating to a depth of 13.5 

feet, whereas the water table was encountered at 5.5 feet below 

grade. It disallowed reimbursement for the cost of excavation 

below the water table. It found that May had excavated 683 tons 

of soil, pursuant to authorization, down to the 5.5 foot water 

table level. It allowed reimbursement for that amount of 

excavation. 

 The trial court affirmed DEQ's reconsideration panel 

decision. 

II. ANALYSIS

 Separate standards of review determine the degree of 

deference, if any, to be given on appeal to an administrative 

agency's decision. Holtzman Oil Corp. v. Commonwealth, 32 

Va. App. 532, 539, 529 S.E.2d 333, 337 (2000). 

Where the issue is whether there is 

substantial evidence to support findings of 

fact, great deference is to be accorded the 

agency decision. Where the issue falls 

outside the specialized competence of the 

agency, such as constitutional and statutory 

interpretation issues, little deference is 

required to be accorded the agency decision. 

Where, however, the issue concerns an agency 

decision based on the proper application of 

its expert discretion, the reviewing court 

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will not substitute its own independent 

judgment for that of the agency but rather 

will reverse the agency decision only if 

that decision was arbitrary and capricious. 

Finally, in reviewing an agency decision, 

the courts are required to consider the 

experience and specialized competence of the 

agency and the purposes of the basic law 

under which the agency acted. 

Id. (quoting Johnston-Willis Ltd. v. Kenley, 6 Va. App. 231, 

246, 369 S.E.2d 1, 9 (1988)). Agency decisions must be in 

writing and become part of the record. See Code §§ 2.2-4020 

and -4023. 

When the decision on review is to be made on 

the agency record, the duty of the court 

with respect to issues of fact shall be 

limited to ascertaining whether there was 

substantial evidence in the agency record 

upon which the agency . . . could reasonably 

find them to be as it did. 

Code § 2.2-4027. 

A. POST HOC RATIONALE

 May first argues that the trial court erroneously 

considered, as grounds for affirmance, reasons not underlying 

DEQ's decision. "Under well-established principles of 

administrative law, the Court may not accept counsel's post hoc

rationalizations for agency action. Rather, the Court must 

determine the validity of agency rules solely on the basis 

articulated by the agency itself in the administrative record 

made in connection with the rulemaking." Jordan v. Lyng, 659 

F. Supp. 1403, 1416 (E.D. Va. 1987). 

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 The DEQ reconsideration panel based its denials of 

reimbursement on two holdings: First, that its regulation 

VR 680-13-02 authorized soil removal only upon written 

pre-approval by DEQ and non-compliant soil removal was not 

reimbursable; and second, that excavation below the ground water 

table was not standard practice and was not reimbursable. 

 DEQ argued before the trial court that May's excavation 

prior to April 21, 1993, was neither an "initial response," 

VR 680-13-02 § 6.2,1 nor an "initial abatement," VR 680-13-02 

§ 6.3.2 It argued that the excavation for which reimbursement 

was sought was a "corrective action plan," VR 680-13-02 § 6.6,3

which required prior written authorization by DEQ. It argued 

further that excavation below the ground water table contravened 

standard industry practice and prudent cleanup management and 

thus was ineligible for reimbursement. 

 We hold that the position taken by DEQ before the trial 

court was in support of its reconsideration panel's 

determination and lay along the same lines. Thus, that position 

was not a post hoc rationale. 

 1

 Recodified as 9 VAC 25-580-240. 

2

 Recodified as VAC 25-580-250. 

3

 Recodified as VAC 25-580-280. 

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B. MERITS OF THE DEQ DETERMINATION

1. REQUIREMENT OF WRITTEN AUTHORIZATION

 The Tank Fund, Code § 62.1-44.34:11, provides reimbursement 

for "reasonable and necessary costs incurred by 'owners and 

operators' of underground petroleum storage tanks 'in taking 

corrective action for any release of petroleum into the 

environment . . . .'" Holtzman, 32 Va. App. at 540, 529 S.E.2d 

at 337 (quoting Code § 62.1-44.34:11(A)(2)(a)). The Tank Fund 

provides reimbursement for three types of corrective action: 

(1) initial response pursuant to VR 680-13-02 § 6.2, (2) initial 

abatement pursuant to VR 680-13-02 § 6.3, and (3) activity 

pursuant to an approved corrective action plan pursuant to VR 

680-13-02 § 6.6. Id. at 541, 529 S.E.2d at 338. 

 VR 680-13-02 § 6.2 "initial response" requires an owner or 

operator, upon discovering a petroleum release, (1) to report 

the release, (2) to take immediate action to prevent further 

release into the environment, and (3) to identify and mitigate 

fire, explosion and vapor hazards. "The DEQ has interpreted VR 

680-13-02 § 6.2 to include those activities involving 'hazards' 

to 'human health, safety, and the environment,' which 'must be 

initiated immediately.'" Holtzman, 32 Va. App. at 541, 529 

S.E.2d at 338. 

 May reported discovering the release. No other 

circumstances contemplated by VR 680-13-02 § 6.2 obtained, and 

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May performed no activity pursuant to VR 680-13.02 § 6.2 for 

which it sought reimbursement. 

 On June 8, 1993, May submitted to DEQ a report, which 

stated: 

No vapors or free product were observed in 

the site storm sewers or basements of the 

site buildings. Sanitary sewers were not 

observed in the vicinity of the UST 

[underground storage tank] areas. Ambient 

air was monitored in the UST removal work 

areas using an HNu PID [photo-ionization 

detector]. There was no instrument response 

during ambient air monitoring. 

This site characterization report stated that the petroleum 

remaining in the soils was "immobile and not volatile." With no 

fire, explosion, or vapor hazard present, May's actions were not 

performed as an initial response activity pursuant to VR 

680-13-02 § 6.2. See Holtzman, 32 Va. App. at 542, 529 S.E.2d 

at 338. 

 A corrective action plan developed under VR 680-13-02 § 6.6 

is a detailed strategy for responding to contaminated soil and 

ground water. It is designed to provide direction, with agency 

specifications, in the cleanup process and to ensure the 

protection of human health, safety, and the environment. A 

corrective action plan must be approved by DEQ. See

VR 680-13-02 § 6.6. May submitted no corrective action report, 

and DEQ approved no corrective action plan. Thus, May's 

activities were not pursuant to VR 680-13-02 § 6.6 and do not 

qualify for reimbursement under that section. 

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 Because May's actions fell within the ambit of neither 

Section 6.2 nor Section 6.6, the issue is whether its actions 

constituted initial abatement pursuant to Section 6.3. 

 Under Section 6.3, owners and operators, unless otherwise 

directed, must, among other things: 

(1) remove as much of the regulated 

substance from the [excavated] system as is 

necessary to prevent further release to the 

environment; 

(2) visually inspect any above ground 

releases or exposed below ground releases 

and prevent further migration of the 

released substance into surrounding soils 

and ground water; 

(3) [not applicable;] 

(4) remedy hazards posed by contaminated 

soils that are excavated or exposed as a 

result of release confirmation, site 

investigation, abatement, or corrective 

action activities; 

(5) [not applicable;] 

(6) investigate to determine the possible 

presence of free product, and begin free 

product removal as soon as practicable and 

in accordance with 9 VAC 25-580-270 

[relating to the matter of handling and 

disposing of free petroleum product]. 

VR 680-13-02 § 6.3 (emphasis added). The measures required of 

owners and operators under VR 680-13-02 § 6.3 are not 

conditioned upon prior written authorization and must be 

accomplished absent contrary direction by DEQ. 

 The excavations performed by May fell within its 

obligations under VR 680-13-02 § 6.3. May promptly reported its 

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discovery of the petroleum leakage and undertook diligently and 

efficiently to perform and satisfy its obligations under the 

regulation. It removed the escaped regulated substance and 

contaminated soil and water. It forestalled further migration 

of the regulated substance. DEQ never directed it to do 

otherwise. Indeed, on April 21, 1993, DEQ directed May to 

continue the operation in progress. DEQ misconstrued its 

regulation when it held that VR 680-13-02 § 6.3 required prior 

written authorization for May's activity. Furthermore, it makes 

no sense to approve and permit reimbursement for excavation 

subsequent to the April 21, 1993 telephone conference while 

denying reimbursement for identical and equally necessary 

excavation prior to that date. Thus, we hold that DEQ committed 

an error of law in misconstruing its regulation and that the 

trial court erred in affirming that error. 

2. EXCAVATION BELOW THE WATER TABLE

 DEQ justified its denial of reimbursement upon a finding 

that May had excavated below the water table level, which it 

stated was located at 5.5 feet below grade. No evidence 

supports this finding. DEQ attributed its ascertainment of the 

water table depth to May's site characterization report. 

However, that report did not identify the water table level. 

Rather, it referred to "[a]n apparent perched ground water at 

the site occurs at a depth between approximately 5.5 and 9.0 

feet as measured in ground water monitoring wells . . . ." 

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Perched water is a containment or pooling of water not connected 

to the water table. Thus, DEQ's determination that May 

excavated below the water table level is unsupported by 

evidence, and the trial court erred in affirming that finding. 

 We reverse the judgment of the trial court and direct that 

the case be remanded to DEQ for determination whether May's 

excavation and cleanup efforts accorded with the requirements of 

VR 680-13-02 § 6.3 and whether May is entitled to reimbursement 

for its attendant expenses. 

 Reversed and remanded. 

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