Source: https://virginia.lexroll.com/7-eleven-v-dept-of-env-quality-39-va-app-377-2002/
Timestamp: 2019-04-21 20:03:19+00:00

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7-ELEVEN, INC., F/K/A THE SOUTHLAND CORPORATION v. THE DEPARTMENT OF ENVIRONMENTAL QUALITY.
Record No. 2380-01-2.Court of Appeals of Virginia. Richmond.
Bradshaw, P.L.C., on briefs), Richmond, for appellant.
damages. 7-Eleven raises four issues on appeal. For the reasons that follow, we affirm the decision of the trial court.
In 1988, Hechinger, Inc. purchased a parcel of real property located in Henrico County, Virginia. The property was located near a parcel of property leased by 7-Eleven, Inc. (f/k/a Southland Corporation. On June 11, 1990, 7-Eleven reported to the State Water Control Board (the “Board”) a leaking seal on an unleaded gasoline pump located on the property. Two days later, an environmental consultant hired by 7-Eleven found gasoline in a spring and stream located on the nearby Hechinger property.
Board, acting through its staff, the Department of Environmental Quality (“DEQ”), reimbursed 7-Eleven for $408,838.74 of its incurred clean-up expenditures. The corrective action only partially abated the gasoline plume in the groundwater.
statutory liability under Code § 62.1-44.34:18(C)(4). The case subsequently went to trial on the issue of damages. After a day and half of trial proceedings, the parties agreed to a settlement of $575,000.
By letter dated May 1, 1996, 7-Eleven notified the Board of its potential claim against the Fund for third-party damages due to Hechinger, pursuant to Code § 62.1-44.34:11(A)(2)(b). 7-Eleven notified the Board of the settlement on September 23, 1997. The DEQ held an informal fact-finding proceeding on July 12, 2000 to consider 7-Eleven’s claim for reimbursement. The DEQ also allowed both parties to submit additional evidence subsequent to the hearing.
The evidence presented on the issue of damages included appraisals prepared by each party’s expert witnesses, depositions of each of the experts, and Henrico County tax assessment records. The evidence demonstrated that Hechinger had purchased the property at issue in 1988 for a purchase price of $903,117. However, Hechinger’s expert, Salzman Real Estate Services, Inc. (“Salzman”), opined that the pre-injury fair market value of the property was $1,300,000 ($124,820 per acre). Salzman did not offer an opinion as to the post-injury fair market value of the property. Yet, Salzman opined that Hechinger lost rental income in the amount of $710,000, and investment returns in the amount of $550,000, as a result of the environmental damage. Salzman further opined that Hechinger had to pay $283,000 in taxes, insurance, administration expenses, as well as legal fees and expert fees, that it would not have had to pay but for the contamination.
7-Eleven, estimated the post-injury fair market value of the property to be $520,750 ($50,000 per acre). Salzberg based its opinion on an assumption that the contamination was no longer present and that the lower property value was merely a result of topographical problems that Salzberg described as “severe.” Henrico County tax assessment records appraised the property at a pre-injury value of $938,700 ($90,130 per acre), and a post-injury fair market value of $508,700 ($48,843 per acre). However, the County based its reduced assessment amount on the estimated cost to perform remediation on the property, which had already been largely completed, and for which the Board had already reimbursed 7-Eleven.
The evidence further established that Hechinger listed the property for sale in 1990, prior to the discovery of the contamination, asking for a price of $1,550,000. Hechinger was ultimately offered $800,000 for the property in 1996. In determining the amount 7-Eleven was entitled to for reimbursement, the hearing officer, J. Andrew Hagelin, Director of the Office of Spill Response and Remediation, stated the DEQ’s interpretation of the standard to determine “reasonable and necessary” costs for third party claims as follows: 1) the claimant’s legal liability for third party damages must be at least disputable; 2) the amount of damages claimed must be supported by the evidence; and 3) the types of damages must be eligible pursuant to the Fund’s Guidelines.
(1989),] is the permanent dimunition in the value of property.
In making this determination, the hearing officer disregarded the expert opinions of Salzman and Call as not credible, because they valued the property well above the amount Hechinger paid for it, and well above the county assessment amount. Further, they did not offer post-injury fair market valuations and offered damage estimates using formulae other than that prescribed in Packett. The hearing officer also disregarded the opinion of Salzberg because the post-injury evaluation offered assumed no contamination was present on the property. In addition, the hearing officer disregarded the county’s assessed post-injury value, because it reflected the estimated clean-up costs that the Board had already paid to 7-Eleven.
Based on the remaining evidence, the hearing officer found a reasonable range for the pre-injury fair market value of the property was $903,177 to $938,700, the pre-injury county assessment amount and the actual purchase price Hechinger paid for the property just two years before the pollution report. He found the 1996 offer of $800,000 to purchase the property a reasonable basis for estimating post-injury fair market value, as most of the clean-up expenses had already been incurred and it was not unreasonable to assume the potential buyer was aware of the condition of the parcel, and that the condition was reflected in the offer price.
Accordingly, he awarded 7-Eleven $103,117 ($903,117 — $800,000) in reimbursement for third-party claim costs, finding this amount of damages most accurately reflected the actual market value of the property.
7-Eleven appealed this finding to the Richmond Circuit Court arguing that the hearing officer 1) failed to consider important factors in analyzing the reasonableness of the settlement; 2) misunderstood and misapplied the law of damages; and 3) arbitrarily and capriciously rejected the opinions of certain experts. 7-Eleven further contended that the Fund’s Guidelines conflicted with Code § 62.1-44.34:11(A)(2)(b). 7-Eleven asserted that each of these issues constituted matters of law, requiring little deference to be given to the determination of the DEQ.
Following written briefs and oral argument, the trial judge issued a letter opinion finding the decision concerning “reasonable and necessary per occurrence costs” was an area involving the special expertise of the DEQ, entitling its decision to deference and making the appropriate standard of review whether the decision was supported by substantial evidence. Finding that the decision was both supported by the evidence and not arbitrary and capricious, the trial court upheld the DEQ’s decision.
questions of law and that judicial deference to the DEQ is inappropriate in matters outside the scope of its specialized competence and expertise. We don’t disagree with this basic statement of the law.
Judicial review of agency decisions is authorized by the [Virginia Administrative Process Act]. See Code § 9-6.14:17. Issues of law specified in the statute “fall into two categories: first, whether the agency . . . acted within the scope of [its] authority, and second, whether the decision itself was supported by the evidence.” Johnston-Willis Ltd. v. Kenley, 6 Va. App. 231, 242, 369 S.E.2d 1, 7 (1988). Although many circumstances involve “mixed questions” of both “law and fact,” issues are sometimes “oversimplified” as “legal” or “factual,” a distinction that is significant to judicial review of an administrative decision. Id. at 243, 369 S.E.2d at 7. The separate standards of review determine the degree of deference, if any, to be given to an agency’s decision on appeal. See id. at 246, 369 S.E.2d at 9.
abdicate their judicial function and merely rubber-stamp an agency determination.
Johnston-Willis, 6 Va. App. at 243, 369 S.E.2d at 7-8. However, where the “issue is a legal issue which falls within the specialized competence of the Commissioner and his [action] involves the proper application of his expert discretion, we will reverse that decision only if it was arbitrary and capricious.” Id. at 253-54, 369 S.E.2d at 13. Indeed, “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. at 246, 369 S.E.2d at 9.
responsibility requirement imposed by subsection B of § 62.1-44.34:12, up to one million dollars. Disbursements for third party claims shall be subordinate to disbursements for the corrective action costs in subdivision A 2 a of this section.
The present matter, involving the third-party reimbursement provision of Code § 62.1-44.34:11, is one of first impression in Virginia. However, as we held in Holtzman Oil Corp., “[t]he DEQ possesses the requisite experience and competence necessary to determine levels of contamination and the reimbursement due `owners and operators’ for the reasonable costs incurred for their environmental clean-up efforts,” pursuant to Code § 62.1-44.34:11(A)(2)(a). Holtzman, 32 Va. App. at 539, 529 S.E.2d at 337.
Although Code § 62.1-44.34:11(A)(2)(b) involves a consideration not of the clean-up costs, but of the “reasonable and necessary per occurrence costs incurred . . . by the owner . . . who is the responsible person for compensating third parties, including judgments for bodily injury and property damage caused by the release of petroleum,” we find that the DEQ likewise possesses the requisite experience and competence necessary to determine appropriate reimbursement under this section.
Indeed, when the legislature amended the third-party reimbursement language in 1996, it inserted the phrase “reasonable and necessary” before each of the statute’s relevant references to “per occurrence costs.” See 1996 Va. Acts, ch. 737. In so doing, the General Assembly transferred the decision-making power in this regard to the Board and its authorized agent, the DEQ. No evidence before us discloses that it did so without first determining that the Board and its agents were fully competent to render such judgments. See Groome v. Transportation, Inc., 27 Va. App. 682, 696, 500 S.E.2d 852, 859 (1998).
In fact, the entire statute, by its very language, clearly addresses corrective measures, and the costs associated therewith, for remedying releases of petroleum into the environment from underground storage tanks. Thus, although the consideration here involves a determination of reasonable and necessary costs incurred by the responsible party, in compensating a third party, as opposed to clean-up costs, the costs to be considered are clearly set forth by the language of the statute, imposing no need to resort to statutory construction. They are those incurred as a result of compensating a third party for the damage caused by the environmental contamination at issue, an area which we have found falls within the specialized expertise and competence of the DEQ. SeeHoltzman, 32 Va. App. at 539, 529 S.E.2d at 337. As such, its enforcement and implementation of the statutes and regulations governing the Tank Fund’s reimbursement policies in this regard, are entitled to deference by a reviewing court and should only be overturned when found to be arbitrary and capricious. Holtzman, 32 Va. App. at 538-39, 529 S.E.2d at 337.
Based upon the above, we hold that the trial court properly applied the substantial evidence standard and the arbitrary and capricious standard in reviewing the hearing officer’s decision.
necessary costs,” as it is utilized in Code § 62.1-44.34:11(A)(2), is clear. It provides the DEQ with the discretion to reimburse an owner for all “reasonable and necessary” costs incurred as a result of compensating a third party for environmental contamination, except those otherwise excluded by the statute. The phrase does not confine the DEQ’s determination to whether the costs are reasonable in the context of litigation.
Thus, because the statute provides the DEQ with the discretion to determine the reasonableness and necessity of all recoverable costs, and does not mandate any specific considerations beyond those parameters, 7-Eleven’s argument that the DEQ should have considered factors concerning the reasonableness of the settlement is without merit. Moreover, the dissent’s contention that the DEQ was required to consider the reasonableness of the settlement disregards the plain language of the statute.
because parties feel that other results are more reasonable. Va. and Md.R.R. Co. v. White, 228 Va. 140, 145, 319 S.E.2d 755, 758 (1984) (quotingBly v. Southern Ry. Co., 183 Va. 162, 175, 31 S.E.2d 564, 570 (1944)). Indeed, “the very essence of [the fact finder’s] function is to select from among conflicting inferences and conclusions that which it considers most reasonable.” Id.
Lastly, we find no merit in 7-Eleven’s contention that the hearing officer and the circuit court disregarded the temporary damage issue. The hearing officer specifically considered whether 7-Eleven was entitled to temporary damages in this case, and determined that the injuries suffered were permanent in nature as there was no evidence suggesting that the contamination would ever be completely abated, or at least within what time frame complete abatement was likely to occur.
Accordingly, because there is substantial credible evidence supporting the hearing officer’s determinations, and because there is no indication in the record that the hearing officer’s determinations on these issues were arbitrary and capricious, we find no error in the trial court’s decision to uphold the hearing officer’s judgment.
Finally, 7-Eleven maintains that the Fund’s Guidelines, which were promulgated by the DEQ and became effective on February 12, 1998, conflict with Code § 62.1-44.34:11(A)(2)(b) by unlawfully restricting the damages subject to reimbursement. Specifically, 7-Eleven contends that the Guidelines fail “to recognize that under Virginia’s law on tort damages” a responsible party should be “entitled to recover, if proven, all of the proximately caused damages specified in [the third-party plaintiff’s] motion for judgment,” as reasonable and necessary costs. 7-Eleven argues the Guidelines produce “artificial limits,” inconsistent with a claimant’s “real exposure to liability, which is what this court should presume the legislature intended.” Once again, we disagree.
The Agency’s acquiescence to a settlement between owner and third party does not mean that the Agency will pay the full settlement amount. Settlements and final court orders will be used as baselines from which the Agency will conduct eligibility, reasonableness, and necessity reviews.
The fact that the Guidelines do not designate as eligible any and all costs incurred does not conflict with the charge given to the Board and its agents by the legislature. In fact, as stated above, the statute does not entitle a claimant to a recovery for any and all costs incurred in the form of damages. Instead, the legislature limited reimbursable costs to those that the Board, in its discretion, finds reasonable and necessary, “including payments of judgments for bodily injury and property damage.” Code § 62.1-44.34:11(A)(2)(b). The legislature did not provide for reimbursement of litigation costs and/or the various damages that might be reflected in the form of a settlement. We reiterate that litigation and related settlements can often reflect inflated and/or unnecessary costs, and even speculative damages based on the parties’ theories of what a judge or jury might award.
intention of the legislature, clearly disclosed by its language, must be applied.'” Barr v. Town Country Properties, Inc., 240 Va. 292, 295, 396 S.E.2d 672, 674 (1990) (quoting Anderson v. Commonwealth, 182 Va. 560, 566, 29 S.E.2d 838, 841 (1944)). Therefore, we cannot broaden the parameters of the statute at issue as 7-Eleven suggests. To do so would conflict with the legislature’s clear intention to limit the reimbursement available and to provide the Board with discretion in determining reasonable and necessary costs.
 For example, Code § 62.1-44.34:11(A)(2)(b) limits reimbursement of costs in the form of judgments to those related to “bodily injury and property damage caused by the release.” Code § 62.1-44.34:11(A)(5) precludes reimbursement for costs expended for payment of interest or other finance charges on loans used for corrective action or containment, under certain circumstances. Code § 62.1-44.34:11(A)(6) and (7) preclude reimbursement for costs incurred in the form of penalties, charges or fines imposed pursuant to applicable laws, as well as costs that are reimbursed or reimbursable from other applicable state or federal programs.
Although I concur in the holding of the majority opinion, I do so based on different analytical considerations, beginning with my finding the term, “costs,” as it is used in Code § 62.1-44.34:11(A)(2)(a)(b), to be ambiguous.
Code § 62.1-44.34:11(A)(2)(b) states that “costs” includes “payment of judgments for bodily injury and property damage caused by the release of petroleum into the environment from an underground storage tank.” The term “costs” is not more specifically defined under the Tank Fund statute and neither Code section makes clear whether the legislature intended to limit recovery to actual clean-up costs for the property in question or whether the term “costs” encompasses other factors, such as the costs of prosecuting a suit for such damages, settlement costs incurred in conjunction with such a suit, or damages as defined in the context of litigation.
No reference to settlement costs, whatsoever, is made in the statute. The sole reference to “settlement” is found in § VIII of the Fund Guidelines, promulgated by the DEQ in 1998. The reference is general in its import and, like the statute, is devoid of any definition of the components to be considered.
In short, I find the term “costs,” as employed in §62.1-44.34:11(A)(2), as well as in the Guidelines that the DEQ promulgated, to be ambiguous and subject to statutory construction. The ambiguity gives rise to dual inquiries: Did the legislature intend compensation to extend to amounts expended in settling litigation and, if so, what factors relating to settlement are to be considered?
In its analysis, the Agency noted that it could not find any authority for 7-Eleven’s proposition that factors such as the strength of the case, the potential range of jury verdicts, the likely duration of the litigation and other similar “cost of settlement” factors, were to be considered by the Agency in awarding compensation under the statute, and 7-Eleven cites none. Rather, it simply contends that, since the reimbursement statute specifically includes “judgment” as part of what might be reasonable and necessary, the legislature contemplated that litigation between owners, operators and aggrieved third parties would be instituted and that at least some of the litigation would result in settlement. From that premise, 7-Eleven concludes that the legislature intended “the traditional common law factors that are used by courts to determine the reasonableness and necessity of a settlement [such as the expense, complexity and likely duration of the litigation] to apply when the DEQ ma[kes] its initial judgement, as well as when an appellate court review[s] that decision.” It cites no authority for that proposition, nor explains why its proposed reasoning and conclusion necessarily follow, particularly in the context of the statute at issue here.
In this case, the Agency employed the settlement as its point of departure, as provided in the Guidelines, and determined that the amount expended in settlement was compensable, but found the statute and case law limited its consideration to the costs incurred as a result of the property damage caused by the spill, using as its measure the diminution in the market value of the property. See Packett v. Herbert, 237 Va. 422, 427, 377 S.E.2d 438, 442 (1989). An appellate court is required to give deference to the Agency’s interpretation of the statute and, “in doubtful cases [that interpretation] will be regarded as decisive.” Southern Spring, 205 Va. at 275, 136 S.E.2d at 902. I find the trial court properly applied this rule of law. 7-Eleven also contends it is entitled to damages for “carrying costs, lost profits and lost investment income.” There is no legal authority to support the proposition that such elements of damage are compensable under the statute. Code § 62.1-44.34:11(A)(2)(b) defines reimbursable “costs” only as: “payment of judgments for . . . property damage caused by the release of petroleum into the environment from an underground storage tank.” Furthermore, the Agency’s Guidelines exclude from reimbursement “intangible property damage costs.” Guidelines, § VIII. The Guidelines, thus, focus on damage to the property itself.
damages which an injured third party may recover for property damage in a suit against a liable owner/operator, and specifically contemplates recovery for “loss of income, loss of the means of producing income, or loss of the use of the damaged property for recreational, commercial, industrial, agricultural or other reasonable uses, caused by such discharge.” The statutory provision at issue in 7-Eleven’s claim is distinguished by the absence of such language; reimbursement is explicitly limited to costs for “property damage,” with no mention of lost income or profits. When interpreting statutory language, we must assume that the legislature chose with care the words it used and, where it includes specific language in one section but omits that language from another section, we presume that the exclusion of the language was intentional. See Industrial Dev. Auth. v. Bd. of Supervisors, 263 Va. 349, 353, 559 S.E.2d 621, 623 (2002).
Under the familiar principle of law governing appellate review of an Agency’s construction of a statute that it is mandated to enforce, the trial court properly gave the Agency’s interpretation great deference on appeal. In the absence of specific statutory language to the contrary, or clearly supportive case precedent, I find the trial court did not err in according the Agency’s interpretation of the statute such deference. See Holtzman OilCorp. v. Commonwealth, 32 Va. App. 532, 538-39, 529 S.E.2d 333, 337 (2000).
the record discloses that the Agency began its review of the settlement amount, excluding all but the amount relating to the diminution of market value. Then, applying traditional principles governing the evaluation of evidence both expert and lay, together with its expertise, the Agency determined that the amount 7-Eleven sought was not reasonable and necessary, and set its award at $103,117. That determination, which was based on the application of its expert discretion, fell within the specialized competence of the Agency. The trial court may not substitute its own independent judgment for that of the Agency and will only reverse the Agency decision if it was arbitrary and capricious. See Holtzman, 32 Va. App. at 538-39, 529 S.E.2d at 337. Because I find the trial court’s deference to the Agency’s construction of the statute was proper and that it also properly found that substantial evidence supported the Agency’s findings of fact, I would affirm its decision to sustain the Agency’s decision.
 “The term `costs’ also has a well-defined legal meaning: Those expenses incurred by parties in prosecuting or defending a suit, action or other proceeding at law or in equity, recognized and allowed by law, and taxed against the losing party.” Morgan v. Haley, 107 Va. 331, 337, 58 S.E. 564, 566 (1907). The Code sections in the matter at issue cannot necessarily be read as incorporating the traditional legal definition of the term.
The Agency’s acquiescence to a settlement between owner and third party does not mean that the Agency will pay the full settlement amount. . . .
 In addition to its statutory analysis, the DEQ noted numerous factual problems with 7-Eleven’s claim, including 7-Eleven’s failure to provide the Agency with the legal theories underlying the damages it sought in the litigation and upon which settlement was premised. The Agency thus had no way to evaluate whether 7-Eleven’s claims for damages other than those damages related to property damage were legally viable.
 I further note that, even were 7-Eleven’s position to be adopted, no evidence relating to the Dauphin factors relevant to assessing the reasonableness of a settlement, such as the complexity of the case, the range of jury verdicts and other such facts that 7-Eleven asked be considered, was submitted and there has been no showing that the Agency has the expertise necessary to determine the reasonableness of settlement, absent such evidence.
 The Agency Guidelines provide: “Settlements and final court orders will be used as baselines from which the Agency will conduct eligibility, reasonableness, and necessity reviews.” Guidelines, § VIII (emphasis added).
underground storage tank which are in excess of the per occurrence financial responsibility requirement imposed in subsection B of § 62.1-44.34:12, up to one million dollars.
Code § 62.1-44.34:11(A)(2)(a). The Board, acting through the Department, reimbursed 7-Eleven for $408,838.74 of its costs. Those costs and reimbursements are not at issue in this appeal.
against the Tank Fund for damages to Hechinger’s property. See Code § 62.1-44.34:11(A)(2)(b). After 7-Eleven stipulated to statutory liability under Code § 62.1-44.34:18(C)(4), the case went to trial in the circuit court on the issue of damages. During the second day of trial, the parties agreed that 7-Eleven would pay Hechinger $575,000 as a settlement of its $2,000,000 claim.
7-Eleven notified the Department of the settlement and sought reimbursement for the settlement amount from the Tank Fund. In support of its claim, 7-Eleven presented to the Department various documents, including exhibits prepared for and used at trial. The Department held an informal fact-finding proceeding and allowed 7-Eleven to later submit additional evidence. Based on its consideration of the evidence, the Department awarded 7-Eleven $103,117 as reimbursement for payment of property damage to Hechinger. See Code § 62.1-44.34:11(A)(2)(b). The Department found that this amount represented the diminution in the market value of Hechinger’s property.
7-Eleven appealed to the circuit court, alleging the case decision was unlawful. Following written briefs and oral argument, the trial judge ruled that the Department’s decision concerning “reasonable and necessary per occurrence costs” for compensating Hechinger for property damage was an issue involving the Department’s special expertise. Finding that the decision was supported by substantial evidence and was not arbitrary and capricious, the trial judge upheld the Department’s decision to award only partial reimbursement to 7-Eleven.
Department erred by failing to consider the factors reflective of the reasonableness of the settlement for damage to Hechinger’s property, including “the strength of Hechinger’s case heading into trial, 7-Eleven’s exposure to liability and damages, the expense to the parties, the complexity of the issues presented in the litigation, the likely duration of the litigation, the amount offered at settlement, and the state of the proceedings at the time of the settlement.” The Department responds that the trial judge correctly ruled that substantial evidence supported the Department’s decision.
The sole issue involves a question of statutory interpretation. The issue does not involve “the substantiality of the evidential support for findings of fact,” which requires great deference because of the specialized competence of the agency. Instead, when, as here, the question involves a statutory interpretation issue, “little deference is required to be accorded the agency decision” because the issue falls outside the agency’s specialized competence.
Sims Wholesale Co. v. Brown-Forman Corp., 251 Va. 398, 404, 468 S.E.2d 905, 908 (1996) (citation omitted). “The reviewing court may set the agency action aside, even if it is supported by substantial evidence, if the court’s review discloses that the agency failed to comply with a substantive statutory directive.” Browning-Ferris Indus. of SouthAtlantic, Inc. v. Residents Involved in Saving the Env’t, Inc., 254 Va. 278, 284, 294 S.E.2d 431, 434 (1997).
clear wording of Code § 65.1-44.34:11(A)(2)(b) provides that an owner may recover “[r]easonable and necessary . . . costs incurred for releases [of petroleum from an underground storage tank] . . ., including payment of judgments for bodily injury and property damage.” In the context of the statute, the word “costs” means “an item of outlay incurred in the operation of a business enterprise.” Webster’s Third New InternationalDictionary 515 (1981), or as more generally understood, “the expenditure or outlay of money.” Id.
Except as generally circumscribed by the Tank Fund scheme, Code § 65.1-44.34:11(A)(2)(b) does not contain an exclusive listing of costs to be reimbursed and clearly does not exclude money paid in a settlement for property damage as a factor to be used in determining the “[r]easonable and necessary . . . costs” of an owner. Moreover, the statutory directive to consider “payment of judgments for . . . property damage caused by the release of petroleum” as a measure of the “[r]easonable and necessary per occurrence costs” clearly encompasses settlements that occur during litigation concerning the property damage. Because the statute is without limitation in defining the type of costs recoverable by an owner who has compensated a third party for damage caused by a petroleum release from an underground tank, a plain reading of the statute manifests an intention that settlement expenses are “costs” contemplated by the legislature.
470 U.S. 414, 423 n. 9 (1985). I would hold that the wording of the statute leaves no doubt that the legislature envisioned legal actions being brought against owners for petroleum spills and that the legislature intended that the monetary result of those legal actions for property damage, including settlements, be included as a costs to be reimbursed.
Every statute is to be read so as to “promote the ability of the enactment to remedy the mischief at which it is directed.” Natrella v. Board of Zoning Appeals, 231 Va. 451, 461, 345 S.E.2d 295, 301 (1986) (quoting Jones v. Conwell, 227 Va. 176, 181, 314 S.E.2d 61, 64 (1984)). The ultimate purpose of all rules of construction is to ascertain the intention of the legislature, which, absent constitutional infirmity, must always prevail. All rules are subservient to that intent. Shackelford v. Shackelford, 181 Va. 869, 877, 27 S.E.2d 354, 358 (1943). Further, it is a universal rule that statutes . . ., which are remedial in nature, are to be “construed liberally, so as to suppress the mischief and advance the remedy,” as the legislature intended. Shumate’s Case, 56 Va. (15 Gratt.) 653, 661 (1860) (emphasis added).
storage tanks. The statute renders irrelevant whether the third party has been compensated for those injuries by a judgment or by a reasonable settlement prior to judgment.
In determining the costs to be reimbursed, the Department can only fulfill its responsibility under the statute — to ensure that the public interest is served — if it considers the reasonableness of the cost of settling litigation. This conclusion is buttressed by long-standing “settled principles of law,” which the Supreme Court has recognized as a matter of public policy and equity, that “`[t]he law favors compromise and settlement of disputed claims.'” Snyder-Falkinhamv. Stockburger, 249 Va. 376, 381, 457 S.E.2d 36, 39 (1995) (citation omitted); see also Eggleston v. Crump, 150 Va. 414, 418-19, 143 S.E. 688, 689 (1928). Indeed, here, where the issue of liability is uncontested, it would be contrary to the clear meaning of the statute and, furthermore, would be incongruous and injurious to public policy to hold that the Department could fail to consider the settlement costs as a factor in determining reasonable and necessary costs for property damage caused by 7-Eleven’s petroleum spill.
deductible, the owner can either pay the full value of the settlement out of its own pocket, or it can adjudicate. If the owner chooses to adjudicate, because the Department must consider court judgments as reasonable “costs,” as long as the judgment does not exceed $435,937 above the value of the proposed settlement, the owner’s out of pocket exposure will be less. In this case, that means as long as the amount of the judgment is estimated to be less than $1,010,037, 7-Eleven should adjudicate. Assuming judgments are generally higher than settlements, the Department will pay more out of the Tank Fund because owners have great incentive to adjudicate.
The Department does not offer and I do not discern any logical reason why the legislature would have intended to differentiate between reimbursement for settlements and reimbursement for judgments. If we read the statute, as we must, to promote its ability to “remedy the mischief at which it is directed,” Kind Land Corp., 238 Va. at 103, 380 S.E.2d at 897, the statute inexorably and logically manifests the conclusion that settlements of legal actions would occur, that settlements would be judged by determining the reasonableness of the settlement, and that the amount of a reasonable settlement would also be an item the Department would reimburse as “reasonable and necessary . . . costs.” Thus, I would hold that the Department’s interpretation of the statute to preclude recovery of settlement costs is contrary to a plain reading of the statute which requires, subject only to the statutory limitation of one million dollars, that costs an owner incurs for compensating third parties for property damage caused by petroleum releases be reimbursed based on whether they are reasonable and necessary.
Storage Fund Third Party Disbursement Guidelines (emphasis added). To implement that policy, the Guidelines now provide that the Department will “review all settlements for reasonableness.” Guidelines, VIII (A)(3) (emphasis added). This policy, which the Department apparently derives from the authority of the statutes is precisely the remedy 7-Eleven contends is mandated by the statutes and pre-existed the adoption of the Guidelines.
Neither the Department in its fact finding nor the trial judge on review determined that $575,000 was an unreasonable amount to settle the pending property damage litigation or that $575,000 was not within the range of a judgment of a rational jury had the litigation, which already had consumed a day and one-half at trial, proceeded to judgment on the merits. See Dauphin Deposit Bank and Trust Co. v. Hess, 727 A.2d 1076, 1078 (Pa. 1999) (holding that criteria used in assessing the reasonableness of settlement “include evaluations of (1) the risks of establishing liability and damages, (2) the range of reasonableness of the settlement in light of the best possible recovery, (3) the range of reasonableness of the settlement in light of all the attendant risks of litigation, (4) the complexity, expense and likely duration of the litigation, (5) the stage of the proceedings and the amount of discovery completed, (6) the recommendations of competent counsel, and (7) the reaction of the [beneficiaries] to the settlement”). Likewise, the record contains no finding that a $575,000 judgment by a jury for the property damage would have been so excessive as to require a trial judge to set it aside or as to require an appellate court to do the same. See Edmistonv. Kupsenel, 205 Va. 198, 202, 135 S.E.2d 777, 780 (1961). The majority opinion’s suggestion that, prior to the adoption of the Guidelines, the Department had the discretion to refuse to consider the settlement as a “costs” is simply based on a misreading of the Tank Fund statutes.
This record clearly “demonstrate[s] an error of law . . . [concerning] compliance with statutory authority.” Code § 9-6.14:17. In short, the Department did not evaluate the reasonableness and necessity of the settlement but, instead, reviewed the evidence developed during the litigation and decided, independent of the litigation risk, an amount it believed represented the diminution of the fair market value of the property. The Department then ruled that this amount constituted the reasonable and necessary costs to be reimbursed.
Put simply, the Department’s decision was contrary to the plain language of the statute. “Since the issue before us is purely one of law, containing no underlying factual issues, we do not apply a presumption of official regularity or take account of the experience and specialized competence of the administrative agency.” Browning-FerrisIndus., 254 Va. at 284, 492 S.E.2d at 434. A reviewing court may reverse an agency’s determination where the agency’s decision is based on an improper statutory interpretation. Johnston-Willis, Ltd. v. Kenley, 6 Va. App. 231, 247, 369 S.E.2d 1, 10 (1988).
Code § 9-6.14:19, a part of the Administrative Process Act, controls the action a . . . court may take when it finds a case decision “to be not in accordance with law under § 9-6.14:17.” Among the errors of law addressed in the latter statute is failure of the agency to comply “with statutory authority” and failure of the agency to observe “required procedure.” § 9-6.14:17(ii) and (iii). When the court finds the case decision to be unlawful on these grounds, it “shall suspend or set it aside and remand the matter to the agency for such further proceedings, if any, as the court may permit or direct in accordance with law.” § 9-6.14:19.
For these reasons, I would hold that because Code §62.1-44.34:11(A)(2)(b) requires the Department, in administering the Tank Fund, to assess the “reasonable and necessary . . . costs incurred for releases . . . by the owner . . . for compensating third parties, including payments of judgments for . . . property damage caused by the release,” the Department erred when it failed to assess the reasonableness of the settlement and failed to determine as a factor in reimbursing 7-Eleven for its reasonable and necessary costs the settlement amount paid by 7-Eleven to Hechinger.
In granting the Department the discretion to determine whether costs an owner incurred “for compensating third parties . . . for property damage caused by the release of petroleum” were reasonable and necessary, Code § 62.1-44.34:11(A)(2)(b), the General Assembly obviously intended that the Department determine, on a case-by-case basis, which costs would be reimbursed. In other instances, where a statute has given an agency such discretion, we have reversed agency action, noting that, “[a]lthough the statute authorizes the use of discretion, the current policy guidelines allow no discretion to be exercised in determining [the statutorily delegated function].” Woods v. Commonwealth, 26 Va. App. 450, 458-59, 495 S.E.2d 505, 509 (1998).
was “implemented through the Guidelines . . . [and was not] arbitrary and capricious.” I would hold that the trial judge erred in applying this standard.
Upon site closure, contamination remained on the Hechinger property. The Regional Office’s July 7, 2000 memorandum indicates that it is simply not possible to predict how long it will take for natural attention [sic] to return the site to background levels. [7-Eleven] provided no evidence and no evidence exists in the Agency’s records that indicates the remaining contamination will attenuate within a known time frame. Consequently, it is appropriate to treat the injury as permanent. The measure for permanent injury to real property pursuant to Packett v. Herbert is the permanent diminution in the value of the property.
that property, and for causing material disturbance or annoyance to plaintiffs in their use and occupation of the property.” National EnergyCorp. v. O’Quinn, 223 Va. 83, 91, 286 S.E.2d 181, 186 (1982).
Where, as 7-Eleven contends in this case, Hechinger sued for and was entitled to carrying costs, lost profits, and lost investment income proximately caused by 7-Eleven’s conduct, such costs are recoverable under Virginia tort law if proved. Id. See also Raleigh Court Corp. v.Faucett, 140 Va. 126, 142, 124 S.E. 433, 437-38 (1924) (permitting recovery for “temporary and permanent damage . . . done to the plaintiff’s lot [of land]”). Indeed, Code § 62.1-44.34:18(C)(4), which addresses an owner’s liability for the petroleum spill, recognizes potential liability for “damage to . . . property, . . . loss of income, loss of the means of producing income, or loss of the use of the damaged property for . . . commercial, industrial, . . . or other reasonable uses, caused by such discharges.” The record contains the expert appraisals on the pre-injury and post-injury value of Hechinger’s property. The record also contains the opinion of Salzman Real Estate Services, Inc., an expert hired by Hechinger, that Hechinger incurred as a result of the spill lost rental income of $710,000 and lost investment returns of $550,000. Salzman calculated that Hechinger had also incurred and paid as property expenses resulting from the spill $283,000 in additional insurance, taxes, administrative expenses, legal fees, and expert fees.
because they did not conform to the damage formula prescribed inPackett.
Without permitting double recovery, the Department should have analyzed whether any of the other expenses alleged by Hechinger were proximately caused by the petroleum spill and were properly encompassed by the settlement. I would hold that because the Department determined without factual analysis that 7-Eleven was not allowed to recover as costs other items that Hechinger alleged as expenses resulting from the property damage, the Department erred as a matter of law in its assessment of the extent of 7-Eleven’s liability to Hechinger for property damage.
the property damages for which 7-Eleven was liable to Hechinger. Therefore, I dissent.

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