                  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
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




                               - 2 -
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




                                 - 3 -
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




                               - 4 -
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




                               - 5 -
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



                                 - 6 -
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.




                                - 7 -
     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



                               - 8 -
            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,




                                - 9 -
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




                               - 10 -
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



                               - 11 -
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


                               - 12 -
            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



                               - 13 -
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



                                - 14 -
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.




                               - 15 -
