Bd. of Supervisors of Loudoun Cnty. v. State Corp. Comm'n, 790 S.E.2d 460

Background

Under the Virginia Highway Corporation Act (Code § 56-535 et seq.) the State Corporation Commission (SCC) may approve or revise tolls for privately owned toll roads under Code § 56-542(D); the Commission approved initial and substituted tolls for the Dulles Greenway, including increases approved in 2007 effective through 2012.
The General Assembly added Code § 56-542(I) in 2008, prescribing automatic annual toll increases (CPI+1%, GDP change, or 2.8%) effective Jan 1, 2013–Jan 1, 2020, which the operator TRIP II invoked in 2012–2013 to increase tolls for the Greenway.
Delegate Ramadan (and later the Loudoun County Board) filed complaints under § 56-542(D) seeking investigation and reduction of the Greenway tolls; SCC approved TRIP II’s § 56-542(I) increase and separately initiated a § 56-542(D) investigation into the existing tolls.
A hearing examiner found § 56-542(I) superseded § 56-542(D) for 2013–2020 but nonetheless evaluated the D-criteria and recommended limited reduction only for some truck off-peak tolls; the SCC concluded its investigation without substituting new tolls under § 56-542(D).
On review, the Supreme Court of Virginia assumed (without deciding) § 56-542(D) applied, but held the SCC did not abuse its discretion in declining to substitute new tolls after finding existing tolls met § 56-542(D)’s three statutory criteria.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Did the SCC misapply § 56-542(D) by treating substitution as discretionary so long as existing tolls met the statutory minima?	Ramadan/Board: SCC must determine whether new rates ought to be substituted — not only whether they are required; SCC erred by effectively requiring a showing that substitution was mandatory.	TRIP II/SCC: § 56-542(D) uses "may," granting the SCC discretion; it properly investigated and exercised discretion to retain the rates.	Court: Affirmed SCC — § 56-542(D) is permissive and SCC did not misapply it.
2. Does § 56-542(I) preclude SCC from substituting tolls under § 56-542(D) during 2013–2020?	Ramadan/Board: § 56-542(D) controls and allows review/substitution despite (I).	TRIP II: § 56-542(I) controls 2013–2020 and limits SCC to increases prescribed therein.	Court: Assumed without deciding § 56-542(D) applied and resolved case on that basis; did not decide the preclusion question.
3. Did SCC err in finding the existing tolls "will not materially discourage use" (D(2))?	Ramadan/Board: Screenline/market-share analysis shows significant diversion — tolls materially discourage use.	TRIP II/Staff: Regression and level-of-service analyses show inelastic demand and no material discouragement; SCC credited this evidence.	Court: SCC’s factual finding has evidentiary support; no reversible error.
4. Did SCC err in finding existing tolls provide "no more than a reasonable return" (D(3))?	Ramadan/Board: SCC improperly equated lack of partner distributions with reasonableness of return; SCC failed to assess reasonableness of TRIP II’s return.	TRIP II/Staff: Evidence showed TRIP II never earned a return; reduced tolls proposed by Ramadan would jeopardize debt service and operations.	Court: SCC’s finding was supported by evidence (operating losses, debt-service shortfall); no reversible error.

Key Cases Cited

Virginia Elec. & Power Co. v. State Corp. Comm’n, 284 Va. 726, 735 S.E.2d 684 (Va. 2012) (Commission’s broad discretion in utility ratemaking)
BASF Corp. v. State Corp. Comm’n, 289 Va. 375, 770 S.E.2d 458 (Va. 2015) (deference to tribunal expertise)
Appalachian Voices v. State Corp. Comm’n, 277 Va. 509, 675 S.E.2d 458 (Va. 2009) (Commission decisions entitled to respect)
Sauder v. Ferguson, 289 Va. 449, 771 S.E.2d 664 (Va. 2015) (ordinary meaning of "may" as permissive)
Small v. Federal Nat’l Mortg. Ass’n, 286 Va. 119, 747 S.E.2d 817 (Va. 2013) ("may" prima facie permissive)
Advanced Towing Co. v. Fairfax Cnty. Bd. of Supervisors, 280 Va. 187, 694 S.E.2d 621 (Va. 2010) (statutory construction of permissive terms)
GTE South Inc. v. AT&T Commc’ns of Va., Inc., 259 Va. 338, 527 S.E.2d 437 (Va. 2000) (weight of evidence and factfinding by agency)
Babcock & Wilcox Co. v. Areva NP, Inc., 292 Va. 165, 788 S.E.2d 237 (Va. 2016) (approbate-reprobate principle in litigation positions)
Federal Power Comm’n v. Hope Natural Gas Co., 320 U.S. 591 (U.S. 1944) (rates must allow recovery of operating costs and reasonable return)
Bluefield Water Works & Improvement Co. v. Public Serv. Comm’n, 262 U.S. 679 (U.S. 1923) (investors entitled to a reasonable return)
City of Portsmouth v. Virginia Ry. & Power Co., 141 Va. 44, 126 S.E. 366 (Va. 1925) (constitutional constraints on rate reductions)