author: PER CURIAM.

text:
    In re HERITAGE BUILDING SYSTEMS, INC.
    No. 09-05-445 CV.
    Court of Appeals of Texas, Beaumont.
    Submitted Oct. 28, 2005.
    Decided Feb. 9, 2006.

      David R. Sweat, Arlington, for relator.
    Jon B. Burmeister, Dan Ducote, Jr., Moore Landrey, LLP, Beaumont, for real party in interest.
    Before GAULTNEY, KREGER and HORTON, JJ.
   OPINION

PER CURIAM.

The issue in this case is whether we should enforce an arbitration agreement between the parties to a contract. Heritage Building Systems, Inc. (“Heritage”) requests that we direct the trial court to order claims asserted in a lawsuit against it by John Bohler be sent to arbitration. We conditionally grant the writ of mandamus sought by Heritage.

Background

Bohler’s lawsuit relates to his purchase of materials to construct a prefabricated building pursuant to a contract with Heritage dated February 27, 2004. An arbitration clause in the general terms and conditions of the contract provides in part:

21. Arbitration: Buyer and Seller agree that in the event of any disputes from this transaction whether in contract or tort, Buyer and Seller shall submit all matters to final and binding arbitration. The parties designate American Arbitration Association as the arbitrator to conduct any hearings in Little Rock, Arkansas. The prevailing party in the arbitration shall be awarded their costs and attorney’s fees.

Bohler’s signature appears on the front of the purchase order.

Following his receipt of the materials for the building, Bohler sued Heritage claiming that Heritage incorrectly engineered and manufactured components of the building. Heritage responded on April 29, 2005, by filing a plea in abatement in which Heritage asserted that the parties’ contract contained an arbitration clause that required Bohler to submit the dispute to arbitration. On July 7, 2005, Bohler filed a motion requesting that the trial court refer the case to mediation. On July 16, 2005, Heritage filed its Motion to Enforce Agreement to Arbitrate.

On August 29, 2005, the trial court granted Bohler’s motion to refer the case to mediation and advised that Heritage’s motions were being taken under advisement until after mediation. The trial court’s order required that mediation take place in Beaumont not later than October 27, 2005, and also advised that within ten days of receiving the order any party could file a written objection to the court’s referral of the case to mediation. On October 14, 2005, Heritage filed its petition for -writ of mandamus.

Governing Law and Agreement to Arbitrate

In its Petition for Writ of Mandamus, Heritage asserts that it presented evidence of the contract containing the above arbitration clause at the hearing on its motion requesting that the matter be sent to arbitration. Bohler does not contest Heritage’s assertion that evidence of the contract was before the trial court at the hearing. Under the Rules of Appellate Procedure, we accept as true the facts stated in Heritage’s brief unless contradicted by Bohler. Tex.R.App. P. 38.1(f).

Since the transaction involved commerce between Heritage, an Arkansas resident, and Bohler, a Texas resident, Heritage asserts the Federal Arbitration Act (“FAA”) applies to the contract. See 9 U.S.C.A. §§ 1-16 (West 1999 & Supp. 2005). The FAA is applicable to contracts “evidencing a transaction involving commerce.” Id. at § 2. An arbitration agreement is governed by the FAA if the contract relates to interstate commerce. Perry v. Thomas, 482 U.S. 483, 489, 107 S.Ct. 2520, 2525, 96 L.Ed.2d 426 (1987); Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 269-70 (Tex.1992). Interstate commerce is broadly defined, and “is not limited to the interstate shipment of goods, but includes all contracts ‘relating to’ interstate commerce.” In re FirstMerit Bank, N.A., 52 S.W.3d 749, 754 (Tex.2001)(orig.proceeding). Here, Boh-ler’s contract involves the interstate shipment of goods, and is clearly within the definition of interstate commerce.

Bohler does not dispute that the FAA applies, but argues that Texas’s policy of encouraging settlement permits the trial court to refer the case to mediation prior to ordering the case to arbitration. See Tex. Civ. PRAC. & Rem.Code Ann. § 154.001-154.023 (Vernon 2005). “Generally, under the FAA, state law governs whether a litigant agreed to arbitrate, and federal law governs the scope of an arbitration clause.” In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex.2005)(orig.proceeding).

Bohler also does not dispute that his claims fall within the scope of the arbitration clause. It is also apparent from the record that the claims asserted by Bohler are within the scope of the arbitration clause. “Claims must be brought on the contract (and arbitrated) if liability arises solely from the contract or must be determined by reference to it.” Id. at 132.

Thus, we find that Heritage made a prima facie showing to the trial court that a valid arbitration agreement existed between it and Bohler. Because the transaction in issue was between citizens of different states, it relates to interstate commerce. Therefore, we also find that the FAA applies to the dispute.

Mandamus

To correct an error made by the trial court, mandamus relief is available where the trial court does not follow guiding rules and principles and reaches an arbitrary and unreasonable decision. In re Ford Motor Co., 165 S.W.3d 315, 317 (Tex.2005)(citing In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex.2004); Walker v. Packer, 827 S.W.2d 833, 839 (Tex.1992)). Also, a trial court abuses its discretion if it erroneously applies the law to the facts, or if it errs in determining the law. In re Bruce Terminix Co., 988 S.W.2d 702, 703 (Tex.1998)(orig.proeeeding).

Under the FAA, “upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.” 9 U.S.C.A. § 4. Further, federal law applicable to arbitration agreements states “the court ... upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement....” 9 U.S.C.A. §3. Thus, under the FAA if there is a valid agreement to arbitrate a dispute that falls within the scope of the arbitration agreement, federal law directs the trial court to refer the matter to arbitration and to stay the proceedings in its court.

But, does the trial court, prior to enforcing an arbitration clause under the FAA, have the discretion to enter other orders that do not constitute a trial? Does the FAA allow the trial court to exercise control of the litigation for everything prior to the trial date? Clearly, allowing the trial court to interpose mediation would result in some additional delay and some additional expense in implementing the dispute resolution to which the parties contractually agreed.

The Eastland Court of Appeals, in In re Champion Technologies, Inc., 173 S.W.3d 595, 599 (Tex.App.-Eastland 2005, orig. proceeding), held that “the trial court lacks discretion to defer ruling on a motion to compel arbitration until the completion of all discovery in the case because doing so forces the parties to litigate their dispute in the trial court even though it may ultimately be determined that all or some of the claims are subject to arbitration.” The appellate court conditionally granted a writ requiring the court to summarily rule on the motion to compel arbitration. Id. at 600. The First Court of Appeals reached a similar result in a case governed by the Texas Arbitration Act that involved a trial court’s deferring its ruling on a motion to compel arbitration until the parties completed discovery. In In re MHI Partnership, Ltd., 7 S.W.3d 918, 923 (Tex.App.-Houston [1st Dist.] 1999, orig. proceeding) the First Court of Appeals states:

Delaying a decision on the merits of arbitrability until after discovery substantially defeats the policy behind [Texas Civil Practice and Remedies Code] section 171.021’s abbreviated procedure, and it violates section 171.021’s mandate to decide the issues summarily. We agree with MHI and McGuyer that, ‘[i]n effect, the trial court is forcing [them] to litigate before the court will rule on the motion to compel arbitration and stay litigation.’ Accordingly, we hold the trial judge had no discretion to defer his ruling until after discovery had been completed in the case.

Although it appears that this is a case of first impression regarding whether a trial judge can delay ruling on a motion to compel arbitration while ordering the parties to mediate, we likewise believe the FAA contemplates not just a stay of the trial, but a stay of the trial proceedings involving matters other than threshold issues such as whether the parties entered into a valid and enforceable arbitration agreement. The order referring the case to mediation does not involve any aspect of any threshold issue.

Conclusion

Discovery into the merits of claims in a suit is one of many aspects involved in litigating a case in a court. Frequently, another aspect of litigating a case in court is court ordered mediation. Either may interfere with the expectation of the parties to an arbitration agreement that the resolution of their dispute will be handled promptly and expeditiously through arbitration.

The parties to this contract chose to resolve their dispute through arbitration, and federal law mandates that a case be ordered “to proceed to arbitration in accordance with the terms of the agreement.” 9 U.S.C.A. § 4. The arbitrator may, or may not, choose to require mediation. However, the trial court’s ordering the parties to mediation undermines the expectation of the parties that their dispute will be resolved by proceedings directed by an arbitrator.

We conditionally grant the writ of mandamus and direct the trial court to vacate its order requiring the parties to mediate. We also direct that the trial court rule summarily on the motion to compel arbitration or to conduct an evidentiary hearing if one is required to determine disputed facts. We are confident the trial court will comply, and our writ will issue only if it does not.

WRIT CONDITIONALLY GRANTED.


source: Caselaw Access Project

author: Justice CASTILLO.

license: Public Domain

text:
    Michael SCOTT, Appellant, v. Officer MENCHACA, Appellee.
    No. 13-05-591-CV.
    Court of Appeals of Texas, Corpus Christi-Edinburg.
    Feb. 9, 2006.
    Rehearing Overruled March 16, 2006.

      Michael Scott, Beeville, for appellant.
    Kimberly Fuchs, Asst. Atty. Gen., Austin, for appellee.
    Before Justices HINOJOSA, YÁÑEZ and CASTILLO.
   OPINION

Opinion by

Justice CASTILLO.

Appellant, Michael Scott, an indigent inmate in the Texas Department of Criminal Justice-Institutional Division (TDCJ), appeals the dismissal of his pro se case under chapter 14 of the Texas Civil Practice and Remedies Code. See Tex. Civ. PRAC. & Rem. Code Ann. § 14.003 (Vernon 2002). He sued appellees, seeking compensatory damages for “excessive use of force while escorting” him to a medical appointment. We affirm the trial court’s chapter 14 dismissal of the lawsuit with prejudice.

I. Issues Presented

Scott contends that the trial court abused its discretion by (1) dismissing his prisoner’s in forma pauperis suit under chapter 14 as frivolous, (2) failing to permit him to cure the defect in his effort to exhaust the prison grievance system, and (3) failing to rule on his motion for stay pending exhaustion of administrative remedies.

II. Background

The defendants moved to dismiss, asserting that Scott failed to meet the following chapter fourteen statutory requirements: (1) list all his previous lawsuits, (2) adequately describe operative facts, and (3) list dates of affirmation of dismissals of prior suits. Scott filed a motion requesting an order allowing him to exhaust administrative remedies.

A review of the record reveals that the live pleading did not contain an affidavit or unsworn declaration as to Scott’s exhaustion of administrative remedies. The trial court convened a telephonic evidentiary hearing wherein Scott admitted he had not exhausted administrative remedies as to all defendants except Menchaca. Scott nevertheless argued: “I’m not required to exhaust the grievance system again after I have filed my grievance with the Court with my original petition. I’m only required to exhaust the grievance system once.” He added, “There’s no case law or no T.D.C. policy or procedure that explicitly states that I’m required to name each defendant to the step 1 and step 2 grievance.” As to the affidavit of previous filings, Scott stated that he filed “an amended list and I have cured the deficiencies that the defendants have alleged.”

Concluding that Scott’s live pleading was procedurally incorrect, the trial court dismissed the case with prejudice. In his motion for a new trial, Scott requested an order allowing him to exhaust administrative remedies.

III. Chapter 14

A. Scope and Standard of Review

The purpose of the procedural requirements in chapter 14 is to deter “constant, often duplicative, inmate litigation.” See Lilly v. Northrep, 100 S.W.3d 335, 337 (Tex.App.-San Antonio 2002, pet. denied); Obadele v. Johnson, 60 S.W.3d 345, 348 (Tex.App.-Houston [14th Dist.] 2001, no pet.). The proper standard of review for the dismissal of a frivolous claim pursuant to chapter fourteen is an abuse of discretion. Jackson v. Tex. Dep’t of Crim. Justice-Inst. Div., 28 S.W.3d 811, 813 (Tex.App.-Corpus Christi 2000, pet. denied). To establish an abuse of discretion, an appellant must show the trial court’s actions were arbitrary or unreasonable in light of all the circumstances. Id. (citing Smithson v. Cessna Aircraft Co., 665 S.W.2d 439, 443, (Tex.1984)); Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.1985) (holding that an abuse of discretion is determined by examining whether the trial court acted without reference to any guiding rules and principles); Spurlock v. Schroedter, 88 S.W.3d 733, 735-36 (Tex.App.-Corpus Christi 2002, no pet.).

Section 14.005 requires that an inmate proceeding pro se file an affidavit or unsworn declaration stating (1) the date that the grievance was filed, and (2) the date the inmate received the written decision. See Tex. Civ. Prac. & Rem.Code Ann. 14.005 (Vernon 2002). The plain meaning of the provision reflects that exhaustion of administrative remedies is mandatory. See Tex. Gov’t Code Ann. § 311.011 (Vernon 2005). We must enforce the plain meaning of an unambiguous statute. Tune v. Tex. Dep’t of Pub. Safety, 23 S.W.3d 358, 363 (Tex.2000); St. Luke’s Episcopal Hosp. v. Agbor, 952 S.W.2d 503, 505 (Tex.1997) (holding that we interpret a statute that is clear and unambiguous by looking at the plain meaning of the statute’s words).

B. Discussion

By his second and third issues, Scott assigns error to the trial court’s refusal to allow him to exhaust administrative remedies. His complaint on appeal is contrary to his assertions at the hearing. He judicially admitted that he need not exhaust administrative remedies as to all but the first defendant, and he did not file an affidavit or unsworn declaration as to exhaustion of administrative remedies (an action consistent with his argument before the trial court).

A judicial admission must be a clear, deliberate, and unequivocal statement; it occurs when an assertion of fact is conclusively established in live pleadings, making the introduction of other pleadings or evidence unnecessary. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 905 (Tex.2000). A judicial admission not only relieves an adversary from making proof of the fact admitted but also bars the party himself from disputing it. See id. We conclude that, because Scott judicially admitted in open court that he need not exhaust administrative remedies, he is barred from now disputing that admission. Id. Accordingly, we overrule his second and third issues. Because exhaustion of administrative remedies is a mandatory requirement in chapter 14 proceedings and because the live pleading did not append the mandatory affidavit or declaration as to exhaustion of administrative remedies, we conclude that the trial court did not abuse its discretion in dismissing the lawsuit with prejudice. See Tex. Civ. PRAC. & Rem.Code Ann. 14.005 (Vernon 2002); Jackson, 28 S.W.3d at 813. Accordingly, we overrule Scott’s first issue.

TV. Conclusion

Having overruled Scott’s three issues presented, we affirm the order dismissing the lawsuit with prejudice.

      . The defendants named in the first amended petition were Rafael Menchaca, Armando Gonzalez, Marie Delarosa, Sgt. Jonny Miles, Sgt. Daniel Breseno, Sgt. Villarreal, Sgt. Darren Mayer, Sgt. Sanchez, Capt. Rene Maldonado, Major Daniel Fernandez, Lt. Andres Gallegso, Sgt. Louis Rocha, Sgt. Rhonda Rawlins, Sgt. Delarosa, Lt. Michael Skay, Capt. Edwin Lang, Capt. Parker, Asst. Warden Alfonso Castillo, and Warden William Stephens in their personal capacities.

        . See Tex Civ. Peac. & Rem.Code Ann. § 14.004(a) (Vernon 2002).

      . Id.

      . See id. at §§ 14.004(a)(2)(D), (b).


author: JAN P. PATTERSON, Justice.

text:
    BEXAR METROPOLITAN WATER DISTRICT, Appellant, v. TEXAS COMMISSION ON ENVIRONMENTAL QUALITY, City of Bulverde and Guadalupe-Bianco River Authority, Appellees.
    No. 03-04-00574-CV.
    Court of Appeals of Texas, Austin.
    Feb. 10, 2006.

      Mark H. Zeppa, Law Offices of Mark. H. Zeppa, PC, Paul M. Terrill, Howard S. Slobodin, Hazen & Terrill, PC, Austin, for Bexar Metropolitan Water District.
    Anthony C. Grigsby, George Thomas Bohl, Office of the Atty. Gen., Natural Resources Div., Austin, for Texas Commission on Environmental Quality.
    Bruce E. Wasinger, Emily W. Rogers, Bickerstaff, Heath, Smiley, Pollan, Kever <⅞ McDaniel, LLP, Austin, for City of Bul-verde/Guadalupe-Blanco River Authority.
    Frank J. Garza, Davidson & Troilo, P.C., San Antonio, for City of Bulverde.
    Before Justices PATTERSON, PURYEAR and WALDROP.
   OPINION

JAN P. PATTERSON, Justice.

Our opinion and judgment issued on October 20, 2005, are withdrawn, and the following opinion is substituted.

For an applicant to obtain a certificate of public convenience and necessity for water utility service, the Texas Commission on Environmental Quality must “ensure” that the applicant (i) possesses the financial, managerial, and technical capability to provide continuous and adequate service, (ii) is capable of providing drinking water that meets specified statutory requirements, and (iii) has access to an adequate supply of water. Tex. Water Code Ann. § 13.241(a)-(b) (West 2000). The question presented is whether a municipality as applicant may demonstrate this capability through contracts and interlocal agreements with a river authority that owns or operates water distribution and treatment systems throughout a river basin. Bexar Metropolitan Water District (“BexarMet”) sought judicial review of the Commission’s approval of the City of Bul-verde’s application for a certificate, after the Commission issued the certificate against the recommendation of an administrative law judge (“ALJ”). The district court denied BexarMet’s claims and affirmed the Commission’s order.

In four issues, BexarMet appeals, contending that, by issuing a certificate to Bulverde, the Commission violated the water code and its own rules. We hold that the Commission acted within its authority when it granted a certificate to Bulverde. We therefore affirm the judgment of the district court.

FACTUAL AND PROCEDURAL BACKGROUND

On June 28, 2000, the City of Bulverde, a new city located in a prime growth corridor north of San Antonio, filed an application for a certificate to provide water utility service in western Comal County. In addition to its incorporated limits, Bul-verde sought to serve its extra-territorial jurisdiction and some outlying areas. To provide a firm supply of treated water, Bulverde contracted with Guadalupe-Bian-co River Authority (“GBRA”) to join the Western Canyon Lake Treated Water Supply Project. The operating agreement between GBRA and Bulverde obligates GBRA to design, construct, finance, operate and maintain the water distribution system to provide treated water on behalf of Bulverde. BexarMet, a water conservation district and municipal corporation created by the Texas Legislature in 1945, requested a hearing on Bulverde’s application, and on November 3, 2000, BexarMet filed an application to amend its certificate to provide water utility service to an area that overlapped with Bulverde’s requested service area.

After consolidating the two applications, a three-day hearing on the merits commenced on June 11, 2002, before an ALJ. Specifically, the ALJ found that:

• Bulverde, by itself, does not possess the financial, managerial, and technical capability to provide continuous and adequate service;
• The Bulverde/GBRA contracts reveal an arms-length relationship with separate rights and duties between Bul-verde and GBRA;
• A non-certificate holder in GBRA’s position would not be subject to the same enforcement authority from the Commission or the attorney general as a certificate holder would be;
• Bulverde failed to adequately demonstrate that it would not be feasible to satisfy some or all of its water needs from existing utilities;
• Bulverde did satisfy some of the statutory requirements for receiving a certificate if GBRA’s capabilities are also taken into consideration;
• In the long run, Bulverde’s access through GBRA to Canyon Lake water is superior to BexarMet’s projected water supplies;
• Based on GBRA’s long history of successfully providing drinking water to customers in several areas, Bulverde will be able to provide drinking water meeting applicable legal requirements;
• Bulverde will have sufficient funds to pay its $23,000 to $27,000 per year obligation for its right to 400 acre-feet of water from GBRA; and
• Granting the certificate would have a positive effect on Bulverde by helping to assure a long-term water supply to its residents, thereby promoting development, adding to its economic base, and attracting businesses.

Despite finding that Bulverde proposed the most reliable long-range water source and would have satisfied the statutory requirements for a certificate if its contractual relationship with GBRA were considered, the ALJ recommended that its application be denied. The ALJ further recommended that the BexarMet application be approved in part.

After considering the ALJ’s proposal for decision and the arguments presented at a hearing, the Commission rejected his recommendation. The Commission disagreed with the ALJ on the threshold question of whether Bulverde could acquire the requisite capabilities through contracts with GBRA, and found that the ALJ’s conclusion was not founded in law or based on the policy of the Commission. The Commission further determined that Bulverde had the capability to provide continuous and adequate service through its contracts with GBRA and had the more rehable water supply for the long term needs of the requested service area,. It unanimously approved Bulverde’s application, denied BexarMet’s, and amended the order to reflect those determinations.

BexarMet filed suit for judicial review of the Commission’s decision. The district court denied BexarMet’s request to remand the matter for additional evidence, dismissed BexarMet’s request for a temporary injunction as moot, and affirmed the Commission’s order. This appeal ensued.

ANALYSIS

The Controversy

BexarMet contends that water code section 13.241(a) requires the applicant itself to possess the necessary capabilities to obtain a water service certificate, and urges that Bulverde’s reliance on GBRA to satisfy the requirements of the statute is not allowed by the water code. See id. § 13.241(a). Alternatively, BexarMet argues that if section 13.241(a) were interpreted to allow applicants to acquire the requisite capabilities through contract, the agreement between Bulverde and GBRA does not grant Bulverde sufficient control to satisfy the “continuous and adequate” service requirement. See id. BexarMet further contends that the Commission abused its discretion by failing to observe its own regulations requiring an applicant to prove that consolidation with another existing utility in the area is not economically feasible.

The Commission responds that it correctly construed section 13.241(a) to allow contracts to satisfy the water code’s requirements for certification and that Bul-verde and GBRA created an adequate contractual framework to accomplish this goal. The Commission further responds that Bulverde’s application fulfilled state policy objectives regarding regionalization.

We are therefore asked whether a municipality, after assessing its internal capabilities and finding them inadequate, can acquire the capability to provide water service through contracts and interlocal agreements with a river authority.

Standard of Review

We review issues of statutory construction de novo. City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex.2003). Here, we are asked to construe section 13.241(a) of the water code, concerning the granting of certificates by the Commission. Construction of a statute by the administrative agency charged with its enforcement is entitled to great weight by reviewing courts. State v. Public Util. Comm’n, 883 S.W.2d 190, 196 (Tex.1994) (citing Dodd v. Meno, 870 S.W.2d 4, 7 (Tex.1994)).

We review the Commission’s determination that Bulverde’s certificate application satisfied the regulatory standards and was superior to BexarMet’s application under the substantial evidence standard. See Tex. Gov’t Code Ann. § 2001.174 (West 2000). When a court is applying the substantial evidence standard of review to an agency decision, the issue for the reviewing court is not whether the agency’s decision was correct, but whether the record demonstrates some reasonable basis for the agency’s action. Central Power & Light Co. v. Public Util. Comm’n, 36 S.W.3d 547, 557 (Tex.App.-Austin 2000, pet. denied). The test here is primarily one of rationality. If the Commission based its order on substantial relevant evidence and it has made no clear error of judgment, we are not authorized to overturn that order.

We also use the substantial evidence standard to determine whether the Commission satisfied its own regionalization rules. An agency’s interpretation of its own regulations is entitled to deference by the courts, even though that interpretation is not binding. Public Util. Comm’n v. Gulf States Utils. Co., 809 S.W.2d 201, 207 (Tex.1991); Lone Star Salt Water Disposal Co. v. Railroad Comm’n, 800 S.W.2d 924, 929 (Tex.App.-Austin 1990, no writ). We will reverse the Commission when it fails to follow the clear, unambiguous language of its own regulations, that is, when its actions are arbitrary and capricious. Power Res. Group, Inc. v. Public Util. Comm’n, 73 S.W.3d 354, 357 (Tex.App.-Austin 2002, pet. denied). Thus, absent evidence that the Commission is disregarding the plain language of its rules, we look to its expertise in calibrating various policy considerations. Id. The agency responsible for regulating an industry must be afforded sufficient flexibility to determine and carry out its clear legislative mandate. Id.

Interpreting Water Code Section 13.241(a)

Section 18.241(a) of the water code governs the granting of certificates. Tex. Water Code Ann. § 13.241(a). It states, “In determining whether to grant a certificate ... the commission shall ensure that the applicant possesses the financial, managerial and technical capability to provide continuous and adequate service.” Id. We look first to the plain and common meaning of the statute’s words. Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865 (Tex.1999) (citing Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 484 (Tex.1998)).

“In determining whether to grant a cer-tifícate ... the Commission shall ensure”

“[E]very word in a statute is presumed to have been used for a purpose, and a cardinal rule of statutory construction is that each sentence, clause and word is to be given effect if reasonable and possible.” Texas Workers’ Comp. Ins. Fund v. Del Indus,, Inc., 35 S.W.3d 591, 593 (Tex.2000) (citing Perkins v. State, 367 S.W.2d 140, 146 (Tex.1963)). Likewise, every word excluded from the statute must be presumed to have been excluded for a purpose. Morrison v. Chan, 699 S.W.2d 205, 208 (Tex.1985) (citing Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540 (Tex.1981)).

The opening words of this section are words of discretion. The phrases, “[i]n determining whether to grant a certificate,” and “the commission shall ensure,” give the Commission broad discretion in characterizing the requisite capabilities, and in determining which candidates for certificates meet the statutory requirements. The legislature could have limited the Commission’s discretion by using language that appears later in the same section, but it chose not to do so. Specifically, section 13.241(e) requires the Commission to develop “by rule ... a standardized method,” while section 13.241(d) states what “the applicant must demonstrate.” Tex. Water Code Ann. § 13.241 (d)-(e) (West 2000). Thus, the language makes clear that the legislature vested discretion in the Commission to evaluate the competing interests and their various capabilities.

“The applicant possesses”

The term “possess” is defined neither in the statute nor in the Commission’s regulations. While section 13.241 of the water code requires the Commission to ensure that the certificate applicant possesses certain capabilities, it does not require the applicant to own the facilities. This is consistent with the water code’s definition of “retail public utility” as a “municipality [or] political subdivision ... operating, maintaining, or controlling in this state facilities for providing potable water service-” Id. § 13.002(19) (West 2000). We agree with Commissioner White’s statement at the hearing that, “[o]wnership is not something legally required, which may be the only thing absent in Bulverde’s application on the first criteria.”

Companion Statutes

The determination that a municipality may demonstrate the required capabilities through contracts and interlocal agreements with a river authority is also consistent with the Interlocal Cooperation Act. See Tex. Gov’t Code Ann. § 791.026 (West 2004). Designed by the legislature “to increase the efficiency and effectiveness of local governments by authorizing them to contract, to the greatest possible extent, with ... agencies of the state,” the statute specifically contemplates contracts for water supply facilities. Id. §§ 791.001, .026 (West 2004). Section 791.026(a) states in pertinent part, “A municipality, district, or river authority of this state may contract with another municipality, district, or river authority of this state to obtain or provide part or all of: (1) water supply or waste-water treatment facilities.... ” Id. § 791.026(a).

To be sure, the Interlocal Cooperation Act does not supersede the specific requirements for certificate applicants. It makes clear, however, the legislature’s intent to allow municipalities to obtain the required capabilities to operate and construct water systems through contracts with river authorities and its belief that these contracts increase the efficiency and effectiveness of local government.

Continuous and Adequate Service

A certificate of convenience and necessity issued by an administrative agency grants operating authority to a utility company. See Black’s Law Dictionary 239-40 (8th ed.2004). Before granting a certificate, the statute requires the Commission to ensure that the proposed system possesses “the financial, managerial, and technical capability to provide continuous and adequate service” to its customers. Therefore, the requirement of “continuous and adequate” in section 13.241(a) is the standard to which Bulverde’s capabilities must rise before the Commission may grant it a certificate. The statutory “continuous and adequate” standard for the actual provision of water service arises elsewhere in the code, apart from the requirements for receiving a certificate. See Tex. Water Code Ann. § 13.250 (West 2000). This is consistent with the notion that the granting of a certificate is not an indication that the Commission approves of all aspects of a particular plan, nor does it imply that a carrier is prepared to begin service at once.

There is substantial evidence in the record to support the conclusion that Bul-verde possesses the capabilities that would allow it to provide continuous and adequate service to its customers. The Commission’s order recognizes that GBRA successfully operates five water treatment plants and has over thirty years’ experience providing water to more than 70,000 persons in Texas. At the time of the héaring before the ALJ, GBRA employed 27 water system operators. The ALJ and the Commission found that Bulverde had over $1,000,000 in liquid assets for the fiscal year ending December 31, 2000, and that it had sufficient funds budgeted for its annual water supply contract obligations to GBRA.

There is also substantial evidence that Bulverde is capable of providing safe drinking water and that it has access to an adequate supply of water. See Tex. Water Code Ann. § 13.241(a)-(b). The ALJ found a “demonstrated need for service in the area,” and concluded that “[i]n the long run, Bulverde’s access through GBRA to Canyon Lake water is superior to Bexar-Met’s projected water supplies.” The ALJ found — and the Commission agreed — that Bulverde, through its contracts with GBRA for a long-term supply of surface water, could provide the more reliable water supply for the long-term needs of the area. In addition, the ALJ found that “[gjranting the [certificate] would have a positive effect on Bulverde by helping to assure a long-term water supply to its residents, thereby promoting development, adding to its economic base, and attracting business.”

The ALJ also recognized the merits of BexarMet’s application, highlighting its experience and capability as a water supplier for over 50 years, with 70,000 accounts and 250 employees. As Chairman Robert J. Huston observed, the Commission had to make a choice between “two competing interests by ... two quality players.” But it cannot be said that the Commission failed to consider the relevant data, or that its decision was arbitrary, capricious, or represented an abuse of discretion. While we recognize that agency action is not without bounds, if the Commission has crystallized the competing interests and drawn rational conclusions, from the evidence presented, we can require no more. We find substantial evidence to support the Commission’s determinations that Bul-verde’s certificate application satisfied the regulatory standards and was superior to BexarMet’s application.

Enforcement

While it is undisputed that Bul-verde, as the certificate holder, is subject to the enforcement of the Commission, BexarMet argues that the Commission is powerless to bring an enforcement action against GBRA. The breadth of the Commission’s authority over public water suppliers and retail public utilities, however, also allows it to enforce the statutory standards against GBRA.

The Commission cites water code section 13.411 as its authority to enforce service obligations against GBRA. Id. § 13.411(a) (West 2000). Section 13.411(a) empowers the attorney general to bring an action on behalf of the Commission against any retail public utility that violates Chapter 13 of the water code or an act of the Commission adopted under it. Id. In any enforcement action against GBRA, section 13.411(a) would work in conjunction with one of the water code provisions that impose obligations on retail public utilities that provide water without a certificate. These sections include section 13.250(c), which prohibits any discontinuance, reduction, or impairment of water service without Commission approval and section 13.250(d), which specifically prohibits a retail public utility that has not been granted a certificate from discontinuing, reducing, or impairing retail water or sewer service without approval of the Commission. Id. § 13.250(c)-(d) (West 2000). Additionally, section 13.139 mandates every district that furnishes retail water to provide service, instrumentalities, and facilities that are safe, adequate, efficient, and reasonable. Id. § 13.139 (West 2000). The Commission may enforce these statutory obligations through administrative action or civil suits, including suits for injunctive relief. Id. § 13.411.

Substantial evidence also supports the Commission’s determination that GBRA is contractually obligated to operate the system in compliance with applicable legal standards. The operating agreement between Bulverde and GBRA is “specifically subject to all applicable sections of the Texas Water Code and Commission rules.” Additionally, GBRA must comply with all city ordinances concerning the construction of the system and has agreed to provide Bulverde with enough treated water per day to meet the service area’s projected needs for 20 years. We therefore disagree with BexarMet’s assertion that there are inadequate enforcement mechanisms available to the Commission in these circumstances to ensure a continuous and adequate water supply to Bulverde’s service area.

Regionalization

BexarMet contends that the Commission erred by not requiring Bulverde, as an applicant, to comply with the Commission’s own regionalization rules. It is the policy of the State of Texas to encourage the optimum regional development of systems built for the filtration, treatment, and transmission of water. Tex. Const, art. Ill, § 49-d(a). This policy, which prevents redundancy and ensures low rates for water service, is codified in the water code and the health and safety code. See Tex. Water Code Ann. § 13.241(d); Tex. Health & Safety Code Ann. § 341.0315(b) (West 2001). Section 13.241(d) of the water code states that before the Commission grants a certificate for an area which would require construction of a “physically separate” water system, an applicant must demonstrate that regionalization or consolidation with another retail public utility is not economically feasible. The Commission’s own rules implement the policy. 30 Tex. Admin. Code § 291.102(b) (2003).

Substantial evidence supports the Commission’s finding that Bulverde’s system is not “physically separate.” Bulverde’s system will be part of the Western Canyon Treated Water Project, a regional treated water supply system that will deliver 10,-000 acre-feet of water annually from Canyon Lake to Comal, Kendall and parts of Bexar County. GBRA’s Director of Project Development explained that the project draws raw water from Canyon Lake, sends it to a storage unit, treats it, and then distributes it to several systems in the area, including Bulverde. He testified that Bulverde’s system is not a stand-alone system because “Bulverde’s distribution system will be connected to the [Western Canyon Project].” Additionally, the Commission found that, “having water supplied from a regional provider such as the GBRA’s Western Canyon Project should result in economies of scale and thus lower costs to consumers.” Because Bulverde’s water system is a regional system as contemplated by the statutory scheme, Bul-verde’s application met the requirements of the water code.

In its final issue, BexarMet argues that its motion to remand was improperly denied by the district court. Because the district court did not abuse its discretion in failing to remand the case to allow BexarMet to present additional evidence, we disagree. Section 2001.175(c) of the Administrative Procedure Act allows a party in an appeal of an agency decision to apply to the court to present additional evidence to the agency. Tex. Gov’t Code Ann. § 2001.175(c) (West 2000). However, the party must demonstrate to the court’s satisfaction that the additional evidence is material and that there were good reasons for failing to present it in the proceeding before the agency. Id. In the instant case, the proffered evidence is not material to our review of the trial court’s denial of the motion to remand.

CONCLUSION

We agree with the district court that the Commission acted within its authority when it granted a certificate to Bulverde. We overrule the issues presented by Bex-arMet and affirm the judgment of the district court.

        . When the legislature has failed to define a specific word in a statute, courts apply its ordinary meaning. Tex. Gov’t Code Ann. § 312.002(a) (West 2005). Black’s Law Dictionary defines "possess” as "to have in one’s actual control." Black's Law Dictionary 1201 (8th ed.2004). It defines "control” as "the direct or indirect power to direct the management and policies of a person or entity, whether ... by contract, or otherwise.” Id. at 353. According to the ordinary meaning of the terms, then, Bulverde possesses the necessary capabilities to provide continuous and adequate service through its contracts with the GBRA.

      . Even without a showing of good cause, a water provider has 180 days from the date of the acceptance of a completed application to provide service to a qualified applicant before its action "may constitute refusal to serve.” See 30 Tex. Admin. Code § 291.85(b) (2003) (emphasis added).