1

United States Court of Appeals,

Fifth Circuit.

Nos. 96-50847, 96-50948.

Catherine A. GHIGLIERI, in her official capacity as Texas Banking

Commissioner, Plaintiff-Appellee,

v.

SUN WORLD NATIONAL ASSOCIATION, El Paso, Texas, et al.,

Defendants,

Sun World National Association, El Paso, Texas; Eugene A.

Ludwig, in his official capacity as United States Comptroller of

the Currency, Defendants-Appellants.

July 22, 1997.

Appeals from the United States District Court for the Western

District of Texas.

Before JOLLY, DUHÉ, and EMILIO M. GARZA, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

The Comptroller of the Currency (the "Comptroller") allowed

Sun World, National Association ("Sun World") to relocate its main

banking office across a state line from Texas to New Mexico.

Notwithstanding that Sun World's principal office would now be in

New Mexico, the Comptroller further allowed Sun World to maintain

its pre-existing branches in Texas, and to establish a new branch

in Texas. The Texas Banking Commissioner (the "Commissioner") had

other notions and persuaded the district court to enjoin both Sun

World and the Comptroller. Sun World and the Comptroller appeal,

seeking to have the Comptroller's decision to allow Sun World to

operate in both New Mexico and Texas reinstated. The appeal

presents a question of statutory interpretation and because the

Comptroller's interpretation of the statute he administers is
 

1The Commissioner initially instituted the district court

action against Sun World prior to the Comptroller's decisions on

the applications. After the Comptroller ruled on the applications,

the complaint was amended to include the Comptroller as a party. 

2

reasonable, we defer to it. We grant the relief requested, vacate

the judgment of the district court, and remand for entry of

judgment in favor of the Comptroller.

I

A

Sun World is a national banking association that had its main

office in El Paso, Texas. In addition to its main office, Sun

World operated two branch banks in El Paso.

Sun World decided to move its main office from El Paso, Texas,

to Santa Teresa, New Mexico, a distance of less than five miles.

To achieve this end, Sun World submitted two applications to the

Comptroller in 1996. The first application sought approval to move

the main office from Texas to New Mexico and to maintain the

pre-existing branches in Texas. The second application sought

authorization to establish a new branch at the location of the

former main office in Texas. The Commissioner objected to both

applications. The Comptroller subsequently approved both

applications, and Sun World operated in both states until enjoined

by the district court.

B

The Commissioner filed this action in the district court1

seeking to have the decision of the Comptroller set aside, to have

Sun World enjoined from conducting interstate banking operations
 

2The statutes that govern this appeal are 12 U.S.C. § 30 and

§ 36. These statutes provide, in relevant part:

§ 30. Change of name or location

(b) Location change

Any national banking association, upon written

notice to the Comptroller of the Currency, may

change the location of its main office to any

authorized branch location within the limits of the

city, town, or village in which it is situated, or,

with a vote of shareholders owning two-thirds of

the stock of such association for a relocation

outside such limits and upon receipt of a

certificate of approval from the Comptroller of the

Currency, to any other location within or outside

the limits of the city, town, or village in which

it is located, but not more than thirty miles

beyond such limits.

3

and to have the Comptroller enjoined from approving any further

applications of this type.

All parties filed motions for summary judgment. The district

court heard arguments on the motions and granted the Commissioner's

motion. The court rejected the Commissioner's argument that Sun

World could not relocate its main office across a state line. The

court, however, held that Sun World could not retain its Texas

branches following relocation to New Mexico and that, consequently,

neither could Sun World establish a new branch at the site of its

former main office in Texas. Sun World and the Comptroller appeal.

II

A

Resolution of this appeal requires us to examine the

provisions of and the interplay between two sections of a federal

statute.2 Section 30 effectively provides that Sun World can
(c) Coordination with section 36 of this title

In the case of a national bank which relocates the

main office of such bank from one State to another

State after May 31, 1997, the bank may retain and

operate such branches within the State from which

the bank relocated such office only to the extent

authorized in section 36(e)(2) of this title.

12 U.S.C. § 30.

§ 36. Branch banks

The conditions upon which a national banking association

may retain or establish and operate a branch or branches

are the following:

(a) Lawful and continuous operation

A national banking association may retain and

operate such branch or branches as it may have had

in lawful operation on February 25, 1927, and any

national banking association which continuously

maintained and operated not more than one branch

for a period of more than twenty-five years

immediately preceding February 25, 1927, may

continue to maintain and operate such branch.

(b) Converted State banks

(c) New branches

A national banking association may, with the

approval of the Comptroller of the Currency,

establish and operate new branches: (1) Within the

limits of the city, town or village in which said

association is situated, if such establishment and

operation are at the time expressly authorized to

State banks by the law of the State in question;

and (2) at any point within the State in which said

association is situated, if such establishment and

operation are at the time authorized to State banks

by the statute law of the State in question by the

language specifically granting such authority

affirmatively and not merely by implication or

recognition, and subject to the restrictions as to

location imposed by the law of the State on State

banks.

(e) Exclusive authority for additional branches

4
(1) In general

Effective June 1, 1997, a national bank may not

acquire, establish, or operate a branch in any

State other than the bank's home State ... or a

State in which the bank already has a branch unless

the acquisition, establishment or operation of such

branch in such State by such national bank is

authorized under this section or section 1823(f),

1823(k) or 1831(I) of this title.

(2) Retention of branches

In the case of a national bank which relocates the

main office of such bank from one State to another

State after May 31, 1997, the bank may retain and

operate branches within the State which was the

bank's home State ... before the relocation of such

office only to the extent the bank would be

authorized, under this section or any other

provision of law referred to in paragraph (1), to

acquire, establish, or commence to operate a branch

in such State if—

(A) the bank had no branches in such State; or

(B) the branch resulted from—

(I) an interstate merger transaction approved

pursuant to section 1831(u) of this title; or

(II) a transaction after May 31, 1997, pursuant to

which the bank received assistance from the Federal

Deposit Insurance Corporation under section 1823(c)

of this title.

12 U.S.C. § 36. 

5

change the location of its main office to any location within

thirty miles of El Paso upon the approval of the Comptroller and

two-thirds of its shareholders. (One paragraph of the section

relates specifically to the retention of branches after an

interstate move, but is irrelevant to our case because it is

applicable only to moves occurring after May 31, 1997.) Section 36

sets forth the requirements for the establishment of new branch
 

3This holding is not seriously challenged by the Commissioner

on appeal, and, to the extent that it is challenged, the appeal is

without merit in the light of the express language of section 30(b)

establishing a thirty-mile limitation on relocation without

reference to state lines. Notably, a limitation requiring that the

move be "within the same state" was deleted from the statute in

1959. 

6

banks. (Two paragraphs of § 36, which provide specific guidelines

for the retention of branch banks upon relocation of a main branch

across state lines, are also effective only with respect to banks

relocating after May 31, 1997, and therefore inapplicable to this

case.)

The Comptroller determined that under § 30 Sun World could

relocate its main branch to New Mexico. The Comptroller further

determined that because the move occurred before June 1, 1997, Sun

World could retain its existing branches in Texas. The Comptroller

then decided that § 36 authorized Sun World to create a new branch

at the site of the former main office. The district court

disagreed. It held that, although Sun World could move its main

office to New Mexico under § 30(b),3 it could not continue to

operate the branches remaining in Texas. This conclusion—that Sun

World could exist only in New Mexico—necessarily led to the holding

that a new branch could not be established in Texas because such

branching was not permitted under New Mexico banking law. We now

turn to the task of resolving the questions of statutory

interpretation posed by this appeal.

B

(1)

In this action, the Commissioner challenges the Comptroller's
7

decision pursuant to the Administrative Procedures Act; we

therefore review the decision of the Comptroller de novo to

determine whether it was "arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law." 5 U.S.C. §

706(2)(A); see Louisiana Envtl. Soc'y v. Dole, 707 F.2d 116, 119

(5th Cir.1983).

 The Supreme Court has set out the analysis to be applied in

reviewing an agency's interpretation of the statute it administers.

See Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,

467 U.S. 837, 841-43, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984).

Chevron 's analysis applies to the case before us because the

Comptroller is charged with the administration of the banking laws

at issue. Smiley v. Citibank (South Dakota), N.A., --- U.S. ----,

----, 116 S.Ct. 1730, 1732, 135 L.Ed.2d 25 (1996). The Supreme

Court instructed as follows:

First, always, is the question whether Congress has directly

spoken to the precise question at issue. If the intent of

Congress is clear, that is the end of the matter; for the

court, as well as the agency, must give effect to the

unambiguously expressed intent of Congress. If, however, the

court determines Congress has not directly addressed the

precise question at issue, the court does not simply impose

its own construction on the statute, as would be necessary in

the absence of an administrative interpretation. Rather, if

the statute is silent or ambiguous with respect to the

specific issue, the question for the court is whether the

agency's answer is based on a permissible construction of the

statute.

Chevron at 842-43, 104 S.Ct. at 2781-82. In reaching a

determination whether Congress has spoken directly on an issue,

courts are free to consider both the plain language and meaning of

the statute and any pertinent legislative history. Doyle v.
 

4When faced with a question not addressed specifically by

Congress, the Supreme Court has noted that

It is our practice to defer to the reasonable judgments

of agencies with regard to the meaning of ambiguous terms

in statutes that they are charged with administering. As

we observed only last Term, that practice extends to the

judgments of the Comptroller of the Currency with regard

to the meaning of the banking laws.

Smiley, at ----, 116 S.Ct. at 1733 (internal citations

omitted). 

8

Shalala, 62 F.3d 740, 745 (5th Cir.1995). The court should use

traditional tools of statutory construction, and if the court can

discern that Congress intended to address the precise question,

then that intention must be given effect. Chevron at 843 n. 9, 104

S.Ct. at 2781 n. 9. If, however, the statute is silent on the

precise issue then the agency's interpretation should be given

"controlling weight." See NationsBank of North Carolina, N.A. v.

Variable Annuity Life Ins. Co., 513 U.S. 251, 255-59, 115 S.Ct.

810, 813-14, 130 L.Ed.2d 740 (1995). In such a case, the issue

before the court "is not whether [the agency's interpretation]

represents the best interpretation of the statute, but whether it

represents a reasonable one."4 Smiley, at ----, 116 S.Ct. at 1735.

We now apply these principles of construction to the statutes

before us today.

(2)

(a)

First, we address whether, upon relocation of its main office

to New Mexico, Sun World was permitted to retain its pre-existing

branches in Texas. We initially look to the statute. The
9

authority for the relocation of Sun World's main office from El

Paso to Santa Teresa is § 30(b). The only relevant restrictions

imposed by that section are that the new site be within thirty

miles of the original site, that the bank obtain the approval of

the shareholders holding at least two-thirds of its stock and that

a certificate of approval issue from the Comptroller.

Thus, the Comptroller argues that because there is no

statutory language requiring divestiture of existing branches upon

relocation of the main office the statute is clear on this issue.

He argues that the absence of any such requirement indicates that

Congress did not intend to affect the retention of branch banks

upon relocation of the bank's main office. The Commissioner

counters that the operation of branches—in all situations—is

governed solely by § 36, and argues that there is no authority

found in § 36 that would allow Sun World to retain its pre-existing

branches upon relocation.

Neither party persuades us that Congress has clearly spoken to

the precise issue before us today. Indeed it is plain, we think,

that the statute is silent on this point. It is obvious that § 30

does not speak to the question of retention of branches after

relocation. Although § 36 addresses branch banking, it fails

completely to speak to the retention of branches upon relocation of

the bank's main office. Section 36(a) speaks only to retention of

branches owned in 1927, 36(b) speaks only to the retention of

branches upon conversion of a state bank, and 36(c) speaks only to

the establishment of new branches. As we have noted earlier, §
10

36(e) speaks to this precise question, but that section is

effective only with respect to relocations occurring after May 31,

1997, and is therefore not applicable to our case. In short, both

sections 30 and 36 are silent as far as our case today is

concerned.

(b)

Having concluded that Congressional intent is not expressed on

this specific issue, we turn now to determine whether the

interpretation advanced by the Comptroller is a permissible one.

See Chevron at 841-43, 104 S.Ct. at 2781; Smiley, at ----, 116

S.Ct. at 1735. For the reasons that follow, we conclude that the

Comptroller reasonably interpreted the statutes.

Initially, the Comptroller's position is supported because,

although there are specific enumerated conditions that must be

satisfied before relocation of a main office, Congress did not

provide that lawfully established pre-existing branches must be

forfeited. In effect, the Commissioner's position would result in

a deprivation of the lawfully acquired property interests of Sun

World without express statutory authority. We doubt Congress would

have intended such an extreme consequence in implied or oblique

terms.

Indeed, when Congress did address the matter, it did so in

express words. Sections 30(c) and 36(e)—added by the Riegle-Neal

Act in 1994—specifically condition the retention of existing

branches after out-of-state relocation of a main office upon the

satisfaction of certain conditions, which focus on state law. See
 

5We reject the Commissioner's argument that the addition of §§

30(c) and 36(e) was a grant of power to the Comptroller and

national banks never before enjoyed. This argument is nonsensical

because, if carried to its conclusion, no relocating national bank

previously had the authority to retain its pre-existing branches

even if it simply moved its main office across the street.

Further, under the Commissioner's argument, after June 1, 1997,

only a bank relocating across state lines can retain branches under

certain conditions while a bank relocating in the same state—which

the new amendments do not address—apparently must divest its

branches and apply to re-establish them under § 36(c). The obvious

weakness of this interpretation stands in sharp contrast to the

interpretation urged by the Comptroller: Until June 1, 1997, all

banks may relocate in accordance with § 30(b) without divestiture

of their lawfully established pre-existing branches; then, after

that date, interstate relocations will be limited by the conditions

of §§ 30(c) and 36(e). In any event, our inquiry is not which

interpretation is preferred, but whether the Comptroller's

interpretation is permissible. We think that it is indeed

permissible. 

11

12 U.S.C. §§ 30(c), 36(e). These provisions apply only to moves

occurring after May 31, 1997, and, thus, have no direct impact on

the case before us today. The addition of these sections, however,

indirectly supports the Comptroller's position. The Supreme Court

recently has noted that the imposition of a Congressional

limitation on a national bank's authority is logical only if the

banks already had the authority. See NationsBank of North

Carolina, N.A. v. Variable Annuity Life Ins. Co., 513 U.S. 251,

257-59, 115 S.Ct. 810, 814, 130 L.Ed.2d 740 (1995). In other

words, it makes no sense to impose conditions on the ability to

retain existing branches following relocation of a main office

unless that ability already existed in some fashion.5

The Conference Report accompanying the adoption of the RiegleNeal Act also lends credence to the interpretation adopted by the

Comptroller. The Report contained the following:
 

6These decisions are the Decision on the Applications of

American Security Bank, N.A., Washington, D.C., and Maryland

National Bank, Baltimore, Maryland (OCC Corporate Decision No. 94-

05, Feb. 4, 1994), reprinted in [1993-94 Transfer Binder] Fed.

Banking L. Rep. (CCH) ¶ 89, 695 and the Decision on the

Applications of First Fidelity Bank, N.A., Pennsylvania,

Philadelphia, Pennsylvania, and First Fidelity Bank, N.A., New

Jersey, Newark, New Jersey (OCC Corporate Decision No. 94-04, Jan.

10, 1994), reprinted in [1993-94 Transfer Binder] Fed. Banking L.

Rep. (CCH) ¶ 89, 644. Both decisions relied upon the provisions of

§ 30(b) to conclude that a bank could retain its pre-existing

branches after relocating its main office out-of-state, although

both also provided alternative bases for the retention of the

branches. 

 

7Both decisions referred to by the legislative history, see

supra note 6, involved questions of state law in the course of

determining whether a new branch could be opened in the former home

state. See 12 U.S.C. § 36(c) (relying on state law to determine

ability to open new branch). 

12

The Comptroller of the Currency (OCC) has used the 30 mile

relocation provision of the National Bank Act ... to approve

several transactions which have permitted national banks to

move their main offices to other States but to retain branches

in the States left by the Main offices.[6] Section 102(b)(2)

amends the provision so that after June 1, 1997, a national

bank relocating its main office to another state may maintain

its branches in the first state only if those branches could

have been established by a bank with its home State in the new

State....

The Conferees are aware of the OCC procedures in permitting

relocation across state lines. The Conferees concur with

those procedures, including the application of appropriate

State law and authority.[7] The Conferees expect the OCC to

continue to follow those procedures until the provisions of

Title I become fully applicable on June 1, 1997.

H.R. Conf. Rep. No. 651, 103d Cong., 2d Sess. 57 (Aug. 2, 1994)

(footnotes added). This statement suggests that Congress indeed

viewed the practice of allowing retention of branches upon

relocation under § 30(b) favorably and did not intend to end the

practice until the effective date of the Riegle-Neal amendments.

We have found no indication, nor has the Commissioner provided
13

us with any evidence, that the interpretation adopted by the

Comptroller is unreasonable. Given that Congress has addressed

branch retention in only two very limited circumstances—neither of

which apply to main office relocations—we conclude that it is

reasonable under § 30 and § 36 for the Comptroller to allow banks

relocating before June 1, 1997, to retain their lawfully

established pre-existing branches in their former home state.

The decision of the Comptroller on Sun World's first

application therefore is reinstated: Sun World will be permitted

to relocate its main office from El Paso, Texas, to Santa Teresa,

New Mexico, and to continue to operate its two pre-existing

branches in El Paso, Texas. We turn now to the second application

and determine whether Sun World should be allowed to open a new

branch at the site of its former main office in El Paso.

(3)

There is no dispute that this second question is governed by

§ 36(c); therefore, Sun World may open a new branch at the site of

its former main office in accordance with the following:

A national banking association may ... establish and operate

new branches: (1) Within the limits of the city ... in which

said association is situated, if such establishment and

operation are at the time expressly authorized to State banks

by the law of the State in question ....

12 U.S.C. § 36(c) (emphasis added). First, Sun World first must be

"situated" in El Paso, Texas—the city in which it wishes to

establish a new branch. Second, the banking laws of Texas—the law

of the state in question—must be broad enough to allow a State bank

located in El Paso to establish a new branch in the city. The
14

Comptroller held that for purposes of this section, Sun World was

situated in both El Paso, Texas, and Santa Teresa, New Mexico, and

therefore could establish a new branch in El Paso because such a

branch would be authorized by the state law of Texas.

The Comptroller relied upon the interpretation of § 36

established by Seattle Trust and Savings Bank v. Bank of

California, 492 F.2d 48 (9th Cir.1974), cert. denied, 419 U.S. 844,

95 S.Ct. 77, 42 L.Ed.2d 72 (1974), to resolve this question.

Seattle Trust involved a bank with its corporate headquarters in

California and legally established branches in Seattle, Washington.

The bank sought to establish a new branch in Seattle, and the

Comptroller approved the application. Id. at 49. On appeal, the

Ninth Circuit affirmed the decision of the Comptroller, holding

that for purposes of § 36(c) the bank was situated in both

California—the site of its corporate headquarters—and

Washington—the site of its legally established branches. Id. at

51-52. The court then held that, because the bank was situated in

Washington, that state's branching law controlled the question

whether a new branch could be established in Seattle. Id. at 52.

We agree with the Comptroller that Seattle Trust is

applicable to the facts before us today. As a result of our

holding that Sun World is authorized to relocate its main branch to

Santa Teresa, New Mexico, and to retain its branches in El Paso,

Texas, Sun World occupies a position identical to the one occupied

by the bank in Seattle Trust. In point of fact, Sun World actually

is situated in both New Mexico and Texas. We therefore conclude
15

that the Comptroller's decision that Sun World was situated in El

Paso for the purposes of § 36(c) is a reasonable interpretation of

the statutory terms. Texas branching law therefore applies to

determine whether Sun World may open a new branch in the city.

Under that law, a State bank may "establish and maintain branches

at any location" without geographic limit. See Tex.Rev.Civ. Stat.

Ann. art. 342-3.201(a) & 342-3.203 (West Supp.1996). Sun World is

entitled under § 36(c) to that same grant of branching authority

and, thus, can establish a new branch at the site of its former

main office. In short, we reinstate the Comptroller's decision on

Sun World's second application, which sought authorization to

establish a new El Paso branch.

III

In conclusion, we find that the statutes at issue do not

address the question of branch retention after relocation under §

30(b) to another state of a main office. Under Chevron, we give

deference to the Comptroller's interpretation of the statutes if

that interpretation is permissible. Finding the interpretation

permissible, we accordingly defer and reinstate the decision of the

Comptroller allowing the retention of the branches. With respect

to Sun World's second application, we are persuaded by the

rationale of Seattle Trust that the Comptroller's interpretation

and application of the statute is reasonable and hold that after

the relocation, Sun World is situated in both El Paso, Texas, and

Santa Teresa, New Mexico, because it has retained its Texas

branches. Thus, the creation of a new branch in El Paso, Texas is
 

8Our holding today renders unnecessary any consideration of

Sun World's appeal from the district court's award of attorneys'

fees to the Commissioner. See Ghiglieri v. Sun World, N.A., appeal

docketed, No. 96-50948 (5th Cir. Dec. 9, 1996), consolidated for

decision with No. 96-50847 (5th Cir. May 12, 1997). 

16

governed by Texas law. Texas law allows State banks to branch

at-will; therefore, the new branch is legally authorized under the

portion of § 36(c) incorporating state law restrictions.

The decision of the district court is therefore VACATED and

the case will be REMANDED to the district court for entry of

judgment in favor of the Comptroller.8

VACATED and REMANDED for entry of judgment.

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