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
1
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
1
The 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
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
2
The 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
(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
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
(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
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
3
This 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
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.
7
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
4
When 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
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, §
9
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
10
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 Riegle-
Neal Act also lends credence to the interpretation adopted by the
Comptroller. The Report contained the following:
5
We 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
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
6
These 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.
7
Both 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
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
13
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
14
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
15
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.
* * * * * *
* * * * * *
* * * * * *
8
Our 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