                  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
