Custodia Bank v. Federal Reserve Board of Governors

• Court: Court of Appeals for the Tenth Circuit
• Decided: October 31, 2025
• Docket: 24-8024
• Status: Published

Opinion

Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 1 FILED United States Court of Appeals PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS October 31, 2025

Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _________________________________

CUSTODIA BANK, INC.,

Plaintiff - Appellant,

v. No. 24-8024

FEDERAL RESERVE BOARD OF GOVERNORS; FEDERAL RESERVE BANK OF KANSAS CITY,

Defendants - Appellees.

------------------------------

AMERICANS FOR PROSPERITY FOUNDATION-WYOMING; STATE OF WYOMING; THE DIGITAL CHAMBER; GLOBAL BLOCKCHAIN BUSINESS COUNCIL-USA; FORMER SENATOR PATRICK J. TOOMEY; BLOCKCHAIN ASSOCIATION; SENATOR CYNTHIA M. LUMMIS; SENATOR STEVE DAINES; REPRESENTATIVE WARREN E. DAVIDSON, Members of the U.S. Senate Banking Committee and U.S. House Financial Services Committee; WYOMING SECRETARY OF STATE; PROFESSOR DAVID ZARING; INDEPENDENT COMMUNITY BANKERS OF AMERICA; CONSUMER BANKERS ASSOCIATION; AMERICAN BANKERS ASSOCIATION; FEDERAL RESERVE BANKS; THE BANK POLICY INSTITUTE; THE CLEARING HOUSE Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 2

ASSOCIATION, LLC; WYOMING BANKERS ASSOCIATION,

Amici Curiae. _________________________________

Appeal from the United States District Court for the District of Wyoming (D.C. No. 1:22-CV-00125-SWS) _________________________________

Ian Heath Gershengorn, Jenner & Block LLP, Washington, D.C. (Michelle S. Kallen, Laurel L. Rimon, Emanuel Powell III and Maria LaBella, Jenner & Block, LLP, Washington, D.C.; Scott E. Ortiz, Williams, Porter, Day & Neville, P.C., Casper, Wyoming; and Ryan Scarborough and Jamie Wolfe, Williams & Connolly LLP, Washington, D.C., with him on the briefs) for Plaintiff-Appellant.

Jeffrey S. Bucholtz, King & Spalding LLP, Washington, D.C. (Christine M. Carletta and E. Caroline Freeman, King & Spalding LLP Washington, D.C.; Andrew Z. Michaelson, King & Spalding LLP, New York, New York; Billie LM Addleman and Erin E. Berry, Hirst Applegate, LLP, Cheyenne, Wyoming; and Jared Lax, King & Spalding LLP, Denver, Colorado, with him on the brief) for Defendant-Appellee Federal Reserve Bank of Kansas City.

Joshua P. Chadwick, Senior Special Counsel (Mark Van Der Weide, General Counsel; Richard M. Ashton, Deputy General Counsel; Yvonne F. Mizusawa, Senior Counsel; Yonatan Gelblum, Senior Counsel; and Katherine Pomeroy, Senior Counsel, Board of Governors of the Federal Reserve System, Washington, D.C., with him on the brief) for Defendant-Appellee Board of Governors of the Federal Reserve System.

Michael Pepson, Americans for Prosperity Foundation, Arlington, Virginia, filed an Amicus Curiae Brief on Behalf of Americans for Prosperity Foundation-Wyoming in Support of Plaintiff-Appellant.

Bridget Hill, Attorney General; Devin Kenney, Senior Assistant Attorney General; and Karl Anderson, Supervising Attorney General, Wyoming Attorney General’s Office, Cheyenne, Wyoming, filed an Amicus Brief on Behalf of the State of Wyoming in Support of Plaintiff-Appellant.

Paul D. Clement, Counsel of Record; Erin E. Murphy; C. Harker Rhodes IV; and Kevin Wynosky (supervised by principals of the firm who are members of the Virginia bar), Alexandria, Virginia, filed an Amici Curiae Brief on Behalf of the Digital Chamber and Global Blockchain Business Council-USA in Support of Plaintiff-Appellant.

2 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 3

Brent R. Baker, Counsel of Record, Buchalter, Salt Lake City, Utah, and Nicolas Morgan, Investor Choice Advocates Network, Los Angeles, California, filed an Amicus Curiae Brief on Behalf of Former Senator Patrick J. Toomey in Support of neither party.

Donald B. Verrilli, Jr. and Kathleen Foley, Munger, Tolles & Olson LLP, Washington, D.C., filed an Amicus Curiae Brief on Behalf of Blockchain Association in Support of Plaintiff-Appellant.

Chris Land, General Counsel, Office of Senator Cynthia M. Lummis, United States Senate, Washington, D.C., filed an Amici Curiae Brief on Behalf of the Members of the United States Senate Banking Committee and United States House Financial Services Committee in Support of Plaintiff-Appellant.

Colin R. Crossman, Cheyenne, Wyoming, filed an Amicus Curiae Brief on Behalf of the Wyoming Secretary of State in Support of Plaintiff-Appellant.

David Oscar Markus, Markus/Moss PLLC, Miami, Florida, filed an Amicus Curiae Brief on Behalf of Professor David Zaring in Support of Defendants-Appellees.

Jonathan K. Youngwood, Simpson Thacher & Bartlett LLP, New York, New York, filed an Amici Curiae Brief on Behalf of Federal Reserve Banks in Support of Defendants- Appellees.

Mark W. Mosier, Randy Benjenk, and Jeffrey Luther, Covington & Burling LLP, Washington, D.C., filed an Amici Curiae Brief on Behalf of the Bank Policy Institute and the Clearing House Association L.L.C. in Support of Defendants-Appellees.

Jonathan S. Franklin, Norton Rose Fulbright US LLP, Washington, D.C., filed an Amici Curiae Brief on Behalf of Independent Community Bankers of America, Consumer Bankers Association, and American Bankers Association in Support of Defendants- Appellees.

Greyson E. Tuck, Gerrish Smith Tuck, PC, Memphis, Tennessee, filed an Amicus Curiae Brief on Behalf of Wyoming Bankers Association in Support of Defendants-Appellees. _________________________________

Before TYMKOVICH, EBEL, and ROSSMAN, Circuit Judges. _________________________________

EBEL, Circuit Judge. _________________________________

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For over one hundred years, the Federal Reserve has served as our nation’s

central bank, providing important financial services to banks while maintaining the

safety and stability of our financial system. Plaintiff Custodia Bank is a Wyoming-

chartered bank that is not a member of the Federal Reserve. Custodia requested an

account (known as a “master account”) with the Federal Reserve Bank of Kansas

City (“FRBKC”), one of the twelve regional Reserve Banks that, along with the

Board of Governors (“Board”) and the Federal Open Market Committee, make up the

Federal Reserve System (the “Fed”). Despite agreeing that Custodia was statutorily

eligible for an account, FRBKC denied the request because it determined Custodia’s

crypto-focused business model introduced undue risk into the Fed’s payment systems

and services. In response, Custodia filed this suit against both FRBKC and the Board

arguing the Fed does not have any discretion over who gets access to Fed accounts

and services and must grant access to all eligible institutions no matter the risk they

pose to the federal financial system. We conclude the plain language of the relevant

statutes grants Federal Reserve Banks discretion to reject master account access

requests from eligible entities and, therefore, we reject Custodia’s attempt to impair

the Fed’s ability to safeguard our nation’s financial system through the exercise of

discretion to reject master account access. Exercising jurisdiction under 28 U.S.C.

§ 1291, we AFFIRM the district court’s judgment in favor of Defendants on all

claims.

This case turns on the interpretation of three distinct statutory provisions.

First, § 342 of the Federal Reserve Act (“FRA”), originally enacted in 1913, provides

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that “[a]ny Federal reserve bank may receive from any of its member banks, or other

depository institutions, . . . deposits.” 12 U.S.C. § 342. Second, § 248a of the

Depository Institutions Deregulation and Monetary Control Act (“MCA”), enacted in

1980, directs the Board to (1) establish a fee schedule to charge for the services the

Fed provides to banks, which the Fed had previously provided for free; and (2)

extend the availability of those services to banks that are not members of the Fed,

where those services had previously been provided only to member banks. Included

in a list of “pricing principles” that the Board’s fee schedule must adhere to is the

following clause: “All Federal Reserve bank services covered by the fee schedule

shall be available to nonmember depository institutions and such services shall be

priced at the same fee schedule applicable to member banks.” Id. § 248a(c)(2).

Third, in 2022 Congress enacted the “Toomey Amendment,” which requires the

Board to create a database listing all entities that have requested a master account and

whether each request was “approved, rejected, pending, or withdrawn.” Id.

§ 248c(b)(1)(B). The Board must also specify whether each entity is one of three

types of institution—all of which are statutorily eligible for an account. Id.

§ 248c(b)(1)(C).

Custodia argues that § 248a of the MCA requires the Fed to provide a master

account to every eligible nonmember depository institution that requests access

because § 248a(c)(2) provides that Fed services “shall be available to nonmember

depository institutions,” and a master account is necessary to use those services. We

disagree and conclude, like the district court and the two other courts to have

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considered the issue, that “§ 248a does not do the lifting Custodia demands of it.”

Custodia Bank, Inc. v. Fed. Rsrv. Bd. of Governors, 728 F. Supp. 3d 1227, 1241 (D.

Wyo. 2024).

Rather, it is § 342 of the FRA that addresses the Fed’s authority to open master

accounts by granting the Reserve Banks authority to receive deposits, and it makes

this authority discretionary. The Toomey Amendment confirms this understanding.

By requiring the Board to report on master account application rejections while

simultaneously addressing only those entities that are eligible for master accounts,

the Toomey Amendment clearly contemplates that Reserve Banks may reject

applications for master accounts from eligible entities.

The later-enacted § 248a in the MCA does not override the discretion

Congress granted in § 342 of the FRA to the regional Reserve Banks. Indeed, § 248a

does not address master account access at all. Each of the items listed in subsection

§248a(c)—including the “shall be available” clause of (c)(2)—are pricing principles

that the Board must comply with when it publishes the schedule of fees. But the

Board does not make master account access decisions—individual Reserve Banks do.

Thus, this provision prescribing how the Board must go about pricing services says

nothing about account access provided by Reserve Banks. Congress “does not . . .

hide elephants in mouseholes.” Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468

(2001). To conclude that Congress, in the MCA, significantly altered Reserve

Banks’ longstanding discretion over account access by mandating master account

access for all eligible institutions in a clause tucked away in a list of pricing

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principles directed at the Board and not at Reserve Banks would be to find an

elephant in a mousehole. Finally, § 248a(c)(2) does not provide that services shall be

available to “all” nonmember depository institutions, just that they shall be available

to nonmember depository institutions in general, as a class. Congress was deliberate

with its use of “all” in the FRA and MCA, and its choice not to include that modifier

before “nonmember depository institutions” in subsection (c)(2) signals it did not

intend to mandate automatic access for all qualifying nonmember depository

institutions.

Accordingly, Custodia is not automatically entitled to a master account. We

affirm the judgment of the district court in favor of Defendants on all claims.

I. BACKGROUND 1

A. The Federal Reserve System

The Federal Reserve consists of the Federal Reserve Board of Governors (“the

“Board”), the Federal Open Market Committee, and twelve regional Federal Reserve

Banks (“the “Reserve Banks”). Fed. Rsrv. Sys., The Fed Explained: What the

Central Bank Does 2 (11th ed. 2021) [hereinafter The Fed Explained]. The Board

exercises “broad oversight responsibility for the operations and activities of the

Reserve Banks.” Id. at 8; see 12 U.S.C. § 248(j). Much like a private corporation,

1 The parties have stipulated that “all evidence and discovery between Custodia, FRBKC, and the Board’s administrative record may be relied upon by all parties including any court hearing in this case throughout the remainder of this litigation,” and this stipulation was approved by the District Court. Custodia Bank, 728 F. Supp. 3d at 1234. 7 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 8

each Reserve Bank is run by its own nine-member board of directors, which appoints

a president to serve as the chief executive of the Reserve Bank and run day-to-day

operations. The Fed Explained at 9.

“[E]ach Reserve Bank acts as a ‘bank for banks.’ In that capacity, it offers

(and charges for) services to these depository institutions similar to those that

ordinary banks provide their individual and business customers: the equivalent of

checking accounts; loans; coin and currency; safekeeping services; and payment

services,” including check clearing and settlement, wire transfers, and automated

clearinghouse services. Id. at 11; see Julie Andersen Hill, Opening a Federal Reserve

Account, 40 Yale J. on Reg. 453, 462 (2023). In order to provide these services,

Reserve Banks are authorized to provide accounts for, and receive deposits from,

depository institutions. 2 See 12 U.S.C. § 342.

A depository institution can be either federally chartered or state-chartered. A

federally chartered institution is required to be a member of the Federal Reserve,

while a state-chartered institution can choose whether it wants to apply to be a

member of the Federal Reserve or not. A state-chartered Federal Reserve member

institution is subject to the supervision and regulation of the Federal Reserve in

addition to the supervision of the relevant banking regulator in the state that issued

its charter.

2 A bank is one type of depository institution. See 12 U.S.C. § 461(b)(1)(A). The distinction between a bank and other types of depository institutions, such as credit unions or savings associations, is not relevant in this case, so we use the terms “bank” and “depository institution” interchangeably. 8 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 9

Until the enactment of the MCA in 1980, most services provided by the

regional Reserve Banks were available only to Fed member banks. Subcomm. on

Domestic Monetary Pol’y of the House Comm. on Banking, Fin. & Urb. Affs., 98th

Cong., Report on the Role and Activities of the Federal Reserve System in the

Nation’s Check Clearing and Payments System, at 3 (Comm. Print 1984) [hereinafter

Domestic Monetary Policy Report]. This meant that a member bank could use the

Fed’s services to, for instance, transfer funds between it and any other member bank.

By contrast, a nonmember bank would have to use a private payment services

provider or partner with a member bank that had Fed access to execute such a

transaction. Id.

Prior to the enactment of the MCA, the Fed also offered its services free of

charge. It funded the provision of services by charging interest on the statutorily

required reserves that member banks had to hold in Fed accounts. Id.; see 38 Stat.

251, Section 19(b). In 1980, Congress passed the MCA, which contained several

significant changes to the Federal Reserve System. Pub. L. No. 96-221, 94 Stat. 132

(1980). Three changes are relevant to this case. First, the MCA extended reserve

requirements to nonmember institutions. See 12 U.S.C. § 461(b)(2)(D). Second, it

allowed nonmember institutions to use all of the Fed’s services. Id. § 248a(c)(2); id.

§ 342. Third, it directed the Fed to charge for these services and to do so without

discriminating between members and nonmembers. 12 U.S.C. § 248a.

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B. Master accounts

A master account is a depository institution’s bank account with the Fed, held

at one of the twelve regional Reserve Banks. 3 To use the Fed’s services, a depository

institution needs a master account. See Fourth Corner Credit Union v. Fed. Rsrv.

Bank of Kansas City, 861 F.3d 1052, 1053 (10th Cir. 2017) (Op. of Moritz, J.). If a

depository institution does not have a master account, then it can access the Fed’s

payment systems by partnering with another institution in a “correspondent

relationship,” in which the correspondent institution acts as an intermediary to

facilitate Fed service transactions for the respondent institution that lacks master

account access. See Hill, supra, at 460. Alternatively, institutions without master

accounts can use payment services offered by private competitors to the Fed, such as

3 As the Board explains, a master account is

a record of financial transactions that reflects financial rights and obligations of an account holder and the Reserve Bank with respect to each other, where opening and closing balances are determined. All credits and debits resulting from the use of Federal Reserve services [are] booked to this one account at one Reserve Bank for each separately chartered institution.

Interstate Branching: New Account Structure, Fed. Rsrv. Bd., https://www.federalreserve.gov/generalinfo/isb/qanda.htm (last updated Sept. 27, 2002). Historically, a depository institution could have multiple accounts with the Fed. Hill, supra, at 462. For instance, an institution might have a “clearing account” for temporarily holding transactions as well as a “reserve account” for holding required reserves at the Fed. Id. Additionally, a depository institution with broad geographic scope might have had accounts with multiple Reserve Banks around the country. In 1998, the Fed changed its account structure to consolidate these multiple accounts into a single “master” account for each institution. See id. Each institution now has a single master account through which it accesses all Fed services. 10 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 11

the Clearing House Interbank Payments System, which competes with the Federal

Reserve’s Fedwire service.

The statutory requirements to be eligible for a master account are simple: a

bank must be chartered under either state or federal law and be “engaged in the

business of receiving deposits, other than trust funds.” 4 12 U.S.C. § 1813(a). It is

undisputed that Custodia is statutorily eligible for a master account.

C. Custodia Bank

Custodia was founded in 2020 to provide banking services for digital asset

companies and to serve as a bridge between digital assets and the U.S. dollar

payment system for institutional customers. 5 It is chartered in Wyoming under the

state’s Special Purpose Depository Institution (SPDI; pronounced “speedy”) charter,

which was established by state statute in 2019. H.B. 74, 65th Leg., Gen. Sess. (Wyo.

2019); Wyo. Stat. Ann § 13-12-101, et seq. Like a traditional bank, a SPDI can

4 No statutory provision expressly refers to “master accounts” (or any other type of Federal Reserve account). Rather, master accounts are a creation of the Fed pursuant to its authority to take deposits and provide services. The parties agree that an entity is eligible for a master account if it is a “nonmember depository institution.” The definition of “depository institution” includes “any bank which is eligible to make application to become an insured bank under section 5 of [the Federal Deposit Insurance Act.]” 12 U.S.C. § 461(b)(1)(A)(i). In turn, a bank is eligible to make an application to become an insured bank under that section if it is “engaged in the business of receiving deposits, other than trust funds,” and is “incorporated under the laws of any State.” Id. § 1813(a). 5 A digital asset is a “digital representation of value” recorded on a “cryptographically secured distributed ledger,” such as a blockchain. 26 U.S.C. § 6045(g)(3)(D) (providing the Internal Revenue Service definition of “digital asset”); see also Wyo. Stat. Ann. § 34-29-101 (providing the Wyoming definition of “digital asset”). Digital assets include things like cryptocurrencies (including stablecoins) and non-fungible tokens (NFTs). 11 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 12

receive deposits of U.S. dollars and provide payment services to its customers. Wyo.

Stat. Ann. § 13-12-103(b)(iii)–(v). Unlike a traditional bank, a SPDI cannot make

loans and must have all customer deposits of U.S. dollars 100% backed by liquid

assets such as U.S. dollars or similar high-quality liquid assets. Id. §§ 13-12-103(c),

13-12-105.

In addition to handling U.S. dollars, a SPDI can provide digital asset custody

services where it holds digital assets in custody or trust for customers and undertakes

transactions with those assets on behalf of the customer. Id. § 13-12-103(b)(vii)(A).

SPDIs under a Wyoming charter are subject to regulation and supervision by the

Wyoming Division of Banking, id. § 13-12-119, and are required under Wyoming

law to “comply with all applicable federal laws, including those relating to anti-

money laundering, customer identification and beneficial ownership,” id. § 13-12-

107.

As permitted by its SPDI charter, Custodia plans to hold U.S. dollar deposits

in its Fed master account and, separately, to provide custody for digital assets. Since

it is not permitted to make loans, Custodia intends to make money by charging its

customers transaction fees.

D. Custodia’s master account application

After receiving its SPDI charter from the state of Wyoming, Custodia applied

for a master account with defendant FRBKC in October 2020. In January 2021,

FRBKC confirmed that Custodia was legally eligible for a master account and told

Custodia there were “no showstoppers” with its application. To alleviate potential

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concerns with Custodia being supervised only by Wyoming regulators, Custodia also

applied to become a member of the Federal Reserve system, and thus subject to

Federal supervision, in August 2021.

While Custodia’s applications were pending, the Board published a final rule

establishing guidelines for Reserve Banks to “utilize in evaluating requests for access

to Reserve Bank master accounts and services” (“Guidelines”). Guidelines for

Evaluating Account and Services Requests. 87 Fed. Reg. 51,099, 51,099 (Aug. 19,

2022). The rule was intended to standardize and clarify the master account

application review process in light of increasingly common requests for master

accounts from banks with “novel charter types” like Custodia. See id. The

Guidelines establish a framework classifying applicants into three tiers to determine

the level of scrutiny Reserve Banks are to apply in evaluating an application. Id. at

51,109–10. Institutions that are federally insured fall into Tier 1 and receive the least

amount of scrutiny. “[I]nstitutions that are not federally insured but are subject (by

statute) to prudential supervision by a federal banking agency” fall into Tier 2 and

receive an intermediate level of scrutiny. Id. at 51,109. Institutions, like Custodia,

that are not federally insured and are not subject to supervision by a federal banking

agency fall into Tier 3 and “generally receive the strictest level of review.” Id. at

51,110.

In addition to the Guidelines, the Board also sent out an “S-Letter” (an internal

guidance document) elaborating on procedures for Reserve Banks to follow in

implementing the Guidelines (“S-Letter 2667”). Among other things, S-Letter 2667

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provides that “[a]ny Reserve Bank that is considering denying any access request, . . .

should consult [the Board] prior to communicating any decision to the requesting

institution.” (J.A. 1814.)

In January 2023, applying the new Guidelines, FRBKC denied Custodia’s

application for a master account. On the same day, the Board denied Custodia’s

application for membership in the Federal Reserve. 6 In denying Custodia’s master

account application, FRBKC explained that Custodia’s novel and “unprecedented”

business model that was “narrowly focused on crypto-asset activities” presented

heightened risks that were “highly likely [to be] inconsistent with safe and sound

banking practices.” (J.A. 1949–50.) Without Custodia having supervision by a

federal banking agency or stronger processes to address these risks, FRBKC

determined that it would be too risky to grant Custodia a master account.

Pursuant to S-Letter 2667, FRBKC consulted with the Board and provided its

analysis of Custodia’s master account application prior to issuing the denial. In

response, the Board sent an email to FRBKC President Esther George explaining that

it had “reviewed the Reserve Bank’s record documenting application of the

Guidelines in evaluating [Custodia’s] access request” and had “no concerns with the

Reserve Bank moving forward with its plan to communicate to Custodia Bank its

decision to deny the request.” (J.A. 1102.)

6 The Board’s decision to deny Custodia’s application for membership in the Federal Reserve is not at issue in this case. 14 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 15

II. PROCEDURE

A. Initial complaint

In June 2022, nineteen months after submitting its master account application,

Custodia filed the present suit in the U.S. District Court for the District of Wyoming.

Though its application was submitted to FRBKC, Custodia sued not only FRBKC but

also the Board, alleging that the Board was involved in the decision to deny

Custodia’s master account application. In its initial complaint, Custodia brought

eight claims based on two basic arguments: (1) Defendants violated the law by failing

to act on Custodia’s application, and Custodia was entitled to a decision on the

application within a reasonable time under either the Administrative Procedure Act

(“APA”) or the Mandamus Act; and (2) Defendants are statutorily required to grant

Custodia’s application—that is, FRBKC has no authority or discretion to deny an

application for a master account from an entity that is statutorily eligible for such an

account.

FRBKC and the Board each filed motions to dismiss the complaint pursuant to

Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), which the district court

granted in part and denied in part. Relevant here, the court concluded that Custodia

had stated a plausible claim that it was statutorily entitled to a master account, and

that a final answer to the statutory entitlement question should await further factual

development during discovery. However, the district court granted the motions to

dismiss three claims based on the United States Constitution. First, the court

concluded Custodia had not plausibly alleged a violation of the Nondelegation

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Doctrine 7 because making master account access decisions is not a legislative power.

Second, Custodia had alleged that, if FRBKC has discretion to deny master account

access to eligible entities, then such decision-making authority violates the Due

Process Clause by vesting FRBKC’s board of directors, which is largely chosen by

and partially composed of self-interested executives from competitor banks, with

regulatory authority over Custodia. The district court concluded there was no due

process violation because master account application decisions are made by a

Reserve Bank’s president, not the board, and a Reserve Bank’s president is chosen

only by the six directors who are prohibited by statute from being representatives of

competitor banks. Third, the court concluded there was no violation of the

Appointments Clause because (1) it is a Reserve Bank’s president who makes master

account application decisions and (2) a Reserve Bank president is appointed with the

approval of the Board, which satisfies the Appointments Clause. See Free Enter.

Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 512 n.13 (2010) (“We have

previously found that the department head’s approval satisfies the Appointments

Clause . . . .”).

7 The nondelegation doctrine bars Congress from delegating legislative power to another branch of government without providing “an intelligible principle to which the person or body authorized to [act] is directed to conform.” See Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 472 (2001) (quoting J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928)) (alteration in original). 16 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 17

B. Custodia’s application is denied and Custodia responds by filing an amended complaint

In January 2023, FRBKC denied Custodia’s application for a master account.

In response to the denial of its application, Custodia amended its complaint to allege

the three claims at issue in this appeal, each of which relies on Custodia’s asserted

entitlement to a master account under § 248a(c)(2). First, Custodia alleges the Board

violated the APA by denying Custodia’s application when § 248a(c)(2) entitles

Custodia to a master account. 8 Second, Custodia claims it is entitled to a writ of

mandamus against both Defendants compelling them to approve its application.

Third, Custodia claims it is entitled to a declaratory judgment that Defendants have a

statutory obligation to provide it with a master account. In essence, Custodia is

claiming that once it submitted a qualifying application for a master account, it had

an absolute right for that application to be approved by FRBKC.

Defendants once again each filed motions to dismiss. The district court once

again concluded Custodia had stated a plausible claim that it was statutorily entitled

to a master account and, therefore, the court denied the motions to dismiss the

amended complaint. 9

8 In its initial complaint, Custodia had brought a claim under the APA against both the Board and FRBKC. In its amended complaint, Custodia did not reassert an APA claim against FRBKC. 9 The one exception to this was Custodia’s request for a writ of mandamus against the Board. Since the Mandamus Act grants relief only when there is no other adequate remedy, the court granted the motion to dismiss the mandamus claim against the Board because it concluded Custodia had another remedy against the Board under the APA. 17 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 18

C. The district court enters judgment in favor of Defendants

The case proceeded to discovery, after which Custodia filed a motion for an

order granting its petition for review on its APA claim pursuant to Federal Rule of

Appellate Procedure 15 and for judgment as a matter of law on its mandamus claim

pursuant to Federal Rule of Civil Procedure 56(a). 10 The Board and FRBKC each

opposed Custodia’s motion, and FRBKC additionally filed its own cross-motion for

summary judgment on the mandamus claim against it. Custodia Bank, 728 F. Supp.

3d at 1231–32.

In the ruling at issue in this appeal, the district court denied Custodia’s motion

and granted FRBKC’s motion for summary judgment, thereby disposing of all claims

against both Defendants. Id. First, the district court explained that the merits

analysis was the same under both the APA and the Mandamus Act: the dispositive

question was whether Custodia was statutorily entitled to a master account or

whether, instead, the defendants had discretion in granting master accounts to eligible

10 Custodia did not specifically move for judgment on its request for declaratory relief. The district court had previously concluded, in its order largely denying Defendants’ motions to dismiss Custodia’s amended complaint, that, while the DJA provides an additional remedy for a valid federal cause of action, it does not provide a stand-alone cause of action. See Hanson v. Wyatt, 552 F.3d 1148, 1157 (10th Cir. 2008) (“The Declaratory Judgment Act does not create substantive rights.” (cleaned up)); Nero v. Oklahoma, No. 22-6121, 2022 WL 14423872, at *2 (10th Cir. Oct. 25, 2022) (unpublished) (“[T]he Declaratory Judgment Act does not provide an independent federal cause of action.”). Custodia does not dispute this conclusion. We also note that Custodia’s DJA claim simply requests a declaration “that the Board and/or [FRBKC] has a statutory obligation to provide Custodia with a master account,” so the claim turns entirely on the same question of statutory interpretation that resolves the mandamus claim. (J.A. 433.) Therefore, we do not separately analyze Custodia’s DJA claim. 18 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 19

entities. Id. at 1234. However, the court held that Custodia’s APA claim against the

Board failed for lack of jurisdiction because it was FRBKC who had denied the

application and there was no final agency action by the Board. Id. at 1237. Finally,

the district court ruled that “[t]he plain language of the relevant statutes can only

reasonably be read to give the Federal Reserve Banks discretion in granting or

denying requests for master accounts.” Id. at 1245. Therefore, Custodia was not

entitled to a master account and Defendants were entitled to judgment in their favor

on each of Custodia’s claims. Custodia now appeals this ruling.

III. STANDARD OF REVIEW

We “review a district court’s grant of summary judgment de novo, using the

same standard applied by the district court.” Cillo v. City of Greenwood Vill., 739

F.3d 451, 461 (10th Cir. 2013) (citing Tabor v. Hilti, Inc., 703 F.3d 1206, 1215 (10th

Cir. 2013)). Summary judgment is appropriate “if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(a). In applying this standard, we “view facts in

the light most favorable to” the non-moving parties and resolve “all factual disputes

and reasonable inferences in their favor.” Cillo, 739 F.3d at 461 (quoting Tabor, 703

F.3d at 1215). This standard applies to our review of the district court’s judgment in

favor of FRBKC on Custodia’s mandamus claim. Rios v. Ziglar, 398 F.3d 1201,

1206 (10th Cir. 2005) (explaining that a district court’s determination of whether the

legal prerequisites for mandamus are met is reviewed de novo). We also review de

novo the district court’s dismissal of Custodia’s APA claim against the Board for

19 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 20

lack of subject-matter jurisdiction. Farrell-Cooper Mining Co. v. United States Dep’t

of Interior, 864 F.3d 1105, 1109 (10th Cir. 2017).

Under the APA, a court will “hold unlawful and set aside agency action” if it

is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with

law.” 5 U.S.C. § 706(2)(A). For a plaintiff to be eligible for mandamus relief, the

government must owe a clear nondiscretionary duty to the plaintiff and the plaintiff

must have no other adequate remedy. See Rios, 398 F.3d at 1206; 28 U.S.C. § 1361.

IV. DISCUSSION

Each of Custodia’s claims relies on its assertion that it is statutorily entitled to

a master account and that FRBKC has no discretion to deny its compliant request for

a master account. 11 Thus, this case turns on the statutory interpretation of the three

relevant provisions of the FRA and the MCA identified in the introductory section of

this opinion. We briefly address the jurisdictional issue of whether Custodia

identified a “final agency action” taken by the Board, as required for APA review,

before turning to the statutory interpretation issue required to resolve the remaining

11 For its APA claim, Custodia alleges that the Board’s involvement in the denial of Custodia’s master account application was unlawful because Custodia is statutorily entitled to a master account. Custodia does not challenge the reasons given for its application being denied or allege the Board violated the APA for any reason other than failing to comply with Custodia’s alleged statutory right to a master account. See Custodia Bank, 728 F. Supp. 3d at 1238. For its Mandamus Act claim, Custodia alleges Defendants have a nondiscretionary duty to grant its master account access request because Custodia is statutorily entitled to a master account. Defendants do not dispute that mandamus relief would be appropriate if Custodia were to prevail on its statutory entitlement theory. 20 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 21

A. Custodia’s APA claim against the Board fails for lack of a final agency action

In its amended complaint, Custodia asserts a claim under the APA against the

Board (but not FRBKC), alleging the Board’s involvement in FRBKC’s denial of

Custodia’s master account application was unlawful because Custodia is entitled to a

master account. Where, as here, review of an agency action is not expressly provided

for by statute, judicial review under the APA is available only for “final agency

action for which there is no other adequate remedy in a court.” 5 U.S.C. § 704. To

be “final,” an agency action must (1) “mark the consummation of the agency’s

decisionmaking process—it must not be of a merely tentative or interlocutory

nature”; and (2) “be one by which rights or obligations have been determined, or

from which legal consequences will flow.” Bennett v. Spear, 520 U.S. 154, 177–78

(1997) (internal quotation marks and citations omitted); see Ctr. for Native

Ecosystems v. Cables, 509 F.3d 1310, 1329 (10th Cir. 2007).

Custodia argues the Board took a final agency action by sending an email to

the FRBKC president stating the Board had “no concerns with the Reserve Bank

moving forward with its plan to communicate to Custodia Bank its decision to deny

the request.” (J.A. 1102.) But this email fails the second prong of the Bennett test

because it did not determine any rights or obligations or have any legal

consequences. Rather, it was only an intermediate advisory step along the path to

FRBKC’s final denial of the request. See Miami Tribe of Oklahoma v. United States,

198 F. App’x 686, 690 (10th Cir. 2006) (unpublished) (explaining that legal opinion

21 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 22

letter from Department of the Interior to the National Indian Gaming Commission

(NIGC) was not a final agency action because Congress vested authority to decide

the relevant issue with NIGC). 12 The email itself refers to “[FRBKC’s] decision to

deny the request.” (J.A. 1102.) When the Board communicated its view on

FRBKC’s decision in the no-concerns email, it was still up to FRBKC to “mov[e]

forward with its plan” to deny the request. (Id.); see Sinclair Wyo. Refin. Co., LLC

v. United States Env’t Prot. Agency, 72 F.4th 1137, 1143 (10th Cir. 2023) (“[A]n

agency action must ‘itself [be] the source of the parties’ obligations, modifying the

applicable legal landscape by interpreting the scope’ of their statutory rights or

duties.” (quoting Kansas ex rel. Schmidt v. Zinke, 861 F.3d 1024, 1034 (10th Cir.

2017)).

We recognize that an agency action can, in certain cases, “qualif[y] as final

agency action even if the ultimate impact of that action rests on . . . a decision by

another administrative agency[] or conduct by a regulated party.” Prutehi Litekyan:

Save Ritidian v. United States Dep’t of Airforce, 128 F.4th 1089, 1110 (9th Cir.

2025). But the action must still determine rights or obligations or have legal

consequences by “alter[ing] the legal regime to which the [agency or other entity] is

subject.” Bennett, 520 U.S. at 169; see id. at 178. And there is nothing in the record

to suggest that the Board’s no-concerns email “alter[ed] the legal regime to which

12 We cite all unpublished decisions only for their persuasive value. See 10th Cir. R. 32.1(A). 22 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 23

[FRBKC] [was] subject.” Bennett, 520 U.S. at 169. The final decision was still

entirely up to FRBKC.

Our conclusion is reinforced by the relevant statutes and regulations. With

respect to the provision of accounts and services, the Board exercises only “general

supervision over [the] Federal reserve banks.” 12 U.S.C. § 248(j). Pursuant to this

authority, the Board published the Guidelines to establish consistent procedures for

Reserve Banks to follow when evaluating master account access requests. 87 Fed.

Reg. at 51,100. However, the Guidelines make clear that “[d]ecisions on individual

requests for access to accounts and services are made by the Reserve Bank.” Id. at

51,102. Thus, while the Board exercises supervisory authority and can offer its input

on Reserve Bank decisions, the ultimate decisions remain up to the Reserve Bank.

To be sure, in this case the Board was undoubtedly involved in FRBKC’s evaluation

of Custodia’s master account application, as FRBKC coordinated that evaluation with

the Board’s evaluation of Custodia’s Fed membership application to avoid

duplicative inquiries or conflicting analyses. But Custodia points to nothing in the

record that would allow us to conclude that it was not FRBKC who made the final

decision on Custodia’s master account application in this case. Therefore, the

Board’s no-concerns email did not determine any rights or obligations or carry legal

consequences for Custodia and, thus, did not constitute final agency action. 13

13 Custodia also argues that the question of who made the final decision is a question of fact that should be decided by the district court in the first instance, so remand on that question is appropriate. We disagree—review under the APA is based on the administrative record, which has already been filed in this case, so 23 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 24

B. Custodia is not statutorily entitled to a nondiscretionary award of a master account from FRBKC

This issue requires us to interpret three specific provisions of three different

statutes. Because each of these provisions relates explicitly or implicitly to the Fed’s

authority to provide access to master accounts, we interpret them together. Our

primary task in reviewing these provisions is “to determine congressional intent,

using traditional tools of statutory interpretation.” M.S. v. Premera Blue Cross, 118

F.4th 1248, 1266 (10th Cir. 2024) (quoting Potts v. Ctr. for Excellence in Higher

Educ., Inc., 908 F.3d 610, 613 (10th Cir. 2018)). We begin by looking at the

statutory text “to determine whether the language at issue has a plain and

unambiguous meaning with regard to the particular dispute in the case.” Potts, 908

F.3d at 613 (quoting Ceco Concrete Constr., LLC v. Centennial State Carpenters

Pension Tr., 821 F.3d 1250, 1258 (10th Cir. 2016)). “The plainness or ambiguity of

statutory language is determined by reference to the language itself, the specific

context in which that language is used, and the broader context of the statute as a

whole.” Ceco Concrete, 821 F.3d at 1258 (quoting Robinson v. Shell Oil Co., 519

U.S. 337, 341 (1997)). We

consider how “important terms in the statute . . . relate to each other” to determine “[t]he plain meaning of the statutory text,” Babb v. Wilkie, 589 U.S. 399, 404 (2020), because “[s]tatutory language ‘cannot be construed in a vacuum,’” Sturgeon v. Frost, 577 U.S. 424, 438 (2016) (quoting Roberts v. Sea-Land Servs., Inc., 566 U.S. 93, 101 (2012)).

remand would not lead to new factual development, and it is appropriate for us to decide this question in this appeal. See Florida Power & Light Co. v. Lorion, 470 U.S. 729, 743–44 (1985). 24 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 25

United States v. Davey, No. 24-3132, 2025 WL 2405322, at *4, --- F.4th --- (10th

Cir. Aug. 20, 2025) (alterations in original).

“If the language is plain and unambiguous, ‘our inquiry must cease and the

plain meaning of the statute controls.’” Ceco Concrete, 821 F.3d at 1258 (quoting

Nat’l Credit Union Admin. Bd. v. Nomura Home Equity Loan, Inc., 764 F.3d 1199,

1225 (10th Cir. 2014)). If, on the other hand, the language is ambiguous, then we

may look to the broader context and purpose of the statute to discern congressional

intent. See Nat’l Credit Union, 764 F.3d at 1225–26.

1. Relevant statutory provisions

With these principles in mind, we begin by outlining the three relevant

statutory provisions before explaining why their plain language grants Reserve Banks

discretion to reject master account applications from eligible entities.

First, § 342 of the FRA provides: “Any Federal reserve bank may receive from

any of its member banks, or other depository institutions, and from the United States,

deposits of current funds in lawful money, national-bank notes, Federal reserve notes,

or checks . . . .” 12 U.S.C. § 342 (emphasis added). Defendants argue, and we agree,

that this provision governs Reserve Banks’ authority with respect to approving or

denying master accounts because Reserve Banks use master accounts to receive

deposits.

25 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 26

Second, § 248a of the MCA provides:

§ 248a. Pricing of services

(a) Publication of pricing principles and proposed schedule of fees; effective date of schedule of fees

Not later than the first day of the sixth month after March 31, 1980, the Board shall publish for public comment a set of pricing principles in accordance with this section and a proposed schedule of fees based upon those principles for Federal Reserve bank services to depository institutions, and not later than the first day of the eighteenth month after March 31, 1980, the Board shall begin to put into effect a schedule of fees for such services which is based on those principles.

(b) Covered services

The services which shall be covered by the schedule of fees under subsection (a) are-- (1) currency and coin services; (2) check clearing and collection services; (3) wire transfer services; (4) automated clearinghouse services; (5) settlement services; (6) securities safekeeping services; (7) Federal Reserve float; and (8) any new services which the Federal Reserve System offers, including but not limited to payment services to effectuate the electronic transfer of funds.

(c) Criteria applicable

The schedule of fees prescribed pursuant to this section shall be based on the following principles: (1) All Federal Reserve bank services covered by the fee schedule shall be priced explicitly. (2) All Federal Reserve bank services covered by the fee schedule shall be available to nonmember depository institutions and such services shall be priced at the same fee schedule applicable to member banks, except that nonmembers shall be subject to any other terms, including a requirement of balances sufficient for clearing purposes, that the Board may determine are applicable to member banks.

26 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 27

(3) Over the long run, fees shall be established on the basis of all direct and indirect costs actually incurred in providing the Federal Reserve services priced, including interest on items credited prior to actual collection, overhead, and an allocation of imputed costs which takes into account the taxes that would have been paid and the return on capital that would have been provided had the services been furnished by a private business firm, except that the pricing principles shall give due regard to competitive factors and the provision of an adequate level of such services nationwide. (4) Interest on items credited prior to collection shall be charged at the current rate applicable in the market for Federal funds.

Id. § 248a (emphasis added). This is the core of Custodia’s argument. Custodia

relies on this brief clause in subsection (c)(2) that we have underlined for emphasis—

“[a]ll Federal Reserve bank services covered by the fee schedule shall be available to

nonmember depository institutions”—to argue that this one isolated clause in a

provision dealing with equitable pricing establishes a mandatory, nondiscretionary

duty for Reserve Banks to approve master account applications from all nonmember

depository institutions who are statutorily eligible. 14 The profound impact and

14 Custodia relies heavily on Judge Bacharach’s separate opinion in Fourth Corner Credit Union v. Federal Reserve Bank of Kansas City, in which he concluded that § 248a(c)(2) mandates master account access for all eligible nonmember depository institutions. 861 F.3d 1052, 1068 (10th Cir. 2017) (Op. of Bacharach, J.). While Judge Bacharach’s opinion is relevant to our analysis in this case, it is not controlling authority because that case resulted in a three-way split decision between the three-judge panel, and the other two judges each voted to dispose of the case without reaching the issue of the plaintiff’s statutory entitlement to a master account. See id. at 1053 (per curiam); id. at 1058 (Op. of Moritz, J.) (“I would not decide whether the Credit Union is entitled to a master account under 12 U.S.C. § 248a.”); id. at 1058, 1063 (Op. of Matheson, J.) (concluding “[t]he issues the Credit Union raises are not yet fit for judicial decision” and the case should be dismissed on ripeness grounds); see also United States v. Guillen, 995 F.3d 1095, 1114–15 (10th Cir. 2021) (“[A] concurring opinion in a splintered . . . decision . . . produces a determinate holding[] when it is ‘a logical subset’ of the other opinion(s) concurring in the judgment.”). Here, Judge Bacharach’s separate opinion on this issue is not a 27 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 28

importance that Custodia attaches to this single isolated clause tucked deep into a

statutory provision that deals with a fairly isolated schedule of fees is indeed

remarkable and non-intuitive.

Third is the Toomey Amendment, enacted in 2022 as part of the National

Defense Authorization Act for Fiscal Year 2023, Public Law 117-263, which requires

the Board to publish a database of all entities holding or applying for master

accounts. It provides, in relevant part:

The Board shall create and maintain a public, online, and searchable database that contains-- (A) a list of every entity that currently has access to a reserve bank master account and services, including the date on which the access was granted to the extent the date is knowable; (B) a list of every entity that submits an access request for a reserve bank master account and services after enactment of this section (or that has submitted an access request that is pending on December 23, 2022), including whether, and the dates on which, a request-- (i) was submitted; and (ii) was approved, rejected, pending, or withdrawn; and (C) for each list described in subparagraph (A) or (B), the type of entity that holds or submitted an access request for a reserve bank master account and services, including whether such entity is-- (i) an insured depository institution, as defined in section 1813 of this title; (ii) an insured credit union, as defined in section 1752 of this title; or (iii) a depository institution that is not an insured depository institution or an insured credit union.

Id. § 248c(b)(1) (emphasis added). Defendants argue, and we agree, that, “by its

plain terms, the law specifically contemplates that requests for master accounts”

logical subset of the opinions of the other two panel judges, so it does not produce a determinate holding. 28 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 29

from depository institutions that are not insured, like Custodia, may be rejected.

(J.A. 492)

2. Analysis

We begin with § 342. As we read this provision, § 342 grants Reserve Banks

the authority to issue master accounts, using the term “may,” which makes this

authority discretionary. Though the statute does not expressly mention accounts

(“master” or otherwise), a Reserve Bank’s authority to open a master account has

always been implied from the authority to receive deposits—which comes from

§ 342—because a master account is necessary to hold any such funds received. See

Banco San Juan Internacional, Inc. v. Fed. Rsrv. Bank of N.Y., 762 F. Supp. 3d 247,

266 (S.D.N.Y. 2025) (“Section [342] governs master accounts.”). And the Supreme

Court has confirmed what the ordinary meaning of the word “may” in § 342 suggests:

the authority to receive deposits is discretionary. See Farmers’ & Merchants’ Bank

of Monroe v. Fed. Rsrv. Bank of Richmond, 262 U.S. 649, 662 (1923) (“[N]either

section [342], nor any other provision of the Federal Reserve Act, imposes upon

reserve banks any obligation to receive checks for collection. The act merely confers

authority to do so.”). It follows that a Reserve Bank’s authority to open an account

to receive such funds is also discretionary. See Banco San Juan Internacional, 762 F.

Supp. 3d at 266–67. To be sure, opening an account and receiving deposits into that

account are not precisely the same thing. But it makes little sense to suggest that a

29 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 30

Reserve Bank would be obligated to open an account but then have discretion to

render that account useless by rejecting all deposits into it.

Next, the single sentence tucked deep and innocuously inside § 248a of the

MCA does not override the discretionary authority that Congress granted to Reserve

Banks in § 342 of the FRA. First, the plain language of § 248a says nothing about

master account access nor the authority of Reserve Banks to establish or to decline to

establish any kind of account, nor even the ability of a Reserve Bank to receive

funds. Rather, § 248a is concerned with an entirely different subject—the pricing of

services. And subsection (c)(2) simply provides that those services must be provided

to both member and nonmember banks on equal terms and with nondiscriminatory

pricing. See Banco San Juan Internacional, 762 F. Supp. 3d at 269 (“[A]ny pricing

and service terms must not discriminate between members and nonmembers based on

their membership status. Section 248a, however, is wholly silent as to how Federal

Reserve banks should evaluate . . . a depository institution’s initial . . . request for

Federal Reserve bank services.”).

Compellingly, § 248a is not even directed to Reserve Banks, which have the

authority to grant or deny master accounts. See 12 U.S.C. § 248a(a) (“[T]he Board

shall publish . . . a proposed schedule of fees . . . .”) (emphasis added). Rather, it is

addressed to the Board; and the Board does not make master account access

decisions—Reserve Banks do. The items listed in subsection (c)(2) are simply

pricing principles that the Board must adhere to when establishing the schedule of

fees. Id. § 248a(c) (“The schedule of fees . . . shall be based on the following

30 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 31

principles: . . .”). Thus, this provision prescribing how the Board must go about

pricing services says nothing about account access, which is controlled by Reserve

Banks. As the district court observed, “[t]he plain language Congress employed in

12 U.S.C. § 248a does not expressly require anything from or provide instruction to

the Federal Reserve Banks.” Custodia Bank, 728 F. Supp. 3d at 1242.

Second, Congress “does not alter the fundamental details of a regulatory

scheme in vague terms or ancillary provisions—it does not, one might say, hide

elephants in mouseholes.” Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468

(2001). To conclude that Congress removed Reserve Bank discretion over master

account access in a clause tucked away in a list of principles for the Board (rather

than Reserve Banks) to follow in pricing services would be akin to finding an

elephant in a mousehole. From the enactment of the FRA in 1913 until the enactment

of the MCA in 1980, the only arguable authority for issuing accounts came from

§ 342, which provides that such authority is discretionary. “Accepting Custodia’s

contention here would mean that Congress, in the [MCA] in 1980, greatly altered the

details of the regulatory scheme first initiated in 1913 by requiring Federal Reserve

Banks to provide master accounts to all eligible depository institutions requesting

one, and also that Congress did so in a provision (and a subchapter) directed at the

Board of Governors and without expressly saying as much.” Custodia Bank, 728 F.

Supp. 3d at 1244.

We find it particularly unlikely that Congress intended to depart from the

discretion afforded by § 342 when, in the MCA, Congress amended § 342 but

31 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 32

retained its discretionary nature. The MCA’s amendment to § 342 demonstrates that

Congress considered the issue of nonmember banks making deposits to use Fed

services, knew the receipt of deposits was a discretionary action on the part of

Reserve Banks, see Farmers’ & Merchants’ Bank, 262 U.S. at 662, 15 and chose to

leave that discretion unchanged. It would make no sense for Congress

simultaneously to remove that discretion in an isolated clause of a separate provision

directed at a different entity (the Board).

Third, the plain language of § 248a(c)(2) does not say that services must be

available to all nonmember depository institutions, just that they must be available to

nonmember depository institutions in general, as a class. In the very same sentence,

Congress chose to use the word “all” before “Federal Reserve Bank services,” but

omitted it before “nonmember depository institutions.” As the district court

observed, this “signal[s] [Congress] intended to treat the two phrases differently.”

Custodia Bank, 728 F. Supp. 3d at 1243. Indeed, Congress’s repeated use of

qualifiers with respect to the term “depository institution(s)” in the FRA and MCA

suggests it was intentional with such usage. For instance, later in § 248a, Congress

refers to “[a]ll depository institutions.” 12 U.S.C. § 248a(e). Similarly, § 461, which

establishes the reserve requirements applicable to depository institutions, uses

modifiers such as “all” and “every” when referring to depository institutions. See id.

15 “We generally presume that Congress is knowledgeable about existing law pertinent to the legislation it enacts.” Goodyear Atomic Corp. v. Miller, 486 U.S. 174, 184–85 (1988). 32 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 33

§ 461(b)(2)(D) (“Any reserve requirement imposed under this subsection shall be

uniformly applied to all transaction accounts at all depository institutions.”); id.

§ 461(b)(4)(A) (“The Board may . . . impose a supplemental reserve requirement on

every depository institution.”). In contrast, § 248a(c)(2), notably, does not refer to

“all” or “every” nonmember depository institution, just nonmember depository

institutions as a class. That services shall be available to nonmembers as a class does

not automatically entitle each nonmember to a master account. 16

Finally, the Toomey Amendment underlines our conclusion that Congress

envisioned that Reserve Banks would reject some master account applications from

eligible entities. The Toomey Amendment amended the FRA and MCA to require

the Board to maintain a public database listing every application for a master account

and whether the application was “approved, rejected, pending, or withdrawn.” 12

U.S.C. § 248c(b)(1). The Board must also specify whether each applicant is one of

three entity types: (i) “an insured depository institution”, (ii) “an insured credit

union”, or (iii) “a depository institution that is not an insured depository institution or

an insured credit union.” Id. § 248c(b)(1)(C). Crucially, each of those entity types is

16 The MCA’s history underscores this understanding. Before 1980, Reserve Banks needed to be told to make payment services available to nonmember depository institutions as a class. Just as in the nineteenth century, if a law school was instructed that admission “shall be available to women who had graduated from college,” that would mean the law school should consider women just as they considered men, but it would not mean that every woman who graduated college and applied got into that law school. The need to change prior practice demonstrates that the purpose of including this provision was to open up eligibility to a class that had been categorically denied, not the more drastic change to create an absolute, nondiscretionary entitlement to enrollment for every applicant. 33 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 34

eligible for a master account. See supra note 4. Thus, Congress expressly addressed

only eligible entities, yet still anticipated Reserve Banks could reject such

applications. 17

For these reasons, we conclude the plain language of the three statutory

provisions grants Reserve Banks the discretion to reject master account applications

from eligible entities.

C. Even if the statutes were considered ambiguous, we would reach the same conclusion

Even if we were to find these statutes ambiguous, expanding our inquiry would

lead to the same result. First, our interpretation is reinforced by each clause’s

placement in the statutory scheme. The title of § 248a, which Custodia relies on, is

“Pricing of services,” suggesting that § 248a(c)(2) is concerned not with mandating

access, but pricing. See Pub. L. No. 96-221, § 107, 94 Stat. 132, 140–41 (1980).

And the provision is located in a subchapter entitled “Board of Governors of the

Federal Reserve System,” reinforcing that it is directed to the Board, not Reserve

Banks, which have the authority to grant or deny an application for a master account.

In contrast, § 342, which directly supports the position of Defendant-Appellee

17 The dissent’s argument is that the Toomey Amendment did not evidence Congress’ expectation and approval of Reserve Banks rejecting some applications; rather, argues the dissent, Congress suspected Reserve Banks were improperly rejecting applications, despite Congress’ intention that the banks should have no discretion to reject any such applications, and Congress wanted to monitor when this was happening. But it would seem oddly indirect for Congress, if it intended for Reserve Banks to approve all applications without discretion, to amend the statute simply to monitor these wrongful rejections instead of directly instructing the Reserve Banks to approve all eligible applications. 34 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 35

FRBKC, is found in a subchapter entitled “Powers and Duties of Federal Reserve

Banks,” which is precisely the issue presented in this appeal.

Furthermore, while we have already explained that the plain language of

§ 248a(c)(2) demonstrates it is a pricing principle rather than an access command,

this conclusion is reinforced by looking at the other pricing principles listed in

§ 248a(c). The canon of noscitur a sociis—literally, “a word is known by the

company it keeps”—can be employed by courts to clarify the meaning of ambiguous

words and phrases by reference to other associated words and phrases. See Yates v.

United States, 574 U.S. 528, 543 (2015); 2A Sutherland Statutes and Statutory

Construction § 47:16 (7th ed. 2007). The canon encourages reading ambiguous

phrases in context to “limit the disruptive potential of overly broad or general terms

in a statute,” NISH v. Rumsfeld, 348 F.3d 1263, 1267 (10th Cir. 2003), and to “avoid

the giving of unintended breadth to the Acts of Congress,” Jarecki v. G. D. Searle &

Co., 367 U.S. 303, 307 (1961). Here, each of the other three items listed in § 248a(c)

is clearly related to pricing, rather than scope of power. See 12 U.S.C. § 248a(c)(1)

(providing that services “shall be priced explicitly”); id. § 248a(c)(3) (providing that

pricing must account for all costs actually incurred in providing services as well as

the taxes and return on capital that a private business firm would have for providing

those same services); id. § 248a(c)(4) (specifying the interest rate for items credited

prior to collection). This suggests that the “shall be available” clause in § 248a(c)(2)

is also a pricing principle, not a master account access mandate.

35 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 36

D. Contrary arguments raised by Custodia are not availing

Custodia raises several arguments against our conclusion, but none are

availing. First, Custodia argues our interpretation renders the “services . . . shall be

available to nonmember depository institutions” clause in § 248a(c)(2) meaningless.

But a look at the context in which Congress passed the MCA reveals the clause’s

class-based meaning: it directs the Board to ensure that the services enumerated in

§ 248a(b) are available to both classes of depository institutions, member and

nonmember. Prior to the enactment of the MCA, only member banks were subject to

a federal (as opposed to state) reserve asset requirement. This imposed opportunity

costs on member banks because they could not earn interest on their reserve amounts.

See Domestic Monetary Policy Report at 10. As a form of partial compensation for

member banks shouldering this burden, the Fed provided services to those banks free

of charge. Gary C. Zimmerman, The Pricing of Federal Reserve Services Under the

MCA, Econ. Rev., Winter 1981, at 23 (1981). As a policy, the Fed did not provide

most services to nonmember banks. Id. at 22.

As interest rates rose in the 1970’s, this arrangement became less appealing to

member banks, as the reserve requirements forced them to forgo the higher profits

available if they could have invested their reserves. Domestic Monetary Policy

Report at 10. Member banks began leaving the Fed, impairing the Fed’s ability to

effectuate its monetary policy. Id.

Congress passed the MCA, in part, to stem the tide of banks withdrawing their

membership. It did so by imposing reserve requirements on all banks, both member

36 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 37

and nonmember, thus eliminating the financial incentive to withdraw from Fed

membership. To make the imposition of a reserve requirement more palatable to

nonmember institutions, Congress also lowered the amount of funds required to be

held in reserve and opened access to Fed services to nonmember institutions. See id.

at 11 (“In return for the posting of reserves, non-member institutions were given

access to Federal Reserve . . . services.”). However, it was expected that the reduced

revenue from lower reserve requirements and the increase in use of Fed services

would lead to a significant reduction in Fed earnings and, consequently, the federal

Treasury. 18 Id. Congress addressed these concerns in § 248a by directing the Fed to

charge for its services. See Domestic Monetary Policy Report at 11.

With this context in mind, § 248a(c)(2) has clear meaning without reading it to

remove Reserve Bank discretion to approve or reject a master account application: it

simply generally directs the Board to open access to Fed services to both classes of

institutions, members and nonmembers. And the Board has done just that. Services

are widely available to nearly all nonmember depository institutions. Yet that

general motive did not mean that Congress intended to eliminate all discretion by the

Reserve Banks to regulate the authorization of master accounts, which remained, as

18 Moreover, there were concerns that increased availability of the Fed’s free services would stifle private sector competition in the provision of those services. Id.; Anatoli Kuprianov, The Monetary Control Act and the Role of the Federal Reserve in the Interbank Clearing Market, Federal Reserve Bank of Richmond 33 (July/Aug. 1985). 37 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 38

before, an essential arrow in the Reserve Bank’s quiver of arrows to keep the banking

system safe and sound. 19

Second, Custodia argues that the lack of the word “all” before “nonmember

depository institutions” is not probative of congressional intent and § 248a(c)(2)

“would have the same meaning regardless of whether the word ‘all’ preceded the

phrase ‘nonmember depository institutions.’” Fourth Corner, 861 F.3d at 1069 (Op.

of Bacharach, J.). Custodia reasons that the word “all” placed before “nonmember

depository institutions” would be an indefinite adjective. Id. (citing Bryan A.

Garner, The Chicago Guide to Grammar, Usage, and Punctuation 60 (2016)). And

drafters of statutes are often advised to use indefinite adjectives only when necessary.

See William P. Statsky, Legislative Analysis and Drafting 184 (2d ed. 1984).

Therefore, Custodia argues, we should not read any significance into the absence of

such an adjective. 20

19 To make its point, the dissent suggests the statute should be rewritten, but that is not only beyond the power of the courts, it is also an implicit recognition that the original language used by Congress does not support the position that nonmember depository institutions have an absolute right to a master account. 20 The dissent accepts Custodia’s reading of § 248a(c)(2), suggesting that despite not including the word “all,” Congress meant that all nonmember depository institutions would have nondiscretionary access to master accounts, rather than just that such language qualified nonmember depository institutions for eligibility to apply for master account access. The analogy the dissent draws actually makes clear why its conclusion is errant. As the dissent says, the statements “ducks are birds” and “all ducks are birds” are equivalent. Without including the word “all,” there would still be no question that it was implied—adding “all” would be superfluous because it would not change the statement’s meaning. To the contrary, in the context of distinguishing between services being available to nonmembers as a class and being automatically granted to every nonmember, if “all” had been included (which it wasn’t), it would carry significant meaning, such that we doubt Congress would leave 38 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 39

While this general guidance might be relevant in certain cases, it is clear

Congress did not follow this principle in § 248a. As noted earlier, Congress started

the very sentence Custodia relies on with “[a]ll Federal Reserve bank services.” 12

U.S.C. § 248a(c)(2) (emphasis added). And later in the same provision, Congress

refers to “[a]ll depository institutions.” Id. § 248a(e). Congress was deliberate with

its use of “all” in this provision, and we find it probative of Congress’s intent that it

chose not to use “all” before “nonmember depository institutions.”

Third, Custodia argues our interpretation is contradicted by statements in the

legislative history that describe the MCA as providing “open access to [Fed] services

to all depository institutions on the same terms and conditions as member banks.”

H.R. Rep. No. 96-842, at 71 (1980) (Conf. Rep.); see also id. at 69; 126 Cong. Rec.

7072 (1980). But these statements do not clearly address the question presented in

this case. These statements do not evince any intention to establish unregulated

master account access to nonmember depository institutions. Rather, they simply

reinforce the statutory language prohibiting discrimination against nonmembers in

pricing and service terms. 21

Fourth, Custodia points to statements by the Board and various Reserve Banks

as evidence that Defendants have historically understood the MCA to mandate an

it out if Congress had intended that all qualifying banks would automatically get access to master accounts. There is no reason to think Congress intended to expand the meaning of this provision so drastically. 21 Indeed, Custodia’s position would elevate nonmembers above members, granting them guaranteed unencumbered access to the exchange of funds when member banks do not have such a privilege. 39 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 40

unregulated absolute right of nonmember institutions to establish a master account.

Custodia argues that Defendants are claiming a newly discovered power that conflicts

with their longstanding interpretation and that should, therefore, be viewed with

skepticism. Not only is this contention contradicted by the record, but, as with the

legislative history from Congress, the statements cited by Custodia shed little light on

the question presented in this case.

The Fed’s historical practices demonstrate that it has always understood that it

had the authority to protect its payment systems from risk. 22 The view advanced by

Custodia creates a danger of Reserve Banks having no discretion with respect to

master account access, thereby impairing the Reserve Bank’s ability to carry out their

duty to safeguard our financial system from risky institutions. But the Fed’s

discretion to protect the financial system is long established. See 12 U.S.C § 248;

United States v. Wells Fargo & Co., 943 F.3d 588, 600 (2d Cir. 2019) (noting that

Reserve Banks “operate in the public interest, and, specifically, in furtherance of [the

Federal Reserve] system’s functions of . . . promoting the stability of the financial

system, promoting the soundness of individual financial institutions, [and] fostering

payment and settlement system safety”); cf. Trump v. Wilcox, 145 S. Ct. 1415, 1415

22 We recognize that, until recently, the Fed has generally not exercised its discretion to deny account access. See Hill, supra, at 463. But it has also not been faced with access requests from novel institutions like Custodia. Custodia lacks both federal insurance and a federal supervisor. As of November 2023, 540 institutions held master accounts with FRBKC, and only one of them lacked both federal insurance and a federal supervisor. And the one outlier was a century-old institution that had insurance and a federal supervisor when it first received its account. 40 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 41

(2025) (“The Federal Reserve . . . follows in the distinct historical tradition of the

First and Second Banks of the United States.”). For example, in 1985 the Fed adopted

policies governing the use of its wire transfer service, Fedwire, that evinced the

Board’s view that it had the authority to deny access to services—even those

expressly listed in § 248a(b)—to an individual institution based on its assessment of

that institution’s risk to the system.

Similarly, since master accounts were first established in 1998, the Fed’s

official master account policy, contained in Operating Circular 1, has consistently

stated that Reserve Banks have discretion with respect to master account access. See

Fed. Rsrv. Fin. Servs., Federal Reserve Banks Operating Circular 1: Account

Relationships § 2.3 (eff. Jan. 2, 1998) (“All master accounts are subject to Reserve

Bank approval.”); Fed. Rsrv. Fin. Servs., Federal Reserve Banks Operating Circular

1: Account Relationships § 2.6 (eff. Sept. 1, 2023) (“A Reserve Bank has discretion

in deciding whether to provide a Financial Institution with access to a Master

Account and may require a Financial Institution to provide additional information

and documentation to the Reserve Bank to support its decision making.”).

Custodia refers to numerous statements that describe the MCA as directing the

Board to make Fed services “available to all depository institutions.” Federal

Reserve Bank Services; Proposed Fee Schedules and Pricing Principles, 45 Fed. Reg.

58,689, 58,690 (Sept. 4, 1980); see also Fourth Corner, 861 F.3d at 1070–72 (Op. of

Bacharach, J.) (citing additional statements by the Fed). When read in the context

described above, however, these statements say nothing about any congressional

41 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 42

intent to remove Reserve Bank discretion over access for individual entities deemed

risky. Indeed, any such change would be breathtaking in scope, limiting Reserve

Banks’ regulatory authority to ensure the safety of the banking system. We read the

MCA to direct the Board to make Fed services generally available to all depository

institutions, as opposed to restricting the availability of services generally to member

institutions only. And statements about services being “available to all depository

institutions” are perfectly consistent with this understanding of the statute. Custodia

points to no statements that actually touch on the issue of discretion with respect to

individual entities.

The same is true of the federal cases and academic commentary cited by

Custodia. See Greater Buffalo Press, Inc. v. Fed. Rsrv. Bank of N.Y., 866 F.2d 38,

40 (2d Cir. 1989) (stating that the MCA made “check clearing services . . . available

to all banks, regardless of whether or not they were member banks”); Jet Courier

Servs., Inc. v. Fed. Rsrv. Bank of Atlanta, 713 F.2d 1221, 1222-23 (6th Cir. 1983)

(stating that, pursuant to the MCA, “services . . . formerly provided to member banks

only will be available to all banks, regardless of whether or not they are members”);

Elijah Brewer III, The Depository Institutions Deregulation and Monetary Control

Act of 1980, Econ. Perspectives, Sept.–Oct. 1980, at 3–4 (stating that the MCA

requires the Fed to “grant all depository institutions access to [Federal Reserve]

services”); Fourth Corner, 861 F.3d at 1073 (Op. of Bacharach, J.) (citing other

academic commentary). Each of these statements says only that the MCA directed

42 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 43

the Board to stop discriminating against nonmember banks as a group; it says nothing

about discretion to deny access to individual entities.

In fact, the only courts to have specifically decided the issue presented in this

case have concluded, as we do, that Reserve Banks have discretion to deny master

account access to particular eligible entities. See Banco San Juan Internacional, 762

F. Supp. 3d at 268 (“No FRA provision instructs Federal Reserve banks to provide all

available services to all depository institutions while ignoring any and all risk factors

pertaining to individual applicants for such services.” (emphasis in original));

PayServices Bank v. Fed. Rsrv. Bank of S.F., 2024 WL 1347094, at *11 (D. Idaho

Mar. 30, 2024) (unreported) (“[Section] 342 makes clear that Federal Reserve Banks

are authorized to accept deposits, and thus open master accounts. Critically,

however, they are not required to do so. Nothing in § 248a(c)(2) upends this

discretion.”).

Fifth, Custodia argues that the Toomey Amendment is solely about

transparency in the master account application process and says nothing about

substantive authority to reject individual applications. 23 Custodia explains that

applications can be rejected on the basis that the applicant is not legally eligible for

an account (i.e., not a depository institution), so the Amendment’s acknowledgement

23 This argument is supported by amici who were among the drafters of the Toomey Amendment. But post-enactment statements of the subjective intent of some drafters cannot override the plain language enacted by Congress. See Bostock v. Clayton Cnty., 590 U.S. 644, 653 (2020) (“[T]he limits of the drafters’ imagination supply no reason to ignore the law’s demands. When the express terms of a statute give us one answer and extratextual considerations suggest another, it’s no contest.”). 43 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 44

of rejections says nothing about rejecting applications from eligible entities. But this

ignores the fact that Congress in the Toomey Amendment expressly required the

Board to list the “type of entity” which was denied a master account, and it provided

three possible groups of entities, each of which were categories of entities who, as a

category, were legally eligible for master accounts. Thus, the plain text of § 248c

contemplates the rejection of master account access requests from eligible entities.

Sixth, Custodia contends that the canon of constitutional avoidance counsels

against our conclusion. Specifically, Custodia argues that, if Reserve Banks have

discretion to deny master account access to eligible entities, then such a statutory

scheme violates (1) the Due Process Clause and (2) the Appointments Clause of the

U.S. Constitution. Custodia raised these same arguments to the district court as

stand-alone claims in its original complaint. The district court dismissed them both

under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, reasoning

that Custodia had not pled plausible violations of either clause.

Custodia first contends that, if FRBKC has discretion to deny master account

access to eligible entities, then such decision-making authority violates the Due

Process Clause by vesting FRBKC’s board of directors, which is largely chosen by

and partially composed of self-interested executives from competitor banks, with

regulatory authority over Custodia. 24 See Ass’n of Am. Railroads v. U.S. Dep’t of

24 Specifically, a Reserve Bank’s nine-member board is made up of three classes of directors with three directors in each class. 12 U.S.C. § 302. Class A directors are representatives of member banks. Id. Class B and Class C directors are “elected to represent the public” and cannot be representatives of member banks. Id.; 44 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 45

Transp., 821 F.3d 19, 27 (D.C. Cir. 2016). We agree with the district court that this

system raises no due process concerns because master account application decisions

are made by a Reserve Bank’s president, not its board, and Reserve Bank presidents

are elected only by those directors who are not representatives of competitors. See

12 U.S.C. §§ 302, 303, 341. 25

As for Custodia’s Appointments Clause argument, that was waived. Custodia

raised this argument in its initial complaint. That claim was then dismissed by the

district court, and Custodia did not reassert it in its amended complaint after that

dismissal.

We have previously explained that “we do not require a party to reallege a

cause of action on which the district court has conclusively ruled” in order to

preserve a claim for appellate review. Davis v. TXO Prod. Corp., 929 F.2d 1515,

1518 (10th Cir. 1991). However, a plaintiff waives its “objections to the ruling of the

court on indefiniteness, incompleteness or insufficiency, or more technical defects in

pleadings” by failing to re-assert a claim in an amended complaint. Id. at 1517–18.

id. § 303. Class A and Class B directors are elected by the Reserve Bank’s member banks, while Class C directors are chosen by the Board. Id. § 302. 25 Another potential problem for Custodia in raising this claim is that Custodia must first establish that it has a property or liberty interest in a master account before it can show a due process violation. See Martin Marietta Materials, Inc. v. Kansas Dep’t of Transp., 810 F.3d 1161, 1171–72 (10th Cir. 2016) (“To be entitled to procedural due process, [Custodia] must prove it has either a protected property or liberty interest.”). Defendants make this argument. (Aple. Bd. Br. 63–64.) Because we conclude Custodia has no statutory entitlement to a master account, Custodia may be unable to establish such a liberty or property interest. See Martin Marietta, 810 F.3d at 1178 (explaining that there is no liberty or property interest where the outcome of the process is within the governing body’s discretion). 45 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 46

In dismissing Custodia’s Appointments Clause claim in this case, the district

court concluded that (1) “the factual allegations in Custodia’s complaint support that”

it is a Reserve Bank’s president, not the board, that makes master account application

decisions (J.A. 384); and (2) the appointment process for Reserve Bank presidents

does not violate the Appointments Clause. Despite having the opportunity to reassert

its claim that the appointment of Reserve Bank directors violates the Appointments

Clause by adding factual allegations to its subsequent amended complaint, Custodia

did not do so. Because the district court dismissed Custodia’s argument about the

appointment process for directors on the ground that the factual allegations were

insufficient to implicate directors, Custodia waived its argument about the directors

by failing to re-assert it in its amended complaint. See Davis, 929 F.2d at 1517–18.

Instead, Custodia proceeded to seek to compel FRBKC’s president to grant it an

account and never mention Appointments Clause issues in any of the remaining

proceedings in the district court.

To the extent Custodia now argues that the appointment process for a Reserve

Bank president violates the Appointments Clause—an argument that was

“conclusively ruled” on by the district court—Custodia has also waived that

argument by failing adequately to brief it on appeal. See United States v. Cooper,

654 F.3d 1104, 1128 (10th Cir. 2011) (“It is well-settled that ‘[a]rguments

inadequately briefed in the opening brief are waived.’” (quoting Adler v. Wal-Mart

Stores, Inc., 144 F.3d 664, 679 (10th Cir. 1998)). Custodia’s Opening Brief raised

Appointments Clause concerns only with the appointment process for Reserve Bank

46 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 47

directors. It never makes any mention of the appointment process for a Reserve

Bank’s president. Further, Custodia’s Reply Brief still fails to make any argument as

to how the appointment process for a Reserve Bank’s president violates the

Appointments Clause or why the district court’s conclusion to the contrary was

wrong. See Perry v. Woodward, 199 F.3d 1126, 1141 n.13 (10th Cir. 1999) (“This

court . . . will not craft a party’s arguments for him.”). We are unwilling to rely on

Custodia’s bare assertion of Appointments Clause concerns when (1) Defendants

were unable to respond to the argument due to Custodia’s inadequate briefing, and

(2) Custodia has not offered any explanation as to how the district court’s well-

reasoned analysis was wrong. 26

26 Custodia also finds it objectionable, from a policy perspective, for Reserve Banks to have discretion to deny master account access. But Custodia does not establish that any such discretion violated any constitutional provisions, nor that such discretion was abused in this case. Further, Custodia’s policy concerns are more than counterbalanced by the comparable danger of Reserve Banks having no discretion with respect to master account access and therefore no ability to carry out their duty to safeguard our financial system from risky institutions. See United States v. Wells Fargo & Co., 943 F.3d 588, 600 (2d Cir. 2019) (noting that Reserve Banks “operate in the public interest, and, specifically, in furtherance of [the Federal Reserve] system’s functions of . . . promoting the stability of the financial system, promoting the soundness of individual financial institutions, [and] fostering payment and settlement system safety”). In the end, we simply follow the text, which directs our holding in this case. 47 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 48

V. CONCLUSION

We agree with the district court that “[t]he plain language of the relevant

statutes can only reasonably be read to give the Federal Reserve Banks discretion in

granting or denying requests for master accounts.” Custodia Bank, 728 F. Supp. 3d

at 1245. Accordingly, we hold that Custodia is not statutorily and automatically

entitled to a master account. We AFFIRM the district court’s judgment in favor of

Defendants on all claims.

48 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 49

24-8024, Custodia Bank, Inc. v. Federal Reserve Board of Governors; Federal Reserve Bank of Kansas City

TYMKOVICH, Circuit Judge, dissenting.

The Federal Reserve and its predecessors, the First and Second Banks of the

United States, have tested the boundaries of our constitutional order since the

founding. No lesser men than Alexander Hamilton and Thomas Jefferson debated the

necessity and legality of a national bank to implement America’s monetary policy.

The Fed has proven an important part of America’s economic policy, but still, it

exists on the boundaries of our tripartite system. By claiming unreviewable

discretion over access to the nation’s financial system, the Fed has gone too far.

In adopting the Fed’s interpretation of the law, the majority endorses a reading

of federal law that allows unappointed bank officials to exercise significant yet

unreviewable executive authority. I doubt our Constitution allows that, and I think

the solution here is simpler. Through the Depository Institutions Deregulation and

Monetary Control Act (MCA), Congress mandated access for all nonmember

depository institutions. This interpretation is more faithful to the MCA’s plain text

and skirts an avoidable constitutional quagmire.

I would reverse. Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 50

I. Background

A. History and Structure of the Federal Reserve

In all its forms, the central bank of the United States has faced legal and

political challenges. Some of our nation’s earliest and most important debates

surrounded the Fed’s predecessors. These debates still echo through this case.

1. The First and Second National Banks

The First Bank of the United States was chartered in 1791 amid political and

legal controversy. The First Bank, like the modern regional Federal Reserve Banks,

was quasi-private. The federal government appointed five directors and private

shareholders appointed twenty more. Alexander Hamilton proposed the bank and

argued it was the cornerstone of a strong national economy and necessary to cement

the states into a national bond. See Bray Hammond, Banks and Politics in America:

From the Revolution to the Civil War 114–15 (1957). Thomas Jefferson believed that

the Bank was not only unnecessary, but a dangerous and unconstitutional expansion

of federal power. Id. at 117. As to the constitutional question, James Madison and

Attorney General Edmund Randolph agreed with Jefferson. Id. at 115–17. The

factions that formed in this debate outlined America’s first political parties.

The Second Bank of the United States was chartered in 1816. Once again, the

President appointed five of the bank’s twenty-five directors. This time, challenges to

the bank’s constitutionality made it to the Supreme Court. Chief Justice Marshall

agreed with Hamilton and ruled that the Constitution’s Necessary and Proper Clause

gave Congress the authority to charter and administer a national bank. See 2 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 51

McCulloch v. Maryland, 17 U.S. 316, 353 (1819). But that did not save the Second

Bank from political controversy. Eventually, President Andrew Jackson, still

believing the Second Bank was unconstitutional, vetoed legislation to renew the

Second Bank’s charter. Disagreements over the constitutionality of the national bank

firmed the lines between the Whigs, Republicans, and Democrats.

2. The Federal Reserve System

The modern Federal Reserve System began in 1913 when Congress passed the

Federal Reserve Act. 12 U.S.C. § 221 et seq. The FRA created twelve regional

Reserve Banks and a Federal Reserve Board in Washington, D.C. Congress later

added the Federal Open Market Committee (FOMC), completing the Federal Reserve

System.

The Federal Reserve Board, now called the Board of Governors, is not itself a

bank, but an independent federal agency made up of seven members appointed by the

President and confirmed by the Senate. The Board oversees the twelve regional

banks and guides their day-to-day activities through notice-and-comment rulemaking.

See generally 12 U.S.C. § 248.

The regional banks each serve as a “bank for banks” in their region. They hold

deposits, lend to member banks, and serve as the bank for the U.S. Treasury. Each

regional bank is run by a board of nine directors. Three A-Class directors and three

B-Class directors are chosen by the member banks—state and national banks who

own stock in their regional bank. Three C-Class directors are chosen by the Board of

Governors. The A-Class and B-Class directors elect a chair from the C-Class

3 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 52

directors, subject to approval from the Board of Governors. The chair serves as the

president and chief executive of the regional bank, and serves as a rotating member

of the FOMC, the part of the Fed that sets the target federal funds rate and authorizes

open market operations to achieve it. 1 Once the regional bank president is chosen, he

can be removed by either the bank’s board of directors or the Board of Governors.

B. Master Accounts and Payment Services

The regional banks provide the banking services to banks in their region. The

Kansas City Fed serves District 10: Wyoming, Colorado, Nebraska, Kansas,

Oklahoma, and parts of New Mexico and Missouri. For member banks in those

states, the Kansas City Fed is their principal federal regulator, performing on-site

evaluations. The Kansas City Fed also holds deposits; lends short-term cash; issues,

transfers, and redeems government securities; and provides integral payment services

between banks.

The Federal Reserve payment services are essential to most bank business. In

fact, any time money moves from one bank to another, the Federal Reserve Banks are

involved. These payment services include wire transfer services, automated

clearinghouse services, check clearing services, and settlement services. As an

1 The FOMC is made up of the seven Governors and five regional bank presidents—the New York Fed President has a permanent seat, and the other 11 banks rotate through the four seats. The FOMC is not relevant here except noting that regional bank presidents serve on the committee.

4 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 53

example, the Fed’s clearinghouse services allow companies to direct deposit their

employees’ paychecks. In 2024, Federal Reserve payment services processed more

than $4.5 trillion per day. Fedwire Funds Service – Annual Statistics, The Fed.

Rsrv., https://www.frbservices.org/resources/financial-services/wires/volume-value-

stats/annual-stats.html (last visited Oct. 10, 2025). Before the Fed provided these

services, banks had to move physical currency between themselves; now, the Fed

simply records credits and debits between the banks.

The Fed records all these transactions in a bank’s master account. Before

1998, some banks had multiple accounts with multiple regional banks. Then the Fed

consolidated all reserve and clearing accounts into a single master account. Master

accounts are the official records of banks’ rights and obligations to each other.

Settlement in a master account is the only way to settle a U.S. dollar transaction other

than the exchange of physical currency.

Master accounts, and the payment services accessible through them, are vital

for functioning banks. Without such access, a depository institution is merely a

vault. Without their own master accounts, banks can only access these services

through a correspondent banking relationship or expensive third-party service

providers. Without a master account, a bank’s business is “effectively crippl[ed].”

Fourth Corner Credit Union v. Fed. Rsrv. Bank of Kansas City, 861 F.3d 1052, 1053

(10th Cir. 2017) (Moritz, J., concurring).

5 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 54

Unsurprisingly, Custodia Bank wants a master account. Custodia is a

Wyoming-chartered Special Purpose Depository Institution (SPDI; pronounced

“speedy”). Wyoming created SPDIs to encourage innovation in digital asset banking.

SPDIs specialize in digital asset management. 2 Under Wyoming law, they can

provide custodial services, asset servicing and management, and typical business

cash management. See Wyo. Stat. Ann. § 13-12-103(b) (2025). But they cannot loan

money and must keep 100% of reserves in cash or high-quality assets like treasury

bonds. Wyo. Stat. Ann. §§ 13-12-103(c), 105(a) (2025). Custodia’s goal as a SPDI

is to provide the full suite of banking services to the cryptocurrency industry.

Custodia wants not only to be a safe depository for digital assets like

cryptocurrencies, but also to provide traditional banking services to digital asset

companies.

To illustrate, consider a hypothetical company. HypoCo creates a new

hypothetical cryptocurrency, HypoCoin. Under Wyoming law, Custodia could

provide a safe depository for the company’s reserves of HypoCoin and, with a master

account, could facilitate HypoCo’s payroll services, bill payment, and large dollar

transfers for capital purchases. The two services would be completely separate, but

together would make Custodia a one-stop-shop for digital asset companies.

2 See generally Special Purpose Depository Institutions, Wyo. Div. of Banking, https://wyomingbankingdivision.wyo.gov/banks-and-trust- companies/special-purpose-depository-institutions (last visited Oct. 10, 2025).

6 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 55

Custodia applied for a master account in October 2020. 3 At the time,

applications for a master account were done on a one-page form and, according to the

Fed, were usually processed in five to seven business days. Custodia’s took twenty-

seven months. Discovery revealed early optimism about Custodia’s application. The

Kansas City Fed told Custodia early on there were “no show-stoppers” in its

application. App. 1721–23.

The Kansas City Fed changed its tune over time. In August 2022, the Board of

Governors issued guidance to the regional banks for evaluating account and service

requests. Guidelines for Evaluating Account and Services Requests, 87 Fed. Reg.

51099 (Aug. 19, 2022). The guidelines list six principles for guiding access

decisions. Regarding the level of scrutiny the regional banks should apply, the

guidelines create a three-tiered review framework:

1. Tier 1: Eligible institutions that are federally insured . . .

2. Tier 2: Eligible institutions that are not federally insured but are subject (by statute) to prudential supervision by a federal banking agency. In addition, (i) if such an institution is chartered under federal law, it has a holding company that is subject to Federal Reserve oversight (by statute or commitments); and (ii) if such an institution is chartered under state law and has a holding company, that holding company is subject to Federal Reserve oversight (by statute or commitments) . . .

3. Tier 3: Eligible institutions that are not federally insured and are not considered in Tier 2.

3 Custodia separately applied for membership in the Federal Reserve System and Federal Deposit Insurance Corporation insurance.

7 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 56

Id. at 51109–10. Custodia fell into Tier 3 and was subject to “the strictest level of

review.” Id. at 51110.

Then, in November 2022, FTX Trading Ltd., a fraudulent cryptocurrency

exchange company, failed. Shortly thereafter, the Board of Governors communicated

to the Kansas City Fed that Custodia’s application should be denied. The Kansas

City Fed sent the Board of Governors a draft denial letter, which the Board redlined

and returned.

On January 27, 2024, the Kansas City Fed sent Custodia the letter denying its

master account application. On the same day, the Board of Governors denied

Custodia’s membership application.

D. Custodia’s Lawsuit

Custodia filed suit before its application was denied. Its first complaint

alleged eight causes of action stemming from the Kansas City Fed’s inaction. The

Fed defendants moved to dismiss, but the district court declined to dismiss

Custodia’s Mandamus and APA claims.

After Custodia’s application was denied by the Kansas City Fed, it amended

its complaint and alleged three claims. First, Custodia alleges the Board of

Governors violated the APA by denying Custodia’s application in violation of the

Federal Reserve Act and the Monetary Control Act. Second, Custodia seeks relief

under the Mandamus Act to compel the Kansas City Fed to grant its application.

Finally, Custodia seeks declaratory relief that the Kansas City Fed and the Board of

Governors lack discretion to deny its application.

8 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 57

The Fed defendants again moved to dismiss. In this motion, they conceded

that Custodia was legally eligible for a master account, but argued it is within their

(absolute) discretion to deny an application. The district court declined to dismiss

Custodia’s APA claim against the Board, its Mandamus claim against the Kansas

City Fed, and its declaratory relief claim.

After discovery, both Custodia and the Kansas City Fed moved for judgment

as a matter of law. This time, the district court ruled for the defendants. It

concluded, first, the APA claim against the Board of Governors failed for lack of

jurisdiction. It ruled that there was no final agency action and, so, no statutory

jurisdiction. Second, the district court found that Custodia was not entitled to

mandamus relief because the Kansas City Fed had discretion over whether to issue

master accounts under 12 U.S.C. § 342. Finally, the district court held its statutory

interpretation would also preclude relief for Custodia under the APA, even if it

possessed jurisdiction.

II. Discussion

This case, at its core, turns on statutory interpretation. No amount of policy

argument or economic theory changes the fundamental question: does the Kansas

City Fed have statutory discretion to deny a master account to a legally eligible

depository institution?

The text tells the story.

There is no single statute that covers master accounts so the parties each put

forth their own theory about what statutory provision controls. Custodia claims the 9 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 58

Monetary Control Act (MCA) is a statutory command that requires a master account

“shall be available to nonmember depository institutions.” 12 U.S.C. § 248a(c)(2)

(emphasis added). On the other hand, the Kansas City Fed claims the Federal

Reserve Act (FRA), 28 U.S.C. § 342, has always given it discretion over accepting

deposits. It contends it would only make sense for it to have discretion over deposit

accounts. The Kansas City Fed bolsters its argument by claiming that a statute

passed in 2022, the Toomey Amendment, 12 U.S.C. § 248c, specifically recognizes

its ability to reject master account applications.

Custodia has the better reading of the MCA and that reading controls the

outcome. The Fed’s interpretation, adopted by the majority, is certainly plausible.

But what the majority calls “context,” I would dub misdirection. Section 248a’s text

is clear and we need go no further, although in context my interpretation avoids

significant constitutional problems. I start by interpreting the MCA and then address

the majority’s approach and concerns.

A. Interpreting the MCA

The MCA provides the clearest textual basis for Custodia’s claims. After all,

it says “[a]ll Federal Reserve bank services covered by the fee schedule shall be

available to nonmember depository institutions and such services shall be priced at

the same fee schedule applicable to member banks.” 12 U.S.C. § 248a(c)(2). This

isolated reading of the text is compelling. Before today, the only other Court of

Appeals judge to explicitly reach the issue (in a concurrence) found that § 248a

controls. Fourth Corner Credit Union, 861 F.3d at 1068 (Bacharach, J., concurring).

10 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 59

In a case also arising in this circuit, Fourth Corner Credit Union v. Federal Reserve

Bank of Kansas City, Judge Bacharach, writing separately, concluded a credit union

hoping to service marijuana-related businesses was entitled to a master account. Id.

First, he concluded the district court should have presumed that Fourth Corner would

follow the law in line with its promises. Id. at 1065. Second, and relevant here, he

determined “§ 248a(c)(2) unambiguously entitles Fourth Corner to a master account.”

Id. at 1068 (emphasis added). Custodia argues that we should do the same. I agree.

First, it is undisputed that Custodia is eligible for a master account. Section

248a adopts its definition of “depository institution” from 12 U.S.C. § 461(b)(1). 12

U.S.C. § 248a(e). Custodia falls under § 461(b)(1)(A)(i): “any insured bank as

defined in section 3 of the Federal Deposit Insurance Act or any bank which is

eligible to make application to become an insured bank under section 5 of such Act.”

It is eligible to apply for insurance under the FDIA because it is a “state

bank . . . engaged in the business of receiving deposits, other than trust

funds . . . incorporated under the laws of [Wyoming].” 12 U.S.C. § 1813(2)(A)–(B);

see also Wyo. Stat. Ann. § 13-12-103(b)(vii)(E) (2025) (confirming SPDIs may

receive deposits under Wyoming law).

It is no trivial fact that Custodia falls under § 461’s broad definition.

Replacing “nonmember depository institutions” in § 248a with § 461(b)(1)(A)(i)’s

definition shows just how broadly § 248a(c)(2) was meant to sweep. The modified

statute reads, “[a]ll Federal Reserve bank services covered by the fee schedule shall

be available to [any bank which is eligible to make application to become an insured

11 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 60

bank].” 12 U.S.C. § 248a(c)(2); § 461(b)(1)(A)(i) (emphasis added). Section 248a

sweeps broadly and covers Custodia.

Second, Custodia argues, as Judge Bacharach explained, that § 248a controls

access to master accounts. Section 248a covers an enumerated list of services:

(1) currency and coin services; (2) check clearing and collection services; (3) wire transfer services; (4) automated clearinghouse services; (5) settlement services; (6) securities safekeeping services; (7) Federal Reserve float; and (8) any new services which the Federal Reserve System offers, including but not limited to payment services to effectuate the electronic transfer of funds.

12 U.S.C. § 248a(b)(1)–(8). Custodia argues that master accounts are either covered

by “any new services,” § 248a(b)(8), or are a prerequisite for those services. It

would then follow that regional banks cannot deny nonmember institutions a master

account without violating § 248a.

I find this interpretation compelling. None of the enumerated services are

“accounts,” master or otherwise. Nor does the Fed contend that it charges a fee for

master accounts as § 248a(c)(3) requires. See 28 U.S.C. § 248a(c)(3) (“Over the long

run, fees shall be established on the basis of all direct and indirect costs actually

incurred in providing the Federal Reserve services priced.”). It makes sense to think

of the master account as the means of accessing the services, not as an end in and of

itself. In Fourth Corner, both Judge Moritz and Judge Bacharach recognized that a

master account is required to access Fed services, and that the services are what the

12 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 61

credit union wanted. See Fourth Corner Credit Union, 861 F.3d at 1053 (Moritz, J.,

concurring) (“A master account is, put simply, a bank account for banks. It gives

depository institutions access to the Federal Reserve System’s services, including its

electronic payments system. In the Credit Union’s words, ‘Without such access, a

depository institution is nothing more than a vault.’”); id. at 1071 (Bacharach, J.,

concurring) (“To purchase these services, a master account is required.”). Here too,

Custodia’s business model hinges on access to the payment services, not just a master

The Fed defendants point out that a master account is not technically required

to access the payment systems. They argue that Custodia can access the payment

systems through a correspondent relationship with another bank by transacting

through that bank’s master account. But I am not persuaded that access through an

intermediary bank satisfies § 248a(c)(2). Relying on intermediaries (who may or

may not provide a long-term relationship) does not guarantee the uniform access to

payment services that the MCA intended.

Master accounts are necessary to access the payment systems. To deny a

financial institution a master account is to deny access to the payment systems. The

Kansas City Fed cannot get around statutorily mandated access to payment systems

by damming the river upstream.

Finally, Custodia asserts that § 248a(c)(2) contains two clear commands:

(1) provide universal access, and (2) at equal prices. I agree. The word “shall”

issues a command beyond the Fed’s discretion. See Lopez v. Davis, 531 U.S. 230,

13 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 62

241 (2001) (“Congress used ‘shall’ to impose discretionless obligations . . . .”); see

also Maine Cmty. Health Options v. United States, 590 U.S. 296, 310 (2020)

(“Unlike the word ‘may,’ which implies discretion, the word ‘shall’ usually connotes

a requirement.”). The statute clearly states, “[a]ll Federal Reserve bank services

covered by the fee schedule shall be available to nonmember depository institutions

and such services shall be priced at the same fee schedule applicable to member

banks.” 12 U.S.C. § 248a(c)(2) (emphasis added). The plain reading of the statute is

that the two uses of “shall” create two nondiscretionary commands for the Kansas

City Fed. “If the statutory language is plain, we must enforce it according to its

terms.” King v. Burwell, 576 U.S. 473, 486 (2015). The first command, the one

Custodia is interested in, creates nondiscretionary access for nonmember depository

institutions. And the second requires the Fed to charge equal prices for those

services.

The Kansas City Fed’s alternative reading of this provision is unpersuasive. It

first argues that the only command in the statute is to price the services equally for

member and nonmember institutions. By adopting that reading, the majority reads

the phrase “shall be available to nonmember institutions” entirely out of the statute.

That, I’m convinced, we cannot do. See TRW Inc. v. Andrews, 534 U.S. 19, 31

(2001) (“It is ‘a cardinal principle of statutory construction’ that ‘a statute ought,

upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or

word shall be superfluous, void, or insignificant.’” (quoting Duncan v. Walker, 533

U.S. 167 (2001))). The sentence contains two commands—access and fair pricing.

14 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 63

The Fed then invites us to zoom out and view the provision in broader context.

It argues that § 248a as a whole is only about the pricing of services and (c)(2) is not

a command for the Kansas City Fed, but a principle that the Board of Governors must

follow. First, it points to the heading of § 248a, “Pricing of services.” While the

headings in the U.S. Code are not law, they can provide context for the text’s

meaning. Merit Mgmt. Grp., LP v. FTI Consulting, Inc., 583 U.S. 366, 380 (2018)

(“Although section headings cannot limit the plain meaning of a statutory

text . . . ‘they supply cues’ as to what Congress intended.”). Plus, the provision is

directed at the Board of Governors. Section 248a(a) states “the Board shall publish

for public comment a set of pricing principles in accordance with this section” and

“the Board shall begin to put into effect a schedule of fees for such services which is

based on those principles.” Under this view, the 248a(c)(2) command is just a

principle for the Board of Governors to remember when pricing. The Fed finally

concludes, given this context, § 248a(c)(2) only requires access to nonmember

institutions as a class. They point out that the statute says, “all Federal Reserve

Bank Services,” but does not say “all” nonmember depository institutions. See 12

U.S.C. § 248a(c)(2) (emphasis added).

The majority accepts the Fed’s contextual interpretation; I would not. Context

does not override the plain text of the statute. Certainly, statutory titles and headings

can provide “cues”—but they are just that. Yates v. United States, 574 U.S. 528, 540

(2015). The plain meaning cannot be undone by headings and titles. Merit Mgmt.

Grp., LP, 583 U.S. at 380. True, § 248a(a) contains commands to the Board, but

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§ 248a(c)(2) is a clear principle of law. I find it strange to rule that the Board of

Governors is bound by that principle, but the Kansas City Fed is not. 4

Lastly, the presence or absence of “all” does not change the plain meaning of

the provision. I agree with Judge Bacharach in Fourth Corner that “the statute would

have the same meaning regardless of whether the word ‘all’ preceded the phrase

‘nonmember depository institutions.’” Fourth Corner Credit Union, 861 F.3d at 1069

(Bacharach, J., concurring). If Congress had included “all,” it would have been an

indefinite adjective. Id. (citing Bryan A. Garner, The Chicago Guide to Grammar,

Usage, and Punctuation 60 (2016)). Statutory drafters are often discouraged from

using pronominal indefinite adjectives unless necessary. As one commentator

advises:

a. Use adjectives such as “each,” “every,” “any,” “all,” “no,” and “some” (technically known as “pronominal indefinite adjectives”) only when necessary.

b. If the subject of the sentence is plural, it is almost never necessary to use this kind of adjective.

William P. Statsky, Legislative Analysis and Drafting 184 (2d ed. 1984) (emphases

added). Pennsylvania codified this rule. 101 Pa. Code § 15.142(c). (“Use adjectives

such as ‘each,’ ‘every,’ ‘any,’ ‘all,’ ‘no,’ and ‘some’ (technically known as

‘pronominal indefinite adjectives’) only where necessary. If the subject of the

4 Recall that the Board of Governors regulates the regional banks but does not provide the services. Applying the § 248a(c)(2) command only to the Board would direct it away from the institution able to fulfill it. Plus, that would allow the Kansas City Fed to do something the Board of Governors cannot permit it to do.

16 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 65

sentence is plural, it is almost never necessary to use such an adjective”); see also

Fourth Corner Credit Union, 861 F.3d at 1069–70 (collecting corroborating sources).

Whether a speaker says, “all ducks are birds” or simply “ducks are birds,” we

would understand he means the same thing. Here too, the statute means every

nonmember depository institution shall have access. To mandate access to

nonmember institutions as a class but allow discretion over individual institutions

gives the Kansas City Fed license to ignore the statute by denying all nonmembers on

the back end.

The majority’s reading also renders the language superfluous. The MCA not

only created § 248a(c)(2), it also amended § 342. The amendments to § 342 added

“nonmember bank[s]” to the list of institutions from whom regional banks “may

receive . . . deposits.” 12 U.S.C. § 342; see infra Section II.B (explaining the MCA’s

amendments to § 342 in greater detail). Thus, reading § 248a(c)(2) as merely

opening access to nonmember banks would make it superfluous alongside § 342. See

TRW Inc., 534 U.S. at 31.

Section 248a(c)(2) contains a clear statutory command. The Federal Reserve

System’s payment services “shall be available to nonmember depository

institutions.” 12 U.S.C. § 248a(c)(2) (emphasis added). The plain meaning of this

provision is that the Kansas City Fed may not deny Custodia a master account

because doing so would unlawfully prevent it from accessing those services.

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B. The Majority’s Contextual Argument

Instead of starting with § 248a, the majority begins its analysis with a

provision of the Federal Reserve Act, 12 U.S.C. § 342. Section 342 provides that

“[a]ny Federal Reserve bank may receive from any of its member banks, or other

depository institutions, and from the United States, deposits of current funds in

lawful money . . . .” 12 U.S.C. § 342 (emphasis added). The Fed defendants argue,

and the majority agrees, that this gives them discretion over deposits and, by logical

extension, deposit accounts. Indeed, the Supreme Court “has repeatedly observed

that the word ‘may’ clearly connotes discretion.” Biden v. Texas, 597 U.S. 785, 787

(2022) (internal quotations omitted).

The Supreme Court explored the Fed’s discretion in Farmers’ & Merchants’

Bank of Monroe v. Federal Reserve Bank of Richmond, 262 U.S. 649 (1923). In that

case, the Court held that “neither section [342], nor any other provision of the

Federal Reserve Act, imposes upon Reserve Banks any obligation to receive checks

for collection. The act merely confers authority to do so.” Id. at 662. The majority

reads Farmers’ as confirmation that the Fed has broad discretion over deposits and

that includes deposit accounts. It also argues that statutory amendments have only

affirmed this discretion.

The history does not support this broad assertion. When the MCA was passed,

it made only minor amendments to § 342. In fact, one of the only changes was to add

“other depository institutions” to the list of parties it may receive deposits from.

Depository Institutions Deregulation and Monetary Control Act (MCA), Pub. L. No.

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96-221, § 105(a)(1), 94 Stat. 132, 139 (1980). Meanwhile, Congress placed § 248a in

a new section that is not linked to the discretion of regional banks. The Supreme

Court has noted that the FRA “appears to have been drawn with great care.

Throughout the Act Congress clearly distinguished between what the board and the

Reserve Banks ‘shall’ do and what they ‘may’ do.” Farmers’ & Merchants’ Bank of

Monroe, 262 U.S. at 663. The majority argues that if Congress had intended to limit

the bank’s discretion, it would have done so in the section granting that discretion.

Once again in 2022, Congress amended the FRA. This amendment, the

Toomey Amendment, also supports discretion in the majority’s eyes.

“The Board shall create and maintain a public, online, and searchable database that contains . . . a list of every entity that submits an access request for a reserve bank master account and services after enactment of this section (or that has submitted an access request that is pending on the date of enactment of this section), including whether, and the dates on which, a request . . . was approved, rejected, pending, or withdrawn.”

12 U.S.C. § 248c(b)(1)(B)(ii). The majority believes that with this amendment,

Congress once again considered and blessed the Fed’s ability to reject master account

applications.

The majority’s overarching theory is that § 342 gives the Fed broad discretion

over deposits and Congress affirmed that discretion when it passed the MCA and the

Toomey Amendment. To find that Custodia has an absolute entitlement to a master

account based solely on § 248a(c)(2) would be squeezing an elephant into a

mousehole. Certainly, this argument has some merit. After all, this is how the

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district court in this case ruled, and two other district courts agreed. See PayServices

Bank v. Fed. Rsrv. Bank of S.F., No. 1:23-CV-00305-REP, 2024 WL 1347094 (D.

Idaho Mar. 30, 2024) (appeal docketed); see also Banco San Juan Internacional, Inc.

v. Fed. Rsrv. Bank of N.Y., 762 F. Supp. 3d 247 (S.D.N.Y. 2025).

But respectfully, I disagree. The discretion the majority identifies in § 342 is

not the heart of that statute. Section 342 is simply the background legal principle that

gives the regional banks legal authority to accept deposits—“words of authorization

merely.” Farmers’ & Merchants’ Bank of Monroe, 262 U.S. at 662. No doubt

Congress can pass additional laws changing the Fed’s discretion. It did so in 1916,

further allowing the Fed to accept deposits in maturing bills. See Federal Reserve

Act Amendments, Pub. L. No. 64-270, 39 Stat. 752 (1916). Section 248a limits the

Kansas City Fed’s discretion in light of § 342’s backdrop. I agree that the placement

of this provision is imperfect, but that does not make the statutory language any less

clear. Besides, as I explain below, the MCA is no mousehole.

Further, the Toomey Amendment does not affirm any powers of the Kansas

City Fed. In the majority’s view, the Toomey Amendment underlines its conclusion

that Congress expected the Fed would reject some master account applications. But I

do not believe the Amendment changed anything. Congress passed the Toomey

Amendment because it believed rejections were happening and merely wanted to

gather information. See Former Senator Patrick J. Toomey Amicus Br. 12 (“The

focus was consistently, and exclusively, on promoting transparency as to which

institutions held and had applied for master accounts.”); see also Members of the

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U.S. Senate Banking Committee and U.S. House Financial Services Committee

Amicus Br. 20 (“It is unreasonable to construe the Toomey Amendment as modifying

§ 248a(c)(2) or implying Congressional intent for § 342 to override the mandatory

language of § 248a(c)(2).”). I read the Toomey Amendment only to require

transparency in the existing framework. Whether the Fed denies a master account

because it believes a bank is statutorily ineligible, or is exercising unlawful

discretion, it must disclose its decision to the public.

The reading the Fed advances and the majority endorses is certainly a plausible

one, but it is not the best reading of the statute. The clear, unambiguous meaning of

“shall be available” cannot be explained away. 12 U.S.C. § 248a(c)(2).

C. Of Elephants and Mouseholes

An important influence on the majority’s constricting interpretation of § 248a

is its belief that Congress would not make a change to the Fed’s discretion in a

“single sentence tucked deep and innocuously inside . . . the MCA.” Majority Op.

30. In the majority’s view, limiting the Fed’s discretion risks financial instability by

inhibiting its ability to safeguard our financial system. Congress would not make

such a change in a relatively obscure statutory section—that would be like finding an

elephant in a mousehole. But the Fed has many tools in its belt to protect against

harmful banking practices; granting it unreviewable discretion over deposit accounts

would itself be an elephant that does not fit within the MCA mousehole. So this may

be the rare case in which there are two elephants and two mouseholes. Regardless of

the consequences, we must interpret the law.

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This case presents a choice between a nondiscretionary entitlement for

Custodia (and any other eligible depository institution) and unreviewable discretion

for the Kansas City Fed. At oral argument, counsel for the Kansas City Fed

suggested it disclaimed unreviewable discretion. But that is not the clear logic of its

position. Custodia seeks relief under the Mandamus Act, and mandamus is only

available to compel nondiscretionary acts. 28 U.S.C. § 1361. By granting the

Kansas City Fed any discretion, we preclude mandamus relief. When pressed at oral

argument to give us another way the Kansas City Fed’s discretion would be subject to

judicial review, counsel could not.

The district courts that have agreed with the Kansas City Fed’s position,

moreover, have found the regional banks’ discretion to be beyond judicial review.

Both the Southern District of New York and the District of Idaho recognized that if

master account decisions are discretionary, they are beyond APA review and

mandamus relief. In Banco San Juan Internacional, Inc. v Federal Reserve Bank of

New York, the court ruled that master accounts were governed by § 342 and were

subject to the bank’s discretion. 762 F. Supp. 3d at 266–67. As a result, it ruled that

Banco San Juan’s “APA, Mandamus Act, and DJA claims are precluded from review

by statute.” Id. at 274. It then dismissed Banco San Juan’s due process claims

because the bank failed to identify a valid cause of action. Id. at 283. Finally, the

court dismissed Banco San Juan’s state-law claims because the bank had conceded

that the New York Fed had a discretionary right to terminate master accounts. Id. at

284. The district court in PayServices Bank v. Federal Reserve Bank of San

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Francisco likewise recognized that “[t]he success of [PayServices’ APA, Mandamus,

and Due Process] claims depends on the existence of a nondiscretionary duty.” 2024

WL 1347094, at *6. At oral argument before the Ninth Circuit, counsel for the San

Francisco Fed confirmed his argument was that there was “no opportunity for judicial

review.” Oral Argument at 18:58, PayServices Bank v. Federal Rsrv. Bank of S.F.,

No. 24-2455 (9th Cir. argued Dec. 12, 2024).

The Kansas City Fed’s attempt to temper its legal claim misses the larger

consequence of its theory. There is really no way around the fact that any discretion

becomes unreviewable discretion.

Either outcome would come with significant consequences for our financial

system and our federal structure. The majority concludes that the better view is Fed

discretion. But the MCA is no mousehole—it upended the bargain between the

federal reserve and nonmember banks. As one scholar aptly explains, “Congress

struck a compromise in the Monetary Control Act of 1980: All depository institutions

would be subject to federally established reserve requirements and in return all

depository institutions would get access to the Federal Reserve’s payment services.”

Julie Andersen Hill, From Cannabis to Crypto: Federal Reserve Discretion in

Payments, 109 Iowa L. Rev. 117, 168 (2023). Even the Fed’s own publications

recognize that the MCA “changed the way the Fed provided services.” Federal

Reserve System: The First 100 Years, Fed. Rsrv. Bank of Phila. (Jan. 2021),

https://www.philadelphiafed.org/-

/media/FRBP/Assets/Institutional/Education/Publications/federal-reserve-system-the-

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first-100-years.pdf. Mandating that Custodia have access to Fed payment systems is

perfectly in line with the policy changes Congress intended in the MCA.

The MCA was passed in 1980 and, to my knowledge, the Fed denied a master

account for the first time in 2015. See Fourth Corner Credit Union, 861 F.3d at 1053

(Moritz, J., concurring). During those 30 years, the Fed used other tools to mitigate

potential risk to the financial system. It still has general discretion over deposits and

can reject deposits it views as risky. 5 Section 241(c)(2) also explicitly leaves open

all other requirements that member banks are subject to. 12 U.S.C. § 248a(c)(2)

(“[N]onmembers shall be subject to any other terms, including a requirement of

balances sufficient for clearing purposes, that the Board may determine are

applicable to member banks.”). The Fed can require banks to maintain extra

balances, limit the total deposits, limit the size of transfers, and deny access to other

services not covered under § 248a, like the discount window. See generally Guide to

the Federal Reserve’s Payment System Risk Policy on Intraday Credit, Bd. of

Governors of the Fed. Rsrv. Sys. (July 20, 2023),

https://www.federalreserve.gov/paymentsystems/files /psr_guide.pdf. The Fed has

managed risky banks with master accounts for years, and I am confident it still can.

Indeed, recent history has amply demonstrated that traditional banks can be no less

5 Of course, the Fed cannot deny all deposits and de facto prevent Custodia from accessing payment services. Nat’l Rifle Ass’n of Am. v. Vullo, 602 U.S. 175, 191 (2024) (“[A] government official cannot do indirectly what she is barred from doing directly.”).

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risky than innovative banks. The Fed’s policy concerns can be handled through

policy innovation rather than shutting the door to innovative banks and insulating

itself from judicial review.

D. Constitutional Avoidance

Finally, the majority’s interpretation of the law, though plausible, raises a host

of constitutional concerns that we are bound to avoid. See Clark v. Martinez, 543

U.S. 371, 380–81 (2005) (“[W]hen deciding which of two plausible statutory

constructions to adopt, a court must consider the necessary consequences of its

choice. If one of them would raise a multitude of constitutional problems, the other

should prevail.”). I agree with Custodia and its amici that giving unreviewable

discretion to the Kansas City Fed would push the boundaries of executive power. So

I adopt the interpretation that limits the Fed’s discretion and evades any

constitutional issues thereby.

The executive power in Article II of the Constitution is “vested in a President

of the United States of America.” U.S. Const. art. II, § 1, cl.1. The Constitution

“provides for executive officers to ‘assist the supreme Magistrate in discharging the

duties of his trust.’” Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477,

483 (2010) (quoting 30 Writings of George Washington 334 (J. Fitzpatrick ed.

1939)). These officers must still be accountable to the people, by being accountable

to the President. See generally, Michael W. McConnell, The President Who Would

Not Be King: Executive Power under the Constitution 161–69 (2020) (“Unless the

President has the power to remove executive officers ‘at pleasure’—to use

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Gouverneur Morris’s term—he cannot exercise control of the executive branch,

cannot ‘take care’ that the laws be faithfully executed, and is deprived of a portion of

‘the executive power.’”). They must meet the appointment and removal requirements

set forth by the Constitution and Supreme Court case law.

The Supreme Court’s clearest articulation of the distinction between superior

officers, inferior officers, and employees comes from Lucia. In Lucia, the Court

ruled that SEC Administrative Law Judges are officers of the United States, not mere

employees. Lucia v. Sec. & Exch. Comm’n, 585 U.S. 237, 249 (2018). The Lucia

majority held that the ALJs were officers under Buckley v. Valeo’s “significant

authority” test. Id. The Court did not reach the question of whether the ALJs were

inferior or superior officers because the ALJs were unconstitutionally appointed

regardless of that distinction. Id. at 245–46. In this case, the President of the Kansas

City Fed is certainly not a constitutionally appointed superior officer, and if he is an

inferior officer, the appointment and removal process are suspect. Like Lucia, we are

concerned with the line between officer and employee.

Principal officers who occupy a “continuing position established by law” and

“exercise significant authority pursuant to the laws of the United States,” Lucia, 585

U.S. at 245 (citation modified), must be appointed by the President and confirmed by

the Senate, see U.S. Const. art. II, § 2, cl. 2. Inferior officers also occupy a

continuing position and exercise significant authority but may be appointed by, and

must be subject to, a principal officer. See Edmond v. United States, 520 U.S. 651,

662–63 (1997). All other executive officials are employees whose “duties [are]

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‘occasional or temporary’ rather than ‘continuing and permanent.’” Lucia, 585 U.S.

at 245 (quoting United States v. Germaine, 99 U.S. 508, 511–12 (1878)). The

Constitution “cares not a whit about who” appoints employees. Id.

The majority’s decision that the Kansas City Fed and its president may deny

master accounts makes it much more likely that they are inferior officers of the

United States. “The exercise of ‘significant authority pursuant to the laws of the

United States’ marks . . . the line between officer and nonofficer.” Edmond, 520 U.S.

at 662 (quoting Buckley v. Valeo, 424 U.S. 1, 126 (1976)). If the Kansas City Fed

President is an inferior officer, then we must question whether the appointment and

removal process is constitutional. Recall that the bank president is chosen from

among the C-Class directors appointed by the Board of Governors by the A- and B-

Class directors chosen by the private member banks. The Governors may be

principal officers, but whether they are properly appointing regional bank presidents

is a tricky legal question. The bank president can also be removed by either the

board of directors or the Board of Governors. Since “executive power include[s] a

power to oversee executive officers through removal,” Free Enter. Fund, 561 U.S. at

492, I am skeptical of an attempt to delegate the removal power to private board

members.

I do not mean to suggest that the entirety of the Federal Reserve System is

unconstitutional. The Supreme Court has made clear “[t]he Federal Reserve is a

uniquely structured, quasi-private entity that follows in the distinct historical

tradition of the First and Second Banks of the United States.” Trump v. Wilcox, 145

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S. Ct. 1415, 1415 (2025). But if the Fed’s independence is constitutional only

because it “follows in the distinct historical tradition of the First and Second Banks

of the United States,” id., the Fed would be wise not to expand its power beyond its

historical limits. As scholars have put it, “[m]oving money around . . . seems quite

like what the First and Second Banks did,” but “to the extent that Congress has given

the Fed regulatory authority for this purpose . . . , the argument that the President

does not enjoy removal authority is much harder to make.” Aditya Bamzai & Aaron

L. Nielson, Article II and the Federal Reserve, 109 Cornell L. Rev. 843, 906–07

(2024).

We can avoid these thorny questions if we conclude, as I think we must, that

the Bank President is merely an employee of the United States. So we must favor the

interpretation of the statute that prohibits the Kansas City Fed President from

exercising “significant executive authority.” Lucia, 585 U.S. at 245.

We are bound by the ordinary language of the statute and, in my view, shall

means shall. Section § 248a(c)(2) mandates access to the Fed’s payment services for

all nonmember depository institutions. By denying Custodia a master account, the

Kansas City Fed has unlawfully denied it access to those services which are vital to

its business. That, it cannot do.

III. Conclusion

This case comes clothed in 21st Century terms: cryptocurrency, digital assets,

instant wire transfers, and master accounts. But there is nothing new about this issue.

Courts have probed the legality of our nation’s central bank and interpreted the 28 Appellate Case: 24-8024 Document: 167 Date Filed: 10/31/2025 Page: 77

relevant statutes since the founding. It remains true that “where a specific duty is

assigned by law, and individual rights depend upon the performance of that duty, it

seems equally clear that the individual who considers himself injured, has a right to

resort to the laws of his country for a remedy.” Marbury v. Madison, 5 U.S. 137, 166

(1803). The Monetary Control Act unambiguously provides that the Federal

Reserve’s payment services “shall be available” to nonmember institutions like

Custodia. 12 U.S.C. § 248a(c)(2). Under the Mandamus Act, the district court has

the power to order a federal actor to perform a nondiscretionary duty.