Banco San Juan Internacional , Inc . v. the Federal Reserve Bank of New York , the Board of Governors of the Federal Reserve…

25-1144-cv
Banco San Juan Internacional, Inc. v. Fed. Rsrv. Bank of N.Y., Bd. of Governors of the Fed. Rsrv.
UNITED S TATES COURT OF APPEALS
F OR THE S ECOND CIRCUIT
August Term 2025
(Argued: January 29, 2026 Decided: May 13, 2026)
Docket No. 25-1144-cv
BANCO SAN J UAN I NTERNACIONAL , I NC .,
Plaintiff-Appellant,
- against -
T HE F EDERAL R ESERVE BANK OF N EW Y ORK ,
T HE BOARD OF G OVERNORS OF THE F EDERAL R ESERVE SYSTEM,
Defendants-Appellees.
O N A PPEAL FROM THE U NITED S TATES D ISTRICT C OURT
FOR THE SOUTHERN D ISTRICT OF NEW Y ORK
Before:
SACK , C HIN, AND L OHIER , Circuit Judges.

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Appeal from orders and final judgment of the United States District
Court for the Southern District of New York (Koeltl, J.) dismissing all claims
brought by a Puerto Rican "International Banking Entity." After its Master
Account at a regional Federal Reserve Bank was terminated, the International
Banking Entity brought suit against the Reserve Bank and the Board of
Governors of the Federal Reserve System, alleging that it was statutorily entitled
to an account under the Federal Reserve Act. The district court held, inter alia,
that the statute did not create a nondiscretionary entitlement to a master account,
and dismissed all claims under federal and state law pursuant to Federal Rules of
Civil Procedure 12(b)(1) and 12(b)(6).
AFFIRMED.
C ARTER G. PHILLIPS , Sidley Austin LLP, Washington,
D.C., and Kelly A. Librera, Matthew D. Olsen,
Winston & Strawn LLP, New York, New York;
Abbe D. Lowell, Lowell & Associates, PLLC,
Washington, D.C., on the brief, for Plaintiff-
Appellant Banco San Juan Internacional, Inc.
JONATHAN K. YOUNGWOOD (Meredith D. Karp, on the
brief), Simpson Thacher & Bartlett LLP, New
York, NY, and Michael M. Brennan, Michele
Kalstein, Federal Reserve Bank of New York,

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New York, NY, on the brief, for Defendant-Appellee
Federal Reserve Bank of New York.
JOSHUA P. C HADWICK (Mark Van Der Weide, Richard
M. Ashton, Nicholas Jabbour, on the brief), Board
of Governors of the Federal Reserve System,
Washington, D.C., for Defendant-Appellee Board of
Governors of the Federal Reserve System.
Anthony O. Maceira Zayas, Mabel Sotomayor
Hernández, MZLS LLC, San Juan, P.R., for Amicus
Curiae Senate of Puerto Rico, in support of Plaintiff-
Appellant.
C HIN, Circuit Judge:
For over a century, regional Federal Reserve Banks ("Reserve
Banks") have provided payment services to banks and other depository
institutions across the country. Reserve Banks -- which are the operating arms of
the nation's central bank, the Federal Reserve System (the "Fed") -- facilitate the
flow of trillions of dollars through the U.S. financial system, collectively
processing about $4.5 trillion in wire transfers,1 $188 billion in commercial
1 See Fedwire Funds Service - Annual Statistics, Fed. Rsrv. Bank Servs. (Jan. 26, 2026),
https://www.frbservices.org/resources/financial-services/wires/volume-value-
stats/annual-stats.html [https://perma.cc/SPP8-UKZP].

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automated clearinghouse transactions,2 and $33 billion in commercial checks on
a daily basis.3 All of these transactions are effectuated through master accounts,
which are the critical financial arrangement through which banks and other
depository institutions transact with each other, their customers, and the federal
government. Master accounts have accordingly been aptly described as "bank
account[s] for banks." Fourth Corner Credit Union v. Fed. Rsrv. Bank of Kan. City,
861 F.3d 1052, 1053 (10th Cir. 2017) (Moritz, J.).
This case is the latest in a series of challenges over master account
access brought by nontraditional banking institutions. Challenges have been
brought by, for example, a credit union serving cannabis businesses,4 a financial
technology payment processor for foreign transactions,5 and a cryptocurrency
2 See Commercial Automated Clearinghouse Transactions Processed by the Federal
Reserve -- Annual Data, Bd. of Governors of the Fed. Rsrv. Sys. (Feb. 26, 2026),
https://www.federalreserve.gov/paymentsystems/fedach_yearlycomm.htm
[https://perma.cc/T4KY-6RHX].
3 Commercial Checks Collected Through the Federal Reserve -- Annual Data, Bd. of
Governors of the Fed. Rsrv. Sys. (Feb. 26, 2026),
https://www.federalreserve.gov/paymentsystems/check_commcheckcolannual.htm
[https://perma.cc/L5LU-HSFY].
4 Fourth Corner Credit Union v. Fed. Rsrv. Bank of Kan. City, 154 F. Supp. 3d 1185,
1187 (D. Colo. 2016), vacated, 861 F.3d 1052 (10th Cir. 2017).
5 PayServices Bank v. Fed. Rsrv. Bank of S.F., No. 1:23-CV-00305-REP, 2024 WL
1347094, at *4 (D. Idaho Mar. 30, 2024); appeal pending, No. 24-2355 (9th Cir.).

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custody bank.6 In each case, the governing Reserve Bank evaluated the
institution's request for a master account and rejected it, thereby barring the
institution from directly accessing the Fed's payment services.
The plaintiff before us is an International Banking Entity ("IBE")
operating under an offshore bank charter pursuant to Puerto Rican law. See P.R.
Laws Ann. tit. 7, §§ 232c, 232j (2011). Plaintiff-Appellant Banco San Juan
Internacional, Inc. ("BSJI") opened a master account (the "Master Account") with
the Federal Reserve Bank of New York (the "FRBNY"), but then had the Master
Account closed by the FRBNY as a consequence of alleged noncompliance with
certain anti-money laundering safeguards. BSJI challenged the closure, arguing
that it had a statutory entitlement to its Master Account under the Federal
Reserve Act (the "FRA"), 12 U.S.C. § 221 et seq., as amended by the Monetary
Control Act (the "MCA"), Pub. L. No. 96-221, 94 Stat. 132 (1980). BSJI brought
claims against the FRBNY and the Board of Governors of the Fed (the "Board,"
and, together with the FRBNY, "Defendants") under the Administrative
Procedure Act (the "APA"), the Mandamus Act, the Declaratory Judgment Act
6 Custodia Bank, Inc. v. Fed. Rsrv. Bd. of Governors, 157 F.4th 1235, 1244 (10th Cir.
2025).

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(the "DJA"), the Fifth Amendment Due Process Clause, and New York state
contract law.
After denying BSJI's request for a preliminary injunction, the district
court granted the FRBNY and the Board's motions to dismiss, and later denied
BSJI's motion to add another APA claim and a Fifth Amendment Equal
Protection claim. It then entered judgment dismissing BSJI's amended complaint
and denying leave to amend.
We conclude that BSJI does not have a statutory entitlement to a
master account under the Federal Reserve Act. Because BSJI's federal law claims
turn on the existence of a nondiscretionary obligation on the part of the FRBNY,
they were properly dismissed. We further conclude that BSJI does not have
constitutional standing to assert its claims against the Board, it has failed to
plausibly plead its contract claims under New York state law, and its proposed
Equal Protection claim is futile. Accordingly, we AFFIRM the judgment of the
district court.

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BACKGROUND
I. The Federal Reserve System7
The Fed was established in 1913 pursuant to the FRA, and is
composed of its Board of Governors, the Federal Open Market Committee, and
twelve regional Reserve Banks. The Reserve Banks are incorporated as private
corporations owned by private shareholders, see 12 U.S.C. §§ 282, 321; United
States ex rel. Kraus v. Wells Fargo & Co., 943 F.3d 588, 597 (2d Cir. 2019), and are
statutorily authorized to provide banking services -- such as holding deposits,
issuing loans, facilitating wire and automated clearing house transfers, and
settling transactions -- to banks and to the federal government, see Fed. Rsrv.
Sys., The Fed Explained: What the Central Bank Does 86-87 (11th ed. 2021); Financial
Services, FRBServices.org, https://www.frbservices.org/financial-services
[https://perma.cc/G3H6-R99P].
7 The facts in this section are either undisputed or drawn from the relevant
statutory text and legislative history, of which we may take judicial notice. See Goe v.
Zucker, 43 F.4th 19, 29 (2d Cir. 2022).

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A. Reserve Banks and Master Accounts
Banks and other depository institutions8 access Reserve Bank
services by holding a master account, which is a deposit account held and
administered by the Reserve Banks into which the owner can make deposits and
from which it can make withdrawals. To be statutorily eligible for such an
account, a depository institution must be chartered under federal, state, or
territorial law, and be "engaged in the business of receiving deposits." 12 U.S.C.
§ 1813(a).
When the Fed was created in 1913, direct access to its payment
services was limited to "member banks" -- national or state-chartered banks that
purchased stock in their regional Reserve Bank and were subject to the Fed's
regulatory oversight. See id. §§ 221-223; 12 C.F.R. §§ 209.1-209.5. Member banks
could access the Fed's services for free, but had to maintain a certain amount of
non-interest-bearing reserves at their respective Reserve Bank. See Federal
8 The term "depository institutions" includes banks, savings associations, and
credit unions. See 12 U.S.C. § 461(b)(1). Because BSJI is a "State bank" chartered under
the laws of Puerto Rico as defined in 12 U.S.C. § 1813(a), we use the terms "bank" and
"depository institution" interchangeably in this opinion.

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Reserve Act, Pub. L. No. 63-43, §§ 2, 19, 38 Stat. 251, 252, 270 (1913).9 By contrast,
nonmember banks could only indirectly access the Fed's services by keeping
reserves with correspondent member banks that charged for payment services.
This regime changed with the passage of the MCA in 1980. The
MCA was a legislative response to two sources of mounting market pressure.
First, novel financial institutions like credit unions and thrifts were becoming
more popular, but had to pay correspondent banks to access the same Fed
services that member banks were provided for free, causing concern that the Fed
was undercutting its private competitors. Second, the Fed was experiencing
what its then-Chairman described as an "avalanche in [the] loss of members" as
rising interest rates increased the cost to member banks of holding the required
amount of non-interest-bearing reserves. Federal Reserve Requirements: Hearings
on S. 353 and Proposed Amendments, S. 85, and H.R. 7 Before the S. Comm. on
Banking, Hous., & Urb. Affs., 96th Cong. 5-6 (1980) (statement of Paul A. Volcker,
Chairman, Bd. of Governors of the Fed. Rsrv. Sys.); see also Monetary Control and
the Membership Problem: Hearings on H.R. 13476, H.R. 13477, H.R. 12706, and H.R.
9 Historically, the reserve requirement was a critical monetary policy tool,
allowing the Fed to control available money supply, which in turn affects interest rates.
See The Fed Explained, supra, at 36, 40, 42.

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14072 Before the H. Comm. on Banking, Fin. & Urb. Affs., 95th Cong. 80 (1978)
(statement of G. William Miller, Chairman, Bd. of Governors of the Fed. Rsrv.
Sys.).
Congress responded to these concerns by enacting a two-fold
solution in the MCA. First, the MCA made nonmember banks statutorily eligible
for Reserve Bank services, see 12 U.S.C. § 342, but subjected them to the Fed's
reserve requirements, id. § 461(b)(2)(D). This would increase reserves and the
Fed's corresponding influence over monetary policy while mitigating the
"avalanche" of membership loss. Second, and in parallel, the Fed would begin
charging both member and nonmember banks for its payment services. Id.
§ 248a(a). The Board would set a uniform fee schedule that covered the full costs
of providing such services "[o]ver the long run," id. § 248a(c)(3), thereby placing
the Fed in "direct competition" with private payment services providers, The Role
of the Federal Reserve in Check Clearing and the Nation's Payments System: Hearings
on S. 573 Before the Subcomm. on Com., Consumer & Monetary Affs. of the H. Comm.
On Gov't Operations & the Subcomm. on Domestic Monetary Pol'y of the H. Comm.
On Banking, Fin. & Urb. Affs., 98th Cong. 2 (1983) (statement of Sen. Doug

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Barnard, Jr., Chairman, Subcomm. on Com., Consumer & Monetary Affs. of the
H. Comm. on Gov't Operations).
As was true before the MCA, banks today access the Fed's payment
services through an account at a Reserve Bank. While some banks originally had
accounts with several Reserve Banks, banks have, since 1998, accessed the Fed's
services through a single master account. See Julie Andersen Hill, Opening a
Federal Reserve Account, 40 Yale J. on Regul. 453, 462 (2023). To open a master
account, banks execute a Master Account Agreement ("MAA"), which has, since
1998, incorporated by reference Operating Circular 1 ("OC 1"), a standard policy
that sets forth the terms under which eligible banks may open, maintain, and
terminate an account. See Fed. Rsrv. Bank of Dall., Federal Reserve Standardized
Operating Circulars, Notice 97-104 (Nov. 12, 1997), https://fraser.stlouisfed.org/
title/district-notices-federal-reserve-bank-dallas-5569/federal-reserve-
standardized-operating-circulars-546823 [https://perma.cc/SH6Y-KJC9] (first OC
1, effective January 1998) (hereinafter "OC 1 (1998)");10 Fed. Rsrv. Fin. Servs.,
Operating Circular No. 1: Account Relationships 1 (2023),
10 The first uniform OC 1 was adopted by the FRBNY in September 1997 and went
into effect in January 1998. See Fed. Rsrv. Bank of N.Y., New Operating Circulars,
Circular No. 10985, https://www.newyorkfed.org/banking/circulars/10985.html#List
[https://perma.cc/XBC2-HP3U].

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https://www.frbservices.org/binaries/content/assets/crsocms/resources/rules-
regulations/090123-operating-circular-1.pdf [https://perma.cc/HYC6-RMJ6] (most
recent OC 1, effective September 2023). OC 1 grants the Reserve Bank the right
to terminate a bank's master account "at any time by notice to the Account
Holder." Conf. App'x at 1583. Some high-risk master account holders agree to
additional enhanced risk-mitigation requirements, which are typically codified in
supplemental agreements or policies specific to a regional Reserve Bank.
The Fed and other federal banking regulators maintain significant
supervisory authority over Fed member banks.11 This supervisory authority
includes the ability to access member banks' books and records, 12 U.S.C.
§ 248(a), conduct on-site examinations, id. § 325, and take various enforcement
actions, including issuing cease-and-desists, removal orders, and civil penalties,
id. §§ 504, 1818; see Enforcement Actions, Bd. of Governors of the Fed. Rsrv. Sys.
(Jan. 15, 2025), https://www.federalreserve.gov/supervisionreg/enforcement-
11 The federal regulator to which a member bank is subject depends on whether the
institution is chartered at the federal or state level. State chartered member banks are
supervised by the Board, see 12 U.S.C. § 1813(q)(3)(A), while federally chartered
national banks are supervised by the Office of the Comptroller of the Currency (the
"OCC"), part of the U.S. Department of the Treasury, see id. §§ 1, 21, 481.

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actions-about.htm [https://perma.cc/8CUV-PQLE]. These supervisory powers do
not extend to nonmember banks, even those that hold a master account.12
Today, banks that do not hold their own master account can still
access the Fed's services through a correspondent banking relationship.
Alternatively, they may pay a private provider for these payment services.
B. The Board
While the Reserve Banks are privately owned corporations, the
Board is an independent agency whose seven governors are nominated by the
President and confirmed by the Senate. The Board "exercise[s] general
supervision" over the Reserve Banks, including by supervising their provision of
payment services through the promulgation and issuance of regulations,
statements, and guidance documents. 12 U.S.C. § 248(j); see Bd. of Governors of
the Fed. Rsrv. Sys., 111th Annual Report of the Board of Governors of the Federal
Reserve System 37-40 (2024), https://www.federalreserve.gov/publications/files/
2024-annual-report.pdf [https://perma.cc/FR84-SBXM].
12 Some nonmember banks are still subject to federal prudential supervision, albeit
not by the Fed. For example, state-chartered nonmember banks are supervised by the
Federal Deposit Insurance Corporation (the "FDIC").

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In August 2022, the Board published one such guidance document
pursuant to its supervisory authority under § 248(j) titled "Guidelines for
Evaluating Account and Services Requests" (the "Guidelines"). 87 Fed. Reg.
51099 (Aug. 19, 2022). Responding to "a recent uptick" in novel types of federal
and state-chartered depository institutions and the related increase in the
"number of inquiries and access requests" from such institutions, the Guidelines
set out six risk-assessment principles for Reserve Banks to consider when
reviewing access requests. Id. at 51099. Among them, Principle 4 states that
provision of an account "should not create undue risk to the stability of the U.S.
financial system." Id. at 51108. Principle 5 states that provision of an account
"should not create undue risk to the overall economy by facilitating activities
such as money laundering, terrorism financing, fraud, cybercrimes, economic or
trade sanctions violations, or other illicit activity." Id. at 51109.
The Guidelines also outline a three-tiered framework for the "level
of due diligence and scrutiny to be applied by Reserve Banks to different types of
institutions." Id. As relevant here, Tier 3 institutions are those that do not have
federal insurance and do not have a federal regulator. Account requests by such
institutions are subject to the "strictest level of review," in part because they have

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no federal prudential regulator and may accordingly "be subject to a regulatory
framework that is substantially different" from federally supervised institutions.
Id. at 51110.13 The Guidelines expressly note, however, that "a Reserve Bank has
the authority to grant or deny an access request by an institution in any of the
three proposed tiers." Id. at 51109 (emphasis added).
Finally, the Guidelines instruct Reserve Banks to "engage in
consultation" with the Board "on reviews of account and service requests." Id. at
51106. The Board followed up with an internal guidance memorandum issued in
January 2023, S-Letter 2677, directing Reserve Banks to, before communicating
any decision, consult with the Board if it was considering denying a master
account request made by any institution, or granting a master account to a Tier 3
institution. Both the August 2022 Guidelines and January 2023 S-Letter are
careful to emphasize, however, that "legal eligibility [for a master account] does
13 Federal prudential regulators include the Board, the OCC, and the FDIC.
Guidelines for Evaluating Account and Services Requests, 87 Fed. Reg. at 51109 n.12.
Federally insured institutions (defined as Tier 1 institutions in the Guidelines
framework), are subject to federal banking regulations. See id. at 51109. Some
institutions that do not have federal insurance still have a federal regulator (defined as
Tier 2 institutions in the Guidelines framework) -- for example, institutions that are not
federally insured but are federally chartered are subject to supervision by the OCC, and
those that are not federally insured but are state chartered and have become Fed
member banks are subject to supervision by the Board. See id. at 51109 n.12.

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not bestow a right to obtain an account and services," and that "decisions
regarding individual access requests remain at the discretion of the individual
Reserve Banks." Id.; see also Conf. App'x at 1651 (S-Letter 2677) ("[T]he Board
recognizes the discretion granted to the Reserve Banks . . . to grant or deny access
requests or to take action on existing access relationships.").
II. The Facts14
A. BSJI
BSJI is an IBE established under Puerto Rican law. By law, IBEs
cannot service most residents of Puerto Rico. Instead, IBEs were created to
attract foreign capital to Puerto Rico by offering tax-advantaged offshore
banking services to customers outside of Puerto Rico. See P.R. Laws Ann. tit. 7,
§§ 232c, 232j (2011).15 IBEs are licensed and regulated by Puerto Rico's Office of
14 Unless otherwise noted, we draw these facts from BSJI's Amended Complaint, as
well as "documents attached to the [C]omplaint as an exhibit or incorporated in it by
reference, matters of which judicial notice may be taken, or documents either in
plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing
suit." Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) (citation modified)
(quoting Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993)).
15 Unlike U.S. onshore banks, IBEs can also provide investment banking and
brokerage services. Compare 12 U.S.C. § 24 (providing that federally chartered banks
cannot "underwrite any issue of securities or stock"), and id. § 1831a(a)(1) (stating
state-chartered banks generally may not engage in activities that are barred for national

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the Commissioner of Financial Institutions, which can approve or deny IBE
applications, revoke licenses, and take enforcement action. As state-chartered
institutions without federal insurance and without a federal regulator, IBEs like
BSJI are classified as Tier 3 institutions under the Fed's August 2022 Guidelines.
BSJI was formed as an IBE in 2011 and is headquartered in
Guaynabo, Puerto Rico. It opened its Master Account with the FRBNY in
November 2011. Like all account holders, BSJI executed an MAA that
incorporated OC 1, which stated that the FRBNY could terminate its account "at
any time by notice to the Account Holder." Conf. App'x at 1583; see also id. at
1572.
B. FBI Raid and Initial Suspension
On February 6, 2019, the Federal Bureau of Investigation (the "FBI")
searched BSJI's offices in connection with a federal investigation into its
compliance with anti-money laundering laws in its dealings with a customer
based in Venezuela. The Government seized approximately $53 million in funds
and initiated a civil forfeiture action and investigation with respect to BSJI's
banks), with P.R. Laws Ann. tit. 7, § 232j(a)(9) (permitting IBEs to "[u]nderwrite,
distribute, and otherwise trade in securities, notes, debt instruments, drafts and bills of
exchange issued by a foreign person for final purchase outside of Puerto Rico").

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compliance with the Bank Secrecy Act ("BSA"). Shortly after the raid, the FRBNY
temporarily suspended BSJI's Master Account. About a year later, the
Government announced that it would return the seized funds and end its
investigation, and that, in return, BSJI had agreed to pay a $1 million fine and
improve its anti-money laundering policies.
Before the FRBNY lifted its suspension on BSJI's Master Account, the
parties executed a set of Supplemental Terms that required BSJI to comply with
an enhanced set of risk-mitigation measures.16 The Supplemental Terms
confirmed the FRBNY's right to "suspend or terminate [BSJI's] access to one or
more Financial Services," and to "close [BSJI's] Master Account." Conf. App'x at
1602. Mirroring the language of OC 1, the Supplemental Terms permitted the
FRBNY to terminate BSJI's account "at any time by giving written notice to
[BSJI]." Id.; see also id. at 1572.
16 We note that the Amended Complaint and BSJI's briefs on appeal do not contain
reference to the Supplemental Terms. The district court, however, relied in part on the
Supplemental Terms, which were introduced as part of the FRBNY's opposition to
BSJI's motion for preliminary relief, in deciding that motion and the motions to dismiss.
BSJI does not dispute its execution of the Supplemental Terms or their contents on
appeal, nor does it argue that the district court improperly relied on the Supplemental
Terms in its decision dismissing the Amended Complaint from which it appeals.
Accordingly, while we do not base our decision on the Supplemental Terms, we refer to
them to the extent that they further support our reasoning.

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After BSJI agreed to the Supplemental Terms, the FRBNY informed
BSJI that it would restore BSJI's master account access in two phases, the second
of which would occur if and when the FRBNY was satisfied that BSJI was in full
compliance with its requirements for high-risk accounts. This phased process
proceeded smoothly for the first year or so: BSJI engaged independent
consultants and submitted the requisite compliance reports, and the FRBNY
restored the first tier of account services in December 2020.
C. Account Termination
In July 2022, however, the FRBNY notified BSJI that BSJI had failed
to submit certain required compliance assessments, and that it would be closing
BSJI's Master Account in September 2022. After BSJI belatedly submitted the
missing assessments before the September closure date, the FRBNY suspended
the closure while it reviewed them, and then issued several further requests for
information.
During this review period, the FRBNY also solicited its internal
teams to conduct risk assessments of BSJI. In March 2023, the FRBNY's
Compliance Function issued a risk report identifying numerous red flags in

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BSJI's operations and concluded that BSJI posed undue risk of facilitating money
laundering or other illicit activity under Principle 5 of the Guidelines.
On April 6, 2023, the FRBNY sent an email to the Board notifying it
of the FRBNY's intent to terminate BSJI's Master Account. In that email to the
Board, the FRBNY attached its internal compliance assessments explaining its
basis for the closure. The Board replied on April 12, 2023, stating that it "ha[d] no
concerns with [the FRBNY's] application of the Guidelines to BSJI's [access] and
with it moving forward with its intended action to terminate BSJI's access based
on this analysis." Conf. App'x at 1294.
On April 24, 2023, the FRBNY sent an email to BSJI with the
compliance assessments and informed BSJI that its Master Account would be
terminated on June 20, 2023. In that email, the FRBNY highlighted the "serious
risk concerns" identified by its compliance assessments, including "[l]arge
inflows of funds" and "[m]ultiple transactions made in rapid succession to shell
companies owned by parties related to BSJI's owner in high-risk jurisdictions";
"[l]arge outflows to individuals and shell companies purportedly related to bond
payments that did not align with [] bond documentation"; and over a dozen
deficiencies in BSJI's compliance programs. Id. at 1298-301 (FRBNY email to

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BSJI); see also id. at 1546 ¶ 122, 1548-50 ¶¶ 134-39 (quoting and referencing the
email). Based on the "programmatic weaknesses in BSJI's compliance program
and the high concentration of high-risk transaction activity," the FRBNY
concluded that BSJI posed undue risk under Principle 5, and that this risk could
not be mitigated with heightened compliance controls. Id. at 1301. As a result,
the FRBNY informed BSJI that it was "exercising its contractual rights to close
[BSJI's] master account . . . upon notice to BSJI under both the Supplemental
Terms . . . as well as the applicable operating circulars." Id. at 1298.
In June 2023, the FRBNY notified BSJI that, after reviewing
supplemental information provided by BSJI, it was nonetheless moving forward
with closing BSJI's account on July 31, 2023. The FRBNY ultimately closed BSJI's
Master Account in November 2023, following, as discussed below, the district
court's denial of BSJI's motion for a preliminary injunction in this case, and this
Court's denial of an immediate stay.
III. Procedural Background
On July 25, 2023 -- six days before BSJI's Master Account was
scheduled for closure -- BSJI filed suit in the Southern District of New York,
seeking, inter alia, a temporary restraining order and preliminary injunction to

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block the closure. The district court denied BSJI's motion for a preliminary
injunction on October 27, 2023, finding that BSJI was unlikely to succeed on the
merits and did not otherwise meet the requirements for preliminary relief. See
Banco San Juan Internacional, Inc. v. Fed. Rsrv. Bank of N.Y., 700 F. Supp. 3d 86, 98-
105 (S.D.N.Y. 2023). BSJI then filed an interlocutory appeal, which it later
withdrew after this Court denied its motion for an immediate stay.
After the FRBNY closed BSJI's Master Account, BSJI filed an
Amended Complaint in February 2024, seeking, inter alia, a mandamus order to
compel reinstatement of its Master Account and $150 million in damages
pursuant to the APA, Mandamus Act, DJA, Fifth Amendment Due Process
clause, and New York state contract law. Both Defendants moved to dismiss
pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure.
The district court granted the motions on January 8, 2025, concluding that the
FRA did not provide BSJI with "an unqualified statutory right" to a master
account, and that the court accordingly lacked subject matter jurisdiction over
BSJI's APA, Mandamus Act, and DJA claims. Banco San Juan Internacional, Inc. v.
Fed. Rsrv. Bank of N.Y., 762 F. Supp. 3d 247, 266 (S.D.N.Y. 2025); see also id. at 274,
280-82. It further held that BSJI failed to plausibly plead its APA, Due Process,

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and state law claims, and that it did not have constitutional standing to assert its
claims against the Board. Id. at 274, 278-86. It then denied as futile BSJI's motion
for leave to further amend its Amended Complaint to add a new APA claim
against the Board and a new Fifth Amendment Equal Protection claim against
the FRBNY on March 10, 2025, Banco San Juan Internacional, Inc. v. Fed. Rsrv. Bank
of N.Y., No. 23-CV-6414 (JGK), 2025 WL 753768, at *1 (S.D.N.Y. Mar. 9, 2025), and
entered final judgment the same day. This appeal followed.
DISCUSSION
The central issue in this case is whether the FRA, as amended by the
MCA, grants BSJI a statutory entitlement to a master account such that the
FRBNY possesses no discretionary authority to terminate it. Because the FRA
does not authorize a private right of action, BSJI instead seeks relief pursuant to
the APA, Mandamus Act, DJA, and Due Process Clause. To succeed on these
claims, however, BSJI must first establish that the FRBNY has a nondiscretionary
obligation to grant BSJI a master account to access the Fed's payment services.
We first address the core statutory issue on which BSJI's federal
claims turn, and conclude that the FRA does not create a statutory entitlement to
a master account for nonmember depository institutions like BSJI. We then

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address BSJI's standing to bring claims against the Board, the various statutory
vehicles through which BSJI asserts federal claims against the FRBNY, BSJI's state
law contract claims against the FRBNY, and the district court's denial of leave to
amend.
We review de novo a district court's decision to dismiss for failure to
state a claim under Rule 12(b)(6), "construing the complaint liberally, accepting
all factual allegations in the complaint as true, and drawing all reasonable
inferences in the plaintiff's favor." Mazzei v. The Money Store, 62 F.4th 88, 92 (2d
Cir. 2023) (citation modified). On appeal from a district court's dismissal for lack
of subject matter jurisdiction under Rule 12(b)(1), including for lack of Article III
standing, we review legal conclusions de novo and factual findings for clear error.
A.H. by E.H. v. N.Y. State Dep't of Health, 147 F.4th 270, 276 (2d Cir. 2025). Finally,
while we generally review a district court's denial of leave to amend for abuse of
discretion, we conduct de novo review when the denial is based on a legal
conclusion, such as futility. Balintulo v. Ford Motor Co., 796 F.3d 160, 164 (2d Cir.
2015).

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I. Interpretation of the FRA and MCA
"When interpreting the meaning of a statutory provision, the best
evidence of Congress's intent is the statutory text." Grajales v. Comm'r, 47 F.4th
58, 62 (2d Cir. 2022) (citation modified). The "starting point" for statutory
interpretation is always the "language of the statute itself." United States v. Grillo,
160 F.3d 149, 150 (2d Cir. 1998) (quoting Consumer Prod. Safety Comm'n v. GTE
Sylvania, Inc., 447 U.S. 102, 108 (1980)); accord Conn. Nat'l Bank v. Germain, 503
U.S. 249, 254 (1992) ("When the words of a statute are unambiguous, then . . .
[the] judicial inquiry is complete." (citation modified)). The plain meaning of
statutory text "draws on the specific context in which that language is used."
Williams v. MTA Bus Co., 44 F.4th 115, 127 (2d Cir. 2022) (citation modified). "If,
upon examination, the text is ambiguous, we look to traditional canons of
statutory construction, the broader statutory context, and the provision's history
to help resolve the ambiguity." MSP Recovery Claims, Series LLC v. Hereford Ins.
Co., 66 F.4th 77, 86 (2d Cir. 2023).
The two statutory provisions that lie at the heart of this dispute are
12 U.S.C. §§ 342 and 248a(c)(2).

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Section 342, which codifies § 13 of the FRA as originally enacted in
1913, states: "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.
Section 248a(c)(2) was added by the MCA in 1980 as part of a new
section titled "Pricing of services." See id. § 248a. Section 248a(a) instructs the
Board to publish and implement "a proposed schedule of fees . . . for Federal
Reserve bank services" in accordance with the section. Id. § 248a(a). Section
248a(b) lists a set of Reserve Bank services that "shall be covered" by the fee
schedule. Id. § 248a(b). Section 248a(c) outlines principles to which the Board
should adhere when setting this fee schedule. Among those principles,
§ 248a(c)(2) states, in full:
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.
Id. § 248a(c)(2).

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BSJI argues that the first sentence of § 248a(c)(2), which states that
services "shall be available" to nonmember banks, means that it is statutorily
entitled to a master account, which is required to use those services. The FRBNY
and the Board instead emphasize § 342, arguing that its language that Reserve
Banks "may receive" deposits grants Reserve Banks the authority to allow or
disallow master accounts at their discretion.
A. Section 342
We agree with the FRBNY and the Board that § 342 confers to
Reserve Banks discretionary authority over master account access, and that this
discretionary authority is not disrupted or otherwise abridged by § 248a(c)(2).
By its text, § 342 gives Reserve Banks authority over master
accounts, and its language "may receive" makes that authority discretionary. 12
U.S.C. § 342.17 This discretion is clear based on the plain meaning of "may,"
century-old Supreme Court precedent, and Congress's awareness of -- and
repeated refusal to disturb -- this longstanding interpretation.
17 The term "master account" did not appear anywhere in § 13 of the original FRA;
today, however, master accounts are the only vehicle by which the Reserve Banks can
"receive . . . deposits." 12 U.S.C. § 342. Accordingly, the Reserve Banks' power "to
open" master accounts is "implied from [their] authority to receive deposits." Custodia
Bank, 157 F.4th at 1253.

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We begin with the text of § 342, which states that any Reserve Bank
"may receive . . . deposits." 12 U.S.C. § 342. The Supreme Court has "repeatedly
observed that the word 'may' clearly connotes discretion." Biden v. Texas, 597 U.S.
785, 802 (2022) (citation modified); accord Yoo v. United States, 43 F.4th 64, 72 (2d
Cir. 2022) ("The use of the word 'may' -- in contrast to words like 'shall' or
'must' -- authorizes, rather than commands."). The plain meaning of § 342,
therefore, is that Reserve Banks have the authority to grant a master account, but
are not statutorily required to do so.
In fact, more than a century ago, the Supreme Court interpreted this
exact statutory language in § 342 as "words of authorization merely." Farmers' &
Merchs.' Bank of Monroe, N.C. v. Fed. Rsrv. Bank of Richmond, Va., 262 U.S. 649, 662
(1923). In construing "may" to confer discretionary authority, the Court in
Farmers' & Merchants' underscored that "neither [§ 342], nor any other provision
of the Federal Reserve Act, imposes upon [R]eserve [B]anks any obligation" to
exercise the powers delineated in the predecessor of § 342. Id. This was
reinforced, the Court reasoned, by the fact that "[t]hroughout the [FRA] the
distinction is clearly made between what . . . the Reserve Banks 'shall' do and
what they 'may' do." Id. at 663.

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Nearly sixty years after Farmers' & Merchants', Congress
reconfirmed the Reserve Banks' discretion over accounts through the MCA. As
part of that legislation, Congress amended § 342 to expand Reserve Banks'
authority to receive deposits from "other depository institutions," but notably did
not modify the "may receive " language, thereby implicitly adopting the Court's
decades-old interpretation of that language as permissive. See Tex. Dept's of
Hous. & Cmty. Affs. v. Inclusive Cmtys. Project, 576 U.S. 519, 536-37 (2015)
(adopting similar logic regarding the Fair Housing Act); see also Lorillard v. Pons,
434 U.S. 575, 580 (1978) ("Congress is presumed to be aware of . . . [a] judicial
interpretation of a statute and to adopt that interpretation when it re-enacts a
statute without change.").
The discretionary nature of the authority conferred by § 342 was
most recently confirmed in 2022, when Congress adopted an amendment to the
FRA known as the Toomey Amendment. National Defense Authorization Act
for Fiscal Year 2023, Pub. L. No. 117-263, 136 Stat. 2395 (2022). The Toomey
Amendment, titled "Master account and services database," requires the Board to
create a public online database listing every entity that has submitted a master
account request, classifying the entity as one of three types of depository

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institutions, and indicating whether its master account request was "approved,
rejected, pending, or withdrawn . . . ." 12 U.S.C. § 248c(b)(1)(B)(ii) (emphasis
added).
The Toomey Amendment expressly contemplates the ability of
Reserve Banks to "reject[]" access requests.18 Notably, the three classification
categories listed in the amendment -- insured depository institutions, insured
credit unions, and depository institutions that are neither of the former two
categories -- are all eligible to receive master accounts under the FRA.
Accordingly, the text of the Toomey Amendment confirms that Reserve Banks
are not required to accept all access requests from statutorily eligible applicants,
and can in fact "reject[]" them.
BSJI presses us to read § 342 as merely restricting the types of
currency a Reserve Bank can accept, noting that the provision states that Reserve
Banks "may receive . . . deposits of current funds in lawful money, national-bank
18 BSJI points to an amicus brief that Senator Toomey filed in Custodia Bank, in
which he frames the amendment as a transparency law that does not otherwise
recognize or authorize any discretion by Reserve Banks. But a sponsor's post-hoc
statement of intent does not overcome the plain text of the enacted statute. See Bostock
v. Clayton Cnty., 590 U.S. 644, 653 (2020) ("When the express terms of a statute give us
one answer and extratextual considerations suggest another, it's no contest."); Quarles v.
St. Clair, 711 F.2d 691, 705 (5th Cir. 1983) ("[I]t is well accepted that even explicit post-
enactment, retrospective, statements of intent are to be looked upon with caution.").

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notes, Federal reserve notes, or checks . . . ." Id. § 342 (emphasis added). But even so,
§ 342 still delineates the types of institutions from which Reserve Banks "may
receive" those forms of currency. And the fact that Congress's single amendment
to § 342 in the MCA was to add "other depository institutions" reinforces the
view that the gravamen of the section is delineating the types of institutions that
are eligible for a master account. See Pub. L. No. 96-221, § 105(a)(1), 94 Stat. 132,
139 (1980), codified at 12 U.S.C. § 342.
We therefore conclude that the text of § 342 unambiguously confers
to Reserve Banks the authority to control access to its master accounts, and that
this authority is discretionary.
B. Section 248a
BSJI argues that § 248a overrides whatever authority is conferred by
§ 342, and instead creates a statutory entitlement to a master account on behalf of
any eligible applicant institution. We disagree, concluding that the phrase "shall
be available" in § 248a cannot bear the weight that BSJI places on those words.
Beginning again with the statutory text, § 248a is silent as to who
governs master accounts or what types of institutions are eligible to receive one.
Instead, § 248a -- which is expressly directed at the Board, rather than at Reserve

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Banks -- outlines the process for setting a fee schedule for Fed services that had
been free to member banks prior to the MCA. See 12 U.S.C. § 248a(a) ("[T]he
Board shall publish . . . a proposed schedule of fees . . . ." (emphasis added)). As
part of this process, § 248a(c)(2) requires that "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). Section 248a(c)(2) is therefore best read
as a non-discrimination requirement: When the Board sets its fee schedule, it
may not exclude nonmember banks from the schedule or price-discriminate
between member and nonmember banks. But this requirement does not create
an entitlement to those services.
Moreover, the phrase "nonmember depository institutions" refers to
the class of entities, rather than to every individual entity within the class.
Section 248a(c)(2) speaks of "nonmember depository institutions" in relation to
"member banks," requiring that Reserve Bank services "shall be available to
nonmember depository institutions" and "shall be priced at the same fee schedule
applicable to member banks," and that "nonmembers" shall be subject to the same
reserve and other requirements that are applicable to "member banks." 12 U.S.C.

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§ 248a(c)(2) (emphases added). In comparing and contrasting these two classes
of institutions, § 248a(c)(2) does not confer a statutory right to each and every
individual nonmember bank.
Tellingly, Congress can and did modify neighboring terms with
"all," but did not include it before "nonmember depository institutions." For
example, § 248a(e) states that "[a]ll depository institutions" may receive deposits
from any number of other institutions or Reserve Banks, referring to "all" entities
within the class of depository institutions. Id. § 248a(e) (emphasis added). And
earlier in the same sub-section on which BSJI relies, Congress specified that "[a]ll
Federal Reserve bank services . . . shall be available to nonmember depository
institutions . . . ." Id. § 248a(c)(2) (emphasis added). We therefore decline BSJI's
invitation to read an additional "all" into § 248a(c)(2) where it was not penned by
Congress, especially when this discrepancy in phrasing occurs in the same
section and, indeed, "in the same sentence." DHS v. MacLean, 574 U.S. 383, 392
(2015); see also Barnhart v. Sigmon Coal Co., 534 U.S. 438, 452 (2002) ("[W]hen
Congress includes particular language in one section of a statute but omits it in
another section of the same Act, it is generally presumed that Congress acts

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intentionally and purposely in the disparate inclusion or exclusion." (citation
modified)).
Finally, nothing in § 248a(c)(2) abrogates the discretionary mandate
Congress previously conferred to Reserve Banks through § 342. To be sure, the
MCA meaningfully altered the cost and accessibility of the Fed's payment
services, including by expressly permitting Reserve Banks to accept deposits
from nonmember banks through an amendment to § 342. But Congress does not
"hide elephants in mouseholes" -- that is, it does not "alter the fundamental
details" of an existing scheme through "vague terms or ancillary provisions."
Whitman v. Am. Trucking Ass'ns, 531 U.S. 457, 468 (2001). Accordingly, we are
unpersuaded that a single phrase in a sub-section of an amendment titled
"Pricing of services" and directed at the Board upends decades of Reserve Bank
authority over account access as codified by the FRA, interpreted by the Supreme
Court, and unaltered by the MCA decades later. To the extent BSJI asks us to
conclude that § 248a(c)(2) impliedly overruled the discretionary regime that had
existed for the prior seven decades, we are loath to do so "absent a clearly
expressed congressional intention." Branch v. Smith, 538 U.S. 254, 273 (2003)
(citation modified). Section 248a(c)(2) provides no such clear expression here.

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C. Statutory Structure
Our conclusion that § 248a(c)(2) does not disturb the discretionary
authority conferred by § 342 is also supported by the "broader context of the
statute as a whole." Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997).
To begin, § 342 is located in the subchapter of the FRA titled "Powers
and Duties of Federal Reserve Banks." Sensibly, then, its text is directed at the
Reserve Banks, stating that they "may receive" deposits from member banks or
other depository institutions. In comparison, § 248a is located in the subchapter
of the FRA titled "Board of Governors of the Federal Reserve System." Its various
commands are therefore unsurprisingly directed at the Board, rather than at
Reserve Banks. See, e.g., 12 U.S.C. § 248a(a) ("[T]he Board shall publish for public
comment a set of pricing principles . . . ."); id. ("[T]he Board shall begin to put into
effect a schedule of fees . . . ."); id. § 248a(d) ("The Board shall require reductions
in the operating budgets of the Federal Reserve [B]anks . . . .").
Next, placing § 248a(c)(2)'s "shall be available" language in the
context in which it is used, the sub-section is best read as a pricing principle,
rather than an account access mandate. To begin, § 248a(c)(2) is located in a
section titled "Pricing of services," and a sub-section titled "Criteria applicable."

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Id. § 248a(c); see 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." (citation modified)); INS v.
Nat'l Ctr. for Immigrants' Rts., Inc., 502 U.S. 183, 189 (1991) ("[T]he title of a statute
or section can aid in resolving an ambiguity in the legislation's text.").
Unsurprisingly, the other criteria listed in § 248a(c) all refer to the Board's
authority over the pricing of services, rather than the Reserve Banks' authority
over access to those services. See 12 U.S.C. §§ 248a(c)(1) (requiring that "services
covered by the fee schedule shall be priced explicitly"); (c)(3) (requiring that fees
be based on cost of services, including interest, overhead, and other costs); (c)(4)
(setting the operative interest rate for credited services). Sub-section (c)(2) --
which requires that all Fed services "covered by the fee schedule shall be
available to nonmember depository institutions" -- is properly read as another
pricing criterion. Id. § 248a(c)(2); see Yates v. United States, 574 U.S. 528, 543-44
(2015) (reasoning that items in a list should be understood in a manner consistent
with surrounding terms).
Moreover, the "broader statutory context" evinces § 248a(c)(2)'s
purpose of preventing discrimination against nonmember banks as a class

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following the MCA's allowance of such institutions into the Fed system. MSP
Recovery Claims, 66 F.4th at 86.19 As detailed above, the MCA was a response to
concerns about the Fed's membership crisis and anti-competitive behavior
vis-à-vis private payment providers. The MCA's two-part solution was to allow
nonmember banks to access Fed services subject to them meeting the Fed's
reserve requirement, but to charge for the services to cover cost of provision and
to compete in the private market.
Section 248a was therefore critical in the MCA's restructuring of the
Fed's operations, as it dictated the terms by which the Board was to establish the
then-new pricing schedule for Fed services. And among those terms, § 248a(c)(2)
ensured that the pricing schedule would not discriminate against newly eligible
nonmember banks. But § 248a(c)(2)'s protection of nonmember banks from the
Board's decisions with regard to pricing does not abrogate the Reserve Banks'
authority with regard to access. Moreover, giving effect to § 248a(c)(2)'s
19 BSJI points us to legislative history of the MCA describing the statute as
"open[ing] access to [Federal Reserve] services to all depository institutions on the same
terms and conditions of Master Banks." BSJI Br. at 38 (citing 126 Cong. Rec. 6250 (1980)
(Conf. Rep.)). To the extent we consider such evidence in discerning the meaning of
statutory text, there is nothing incongruous about the purpose of the MCA being to
open Fed services to nonmember banks in general, and the fact that Congress did not
make that access automatic and nondiscretionary as to every nonmember bank.

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protection of nonmember banks as a class does not preclude Reserve Banks from
allowing or denying any specific nonmember bank's access request. At bottom,
the fact that Reserve Banks may grant master accounts to nonmember banks
post-MCA does not mean they must grant such access to every eligible
nonmember bank.
* * *
We conclude that 12 U.S.C. § 342 grants Reserve Banks discretionary
authority over master account access, and that this authority is undisturbed by
the pricing principles enacted in § 248a(c). In so holding, we join the Tenth
Circuit and every district court to address this question. See Custodia Bank, Inc. v.
Fed. Rsrv. Bd. of Governors, 157 F.4th 1235 (10th Cir. 2025); Fourth Corner, 154 F.
Supp. 3d 1185, vacated, 861 F.3d 1052 (10th Cir. 2017) (per curiam); 20 PayServices
Bank v. Fed. Rsrv. Bank of S.F., No. 1:23-CV-00305-REP, 2024 WL 1347094 (D.
Idaho Mar. 30, 2024), appeal filed, No. 24-2355 (9th Cir.).21
20 On appeal, each member of the Fourth Corner panel wrote separately. Only
Judge Bacharach would have reached the merits and reversed on the operative question
here by concluding that § 248a(c)(2) created a statutory right to a master account. See
Fourth Corner, 861 F.3d at 1064-80 (Bacharach, J.).
21 BSJI's reliance on Greater Buffalo Press, Inc. v. Federal Reserve Bank of New York, a
1989 decision from our Court, is misplaced. Greater Buffalo mentioned in its background

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BSJI argues that the FRBNY terminated its Master Account as part of
a campaign to de-bank "disfavored bank models." BSJI Br. at 23. It may be that
Reserve Banks did not terminate or deny master account access until recent
years.22 But Reserve Banks have claimed the authority to limit master account
access since master accounts were first introduced nearly 30 years ago. See OC 1
(1998) ¶ 2.3 ("All master accounts are subject to Reserve Bank approval."); id. ¶
2.8 ("[The Reserve Bank] may close your master account . . . at any time . . . .").
And Reserve Banks presumably also were not, until recently, faced with requests
from novel types of banking institutions that, such as BSJI, operate without any
federal supervision or insurance.
As our Court has previously observed, Reserve Banks "operate in
the public interest" and "in furtherance of [the Fed's] functions of . . . promoting
description of the Fed that, after the MCA, "check clearing services were now to be
made available to all banks, regardless of whether or not they were member banks."
Greater Buffalo Press, Inc. v. Fed. Rsrv. Bank of N.Y., 866 F.2d 38, 40 (2d Cir. 1989). This
language does not hold that BSJI had a "nondiscretionary right to a master account,"
BSJI Br. at 47, especially because the case did not even discuss § 342 or § 248a. If
anything, the language instructing that services are "to be made available" to all instead
supports reading the MCA as extending access to Fed services to nonmember banks as
a class.
22 The Reserve Banks' history of denying master account requests was not a matter
of public record until the passage of the Toomey Amendment, which only requires the
Fed to publish the status of access requests submitted after its enactment in 2022. See 12
U.S.C. § 248c(b)(1)(B).

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the stability of the financial system." Kraus, 943 F.3d at 600 (citation modified).
To perform that function, Congress gave Reserve Banks a toolkit of scalpels and
a hatchet. Against member banks, Reserve Banks have a myriad of precise and
targeted powers -- including supervision, investigation, and enforcement
authority -- through which they can surgically manage risk. But against
nonmember banks, their primary power is the blunt instrument of allowing or
disallowing access to the Fed's payment system. Interpreting the FRA's text as
requiring that Reserve Banks grant master account access to every nonmember
institution without question -- regardless of the safety and soundness risk it
might pose -- would plainly undermine their ability to use their
statutorily-conferred authorities to "promot[e] the stability of the financial
system." Id. The FRA creates no such rule.
II. Claims Against the Board
Apart from the deficiencies in BSJI's statutory argument, its claims
against the Board also suffer from a fundamental defect in the form of Article III
standing. We agree with the district court that BSJI has not shown that its

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alleged injury is "fairly traceable to [the Board's] allegedly unlawful conduct."
Allen v. Wright, 468 U.S. 737, 751 (1984).23
To establish standing, "a plaintiff must show (i) that he suffered an
injury in fact that is concrete, particularized, and actual or imminent; (ii) that the
injury was likely caused by the defendant; and (iii) that the injury would likely
be redressed by judicial relief." TransUnion LLC v. Ramirez, 594 U.S. 413, 423
(2021) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)). To survive a
motion to dismiss based on Rule 12(b)(1), "the complaint's factual allegations of
standing must be plausible and nonconclusory," and "the plaintiff must clearly
allege facts in his complaint demonstrating each element of standing." Lugo v.
City of Troy, 114 F.4th 80, 87 (2d Cir. 2024) (citation modified).
To meet the causation requirement, the alleged injury must be "fairly
traceable to the challenged conduct of the defendant." Spokeo, Inc. v. Robins, 578
U.S. 330, 338 (2016). The defendant's conduct may be an "indirect[]" cause of the
injury, and the traceability inquiry "imposes a standard lower than proximate
cause." Rothstein v. UBS AG, 708 F.3d 82, 91-92 (2d Cir. 2013). But a plaintiff
23 Because we conclude that BSJI has failed to establish the causation element of
constitutional standing, we need not address the district court's additional conclusion as
to redressability.

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must still establish that the alleged injury was a result of "the challenged action
of the defendant," rather than the "the result of the independent action of some
third party." Lujan, 504 U.S. at 560 (quoting Simon v. E. Ky. Welfare Rts. Org., 426
U.S. 26, 41-42 (1976) (citation modified)). If the alleged injury results from the
"independent decisions" of a third party, that would "break the chain of
causation between the plaintiffs' injury and the challenged Government action"
for purposes of establishing standing. Allen, 468 U.S. at 759.
BSJI's claims against the Board fail in this respect, because the
FRBNY is an entity whose "independent decisions" caused the injury alleged
here -- the closure of BSJI's Master Account. According to the factual record
before us, the Board was involved only at two points: (i) issuing the August 2022
Guidelines and January 2023 S-Letter and (ii) replying that it "ha[d] no concerns
with" the FRBNY's moving forward with closing BSJI's Master Account after the
FRBNY informed the Board of its decision to do so. Conf. App'x at 1294. Neither
action satisfies the traceability requirement because the Board does not exercise
control over the FRBNY's access decisions with regard to any master account.
Indeed, it likely has no statutory authority to do so.

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Like all Reserve Banks, the FRBNY operates under the Board's
"general supervision." 12 U.S.C. § 248(j). BSJI contends that this means the
FRBNY "can exercise only the authority that has been delegated to it by the
Board." BSJI Br. at 59. But nowhere in the FRA does it state that the Board must
delegate the power to regulate master accounts to Reserve Banks. Instead, that
authority is given directly to Reserve Banks by § 342, which is located in the
chapter of the FRA titled "Powers and Duties of Federal Reserve Banks." 12
U.S.C. § 342; see also id. § 341 (granting Reserve Banks "all powers specifically
granted by the provisions of this chapter").
By contrast, the Board wields no authority to open, close, or set the
terms for accessing a master account. This is so based on the text of the statute
and as confirmed by subsequent actions by the Board itself, such as the issuance
of S-2677, which directs Reserve Banks to consult with the Board while expressly
recognizing "the discretion granted to the Reserve Banks under section 13 of the
Federal Reserve Act" to close an existing master account. Conf. App'x at 1651.
Indeed, the Board is not even a contractual party to the MAA or OC 1, which
reiterates the Reserve Bank's authority to close an account.

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Accordingly, we reject BSJI's argument that the Board had the
"opportunity and power" to prevent the FRBNY from terminating BSJI's Master
Account. BSJI Br. at 60. Because the FRBNY's decision to do so was an
"independent" one, its action "break[s] the chain of causation" such that BSJI fails
to establish causation, and therefore standing, as to the Board. Allen, 468 U.S. at
759.
III. Federal Law Claims Against the FRBNY
Each of BSJI's federal law claims against the FRBNY rests on the
premise that the FRBNY had a nondiscretionary obligation to provide it with
access to a master account. Because the FRA creates no such obligation, the
district court properly dismissed these claims under the relevant statutory and
constitutional provisions.
A. Administrative Procedure Act
Although there is typically a strong presumption in favor of judicial
review of an administrative action, the APA also contains express jurisdictional
carveouts from review. Below, the district court dismissed BSJI's APA claim
against the FRBNY for lack of jurisdiction, reasoning that, first, it was not an
"agency" within the meaning of the APA, and second, even if it was, its

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termination of BSJI's Master Account was "committed to agency discretion by
law." See Banco San Juan Internacional, 762 F. Supp. 3d at 274-79 (quoting, inter
alia, 5 U.S.C. § 701(a)(2)). We assume without deciding that the FRBNY is an
agency for purposes of APA review, and affirm the dismissal because the FRA
provides "no meaningful standard against which to judge the [FRBNY's] exercise
of discretion." Heckler v. Chaney, 470 U.S. 821, 830 (1985).
The APA expressly precludes judicial review of agency actions that
are "committed to agency discretion by law." 5 U.S.C. § 701(a)(2); see Salazar v.
King, 822 F.3d 61, 76 (2d Cir. 2016). This exception is drawn narrowly and "is
applicable in those rare instances where statutes are drawn in such broad terms"
that there is "no law to apply." Citizens to Pres. Overton Park v. Volpe, 401 U.S. 402,
410 (1971) (citation modified). The party challenging the agency decision bears
the burden of establishing the "law to apply," see Lunney v. United States, 319 F.3d
550, 559 (2d Cir. 2003), which can be found in "the statutory text, the agency's
regulations, and informal agency guidance that govern the agency's challenged
action," Salazar, 822 F.3d at 76.
This is a case where Congress has not provided us with any "law to
apply." The governing statute, 12 U.S.C. § 342, states only that Reserve Banks

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"may" accept deposits from eligible institutions. 12 U.S.C. § 342. As we have
explained, whereas we have previously held that statutory use of the word
"shall" creates "mandatory, non-discretionary . . . requirements for agency action
and shows that Congress has not left the decision . . . to the discretion of the
agency," there is no such "mandatory command" here. See Salazar, 822 F.3d at 77.
Even if we expand our inquiry to consider regulations and
guidelines issued by the Board, those likewise do not "contain meaningful
standards constraining [the FRBNY's] discretion and providing for judicial
review." Westchester v. U.S. Dep't of Hous. & Urb. Dev., 778 F.3d 412, 422 (2d Cir.
2015). Principles 4 and 5 of the August 2022 Guidelines, which direct the Reserve
Banks to "not create undue risk to the stability of the U.S. financial system" or
"the overall economy," respectively, do not articulate judicially enforceable
standards and instead reiterate that "decisions regarding individual access
requests remain at the discretion of the individual Reserve Banks." 87 Fed. Reg.
51099, 51106. And S-Letter 2677, which directs Reserve Banks to consult with the
Board before issuing an account to a Tier 3 institution, also expressly recognizes
"the discretion granted to the Reserve Banks . . . to grant or deny access requests."
Conf. App'x at 1651.

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BSJI has not pointed to sufficient "law to apply" in assessing the
propriety of the FRBNY's discretionary act of closure. Accordingly, we conclude
that, assuming the FRBNY is an agency for purposes of the APA, its termination
of BSJI's Master Account was nonetheless "committed to [its] discretion by law"
and therefore not subject to judicial review. 5 U.S.C. § 701(a)(2).
B. Mandamus Act, Declaratory Judgment Act, and Due Process Claims
BSJI addresses its remaining federal claims against the FRBNY in a
single sentence of its brief, arguing that "the district court erred in dismissing
[its] APA, Mandamus Act, Due Process, and declaratory judgment claims"
because each decision "turned on [the district court's] mistaken interpretation" of
the FRA. BSJI Br. at 47. Such "perfunctory" treatment of these issues,
"unaccompanied by some effort at developed argumentation," results in the
abandonment of these challenges. United States v. Botti, 711 F.3d 299 (2d Cir.
2013) (citation modified).
Even if BSJI had not abandoned its challenges to the dismissal of its
non-APA federal claims, its Mandamus Act and Due Process challenges would
fail because they depend on the presence of a nondiscretionary obligation on the
part of the FRBNY, which, as discussed above, does not exist here. See Pittston

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Coal Grp. v. Sebben, 488 U.S. 105, 121 (1988) ("The extraordinary remedy of
mandamus under 28 U.S.C. § 1361 will issue only to compel the performance of a
clear nondiscretionary duty" (citation modified)); Town of Castle Rock v. Gonzales,
545 U.S. 748, 756 (2005) (holding that a government benefit is "not a protected
entitlement" for purposes of supporting a Due Process claim if "officials may
grant or deny it in their discretion"). Moreover, § 248a does not authorize the
right of action needed to support BSJI's DJA and Due Process claims. See 12
U.S.C. § 504 (containing no statutory private right of action); cf. Adato v. Kagan,
599 F.2d 1111 (2d Cir. 1979) (holding that there is no implied right of action
under § 11(m) of the FRA); see also Chevron Corp. v. Naranjo, 667 F.3d 232, 244 (2d
Cir. 2012) ("The DJA is procedural only, and does not create an independent
cause of action" (citation modified)); Corr. Servs. Corp. v. Malesko, 534 U.S. 61, 69-
70 (2001) (reasoning that Bivens's recognition of an implied cause of action under
the Due Process clause does not extend to suits against federal agencies).
IV. State-Law Claims Against the FRBNY
BSJI also brought two state-law contract claims against the FRBNY:
(1) breach of the contractual duty of care, and (2) breach of the implied covenant

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of good faith and fair dealing. Both claims were correctly dismissed as a matter
of law.
BSJI's contract claims begin and end with Section 2.10 of OC 1,
which is incorporated by the MAA and governed by New York law. Section 2.10
states that the FRBNY can terminate BSJI's Master Account "at any time by
notice." Conf. App'x at 1583. This termination right was subsequently reinforced
by Article 3 of the Supplemental Terms, which states that "the Bank may suspend
or terminate [BSJI's] access" or "close [BSJI's] Master Account [or] impose
conditions . . . at any time by giving written notice to [BSJI.]" Id. at 1602. These
provisions create an "absolute, unqualified right to terminate" the account that,
under New York law, must be given effect without judicial inquiry into whether
the right was "activated by an ulterior motive." See Big Apple Car, Inc. v. City of
New York, 204 A.D.2d 109, 111 (1st Dep't 1994); Watermelons Plus, Inc. v. N.Y.C.
Dep't of Educ., 76 A.D.3d 973, 974 (2d Dep't 2010) (collecting cases); In Touch
Concepts, Inc. v. Cellco P'ship, 949 F. Supp. 2d 447, 470 (S.D.N.Y. 2013).
BSJI instead asserts that Section 7.1 of OC 1 creates a duty of care
that the FRBNY breached when it terminated BSJI's Master Account. But Section

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7.1 does not impose a duty of care on the FRBNY independent of its existing
obligations as a provider of payment services. The provision states:
[A] Reserve Bank shall be liable only to an Account Holder and only
for actual damages incurred by the Account Holder and proximately
caused by the Reserve Bank's lack of good faith and failure to
exercise ordinary care. A Reserve Bank is not liable for lost profits,
claims by third parties, or consequential or incidental damages, even
if the Reserve Bank has been informed of the possibility of such
damages.
Conf. App'x at 1590.
Read in full and in context, Section 7.1's reference to "good faith" and
"ordinary care" is clearly with regard to damages that may be incurred due to
commercial acts that the FRBNY undertakes as a payment processor. See Banco
San Juan Internacional, 762 F. Supp. 3d at 284 (noting that Section 7.1 might apply
to suits brought if the FRBNY "messe[d] up check clearing" (citation modified));
FRBNY Br. at 53 (noting that Section 7.1 might limit liability where the
FRBNY "experiences a delay in processing a check for a financial institution").
Even in those cases, Section 7.1 limits the FRBNY's liability to "actual damages
incurred" and "proximately caused by [its] lack of good faith and failure to
exercise ordinary care." Conf. App'x at 1590. Section 7.1 therefore "does not . . .
impose upon the FRBNY a generalized duty of care above and beyond" any

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existing obligation owed to BSJI. Banco San Juan Internacional, 762 F. Supp. 3d at
284. More importantly, Section 7.1 does not otherwise overcome the express
right to terminate a master account that is codified earlier in the same contractual
agreement.
BSJI's good faith and fair dealing claim also fails. Under New York
law, implied covenants do not limit a party's discretion to exercise an express
termination right, as courts "do not ordinarily read implied limitations into
unambiguously worded contractual provisions designed to protect contracting
parties." Moran v. Erk, 11 N.Y.3d 452, 456 (2008). Moreover, New York law "does
not recognize a separate cause of action for breach of the implied covenant of
good faith and fair dealing when a breach of contract claim, based upon the same
facts, is also pled." Harris v. Provident Life and Acc. Ins. Co., 310 F.3d 73, 81 (2d Cir.
2002). The district court therefore properly dismissed BSJI's good faith and fair
dealing claim as duplicative of its breach of contract claim.
V. Denial of Leave to Amend
Finally, BSJI challenges the district court's decision denying it leave
to add a Fifth Amendment Equal Protection claim against the FRBNY based on
purported discrimination on the basis of national origin because BSJI's is wholly

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owned by a Venezuelan national. "Proposed amendments are futile if they
would fail to cure prior deficiencies or to state a claim under Rule 12(b)(6)." Thea
v. Kleinhandler, 807 F.3d 492, 496-97 (2d Cir. 2015) (citation modified). In
evaluating futility, we consider the proposed amendments and original
complaint, accepting all non-conclusory factual allegations as true and drawing
all reasonable inferences in favor of the plaintiff. Pyskaty v. Wide World of Cars,
LLC, 856 F.3d 216, 225 (2d Cir. 2017).
"While the Fifth Amendment contains no [E]qual [P]rotection clause,
it does forbid discrimination that is so unjustifiable as to be violative of due
process" such that our "approach to Fifth Amendment equal protection claims
has always been precisely the same as to equal protection claims under the
Fourteenth Amendment." Weinberger v. Wiesenfeld, 420 U.S. 636, 638 n.2 (1975)
(citation modified). For a Fifth Amendment Equal Protection claim to survive a
motion to dismiss, a plaintiff must "plead sufficient factual matter to show" that
defendants "implemented the [policy] at issue not for a neutral, investigative
reason but for the purpose of discriminating on account of . . . national origin."
Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009).

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As a threshold matter, BSJI's Equal Protection claim suffers from the
same infirmity as its Due Process claim in that there is no right of action available
under Bivens or otherwise. See Malesko, 534 U.S. at 69-70. Even if there were, the
proposed amendment fails to state a claim because BSJI has failed to "plead and
prove that [the FRBNY] acted with [a] discriminatory purpose" in closing its
Master Account. See Iqbal, 556 U.S. at 676.
BSJI alleges that 9 of 10 IBEs owned by Venezuelan nationals have
had their master accounts terminated in the last five years. It also alleges that the
FRBNY issued an "internal directive" in 2019 to reject all future access requests
from IBEs. Conf. App'x at 1872 ¶ 155 (Proposed Second Amended Complaint).
But the only source cited for this allegation is a Reuters article reporting, based
on "four sources and a document seen by Reuters," that the FRBNY had issued a
letter stating it would halt approval of IBEs "in light of recent events, including
the expansion of U.S. economic sanctions relating to Venezuela." Id. at 1830 ¶ 14
& n.1 (citing Luc Cohen & Corina Pons, Exclusive: New York Fed Cracks Down on
Puerto Rico Banks Following Venezuela Sanctions, Reuters (Apr. 18, 2019),
https://www.reuters.com/article/ business/exclusive-new-york-fed-cracks-down-

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on-puerto-rico-banks-following-venezuela-san-idUSKCN1RU2EH/
[https://perma.cc/LW3Y-YB8S]).
BSJI's allegation that Reserve Banks have terminated the master
accounts of 9 of 10 Venezuelan-owned IBEs, even if true, cannot sustain an Equal
Protection claim without "additional evidence of discriminatory animus." Brown
v. City of Oneonta, N.Y., 221 F.3d 329, 338 (2d Cir. 2000); see Washington v. Davis,
426 U.S. 229, 239 (1976) (holding that a government act is not unconstitutional
"[s]olely because it has a . . . disproportionate impact" and "without regard to
whether it reflects racially discriminatory purpose"). And the Reuters article falls
short of suggesting that the FRBNY's decision to terminate BSJI's account was
based on animus, instead noting documented, nondiscriminatory concerns about
money laundering and sanctions evasion. See Cohen & Pons, Exclusive: New York
Fed Cracks Down on Puerto Rico Banks Following Venezuela Sanctions (noting "the
role Puerto Rico's offshore banks have played in efforts to launder Venezuelan
funds through the United States" and that the FBI had raided BSJI "as part of a
probe of money laundering and evasion of Venezuela-related sanctions").
Accordingly, even accepting all of BSJI's assertions as true, they do not plausibly

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allege that the FRBNY acted with discriminatory purpose in terminating BSJI's
Master Account.
CONCLUSION
For the foregoing reasons, the judgment of the district court is
AFFIRMED.

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