OPINION OF THE COURT
I. INTRODUCTION
In this action seven plaintiff States (“the States”) sought to recover proceeds of matured but unredeemed United States savings bonds from the United States Treasury (“the Treasury”).
II. FACTS AND PROCEDURAL HISTORY
A. The United States Savings Bond Program
Pursuant to its constitutional power “to borrow money on the credit of the United States,” Free v. Bland,
There are limited exceptions to the general rule precluding the transfer of savings bonds, including cases in which a third party attains an interest in a bond through valid judicial proceedings. 31 C.F.R. §§ 315.20(b), 353.20(b).
The redemption process is not complex, as the owner of a bond seeking to redeem it need only present the bond to an authorized payment agent for redemption, 31 C.F.R. §§ 315.39(a), 353.39(a), establish his identity, sign the request for payment, and provide his address. The agent then may pay the bond with a check drawn against funds of the United States. See 31 C.F.R. §§ 315.38, 353.38. Payment agents, ordinarily banks, are financial institutions qualified under Treasury regulations to pay sums due on savings bonds. See 31 C.F.R. §§ 315.2®, 353.2(f). The relevant statutes and regulations do not contain provisions for locating owners of matured but unredeemed bonds. In 2000, the
B. The States’ Unclaimed Property Acts
All of the plaintiff States have enacted unclaimed property acts, most of which they have based on some version of the Uniform Unclaimed Property Act, which is rooted in the common-law doctrine of es-cheat. See Conn. Mut. Life Ins. Co. v. Moore,
The unclaimed property acts at issue in this case are “custody” escheat statutes rather than “title” escheat statutes in that under them the State does not take title to abandoned property, but, instead, obtains its custody and beneficial use pending identification of the property owner.
The unclaimed property acts contain specific provisions for presuming property to be “abandoned” when the United States either holds the property or is obligated to make payment for it to its owner. See N.J. Stat. Ann. § 46:30B-41.2 (presuming property to be abandoned if unclaimed for more than one year after it became payable by “the executive, legislative, or judicial branch of the United States Government”); Okla. Stat. tit. 60, § 657 (property held by a state or other government presumed abandoned after being unclaimed for one year); Ky.Rev.Stat. Ann. § 393.068(1) (property held by Federal Government presumed abandoned if it remains unclaimed for more than five years); Mo.Rev.Stat. § 447.532(2) (property held by any agency or department of the United States deemed abandoned if unclaimed for more than three years); Mont.Code Ann. § 70-9-803(l)(k) (property held by a government or governmental subdivision unclaimed one year after it becomes distributable presumed abandoned); 72 Pa. Stat. Ann. § 1301.9 (any property held for its owner by any “instrumentality of the United States” unclaimed for five years from the date it first became demandable or distributable presumed abandoned).
C. The States’ Efforts to Claim Proceeds of Matured but Unredeemed Savings Bonds
Over the last several decades, various states have sought to recover the proceeds from matured but unredeemed savings bonds. On February 27, 1952, the Treasury issued a bulletin reprinting a letter dated January 28, 1952, from the Secretary to the Comptroller of the State of New York in response to the Comptroller’s inquiry regarding “the prospective right of the state of New York ... to receive payment of certain United States securities of which it is not the registered owner.” App. at 134. The Secretary explained that the Federal Government would pay the proceeds of savings bonds to the State of New York if it actually obtained title to the bonds, but would not do so where the State merely obtained a right to the custody of the proceeds. The Secretary made this distinction because he believed that the effect of applying a custody-based es-cheat statute to savings bonds would
either provide the obligor with a discharge, valid within and without New York, or fail to provide such discharge.*391 If the discharge is provided in the case of the ordinary debtor, then the other party to the contract has substituted for his right to pursue his obligor in any jurisdiction, a right merely to prosecute a claim against the State Comptroller of New York; if an effective discharge is not provided, the obligor is subject to suit outside the State of New York and the necessity of making double payment — in exchange he has a right to claim relief from the Comptroller under ... [New York’s] Abandoned Property Law.
Id. at 135. The Secretary concluded that “[n]either of these possible alterations of [the] contract [created by the savings bond] is contemplated in the agreement by which the United States pledges its faith on its securities,” because “the rights and duties of the Unitеd States are governed by federal rather than local law.” Id. at 135-36.
To the best of our knowledge the Treasury last articulated its position with respect to the application of state escheat laws on savings bonds or their proceeds in 2000 on its Internet website, “EE/E Savings Bonds FAQs” (frequently asked questions). In particular, the Treasury posted an answer to the question: “In a state that has a permanent escheatment law, can the state claim the money represented by securities that the state has in its possession. For example, can a state cash savings bonds that it’s gotten from abandoned safe deposit boxes?” The plaintiff States refer to the Treasury’s answer to this question — which is consistent with the bulletin that the Treasury issued almost one half of a century earlier and that we have quoted — as the “Escheat Decision.” The Es-cheat Decision answered that:
The Department of the Treasury will recognize claims by States for. payment of United States securities where the States have succeeded to the title and ownership of the securities pursuant to valid escheat proceedings. The Department, however, does not recognize claims for payment by a State acting merely as custodian of unclaimed' or abandoned securities and not as successor in title and ownership of the securities.
In other words, the Treasury recognizes escheat statutes that provide that a State has succeeded to the legal ownership of securities because in such case payment of the securities results in full discharge of the Treasury’s obligation and this discharge is valid in all jurisdictions.
But, payment of securities to a State claiming only as a custodian results in the substitution of one obligor, the Department of the Treasury, for another, the State. Not only is there seriоus question whether there is authority for a State to effect such a substitution, but also there seems to be no basis for believing that payment to a State custodian would discharge Treasury of its obligation. Even if the discharge were claimed effective in the State to which the payment is made, it is believed that the Treasury’s obligation and liability would still remain in force in all other jurisdictions.8
In the District Court, the parties stipulated that the Escheat Decision “is defendants’ interpretation of federal savings bond regulations ... and reflects defendants’ understanding of existing laws” and that “the Department has no intention of deviating from the statement.” Id. at 142.
D. Procedural History
The Treasurer of the State of New Jersey filed this action on September 8, 2004, against the Treasury, the Secretary, the Bureau of Public Debt,
On June 15, 2006, the Court of Appeals for the Federal Circuit held that the Court of Federal Claims lacked jurisdiction over this case and the court of appeals accordingly remanded the case to the District Court for further proceedings. See McCormac v. U.S. Dep’t of Treasury,
After the return of the case to the District Court the plaintiff States amended their complaint multiple times to add as plaintiffs officials of the States of Montana, Kentucky, Oklahoma, Missouri, and Pennsylvania, and to add claims that the Escheat Decision violated the Tenth Amendment
After oral argument, the District Court denied the Government’s motion without prejudice, but granted it leave to file a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b). In July of 2009, the Government filed the ultimately successful motion to dismiss and obtained the order that the States challenge on this appeal.
Next, addressing preemption, the District Court held that the States’ proposal for taking custody of the bonds pursuant to their escheat laws impermissibly would interfere with the contract between the bondholders and the United States, thus conflicting “with the narrow regulations governing redemption of the bonds.” Id. at 30-31. The Court also rejected the States’ Tenth Amendment reserved power claim that they had the right to enforce their unclaimed property acts to gain custody of the proceeds of the savings bonds. In this regard, the Court held because the States’ acts had been preempted, Congress had not infringed the States’ reserved powers by exercising powers not delegated to the United States. Finally, the Court held that the States’ notice and comment claim failed because the Escheat Decision concerns government contracts and thus the Decision explicitly was exempt from the requirements of 5 U.S.C. § 553.
When it addressed the sovereign immunity and jurisdictional issues, the District Court concluded that the Escheat Decision and the Government’s refusal to turn over the unclaimed bonds did not constitute “final agency action” subject to judicial review. See 5 U.S.C. § 704 (“Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review. A preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action.”).
III. JURISDICTION AND STANDARD OF REVIEW
The question of whether the District Court had jurisdiction is at issue in this appeal. Accordingly, we will address its jurisdiction in our discussion below. We have appellate jurisdiction under 28 U.S.C. § 1291.
Our review of the dismissal in this case involving a facial challenge to the District Court’s jurisdiction is plenary. In re Kaiser Grp. Int’l Inc.,
We exercise plenary review of the District Court’s order granting the Government’s motion to dismiss under Rule 12(b)(6) for failure to state a claim. See Allen ex rel. Martin v. LaSalle Bank, N.A.,
IV. DISCUSSION
A. Subject Matter Jurisdiction
Without a waiver of sovereign immunity, a court is without subject matter jurisdiction over claims against federal agencies or officials in their official capacities. United States v. Mitchell, 445 U.S.
The States initially argue that the proposed application of their respective unclaimed property acts to the savings bonds or their proceeds does not implicate sovereign immunity because it does not create a context in which the Federal Defendants might be able to assert their sovereign immunity. The States predicate this argument on the circumstance that the United States does not assert an ownership interest in the proceeds of the unclaimed bonds or in the bonds themselves. We, however, conclude that this argument lacks merit. In rejecting the States’ argument we note that we have observed, rather unsurprisingly, that “sovereign immunity is implicated” when “a plaintiff [is] suing the United States.” Scheafnocker v. Comm’r,
The States next assert that even if sovereign immunity is implicated in this case, the APA provides for its waiver. We agree with the States’ APA argument and thus hold that the District Court erred to the extent it relied on sovereign immunity to dismiss the case under Rule 12(b)(1). In considering sovereign immunity we initially observe that the APA “sets forth the procedures by which federal agencies are accountable to the public and their actions subject to review by the courts.” Franklin v. Massachusetts,
A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official сapacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensable party.
The second sentence of the above portion of section 702 had its origin in the 1976 amendments to the APA by which Congress sought to “remove three technical barriers to the consideration on the merits of citizens’ complaints against the Federal
The States now contend that the District Court erred in holding that the scope of the waiver of sovereign immunity under section 702 is limited to “final agency action.”
But the District Court’s conclusion was at odds with opinions of several courts of appeals that have clarified that the waiver of sovereign immunity in section 702 extends to all nonmonetary claims against federal agencies and their officers, regardless of whether or not the cases seek review of “agency action” or “final agency action” as set forth in section 704. For example, in Trudeau v. Federal Trade Commission,
In its opinion the Trudeau court dealt with the first sentence of section 702 which reads, “[a] person suffering legal wrong because of agency action ... is entitled to judicial review thereof,” but then emphasized that the statute’s waiver of sovereign immunity was in the second sentence of section 702 which reads:
An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensable party.
Id. at 185. The court of appeals emphasized that while the second sentence refers to a claim against an “agency,” and thus carries that limitation to the scope of the waiver of sovereign immunity, the sentence does not use the terms “agency action” or “final agency action.” Furthermore, the court of appeals observed that the House and Senate Reports accompanying the 1976 amendments reflected Congress’s intent to waive immunity for “any” and “all” actions for non-monetary relief against an agency. Id. at 187 (citing H.R.Rep. No. 94-1656, at 3, S.Rep. No. 94-996, at 8, reprinted in 1976 U.S.C.C.A.N. 6121, at 6129). In sum, the court of appeals held that section 704’s “final agency action” requirement only limited the viability of claims made under the APA, and because section 702 operated as a waiver for all nonmonetary claims, including those claims not made under the APA, section 704 did not limit section 702’s waiver of sovereign immunity.
The Court of Appeals for the Ninth Circuit recently agreed with Trudeau that section 702’s waiver of sovereign immunity is not limited to actions brought under the APA. In Veterans for Common Sense v. Shinseki,
The Veterans for Common Sense court relied on its earlier decision in Presbyterian Church (U.S.A.) v. United States,
Other courts of appeals have taken the same position as the Trudeau and Veterans for Common Sense courts. In Delano Farms Co. v. California Table Grape Commission,
Although we acknowledge that section 702 is not a model of clarity, our independent review of our precedents and the statute’s legislative history leads us to agree with the position taken by the courts of appeals in the opinions to which we have referred. In Specter v. Garrett,
The House of Representatives Report accompanying the 1976 amendments confirms that Congress contemplated that the amendments would implement a broad waiver of sovereign immunity. As stated above, prior to the amendments section 702 contained the first sentence, which provided that a person aggrieved by agency action within the meaning of a relevant statute is entitled to judicial review, but it did not contain the second sentence. Thus, in 1976 when Congress added the second sentence it did so for the specific purpose of waiving sovereign immunity. See H.R.Rep. No. 94-1656, at 1, reprinted in 1976 U.S.C.C.A.N. at 6121. The House Report, however, explained that the second sentence of section 702, providing that a federal agency and its officers could be named as defendants in non-monetary actions, was subject to limitations. First, the amendment only waives sovereign immunity for actions in a federal court; second, such actions must seek non-monetary relief; and third, it is “applicable only to functions falling within the definition of ‘agency’ in 5 U.S.C. section 701.” Id. at 11, reprinted in 1976 U.S.C.C.A.N. at 6131.
But the House Report does not state that there is a fourth limitation limiting the waiver of sovereign immunity in section 702 to suits challenging “agency action” as defined in the APA. Rather, the Report indicates that “[t]he amendment made to section 702 of title 5 would eliminate the defense of sovereign immunity in any action in a federal court seeking relief other than money damages and stating a claim based on the assertion of unlawful official action by an agency or by an officer or employee of that agency.” Id. at 3, reprinted in 1976 U.S.C.C.A.N. at 6123 (emphasis added); see id. at 9, 1976 U.S.C.C.A.N. at 6129 (“[T]he time now [has] come to eliminate the sovereign immunity defense in all equitable actions for specific relief against a Federal agency or officer acting in an official capacity.”) (emphasis added.). Accordingly, section 704 in limiting review' to “final agency action” concerns whether a plaintiff has a cause of action under the APA that can survive a motion to dismiss under Rule 12(b)(6) but does not provide a basis for dismissal on grounds of sovereign immunity.
We thus must decide whether the States’ claims arise “under the Constitution, laws, or treaties of the United Stаtes,” so that the District Court had jurisdiction pursuant to 28 U.S.C. § 1331, or whether the Court had jurisdiction pursuant to another statute. See Trudeau,
Even though the States have brought this action with the intent ultimately to obtain relief under their laws there is no escape from the fact that this ease largely involves the Government’s claim that federal statutes and regulations preempt the States’ unclaimed property acts. That circumstance compels us to consider the long established well-pleaded complaint rule to the end that “federal courts have federal question jurisdiction only when a federal claim appears in the complaint, and not when a federal preemption defense may eventually be raised in litigation.” Levine v. United Healthcare Corp.,
Gmble, however, insofar as the States advance it as support for their jurisdictional contentions, has its limitations. In Grable a federal taxpayer brought an action to quiet title in a state court against a purchaser of the property who acquired the property by a quitclaim deed from the
The Supreme Court held that there was federal question jurisdiction in Grable principally because of the dominance of significant federal issues in that case. But as the Court of Appeals for the Ninth Circuit said in California Shock Trauma Air Rescue v. State Compensation Insurance Fund,
In the end, however, we do not find it necessary to decide whether the District Court had jurisdiction by reason of the presence of the preemption issue in this case. We bypass the preemption jurisdictional question because it is clear that the Court had jurisdiction in light of the States having advanced a significant Tenth Amendment claim in their complaint which seeks relief on the basis of the “Treasury’s Escheat Decision [having] violated the Tenth Amendment of the United States Constitution.” App. at 109. In considering the effect of this claim with respect to federal jurisdiction we start from the unquestioned principle that jurisdiction lies under 28 U.S.C. § 1331 when a cause of action arises under federal law on the basis of the plaintiff having made a claim under the Tenth Amendment. As the court of appeals indicated in Bolden v. City of Mobile,
The abuse of local governmental power, when of the constitutional magnitude in this case, is a power denied the Stаtes by the Constitution within the meaning of the tenth amendment. The power to remedy the unconstitutional wrong is one delegated to the United States by the Constitution. The Constitution expressly provides for federal court jurisdiction in claims arising under this Constitution (or) Laws of the United States. U.S. Const, art. 3, § 2. Congress has given the federal courts original jurisdiction over such claims. 28 U.S.C. § 1331.
Id. (internal quotation marks omitted); see also Hodges v. Shalala,
The Supreme Court at one time regarded the Tenth Amendment as little more than a tautology that could not support a cause of action:
The amendment states but a truism that all is retained which has not been surrendered. There is nothing in the history of its adoption to suggest that it was more than declaratory of the relationship between the national and state governments as. it had been established by the Constitution before the amendment or that its purpose was other than to allay fears that the new national government might seek to exercise powers not granted, and that the states might not be able to exercise fully their reserved powers.
United States v. Darby,
More recently, however, the Court has embraced the view that the states may invoke the Tenth Amendment as a basis for invalidating federal action. Most notably, in New York v. United States,
The Supreme Court in New York v. United States rejected the reasoning of Darby and, rather than regarding the Tenth Amendment as a mere tautology as it had done in Darby, “directed] [courts] to determine ... whether an incident of state sovereignty is protected by a limitation on [congressional] power.” Id. at 157,
Of course, a court makes a different analysis when determining if it has jurisdiction over a claim than it makes when considering the merits of the claim. As the Supreme Court has stated, “[dismissal for lack of subject-matter jurisdiction because of the inadequacy of the federal claim is proper only when the claim is so insubstantial, implausible, foreclosed by prior deсisions of [the Supreme] Court, or otherwise completely devoid of merit as not to involve a federal controversy.”
Inasmuch as the District Court had jurisdiction under 28 U.S.C. § 1331 over the States’ Tenth Amendment claim, by reason of 28 U.S.C. § 1367 it had jurisdiction over the States’ entire complaint. Section 1367 provides, with inapplicable exceptions, if “the district courts have original jurisdiction, [they] shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” Here it is clear that all of the States’ claims are related to their claim under the Tenth Amendment. In this regard, we point out that in the introduction to their complaint the States assert that “Treasury’s refusal to comply with state laws governing unclaimed property usurps sovereign power exercised by the states since the Declaration of Independence, and reserved to the states under the Tenth Amendment of the U.S. Constitution.” App. at 88.
The Supreme Court in City of Chicago v. International College of Surgeons,
Inasmuch as we have determined that sovereign immunity does not bar this action and that the District Court had constitutional and statutory jurisdiction we finally reach the substantive aspects of the case. We start this discussion by recognizing that although this case is essentially a dispute over the application of federal law, the States’ claims arise from them attempt to enforce their unclaimed property acts against the Federal Government. The Government asserts that these claims run afoul of the Supremacy Clause of the Constitution in art. VI, cl. 2, which provides that the Constitution and laws in pursuance of it “shall be the supreme Law of the Land.” State laws may violate the Supremacy Clause in two ways. Under the doctrine of federal preemption, state laws are invalid if they “conflict with an affirmative command of Congress.” North Dakota v. United States,
1. Federal Preemption
Federal preemption doctrine “provid[es] Congress with the power to preempt state legislation if it so intends.” Roth v. Norfalco LLC,
There are two guiding principles of preemption jurisprudence. “ ‘First,
We agree with the District Court that the federal statutes and regulations pertaining to United States savings bonds preempt the States’ unclaimed property acts insofar as the States seek to apply their acts to take custody of the proceeds of the matured but unredeemed savings bonds. In reaching this conclusion we recognize that there is no federal statute or regulation that expressly preempts the application of the States’ unclaimed property acts in the way that the States seek to enforce them in this litigation. But it is equally important to recognize that “[f]ederal law of course governs the interpretation of the nature of the rights and obligations created by the Government bonds themselves.” Free,
The States’ unclaimed property acts conflict with federal law regarding United States savings bonds in multiple ways. First, in advancing the goal of making the bonds “attractive to savers and investors,” see Free,
The States assert that the “restrictions on ‘payment’ in these regulations foreclose only redemption of bonds by persons who are not owners, not application of historic laws governing disposition of property not redeemed by its owner.” Appellants’ br. at 29. In other words, the States argue that because they seek only custody of the bond proceeds, their unclaimed property acts will not interfere directly with federal contracts or the regulations regarding redemption. However, those regulations conflict with the outcome that the States seek here. Most critically, application of the States’ unclaimed property acts would interfere with the terms of the contracts between the United States and the owners of the bonds because, according to the States’ complaint, they effectively would substitute the respective States for the United States as the obligor on affected savings bonds. See app. at 99 (asserting that “delivery of an Unclaimed Bond to a State ... will discharge the Treasury from its оbligation under the bond,” such that the bond owners may “claim their property from the state”). As the Government points out, the bonds are pledged “on the credit of the United States,” U.S. Const, art. I, § 8, cl. 2, and not on the credit of any individual state. Both bondholders and the United States, who bargained for a federal redemption process that the Federal Government set forth in detail in the relevant statutes and regulations, instead would have to comply with procedures set forth in the various States’ unclaimed property acts, thus “intruding] upon the rights and the duties of the United States.” See Free,
This change in redemption procedures if the States obtain custody of the proceeds of the matured but unredeemed bonds might not be a small thing from the point of view of an owner of a bond seeking to redeem it. As we explained above, redemption of a matured savings bond is now an uncomplicated process involving little more than a trip to a bank, a venue likely to be familiar to the owner of the bond, with the bondholder dealing with a bank employee with whom he already may be acquainted. On the other hand, though it is possible that the States would designate the same payment agents as the Government now designates if the States obtained custody of the proceeds of the bonds, an owner seeking those funds would have to navigate whatever procedures the States adopted for the owner to receive the* funds and those procedures could be more complex than those presently in place under federal law. Moreover, a bondholder’s effort to recover the funds in a State’s custody might require the bond owner to deal with what almost certainly
The Government also has expressed concerns that a substitution of the plaintiff States as obligors on the bonds could result in the United States being subject to multiple obligations on a single savings bond. Thus, the Government fears that bondholders still would have a contractual right to payment from the United States based on the terms of the bonds even though the various state unclaimed property acts would give bondholders the right to recover the proceeds of property deemed “abandoned” or “unclaimed” from the States. Although the States have indicated that they would indemnify the Federal Government if it was required to make payments on matured bonds to bondholders after the Government delivered the proceeds of the bonds to the States pursuant to their unclaimed property acts, the possible availability of indemnification does not change the fact that application of the States’ acts in the redemption process significantly would alter that process as contemplated in the relevant federal regulations.
The States note that the federal statutes and regulations implementing the savings bond program do not include provisions for the disposition of abandoned property, and thus they argue that federal law leaves room for the operation of their unclaimed property acts in this field. However, the bond proceeds are not “abandoned” or “unclaimed” under federal law because the owners of the bonds may redeem them at any time after they mature, and thus Congress has not been silent with respect to the fate of the proceeds of unclaimed bonds. The States’ efforts to impose the status of “abandoned” or “unclaimed” ‘on the Federal Government’s obligations only underscores the conflict between federal and stаte law, in which federal law must prevail. There simply is no escape from the fact that the Federal Government does not regard matured but unredeemed bonds as abandoned even in situations in which a state would do exactly that. Of course, in a preemption analysis the distinction between the custody of the proceeds of the bonds or physical custody of the bonds themselves is without legal significance. The States seek the transfer of $1.6 billion of federally-held funds to their treasuries together with a substantial realignment of the obligations that the bonds evidence and the procedures for redemption that federal laws and regulations have established. It is clear to us that the federal statutes and regulations are sufficiently pervasive so as not to leave room for the enforcement of the unclaimed property acts to achieve the result that the States seek.
2. Intergovernmental Immunity
The Supreme Court’s decision in McCulloch,
First, in this regard, the unclaimed property acts would interfere with Congress’s “[p]ower to dispose of and make all needful Rules Acts and Regulations respecting the ... Property belonging to the United States.” See U.S. Const, art. IV, § 3, cl. 2. On this point, the States argue that the United States no longer has a beneficial interest in the undisbursed" proceeds from the matured but unredeemed bonds. But we disagree. In support of their position, the States cite United States v. Klein,
The plaintiff States also rely on In re Moneys Deposited,
As did the District Court, we find Bowsher to be persuasive on this point. In Bowsher, 23 states sued the Comptroller General of the United States and the Secretary claiming the right to custody pursuant to their respective unclaimed property acts of money held by the Treasury pursuant to 31 U.S.C. § 1322, which granted the Treasury custody of money that federal agencies owed to persons whose whereabouts were unknown.
The money here is federal money. That various persons have claims against the United States in amounts exactly matching the funds, and intended by Congress to be paid from these funds, does not give those individuals a property interest in the money. Thus, the states’ plan would amount to direct regulation of federal property. In extracting funds from the Treasury, the states would effectively subordinate federal property to their own laws and appropriate that property, at least for a period, for themselves.
Id. Accordingly, the court held that the states’ plan to take custody of the money violated the doctrine of intergovernmental immunity.
We recognize that the States argue that their unclaimed property acts come, in the words of Bowsher, “with a patina of ancient history,” see id. at 335, and that there is a presumption against preemption of laws of such origin. Nevertheless, we see no reason to reach a different result here from that reached in Bowsher. Although the United States must pay holders of matured bonds the sums due on the bonds when the owners present them for payment, until it does so the funds remain federal property, and the Government may use the proceeds from the sale of savings bonds “for expenditures authorized by [federal] law,” 31 U.S.C. § 3105(a).
The States argue that instead of following Bowsher we should be guided by the Supreme Court’s analysis in Connecticut Mutual Life,
For similar reasons, we hold that an order compelling the accounting that the plaintiff States request would violate the governmental immunity of the United States. As the District Court observed, the States’ unclaimed property acts impose “onerous record-keeping and reporting requirements, [and] civil and criminal penalties for failure to comply.” App. at 29; see, e.g., 72 Pa. Cons.Stat. § 1301.11 (de
When Congress was considering legislation in the late 1980s that would have required the Federal Government to transfer unclaimed money obtained from various sources — including savings bonds — to the states, the General Accounting Office estimated that tracking owners of such property would cost over $23 million.
C. The Tenth Amendment
The Tenth Amendment provides that “[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The States argue that the status quo amounts to a federal escheat of the proceeds from the unclaimed bonds, a process which they contend violates the Tenth Amendment because the Federal Government does not possess the escheat power, as it is a traditional prerogative of the states. However, the funds at issue here have not been escheated to the Government and the Government does not seek to acquire them through escheat proceedings. To the contrary the Government is holding the funds and will disburse them to the bondholders or their successors if they present the bonds for redemption. Moreover, our result does not nullify state es-cheat laws for, as provided in the federal regulations and as recognized by the Treasury, third parties, including the States, may obtain ownership of the bonds — and consequently the right to redemption— through “valid[] judicial proceedings,” 31
In considering the States’ Tenth Amendment contentiоns it is important to remember that the Government administers the savings bond program pursuant to the federal constitutional power. “[t]o borr row money on the credit of the United States.” Free,
V. CONCLUSION
Though the United States pursuant to 5 U.S.C. § 702 has waived its sovereign immunity from suit in this case, we do not find any merit in any of the States’ claims. Therefore, we will affirm the District Court’s February 5, 2010 order dismissing the action under Rule 12(b)(6).
Notes
. Throughout this opinion we refer to the plaintiffs in this action as "States” but to the 50 states as a whole as "states.”
. This statute previously was codified at 31 U.S.C. § 757c(a). See Free,
. The plaintiff States' representation that interest ceased to accrue on Series E bonds after maturity may be somewhat misleading but we will accept it in adjudicating this appeal. The reason we think that this representation may be misleading is that 31 U.S.C. § 3105(b)(2)(A) indicates that the Secretary may prescribe regulations that provide for savings bonds to continue to earn interest during "a period beyond maturity.” Moreover, 31 C.F.R. § 315.30 provides that "[a]U Series E bonds and savings notes have been extended and continue to earn interest until their final maturity dates, unless redeemed earlier.” The regulations allow for such an "extended maturity period,” a "period after the original maturity date during which the owner may retain a bond and continue to earn interest on the maturity value” of the bond. 31 C.F.R. § 315.2(c). We see little difference between a bond paying interest accrued beyond maturity and extending a bond’s maturity date for a period during which the bond earns interest. Indеed, it appears that when this action was commenced in 2004 some Series E bonds had passed their original maturity dates but were continuing to earn interest as their maturity dates had been extended. See 31 C.F.R. § 316.8. Obviously, if interest runs after the bonds’ original maturity dates, the States’ case, if affected at all, only could be weaker.
. 31 C.F.R. § 315.39(a) and (b) provide for payment of series A, B, C, D, E, F, G, H, J, and K bonds, and 31 C.F.R. § 353.39(a) provides for payment of series EE bonds. The regulations contain identical language:
The Department of the Treasury will recognize a claim against an owner of a savings bond and conflicting claims of ownership of, or interest in, a bond between coowners or between the registered owner and the beneficiary, if established by valid, judicial proceedings, but only as specifically provided in this Subpart. Section 315.23 [or section 353.23] specifies the evidence required to establish the validity of the judicial proceedings. 31 C.F.R. §§ 315.20(b), 353.20(b). 31 C.F.R. § 315.23 requires "that certified copies of the final judgment, decree, or court order, and of any necessary supplementary proceedings,” be submitted to establish the validity of judicial proceedings, and also makes provisions for payment to certain bankruptcy trustees and receivers.
. We note that the States in their complaint assert that “[n]ot surprisingly, Treasury has not been approached by owners in significant numbers seeking long-matured savings bonds.” We cannot reconcile this allegation with the evidence in the record to which we have referred.
. The website is available at Treasury Hunt, http://www.treasurydirect.gov/indiv/tools/ tools_treasuryhunt.htm.
. According to the plaintiff States, "statutes that transfer title [are] an obsolescent form of escheat no longer in force in any state.” Appellants' br. at 3. We have some question as to whether this statement may be overbroad as it is difficult to understаnd how there can be an escheat of real or tangible personal property without a transfer of title, inasmuch as a state to dispose of such property ordinarily would need to sell it to a purchaser who would want title to the property. We, however, consider that an inquiry into the accuracy of the States’ representation would be beyond the scope of this opinion and so do not malte it. We recently described the New Jersey Unclaimed Property Act in American Express Travel Related Services, Inc. v. Sidamon-Eristoff,
. The Escheat Decision took this statement nearly verbatim from a 1983 letter from the Treasury to the State of Kentucky. See app. at 139. The Escheat Decision is available at http://www.treasurydirect.gov/indiv/research/ indepth/ebonds/res_e_bonds_eefaq.htm.
. The Bureau of Public Debt is the division of the Treasury responsible for administrating the savings bond program.
. North Carolina has not joined in this appeal. See app. at 1 (notice of appeal).
. The Tenth Amendment provides that "[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
. 5 U.S.C. § 553 provides in relevant part:
(b) General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law....
Except when notice or hearing is required by statute, this subsection does not apply—
(A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or
(B) when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.
(c) After notice required by this section, the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation....
.The Government addressed its motion to dismiss to the fourth amended complaint but after oral argument on the motion the States sought leave to amend the complaint to add the Treasurer of Pennsylvania as a plaintiff. The Government consented to the amendment, thus generating a fifth amended complaint. Because the fifth amended complaint was substantially the same as the fourth amended complaint, the District Court’s opinion referenced the fourth amended complaint.
. In Steel Co. v. Citizens for a Better Environment,
. On this appeal, the States essentially do not challenge the District Court’s ruling rejecting their 5 U.S.C. § 553 notice and comment argument, and therefore they have waived their right to contend that the Court erred in making that ruling. See FDIC v. Deglau,
. The District Court did not specify whether it based its decision to dismiss the case on the merits pursuant to Rule 12(b)(6) or on its lack of jurisdiction under Rule 12(b)(1). As we discuss below, regardless of the District Court's intent we affirm its dismissal on the basis of Rule 12(b)(6) as we are satisfied that it had jurisdiction.
. The States took the position before the District Court that if a waiver of sovereign immunity was necessary, the Escheat Decision would have to have been "final agency action" for it to be reviewable under the APA. That contention is inconsistent with their position on this appeal. The States complain that the District Court "severely limited discovery to the issues of ripeness and whether Treasury's policy on escheat constituted final agency action,” Appellants’ reply br. at 2, and assert that broader discovery would have been useful on the issues of "whether escheat of unclaimed bonds would interfere with the administration of the federal bond program, or subject Treasury to double liability, or confuse bondholders.” Id. at 2-3. They, however, do not ask us to reverse because of the Court’s limitation on discovery.
. Such lawsuits "are called 'nonstatutory' because they are not brought under the statutes that specially provide for review of agency action.” Jaffee,
. The Government contends that the waiver of sovereign immunity should be limited to actions brought under federal law rather than state law as the States have done here to the extent that they seek relief under their unclaimed property acts. Though in view of the circumstance that most cases against the Government are under federal law so that Congress probably was focused on that law when it adopted the 1976 amendments to the APA, we see no support for the distinction that the Government makes between federal and state law in either the text or the history of section 702.
. We emphasize here that although in this action the States seek to recover a very large sum of money, this action does not seek "money damages” within the meaning of section 702. In Bowen,
. Of course, inasmuch as we must assure ourselves that the District Court had subject matter jurisdiction the Government may assert this jurisdictional argument initially on this appeal. See Arizonans for Official English v. Arizona,
. The dominance of federal law in this case is highlighted in the States’ brief in which they correctly point out that the "United States does not dispute that the States’ unclaimed property laws require unclaimed savings bonds to be turned over to state custody pending location of the absent owners. The question on the merits is thus whether federal law somehow preempts the operation of these escheat laws.” Appellants’ br. at 22.
. In this regard, we note that the Supreme Court indicated in Bowen,
. The States also assert that the Mandamus and Venue Act, 28 U.S.C. § 1361, and 28 U.S.C. § 1346 (containing the Little Tucker Act and the Federal Tort Claims Act), provide for federal jurisdiction here but we do not decide whether either statute would confer jurisdiction in light of our conclusion that the District Court had jurisdiction by reason of the States’ Tenth Amendment claim under 28 U.S.C. § 1331 and 28 U.S.C. § 1367.
Though we do not predicate our result on this point we note that if the District Court could not exercise jurisdiction in this case it well may be that there would not be any court in which plaintiff States could have brought their claims against the Federal Defendants under their unclaimed property acts. After all, the New Jersey state courts are well aware that section 702 "does not waive sovereign immunity in actions in a state court" and thus they would not entertain an action seeking an order enjoining the Securities and Exchange Commission from prosecuting an administrative complaint against the plaintiff in the state court action. First Jersey Secs., Inc. v. Sec. Exch. Comm’n,
. The Secretary effectively has allowed owners of savings bonds to keep them after maturity and to earn interest after maturity because the Treasury has extended the bonds' original maturity dates and interest accrues during the extension period. See supra note 3.
. We are not predicating our result on a conclusion that honoring a custody-based unclaimed property act might subject the United States to multiple liabilities on a single bond. We decline to speculate on what would happen if a bondholder sought to redeem a bond by presenting it to a Government payment agent and requesting that he be paid the proceeds if the Government already had delivered the proceeds of the bond to a State pursuant to its unclaimed property act. That situation is not before us and, in any event, even disregarding the possibility that the Government might face multiple liabilities on a single bond by complying with a State’s unclaimed property act, the States’ unclaimed property acts are preempted.
. We are not drawing any inference with respect to the issues in this case from the fact that Congress did not adopt that bill.
. We hasten to add that while in concluding that the State custody-based unclaimed property acts are preempted we are distinguishing, as does the Government itself, those acts from title-based acts, we do not imply that our result would be different if, confronted with a judgment of escheat under a title-based es-cheat act, the Government abandoned its long held position as reflected in the Escheat Decision and refused to recognize the enforceability of the judgment with respect to savings bonds or their proceeds. We simply are not faced with that possibility and thus we do not address it. We merely are ruling on the basis of the legal picture as the Government presently sees it. Furthermore, we neither are agreeing nor disagreeing with the States with respect to their contention that the Federal Government does not have escheat power. We see no need to pass on this contention as the Federal Government is not seeking to escheat the proceeds of matured but unredeemed bonds.