In the United States Court of Federal Claims

No. 13-1011C

(Filed: August 8, 2017)

JAKE LATURNER, Treasurer of the 

State of Kansas,

Plaintiff,

v.

THE UNITED STATES OF 

AMERICA,

Defendant.

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Keywords: Summary Judgment; 

Breach of Contract; U.S. Savings 

Bonds; Preemption; Intergovernmental 

Immunity; Due Process Clause of the 

Fourteenth Amendment; Breach of 

Contract; 31 C.F.R. § 315.20(b).

J. Brett Milbourn, Walters Bender Strohbehn & Vaughn, P.C., Kansas City, MO, with 

whom was David C. Frederick, Kellogg, Huber, Hansen, Todd, Figel, & Frederick,

P.L.L.C., Washington, DC, for Plaintiff. 

Eric P. Bruskin, Senior Trial Counsel, Civil Division, U.S. Department of Justice, 

Washington, DC, with whom were Steven J. Gillingham, Assistant Director, Robert E. 

Kirschman, Jr., Director, and Chad A. Readler, Acting Assistant Attorney General, for 

Defendant. Theodore C. Simms, II, Senior Counsel, U.S. Department of the Treasury, and 

Albert S. Iarossi, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. 

Department of Justice, Of Counsel.

OPINION AND ORDER

KAPLAN, Judge.

In this breach-of-contract case, Plaintiff Jake LaTurner, Treasurer of the State of 

Kansas (Kansas) claims that Kansas has obtained title under the state’s Disposition of 

Unclaimed Property Act (Unclaimed Property Act) to a large but unknown number of 

matured, unredeemed United States savings bonds, and that the federal government has 

wrongfully failed to redeem those bonds. The bonds, issued by the United States 

Department of the Treasury (Treasury), carry thirty- or forty-year maturity periods. 

Although Kansas claims that it owns the bonds, it does not possess the bond certificates 

that Treasury issued when the bonds were purchased. Nevertheless, pursuant to a state 

court judgment of escheat, Kansas contends that it has obtained title to all unredeemed

bonds whose holders’ last known addresses, as shown on Treasury’s records, are in the 

state. These bonds are known as the “absent bonds.”
2

Kansas has moved for partial summary judgment as to the government’s liability 

for failing to redeem the bonds or to provide Kansas with identifying information about 

them. The government has also moved for summary judgment on all of Kansas’s claims. 

It contends that, for several reasons, Treasury did not breach the savings bond contracts 

when it refused to redeem the absent bonds. Among other things, it claims that Treasury’s 

savings bond regulations do not permit transfers of ownership under the Unclaimed 

Property Act, and that Kansas’s lack of possession of the bond certificates is fatal to its 

claims; that the Unclaimed Property Act runs afoul of principles of federal supremacy; 

and that the state court judgment of escheat was constitutionally infirm. 

For the reasons discussed below, the Court concludes that the government’s 

arguments lack merit, and that the undisputed facts entitle Kansas to summary judgment 

with respect to its ownership of the absent bonds and the government’s liability. 

Accordingly, the government’s motion for summary judgment is DENIED, and Kansas’s 

motion for partial summary judgment is GRANTED. 

BACKGROUND

I. The United States Savings Bond Program and Implementing Regulations 

A. Overview

In the exercise of its power to “borrow Money on the credit of the United States,” 

U.S. Const. art. I, § 8, cl. 2, Congress has authorized Treasury to “issue savings bonds 

and savings certificates,” the proceeds of which “shall be used for expenditures 

authorized by law,” 31 U.S.C. § 3105(a); see also Free v. Bland, 369 U.S. 663, 666–67 

(1962). Over the years, Treasury has issued such bonds in various Series, each designated 

by a letter of the alphabet. See, e.g., 31 C.F.R. Part 315 (regulations governing Series A, 

B, C, D, E, F, G, H, J, and K bonds). Treasury issued the bonds in paper form until 2012, 

when it switched to an all-electronic system. See Treasury Looks Back at 76 Years of 

Paper U.S. Savings Bonds As Move to Online Savings Bonds to Save Taxpayers $120 

Million, TreasuryDirect.gov (Dec. 27, 2011), https://www.treasurydirect.gov/news/

pressroom/pressroom_comotcend1211.htm.

“It is well established that savings bonds are contracts between the United States 

and the owners of the bonds . . . .” Estes v. United States, 123 Fed. Cl. 74, 81 (2015) 

(citing Treasurer of N.J. v. U.S. Dep’t of the Treasury, 684 F.3d 382, 387 (3d Cir. 2012) 

and Rotman v. United States, 31 Fed. Cl. 724, 725 (1994)). The contracts’ terms are set 

forth in Treasury’s savings bond regulations, found in Part 315 of Title 31 of the Code of 

Federal Regulations. See id. As discussed below, the regulations prescribe (among other 

things) “the form and amount of an issue and series”; “the way in which [the savings 

bonds] will be issued”; “the conditions, including restrictions on transfer, to which they 

will be subject”; and “conditions governing their redemption.” 31 U.S.C. § 3105(c)(1)–

(4). 

As noted, the bonds typically carry long maturity periods—often thirty or forty 

years. See The History of U.S. Savings Bonds, TreasuryDirect.gov, https://www.treasury
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direct.gov/timeline.htm?src=td&med=banner&loc=consumer (last visited August 4, 

2017). Treasury issued millions of savings bonds between the 1940s and the 1970s. See

id. Although most of the matured bonds have been redeemed, millions remain 

unredeemed. See See Savings Bonds and Notes (SBN) Tables and Downloadable Files, 

TreasuryDirect.gov, https://www.treasurydirect.gov/govt/reports/pd/pd_sbntables_

downloadable_files.htm (last updated Apr. 27, 2012). As of March 2012, the value of 

such matured, unredeemed savings bonds was approximately $16 billion. See id.

B. Issuance and Registration

Under Treasury’s regulations, “[s]avings bonds are issued only in registered 

form.” 31 C.F.R. § 315.5(a) (2014).

1 This means that “the names of all persons named on 

the bond and the taxpayer identification number (TIN) of the owner, first-named 

coowner, or purchaser of a gift bond are maintained on [Treasury’s] records.” Id.

§ 315.2(n). According to the regulations, “[r]egistration is conclusive of ownership.” Id.

§ 315.5(a). Thus, registration “express[es] the actual ownership of, and interest in, the 

bond.” Id.

C. Restrictions on Transfer

The regulations contain numerous conditions restricting the transfer of savings 

bonds and inhibiting third-party attempts to assert rights against them. First, § 315.15 

establishes that bonds “are not transferable and are payable only to the owners named on 

the bonds, except as specifically provided in these regulations and then only in the 

manner and to the extent so provided.” Id.

Next, subsections 315.20–.23 set forth “limitations on judicial proceedings” 

applicable to “adverse claims affecting savings bonds.”2Id. § 315.20. In particular, 

§ 315.20(b) provides that Treasury “will recognize a claim against an owner of a savings 

bond . . . if established by valid, judicial proceedings, but only as specifically provided in 

this subpart.” In that regard, § 315.20(a) specifies that Treasury “will not recognize a 

judicial determination that gives effect to an attempted voluntary transfer inter vivos of a 

bond, or a judicial determination that impairs the rights of survivorship conferred by 

these regulations upon a coowner or beneficiary.” Id. Further, § 315.23(a) instructs that 

“[t]o establish the validity of judicial proceedings,” a claimant must submit “certified 

copies of the final judgment, decree, or court order, and of any necessary supplementary 

proceedings.” 

Before 2015, the regulations did not expressly mention state court judgments of 

escheat of the type at issue in this case. See Estes, 123 Fed. Cl. at 83–86 (analyzing the 

regulations); see also id. at 90 n.13 (noting that Treasury had proposed revised 

 

1 Unless otherwise noted, all references to Treasury’s savings bond regulations are to the 

regulations in effect on December 20, 2013, the date Kansas filed its complaint.

2 These four subsections form Subpart E of the regulations.
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regulations expressly tailored to state court escheat judgments); Regulations Governing 

United States Savings Bonds, 80 Fed. Reg. 80,258-01 (Dec. 24, 2015) (codified at 31 

C.F.R. pts. 315, 353, 360) (final rule promulgating the revised regulations).

D. Redemption and Relief for Lost, Stolen, Destroyed, or Mutilated 

Bonds

The regulations specify that, as a general matter, “[p]ayment of a savings bond 

will be made to the person or persons entitled under the provisions of these regulations.” 

31 C.F.R. § 315.35(a). Series E bonds will be paid “at any time after two months from 

issue date at the appropriate redemption value,” while Series H bonds “will be 

redeemed at face value at any time after six (6) months from issue date.” Id. § 315.35(c), 

(e). Series A, B, C, D, F, and J bonds “will be paid at face value,” while Series G and K 

bonds “will be paid at face value plus the final semiannual interest due.” Id. § 315.35(b), 

(d).

Subsection 315.39, entitled “[s]urrender for payment,” provides that individual 

owners or co-owners of Series A–E bonds “may present the bond to an authorized 

payment agent for redemption.” Id. § 315.39(a). “[F]or all other cases,” the “owner or 

coowner, or other person entitled to payment” must “appear before an officer authorized 

to certify requests for payment, establish his or her identity, sign the request for payment, 

and provide information as to the address to which the check in payment is to be mailed.” 

Id. § 315.39(b). 

Subsection 315.25 authorizes relief in the event of “the loss, theft, destruction, 

mutilation, or defacement of a bond after receipt by the owner.” Id. Such relief may 

include “the issue of a substitute bond or . . . payment.” Id. “As a condition for granting 

relief,” Treasury “may require a bond of indemnity, in the form, and with the surety, or 

security [Treasury] considers necessary to protect the interests of the United States.” Id.

Further, “[i]n all cases[,] the savings bond must be identified by serial number and the 

applicant must submit satisfactory evidence of the loss, theft, or destruction.” Id. If the 

serial number of the bond is not known, “the claimant must provide sufficient 

information to enable [Treasury] to identify the bond by serial number.” Id. § 315.26(b) 

(citing id. § 315.29(c)). 

E. Additional Relevant Regulations

The savings bond regulations also contain a waiver provision. Id. § 315.90. Under 

§ 315.90, Treasury “may waive or modify any provision or provisions of [the] 

regulations . . . . [i]f such action would not be inconsistent with law or equity”; “if it does 

not impair any existing rights”; and “if [Treasury] is satisfied that such action would not 

subject the United States to any substantial expense or liability.” Further, the regulations 

empower Treasury to “require . . . [s]uch additional evidence as [it] may consider 

necessary or advisable, or [to require] [a] bond of indemnity, with or without surety, in 

any case in which [it] may consider such a bond necessary for the protection of the 

interests of the United States.” Id. § 315.91.
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Finally, Treasury has issued regulations to govern the disclosure of records and 

information related to outstanding securities, including savings bonds. See id. § 323.2. 

Specifically, § 323.2(b) states that “[r]ecords relating to the purchase, ownership of, and 

transactions in Treasury securities . . . will ordinarily be disclosed only to the owners of 

such securities, their executors, administrators or other legal representatives or to their 

survivors.” Id. The regulation notes that “[t]hese records are confidential because they 

relate to private financial affairs of the owners.” Id. Further, according to Treasury, these 

records “fall[] within the category of ‘personnel and medical files and similar files the 

disclosure of which would constitute a clearly unwarranted invasion of personal privacy’

under the Freedom of Information Act (FOIA).” Id. (citing 5 U.S.C. § 552(b)(6)). Thus, 

according to Treasury, such records are exempt from FOIA requests. See id.

II. Background on State Unclaimed Property Laws

All fifty states have statutes governing the disposition of unclaimed or abandoned 

real and personal property. See David J. Epstein, 1-1 Unclaimed Property Law § 1.06(1)

(2017). These laws are “rooted in the common-law doctrine of escheat, under which 

‘[s]tates as sovereigns may take custody of or assume title to abandoned . . . property.’” 

Estes, 123 Fed. Cl. at 77 (citation omitted) (quoting Delaware v. New York, 507 U.S. 

490, 497 (1993)) (alterations in original). 

For the most part, state unclaimed property laws are custodial in nature. See

Epstein, supra, § 1.06(2). When a state with a custody-based unclaimed property law 

acquires unclaimed property, it “does not take title to [the] unclaimed property, but takes 

custody only, and holds the property in perpetuity for the owner.” Estes, 123 Fed. Cl. at 

77 (quoting Unif. Unclaimed Prop. Act, prefatory note (1995), http://www.uniform

laws.org/shared/docs/unclaimed%20property/uupa95.pdf). Indeed, Kansas’s Unclaimed 

Property Act is custodial in nearly every respect. See Kan. Stat. Ann. § 58-3936 (“Except 

as otherwise provided in this act or by other statute of this state, property that is presumed 

abandoned, whether located in this or another state, is subject to the custody of this 

state . . . .”). 

In 2000, however, the Kansas legislature amended its Unclaimed Property Act

with respect to U.S. savings bonds to allow Kansas to take title (rather than assert custody 

over) bonds deemed to be abandoned under the Act. See id. § 58-3979. Specifically, the 

relevant provision provides that “United States savings bonds which are unclaimed 

property [as defined by the Act] . . . shall escheat to the state of Kansas three years after 

becoming unclaimed property . . . and all property rights to such United States savings 

bonds or proceeds from such bonds shall vest solely in the state of Kansas.”3Id.

§ 58-3979(a). Then, “[w]ithin 180 days . . . the administrator [of the unclaimed property 

scheme, i.e., the state treasurer] shall commence a civil action in the district court of 

 

3 A number of other states have since enacted similar amendments to their unclaimed 

property laws. See Ark. Code Ann. § 18-28-231; Fla. Stat. §§ 717.1382–.83; Ind. Code 

§ 32-34-1-20.5; Ky. Rev. Stat. Ann. § 393.022; La. Stat. Ann. § 9:182; Miss. Code Ann. 

§ 89-12-59; S.C. Code Ann. §§ 27-18-75 to -76; S.D. Codified Laws § 43-41B-44.
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Shawnee county for a determination that such United States savings bonds shall escheat 

to the state.” Id. § 58-3979(b).

III. Treasury’s Historical Treatment of States’ Attempts to Redeem Bonds 

Obtained Via Their Unclaimed Property Laws

As discussed below, the government argues that the Court owes deference to the 

interpretation of Treasury’s regulations that it has proffered in this case. Because 

Treasury’s historical application of its regulations is relevant to whether the Court owes 

deference to Treasury’s proffered interpretation, the Court sets forth below Treasury’s 

historical treatment of states’ attempts to redeem U.S. savings bonds in some detail.

A. The 1952 Escheat Decision Regarding Bonds in Possession and New 

York’s Custodial Unclaimed Property Law

Treasury first confronted a state’s attempt to redeem bonds obtained under an 

unclaimed property law in 1952, when it refused the State of New York’s request to 

redeem four bonds in its possession. See Def.’s Mot. for Summ. J. (Def.’s Mot.) App. at 

A1, ECF No. 86-1 (Bureau of the Public Debt, Public Debt Bulletin No. 111 (Feb. 27, 

1952)) (hereinafter “the 1952 Escheat Decision”). New York obtained the bonds pursuant 

to its unclaimed property law after their owner died intestate in a state institution. Id.

Treasury noted that under New York’s law, the state took custody of, but not title to, 

abandoned property. Id. at A3–4. According to Treasury, under those circumstances,

payment of the bond’s proceeds into New York’s custody would violate the bond’s terms 

(as set forth in Treasury’s regulations). Id. at A2–3. Treasury explained that such a 

payment would alter the rights of the parties to the bond contract by “substitut[ing]” the 

bondholder’s right to claim redemption from the United States for a right to “prosecute a 

claim against the State Comptroller of New York”; or, alternatively, by exposing the 

United States to “the necessity of making double payment” and then pursuing “a right to 

claim relief from the Comptroller” itself. See id. at A2. 

In Treasury’s view, “[n]either of th[ose] possible alterations of contract is 

contemplated in the agreement by which the United States pledges its faith on its 

securities.” Id. And, citing Clearfield Trust Company v. United States, 318 U.S. 363, 366 

(1943), Treasury asserted the supremacy of the rights created by federal law over the 

operation of New York’s unclaimed property law. See id. at A2–3. 

Treasury then contrasted New York’s request with a hypothetical request for 

payment made by “one who succeeds to the title of the bondholder” pursuant to the 

regulations, such as “the duly qualified representative of the estate of a decedent 

bondholder.” Id. at A3 (internal quotation and emphasis omitted). In that case, Treasury 

stated, payment “is not regarded as a violation of the agreement, but, on the contrary, as 

payment to the bondholder in the person of his successor or representative.” Id.

(emphasis omitted). “Thus,” Treasury continued, “although the regulations do not 

mention such a case, [Treasury] recognizes the title of the state when it makes a claim 

based upon a judgment of escheat.” Id.
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B. Subsequent Decisions Where States Were In Possession of U.S. 

Savings Bonds

Treasury reiterated its position on custodial unclaimed property laws in 1970,

when the State of Oklahoma tried to redeem bonds it had obtained from unclaimed safe 

deposit boxes. See id. at A5–7. According to Treasury, one of “the problems involved in 

recognizing a State’s right to receive payment of unclaimed or abandoned Government 

securities . . . . relate[d] to the issue as to whether the State has actually succeeded to title 

and ownership of the securities, or whether it is acting as a repository.” Id. at A6. “This is 

a critical distinction,” Treasury stated, because “the discharging of the obligation 

represented by the securities must have validity for all jurisdictions.” Id. “Ordinarily,” 

Treasury continued, “such a discharge results only where a valid escheat has occurred.” 

Id. Oklahoma’s unclaimed property law, however, “d[id] not purport to vest title to the 

abandoned property in the State,” but “[was] quite clear that the State’s role [wa]s 

essentially custodial.” Id. at A7. 

Over the next thirty years, Treasury repeatedly denied claims from states with 

custodial unclaimed property laws and bonds in their possession. See id. at A8 (Indiana, 

Nov. 19, 1971); id. at A10 (New Hampshire, May 12, 1976); id. at A12 (South Carolina, 

May 26, 1976); id. at A15 (Hawaii, July 14, 1976); id. at A17 (Indiana, Jan. 18, 1977); id.

at A19 (North Dakota, June 24, 1977); id. at A22 (Illinois, Oct. 27, 1980); id. at A39 

(Kentucky, Sept. 6, 1983); id. at A40 (Alaska, Oct. 25, 1983); id. at A109 (Alaska, Feb. 

6, 1992); id. at A112 (Oklahoma, Aug. 5, 1999). As early as 1976, Treasury described as 

“long-standing” its position that it would “recognize claims by States for payment of 

United States securities where the States have actually succeeded to the title and 

ownership of the securities pursuant to valid escheat proceedings.” Id. at A10. 

Treasury apparently first considered a state’s claim based on a title-based 

unclaimed property law in 1982, in response to a request for information from the 

Commonwealth of Massachusetts. See id. at A24–38. The request concerned 

approximately $250,000 in savings bonds that Massachusetts obtained via its unclaimed 

property law. Id. at A24. At the time, Massachusetts’s unclaimed property law provided 

that “[p]roperty which has been surrendered to the state treasurer under [the unclaimed 

property law] shall vest in the commonwealth.” Id. at A31. In its request, Massachusetts

asked Treasury whether it “would . . . be able to either escheat to [the Commonwealth] 

the approximately $250,000 [in] bonds now accumulated . . . or some how [sic] through 

your regulation or ruling be able to return them to their rightful heirs.” Id. at A24.

In its response, Treasury informed Massachusetts that it would recognize a state’s 

claim pursuant to a title-based unclaimed property law if the law included sufficient due 

process protections for the named bondholders. Id. at A37. Specifically, Treasury stated 

that:

In accordance with the bond contract, we will recognize a request 

for payment on behalf of the state pursuant to a statute which 

provides for the administrative escheat, i.e., vesting of title, of 

abandoned property, where the application of the statute is 
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conditioned upon the furnishing of adequate notice and reasonable 

opportunities for interested parties to be heard.

Id. Further, Treasury elaborated, “[u]nder the terms of the bond contract, we could make 

payment to the Treasurer of the Commonwealth where the Commonwealth, through 

appropriate court proceedings, takes the owner’s title to itself.” Id. at A38. “In that event, 

[Treasury] would pay the owner in the person of its successor, the Commonwealth.” Id.

C. Treasury’s Treatment of States’ Requests to Obtain the Proceeds of

Bonds They Did Not Possess

1. Decisions and Guidance

By the early 2000s, the number of matured, unredeemed savings bonds ballooned

as bonds purchased in the 1960s and 1970s finally reached maturity. In 2004, several 

states requested that Treasury redeem these bonds in bulk (the “2004 requests”). The 

states did not possess the vast majority of these bonds, but, according to the states, the 

bonds were statistically likely to be in the hands of their citizens. See, e.g., id. at A127 

(March 30, 2004 letter from the treasurer of Kentucky “estimat[ing] that over $150 

million” in unredeemed savings bonds “rightfully belong[] to Kentuckians” and 

“requesting . . . that [Treasury] return these funds to . . . Kentucky so that [the] 

Unclaimed Property Division . . . can begin the work of returning this money to its 

rightful owner[s]”); id. at A129 (April 2, 2004 letter from the treasurer of the District of 

Columbia estimating that “between $50 and $75 million” in unredeemed savings bonds 

belonged to District of Columbia citizens and “seeking to have th[o]se assets and records

transferred to the District of Columbia so that we can begin to find the rightful owners”); 

id. at A130 (April 21, 2004 letter from the treasurer of New Hampshire positing that 

“somewhere between $35 million and $45 million” in unredeemed savings bonds “would 

likely belong to New Hampshire residents” and requesting that Treasury “provide owner 

information and deliver funds due” for those bonds). 

Treasury denied the 2004 requests. E.g., id. at A140–41 (Kentucky); id. at A138–

39 (District of Columbia); id. at A142–43 (New Hampshire). In its denials, Treasury 

explained that it “d[id] not have the legal authority” to grant the states’ requests because 

“[a] U.S. Savings Bond is a federal contract between the United States and the registered 

owner on the bonds, and under federal regulations payment may only be made to the 

registered owner.” E.g., id. at A140. “In order for the bonds to be paid,” Treasury 

continued, the state “must have possession of the bonds, statutory authority to obtain title 

to the individual bonds, obtain an order of escheat from a court of competent jurisdiction 

vesting title in the [state] to the individual bonds, and apply to [Treasury] for payment.” 

E.g., id.

In 2006, Florida submitted a similar request to redeem or obtain custody over the 

proceeds of bonds that it did not possess. See id. at A148. As with the 2004 requests, 

Treasury denied Florida’s request. Id. Unlike with the denials of the 2004 requests, 

however, Treasury did not mention any possession requirement. See id. Rather, Treasury 

stated that:
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The applicable regulations would permit the state of Florida 

to be paid for the bonds, pursuant to an appropriate state 

statute and after due process, by obtaining an order of

escheat from a court of competent jurisdiction vesting title 

in the state, and then applying for payment to the Department 

of the Treasury pursuant to the procedures established by the 

regulations that all bond owners must utilize.

Id.

2. Subsequent Litigation

In September 2004, the State of New Jersey filed an action in federal district court 

challenging Treasury’s denial of its 2004 request to pay over the proceeds of matured but 

unredeemed bonds whose owners’ last known addresses were in the state. See Treasurer 

of N.J., 684 F.3d at 392. Several more states eventually joined that litigation. See id. at 

392–93. The district court dismissed the case for failure to state a claim, reasoning that

the states’ custodial unclaimed property laws conflicted with Treasury’s regulations. Id.

at 394–95. Further, the district court found that applying those laws to unredeemed bonds 

that the states did not possess would violate the principle of intergovernmental immunity. 

Id.

The states appealed the decision to the United States Court of Appeals for the 

Third Circuit. See id. at 395. In its brief before the Third Circuit, the government 

acknowledged that although Treasury’s regulations “generally provide that payment on a 

U.S. savings bond will be made only to the registered owner,” they also set forth

“exceptions to this rule, including cases in which a third party obtains ownership of the 

bond through valid judicial proceedings.” Br. for Appellees at 6, Treasurer of N.J., 684 

F.3d 382 (No. 10-1963) (citing 31 C.F.R. §§ 315.20(b) and 315.23). Further, Treasury 

advised that “[a] State may satisfy this ownership requirement ‘through escheat, a 

procedure with ancient origins whereby a sovereign may acquire title to abandoned 

property if after a number of years no rightful owner appears.’” Id. (quoting Texas v. 

New Jersey, 379 U.S. 674, 675 (1965)). “Accordingly,” the government continued, it had 

“long advised state governments that, to receive payment on a U.S. savings bond, [the] 

State must go through an escheat process that satisfies due process and awards title to the 

bond to the State, making the State the rightful owner of the bond.” Id.

According to the government’s brief, however, the states involved in the litigation 

“d[id] not claim to have obtained title to any of the U.S. savings bonds at issue,” and thus 

“d[id] not assert a right to receive payment under the federal regulation that authorizes 

payment to a third party that obtains ownership of a bond through valid judicial 

proceedings.” Id. at 8. Nowhere in its brief did the government assert the states’ lack of 

possession as a factor affecting their claims. See id.

The Third Circuit affirmed. Treasurer of N.J., 684 F.3d at 413. With respect to 

preemption, it concluded that Treasury’s regulations “preempt[ed] the States’ unclaimed 

property acts insofar as the States s[ought] to apply their acts to take custody of the 
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proceeds of the matured but unredeemed savings bonds” because the acts “conflict[ed] 

with federal law regarding [the] bonds in multiple ways.” Id. at 407. First, paying over 

the proceeds of the bonds would inhibit Treasury’s “goal of making the bonds ‘attractive 

to savers and investors.’” Id. at 407–08 (quoting Free, 369 U.S. at 669). Congress, the 

court noted, had authorized Treasury to “implement regulations specifying that ‘owners 

of savings bonds may keep the bonds after maturity’”; the states’ unclaimed property 

laws, “by contrast, specify that matured bonds are abandoned and their proceeds are 

subject to the acts if not redeemed within a time period as short as one year after 

maturity.” Id. (quoting 31 U.S.C. § 3105(b)(2)(A)). 

Second, by “effectively . . . substitut[ing] the respective States for the United 

States as the obligor on the affected savings bonds,” the operation of the unclaimed 

property laws “would interfere with the terms of the contracts.” Id. at 408. Instead of the 

“federal redemption process . . . set forth . . . in the relevant statutes and regulations,” 

bondholders “would have to comply with [the] procedures set forth in the various States’ 

unclaimed property acts.” Id. The “application of the States’ acts in the redemption 

process” would thus impermissibly “alter [the redemption] process as contemplated in the 

relevant federal regulations.” Id. at 409. 

On the principle of intergovernmental immunity, the Third Circuit determined 

that the operation of the states’ unclaimed property laws 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.’” Id. at 410 (quoting U.S. 

Const. art. IV, § 3, cl. 2) (alterations in original). “Although the United States must pay 

holders of matured bonds the sums due on the bonds when the owners present them for 

payment,” the court reasoned, “until it does so the funds remain federal property.” Id. at 

411. Further, the Third Circuit determined that the states’ unclaimed property laws would 

unlawfully regulate the federal government by requiring it to comply with state 

accounting, record-keeping, and reporting requirements. Id. In the court’s view, “forcing 

the Federal Government to account to the plaintiff States for unredeemed savings bonds 

or their proceeds . . . would result in a direct regulation of the Federal Government in 

contravention of the Supremacy Clause.” Id. at 412. 

In the wake of the Third Circuit’s ruling, Montana and four other states filed a 

petition for a writ of certiorari to the United States Supreme Court. See Dir. of the Dep’t 

of Revenue of Mont. v. Dep’t of Treasury, 133 S. Ct. 2735 (2013) (mem.). The Solicitor 

General opposed certiorari. See Pl.’s Cross-Mot. for Partial Summ. J. & Br. in Opp’n to 

Def.’s Mot. for Summ. J. (Pl.’s Mot.) App. at A304–37, ECF No. 87-1 [hereinafter “SG’s 

Brief”]. As in the briefing before the Third Circuit, the Solicitor General acknowledged 

that under 31 C.F.R. § 315.20(b), third parties may “obtain[] ownership of . . . bond[s] 

through valid judicial proceedings.” Id. at A311. “Accordingly,” the Solicitor General 

continued, Treasury had “long advised the States that to receive payment on a U.S. 

savings bond a State must complete an escheat proceeding that satisfies due process and 

that awards title to the bond to the State, substituting the State for the original bondholder 

as the lawful owner.” Id. at A312. Further, as with the government’s brief before the 

Third Circuit, the states’ lack of possession of the bonds was not presented as pertinent to 
11

the issue before the Court. See id. at A320–36. The Supreme Court ultimately denied the 

petition. Dir. of the Dep’t of Revenue of Mont., 133 S. Ct. at 2735.

IV. Other Guidance Provided by Treasury

From time to time, Treasury has also provided public guidance on its savings 

bond redemption policies. As most relevant to this case, Treasury has posted information 

about purchasing and redeeming U.S. savings bonds on its website, TreasuryDirect.gov. 

From 2000 through the initiation of this litigation, an FAQ page on that website included 

the following question regarding states with permanent escheat laws:

In a state that has a permanent escheat 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?

See Def.’s Mot. App. at A115; see also Estes, 123 Fed. Cl. at 87 n.11. In its answer, 

Treasury confirmed that it “recognize[s] 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.” Def.’s Mot. App. at A115. “[I]n such [a] case,” 

Treasury continued, “payment of the securities results in full discharge of . . . Treasury’s 

obligation and the discharge is valid in all jurisdictions.” Id.

V. Kansas’s Claim to Ownership Over the Bonds at Issue in This Case

A. Kansas’s Initial Requests for Information Regarding Bonds It Did 

Not Possess

On June 19, 2000, Kansas’s state treasurer sent Treasury a letter informing 

Treasury that Kansas intended to appoint an agent to conduct “an examination of 

[Treasury’s] books and records” related to “unredeemed US Savings Bonds subject to 

escheat” under its Unclaimed Property Act. Id. at A116. Kansas’s letter also purported to 

grant the agent the authority to “instruct [Treasury] to deliver all unredeemed US Savings 

Bonds found due and owing to a custodian on behalf of, and in trust for, the State.” Id.

Treasury responded on August 11, 2000. Id. at A118. In line with its prior 

guidance, it explained that it would “recognize claims by States for payment of United 

States securities where the States have actually succeeded to the title and ownership of 

the securities pursuant to valid escheat proceedings.” Id. Treasury acknowledged that 

Kansas claimed to have recently “changed its custodial statutes to provide for the escheat 

of savings bonds” and suggested that Kansas’s Attorney General provide Treasury with

“[an] analysis and opinion regarding these statutes.” Id.

Kansas provided the analysis and opinion on October 30, 2000. Id. at A120. In the 

analysis, Kansas’s Attorney General stated that “[c]learly, once applicable court 

proceedings have been favorably concluded, Kansas law provides that unclaimed United 

States savings bonds escheat to the State of Kansas, and all property rights to such United 

States savings bonds or their proceeds vest solely in the State of Kansas.” Id. at A122. 
12

Treasury responded on December 27, 2000. Id. at A124. It observed that under 

the Kansas Attorney General’s analysis, “it would appear that . . . title is not vested in the 

state of Kansas unless and until the judgment of the court has been rendered that the 

savings bonds have escheated to the state.” Id. Treasury noted, however, that it had “not 

received a court order or similar evidence supporting [Kansas’s] request to redeem the 

bonds on behalf of the state.” Id. Treasury then asked Kansas a number of additional 

questions about the application of its unclaimed property law to U.S. savings bonds, and 

concluded that it would “consider this matter further” after it received Kansas’s response. 

Id. at A124–25. Kansas apparently never responded to the letter. 

More than a decade later, on June 4, 2012, Kansas sent Treasury a FOIA request 

“seeking records, or access to records, concerning unclaimed U.S. savings bonds that 

were issued before December 31, 1974[,] to bondholders with last known addresses in the 

state of Kansas.” Pl.’s Mot. App. at A201. Treasury responded on July 17, 2012. Id. at 

A208. Treasury explained that, in its view, “[r]ecords of an individual’s securities” were 

exempt from FOIA as “files the disclosure of which would constitute a clearly 

unwarranted invasion of personal privacy.” Id. (citing 5 U.S.C. § 552(b)(6)). Further, 

Treasury pointed to its own regulation, 31 C.F.R. § 323.2, which (as noted above) states 

that “[r]ecords relating to the purchase, ownership of, and transactions in Treasury 

securities or other securities handled by the Bureau of the Public Debt . . . will ordinarily 

be disclosed only to the owners of such securities, their executors, administrators or other 

legal representatives.” Id. Based on these provisions, Treasury denied Kansas’s request.

Id. at A209. 

B. Escheat Proceedings in Kansas State Court

After receiving this denial, on January 3, 2013, Kansas’s state treasurer filed an 

escheatment action in the District Court of Shawnee County “seeking a determination 

that all right and legal title in, and ownership of, certain matured, unredeemed United 

States savings bonds, which are unclaimed property under the Kansas Disposition of 

Unclaimed Property Act . . . shall escheat to the State of Kansas.” See id. at A178. Along 

with its petition, Kansas filed a motion seeking leave to effect service by publication on

the “purchasers or owners” of certain U.S. savings bonds who had “last known addresses 

in the state of Kansas according to the records of the U.S. Treasury Department.”4Id.

In the motion, Kansas noted that it had in its possession 1,481 bonds “originally 

owned by 213 individual apparent owners.” Id. at A181. It had obtained these bonds “[i]n 

most cases” when they were “turned over to the Treasurer’s office because they had 

remained unclaimed in bank safe deposit boxes for a period of at least five years.” Id. at 

A180. Kansas believed that it had obtained current addresses for twelve of these 213 

 

4 The specific bonds at issue included “40-year Series E bonds issued between 1941 and 

December 31, 1964”; “30-year Series E bonds issued between 1965 and December 31, 

1974”; “Series A, B, C, D, F, G, J and K bonds (all of which were issued prior to 1958)”; 

and “Series H bonds issued before December 31, 1974.” Pl.’s Mot. App. at A178. 
13

individuals. Id. at A181. On the other hand, Kansas had been “unable to locate” the other 

201 individuals. Id. at A182.

“Separate and apart” from the bonds in its possession, Kansas stated that “most of 

the Kansas Unclaimed U.S. Savings Bonds at issue in the . . . case” were “not in the 

physical possession of the Kansas Treasurer.” Id. Rather, according to Kansas, those 

bonds “h[ad] been lost, stolen, destroyed, or otherwise made unavailable.” Id. Kansas 

described these as “the absent bonds.” Id. (quotation omitted). Kansas noted that, as to 

the absent bonds, it had no information “concerning the identity or location of [the]

apparent owners.” Id. It further advised the Court that Treasury had “refused to provide 

such information to [Kansas]” because of its policy against “provid[ing] such information 

to anyone other than the title owner of the bonds.” Id. Thus, according to Kansas, there 

was “no way for [it] to search for the names and addresses of the unknown owners” of 

the absent bonds “until [Kansas] obtains title by way of this escheat proceeding.” Id. at 

A183. “Under these circumstances,” Kansas contended, “it is appropriate for this escheat 

proceeding to be initiated by service of process by publication.” Id. at A185.

The court granted Kansas’s motion on January 4, 2013. Id. at A214. Pursuant to 

Kansas’s Unclaimed Property Act, Kansas then published notice of the escheatment 

action in newspapers across the state for three consecutive weeks. Id. at A219. It also 

published notice on the Kansas state treasurer’s website. Id. Soon after, on March 29, 

2013, the state court issued a judgment of escheat. Id. at A213–21. The court found that 

at the time Kansas filed its petition, it had “physical custody of approximately 1,481 

Kansas Unclaimed U.S. Savings Bonds.” Id. at A214. Further, it found that “it is 

estimated, upon information and belief, that there are approximately $151.8 million in 

absent Kansas Unclaimed U.S. Savings Bonds that have been lost, stolen, or destroyed, 

and are thus[] not currently in the possession of [Kansas].” Id. at A215. The court also 

found that “those unredeemed bonds belonging to Kansas citizens confer a right to collect 

matured principal and interest from the U.S. Treasury,” and that “[t]his right is intangible

property subject to” Kansas’s Unclaimed Property Act. Id. at A216–17.

Based on these findings, the court determined that Kansas was “seeking to take 

ownership of and title to the subject bonds and the right to proceeds thereof through this 

state’s valid judicial escheat proceedings as the sole owner of and ultimate heir to such 

bonds and proceeds.” Id. at A217–18. Further, the court concluded that “all of the abovedescribed Kansas Unclaimed U.S. Savings Bonds . . . have been unclaimed and 

abandoned property pursuant to the provisions of” Kansas’s Unclaimed Property Act. Id.

at A218. Finally, the court found that “exceptional efforts ha[d] been undertaken to locate 

the owners of [the] bonds and [to] provide notice of these proceedings far in excess of the 

due diligence and notice requirements” set forth in Kansas law. Id. at A219.

For these reasons, the court issued a declaratory judgment stating that the bonds at 

issue “constitute abandoned and unclaimed property pursuant to the laws of the State of 

Kansas and are therefore subject to escheatment.” Id. at A220. It further declared that 

“such unclaimed and abandoned Bonds . . . include the Absent Kansas Unclaimed U.S. 

Savings Bonds, which have been lost, stolen, or destroyed, and which have registered 

owners with last known addresses in the State of Kansas.” Id. at A220–21. “[P]ursuant to 
14

[its] powers of escheatment,” the court then decreed that “all rights and legal title to, and 

ownership of the above described Kansas Unclaimed U.S. Savings Bonds and the 

proceeds thereof . . . shall escheat to the State of Kansas.” Id. at A221.

C. Kansas’s Request to Redeem the Purportedly Escheated Bonds

On May 13, 2013, Kansas sent Treasury a “two-fold” redemption request for the 

bonds that were the subject of the state court proceedings. Id. at A341. First, it requested 

redemption of the bonds in its possession.5Id. Second, it requested “payment of the 

proceeds of those Absent Kansas Unclaimed U.S. Savings Bonds which the Kansas 

District Court, in its Judgment of Escheatment, declared lost, stolen, or destroyed, and 

which had registered owners with last known addresses in Kansas.” Id. at A341–42.

According to Kansas, “[t]he state of Kansas . . . gained title to and ownership of the 

Absent Bonds and their proceeds by valid judicial escheatment proceedings.” Id. at A342. 

“Therefore,” it continued, “Kansas, as owner of the Absent Bonds, can now redeem these 

bonds and collect their proceeds.” Id.

Further, “[w]ith respect to [its] claim for redemption of the proceeds of the Absent 

Bonds,” Kansas “request[ed] that [Treasury] either re-issue the bonds to the state of 

Kansas as owner or provide the records, including serial numbers, regarding the Absent 

Bonds that U.S. Treasury will require for redemption of each Absent Bond.” Id. at A343 

(emphasis in original). Noting that under 31 C.F.R. § 323.2(b) records regarding U.S. 

Savings Bonds will “ordinarily be disclosed only to the owners of such securities,” 

Kansas claimed that “[t]he information regarding the securities that have escheated to the 

state of Kansas must be made available to the owner of those securities, Kansas.” Id.

(emphasis in original). 

On October 9, 2013, Treasury responded to the first portion of Kansas’s 

redemption request (regarding the bonds in its possession). Id. at A358. Treasury 

requested that Kansas provide it with a certified copy of the judgment of escheat, certain 

information about the state treasurer, and the bonds themselves, signed by the state 

treasurer. Id. “Assuming the savings bonds you surrender are legitimate and have not 

previously been redeemed,” Treasury stated, it “anticpate[d] redeeming them in the 

normal course after receiving” the requested information.6Id. at A359.

About a week later, on October 16, 2013, Treasury responded to the second 

portion of Kansas’s redemption request (regarding the absent bonds). Id. at A360–61. 

Treasury stated that it was “unable to grant [Kansas’s] request to redeem” the absent 

bonds. Id. at A360. Under its regulations, Treasury claimed, registration was “conclusive 

of ownership,” and Treasury was “only authorized to redeem a savings bond to the 

 

5 Although the state court proceedings involved 1,481 bonds in Kansas’s possession, the 

state requested that Treasury redeem just 1,445 of those bonds. See Pl.’s Mot. App. at 

A341.

6 Treasury in fact redeemed the bonds a short time later. See Pl.’s Mot. App. at A362.
15

registered owner.” Id. According to Treasury, however, “[e]scheatment claims by states 

are not an explicit exception to the conclusive ownership requirements.” Id. (citation 

omitted). “In the past,” Treasury acknowledged, it had “interpreted its regulations to 

allow some state escheatment claims, but only when the state possesse[d] the savings 

bonds in its claim.” Id. at A360–61. Kansas, however, was neither “the registered owner 

of the savings bonds, nor d[id] it possess them.” Id. at A361. 

Treasury also noted that because Kansas did not possess the bonds, it could not 

“comply with requirements in the savings bond contract concerning surrender of the 

Absent Bonds.” Id. “As provided in [Treasury’s] regulations,” Treasury stated, “an owner 

seeking to redeem a savings bond must surrender it to the Treasury 

Department . . . unless the owner can show that the savings bond was lost, stolen, or 

destroyed.” Id. (footnote omitted). But “Kansas [could not] present the Absent Bonds for 

payment, presumably because the savings bonds are in the possession of the registered 

owners or their heirs.” Id. And, according to Treasury, its “regulations do not provide that 

owners abandon their right to payment simply because they have not redeemed a matured 

savings bond.” Id. Rather, the owners’ “contract[s] with the United States allow[] them to 

redeem their savings bonds at any time, even after maturity.” Id. (footnote omitted).

Finally, Treasury rejected Kansas’s request for information about the absent 

bonds. Id. In its view, “turn[ing] over the Absent Bond records would violate the rights of 

the registered owners” under the Privacy Act. Id. Further, Treasury noted that it “does not 

index its registration records according to the state of the registered owner.” Id. Treasury 

thus “would have to search millions of records by hand to fulfill Kansas’[s] request,” 

which “would be prohibitively expensive.” Id.

VI. Commencement of This Action and the Government’s Motion to Dismiss

After receiving these responses, Kansas filed this action on December 20, 2013. 

Compl., ECF No. 1. It alleges that as a result of the state court judgment of escheat, it is 

in privity of contract with the United States with respect to the absent bonds. Id. ¶¶ 1, 84. 

It also alleges that it “made proper presentment under applicable federal regulations of 

the U.S. savings bond contracts” for both sets of bonds. Id. ¶ 90.

Kansas’s complaint incorporates several theories of liability. First, in Count I, 

Kansas claims that Treasury’s “refusal to provide necessary and required information 

regarding the Absent Bonds, and its further refusal to accept presentment and redeem the 

Absent Bonds” constituted a breach of express contracts between it and the United 

States—i.e., the savings bonds to which it claims title. Id. ¶¶ 93, 95. It requests damages 

“believed to be in excess of $151,800,000” based on “the matured value . . . of all lost, 

stolen, destroyed or otherwise abandoned U.S. savings bonds . . . now owned by [Kansas] 

which are registered with [Treasury] and having last known addresses in the State of

Kansas.”7Id. at 24. Relatedly, in Count III, Kansas claims that the government has 

 

7

In Count II of its complaint, Kansas alternatively claims that the bonds constitute 

implied-in-fact contracts between it and the United States, and that the government has 

breached those contracts. See Compl. ¶¶ 96–108. And in Count V of its complaint, it 
16

breached fiduciary duties in connection with the express contracts, and that it is entitled 

to damages as a result. Id. ¶¶ 109–115. And in Count VII, Kansas claims that the 

government’s refusal to redeem the bonds constitutes a taking of private property without 

just compensation in violation of the Fifth Amendment’s Takings Clause.8Id. ¶¶ 141–43.

Finally, in Count VI, Kansas also seeks a declaratory judgment that the 

government has breached its obligations on the savings bond contracts. Id. ¶¶ 133–40. In 

particular, it asks the Court to enter an order declaring (among other things) that the 

government has “no right, title, or interest to the Absent Bonds”; that the government has 

“wrongfully asserted custody and/or ownership over [Kansas’s] Absent Bonds”; and that 

the government has “failed to turn over to [Kansas] required and necessary information 

regarding the Absent Bonds, namely serial numbers, addresses, and other information 

which would identify those bonds with last known addresses in the State of Kansas.” Id.

at 35. Kansas also asks the Court to order the government to “provide [Kansas with] the 

information necessary to identify those Absent Bonds registered with last known 

addresses in the State of Kansas” and to “accept [Kansas’s] presentment and redemption 

of the subject Absent Bonds.” Id.

As discussed in Estes, the government moved to dismiss Kansas’s claims other 

than its takings claims for lack of subject matter jurisdiction, and to dismiss its takings 

claim for failure to state a claim. 123 Fed. Cl. at 80. The Court determined, however, that 

it had subject matter jurisdiction over Kansas’s contract, estoppel, and declaratory 

judgment claims because “the government’s argument—that Kansas was not a party to 

the contract[s] because under Treasury’s [r]egulations it was not the owner of the Absent 

Bonds—[went] to the merits of Kansas’s . . . claims, not th[e] Court’s jurisdiction over 

them.” Id. at 82–83. Therefore, the Court treated the government’s entire motion as a 

motion to dismiss for failure to state a claim, and concluded that Kansas had stated a 

plausible claim for relief with respect to its contract, estoppel, declaratory judgment, and 

takings claims. Id. at 85, 90–91. On the other hand, it dismissed Kansas’s third-party 

beneficiary claim. Id. at 90.

The Court’s ruling on Kansas’s contract and declaratory judgment claims turned 

on a narrow issue of regulatory interpretation around which the parties framed their 

 

alternatively claims that it is a third-party beneficiary of the savings bond contracts, and 

that the government’s breach of those contracts entitles it to damages. See id. ¶¶ 125–32.

8 As a corollary to these claims, Kansas also asserts, in Count IV, that the government 

“should be equitably estopped from asserting that [its] claims for relief are wrongful.” Id.

¶ 117; see also id. ¶ 118 (contending that the government “misled” Kansas by “making 

statements and taking action indicating that it would redeem Kansas’s absent Bonds,” 

including the government’s “recognition of Kansas’s ownership of the Bonds in 

Possession and redeeming the proceeds thereof upon request”); id. ¶ 120 (asserting that 

the government “concealed material facts” by “engag[ing] in self-serving refusals to 

honor FOIA and other requests that would reveal necessary and requested information 

about . . . Kansas[’s] Absent Bonds”).
17

briefs. See id. at 81–85; see also Def.’s Mot. to Dismiss at 10–16, ECF No. 9; Pl.’s Resp. 

to Def.’s Mot. to Dismiss at 22–29, ECF No. 15. In particular, the government centered 

its arguments on Subpart E of Treasury’s regulations, 31 C.F.R. §§ 315.20–.23, which (as 

discussed above) sets forth “[l]imitations on [j]udicial [p]roceedings” with respect to U.S. 

savings bonds. See Def.’s Mot. to Dismiss at 11–12. 

Advancing a restrictive interpretation of 31 C.F.R. § 315.20(b)—which states that 

Treasury “will recognize a claim against an owner of a savings bond . . . if established by 

valid, judicial proceedings, but only as specifically provided in this subpart”—the 

government contended that escheat judgments could never form the basis of claims of

ownership under the regulations because such judgments were not specifically provided 

for elsewhere in Subpart E. Id. at 11–13. Rather, according to the government, Subpart E 

only specifically provided for two types of claims: “claims under a divorce decree 

(§ 315.22(a)) and gift causa mortis claims (§ 315.22(b)).”9Id. at 12. Thus, the 

government contended, “[e]scheatment actions are not one of the ‘valid judicial 

proceedings’ recognized in the regulations.” Id. And because “the only ‘valid judicial 

proceedings’ are the ones set forth in the regulations,” the government reasoned, “[i]t 

makes no difference whether the states’ escheatment statute purports to take title to or 

custody of the bonds.” Id. at 13; see also Def.’s Suppl. Br. in Supp. of Its Mot. to Dismiss 

at 4 (“Only certain judicial proceedings are covered by 31 CFR 315.20, and escheat 

proceedings are not among them.”).

The government then sought to explain away Treasury’s past statements regarding 

state claims to bonds obtained by escheatment proceedings by contending that those 

statements “were made in the context of states claiming title for bonds in their 

possession.” Def.’s Mot. to Dismiss at 13 (emphasis in original). The government

maintained that position even after Kansas pointed out that the Treasurer of New Jersey

litigation involved state claims for redemption of absent bonds. See Def.’s Reply Br. in 

Supp. of Its Mot. to Dismiss at 5–7, ECF No. 20. Further, in supplemental briefing, the 

government argued that its prior statements did not reflect its “considered judgment” on 

the meaning of its regulations; that its current litigating position did, in fact, reflect its 

considered judgment; and that the Court was thus required to defer to its litigating 

position under Auer v. Robbins, 519 U.S. 452 (1997). See Def.’s Suppl. Brief at 10–11, 

15.

The Court was not persuaded by the government’s arguments. See Estes, 123 Fed. 

Cl. at 85–90. First, it rejected the government’s reading of § 315.20(b) as incompatible 

with the text of Subpart E as a whole. Id. at 85–86. The Court noted that in § 315.20(a), 

Treasury expressly disavowed recognition of two types of judicial determinations. See 31 

C.F.R. § 315.20(a) (stating that Treasury “will not recognize a judicial determination that 

 

9

In supplemental briefing ordered by the Court, the government expanded its argument 

to include the additional types of judicial proceedings listed in 31 C.F.R. § 315.21, which 

concern payments to judgment creditors and the treatment of U.S. savings bonds in 

bankruptcy proceedings. See Def.’s Suppl. Br. in Supp. of Its Mot. to Dismiss at 5, ECF 

No. 28.
18

gives effect to an attempted voluntary transfer inter vivos of a bond, or a judicial 

determination that impairs the rights of survivorship conferred by these regulations upon 

a coowner or beneficiary”); see also Estes, 123 Fed. Cl. at 85. Accepting the 

government’s reading of § 315.20(b), however, would render superfluous this express

disavowal. Estes, 123 Fed. Cl. at 85. Further, the Court found that the government’s 

reading “ignore[d] what appear[ed] to be [the] actual purpose” of the restrictions found in 

§§ 315.21 and 315.22: “to address specific considerations and concerns attendant to the 

types of judgments referenced” in those subsections. Id. at 86.

In an extended discussion, the Court also rejected the government’s position 

regarding the import of its prior statements and the deference owed to its litigating 

position. See id. at 86–90. First, it found that the government’s litigating position actively 

conflicted with Treasury’s prior statements regarding escheat, especially statements made 

in connection with the Treasurer of New Jersey litigation. See id. at 87–88. That 

litigation, the Court noted, involved claims for custody over the proceeds of absent 

bonds, undercutting the government’s contention that all of its prior statements were 

made in the context of bonds-in-possession. Id. at 88. Further, in the Court’s view, 

possession had never served as an essential characteristic in Treasury’s prior statements 

regarding title-based escheat, without which an escheat judgment would not have been 

“valid” under the regulations. See id. at 88–89. And the government’s litigating position 

was internally inconsistent: it claimed (without any apparent factual basis) that it had 

exercised its waiver authority under 31 C.F.R. § 315.90 when it redeemed the bonds in 

Kansas’s possession; and it argued in supplemental briefing that escheat judgments were 

invalid under the regulations because they were proceedings in rem. See id. at 88–90. The 

Court thus concluded that the government’s ever-evolving litigating position did not 

reflect its considered judgment, and thus was not entitled to Auer deference. See id. at 90 

(“If anything, deference is due to the interpretation that Treasury expressed for over sixty 

years until the instant controversy arose.”).

Accordingly, the Court rejected the government’s contention that all escheat 

judgments—whether under a title-based or custody-based state law scheme—fell outside 

the category of “valid, judicial proceedings” under § 315.20(b). See id.

With respect to Kansas’s takings claim, the Court, following the Federal Circuit’s 

lead, observed that a party may properly “alleg[e] in the same complaint two alternative 

theories for recovery against the Government . . . one for breach of contract and one for a 

taking under the Fifth Amendment to the Constitution.” Id. at 91 (quoting Stockton E. 

Water Dist. v. United States, 583 F.3d 1344, 1368 (Fed. Cir. 2009)). It therefore denied 

the government’s motion to dismiss Kansas’s claims under the Takings Clause. See id.

VII. Treasury’s Revision of the Regulations and Kansas’s APA Challenge

In the meantime, on July 1, 2015 (while the government’s motion to dismiss was

pending), Treasury issued a Notice of Proposed Rulemaking in which it proposed 

revising its savings bond regulations to expressly address state court judgments of escheat

pursuant to title-based unclaimed property laws. See Regulations Governing United 

States Savings Bonds, 80 Fed. Reg. 37,559-01 (July 1, 2015). After a period of notice and 
19

comment, Treasury issued the final revised regulations on December 24, 2015. 

Regulations Governing United States Savings Bonds, 80 Fed. Reg. at 80,258-01. In the 

preamble to the revised regulations, Treasury stated that it intended for the revisions to 

“clarify its prior statements on escheat and to describe more formally the criteria 

Treasury will use to evaluate escheat claims.” Id. at 80,259. Further, by promulgating a 

“uniform federal rule governing title escheat claims,” Treasury would “provide formal 

notice to all states about the escheat claims it will recognize and how it will protect the 

rights of bond owners still in possession of their savings bonds.” Id.

As relevant to the issue presented in this case, the revised rule amended 31 C.F.R. 

§ 315.20(b) to add a sentence stating that “[e]scheat proceedings will not be recognized 

under this subpart.”10 Id. at 80,264. Treasury also added a new provision, § 315.88, to 

govern “[p]ayment to a State claiming title to abandoned bonds.” Id. Under the new 

provision, Treasury “may, in its discretion, recognize an escheat judgment that purports 

to vest a State with title to a definitive savings bond that has reached the final extended 

maturity date and is in the State’s possession.” Id. But Treasury “will not recognize an 

escheat judgment that purports to vest a State with title to a bond that the State does not 

possess.” Id.

Kansas and four other states challenged the rule under the Administrative 

Procedure Act (APA), 5 U.S.C. § 706. Estes v. U.S. Dep’t of Treasury, 219 F. Supp. 3d 

17, 22, 27 (D.D.C. 2016). They argued (among many other things) that the rulemaking 

was arbitrary and capricious because the new provisions “marked a change of agency 

policy, without any acknowledgment of that change.” Id. at 27.

The District Court for the District of Columbia disagreed. Id. at 28–33. After 

noting that the questions it faced and the issues before this Court were “distinct in 

numerous respects,” it concluded that the possession requirement expressed in the revised 

rule was not inconsistent with any clearly established prior policy.11 Id. at 28 n.4, 31.

Alternatively, the District Court concluded that even if the new rule did work a policy 

change, Treasury had not violated the APA in promulgating it because Treasury did not 

“depart from [its] prior policy sub silentio or simply disregard rules that are still on the 

books.” Id. at 33 (quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502, 514

(2009)). Rather, it “extensively explained its Rule and its view as to why that Rule did 

not contradict prior statements.” Id. There was thus “no basis for concluding that 

[Treasury] casually ignored prior policies and interpretations or otherwise failed to 

 

10 Thus, the revised § 315.20(b) expressly conformed to the arguments the government 

made in its motion to dismiss.

11 Thus, the District Court found that although Treasury’s prior statements reflected a 

“longstanding policy that payment requests for escheated bonds will not be honored 

unless a state has title ownership over those bonds,” they “d[id] not express a policy that 

a state may redeem bonds without possessing them.” Estes v. U.S. Dep’t. of Treasury, 

219 F. Supp. 3d at 29 (emphasis in original). 
20

provide a reasoned explanation for its [Rule].” Id. (quoting Cablevision Sys. Corp. v. 

FCC, 649 F.3d 695, 710 (D.C. Cir. 2011)) (second alteration in original).12

VIII. The Pending Cross-Motions

After the Court denied the government’s motion to dismiss, the parties engaged in 

targeted discovery regarding “the history of the Department of Treasury’s recordkeeping, 

registration, and redemption practices regarding the types of U.S. savings bonds involved 

in this case, as well as information regarding the nature of how the Department’s relevant 

savings bond records are catalogued and may best be searched.” See Order (Dec. 18, 

2015), ECF No. 51. Once discovery concluded, the government moved for summary 

judgment. ECF No. 86. Kansas then filed a cross-motion for partial summary judgment 

on liability, “which it asserted would fully resolve Count VI of Kansas’s Complaint and 

partially resolve Counts I, II, III, and VII.” Pl.’s Mot. at 3. The Court heard oral argument 

on June 22, 2017.

13

DISCUSSION

I. Standard For Summary Judgment

In accordance with RCFC 56(a), summary judgment may be granted “if the 

movant shows that there is no genuine dispute as to any material fact and the movant is 

entitled to judgment as a matter of law.” See Celotex Corp. v. Catrett, 477 U.S. 317, 322 

(1986). A fact is material if it “might affect the outcome of the suit under the governing 

law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if 

it “may reasonably be resolved in favor of either party.” Id. at 250.

The material facts in this case are not in dispute. Further, Kansas’s breach of 

contract claim depends upon the resolution of questions of law—namely, the 

interpretation of Treasury’s regulations, the interplay between those regulations and 

Kansas’s Unclaimed Property Act, and the constitutional principles raised by the 

government in opposition to Kansas’s claims. Therefore, Kansas’s breach of contract and 

other claims are appropriate for resolution by summary judgment. 

 

12 Kansas has appealed the District Court’s ruling. See Docketing Statement, LaTurner v. 

U.S. Dep’t of Treasury, No. 17-5015 (D.C. Cir. Mar. 2, 2017).

13 Since Kansas filed its complaint, eight other states with title-based escheat regimes 

have filed similar lawsuits seeking redemption of bonds they do not possess. See Sattgast 

v. United States, No. 15-1364 (South Dakota); Kennedy v. United States, No. 15-1365 

(Louisiana); Lea v. United States, No. 16-43 (Arkansas); Ball v. United States, No. 16-

221 (Kentucky); Fitch v. United States, No. 16-231 (Mississippi); Loftis v. United States, 

No. 16-451 (South Carolina); Zoeller v. United States, No. 16-699 (Indiana); Atwater v. 

United States, No. 16-1482 (Florida). With the exception of Lea, the Court has stayed 

these cases pending this decision. The Court is issuing a separate Opinion and Order on 

cross-motions for summary judgment in Lea. 
21

II. Merits 

In its motion for partial summary judgment, Kansas seeks a ruling that the 

government is liable for breach of contract. To succeed on this claim, Kansas must first 

demonstrate that it is in privity of contract with the government with respect to the absent 

bonds—i.e., it must establish that it owns the absent bonds. See Cienega Gardens v. 

United States, 194 F.3d 1231, 1239 (Fed. Cir. 1998); Rotman, 31 Fed. Cl. at 725. Further, 

it must also show that in refusing to recognize its ownership of the bonds and in declining 

to redeem the proceeds of the bonds, the government materially breached the terms of the 

bond contracts. See Bell/Heery v. United States, 739 F.3d 1324, 1330 (Fed. Cir. 2014);

San Carlos Irrigation & Drainage Dist. v. United States, 877 F.2d 957, 959 (Fed. Cir. 

1989).

Kansas’s contention that it is the owner of the absent bonds is predicated on 31 

C.F.R. § 315.20(b), which it argues obligates the United States to recognize the state-law 

judgment of escheat that purported to vest it with title to the bonds. Kansas asks the Court 

to direct the Department of Treasury to provide it with the information it is entitled to 

receive pursuant to 31 C.F.R. §§ 1.5 and 323.2 as the owner of the bonds. It further 

requests a ruling that—notwithstanding that it currently lacks information about the 

whereabouts of the bond certificates—Treasury was required to redeem the bonds upon 

presentation of a certified copy of the state court judgment under 31 C.F.R. §§ 315.20 

and 315.23, or pursuant to 31 C.F.R. § 315.25, which provides a method for owners to 

redeem bonds where the certificates have been lost. Kansas contends that Treasury’s 

refusal to redeem the bonds constitutes both a breach of contract and a compensable 

taking of its property under the Fifth Amendment.

The government asserts, on the other hand, that Kansas has not obtained 

ownership of the absent bonds and that, as a result, the United States is entitled to an 

entry of summary judgment. It briefly reprises its contention that 31 C.F.R. § 315.20(b) 

does not require Treasury to recognize ownership claims arising out of state court 

judgments under title-based escheat statutes. Further, it argues that even if Kansas 

Treasury’s regulations permit transfers of ownership pursuant to title-based escheat 

statutes, the government was not required to redeem the absent bonds because Kansas has 

not and cannot submit the paper bond certificates, which the government argues is a prerequisite to its obligation to pay Kansas their proceeds. Finally, it contends that, in any 

event, ownership of the bonds cannot be transferred to Kansas under the circumstances of 

this case because: (1) the state law on which the judgment rests is preempted by federal 

law; (2) the underlying state law violates the principle of intergovernmental immunity; 

and (3) the state court proceedings did not comport with the due process clause of the 

Fourteenth Amendment. 

For the reasons set forth below, the Court agrees that Kansas is the owner of the 

absent bonds pursuant to Treasury’s regulations and that Treasury’s refusal to recognize 

Kansas’s ownership of the bonds is a breach of contract. It further finds that Treasury 

breached the contract when it refused to provide Kansas with information about the 

bonds and demanded that Kansas produce the bond certificates as a condition of 
22

redeeming their proceeds. Accordingly, the Court grants Kansas’s motion for partial 

summary judgment as to liability for breach of contract.

A. Whether Treasury is Required to Redeem the Absent Bonds Under 

Treasury’s Regulations

As discussed, 31 C.F.R. § 315.20(b) provides that Treasury “will recognize a 

claim against an owner of a savings bond . . . if established by valid, judicial proceedings, 

but only as specifically provided in this subpart.” And 31 C.F.R. § 315.23(a) states that 

“[t]o establish the validity of judicial proceedings,” a claimant must submit to Treasury 

“certified copies of the final judgment, decree, or court order, and of any necessary 

supplementary proceedings.” 

The facts material to the application of these regulations with respect to the absent 

bonds are not disputed. Thus, the parties do not dispute that Kansas obtained the state 

court escheat judgment, Pl.’s Mot. App. at A213–22; that the judgment concerned 

ownership of the absent bonds, id. at A215; and that, when it attempted to redeem the 

absent bonds, Kansas supplied certified copies of the judgment to Treasury in accordance 

with § 315.23(a), id. at A342. 

In its motion for summary judgment, the government revives (albeit briefly) the 

arguments which this Court rejected in Estes regarding the proper interpretation of 

§ 315.20(b). Thus, it contends that the ownership recognition requirements of § 315.20(b) 

do not under any circumstances apply to judgments entered pursuant to state escheatment 

laws. See Def.’s Mot. at 19–20 & n.3; Def.’s Reply at 30–32. It also appears to argue 

that—even if title to the absent bonds has passed to Kansas—the state may not redeem 

the proceeds of the bonds because it has not presented the bond certificates to Treasury. 

Both of these arguments lack merit.

1. Whether Treasury is Required to Recognize Kansas’s Ownership 

Claims Based on the State Escheat Judgment

As discussed briefly above, and in greater detail in Estes, the government’s 

argument in support of its initial motion to dismiss was that under § 315.20(b), Treasury 

would recognize only those claims of ownership that arise out of the specific types of 

judgments referenced elsewhere in Subpart E of Part 315. Because state court escheat 

judgments were not referenced in the regulations, Treasury argued, they were not subject 

to § 315.20(b) at all. Treasury reprises this argument in its motion for summary 

judgment, observing once again that “Treasury’s regulations do not recognize the transfer 

of savings bonds via escheat judgment.” Def.’s Mot. at 19. 

In Estes, this Court found Treasury’s interpretation inconsistent with the language 

and structure of the regulation. See 123 Fed. Cl. at 85–86 (concluding that the 

government’s “construction of the regulations . . . collides with the well-established 

canon of interpretation that holds that regulatory text should not be read in such a way as 

to render any portion of the language superfluous” and “ignores [the] actual purpose” of 

the provisions of Subpart E). The government’s summary judgment briefs do not address 
23

the Court’s textual analysis or provide any basis for it to depart from its conclusion in 

Estes that a textual analysis of the language of § 315.20(b) establishes that Treasury is 

required to recognize claims of bond ownership that are based on state court judgments of 

escheat pursuant to valid judicial proceedings.

Nor is there anything in the government’s summary judgment briefs that would 

alter this Court’s conclusion in Estes that Treasury’s position in this litigation conflicts

directly with Treasury’s prior explicit statements interpreting § 315.20(b). These 

statements, which go back more than sixty years, clearly reflect that before this litigation, 

Treasury took the position that states could secure ownership of savings bonds on the 

basis of title-based escheatment statutes like Kansas’s.

Thus, as the Court explained in Estes, in its brief filed with the Third Circuit in 

the Treasurer of New Jersey litigation, the federal government represented that “Treasury 

regulations generally provide that payment on a U.S. savings bond will be made only to 

the registered owner,” but that “[t]he regulations specify limited exceptions to this rule, 

including cases in which a third party obtains ownership of the bond through valid 

judicial proceedings.” See Br. for Appellees at 6, Treasurer of N.J., 684 F.3d 382 (No. 

10-1963). In particular, the government explained, “[a] State may satisfy this ownership 

requirement ‘through escheat, a procedure with ancient origins whereby a sovereign may 

acquire title to abandoned property if after a number of years no rightful owner appears.’” 

Id. (emphasis added) (quoting Texas, 379 U.S. at 675). In its decision, the Third Circuit 

went on to endorse Treasury’s reading of its own regulations. See Treasurer of N.J., 684 

F.3d at 412–13 (observing that “the States[] may obtain ownership of . . . bonds—and 

consequently the right to redemption—through ‘valid[] judicial proceedings’” as 

provided in 31 C.F.R. § 315.20(b) (second alteration in original)).

The Solicitor General made a similar representation regarding Treasury’s 

interpretation of its regulations to the Supreme Court in 2013, in opposing a petition for 

certiorari filed by some of the states that were parties to the Third Circuit case. See Pl.’s 

Mot. App. at A304–37. In that brief, the Solicitor General, citing 31 C.F.R. §§ 315.20(b), 

315.23, and 353.23, observed that Treasury “has long advised the States that to receive 

payment on a U.S. savings bond a State must complete an escheat proceeding that 

satisfies due process and that awards title to the bond to the State,” and that this 

“represents the Department’s considered interpretation of federal law.” Id. at A311–12.

As the Court also explained in Estes, Treasury has long assured inquiring states 

that it would recognize state claims of ownership based on title-based escheat statutes. 

Thus, Treasury explained in the 1952 Escheat Decision that it would “recognize[] the title 

of the state when it makes claim based upon a judgment of escheat,” because, in that 

case, the state has “succeed[ed] to the title of the bondholder.” Def.’s Mot. App. at A3 

(emphasis omitted). And Treasury continued to emphasize this position throughout the 

1970s, 1980s, and 1990s in its responses to states’ requests to redeem or obtain custody 

over the proceeds of bonds in their possession under custody-based escheat regimes. See

id. at A6 (Oklahoma, June 26, 1970); id. at A8 (Indiana, Nov. 19, 1971); id. at A10 (New 

Hampshire, May 12, 1976); id. at A12 (South Carolina, May 26, 1976); id. at A15 

(Hawaii, July 14, 1976); id. at A17 (Indiana, Jan. 18, 1977); id. at A19 (North Dakota, 
24

June 24, 1977); id. at A22 (Illinois, Oct. 27, 1980); id. at A39 (Kentucky, Sept. 6, 1983); 

id. at A40 (Alaska, Oct. 25, 1983); id. at A109 (Alaska, Feb. 6, 1992); id. at A112 

(Oklahoma, Aug. 5, 1999).

In addition, in 1982, Treasury informed Massachusetts that under the state’s titlebased escheat regime, Treasury would “make payment to the Treasurer of the 

Commonwealth where the Commonwealth, through appropriate court proceedings, takes 

the owner’s title to itself.” Id. at A38 (observing that “[i]n that event, [Treasury] would 

pay the owner in the person of its successor, the Commonwealth”). Further, Treasury 

referred Massachusetts to 31 C.F.R. §§ 315.23(a) and 353.23(a) as the sources of “the 

proper evidence to be submitted if this approach is followed.” Id.

Notwithstanding the foregoing, the government contends now, as it did in the 

context of its motion to dismiss, that the Court should discount Treasury’s pre-2000 

statements because they “did not address the applicability of section 315.20(b) to titlebased escheat judgments for bonds a state did not possess.” Def.’s Mot. at 20 (emphasis 

added). But there is nothing in § 315.20(b) that purports to make possession of bond 

certificates a condition for Treasury’s recognition of ownership claims based on valid 

judicial proceedings. More to the point, under Treasury’s interpretation, state judgments 

of escheat can never confer ownership, regardless of whether the state has possession of 

the bond certificates. That is, under Treasury’s interpretation, even a state that: (1) has 

obtained title to the bonds through state escheatment proceedings; (2) possesses the bond 

certificates; and (3) presents those certificates to Treasury for redemption cannot claim an 

entitlement to the proceeds of the bonds. The factual distinction Treasury asks the Court 

to draw thus is not relevant to the legal position it advances—i.e., that the Court ought to 

accept its assertion that it does not recognize claims against bond holders based on statecourt escheat judgments under § 315.20(b).

Indeed, Treasury’s litigating position here is that to redeem even the bonds in 

possession to which it holds title pursuant to valid judicial proceedings, the state must 

persuade Treasury to waive its regulations. See Def.’s Mot. to Dismiss at 15 (contending 

that “[p]ursuant to [its] discretionary authority, Treasury elected to waive its regulations 

for the bonds in Kansas’ possession” but “found no basis to waive its regulations for the 

Absent Bonds”). But until this litigation, Treasury never mentioned its waiver authority 

in any of its many pronouncements concerning states’ rights to redeem bond proceeds 

under title-based escheat regimes; instead, it cited § 315.20. Thus, Treasury’s evershifting explanations for denying states’ requests to redeem absent bonds resemble 

nothing so much as a game of “whack-a-mole” in which the federal government’s 

rationale for denying such requests changes each time the states satisfy the most recently 

articulated condition for doing so. 

In that regard, the government also draws the Court’s attention to certain 2004 

correspondence between Treasury and several states that were then seeking information 

about the redemption of absent bonds under their custody-based escheat statutes. See

Def.’s Mot. at 19–20. That correspondence, which was not before the Court when it ruled 

in Estes, contained a passage advising the inquiring states that “[i]n order for the bonds to 

be paid to [the state], [it] must have possession of the bonds, . . . obtain an order of 
25

escheat from a court of competent jurisdiction vesting title in the state to the individual 

bonds, and apply to the Department of the Treasury for payment.” E.g., Def.’s Mot. App. 

at A134.

The passing mention of a possession requirement in the 2004 correspondence 

does not persuade the Court to depart from its prior interpretation of the plain text of the 

applicable Treasury regulations. For one thing, that correspondence did not purport to 

interpret § 315.20(b). Nor did it address Treasury’s treatment of claims brought under

title-based escheat judgments for bonds that a state did not possess, as the correspondence 

arose in the context of state claims for bond proceeds under custody-based escheat 

regimes. The correspondence thus did not identify possession of the bonds as a condition 

of recognizing the state’s claim of ownership under a title-based escheat regime, as 

Treasury appears to argue. 

Further, the Court notes that in Treasury’s subsequent 2006 correspondence with 

the state of Florida, there is no mention of a possession requirement. Instead, Treasury 

advised the State that “[t]he applicable regulations would permit the State of Florida to be 

paid for the bonds, pursuant to an appropriate state statute and after due process, by 

obtaining an order of escheat from a court of competent jurisdiction vesting title in the 

state, and then applying for payment to the Department of the Treasury pursuant to the 

procedures established by the regulations that all bond holders must utilize.” Id. at A148.

Accordingly, Treasury’s mention of a possession requirement in the 2004 correspondence 

does not cast doubt upon its assurances over the more than sixty preceding years, or the 

representations that it made to the Supreme Court almost ten years later, all of which 

clearly confirmed that Treasury would recognize claims of ownership based on valid state 

court escheatment proceedings.14

 

14 In support of its argument that § 315.20(b) is inapplicable to escheat judgments, the 

government cites the recent decision of the U.S. District Court for the District of 

Columbia in the litigation brought by Kansas and several other states to challenge 

Treasury’s new rule. See Def.’s Mot. at 4, 20–21 n.3 & 5 (citing Estes v. U.S. Dep’t of 

Treasury, 219 F. Supp. 3d at 32. As noted, the new rule, among other things, explicitly 

requires a state to possess the escheated bond in order to redeem it. See Estes v. U.S. 

Dep’t of Treasury, 219 F. Supp. 3d at 27–28. As the district court itself acknowledged, 

however, the issues in that case are “distinct in numerous respects” from the issues in this 

one. See id. at 28 n.4. Thus, in that case, the plaintiffs argued (among other things) that 

the new rule violated the APA “because it capriciously abandon[ed] prior Treasury 

policy.” Id. at 22. The issue before the district court was therefore whether the new rule 

“altered a clearly established policy without sufficient explanation.” Id. at 28 n.4 

(emphasis omitted). As noted above, the district court concluded only that there was no 

clearly established prior policy recognizing state claims of ownership pursuant to 

escheatment proceedings where the bonds were not in the state’s possession, and that, in 

any event, if there was such a policy, Treasury had adequately explained its reasons for 

changing it. See id. at 28–30, 33. To the extent that the district court’s decision, while 
26

For the reasons set forth above and in its opinion in Estes, the Court is of the view 

that, under § 315.20(b), title and ownership of the absent bonds was transferred to Kansas 

pursuant to the state court escheat judgment. It turns now to the government’s alternative 

argument that, even if Kansas has succeeded to ownership of the absent bonds, 

presentation of the escheated bonds is a prerequisite to their redemption. Def.’s Mot. at 

20–26; Def.’s Reply at 25–30.

2. Whether Kansas Must Present the Certificates for the Bonds it Owns 

as a Condition to Securing their Redemption

As noted, the government contends that even assuming that Kansas secured 

ownership of the absent bonds through the state escheatment proceedings, it cannot 

redeem the bonds because it does not possess them. This argument—whose premise is

that the Treasury’s regulations allow it to keep the proceeds of bonds indefinitely even if 

Kansas’s ownership of the bonds has been established by valid judicial proceedings—

does not withstand scrutiny. 

Treasury’s regulations make its payment obligation clear: under 31 C.F.R. 

§ 315.35(a), “[p]ayment . . . will be made to the person or persons entitled under the 

provisions of these regulations.” Id. Generally, in order to redeem the proceeds of a bond, 

the bond owner must surrender the bond certificate to Treasury. See id. § 315.35. But (as 

noted) Treasury has the authority to waive any portion of its regulations. See id. § 315.90. 

And in any event, as the Court already explained in Estes, presentation of the bond 

certificate is not the exclusive means for an individual to establish his or her ownership of 

the bond and consequent entitlement to redeem its proceeds. See 123 Fed. Cl. at 88–89. 

Thus, the regulations provide procedures by which a bond owner can secure redemption 

of bonds whose certificates have been “lost,” or subject to “theft, destruction, mutilation, 

or defacement.” 31 C.F.R. § 315.25 (authorizing “[r]elief, by the issue of a substitute 

bond or by payment” for lost, stolen, destroyed, or mutilated bonds). In such 

circumstances, the owner is required to provide either the serial number of the bond or 

other information that will allow Treasury to identify it by serial number. Id. § 315.26. 

Presumably, the purpose of these requirements is to enable Treasury to confirm through 

its records that the claimant is the bond owner, notwithstanding that he or she cannot 

produce the physical bond certificate.15

Counsel for the government in this case has taken the position that the certificates 

for the absent bonds cannot be deemed “lost” within the meaning of the regulations

because Kansas never physically possessed them. But it is not apparent to the Court why 

an item is not “lost” where its owner is unaware of its location, whether or not the owner 

 

addressing a different issue, can be read to endorse an interpretation of the former § 

315.20(b) that is at odds with this Court’s interpretation, the Court respectfully disagrees.

15 It bears noting that under the regulations, where Treasury redeems bonds that are lost, 

it may protect itself against duplicate claims by “requir[ing] a bond of indemnity” as 

“necessary to protect the interests of the United States.” 31 C.F.R. § 315.25. 
27

ever had the item in his possession. Moreover, the government has not supplied the Court 

with any basis for determining whether Treasury’s official interpretation of the scope of 

31 C.F.R. § 315.25 is as narrow as the one counsel proposes, or how Treasury has applied 

the regulation in the past.

In fact, counsel’s narrow interpretation of § 315.25 appears to conflict with the 

requirement in § 315.20(b) that Treasury “recognize” claims against registered owners of 

savings bonds if established by valid, judicial proceedings, as well as 31 C.F.R. 

§ 315.23(a), which provides that the validity of the judicial proceedings is established by 

presentation of certified copies of the final judgment. For if prior possession of the paper 

certificate is invariably required in order for an owner to claim them “lost,” then Treasury 

in fact would be unable to “recognize” claims of ownership based on valid judicial 

proceedings, as § 315.20(b) requires, where, for example, the prior owner of a bond had 

lost the physical certificates. It could also not recognize ownership claims where the prior 

owner refused to turn over the physical certificates, such as, for example, in the wake of a 

contentious divorce.16

It is certainly clear that 31 C.F.R. § 315.25 was intended to afford relief to bond 

owners in circumstances in which, for reasons beyond their control, they are unable to 

prove their ownership by presenting the bond certificate. And where ownership is 

conferred by a judicial determination, it would seem that submission of the certified 

judgment would suffice to prove such ownership. See id. § 315.23. But even leaving that 

aside, in light of the remedial purposes of § 315.25, and the anomalous results that would 

ensue if counsel’s position were adopted, the Court finds unpersuasive Treasury’s

argument that bond certificates can never be considered “lost” unless they were once in 

the current bond owner’s possession.

Finally, in any case, it is neither necessary nor appropriate for the Court to 

determine at this stage in the proceedings whether Kansas is entitled to redeem the bonds 

under the provisions of 31 C.F.R. § 315.25. For one thing, Kansas has not yet been 

afforded its rights as an owner of the bonds to make a claim for their proceeds based on 

the theory that they are “lost.” It also has not been given access to the information that it 

needs to make such a claim, including the serial numbers of the absent bonds, or the 

names of their original owners. Presumably, with additional identifying information in 

hand, Kansas may be able to determine whether or not the certificates can be located or 

whether instead they have been “lost” or destroyed.

* * * * * * 

 

16 In that vein, the Court notes that the regulation specific to divorce proceedings does not 

mention surrendering the physical bond; rather, it states (1) that Treasury will “recognize 

a divorce decree that ratifies or confirms a property settlement agreement disposing of 

bonds or that otherwise settles the interests of the parties in a bond”; (2) that “[t]he 

evidence required under § 315.23 must be submitted in every case”; and (3) that 

“[p]ayment, rather than reissue, will be made if requested.” See 31 C.F.R. § 315.22(a).
28

On the basis of the foregoing, and for the reasons set forth more fully in Estes, the

Court stands by its ruling that state court proceedings leading to judgments of escheat are 

among the valid judicial proceedings referenced in Treasury’s regulations at 31 C.F.R. 

§ 315.20(b). It also continues to find unpersuasive Treasury’s argument that possession of 

the bond certificates is a pre-requisite to the recognition of a state’s ownership rights 

under Treasury’s regulations, where such ownership is conferred through valid judicial 

proceedings. Finally, it rejects as unpersuasive and premature Treasury’s argument that 

its regulations preclude Kansas from redeeming the bonds that it owns unless it supplies 

Treasury with the bond certificates. The Court turns now to the government’s additional 

bases for refusing to recognize Kansas’s ownership of the absent bonds. 

B. Whether Kansas’s Escheatment Law is Preempted

In addition to its argument that § 315.20(b) does not by its terms apply to claims 

of ownership based on state court escheat judgments, the government contends that 

Kansas cannot be the “rightful owner of the Absent Bonds because its ownership claim is 

based on a state court escheat judgment that rests on a state statute that is preempted by 

Federal law.” Def.’s Mot. at 10. Treasury’s preemption argument is without merit.

1. Preemption Standards

It is well established that where a state law comes into conflict with a federal law, 

the state law must give way. E.g., Hillsborough Cty. v. Automated Med. Labs., Inc., 471 

U.S. 707, 712 (1985); see also Free, 369 U.S. at 669. This principle applies not only 

when the state law “actually conflicts” with federal law, but also if the state law “stands 

as an obstacle to the accomplishment and execution of the full purposes and objectives” 

of the federal government. Fidelity Fed. Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 

141, 153 (1982) (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)); see also Wyeth 

v. Levine, 555 U.S. 555, 565 (2009); Allergan Inc. v. Athena Cosmetics, Inc., 738 F.3d 

1350, 1355 (Fed. Cir. 2013).

“In all pre-emption cases,” the court “start[s] with the assumption that the historic 

police powers of the States were not to be superseded by the Federal Act unless that was 

the clear and manifest purpose of Congress.’” Wyeth, 555 U.S. at 565 (quoting 

Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996)). “[T]he purpose of Congress,” 

therefore, “is the ultimate touchstone in every pre-emption case.” Id. (quoting Medtronic, 

Inc., 518 U.S. at 485); see also Retail Clerks Int’l Ass’n v. Schermerhorn, 375 U.S. 96, 

103 (1963). Where Congress leaves the implementation of a statute to an agency, a 

“regulation with the force of law [may] pre-empt conflicting state requirements.” Wyeth, 

555 U.S. at 576; see also Hillsborough Cty., 471 U.S. at 713 (“[S]tate laws can be preempted by federal regulations as well as by federal statutes.”); Free, 369 U.S. at 666–69 

(operation of state community property law displaced by right of survivorship embedded 

in Treasury’s savings bond regulations). 

Unless Congress has specified otherwise, agencies have no special authority to 

pronounce on preemption. See Wyeth, 555 U.S. at 576–77. Nevertheless, agencies are 

“likely to have a thorough understanding of [their] own regulation[s] and [their] 
29

objectives,” Geier v. Am. Honda Motor Co., 529 U.S. 861, 883 (2000), and thus may 

have “an attendant ability to make informed determinations about how state requirements 

may pose an obstacle” to federal law, Wyeth, 555 U.S. at 577 (quotation omitted); see 

also Geier, 529 U.S. at 883. The weight accorded to the agency’s explanation “depends 

on its thoroughness, consistency, and persuasiveness.” Wyeth, 555 U.S. at 577 (citing 

United States v. Mead Corp., 533 U.S. 218, 234–35 (2001) and Skidmore v. Swift & Co.,

323 U.S. 134, 140 (1944)).

2. Application of Standards

Treasury urges the Court to find that the Kansas law, which presumes bonds 

abandoned five years after their maturity date if the owner has not communicated with 

Treasury, conflicts with federal law, which it contends “allows savings bond owners to 

hold their bonds after maturity and has no deadline for owners to redeem their bonds.”17

Def.’s Mot. at 10–12; Def.’s Reply at 3–15. Further, the federal government argues, the 

Kansas law creates an obstacle to the accomplishment of the objectives of the federal 

savings bond program. It reasons that “[f]ederal savings bonds are attractive to 

purchasers in part because they have no expiration date,” and that “confidence in the U.S. 

savings bond program would be undermined” if a state were permitted “to impair [the 

bond owner’s] contract rights.” Def.’s Mot. at 12.

Treasury’s arguments that the Kansas law and federal law are in conflict lack 

merit. First and foremost, for the reasons set forth above, and in Estes, this Court has 

concluded that federal law itself (i.e., 31 C.F.R. § 315.20(b)) requires Treasury to 

recognize claims of ownership based on title-based escheatment statutes. In fact, 

Treasury has not only represented to both the Third Circuit and the Supreme Court that it 

so interprets its regulations, it redeemed the bonds in Kansas’s possession that Kansas 

obtained via the very unclaimed property law that Treasury now argues is preempted. 

Pl.’s Mot. App. at A358–59, 362. 

Further, Kansas’s law determines the identity of the bond owner, and not the time 

period within which the bond owner may redeem it. If Kansas lawfully becomes the 

owner of bonds pursuant to Treasury’s regulations via a judgment of escheat (as the 

Court has already concluded), then the former bond holders no longer have a right under 

federal law to redeem the bonds because they no longer own them. As Treasury expressly 

observed in its 1952 Escheat Decision, in such circumstances payment of the proceeds to 

the State is “not regarded as a violation of the agreement, but, on the contrary, as 

payment to the bondholder in the person of his successor or representative.”18 Def.’s Mot. 

App. at A3 (emphasis omitted).

 

17 As noted above, under its Unclaimed Property Act, bonds that have been presumed 

abandoned do not escheat to Kansas until three years after the end of this five-year 

period. See Kan. Stat. Ann. § 58-3979(a). 

18 Treasury’s argument based on 31 U.S.C. § 3105(b)(2)(A) fails for similar reasons. That 

provision authorizes Treasury to “prescribe regulations providing that . . . owners of 
30

For similar reasons, the Court is not persuaded by the government’s argument that 

the Kansas law makes ownership of federal bonds less attractive, thereby impairing the 

objectives of the federal savings bond program. The Court does not agree with Kansas 

that there is no value at all to a right to hold onto a bond over an extended period of time 

after it has stopped earning interest. But even under Treasury’s own interpretation of its 

regulations, that right is subject to another party’s claim of ownership based on “valid, 

judicial proceedings” for at least some categories of judgments. See 31 C.F.R. 

§ 315.20(b). 

Put another way, Treasury’s regulations themselves expressly contemplate that 

the original bond owner may be deprived of his ownership interest in the bond, and 

thereby lose the right he once held as the owner to redeem the bond at any time after 

maturity. Thus, anyone who chooses to purchase a savings bond is already aware (at least 

constructively) that his right to hold onto the bond after it matures (and even while it is 

still earning interest) is not unlimited and may be affected by rulings issued in the course 

of valid judicial proceedings.

Finally, Treasury’s reliance upon the Third Circuit’s decision in Treasurer of New 

Jersey, which found certain custody-based state escheatment laws preempted by federal 

law, is unavailing. In that case, the Third Circuit held 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.” 684 F.3d at 407. “Most critically,” it 

stated, “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.” Id. at 408. Therefore, 

once the states took custody of the bonds’ proceeds, the bonds’ owners would have to 

follow the “procedures set forth in the various States’ unclaimed property acts” rather 

than the federal redemption process, in order to secure their proceeds. See id. Further, the 

Third Circuit observed, the original bondholders (who remained the bond’s owners) “still 

would have a contractual right to payment from the United States based on the terms of 

the bonds,” exposing the federal government to the risk of double liability on the bonds. 

Id. at 409.

Title-based escheatment statutes do not raise the concerns identified by the Third 

Circuit in Treasurer of New Jersey because once ownership transfers to a state, the state 

 

savings bonds may keep the bonds after maturity or after a period beyond maturity during 

which the bonds have earned interest and continue to earn interest.” Id. Section 

3105(b)(2)(A) thus concerns the rights that Treasury may choose to confer upon 

“owners”; it is agnostic as to who the owner is. Further, Treasury’s argument is purely 

academic, as Treasury has not, in fact, prescribed regulations allowing the absent bonds 

at issue in this case to continue to earn interest. The Court therefore is not confronted 

with a situation where a state seeks recognition of its ownership of bonds that are still 

earning interest. 
31

is not the obligor on the bonds; it is their owner. And when the state takes title, the former 

owners’ rights to payment from the federal government are extinguished. The

government therefore cannot be liable for double payment. Further, the state must follow 

existing federal regulations to redeem the bonds. Thus, as the Third Circuit recognized, 

its holding “does not nullify state escheat 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.’”19 Id. at 412–13 (quoting 31 C.F.R. § 315.20(b) (alteration in 

original)).

In short, the federal government’s argument that the Kansas law is preempted 

because it conflicts with or presents an obstacle to federal law is without merit. The Court 

now turns to its related argument that the Kansas law is inconsistent with principles of 

intergovernmental immunity.

C. Whether the State Statute Violates Principles of Intergovernmental 

Immunity

Under the principle of intergovernmental immunity, states may not “directly 

regulate the federal government’s operations or property.” Id. at 410 (citing Arizona v. 

Bowsher, 935 F.2d 332, 334 (D.C. Cir. 1991)); see also Hancock v. Train, 426 U.S. 167, 

178–80 (1976); McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 426–27 (1819). In other 

words, states may not “regulate the [federal] [g]overnment directly.” North Dakota v. 

United States, 495 U.S. 423, 434 (1990) (plurality opinion); see also United States v. City 

of Arcata, 629 F.3d 986, 991 (9th Cir. 2010) (invalidating local ordinances prohibiting 

military recruiters from contacting teenagers because the ordinances “s[ought] to directly 

regulate the conduct of agents of the federal government”).

Treasury argues that Kansas’s unclaimed property law directly regulates the 

federal government because that law seeks to “compel payment of unredeemed bond 

proceeds from the Federal Treasury based on [a] state imposed deadline[] for registered 

owners to redeem their bonds.” Def.’s Mot. at 15. According to the government, “Kansas 

 

19 In Treasurer of New Jersey, the Third Circuit explicitly observed that “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.” 684 F.3d 

at 413 n.28. It stated, however, that it did not wish to “imply that our result would be 

different” in the event that (1) the government was “confronted with a judgment of 

escheat under a title-based escheat act,” and (2) Treasury “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.” Id. Thus, the Third 

Circuit recognized that so long as Treasury’s regulations require Treasury to recognize 

state claims of ownership based on title-based escheatment statutes (which the Court has 

concluded the former regulations did), such statutes are not pre-empted by federal law. 
32

would then be able to use money now in the Federal Treasury to fund its own state 

programs and operations.” Id.

This argument lacks merit for many of the reasons articulated above. First, it is 

incompatible with Treasury’s decision to redeem the bonds in Kansas’s possession, 

which Kansas obtained via the same unclaimed property law Treasury now contests. 

Second, nothing in Kansas’s law requires the government to pay funds to Kansas on 

terms set by Kansas. Rather, Kansas seeks payment pursuant to Treasury’s own 

regulations—i.e., by obtaining title to the bonds via judicial proceedings under 31 C.F.R. 

§ 315.20(b) and then seeking redemption as the owner of the bonds.

Treasury’s reliance on Treasurer of New Jersey and Bowsher is thus unavailing. 

In the Treasurer of New Jersey litigation, the states acknowledged that they did not own 

the bonds they wanted to redeem and framed their claim as an APA claim seeking relief 

other than monetary damages. See McCormac v. U.S. Dep’t of Treasury, 185 F. App’x 

954, 956 (Fed. Cir. 2006) (concluding that it would be improper to transfer the Treasurer 

of New Jersey litigation to the Court of Federal Claims and observing that “the States 

neither assert[ed] that they currently ha[d] title to the bonds, nor s[ought] transfer of title 

to the bonds”). Bowsher similarly involved states seeking only custody over funds in the 

government’s hands. See 935 F.2d at 334 (observing that states seeking custody over 

funds in a federal unclaimed property fund “claim[ed] no escheat,” but rather “s[ought] 

only temporary custody over the money until the rightful owners appear with valid 

claims”). 

Indeed, the court in Bowsher seemingly anticipated a situation like this one, 

noting that “escheat of the claimant’s right might well substitute the state for the claimant 

and entitle it to payment.” See id. at 335. In such a case, the court cautioned, the 

substitution would need to occur in a manner “consistent” with the relevant statutes. See

id. As described above, Treasury has long acknowledged that transfers pursuant to titlebased escheat proceedings are consistent with its regulations, leaving open the possibility 

that Kansas might be substituted for the original owners of the absent bonds pursuant to 

such proceedings. Bowsher thus does not support Treasury’s intergovernmental immunity 

argument.

In sum, because under Treasury’s regulations, the operation of Kansas’s 

Unclaimed Property Act grants Kansas title over the savings bonds at issue, the Act does 

not directly regulate the federal government’s operations or property. The principle of 

intergovernmental immunity therefore does not invalidate Kansas’s unclaimed property 

law. 

D. Whether the State Proceedings Were Invalid Because They Did Not 

Comport with the Due Process Clause

The government’s final contention is that the state court proceedings did not 

effect a valid transfer of ownership because those proceedings did not comport with the 
33

due process requirements of the Fourteenth Amendment.20 Def.’s Mot. at 17–18; Def.’s 

Reply at 20–25. First, it argues that the judgment was defective because the “state court 

did not identify a constitutional basis for exercising in rem jurisdiction over the Absent 

Bonds.” Def.’s Mot. at 17; see also Def.’s Reply at 24–25. Second, it claims that “the 

state court failed to give the owners of the Absent Bonds constitutionally adequate notice 

of the escheat proceeding.” Def.’s Mot. at 18; see also Def.’s Reply at 23. Both 

arguments lack merit.

Regarding the first issue, as Kansas correctly observes, savings bonds are a form 

of intangible property. See Pl.’s Mot. at 46–47 (citing Blodgett v. Silberman, 277 U.S. 1, 

10 (1928)). As the Supreme Court has observed, “intangible property, such as a debt 

which a person is entitled to collect, is not physical matter which can be located on a 

map.” Texas, 379 U.S. at 677; see also Hanson v. Denckla, 357 U.S. 235, 246–47 (1958) 

(noting, with respect to in rem jurisdiction, that “the situs of intangibles is often a matter 

of controversy” and that “[i]n considering restrictions on the power to tax, th[e] Court has 

concluded that jurisdiction over intangible property is not limited to a single State” 

(quotation, citations, and footnote omitted)); Mullane v. Cent. Hanover Bank & Trust 

Co., 339 U.S. 306, 312 (1950) (observing that “[t]he legal recognition and rise in 

economic importance of incorporeal or intangible forms of property have upset the 

ancient simplicity of property law and the clarity of its distinctions” between in rem and 

in personam proceedings). 

Further, in Texas, the Supreme Court held in a similar context that when in rem

escheat proceedings involve intangible property that may be subject to several states’ 

unclaimed property regimes, “the right and power to escheat the debt should be accorded 

to the State of the creditor’s last known address as shown by the debtor’s books and 

records.” 379 U.S. at 680–81. According to the Court, this “clear rule” would “govern all 

types of intangible obligations.” Id. at 678. The Court stated that the virtues of this rule

include that it involves only “a factual issue [that is] simple and easy to resolve”; that it 

“recognizes that the debt was an asset of the creditor”; and that it “tend[s] to distribute 

escheats among the States in the proportion of the commercial activities of their 

residents.” Id. at 681. “It may well be that some addresses left by vanished creditors will 

be in States other than those in which they lived at the time the obligation arose or at the 

time of the escheat,” the Court continued, “[b]ut such situations probably will be the 

exception, and any errors thus created, if indeed they could be called errors, probably will 

tend to a large extent to cancel each other out.” Id.

 

20 Kansas asserts that the government lacks standing to raise the due process issue “on 

behalf of the bond owners.” See Pl.’s Mot. at 43. But the government is not raising the 

due process issue on behalf of the owners; rather, it asserts the issue as a basis for finding 

that the state’s claims of ownership are not based on valid judicial proceedings, so that 

Treasury is not contractually obligated to honor them. The Court therefore rejects 

Kansas’s suggestion that the government somehow lacks standing to raise this defense to 

Kansas’s breach of contract action. 
34

Treasury offers no persuasive reason why the Texas rule ought not apply here. Its 

observation that “the state court did not find that the Absent Bonds are in Kansas” is of 

no moment: because the bonds are intangible property, the inquiry turns on what the facts 

reveal about the bondholders’ last known addresses. See Def.’s Mot. at 17. Treasury’s

concern that addresses in its records may “reveal[] nothing about the present location of 

the bonds or their current owners” was addressed in Texas, as just described. See id. And 

its protest that bonds may “pass by inheritance to persons other than the purchaser” who 

live elsewhere is unavailing: under 31 C.F.R. § 315.70, surviving heirs may request 

reissue or payment upon the bondholder’s death, obviating Treasury’s concern. See id. at 

18. 

There is also no merit to Treasury’s argument that Texas is distinguishable 

because, unlike the property at issue in that case, U.S. savings bonds are “a form of 

property created under Federal laws that establish the registered owners’ right to redeem 

them at any time and the United States’ expectation that the physical bond be presented 

for payment in all but exceptional cases.” Def.’s Reply at 24. This contention, like 

Treasury’s preemption argument, cannot be reconciled with the governing regulations, 

which provide for transfers of ownership that displace the original registered owners’ 

expectations regarding redemption.

Treasury’s argument as to the constitutional adequacy of the notice Kansas 

provided to the absent bondholders is also inconsistent with Supreme Court precedent. In

Mullane, the Court held that to comport with the Due Process clause, notice must be 

“reasonably calculated, under all the circumstances, to apprise interested parties of the 

pendency of the action and afford them an opportunity to present their objections.” 339 

U.S. at 314. Whether this standard has been met depends on “the practicalities and 

peculiarities” of the individual case. Id. And, as Mullane shows, the Due Process Clause 

allows for the disposition of property interests where, as here, notice by publication is the

only practical option.

Thus, in Mullane, a state law allowing for common administration of small trusts 

permitted the administrator from time to time to seek judicial settlement of claims arising 

against the trustee. Id. at 307–09. Regarding notice, the law required only that the 

administrator publish notice of the settlement proceedings in a local newspaper for four 

consecutive weeks. Id. at 309–10.

In assessing the adequacy of this procedure under the Due Process Clause, the 

Court divided the trust’s beneficiaries into two categories: beneficiaries “whose interests 

or whereabouts could not with due diligence be ascertained,” and “known present 

beneficiaries of known place of residence.” Id. at 317–18. The Court held that notice by 

publication satisfied the Due Process Clause with respect to the first category of 

beneficiaries. Id. Acknowledging that “publication alone” was hardly a “reliable means 

of acquainting interested parties of the fact that their rights are before the courts,” id. at 

315, the Court nevertheless concluded that it was “not in the typical case much more 

likely to fail than any of the choices open to legislators endeavoring to prescribe the best 

notice practicable,” id. at 317. 
35

In contrast, “[a]s to [the] known present beneficiaries of known place of 

residence,” notice by publication did not suffice. Id. at 318 (observing that “[e]xceptions 

in the name of necessity do not sweep away the rule that within the limits of practicability 

notice must be such as is reasonably calculated to reach interested parties” and that 

“[w]here the names and . . . addresses of those affected by a proceeding are at hand, the 

reasons disappear for resort to means less likely than the mails to apprise them of its 

pendency.”).

According to the Court, “[i]t [was] not an accident that the greater number of 

cases reaching th[e] Court on the question of adequacy of notice have been concerned 

with actions founded on process constructively served through local newspapers.” Id. at 

315. Among these were several cases involving state unclaimed property regimes and 

their treatment of languishing bank deposits. See Anderson Nat’l Bank v. Luckett, 321 

U.S. 233 (1944); Sec. Sav. Bank v. California, 263 U.S. 282 (1923). As most relevant 

here, the Court in Luckett held that, in addition to the notice afforded by publication, 

“[t]he [unclaimed property] statute itself is notice to all depositors of banks within the 

state[] of the conditions on which the balances of inactive accounts will be deemed 

presumptively abandoned, and their surrender to the state compelled.” 321 U.S. at 243. 

Further, the Court cautioned, “[a]ll persons having property located within a state and 

subject to its dominion must take note of its statutes affecting the control or disposition of 

such property and of the procedure which they set up for those purposes.” Id.

Here, as in Mullane, the necessary notice had to be provided to two categories of 

property owners: the individuals whose bonds were in Kansas’s possession and the 

original owners of the absent bonds. Regarding the bonds-in-possession, Kansas 

attempted to locate bond owners “us[ing] both internet search sites and LexisNexis record 

searches . . . . as well as searching obituaries[] and records of probate proceedings.” Pl.’s 

Mot. App. at A189. Upon locating potential owners, Kansas sent them “claim 

packets . . . informing them of the existence” of the bonds. Id.

With respect to the absent bonds, Kansas attempted to obtain information about 

the original owners’ names and last known addresses from Treasury, but Treasury 

refused to provide it. See id. at A208–09 (denying FOIA request); id. at A345–47 (same); 

id. at A355 (denying FOIA appeal). Notably, Treasury did not deny that such 

bondholders existed; instead, it stated that it withheld the requested records because, in 

Treasury’s view, they were FOIA-exempt. See id. at A347. 

Thus, as in Mullane, Kansas could not discover individualized information about 

the absent bondholders through the exercise of reasonable diligence. Further, as in 

Luckett, the 2000 amendment to Kansas’s unclaimed property law (as well as Treasury’s 

regulations and its decades-long position regarding states’ rights to secure title to federal 

savings bonds pursuant to valid judicial proceedings) provided some notice of the 

possibility that bonds might escheat in the future. Accordingly, considering the 

“practicalities and peculiarities” of this case, the Court concludes that Kansas supplied 

constitutionally adequate notice of the state court proceedings to the absent bondholders.
36

In summary, the Court concludes that the state court did not violate the Due 

Process Clause when it asserted in rem jurisdiction over the absent bonds, and that 

Kansas’s efforts to notify the absent bondholders of the proceeding via publication passed

constitutional muster. Accordingly, for the reasons discussed above, the Court rejects the 

government’s argument that the state court escheatment proceedings were not valid 

judicial proceedings within the meaning of 31 C.F.R. § 315.20(b).

21

E. Kansas’s Fifth Amendment Takings Claim

As noted above, in Count VII of its complaint, Kansas alleged that Treasury’s 

failure to redeem the absent bonds amounted to a taking of its property without just 

compensation. See Compl. ¶¶ 141–43. In its ruling on the government’s motion to 

dismiss, the Court denied the government’s motion with respect to the takings claim 

because, under Federal Circuit precedent, a plaintiff may “alleg[e] in the same complaint 

two alternative theories for recovery against the Government . . . one for breach of 

contract and one for a taking under the Fifth Amendment to the Constitution.” See Estes, 

123 Fed. Cl. at 91 (quoting Stockton E. Water Dist. v. United States, 583 F.3d 1344, 1368 

(Fed. Cir. 2009)). In Stockton East, the Federal Circuit also observed that “[i]t has long 

been the policy of the courts to decide cases on non-constitutional grounds when that is 

available, rather than reach out for the constitutional issue.” 583 F.3d at 1368. For that 

reason, “when a case arises in which both a contract and a taking cause of action are pled, 

the trial court may properly defer the taking issue . . . in favor of first addressing the 

contract issue.” Id. “[O]f course,” the Federal Circuit continued, “when a plaintiff is 

awarded recovery for the alleged wrong under one theory, there is no reason to address 

the other theories.” Id.

Here, the Court has determined that Kansas has succeeded to title over the bonds 

but it has not yet “awarded recovery” to Kansas on its breach-of-contract claims. 

Accordingly, the Court will defer ruling on the parties’ cross-motions for summary 

judgment as to Kansas’s takings claim pending further proceedings in the case.

CONCLUSION

For the reasons discussed above, the Court concludes that Kansas is the lawful 

owner of the absent bonds pursuant to 31 C.F.R. § 315.20(b). As such, it is entitled to 

 

21 In Count IV of its complaint, Kansas argues that the government should be equitably 

estopped from denying its requests to redeem the absent bonds based on its recognition of 

Kansas’s ownership of the bonds in possession, and upon the 1952 Escheat Decision as 

well as “other, similar statements made over the past sixty years that Treasury would 

recognize title-based state escheat statutes.” Compl. ¶ 118. As the government points out, 

however, equitable estoppel may not be used as a basis to impose liability on the United 

States. See Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 426–30 (1990); Doe v. 

United States, 372 F.3d 1347, 1356–57 (Fed. Cir. 2004) (citing Schweiker v. Hansen, 450 

U.S. 785 (1981)). Accordingly, the government is entitled to judgment as a matter of law 

with respect to Count IV. 
37 

receive from the government the information necessary to allow it to make a request to 

redeem the bonds. Accordingly, Plaintiff’s motion for partial summary judgment as to 

liability is GRANTED as to Counts I, II, III, and VI of its complaint. The government’s 

motion for summary judgment is GRANTED as to Count IV of Plaintiff’s complaint; 

otherwise it is DENIED. 

The parties shall file a joint status report by August 21, 2017, suggesting further 

proceedings in this case. 

IT IS SO ORDERED. 

 

s/ Elaine D. Kaplan 

ELAINE D. KAPLAN 

Judge