Court Opinion

ID: 4194242
Source: CourtListenerOpinion
Date Created: 2017-08-08 20:03:51.46728+00
Date Added: 2024-06-11T14:13:27.846767
License: Public Domain

In the United States Court of Federal Claims
                                          No. 13-1011C
                                     (Filed: August 8, 2017)

                                               )    Keywords: Summary Judgment;
 JAKE LATURNER, Treasurer of the               )    Breach of Contract; U.S. Savings
 State of Kansas,                              )    Bonds; Preemption; Intergovernmental
                                               )    Immunity; Due Process Clause of the
                        Plaintiff,             )    Fourteenth Amendment; Breach of
                                               )    Contract; 31 C.F.R. § 315.20(b).
 v.                                            )
                                               )
 THE UNITED STATES OF                          )
 AMERICA,                                      )
                                               )
                        Defendant.             )
                                               )

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.”
         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

                                             2
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.”2 Id. § 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.

                                              3
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.

                                               4
         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.”3 Id.
§ 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.

                                              5
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.

                                             6
        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

                                                7
            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:

                                              8
               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

                                             9
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

                                             10
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.

                                             11
        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.”4 Id.

       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.

                                             12
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 above-
described 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

                                            13
[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.5 Id. 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.6 Id. 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.

                                              14
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.”7 Id. 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

                                             15
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.8 Id. ¶¶ 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”).

                                             16
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)).”9 Id. 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.

                                             17
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

                                             18
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).

                                             19
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.

                                             20
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 pre-
requisite 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

                                            21
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

                                             22
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,

                                             23
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 title-
based 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 title-
based 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 state-
court 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 ever-
shifting 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

                                             24
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

                                            25
        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.

                                             26
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).

                                             27
        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 pre-
empted 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]

                                             28
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

                                           29
         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.

                                            30
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.

                                             31
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 title-
based 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

                                              32
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.

                                              33
        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.

                                              34
        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.

                                             35
        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.

                                            36
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

                                            37