`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`JAKE LATURNER, TREASURER OF THE STATE
`OF KANSAS, ANDREA LEA, IN HER OFFICIAL
`CAPACITY AS AUDITOR OF THE STATE OF
`ARKANSAS,
`Plaintiffs-Appellees
`
`v.
`
`UNITED STATES,
`Defendant-Appellant
`______________________
`
`2018-1509, 2018-1510
`______________________
`
`Appeals from the United States Court of Federal
`Claims in Nos. 1:13-cv-01011-EDK, 1:16-cv-00043-EDK,
`Judge Elaine Kaplan.
`______________________
`
`Decided: August 13, 2019
`______________________
`
`DAVID CHARLES FREDERICK, Kellogg, Huber, Hansen,
`Todd, Evans & Figel, PLLC, Washington, DC, argued for
`all plaintiffs-appellees. Plaintiff-appellee Jake LaTurner
`also represented by SCOTT H. ANGSTREICH, KATHERINE
`COOPER, BENJAMIN SOFTNESS;
`JONATHAN BRETT
`MILBOURN, Horn Aylward & Bandy, LLC, Kansas City,
`MO.
`
` DAVID THOMPSON, Cooper & Kirk, PLLC, Washington,
`
`

`

`2
`
`LATURNER v. UNITED STATES
`
`DC, for plaintiff-appellee Andrea Lea. Also represented by
`JOHN DAVID OHLENDORF, PETER A. PATTERSON; JOSEPH H.
`MELTZER, MELISSA L. TROUTNER, Kessler Topaz Meltzer &
`Check, LLP, Radnor, PA.
`
` ALISA BETH KLEIN, Appellate Staff, Civil Division,
`United States Department of Justice, Washington, DC, ar-
`gued for defendant-appellant. Also represented by MARK
`B. STERN, JOSEPH H. HUNT.
`
` GEORGE W. NEVILLE, Office of the Mississippi Attorney
`General, Jackson, MS, for amici curiae State of Florida,
`State of Mississippi, State of Georgia, State of Indiana,
`State of Iowa, Commonwealth of Kentucky, State of Loui-
`siana, Commonwealth of Pennsylvania, State of Ohio,
`State of South Carolina, State of Rhode Island, State of
`South Dakota.
` ______________________
`
`Before DYK, CHEN, and HUGHES, Circuit Judges.
`DYK, Circuit Judge:
`During the Great Depression, President Franklin D.
`Roosevelt signed legislation allowing the U.S. Department
`of Treasury (“Treasury”) to issue savings bonds, a type of
`debt security designed to be affordable and attractive to
`even the inexperienced investor. Under longstanding fed-
`eral law, savings bonds never expire and may be redeemed
`at any time after maturity.
` See, e.g., 31 U.S.C.
`§ 3105(b)(2)(A); 31 C.F.R. § 315.35(c). Federal law also lim-
`its the ability to transfer bonds. 31 C.F.R. § 315.15. Kan-
`sas and Arkansas (the “States”) passed so-called “escheat”
`laws providing that if bond owners do not redeem their sav-
`ings bonds within five years after maturity, the bonds will
`be considered abandoned and title will transfer (i.e., “es-
`cheat”) to the state two or three years thereafter. Kan.
`Stat. Ann. §§ 58-3935(a)(16), 58-3979(a) (2000); Ark. Code
`Ann. § 18-28-231(a)–(b) (2015).
`
`

`

`LATURNER v. UNITED STATES
`
`3
`
`Pursuant to these escheat laws, the States sought to
`redeem a large but unknown number of bonds, estimated
`to be worth hundreds of millions of dollars. When Treasury
`refused, the States filed suit in the Court of Federal Claims
`(“Claims Court”). The Claims Court agreed with the
`States, holding that Treasury must pay the proceeds of the
`relevant bonds—once it has identified those bonds—to the
`States. The cases were certified for interlocutory appeal to
`this court.
`We reverse for two independent reasons. First, we hold
`that federal law preempts the States’ escheat laws. That
`means that the bonds belong to the original bond owners,
`not the States, and thus the States cannot redeem the
`bonds. Second, even if the States owned the bonds, they
`could not obtain any greater rights than the original bond
`owners, and, under Federal law, 31 C.F.R. § 315.29(c), a
`bond owner must provide the serial number to redeem
`bonds six years or more past maturity, which includes all
`bonds at issue here. Because the States do not have the
`physical bonds or the bond serial numbers, Treasury
`properly denied their request for redemption.
`BACKGROUND
`This case concerns the ability of states to acquire U.S.
`savings bonds through escheat, the centuries-old right of
`the states to “take custody of or assume title to abandoned
`personal property.” Delaware v. New York, 507 U.S. 490,
`497 (1993). A savings bond is a contract between the
`United States and the bond owner, and Treasury regula-
`tions are incorporated into the bond contract. See Treas-
`urer of New Jersey v. U.S. Dep’t of the Treasury, 684 F.3d
`382, 387 (3d Cir. 2012), cert. denied, 569 U.S. 1004 (2013).
`Treasury “regulations do not impose any time limits for
`bond owners to redeem the[se] savings bonds.” Id. at 388;
`see also 31 U.S.C. § 3105(b)(2)(A) (authorizing Treasury to
`adopt regulations providing that “owners of savings bonds
`may keep the bonds after maturity”). In addition, Treasury
`
`

`

`4
`
`LATURNER v. UNITED STATES
`
`regulations provide that savings bonds are generally “not
`transferable and are payable only to the owners named on
`the bonds.” 31 C.F.R. § 315.15. When the sole owner of a
`bond dies, “the bond becomes the property of that dece-
`dent’s estate.” 31 C.F.R. § 315.70(a). Federal law imposes
`no time limit on the redemption of savings bonds, and nu-
`merous savings bonds in the country have matured but
`have not yet been redeemed by their owners. Generally, in
`order to redeem bonds not in the physical possession of the
`owner—for example, bonds that have been lost or de-
`stroyed—the owner must supply the serial numbers of the
`bonds to Treasury. 31 C.F.R. §§ 315.25, 315.26(a),
`315.29(c). The States do not have the serial numbers of the
`bonds in question.
`This case is related to an earlier litigation that resulted
`in a decision by the Third Circuit. In the 2000s, several
`states attempted to acquire the proceeds of unredeemed
`savings bonds through so-called “custody escheat” laws.
`See New Jersey, 684 F.3d at 389–90. These laws provided
`that if bond owners with last known addresses in the state
`did not redeem their bonds within a certain time after ma-
`turity (such as five years), the bonds would be deemed
`abandoned property. The state could then obtain legal cus-
`tody of (but not title to) the bonds. When several states
`asked Treasury to redeem bonds obtained through these
`custody escheat laws, Treasury refused. Treasury ex-
`plained that for the bonds to be paid, a state “must have
`possession of the bonds” and “obtain title to the individual
`bonds”—neither of which the states had. J.A. 507 (2004
`letter to North Carolina); accord J.A. 509 (letter to Illinois);
`J.A. 511 (letter to D.C.); J.A. 513 (letter to Kentucky); J.A.
`515 (letter to New Hampshire); J.A. 517 (letter to South
`Dakota); J.A. 519 (letter to Connecticut); J.A. 521 (letter to
`Florida).
`A number of states filed suit in the District of New Jer-
`sey, seeking an order directing the government to pay the
`bond proceeds. The district court upheld Treasury’s denial
`
`

`

`LATURNER v. UNITED STATES
`
`5
`
`of payment, holding that the states’ custody escheat laws
`were preempted. See New Jersey, 684 F.3d at 394. The
`Third Circuit affirmed, explaining that the states’ laws
`“conflict[ed] with federal law regarding United States sav-
`ings bonds in multiple ways.” Id. at 407. The court rea-
`soned that unredeemed bonds are “not ‘abandoned’ or
`‘unclaimed’ under federal law because the owners of the
`bonds may redeem them at any time after they mature.”
`Id. at 409. “The plaintiff States’ unclaimed property acts,
`by contrast, specify that matured bonds are abandoned and
`their proceeds are subject to the acts if not redeemed within
`a [certain] time period” after maturity. Id. at 407–08.
`“There simply is no escape from the fact that the Federal
`Government does not regard matured but unredeemed
`bonds as abandoned even in situations in which [state law]
`would do exactly that.” Id. at 409. However, the Third Cir-
`cuit declined to address whether the outcome would be dif-
`ferent if states obtained title to savings bonds, as opposed
`to mere custody. Id. at 413 n.28 (“We simply are not faced
`with that possibility and thus we do not address it.”).
`After the New Jersey litigation, Kansas and Arkansas
`acted to obtain title to the bonds using “title escheat”
`laws—precisely the circumstance the Third Circuit’s New
`Jersey decision did not reach. Kansas’s title escheat law
`provides that a savings bond will be considered “aban-
`doned” if it is not redeemed within five years of maturity.
`Kan. Stat. Ann. § 58-3935(a)(16). If the bond remains un-
`redeemed for three more years—that is, for a total of eight
`years after maturity—Kansas may obtain a state court
`judgment that title to the bond has escheated to the state.
`Id. § 58-3979(a). Arkansas’s law is similar, providing that
`savings bonds will be considered abandoned five years af-
`ter maturity and that the state can obtain title to the bonds
`two years after that. Ark. Code Ann. § 18-28-231(a)–(b).
`Kansas and Arkansas obtained state court judgments
`purporting to give them title to the category of bonds
`deemed abandoned under these title escheat laws—that is,
`
`

`

`6
`
`LATURNER v. UNITED STATES
`
`all unredeemed bonds that were sufficiently past maturity
`and were registered to owners with last known addresses
`in Kansas or Arkansas.1 See J.A. 251 (Kansas); J.A. 1244
`(Arkansas). These bonds were not in the States’ posses-
`sion.2 Kansas and Arkansas estimated that the allegedly
`abandoned bonds were worth $151.8 million and $160 mil-
`lion, respectively.
`The States then attempted to redeem these bonds, ask-
`ing Treasury to redeem bonds whose registered owners had
`last known addresses in the state, relying on its general
`authority to escheat debts owed to individuals whose last
`known addresses were in the state. See generally Texas v.
`New Jersey, 379 U.S. 674, 680–81 (1965) (holding that as
`to abandoned intangible property—there, various debts—
`“the right and power to escheat the debt should be accorded
`to the State of the creditor’s last known address”).3
`
`
`1 For Kansas, the relevant bonds are 40-year Series E
`bonds issued between 1941 and December 31, 1961; 30-
`year Series E bonds issued between 1965 and December 31,
`1972; and Series A–D, F, G, H, J, and K bonds issued before
`December 31, 1972. J.A. 245. For Arkansas, the relevant
`bonds are “all unredeemed series A through D, F, G, J, and
`K bonds, and all series E and H bonds that were issued on
`or before October 16, 1978.” J.A. 1243.
`2 The States also escheated and asked Treasury to re-
`deem a much smaller number of bonds that they did pos-
`sess. Treasury did so, relying on its authority under 31
`C.F.R. § 315.90 to waive its other regulations. See Regula-
`tions Governing United States Savings Bonds, 80 Fed. Reg.
`37,559, 37,3560 (U.S. Dep’t of Treasury July 1, 2015). The
`bonds in the States’ possession are not at issue in this case.
`3 Below, the government challenged the States’ author-
`ity to escheat based on the last known address of the regis-
`tered bond owners, since some bond owners may have
`moved out of state. The government does not make this
`
`

`

`LATURNER v. UNITED STATES
`
`7
`
`Treasury declined, stating that “[u]nless some exception or
`waiver in [its] regulations applies, Treasury is only author-
`ized to redeem a savings bond to the registered owner,” J.A.
`368, who retains the right “to redeem their savings bonds
`at any time, even after maturity,” J.A. 369.
`The States sued for damages under the Tucker Act, 28
`U.S.C. § 1491, alleging that the States were the owners of
`the absent bonds and that the government had breached
`the terms of the savings-bonds contracts by refusing to re-
`deem the bonds. On cross-motions for summary judgment,
`the Claims Court sided with the States, holding that Treas-
`ury was liable to the States and had an obligation to iden-
`tify the absent bonds. The Claims Court reasoned that
`there was no preemption because “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.” La-
`turner v. United States, 133 Fed. Cl. 47, 71 (2017).
`The court also concluded that the States have the
`“right[] as an owner of the bonds to make a claim for their
`proceeds based on the theory that they are ‘lost.’” Id. at 70.
`It determined that “Treasury breached the [bond] contract
`when it refused to provide [the States] with information
`about the bonds and demanded that [the States] produce
`the bond certificates as a condition of redeeming their pro-
`ceeds.” Id. at 65. Thus, the Claims Court held that the
`States were “entitled to receive from the government the
`information necessary to allow it to make a request to re-
`deem the bonds,” including the serial numbers of the ab-
`sent bonds. Id. at 77; see also id. at 70; Laturner v. United
`States, 135 Fed. Cl. 501, 505 (2017).
`
`
`argument on appeal, and we assume without deciding that
`the States have the authority—absent preemption—to es-
`cheat savings bonds based on the last-known address of the
`registered owner.
`
`

`

`8
`
`LATURNER v. UNITED STATES
`
`The Claims Court certified its summary judgment or-
`ders for interlocutory appeal under 28 U.S.C. § 1292(d)(2),4
`noting that identifying the absent bonds would be time-in-
`tensive and expensive and that there are eight other pend-
`ing cases in which other states are asserting similar claims.
`The court also stayed the proceedings pending appeal.
`We granted the government’s petitions for leave to ap-
`peal and consolidated the appeals. We have jurisdiction
`under 28 U.S.C. § 1292(d)(2).
`DISCUSSION
`I
`We first address whether, as the government contends,
`the Treasury regulations governing U.S. savings bonds
`preempt the States’ escheat laws regarding unredeemed
`savings bonds. The parties assume that the regulations in
`effect before December 24, 2015, are the relevant regula-
`tions.5 We proceed on that assumption.
`
`
`4 The language of section 1292(d)(2) “is virtually identi-
`cal to 28 U.S.C. § 1292(b) . . . which governs interlocutory
`review by other courts of appeals.” United States v. Con-
`nolly, 716 F.2d 882, 883 n.1 (Fed. Cir. 1983) (en banc).
`5 The government’s position is that the relevant regula-
`tions are those “that were in effect at the time the requests
`were made”—that is, in May 2013 (for Kansas) and in No-
`vember 2015 (for Arkansas), respectively. Gov’t Open. Br.
`at 7 n.3. (There was no change in the regulations between
`these dates.) The Claims Court indicated that it was ap-
`plying the regulations in effect when the States filed their
`complaints—that is, in December 2013 (for Kansas) and in
`November 2015 (for Arkansas), respectively. The States’
`position is somewhat unclear, though they agree that the
`pre-amendment regulations apply to this case. Given the
`parties’ agreement as to the relevant regulations, we
`
`

`

`LATURNER v. UNITED STATES
`
`9
`
`A
`The Constitution limits state sovereignty “by granting
`certain legislative powers to Congress while providing in
`the Supremacy Clause that federal law is the ‘supreme
`Law of the Land . . . any Thing in the Constitution or Laws
`of any State to the Contrary notwithstanding.’” Murphy v.
`NCAA, 138 S. Ct. 1461, 1476 (2018) (quoting U.S. Const.
`art. VI, cl. 2) (internal citation omitted). “This means that
`when federal and state law conflict, federal law prevails
`and state law is preempted.” Id. The Supreme Court has
`“identified three different types of preemption—‘conflict,’
`‘express,’ and ‘field,’ but all of them work in the same way:
`Congress enacts a law that imposes restrictions or confers
`rights on private actors; a state law confers rights or im-
`poses restrictions that conflict with the federal law; and
`therefore the federal law takes precedence and the state
`law is preempted.” Id. at 1480 (internal citation omitted).
`For example, in Arizona v. United States, 567 U.S. 387
`(2012), the Court held that federal statutes “provide a full
`set of standards governing alien registration” and therefore
`“foreclose any state regulation in the area.” Id. at 401. In
`Murphy, the Court elaborated that “[w]hat this means is
`that the federal registration provisions not only impose fed-
`eral registration obligations on aliens but also confer a fed-
`eral right to be free from any other registration
`requirements.” 138 S. Ct. at 1481. Authorized Federal reg-
`ulations can preempt just as federal statutes can. See
`Hillsborough Cty. v. Automated Med. Labs., Inc., 471 U.S.
`707, 713 (1985).
`The Supreme Court’s decision in Free v. Bland, 369
`U.S. 663 (1962) illustrates how preemption applies in the
`context of the U.S. savings bond program. In that case,
`Treasury regulations provided that when one bond owner
`
`assume that the regulations in effect at the time the bonds
`were issued were not materially different.
`
`

`

`10
`
`LATURNER v. UNITED STATES
`
`died, the surviving co-owner (there, the decedent’s hus-
`band) became the sole owner of the bond. Id. at 664–65.
`Under Texas state community property laws, however, the
`principal beneficiary under the decedent’s will (there, the
`decedent’s son) was entitled to a one-half interest in the
`bonds—despite not being a co-owner of the bond under
`Treasury regulations. Id. The Court held that the state
`law was preempted because it prevented bond owners
`“from taking advantage of the survivorship provisions” of
`the Treasury regulations. Id. at 669–70. The Court rea-
`soned that “Federal law of course governs the interpreta-
`tion of the nature of the rights and obligations created by
`the Government bonds,” id. at 669–70 (quoting Bank of
`Am. Tr. & Sav. Ass’n v. Parnell, 352 U.S. 29, 34 (1956)),
`and a state may not “fail[] to give effect to a term or condi-
`tion under which a federal bond is issued,” id. at 669. In
`other words, Treasury regulations conferred a right on
`bond holders which Texas state law impermissibly re-
`stricted.
`Here there is a similar conflict between state and Fed-
`eral law. Federal law confers on bond holders the right to
`keep their bonds after maturity. Congress specifically au-
`thorized Treasury to prescribe regulations providing that
`“owners of savings bonds may keep the bonds after ma-
`turity,” 31 U.S.C. § 3105(b)(2)(A), as well as regulations
`setting forth “the conditions, including restrictions on
`transfer, to which they will be subject,” id. § 3105(c)(3), and
`the
`“conditions governing
`their
`redemption,”
`id.
`§ 3105(c)(4). Treasury regulations impose no time limit on
`the redemption of savings bonds. See, e.g., 31 C.F.R.
`§ 315.35(c) (“A series E bond will be paid at any time after
`two months from issue date at the appropriate redemption
`value . . . .” (emphasis added)); New Jersey, 684 F.3d at 409
`(“[U]nder federal law . . . the owners of the bonds may re-
`deem them at any time after they mature . . . .”). And
`31 C.F.R. § 315.15 provides that “[s]avings bonds are not
`transferable and are payable only to the owners named on
`
`

`

`LATURNER v. UNITED STATES
`
`11
`
`the bonds, except as specifically provided in these regula-
`tions and then only in the manner and to the extent so pro-
`vided.” See also id. § 315.5(a) (providing that savings
`bonds “are issued only in registered form” and “must ex-
`press the actual ownership of” the bond, and that “registra-
`tion is conclusive of ownership” with limited exceptions).
`Federal law thus confers on bond holders “a federal right
`to engage in certain conduct”—the right to keep their bonds
`after maturity without the bonds expiring—“subject only to
`certain (federal) constraints.” See Murphy, 138 S. Ct. at
`1480.
`The States’ escheat laws on the other hand impermis-
`sibly restrict the bond holder’s right to retain ownership of
`the bonds. Under the escheat laws, if bond holders do not
`redeem their bonds promptly enough (as decided by the
`States), they lose ownership and the bonds will transfer to
`the state. Absent Federal law authorizing such a state law
`restriction, the result is clear: “the federal law takes prec-
`edence and the state law is preempted.” Id.
`B
`The States do not contest that Federal law would
`preempt their escheat laws absent Federal authorization
`for the state legislation. But they contend that here there
`is no conflict between Federal law and the States’ escheat
`laws because Treasury regulations themselves permit the
`transfer of ownership under escheat laws. They rely on
`31 C.F.R. § 315.20(b), which provides that “Treasury will
`recognize a claim [of bond ownership by a third party] . . .
`if established by valid, judicial proceedings, but only as
`specifically provided in this subpart” (emphasis added)—
`i.e., subpart E (§§ 315.20–23). The States contend that
`their escheat proceedings constitute “valid, judicial pro-
`ceedings” under this regulation. Although the Third Cir-
`cuit in the New Jersey litigation did not decide the question
`before us, the States quote language from the Third Cir-
`cuit’s opinion that “as provided in the federal regulations
`
`

`

`12
`
`LATURNER v. UNITED STATES
`
`and as recognized by the Treasury, third parties, including
`the States, may obtain ownership of the bonds—and conse-
`quently the right to redemption—through ‘valid[] judicial
`proceedings,’ 31 C.F.R. § 315.20(b).” 684 F.3d at 412–13
`(alteration in original).
`The States also argue that Treasury has made re-
`peated statements interpreting § 315.20(b) to allow es-
`cheat-based claims so long as the state has title (which the
`States allegedly have here). The States rely on two sets of
`statements: first, statements Treasury made in denying
`past escheat claims by various states; and second, portions
`of Treasury’s briefing in the New Jersey litigation. Treas-
`ury responds that its prior statements are entirely con-
`sistent with its present position that it “considers escheat-
`based redemption claims as an exercise of its discretionary
`waiver authority under provisions such as 31 C.F.R.
`§ 315.90, rather than under § 315.20(b),” and that it grants
`such a waiver only when a state has both title and posses-
`sion. Gov’t Open. Br. at 16 & n.8.
`Paradoxically, the States disclaim any reliance on Auer
`deference, but offer no other basis for deferring to Treas-
`ury’s supposed interpretation of its regulations. In any
`event, there is no basis for Auer deference here. As the Su-
`preme Court recently clarified, “a court should not afford
`Auer [v. Robbins, 519 U.S. 452 (1997)] deference unless the
`regulation is genuinely ambiguous,” Kisor v. Wilkie, 139 S.
`Ct. 2400, 2415 (2019), even after applying “all the ‘tradi-
`tional tools’ of construction,” id. (quoting Chevron U.S.A.
`Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843 n.9
`(1984)). Even if the regulation is genuinely ambiguous,
`Auer deference is not appropriate unless “an independent
`inquiry into . . . the character and context of the agency in-
`terpretation” shows that the interpretation (1) constitutes
`the agency’s “authoritative” or “official position,” (2) impli-
`cates the agency’s “substantive expertise,” and (3) reflects
`the agency’s “fair and considered judgment” of the issue.
`Id. at 2416–18.
`
`

`

`LATURNER v. UNITED STATES
`
`13
`
`Although we are dubious that the statements here
`(particularly those made in the New Jersey briefs) reflect
`Treasury’s “fair and considered judgment” on the question
`of whether 31 C.F.R. § 315.20(b) requires Treasury to rec-
`ognize escheat claims, id. at 2417 & n.6, we need not decide
`that question. Nor need we decide whether Treasury’s ear-
`lier interpretations were overridden by its more recent in-
`terpretations of the regulations. That is so because using
`“the ‘traditional tools’ of construction,” the Treasury regu-
`lations are not “genuinely ambiguous,” and thus Auer def-
`erence is inappropriate. Id. at 2415.
`The regulation on which the States rely, § 315.20(b),
`states that Treasury will recognize the “judicial proceed-
`ings” “only as specifically provided in this subpart” (empha-
`sis added). The only judicial proceedings specifically
`provided
`in the subpart are those for bankruptcy
`(§ 315.21), divorce (§ 315.22), and proceedings finding a
`person to be entitled to the bond “by reason of a gift causa
`mortis” (a gift made in contemplation of impending death)
`“from the sole owner” (§ 315.22). Escheat proceedings are
`not mentioned. Accordingly, the general prohibition on
`transfers of ownership contained in § 315.15 applies.
`The States advance a contrary interpretation of the
`regulation, arguing that § 315.20(b)’s “only as specifically
`provided in this subpart” limitation refers to “the manner
`in which judicial proceedings will be recognized, not the
`sorts of proceedings that will be recognized.” Kansas Resp.
`Br. at 31 (emphasis in original). This is not a tenable read-
`ing of the regulation. A different provision, § 315.23, al-
`ready specifies how to prove the validity of a proceeding,
`such as by providing certified copies of the judgment. The
`“only as specifically provided in this subpart” language in
`§ 315.20(b) plainly refers to the types of judicial proceed-
`ings that will be recognized.
`The States also assert that § 315.20(a), not § 315.20(b),
`exclusively defines the transfers of ownership that
`
`

`

`14
`
`LATURNER v. UNITED STATES
`
`Treasury will not recognize. Section 315.20(a) states that
`Treasury “will not recognize a judicial determination that
`gives effect to an attempted voluntary transfer inter vivos
`of a bond” or that “impairs the rights of survivorship con-
`ferred by these regulations upon a coowner or beneficiary.”
`Contrary to the States’ argument, § 315.20(a) simply lists
`additional transfers that Treasury will not recognize. It
`hardly suggests that all other transfers are valid.
`In short, we reject the States’ contention that Treasury
`regulations permit the transfer of ownership under escheat
`laws. To the contrary, the plain language of the regula-
`tions confers on bond holders the right to retain their bonds
`without losing ownership if they do not redeem the bonds
`within a time limit set by the States.
`While we do not rely on it, we note that Treasury in
`December 2015 confirmed this interpretation of its regula-
`tion when it amended § 315.20 to specifically provide that
`“[e]scheat proceedings will not be recognized under this
`subpart.” Treasury also added a new regulation, section
`315.88, providing that Treasury “will not recognize an es-
`cheat judgment that purports to vest a State with title to a
`bond that the State does not possess”—as is the case here—
`“or a judgment that purports to grant the State custody of
`a bond, but not title”—as was the case in the New Jersey
`litigation.6
`
`
`In Estes v. U.S. Dept’ of the Treasury, the states argued
`6
`that the amended regulations were arbitrary and capri-
`cious because they represented a change in policy without
`an explanation for that change. See 219 F. Supp. 3d 17,
`27–28; Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117,
`2125 (2016) (“Agencies are free to change their existing pol-
`icies so long as they provide a reasoned explanation for the
`change.”) The district court rejected this argument, hold-
`ing that the amended regulation was not a policy change
`
`

`

`LATURNER v. UNITED STATES
`
`15
`
`II
`There is an additional reason that the States cannot
`prevail. The States concede that even if Federal law recog-
`nized them as the rightful bond owners, they could have no
`greater rights than the original bond owners. See Oral Arg.
`at 35:45–36:00. In general, a bond owner must “present
`the bond to an authorized paying agent for redemption.”
`31 C.F.R. § 315.39(a). The States cannot do so here since
`they do not have physical possession of the bonds.7 How-
`ever, the States advance several reasons for why they need
`not present the physical bonds for redemption.
`A
`The States maintain that they need not present the
`physical bonds because the bonds should be considered
`“lost” and the States can meet the requirements for re-
`deeming lost bonds. The Claims Court agreed. Under
`31 C.F.R. § 315.25, “[r]elief, by the issue of a substitute
`bond or by payment, is authorized for the loss . . . of a bond
`after receipt by the owner.” When a bond is lost, “the sav-
`ings bond must be identified by serial number and the
`
`
`but rather “a clarification of prior guidance” and “simply
`elaborated on the standards” followed by Treasury before.
`Estes, 219 F. Supp. 3d at 27–31. The court also rejected the
`states’ Constitutional challenges (based on the Appoint-
`ments Clause and Tenth Amendment) to the amended reg-
`ulations, id. at 37–41, and the States do not renew those
`arguments here.
`7 As discussed above, there is no issue here regarding
`bonds that the States possess. Treasury allowed the States
`to redeem such bonds, invoking its authority under 31
`C.F.R. § 315.90 to waive the provisions that only the origi-
`nal bond owner may redeem the bond, e.g., 31 C.F.R.
`§ 315.15. And when a state possesses the bonds, it is of
`course able to present the physical bonds for payment.
`
`

`

`16
`
`LATURNER v. UNITED STATES
`
`applicant must submit satisfactory evidence of the loss.”
`Id. There is an exception to the serial number require-
`ment: “If the bond serial number is not known, the claim-
`ant must provide sufficient information to enable” the
`government “to identify the bond by serial number.” 31
`C.F.R. § 315.26(b). But if an owner seeks to redeem the
`bond “six years or more after the final maturity of a savings
`bond”—which applies to all bonds at issue here—“[n]o
`claim . . . will be entertained, unless the claimant supplies
`the serial number of the bond.” 31 C.F.R. § 315.29(c). In
`other words, the regulations foreclose the option of redeem-
`ing a bond by providing other identifying information when
`the bonds at issue are six years or more past maturity.
`The government contends that the bonds here are not
`“lost” within the meaning of the regulations, because here
`there is no evidence that the bonds have been lost by the
`original owners. We need not resolve this issue, because
`even if the bonds here are considered lost, the States do not
`have the bond serial numbers as required by 31 C.F.R.
`§ 315.29(c).
`
`B
`Kansas argues that it is entitled to relief under the reg-
`ulation governing “nonreceipt of a bond,” 31 C.F.R.
`§ 315.27, which does not require the bond owner to provide
`the serial number. That regulation provides that “[i]f a
`bond issued on any transaction is not received, the issuing
`agent must be notified as promptly as possible and given
`all information available about the nonreceipt.” Id. “If the
`application is approved, relief will be granted by the issu-
`ance of a bond bearing the same issue date as the bond that
`was not received.” Id. This regulation does not apply here.
`It is directed at the situation where an individual pur-
`chases a bond but does not receive it—in other words,
`where Treasury fails to deliver the bond to the original
`owner. Indeed, Arkansas (unlike Kansas) recognizes that
`this provision governs “those cases where a bond ‘is not
`
`

`

`LATURNER v. UNITED STATES
`
`17
`
`received’ by the original owner in the first place”—which is
`not the situation here. Arkansas Resp. Br. at 50.
`C
`Arkansas contends that if it can properly claim owner-
`ship of the bonds under 31 C.F.R. § 315.20—an argument
`rejected earlier in part I—it need not present the physical
`bonds or the bond serial numbers. There is no basis for this
`contention in the regulations. The provisions in 31 C.F.R.
`§§ 315.20–23 lay out requirements for establishing owner-
`ship when ownership transferred due to proceedings such
`as bankruptcy or divorce. They also establish certain cir-
`cumstances in which Treasury will not recognize the trans-
`fer of ownership, such as when judicial proceedings are still
`pending. See 31 C.F.R. § 315.20(c) (stating that Treasury
`“will not accept a notice of an adverse claim or notice of
`pending judicial proceedings”). But the general require-
`ments for redeeming a bond—such as presenting the phys-
`ical bond, or, if the bond is lost, providing the serial
`number—still apply, and the States cannot meet them.8
`
`
`8 Al