Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-01153/USCOURTS-azd-2_11-cv-01153-1/pdf.json

Nature of Suit Code: 530
Nature of Suit: Prisoner Petitions - Habeas Corpus
Cause of Action: 28:2241 Petition for Writ of Habeas Corpus (Federal)

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Steven Patrick Smiley, 

Petitioner, 

vs.

Dennis Smith,

Respondent. 

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No. CV 11-1153-PHX-GMS (SPL)

REPORT AND RECOMMENDATION

TO THE HONORABLE G. MURRAY SNOW, UNITED STATES DISTRICT JUDGE:

BACKGROUND

Petitioner Steven Patrick Smiley has filed a pro se Petition for Writ of Habeas Corpus

pursuant to 28 U.S.C. § 2241. Doc. 1. On November 12, 2009, Petitioner was sentenced in

the United States District Court for the District of Utah to 48 months in prison, followed by

60 months of supervised release, for conspiracy to commit bank fraud in violation of 18

U.S.C. §§ 1344 and 1349. Doc. 9, Exh 2. The district court further ordered Petitioner to pay

$126,736.87 in restitution to the victims. Id. In addition, on September 30, 2010, Petitioner

was sentenced in the Southern District of Illinois to a consecutive term of 57 months in

prison, followed by 36 months of supervised release, for mail fraud in violation of 18 U.S.C.

§ 1341, aggravated identity theft in violation of 18 U.S.C. § 1928(a)(1), and fraud and related

activity in connection with access devices in violation of 18 U.S.C. § 1029(a)(2). He was

also ordered to pay $24,159.82 in restitution. 

Case 2:11-cv-01153-GMS Document 12 Filed 05/18/12 Page 1 of 8
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1

 In his reply, Petitioner abandons his request for reduced IFRP payments after

acknowledging that only the sentencing court can set a payment schedule. Doc. 10 at 3.

Petitioner’s request for relief, therefore, is limited to an order requiring the BOP to stop

deducting restitution payments from his account.

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Petitioner, who is incarcerated at the Federal Correctional Institution in Phoenix, filed

the instant petition on June 8, 2011, and raises one ground for relief. Doc. 1 at 4. He

contends that the two sentencing courts improperly delegated to the Bureau of Prisons

(“BOP”) their duty to order a schedule of restitution payments. Petitioner asserts that the

BOP is collecting restitution payments from him through the Inmate Financial Responsibility

Program (“IFRP”) by automatically deducting from his prison trust account money earned

from working at the prison. Petitioner contends that the BOP does not have the authority to

set his restitution payments and collect them from him absent a schedule of payments from

the district courts that imposed his sentences. On July 22, 2011, Respondent, through the

United States Attorney for the District of Arizona, filed an Answer. Doc. 9. Petitioner then

filed a Reply on August 23, 2011. Doc. 10. The Magistrate Judge referral on this case was

reassigned to this Court on February 2, 2012. Doc. 11.

DISCUSSION

Respondent first contends in his answer that the petition should be dismissed because

Petitioner failed to exhaust his BOP administrative remedies. Regarding the merits,

Respondent argues that the BOP is lawfully collecting restitution payments from Petitioner

under the IFRP and that the sentencing courts did not unlawfully delegate their duty to order

a restitution schedule. Respondent also argues that the District Court is without authority to

reduce Petitioner’s IFRP payments1

 and that the Court should not find him exempt from the

IFRP.

A. Exhaustion of Administrative Remedies

As a prudential matter, before pursuing habeas relief under 28 U.S.C. § 2241, a

petitioner must exhaust all available judicial and administrative remedies. Ward v. Chavez,

___F.3d___, 2012 WL 1592171, *2 (9th Cir. 2012). A federal prisoner must first exhaust

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2

 The first decision was an informal resolution of which Respondent did not provide

a copy.

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his administrative remedies through the Bureau of Prisons. Fraley v. U.S. Bureau of Prisons,

1 F.3d 924, 925 (9th Cir. 1993). Because exhaustion in § 2241 cases is not a jurisdictional

prerequisite, it can be waived “‘if pursuing those [administrative] remedies would be futile.’"

Ward at *2 (quoting Fraley at 925). Where an official BOP policy forecloses administrative

relief, exhaustion of administrative remedies would be futile. Ward at *3; see also Fraley at

925 (exhaustion was futile where BOP policy would almost certainly have resulted in the

denial of further administrative appeals). 

In Fraley, the petitioner completed one step of the administrative review process.

Fraley at 925. Her request for relief was denied based on an official BOP policy. Id. The

petitioner was told how to appeal but she did not seek further administrative review. Id.

Likewise in Ward, the petitioner exhausted only one step of the BOP administrative review

process. Ward at *3. In both cases, however, the Ninth Circuit found that the existence of

an official BOP policy rendered further administrative appeals futile. Id.; Fraley at 925.

Here, Respondent concedes that Petitioner attempted an informal resolution, followed

up with a Request for Administrative Remedy, and then appealed to the Regional Director.

Doc. 9 at 4 (citing Exh. 5). BOP officials denied Petitioner’s request at each level of review

and, in the two written decisions supplied by Respondent,2

 informed him that restitution

payments could be collected from him pursuant to an official BOP policy, the IFRP. Id.

Respondent further acknowledges that Petitioner subsequently appealed to the National

Inmate Appeals Administrator but the appeal was rejected for exceeding the page limit. Doc.

9 at 4. Rather than re-file the appeal at that time as instructed by the Administrator,

Petitioner filed his habeas petition. Id. Petitioner later re-filed his administrative appeal but

he had not received a decision as of the date he filed his reply in support of his habeas

petition. Doc. 10 at 1. Based on Petitioner’s failure to re-file the appeal and wait for a

response before filing his habeas petition, Respondent argues that Petitioner failed to

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properly exhaust his administrative remedies and that the petition should be dismissed on that

basis. 

Applying Ward and Fraley, the Court finds that although Petitioner failed to fully

exhaust the administrative procedures before filing his habeas petition, doing so would have

been futile. The facts here are more extreme than in Ward and Fraley, in that Petitioner

received three adverse decisions instead of just one. The two written decisions provided by

Respondent both relied on the IFRP policy as the basis for the denials. There was no reason

to believe that submitting one more appeal might produce a different result given the reliance

on the IFRP policy. The Court therefore finds that a timely final appeal would have been

futile. Accordingly, the Court will not recommend that the petition be denied for failure to

exhaust administrative remedies.

B. Merits of the Claim

Respondent next argues that the BOP, through the IFRP, is independently authorized,

separate from the sentencing court’s judgment and commitment orders, to collect restitution

payments from Petitioner. Respondent contends that the IFRP is a voluntary program that

helps inmates take responsibility for financial obligations, including restitution, and that

Petitioner is participating in the program voluntarily. 

The Mandatory Victims Restitution Act of 1996 (“MVRA”) requires the court in an

order of restitution to award each victim the full amount of their loss, regardless of the

defendant’s economic circumstances. 18 U.S.C. § 3664(f)(1)(A). Additionally, “[u]pon

determination of the amount of restitution owed to each victim, the court shall, pursuant to

section 3572, specify in the restitution order the manner in which, and the schedule according

to which, the restitution is to be paid....” 18 U.S.C. § 3664(f)(2). The MVRA charges the

district court with setting the terms of the restitution payments and that duty cannot be

delegated. U.S. v. Gunning, 401 F.3d 1145, 1149-50 (9th Cir. 2005) (“Gunning II”) (citing

U.S. v. Gunning, 339 F.3d 948, 949 (9th Cir. 2003) (“Gunning I”)). However, although the

MVRA prohibits the delegation of scheduling responsibility to the BOP, nothing in the

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statute or case law limits the BOP’s operation of an independent program like the IFRP. U.S.

v. Lemoine, 546 F.3d 1042, 1048 (9th Cir. 2008).

The restitution order at issue in the Gunning cases required the restitution to be paid

immediately, with any unpaid amount to be paid through the IFRP. Gunning II, 401 F.3d at

1147. The sentencing court set no schedule of payments during the period of the defendant’s

incarceration but required him to participate in the IFRP and pay his restitution through that

program. Id. The Ninth Circuit found this to be an unlawful delegation by the sentencing

court of its duty to set a restitution schedule. Id. at 1150. In Lemoine, on the other hand, the

sentencing court set a restitution schedule during the defendant’s period of incarceration in

compliance with the MVRA, but the BOP, through incentives, encouraged the defendant to

participate in the IFRP and pay more than what the court ordered. Lemoine, 546 F.3d at

1048-49. The Ninth Circuit found no improper delegation under these circumstances. Id.

at 1050.

On May 8, 2012, the Ninth Circuit decided Ward v. Chavez, supra. In Ward, the

restitution portion of the sentencing court’s judgment stated only that it was due and payable

“immediately.” Ward at *1. The Ninth Circuit held that “because the sentencing court in

Ward’s case did not set forth a proper payment schedule in the restitution order, that order

is unlawful, and the BOP therefore lacks the authority to collect restitution payments from

Ward through the IFRP.” Id. at *8. The Court explained that such an order would not be

unlawful if the sentencing court considers the defendant’s financial resources and determines

that periodic payments are unwarranted. Id. at 7. “If, however, the district court simply

orders immediate repayment and leaves it to another agency, like the BOP, to actually set the

payment schedule that the statute obligates the court to determine, that order is unlawful, as

the district court has abdicated in its duty to set the schedule ‘in consideration of’ the

financial circumstances of the defendant.” Id. (quoting 18 U.S.C. § 3664). 

Here, two restitution orders from different district courts are at issue. The first order,

part of the criminal case judgment from the District of Utah, is similar to the one at issue in

the Gunning cases. The order provides that restitution payments are to begin immediately.

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Doc. 9, Exhibit 2 at 9. It further states in pertinent part that “[p]ayment of criminal monetary

penalties shall be made in accordance with a schedule established by the Bureau of Prisons’

Inmate Financial Responsibility Program.” Id. Unlike the sentencing court in Lemoine, the

sentencing court here did not set a restitution schedule during incarceration and instead

delegated that responsibility to the BOP by requiring Petitioner to participate in the IFRP and

pay restitution pursuant to that program. Moreover, in light of the language in the restitution

order requiring Petitioner to pay restitution through the IFRP, Petitioner’s participation in the

program cannot be considered voluntary. Respondent’s argument to the contrary is

unconvincing. The Court therefore finds that the District of Utah restitution order improperly

delegates the restitution schedule to the BOP in violation of the MVRA. Consequently, the

BOP lacks the authority under that order to collect restitution payments from Petitioner

through the IFRP. 

The second restitution order, part of the criminal case judgment from the Southern

District of Illinois, provides that “[t]he defendant shall pay any financial penalty that is

imposed by this judgment and that remains unpaid at the commencement of the term of

supervised release.” Doc. 9, Exh. 3 at 8. The order then provides a restitution payment

schedule to begin upon release from prison. Id. Directly below that provision, however, the

order states:

Unless the court has expressly ordered otherwise, if this judgment imposes

imprisonment, payment of criminal monetary penalties is due during

imprisonment. All criminal monetary penalties, except those payments made

through the Federal Bureau of Prisons’ Inmate Financial Responsibility

Program, are made to the clerk of the court.

Id. Thus, like the unlawful orders in the Ward and Gunning cases, this order fails to set a

restitution schedule during the period of imprisonment even though the order requires

payment of restitution during that period. Although the order does not expressly require

participation in the IFRP, it certainly suggests that restitution during the period of

imprisonment will be paid through that program. The Court finds no distinguishable

difference in this restitution order that would warrant a different result than in the Ward and

Gunning cases. The Court therefore finds that the Southern District of Illinois restitution

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order is in violation of the MVRA in that it does not set forth a proper payment schedule.

Consequently, the BOP lacks the authority under that order to collect restitution payments

from Petitioner through the IFRP.

C. Conclusion

Petitioner's failure to exhaust his administrative remedies under these facts does not

require dismissal of the petition because a timely final appeal would have been futile. Upon

consideration of the merits, the Court finds that the BOP is without the authority to require

restitution payments from Petitioner through the IFRP because the two sentencing courts

failed to set a restitution schedule as required by the MVRA. The court will therefore

recommend that the petition be granted.

IT IS THEREFORE RECOMMENDED:

That the Petition for Writ of Habeas Corpus pursuant to 28 U.S.C. § 2241 (Doc. 1) be

GRANTED; and

That the BOP be ordered to stop collecting restitution payments from Petitioner

through the IFRP.

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This recommendation is not an order that is immediately appealable to the Ninth

Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of

Appellate Procedure, should not be filed until entry of the district court's judgment. The

parties shall have 14 days from the date of service of a copy of this recommendation within

which to file specific written objections with the Court. See, 28 U.S.C. § 636(b)(1); Fed. R.

Civ. P. 6(a), 6(b) and 72. Thereafter, the parties have 14 days within which to file a response

to the objections. Failure to timely file objections to the Magistrate Judge's Report and

Recommendation may result in the acceptance of the Report and Recommendation by the

district court without further review. See United States v. Reyna-Tapia, 328 F.3d 1114, 1121

(9th Cir. 2003). Failure to timely file objections to any factual determinations of the

Magistrate Judge will be considered a waiver of a party's right to appellate review of the

findings of fact in an order of judgement entered pursuant to the Magistrate Judge's

recommendation. See Fed. R. Civ. P. 72.

DATED this 18th day of May, 2012.

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