In the

United States Court of Appeals

For the Seventh Circuit

No. 00-1395

United States of America,

Plaintiff-Appellee,

v.

Gary J. Eschman,

Defendant-Appellant.

Appeal from the United States District Court

for the Southern District of Illinois.

No. 99-30066-DRH--David R. Herndon, Judge.

Argued June 8, 2000--Decided September 14, 2000

 Before Easterbrook, Kanne, and Williams, Circuit

Judges.

 Williams, Circuit Judge. Gary J. Eschman pleaded

guilty to several drug-related charges and a gun

charge. Rejecting Eschman’s objections to the

quantity of drugs attributable to him for

sentencing purposes and declining to reduce

Eschman’s sentence for acceptance of

responsibility, the district court sentenced

Eschman to almost twenty years in prison. Eschman

appeals his sentence, and for the reasons stated

herein, we reverse.

I

 Because Eschman does not challenge his

conviction, we discuss only those facts relevant

to his sentencing. Acting on a tip from a local

Wal-Mart store that had sold Eschman’s son-in-law

Anthony Jines a large quantity of

pseudoephedrine, a precursor to methamphetamine,

agents from the Metropolitan Enforcement Group of

Southwestern Illinois (MEGSI) conducted a search

of the residence where Eschman lived with Anthony

Jines and his daughter, Darlla Jines. The agents

found, among other things, methamphetamine in the

Jineses’ bedroom, and two firearms and 6,400 30-

milligram pseudoephedrine pills in Eschman’s

bedroom./1 Shortly after criminal charges were

filed against him, his daughter, and his son-inlaw, Eschman pleaded guilty to conspiracy to

manufacture and possess with intent to distribute

methamphetamine, in violation of 21 U.S.C.
sec.sec. 841(a)(1), 846, maintaining a place for

the manufacture of methamphetamine, in violation

of 21 U.S.C. sec. 856(a)(1), and being a felon in

possession of a firearm, in violation of 18

U.S.C. sec. 922(g)(1)./2 In doing so, Eschman

admitted that he "cooked" or manufactured

methamphetamine in a shed next to the Jineses’

residence. 

 Since the sentencing guidelines base the

applicable offense level on the drug quantity

involved, the key question at Eschman’s

sentencing was how much methamphetamine should be

attributed to him. See U.S. Sentencing Guidelines

(U.S.S.G.) sec. 2D1.1 (1998). Before his

sentencing, the government (and later the

Probation Department in its pre-sentence report)

estimated the "production capacity" of Eschman’s

methamphetamine "laboratory" (i.e., the shed) to

be 177 grams of actual (pure) methamphetamine

based on a 100% "theoretical" yield of the

pseudoephedrine pills found in his possession

(i.e., converting pseudoephedrine into

methamphetamine at a one-to-one ratio). Eschman,

however, objected to this 100% conversion rate as

a means for determining his base offense level.

 At sentencing, Eschman introduced testimony from

Dr. Terry Martinez, a chemist and professor at

the St. Louis College of Pharmacy, who stated

that a 100% conversion rate is merely theoretical

and that professional chemists can only obtain a

90% yield using professional equipment. Based on

a scientific study conducted by the Iowa

Department of Public Safety ("Iowa study"), Dr.

Martinez indicated that an average yield for a

clandestine laboratory is from 40% to 50%. He

stated that a clandestine laboratory can, at

most, obtain an 80% yield. He characterized

Eschman’s lab as "primitive" and testified that

no expert, in his view, could determine the

possible yield of methamphetamine for Eschman’s

lab. 

 In rebuttal, the government offered the

testimony of Virginia Kleekamp, a chemist with

the Drug Enforcement Administration (DEA).

Kleekamp testified that DEA chemists do a

theoretical conversion rate of pseudoephedrine to

methamphetamine of 100%, or one-to-one, adjusted

only for the difference in molecular weight. She

explained that the DEA uses a one-to-one

theoretical conversion ratio because it is

difficult to obtain an accurate measure of the

production capacity of a clandestine laboratory.

She admitted, as a practical matter, that it is

impossible to obtain a 100% yield. She indicated

that an average yield for a clandestine

laboratory is from 40% to 60%, but she has noted

yields as high as 85%. However, she did not
dispute the findings of the Iowa study. 

 After hearing testimony from these two experts,

the district court found Dr. Martinez’s testimony

not credible and accepted the one-to-one

conversion ratio as a means to determine the

applicable base offense level. The district court

agreed with the pre-sentence report that the

production capacity of Eschman’s laboratory was

177 grams of pure methamphetamine. Based on the

statements and testimony of Anthony Jines, who

sold methamphetamine produced by Eschman, the

district court also determined that Eschman

manufactured, at least, 36 ounces (or 1020.6

grams) of mixture or substance containing

methamphetamine. 

 On the basis of these drug amounts, the

district court determined that Eschman had a base

offense level of 34,/3 which when increased by

two levels for his possession of a firearm,

resulted in an offense level of 36. The district

court then denied Eschman a three-level reduction

in his offense level for acceptance of

responsibility, concluding that Eschman had not

genuinely accepted responsibility under the

sentencing guidelines. The court sentenced

Eschman to two 235-month sentences for the drugrelated convictions (the upper limit of the

relevant sentencing range) and a 120-month

sentence for the felon-in-possession conviction,

all to be served concurrently. 

 On appeal, Eschman argues that the district

court erred in calculating his base offense level

by (1) holding him accountable for 177 grams of

pure methamphetamine and (2) denying him a threelevel reduction for acceptance of responsibility.

II

 We review the district court’s calculation of

drug quantity, as well as its determination of

whether a defendant has accepted responsibility,

for clear error. See United States v. Johnson,

200 F.3d 529, 537 (7th Cir. 2000); United States

v. Mancillas, 183 F.3d 682, 711 (7th Cir. 1999).

A. Drug Quantity Calculation

 Eschman argues that the district court erred by

holding him accountable for 177 grams of pure

methamphetamine based on the amount of

pseudoephedrine found in his possession.

Specifically, Eschman contends that the district

court did not have a reliable factual basis for

the drug quantity calculation.

 In cases "[w]here there is no drug seizure or

the amount seized does not reflect the scale of

the offense, the court shall approximate the
quantity of the controlled substance." U.S.S.G.

sec. 2D1.1, cmt. 12 (1998). In making this

approximation, the district court may consider

"the price generally obtained for the controlled

substance, financial or other records, similar

transactions in controlled substances by the

defendant, and the size or capability of any

laboratory involved." Id. Because there was no

seizure of the substance charged in the offense,

the district court in this case applied sec.

2D1.1 to approximate the amount of

methamphetamine Eschman could have produced in

his laboratory based upon the quantity of

pseudoephedrine found in his possession./4 The

district court, in accepting the government’s

recommendation set forth in the pre-sentence

report, found that Eschman could have converted

the pseudoephedrine into methamphetamine at a

one-to-one conversion ratio (i.e., a 100% yield).

We will uphold this finding to the extent it is

based on reliable evidence. Johnson, 200 F.3d at

537. 

 From our review of the record, the district

court’s finding lacks an evidentiary basis. Both

parties’ experts testified that a 100% yield is

merely theoretical (in other words,

unattainable). The experts also testified that

although an 80-85% yield might be possible with

a clandestine laboratory, yields in the range of

40%-60% were more probable. This data is

confirmed by the Iowa study, which Eschman

introduced at sentencing. While the government

must prove the quantity of drugs attributable to

Eschman only by a preponderance of evidence,

United States v. Galbraith, 200 F.3d 1006, 1011

(7th Cir. 2000), the record is void of any

evidence which would reasonably support the

district court’s decision to base its

methamphetamine quantity calculation on a one-toone conversion ratio. 

 Criminal defendants, like Eschman, have a due

process right to be sentenced on the basis of

reliable information, id. at 1012, and district

courts cannot quantify yield figures without

regard for a particular defendant’s capabilities

when viewed in light of the drug laboratory

involved. See, e.g., United States v. Cole, 125

F.3d 654, 655 (8th Cir. 1997) (relevant inquiry

is on what defendant, not "an average cook," is

capable of yielding); United States v. Hamilton,

81 F.3d 652, 653-54 (6th Cir. 1996) (rejecting

standardized drug conversion formulas in favor of

individualized assessment of defendant’s

capabilities); United States v. Mahaffey, 53 F.3d

128, 132-33 (6th Cir. 1995) (same). Here, the

record contains no evidence regarding the sorts

of yields Eschman could, with his equipment and

recipe, obtain in his methamphetamine laboratory
(or, for that matter, even evidence regarding

yields of similarly-situated defendants)./5 See

United States v. Shaffer, 993 F.2d 625, 629 (7th

Cir. 1993) (court may approximate amount that

laboratory could have produced based upon DEA

chemist’s testimony regarding chemical operations

and materials found at "farmhouse" laboratory and

production capacity of defendant’s 12-liter flask

when taking into account "sloppy" laboratory

procedures); Mahaffey, 53 F.3d at 132 (court may

approximate amount that laboratory could have

produced based upon yields of similarly-situated

defendants); United States v. Beshore, 961 F.2d

1380, 1383 (8th Cir. 1992) (court may approximate

amount that laboratory could have produced based

upon quantity of precursor chemicals, size of

laboratory, and recipes to "cook" methamphetamine

seized); United States v. Short, 947 F.2d 1445,

1456-57 (10th Cir. 1991) (court may approximate

amount that laboratory could have produced based

upon testimony of DEA chemist and characteristics

of laboratory equipment seized). Thus, the

district court erred in relying on the one-to-one

conversion ratio when determining Eschman’s base

offense level./6 

 On remand, the district court must undertake a

more precise inquiry into the quantity of

methamphetamine attributable to Eschman, using

reliable evidence to support its ultimate drug

quantity calculation.

B. Acceptance of Responsibility

 Eschman also challenges the district court’s

refusal to grant him a three-level reduction in

offense level for acceptance of responsibility

under U.S.S.G. sec. 3E1.1. The district court

refused to grant the reduction because, in its

view, Eschman had not genuinely accepted

responsibility, but instead was simply attempting

to manipulate the criminal justice system in

order to reduce his sentence. 

 Under U.S.S.G. sec. 3E1.1, a defendant who

clearly demonstrates acceptance of responsibility

for his or her offense is entitled to a reduction

in his or her offense level. To qualify for the

reduction a defendant must, in a timely manner,

(1) demonstrate sincere remorse or contrition,

(2) truthfully admit the conduct comprising the

offense, and (3) neither falsely deny nor

frivolously contest relevant conduct. United

States v. Mancillas, 183 F.3d 682, 711 (7th Cir.

1999); United States v. Purchess, 107 F.3d 1261,

1269 (7th Cir. 1997); U.S.S.G. sec. 3E1.1, cmt.

1 (1998).

 Here, Eschman pleaded very early in the case

and never challenged the charges against him.
Although he raised objections to the pre-sentence

report at sentencing, he never expressed outright

denials of relevant conduct and the district

court found his challenge to the "production

capacity" evidence not frivolous. Eschman also

submitted a statement to the court acknowledging

his wrongdoing and expressing regret, and at

sentencing, he apologized for his conduct,

stating that he was "sorry" for what he did. The

district court, however, did not believe Eschman

had genuinely accepted responsibility. 

 In light of his early, consistent, and repeated

acceptance of responsibility, it appears that the

district court’s determination was affected by

the manner in which Eschman prefaced his

statements. In accepting responsibility, Eschman

stood firm in challenging the drug quantity

calculation and our earlier discussion

demonstrates that he had good reason for doing

so. While we do not take lightly the district

court’s apparent concerns about Eschman’s

contrition, see U.S.S.G. sec. 3E1.1, cmt. 5

(1998) (district court’s determination entitled

to "great deference" on review), the court’s

finding appears to have been colored by Eschman’s

firm, but good faith challenge to the drug

quantity calculation. Our decision rejecting the

court’s drug quantity calculation places the

acceptance of responsibility question in a new

light. On remand, the district court should

reevaluate whether Eschman is entitled to a

three-level reduction in his base offense level

for acceptance of responsibility. 

III

 For the foregoing reasons, we VACATE Eschman’s

sentence and REMAND for resentencing in accordance

with this opinion.

/1 The MEGSI agents actually recovered 6,576

pseudophedrine pills, but the lower figure of

6,400 was used for sentencing purposes.

/2 Pursuant to the plea agreement, the government

dismissed a charge for Eschman’s possession of

methamphetamine.

/3 In calculating Eschman’s base offense level, the

district court converted the two amounts (177

grams of actual methamphetamine and 1020.6 grams

of methamphetamine mixture) into marihuana

equivalents (1,770 kilograms and 2,041 kilograms,

respectively), and added the marihuana

equivalents together to obtain a single base

offense level. The resulting sum (3,811 kilograms

of marihuana) placed Eschman at offense level 34

(for marihuana amounts between 3,000 and 10,000
kilograms). See generally U.S.S.G sec. 2D1.1,

cmt. 9 (1998).

/4 We find this approach somewhat curious because

the sentencing guidelines refer to the size or

capability of the laboratory. Under the

government’s approach, the production capacity of

a laboratory turns on the amount of precursor

drug (pseudoephedrine) found in the defendant’s

possession. This approach seems rather misguided

because one would think that the size and

equipment of the drug laboratory involved would

determine its capacity to produce a controlled

substance. However, Eschman does not challenge

the government’s approach so we reserve our

concerns for another day. 

/5 While the government asserts that Eschman gave

methamphetamine to one of his co-defendants that

allows one to calculate a 90% yield figure, the

record indicates that this was not pure

methamphetamine, but a mixture (which would have

a much lower marihuana equivalent). 

/6 The government contends that the error here is

harmless because only a yield figure of less than

60% would require a lower base offense level and

the record reasonably demonstrates that Eschman

could obtain a 60% yield. However, we did not

locate any record evidence that reasonably

establishes that Eschman had the capacity to

convert pseudoephedrine into methamphetamine at

yields of 60% or greater.

 Easterbrook, Circuit Judge, concurring. I join the

court’s opinion, which resolves the issues the

parties presented for decision and holds that the

record does not demonstrate that the conspirators

could have turned their pseudoephedrine into

methamphetamine of equal weight. As my colleagues

observe, however, the conversion ratio is a

"somewhat curious" subject to pursue. Slip op. 5

n.4. Both the prosecutor and defense counsel

misunderstand the import of the provision that

affects Eschman’s sentence.

 Application Note 12 to U.S.S.G. sec.2D1.1

provides:

Types and quantities of drugs not specified in

the count of conviction may be considered in

determining the offense level. See

sec.1B1.3(a)(2) (Relevant Conduct). Where there

is no drug seizure or the amount seized does not
reflect the scale of the offense, the court shall

approximate the quantity of the controlled

substance. In making this determination, the

court may consider, for example, the price

generally obtained for the controlled substance,

financial or other records, similar transactions

in controlled substances by the defendant, and

the size or capability of any laboratory

involved.

The prosecutor contended, and the district judge

concluded, that seizures of methamphetamine did

not "reflect the scale of the offense", so the

parties set out to determine "the size or

capability of any laboratory involved." But

instead of inquiring whether the laboratory was

large, sophisticated, efficient, and so on--the

keys to its ability to turn out methamphetamine,

and therefore good clues to how much of that drug

this operation had produced (and thus to the

scale of the offense)--both litigants and judge

asked instead how much methamphetamine could have

been made using the stock of raw materials on

hand when the police arrived. The district court

concluded that the pseudoephedrine could have

been used to make an equal weight of

methamphetamine, but this finding is clearly

erroneous, for it conflicts with expert testimony

offered by both sides. Under Application Note 12,

the finding also is irrelevant, because it does

not demonstrate "the size or capability of any

laboratory involved." It is like saying that the

"size or capability" of an automobile body plant

depends on how much aluminum can be found nearby

on a given day. But that tells us only the

plant’s inventory, not its "size or capability";

many producers of automobiles (or drugs) practice

just-in-time purchasing to curtail costs. An auto

body plant produces many more cars per year (or

even per week) than the aluminum on hand at a

given moment can yield. Just so with drug

manufacturing enterprises.

 Application Note 12 is designed to match the

penalty to the true scale of the drug operation.

That the police discovered some inputs for drug

production is happenstance and not a good

indicator of long-term output; the object of the

Note is to move away from "what was seized?" to

"how big was this drug business?" Consider two

situations. In the first, the police find a large

and sophisticated laboratory, able to produce

substantial quantities of high-purity

methamphetamine, but do not find any precursor

chemicals--perhaps because they are stored

elsewhere, perhaps because they had been used

recently. In the second, the police find crude

equipment, a few pots and beakers that could be

used to make only small quantities of low-purity

drug, but also find a supply of pseudoephedrine
because they arrive just before a "cook." The

prosecutor’s approach yields no enhancement under

Application Note 12 in the first case, but a

potentially substantial enhancement in the

second. That’s backward and turns the Guidelines

into an engine of disproportion.

 Perhaps the parties and the district judge were

led to their position by an omission in

Application Note 12: "size or capability of any

laboratory involved" is an incomplete way of

describing the scale of an enterprise.

Manufacturing facilities are rated in capacity

per unit of time. An auto plant produces X cars

per day; a generating station produces so many

megawatts of electricity continuously. Should the

district court take account of the lab’s likely

production over the last month, or year, or the

life span of a normal drug-manufacturing ring, or

the span of this particular conspiracy, or the

period of the statute of limitations? Application

Note 12 does not say, which makes it impossible

for courts to treat equally dangerous drug rings

the same way. Some judges are bound to select a

short period (because estimates based on the

recent past are more accurate), while others

select a long period (because that best reflects

the total output). The Sentencing Commission

should amend Note 12 to incorporate an accounting

period. The most logical period is the span of

this conspiracy, which is "the offense" whose

relevant conduct the judge is supposed to

estimate. U.S.S.G. sec.1B1.3(a)(1)(A). But the

incompleteness of Application Note 12 as it

stands does not justify replacing an estimate of

capacity (and thus of past production) with an

estimate of raw materials at the time of arrest.