28202 Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 / Notices

UNITED STATES SENTENCING

COMMISSION

Amendments to the Sentencing

Guidelines for United States Courts

AGENCY: United States Sentencing

Commission.

ACTION: Notice of submission to

Congress of amendments to the

sentencing guidelines, policy

statements, and official commentary;

notice of proposed amendment for

public comment.

SUMMARY: Pursuant to its authority

under section 994(p) of title 28, United

States Code, the United States

Sentencing Commission, on May 1,

1998, submitted to the Congress

amendments to the sentencing

guidelines, policy statements, and

official commentary together with

reasons for the amendments. The

amendments submitted to Congress are

set forth in Part I of this notice.

In addition, pursuant to its authority

under section 994(a), (o), and (p) of such

title and section 2(g) of the No

Electronic Theft Act of 1997, Pub. L.

105–147, the Commission is considering

promulgating an amendment to the

guidelines and commentary in order to

implement directives to the Commission

contained in the No Electronic Theft

Act. The proposed amendment and a

synopsis of the issues addressed are set

forth in Part II of this notice. The

Commission seeks comment on the

proposed amendment, as well as

alternative proposed amendments.

Bracketed text within a proposal

indicates alternative proposals and that

the Commission invites comment and

suggestions for appropriate policy

choices.

DATES: Pursuant to 28 U.S.C. 994(p), the

Commission has specified an effective

date of November 1, 1998, for the

amendments submitted to Congress,

subject to their acceptability to

Congress.

Written public comment on the

amendments proposed to implement the

directives in the No Electronic Theft Act

of 1997 should be submitted not later

than August 31, 1998.

ADDRESSES: Public comment on the

amendment proposed to implement the

directives in the No Electronic Theft Act

of 1997 should be sent to: United States

Sentencing Commission, One Columbus

Circle, N.E., Suite 2–500, Washington,

D.C. 20002–8002, Attention: Public

Information.

FOR FURTHER INFORMATION CONTACT:

Mike Courlander, Public Affairs Officer,

telephone: (202) 273–4590.

SUPPLEMENTARY INFORMATION: The

United States Sentencing Commission,

an independent agency in the judicial

branch of the U.S. Government, is

empowered by 28 U.S.C. 994(a) to

promulgate sentencing guidelines and

policy statements for federal sentencing

courts. The statute further directs the

Commission to review periodically and

revise guidelines previously

promulgated and authorizes it to submit

guideline amendments to the Congress

not later than the first day of May each

year. See 28 U.S.C. 994(o), (p).

Additionally, a number of the

amendments included in Part I of this

report are authorized and directed by, or

otherwise respond to, a variety of

enactments of the 105th Congress.

Absent action of Congress to the

contrary, the amendments become

effective on the date specified by the

Commission (i.e., November 1, 1998) by

operation of law.

Notice of the amendments submitted

to the Congress on May 1, 1998, was

first published in the Federal Register

of January 6, 1998 (63 FR 602). Public

hearings on the proposed amendments

were held in San Francisco, CA, on

March 5, 1998, and in Washington, DC,

on March 12, 1998. After review of the

hearing testimony and additional public

comment, the Commission promulgated

the amendments set forth in Part I

below, each having been approved by at

least four voting Commissioners.

In the Federal Register of January 6,

1998, the Commission also published a

proposal from the Department of Justice

on the implementation of the directives

contained in the No Electronic Theft

Act, as well as a general issue for

comment on how these directives might

best be carried out. The Commission

heard testimony on these directives at

the public hearing in Washington, DC,

on March 12, 1998, and reviewed

additional written public comment

received on this issue in response to the

Federal Register notice. The

Commission also informally solicited

and received the input of parties

interested in copyright and trademark

infringement sentencing issues, such as

representatives of the Department of

Justice, the defense bar, and other key

groups, in an effort to determine how

best to implement the directives. As a

result of this input and after reviewing

the hearing testimony and additional

written public comment, the

Commission voted, on April 23, 1998, to

publish for comment the three proposals

contained in Part II, below.

In connection with its ongoing

process of guideline review, the

Commission welcomes comment on any

aspect of the sentencing guidelines,

policy statements, and official

commentary.

Authority: 28 U.S.C. 994(a), (o), (p).

Richard P. Conaboy

Chairman.

Part I—Amendments Submitted to

Congress on May 1, 1998

1. Amendment: Section 2B1.1(b) is

amended by adding at the end the

following new subdivision:

‘‘(8) If the offense involved theft of

property from a national cemetery,

increase by 2 levels.’’.

The Commentary to § 2B1.1 captioned

‘‘Application Notes’’ is amended in

Note 1 by adding at the end the

following new paragraph:

‘‘National cemetery means a cemetery

(A) established under section 2400 of

title 38, United States Code, or (B) under

the jurisdiction of the Secretary of the

Army, the Secretary of the Navy, the

Secretary of the Air Force, or the

Secretary of the Interior.’’.

The Commentary to § 2B1.1 captioned

‘‘Background’’ is amended by adding at

the end the following new paragraph:

‘‘Subsection (b)(8) implements the

instruction to the Commission in

Section 2 of Public Law 105–101.’’.

Section 2B1.3(b) is amended by

adding at the end the following new

subdivision:

‘‘(4) If property of a national cemetery

was damaged or destroyed, increase by

2 levels.’’.

The Commentary to § 2B1.3 captioned

‘‘Application Notes’’ is amended in

Note 1 by adding at the end the

following new paragraph:

‘‘National cemetery means a cemetery

(A) established under section 2400 of

title 38, United States Code, or (B) under

the jurisdiction of the Secretary of the

Army, the Secretary of the Navy, the

Secretary of the Air Force, or the

Secretary of the Interior.’’.

The Commentary to § 2B1.3 captioned

‘‘Background’’ is amended by inserting

before the first paragraph the following:

‘‘Subsection (b)(4) implements the

instruction to the Commission in

Section 2 of Public Law 105–101.’’.

Section 2K1.4(b) is amended by

striking ‘‘Characteristic’’ and inserting

‘‘Characteristics’’; and by adding at the

end the following new subdivision:

‘‘(2) If the base offense level is not

determined under (a)(4), and the offense

occurred on a national cemetery,

increase by 2 levels.’’.

The Commentary to § 2K1.4 is

amended by adding at the end the

following new application note and

background commentary:

‘‘4. National cemetery means a

cemetery (A) established under section
Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 / Notices 28203

2400 of title 38, United States Code, or

(B) under the jurisdiction of the

Secretary of the Army, the Secretary of

the Navy, the Secretary of the Air Force,

or the Secretary of the Interior.

Background: Subsection (b)(2)

implements the directive to the

Commission in Section 2 of Public Law

105–101.’’.

Reason for Amendment: The purpose

of this amendment is to provide an

increase for property offenses

committed against national cemeteries.

This amendment implements the

directive to the Commission in the

Veterans’ Cemetery Protection Act of

1997, Pub. L. 105–101, § 2, 111 Stat.

2202, 2202 (1997). This Act directs the

Commission to provide a sentence

enhancement of not less than two levels

for any offense against the property of

a national cemetery. In response to the

legislation, this amendment adds a twolevel enhancement to §§ 2B1.1 (Theft),

2B1.3 (Property Destruction), and 2K1.4

(Arson). National cemetery is defined in

the same way as that term is defined in

the statute.

2. Amendment: Section 2F1.1(b) is

amended by striking subdivision (5) in

its entirety and inserting the following:

‘‘(5) (A) If the defendant relocated, or

participated in relocating, a fraudulent

scheme to another jurisdiction to evade

law enforcement or regulatory officials;

(B) if a substantial part of a fraudulent

scheme was committed from outside the

United States; or (C) if the offense

otherwise involved sophisticated

concealment, increase by 2 levels. If the

resulting offense level is less than level

12, increase to level 12.’’.

Section 2F1.1(b) is amended by

adding at the end the following new

subdivision:

‘‘(7) If the offense was committed

through mass-marketing, increase by 2

levels.’’.

The Commentary to § 2F1.1 captioned

‘‘Application Notes’’ is amended by

redesignating Notes 14 through 18, as

Notes 15 through 19, respectively; and

by inserting after Note 13 the following

new Note 14:

‘‘14. For purposes of subsection

(b)(5)(B), United States means each of

the 50 states, the District of Columbia,

the Commonwealth of Puerto Rico, the

United States Virgin Islands, Guam, the

Northern Mariana Islands, and

American Samoa.

For purposes of subsection (b)(5)(C),

sophisticated concealment means

especially complex or especially

intricate offense conduct in which

deliberate steps are taken to make the

offense, or its extent, difficult to detect.

Conduct such as hiding assets or

transactions, or both, through the use of

fictitious entities, corporate shells, or

offshore bank accounts ordinarily

indicates sophisticated concealment.’’.

The Commentary to § 2F1.1 captioned

‘‘Application Notes’’ is amended by

adding at the end the following new

note:

‘‘20. Mass-marketing, as used in

subsection (b)(7), means a plan,

program, promotion, or campaign that is

conducted through solicitation by

telephone, mail, the Internet, or other

means to induce a large number of

persons to (A) purchase goods or

services; (B) participate in a contest or

sweepstakes; or (C) invest for financial

profit. The enhancement would apply,

for example, if the defendant conducted

or participated in a telemarketing

campaign that solicited a large number

of individuals to purchase fraudulent

life insurance policies.’’.

Section 2T1.1(b) is amended by

striking subdivision (2) in its entirety

and inserting the following:

‘‘(2) If the offense involved

sophisticated concealment, increase by

2 levels.’’.

The Commentary to § 2T1.1 captioned

‘‘Application Notes’’ is amended by

striking Note 4 in its entirety and

inserting the following:

‘‘4. For purposes of subsection (b)(2),

sophisticated concealment means

especially complex or especially

intricate offense conduct in which

deliberate steps are taken to make the

offense, or its extent, difficult to detect.

Conduct such as hiding assets or

transactions, or both, through the use of

fictitious entities, corporate shells, or

offshore bank accounts ordinarily

indicates sophisticated concealment.’’.

Section 2T1.4(b) is amended by

striking subdivision (2) in its entirety

and inserting the following:

‘‘(2) If the offense involved

sophisticated concealment, increase by

2 levels.’’.

The Commentary to § 2T1.4 captioned

‘‘Application Notes’’ is amended by

striking Note 3 in its entirety and

inserting the following:

‘‘3. For purposes of subsection (b)(1),

sophisticated concealment means

especially complex or especially

intricate offense conduct in which

deliberate steps are taken to make the

offense, or its extent, difficult to detect.

Conduct such as hiding assets or

transactions, or both, through the use of

fictitious entities, corporate shells, or

offshore bank accounts ordinarily

indicates sophisticated concealment.’’.

Section 2T3.1(b) is amended by

striking subdivision (1) in its entirety

and inserting the following:

‘‘(1) If the offense involved

sophisticated concealment, increase by

2 levels.’’.

The Commentary to § 2T3.1 captioned

‘‘Application Notes’’ is amended by

adding at the end the following new

note:

‘‘3. For purposes of subsection (b)(1),

sophisticated concealment means

especially complex or especially

intricate offense conduct in which

deliberate steps are taken to make the

offense, or its extent, difficult to detect.

Conduct such as hiding assets or

transactions, or both, through the use of

fictitious entities, corporate shells, or

offshore bank accounts ordinarily

indicates sophisticated concealment.’’.

Reason for Amendment: This

amendment has three purposes: (1) to

provide an increase for fraud offenses

that use mass-marketing to carry out the

fraud; (2) to provide an increase for

fraud offenses that involve conduct,

such as sophisticated concealment, that

makes it difficult for law enforcement

authorities to discover the offense or

apprehend the offender; and (3) to

clarify and conform an existing

enhancement that provides an increase

for tax offenses that similarly involve

sophisticated concealment.

First, this amendment adds a twolevel enhancement in the fraud

guideline for offenses that are

committed through mass-marketing. The

Commission identified mass-marketing

as a central component of telemarketing

fraud and also determined that there

were other fraudulent schemes that

relied on mass-marketing to perpetrate

the offense (for example, Internet fraud).

Accordingly, rather than provide a

limited enhancement for telemarketing

fraud only, the Commission determined

that a generally applicable specific

offense characteristic in the fraud

guideline would better provide

consistent and proportionate sentencing

increases for similar types of fraud,

while also ensuring increased sentences

for persons who engage in massmarketed telemarketing fraud.

Second, this amendment provides an

increase for fraud offenses that involve

conduct, such as sophisticated

concealment, that makes it difficult for

law enforcement authorities to discover

the offense or apprehend the offenders.

The new enhancement provides a twolevel increase and a ‘‘floor’’ offense level

of level 12 in the fraud guideline and

replaces the current enhancement for

‘‘the use of foreign bank accounts or

transactions to conceal the true nature

or extent of fraudulent conduct.’’ There

are three alternative provisions to the

enhancement. The first two prongs

address conduct that the Commission
28204 Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 / Notices

has been informed often relates to

telemarketing fraud, although the

conduct also may occur in connection

with fraudulent schemes perpetrated by

other means. Specifically, the

Commission has been informed that

fraudulent telemarketers increasingly

are conducting their operations from

Canada and other locations outside the

United States. Additionally, testimony

offered at a Commission hearing on

telemarketing fraud indicated that

telemarketers often relocate their

schemes to other jurisdictions once they

know or suspect that enforcement

authorities have discovered the scheme.

Both types of conduct are specifically

covered by the new enhancement. The

third prong provides an increase if any

offense covered by the fraud guideline

otherwise involves sophisticated

concealment. This prong addresses

cases in which deliberate steps are taken

to make the offense, or its extent,

difficult to detect.

Third, this amendment provides a

two-level enhancement for conduct

related to sophisticated concealment of

a tax offense. The primary purpose of

this amendment is to conform the

language of the current enhancement for

‘‘sophisticated means’’ in the tax

guidelines to the essentially equivalent

language of the new sophisticated

concealment enhancement provided in

the fraud guideline. Additionally, the

amendment resolves a circuit conflict

regarding whether the enhancement

applies based on the personal conduct

of the defendant or the overall offense

conduct for which the defendant is

accountable. Consistent with the usual

relevant conduct rules, application of

this new enhancement for sophisticated

concealment accordingly is based on the

overall offense conduct for which the

defendant is accountable.

3. Amendment: Section 2K2.1(a) is

amended in subdivision (4) by striking

‘‘the defendant’’ after ‘‘20, if’’; in

subdivision (4)(A) by inserting ‘‘the

defendant’’ before ‘‘had one’’; in

subdivision (4)(B) by striking ‘‘is a

prohibited person, and’’; and in

subdivision (4)(B) by inserting ‘‘; and

the defendant (i) is a prohibited person;

or (ii) is convicted under 18 U.S.C.

922(d)’’ after ‘‘’ 921(a)(30)’’.

Section 2K2.1(a)(6) is amended by

inserting ‘‘(A)’’ after ‘‘defendant’’; and

by inserting ‘‘; or (B) is convicted under

18 U.S.C. 922(d)’’ after ‘‘person’’.

The Commentary to § 2K2.1 captioned

‘‘Application Notes’’ is amended in

Note 6 by striking ‘‘or’’ before ‘‘(vi)’’;

and by inserting ‘‘; or (vii) has been

convicted in any court of a

misdemeanor crime of domestic

violence as defined in 18 U.S.C.

921(a)(33)’’ after ‘‘922(d)(8)’’.

The Commentary to § 2K2.1 captioned

‘‘Application Notes’’ is amended in

Note 12 in the first paragraph by striking

‘‘924(j) or (k), or 26 U.S.C. 5861(g) or

(h)’’ and inserting ‘‘924 (l) or (m)’’; and

in the second paragraph by striking

‘‘only’’ after ‘‘if the’’; and by inserting

‘‘or 26 U.S.C. 5861(g) or (h)’’ after

‘‘922(k)’’.

Reason for Amendment: This

amendment has three purposes: (1) to

change the definition of ‘‘prohibited

person’’ in the firearms guideline so that

it includes a person convicted of a

misdemeanor crime of domestic

violence; (2) to provide the same base

offense levels for both a prohibited

person and a person who is convicted

under 18 U.S.C. 922(d) of transferring a

firearm to a prohibited person; and (3)

to make several technical and

conforming changes to the firearms

guideline.

The first part of the amendment

amends Application Note 6 of § 2K2.1

(Unlawful Receipt, Possession, or

Transportation of Firearms or

Ammunition; Prohibited Transactions

Involving Firearms or Ammunition) to

include a person convicted of a

misdemeanor crime of domestic

violence within the scope of ‘‘prohibited

person’’ for purposes of that guideline.

It also defines ‘‘misdemeanor crime of

domestic violence’’ by reference to the

new statutory definition of that term in

18 U.S.C. 921(a).

This part of the amendment addresses

section 658 of the Treasury, Postal

Service, and General Government

Appropriations Act, Pub. L. 104–208,

110 Stat. 3009 (1996) (contained in the

Omnibus Consolidated Appropriations

Act for Fiscal Year 1997). Section 658

amended 18 U.S.C. 922(d) to prohibit

the sale of a firearm or ammunition to

a person who has been convicted in any

court of a misdemeanor crime of

domestic violence. It also amended 18

U.S.C. 922(g) to prohibit a person who

has been convicted in any court of a

misdemeanor crime of domestic

violence from transporting or receiving

a firearm or ammunition. Section

922(s)(3)(B)(i), which lists the

information a person not licensed under

18 U.S.C. 923 must include in a

statement to the handgun importer,

manufacturer, or dealer, was amended

to require certification that the person to

whom the gun is transferred was not

convicted in any court of a

misdemeanor crime of domestic

violence. Section 658 also amended 18

U.S.C. 921(a) to define ‘‘misdemeanor

crime of domestic violence’’.

Violations of 18 U.S.C. 922(d) and (g)

are covered by § 2K2.1. The new

provisions at § 922(d) (sale of a firearm

to a ‘‘prohibited person’’) and § 922(g)

(transporting, possession, and receipt of

a firearm by a ‘‘prohibited person’’)

affect Application Note 6 of § 2K2.1,

which defines ‘‘prohibited person’’.

This part of the amendment conforms

Application Note 6 of § 2K2.1 to the

new statutory provisions.

The second part of this amendment

increases the base offense level for a

defendant who is convicted under 18

U.S.C. 922(d), which prohibits the

transfer of a firearm to a prohibited

person. Specifically, this part amends

the two alternative base offense levels

that pertain to prohibited persons in the

firearms guideline in order to make

those offense levels applicable to the

person who transfers the firearm to the

prohibited person. A person who is

convicted under 18 U.S.C. 922(d) has

been shown beyond a reasonable doubt

either to have known, or to have had

reasonable cause to believe, that the

transferee was a prohibited person.

This part of the amendment derives

from a recommendation by the United

States Department of Justice and is

generally consistent with a proposed

directive contained in juvenile justice

legislation approved by the Senate

Judiciary Committee in 1997.

The third part of this amendment

makes two technical and conforming

changes in Application Note 12 of

§ 2K2.1. First, the amendment corrects

statutory references to 18 U.S.C. 924(j)

and (k), which were added as a result of

the Violent Crime Control and Law

Enforcement Act of 1994, Pub. L. 103–

322, 108 Stat. 1796 (1994). In the

Economic Espionage Act of 1996, Pub.

L. 104–294, 110 Stat. 3488 (1996),

Congress again amended 18 U.S.C. 924

and redesignated the provisions as

subsections (l) and (m). The amendment

conforms Application Note 12 to that

redesignation. Second, the amendment

corrects the misplacement of the

reference to 26 U.S.C. 5861(g) and (h).

4. Amendment: The Commentary to

§ 2J1.6 captioned ‘‘Application Notes’’ is

amended in Note 3 in the first paragraph

by striking ‘‘3D1.2’’ and inserting

‘‘3D1.1’’; and by striking the second

paragraph in its entirety and inserting

the following as the new second

paragraph:

‘‘In the case of a conviction on both

the underlying offense and the failure to

appear, the failure to appear is treated

under § 3C1.1 (Obstructing or Impeding

the Administration of Justice) as an

obstruction of the underlying offense,

and the failure to appear count and the

count or counts for the underlying
Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 / Notices 28205

offense are grouped together under

§ 3D1.2(c). (Note that 18 U.S.C.

3146(b)(2) does not require a sentence of

imprisonment on a failure to appear

count, although if a sentence of

imprisonment on the failure to appear

count is imposed, the statute requires

that the sentence be imposed to run

consecutively to any other sentence of

imprisonment. Therefore, unlike a count

in which the statute mandates both a

minimum and a consecutive sentence of

imprisonment, the grouping rules of

§§ 3D1.1–3D1.5 apply. See § 3D1.1(b),

comment. (n.1), and § 3D1.2, comment.

(n.1).) The combined sentence will then

be constructed to provide a ‘total

punishment’ that satisfies the

requirements both of § 5G1.2

(Sentencing on Multiple Counts of

Conviction) and 18 U.S.C. 3146(b)(2).

For example, if the combined applicable

guideline range for both counts is 30–37

months and the court determines that a

‘total punishment’ of 36 months is

appropriate, a sentence of 30 months for

the underlying offense plus a

consecutive six months’ sentence for the

failure to appear count would satisfy

these requirements. (Note that the

combination of this instruction and

increasing the offense level for the

obstructive, failure to appear conduct

has the effect of ensuring an

incremental, consecutive punishment

for the failure to appear count, as

required by 18 U.S.C. 3146(b)(2).)’’.

The Commentary to § 2J1.6 captioned

‘‘Application Notes’’ is amended by

redesignating Note 4 as Note 5; and by

inserting the following as new Note 4:

‘‘4. If a defendant is convicted of both

the underlying offense and the failure to

appear count, and the defendant

committed additional acts of obstructive

behavior (e.g., perjury) during the

investigation, prosecution, or sentencing

of the instant offense, an upward

departure may be warranted. The

upward departure will ensure an

enhanced sentence for obstructive

conduct for which no adjustment under

§ 3C1.1 (Obstruction of Justice) is made

because of the operation of the rules set

out in Application Note 3.’’.

The Commentary to § 2P1.2 captioned

‘‘Application Notes’’ is amended in

Note 2 by striking ‘‘as amended,’’ after

‘‘18 U.S.C. 1791(c),’’; and by inserting

‘‘by the inmate’’ after ‘‘served’’.

The Commentary to § 2P1.2 captioned

‘‘Application Notes’’ is amended in

Note 2 by inserting before the first

paragraph the following:

‘‘In a case in which the defendant is

convicted of the underlying offense and

an offense involving providing or

possessing a controlled substance in

prison, group the offenses together

under § 3D1.2(c). (Note that 18 U.S.C.

1791(b) does not require a sentence of

imprisonment, although if a sentence of

imprisonment is imposed on a count

involving providing or possessing a

controlled substance in prison, section

1791(c) requires that the sentence be

imposed to run consecutively to any

other sentence of imprisonment for the

controlled substance. Therefore, unlike

a count in which the statute mandates

both a minimum and a consecutive

sentence of imprisonment, the grouping

rules of §§ 3D1.1–3D1.5 apply. See

§ 3D1.1(b), comment. (n.1), and § 3D1.2,

comment. (n.1).) The combined

sentence will then be constructed to

provide a ‘total punishment’ that

satisfies the requirements both of

§ 5G1.2 (Sentencing on Multiple Counts

of Conviction) and 18 U.S.C. 1791(c).

For example, if the combined applicable

guideline range for both counts is 30–37

months and the court determines a ‘total

punishment’ of 36 months is

appropriate, a sentence of 30 months for

the underlying offense plus a

consecutive six months’ sentence for the

providing or possessing a controlled

substance in prison count would satisfy

these requirements.’’.

The Commentary to § 3C1.1 captioned

‘‘Application Notes’’ is amended in

Note 6 by striking ‘‘Where’’ and

inserting ‘‘If’’; and by striking ‘‘where’’

both places it appears and inserting ‘‘if’’.

The Commentary to § 3C1.1 captioned

‘‘Application Notes’’ is amended in

Note 7 in the first sentence by striking

‘‘Where’’ and inserting ‘‘If’’; by striking

‘‘both of the’’ and inserting ‘‘both of an’’;

by inserting ‘‘(e.g., 18 U.S.C. § 3146

(Penalty for failure to appear); 18 U.S.C.

§ 1621 (Perjury generally))’’ after

‘‘obstruction offense’’ the first place it

appears; and by striking ‘‘the

underlying’’ the first place it appears

and inserting ‘‘an underlying’’.

Section 3D1.1(b) is amended by

striking the first sentence in its entirety

and inserting the following:

‘‘Exclude from the application of

§§ 3D1.2–3D1.5 any count for which the

statute (1) specifies a term of

imprisonment to be imposed; and (2)

requires that such term of imprisonment

be imposed to run consecutively to any

other term of imprisonment.’’.

The Commentary to § 3D1.1 captioned

‘‘Application Notes’’ is amended by

striking Note 1 in its entirety and

inserting the following:

‘‘1. Subsection (b) applies if a statute

(A) specifies a term of imprisonment to

be imposed; and (B) requires that such

term of imprisonment be imposed to run

consecutively to any other term of

imprisonment. See, e.g., 18 U.S.C.

924(c) (requiring mandatory term of five

years to run consecutively). The

multiple count rules set out under this

Part do not apply to a count of

conviction covered by subsection (b).

However, a count covered by subsection

(b) may affect the offense level

determination for other counts. For

example, a defendant is convicted of

one count of bank robbery (18 U.S.C.

2113), and one count of use of a firearm

in the commission of a crime of violence

(18 U.S.C. 924(c)). The two counts are

not grouped together pursuant to this

guideline, and, to avoid unwarranted

double counting, the offense level for

the bank robbery count under § 2B3.1

(Robbery) is computed without

application of the enhancement for

weapon possession or use as otherwise

required by subsection (b)(2) of that

guideline. Pursuant to 18 U.S.C. 924(c),

the mandatory five-year sentence on the

weapon-use count runs consecutively to

the guideline sentence imposed on the

bank robbery count. See § 5G1.2(a).

Unless specifically instructed,

subsection (b) does not apply when

imposing a sentence under a statute that

requires the imposition of a consecutive

term of imprisonment only if a term of

imprisonment is imposed (i.e., the

statute does not otherwise require a

term of imprisonment to be imposed).

See, e.g., 18 U.S.C. 3146 (Penalty for

failure to appear); 18 U.S.C. 924(a)(4)

(regarding penalty for 18 U.S.C. 922(q)

(possession or discharge of a firearm in

a school zone)); 18 U.S.C. 1791(c)

(penalty for providing or possessing a

controlled substance in prison).

Accordingly, the multiple count rules

set out under this Part do apply to a

count of conviction under this type of

statute.’’.

The Commentary to § 3D1.2 captioned

‘‘Application Notes’’ is amended in

Note 1 in the third sentence by striking

‘‘mandates imposition of a consecutive

sentence’’ and inserting ‘‘(A) specifies a

term of imprisonment to be imposed;

and (B) requires that such term of

imprisonment be imposed to run

consecutively to any other term of

imprisonment’’; and by inserting ‘‘; id.,

comment. (n.1)’’ after ‘‘§ 3D1.1(b)’’.

Section 5G1.2(a) is amended by

striking ‘‘mandates a consecutive

sentence’’ and inserting ‘‘(1) specifies a

term of imprisonment to be imposed;

and (2) requires that such term of

imprisonment be imposed to run

consecutively to any other term of

imprisonment’’; and by inserting ‘‘by

that statute’’ after ‘‘determined’’.

The Commentary to § 5G1.2 is

amended in the last paragraph by

striking the first three sentences and

inserting:
28206 Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 / Notices

‘‘Subsection (a) applies if a statute (1)

specifies a term of imprisonment to be

imposed; and (2) requires that such term

of imprisonment be imposed to run

consecutively to any other term of

imprisonment. See, e.g., 18 U.S.C.

§ 924(c) (requiring mandatory term of

five years to run consecutively to any

other term of imprisonment). The term

of years to be imposed consecutively is

determined by the statute of conviction,

and is independent of a guideline

sentence on any other count.’’.

The Commentary to § 5G1.2 is

amended in the last paragraph in the

fourth sentence by inserting ‘‘, e.g.,’’

after ‘‘See’’; and by adding at the end

the following new sentence:

‘‘Subsection (a) also applies in certain

other instances in which an

independently determined and

consecutive sentence is required. See,

e.g., Application Note 3 of the

Commentary to § 2J1.6 (Failure to

Appear by Defendant), relating to failure

to appear for service of sentence.’’.

Reason for Amendment: The purpose

of this amendment is to clarify how

several guideline provisions, including

those on grouping multiple counts of

conviction, work together to ensure an

incremental, consecutive penalty for a

failure to appear count. This

amendment addresses a circuit conflict

regarding whether the guideline

procedure of grouping the failure to

appear count of conviction with the

count of conviction for the underlying

offense violates the statutory mandate of

imposing a consecutive sentence.

Compare United States v. Agoro, 996

F.2d 1288 (1st Cir. 1993) (grouping rules

apply), and United States v. Flores, No.

93–3771, 1994 WL 163766 (6th Cir. May

2, 1994) (unpublished) (same), with

United States v. Packer, 70 F.3d 357

(5th Cir. 1995) (grouping rules defeat

statutory purposes of 18 U.S.C. § 3146),

cert. denied, 117 S. Ct. 75 (1996). The

amendment maintains the current

grouping rules for failure to appear and

obstruction of justice, but addresses

internal inconsistencies among different

guidelines and explains how the

guideline provisions work together to

ensure an incremental, consecutive

penalty for the failure to appear count.

Specifically, the amendment (1) more

clearly distinguishes between statutes

that require imposition of a consecutive

term of imprisonment only if

imprisonment is imposed (e.g., 18

U.S.C. § 3146 (Penalty for failure to

appear); 18 U.S.C. § 1791(b), (c) (Penalty

for providing or possessing contraband

in prison)), and statutes that require

both a minimum term of imprisonment

and a consecutive sentence (e.g., 18

U.S.C. § 924(c) (Use of a firearm in

relation to crime of violence or drug

trafficking offense)); (2) states that the

method outlined for determining a

sentence for failure to appear and

similar statutes ensures an incremental,

consecutive punishment; (3) adds an

upward departure provision if offense

conduct involves multiple obstructive

acts; (4) makes conforming changes in

§ 2P1.2 (Providing or Possessing

Contraband in Prison) because the

relevant statute, 18 U.S.C. 1791, is

similar to 18 U.S.C. 3146; and (5) makes

conforming changes in §§ 3C1.1, 3D1.1,

3D1.2, and 5G1.2.

5. Amendment: The Commentary to

§ 3B1.3 captioned ‘‘Application Notes’’

is amended in the first paragraph of

Note 1 in the third sentence by inserting

‘‘public or private’’ after ‘‘position of’’;

in the fourth sentence by striking

‘‘would apply’’ and inserting ‘‘applies’’;

and in the last sentence by striking

‘‘would’’ and inserting ‘‘does.’’.

The Commentary to § 3B1.3 captioned

‘‘Application Notes’’ is amended by

redesignating Note 2 as Note 3; and by

inserting the following as new Note 2:

‘‘2. This enhancement also applies in

a case in which the defendant provides

sufficient indicia to the victim that the

defendant legitimately holds a position

of private or public trust when, in fact,

the defendant does not. For example,

the enhancement applies in the case of

a defendant who (A) perpetrates a

financial fraud by leading an investor to

believe the defendant is a legitimate

investment broker; or (B) perpetrates a

fraud by representing falsely to a patient

or employer that the defendant is a

licensed physician. In making the

misrepresentation, the defendant

assumes a position of trust, relative to

the victim, that provides the defendant

with the same opportunity to commit a

difficult-to-detect crime that the

defendant would have had if the

position were held legitimately.’’.

The Commentary to § 3B1.3 captioned

‘‘Background’’ is amended by inserting

after the first sentence the following:

‘‘The adjustment also applies to

persons who provide sufficient indicia

to the victim that they legitimately hold

a position of public or private trust

when, in fact, they do not.’’.

Reason for Amendment: The purpose

of this amendment is to establish that

the two-level increase for abuse of a

position of trust applies to a defendant

who is an imposter, as well as to a

person who legitimately holds and

abuses a position of trust. This

amendment resolves a circuit conflict

on that issue. Compare United States v.

Gill, 99 F.3d 484 (1st Cir. 1996)

(adjustment applied to defendant who

posed as licensed psychologist), and

United States v. Queen, 4 F.3d 925 (10th

Cir. 1993) (adjustment applied to

defendant who posed as financial

broker), cert. denied, 510 U.S. 1182

(1994), with United States v. Echevarria,

33 F.3d 175 (2d Cir. 1994) (defendant

who poses as physician does not occupy

a position of trust). The amendment

adopts the majority appellate view and

provides that the abuse of position of

trust adjustment applies to an imposter

who pretends to hold a position of trust

when in fact he does not. The

Commission has determined that,

particularly from the perspective of the

crime victim, an imposter who falsely

assumes and takes advantage of a

position of trust is as culpable and

deserving of increased punishment as is

a defendant who abuses an actual

position of trust.

6. Amendment: Section 3C1.1 is

amended by inserting ‘‘(A)’’ after ‘‘If’’;

by inserting ‘‘the course of’’ after

‘‘during’’; and by inserting ‘‘of

conviction, and (B) the obstructive

conduct related to (i) the defendant’s

offense of conviction and any relevant

conduct; or (ii) a closely related offense’’

after ‘‘instant offense’’.

The Commentary to § 3C1.1 captioned

‘‘Application Notes’’ is amended in

Note 2 in the second sentence by

striking ‘‘Note 3’’ and inserting ‘‘Note

4’’; in the third sentence by striking

‘‘Note 4’’ and inserting ‘‘Note 5’’; and in

the fourth sentence by striking ‘‘Notes 3

and 4’’ and inserting ‘‘Notes 4 and 5’’.

The Commentary to § 3C1.1 captioned

‘‘Application Notes’’ is amended in

Note 4 in the first paragraph by striking

‘‘Note 7’’ and inserting ‘‘Note 8’’.

The Commentary to § 3C1.1 captioned

‘‘Application Notes’’ is amended by

redesignating Notes 1 through 8, as

Notes 2 through 9, respectively; and by

inserting the following as new Note 1:

‘‘1. This adjustment applies if the

defendant’s obstructive conduct (A)

occurred during the course of the

investigation, prosecution, or sentencing

of the defendant’s instant offense of

conviction, and (B) related to (i) the

defendant’s offense of conviction and

any relevant conduct; or (ii) an

otherwise closely related case, such as

that of a co-defendant.’’.

Reason for Amendment: The purpose

of this amendment is to clarify what the

term instant offense means in the

obstruction of justice guideline, § 3C1.1.

This amendment resolves a circuit

conflict on the issue of whether the

adjustment applies to obstructions that

occur in cases closely related to the

defendant’s case or only those

specifically related to the offense of

which the defendant convicted.

Compare United States v. Powell, 113
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F.3d 464 (3d Cir.) (adjustment applies if

defendant attempts to impede the

prosecution of a co-defendant who is

charged with the same offense for which

defendant was convicted), cert. denied,

118 S. Ct. 454 (1997), United States v.

Walker, 119 F.3d 403 (6th Cir.) (same),

cert. denied, 118 S. Ct. 643 (1997),

United States v. Acuna, 9 F.3d 1442 (9th

Cir. 1993) (adjustment applies if

defendant attempts to obstruct justice in

a case closely related to his own), and

United States v. Bernaugh, 969 F.2d 858

(10th Cir. 1992) (adjustment applies

when defendant testifies falsely at his

own hearing about co-defendants’ roles

in the offense), with United States v.

Perdomo, 927 F.2d 111 (2d Cir. 1991)

(cannot apply adjustment based on

obstructive conduct outside the scope of

charged offense), and United States v.

Partee, 31 F.3d 529 (7th Cir. 1994)

(same). The amendment, which adopts

the majority view, instructs that the

obstruction must relate either to the

defendant’s offense of conviction

(including any relevant conduct) or to a

closely related case. The amendment

also clarifies the temporal element of

the obstruction guideline (i.e., that the

obstructive conduct must occur during

the investigation, prosecution, or

sentencing of the defendant’s offense of

conviction).

7. Amendment: The Commentary to

§ 3C1.1 captioned ‘‘Application Notes’’

is amended in Note 4 in the first

sentence of the first paragraph by

striking ‘‘enhancement’’ and inserting

‘‘adjustment’’; and by inserting ‘‘or

affect the determination of whether

other guideline adjustments apply (e.g.,

§ 3E1.1 (Acceptance of Responsibility))’’

after ‘‘guideline range’’; in the second

sentence by striking ‘‘enhancement’’

and inserting ‘‘adjustment’’; in

subdivision (d) by striking the period at

the end and inserting a semicolon; and

by adding at the end the following new

subdivision:

‘‘(e) lying to a probation or pretrial

services officer about defendant’s drug

use while on pre-trial release, although

such conduct may be a factor in

determining whether to reduce the

defendant’s sentence under § 3E1.1

(Acceptance of Responsibility).’’.

Reason for Amendment: The purpose

of this amendment is to establish that

lying to a probation officer about drug

use while released on bail does not

warrant an obstruction of justice

adjustment under § 3C1.1. This

amendment resolves a circuit conflict

on that issue. Compare United States v.

Belletiere, 971 F.2d 961 (3d Cir. 1992)

(lying about drug use is not obstructive

conduct that impedes government’s

investigation of instant offense), and

United States v. Thompson, 944 F.2d

1331 (7th Cir. 1991) (same), cert. denied,

502 U.S. 1097 (1992), with United

States v. Garcia, 20 F.3d 670 (6th Cir.

1994) (falsely denying drug use, while

not outcome-determinative, is relevant),

cert. denied, 513 U.S. 1159 (1995). The

amendment, which adopts the majority

view, excludes from application of

§ 3C1.1 a defendant’s denial of drug use

while on pre-trial release, although the

amendment provides that such conduct

may be relevant in determining the

application of other guidelines, such as

§ 3E1.1 (Acceptance of Responsibility).

8. Amendment: Section 5K2.13 is

amended by striking the text in its

entirety and inserting:

‘‘A sentence below the applicable

guideline range may be warranted if the

defendant committed the offense while

suffering from a significantly reduced

mental capacity. However, the court

may not depart below the applicable

guideline range if (1) the significantly

reduced mental capacity was caused by

the voluntary use of drugs or other

intoxicants; (2) the facts and

circumstances of the defendant’s offense

indicate a need to protect the public

because the offense involved actual

violence or a serious threat of violence;

or (3) the defendant’s criminal history

indicates a need to incarcerate the

defendant to protect the public. If a

departure is warranted, the extent of the

departure should reflect the extent to

which the reduced mental capacity

contributed to the commission of the

offense.

Commentary

Application Note:

1. For purposes of this policy

statement—

Significantly reduced mental capacity

means the defendant, although

convicted, has a significantly impaired

ability to (A) understand the

wrongfulness of the behavior

comprising the offense or to exercise the

power of reason; or (B) control behavior

that the defendant knows is wrongful.’’.

Reason for Amendment: The purpose

of this amendment is to allow (except

under certain circumstances) a

diminished capacity departure if there

is sufficient evidence that the defendant

committed the offense while suffering

from a significantly reduced mental

capacity. This amendment addresses a

circuit conflict regarding whether the

diminished capacity departure is

precluded if the defendant committed a

‘‘crime of violence’’ as that term is

defined in the career offender guideline.

Compare United States v. Poff, 926 F.2d

588 (7th Cir.) (en banc) (definition of

‘‘non-violent offense’’ necessarily

excludes a crime of violence), cert.

denied, 502 U.S. 827 (1991), United

States v. Maddalena, 893 F.2d 815 (6th

Cir. 1989) (same), United States v.

Mayotte, 76 F.3d 887 (8th Cir. 1996)

(same), United States v. Borrayo, 898

F.2d 91 (9th Cir. 1989) (same), and

United States v. Dailey, 24 F.3d 1323

(11th Cir. 1994) (same), with United

States v. Chatman, 986 F.2d 1446 (D.C.

Cir. 1993) (court must consider all the

facts and circumstances to determine

whether offense was non-violent; terms

are not mutually exclusive), United

States v. Weddle, 30 F.3d 532 (4th Cir.

1994) (same), and United States v.

Askari, F.3d, 1998 WL 164561 (3d Cir.

1998) (en banc) (‘‘non-violent offenses’’

are those that do not involve a

reasonable perception that force against

persons may be used in committing the

offense), abrogating United States v.

Rosen, 896 F.2d 789 (3d Cir. 1990) (nonviolent offense means the opposite of

crime of violence). The amendment

replaces the current policy statement

with a new provision that essentially

represents a compromise approach to

the circuit conflict. The new policy

statement allows a diminished capacity

departure if there is sufficient evidence

that the defendant committed the

offense while suffering from a

significantly reduced mental capacity,

except under the following three

circumstances: (1) the significantly

reduced mental capacity was caused by

the voluntary use of drugs or other

intoxicants; (2) the facts and

circumstances of the defendant’s offense

indicate a need to protect the public

because the offense involved actual

violence or a serious threat of violence;

or (3) the defendant’s criminal history

indicates a need to incarcerate the

defendant to protect the public. The

amendment also adds an application

note that defines ‘‘significantly reduced

mental capacity’’ in accord with the

decision in United States v. McBroom,

124 F.3d 533 (3d Cir. 1997). The

McBroom court concluded that

‘‘significantly reduced mental capacity’’

included both cognitive impairments

(i.e., an inability to understand the

wrongfulness of the conduct or to

exercise the power of reason) and

volitional impairments (i.e., an inability

to control behavior that the person

knows is wrongful). The application

note specifically includes both types of

impairments in the definition of

‘‘significantly reduced mental capacity’’.

9. Amendment: Section 5B1.3(d) is

amended by adding at the end the

following new subdivision:

‘‘(6) Deportation

If (A) the defendant and the United

States entered into a stipulation of
28208 Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 / Notices

deportation pursuant to section

238(c)(5) of the Immigration and

Nationality Act (8 U.S.C. § 1228(c)(5));

or (B) in the absence of a stipulation of

deportation, if, after notice and hearing

pursuant to such section, the Attorney

General demonstrates by clear and

convincing evidence that the alien is

deportable—a condition ordering

deportation by a United States district

court or a United States magistrate

judge.’’.

Section 5D1.3(d) is amended by

adding at the end the following new

subdivision:

‘‘(6) Deportation

If (A) the defendant and the United

States entered into a stipulation of

deportation pursuant to section

238(c)(5) of the Immigration and

Nationality Act (8 U.S.C. § 1228(c)(5));

or (B) in the absence of a stipulation of

deportation, if, after notice and hearing

pursuant to such section, the Attorney

General demonstrates by clear and

convincing evidence that the alien is

deportable—a condition ordering

deportation by a United States district

court or a United States magistrate

judge.’’.

Section 5D1.3(e)(5) is amended by

striking ‘‘to provide just punishment for

the offense,’’.

Section 5B1.3(c) is amended by

inserting ‘‘(Policy Statement)’’ before

‘‘The following’’.

Section 5B1.3(d) is amended by

inserting ‘‘(Policy Statement)’’ before

‘‘The following’’.

Section 5B1.3(e) is amended in the

title by adding ‘‘(Policy Statement)’’ at

the end.

Section 5D1.3(c) is amended by

inserting ‘‘(Policy Statement)’’ before

‘‘The following’’.

Section 5D1.3(d) is amended by

inserting ‘‘(Policy Statement)’’ before

‘‘The following’’.

Section 5D1.3(e) is amended in the

title by adding ‘‘(Policy Statement)’’ at

the end.

Reason for Amendment: The purpose

of this amendment is to make several

technical and conforming changes to the

guidelines relating to conditions of

probation and supervised release. The

amendment has three parts. First, the

amendment adds to § 5B1.3 a condition

of probation regarding deportation, in

response to section 374 of the Illegal

Immigration Reform and Immigrant

Responsibility Act of 1996, Pub. L 104–

208, 110 Stat. 3009 (1996). That section

amended 18 U.S.C. § 3563(b) to add a

new discretionary condition of

probation with respect to deportation.

Second, this amendment deletes the

reference in the supervised release

guideline to ‘‘just punishment’’ as a

reason for the imposition of curfew as

a condition of supervised release. The

need to provide ‘‘just punishment’’ is

not included in 18 U.S.C. § 3583(c) as a

permissible factor to be considered in

imposing a term of supervised release.

Third, this amendment amends the

guidelines pertaining to conditions of

probation and supervised release to

indicate that discretionary (as opposed

to mandatory) conditions are advisory

policy statements of the Commission,

not binding guidelines.

10. Amendment: Section 5K2.0 is

amended in the first paragraph in the

first sentence by inserting a comma after

‘‘3553(b)’’; by striking ‘‘guideline’’ and

inserting ‘‘guidelines’’; in the second

sentence by striking ‘‘guidelines’’ and

inserting ‘‘guideline range’’; in the third

sentence by striking ‘‘controlling’’ after

‘‘The’’; by striking ‘‘can only be made by

the courts’’ and inserting ‘‘rests with the

sentencing court on a case-specific

basis’’; in the last sentence by inserting

‘‘determining’’ after ‘‘consideration in’’;

by striking ‘‘guidelines’’ and inserting

‘‘guideline range’’; by striking

‘‘guideline level’’ and inserting

‘‘weight’’; by inserting ‘‘under the

guidelines’’ after ‘‘factor’’; and by

inserting before the period at the end

‘‘or excessive’’.

Section 5K2.0 is amended in the last

paragraph by striking ‘‘An’’ and

inserting ‘‘Finally, an’’; by striking ‘‘not

ordinarily relevant’’ and inserting ‘‘, in

the Commission’s view, ‘not ordinarily

relevant’ ’’; and by striking ‘‘in a way

that is important to the statutory

purposes of sentencing’’.

The Commentary to § 5K2.0 is

amended by inserting before the first

paragraph the following:

‘‘The United States Supreme Court

has determined that, in reviewing a

district court’s decision to depart from

the guidelines, appellate courts are to

apply an abuse of discretion standard,

because the decision to depart embodies

the traditional exercise of discretion by

the sentencing court. Koon v. United

States, 116 S. Ct. 2035 (1996).

Furthermore, ‘[b]efore a departure is

permitted, certain aspects of the case

must be found unusual enough for it to

fall outside the heartland of cases in the

Guideline. To resolve this question, the

district court must make a refined

assessment of the many facts bearing on

the outcome, informed by its vantage

point and day-to-day experience in

criminal sentencing. Whether a given

factor is present to a degree not

adequately considered by the

Commission, or whether a discouraged

factor nonetheless justifies departure

because it is present in some unusual or

exceptional way, are matters determined

in large part by comparison with the

facts of other Guidelines cases. District

Courts have an institutional advantage

over appellate courts in making these

sorts of determinations, especially as

they see so many more Guidelines cases

than appellate courts do.’ Id. at 2046–

47.’’.

Reason for Amendment: The purpose

of this amendment is to reference

specifically in the general departure

policy statement the United States

Supreme Court’s decision in United

States v. Koon, 116 S. Ct. 2035 (1996).

This amendment (1) incorporates the

principal holding and key analytical

points from the Koon decision into the

general departure policy statement,

§ 5K2.0; (2) deletes language

inconsistent with the holding of Koon;

and (3) makes minor, non-substantive

changes that improve the precision of

the language of § 5K2.0.

11. Amendment: Section 2B3.2(b) is

amended in subdivision (2) by striking

‘‘(b)(6)’’ and inserting ‘‘(b)(7)’’.

The Commentary to § 2K2.1 captioned

‘‘Application Notes’’ is amended in

Note 5 in the first sentence by striking

‘‘subsections (1) and (2)’’ and inserting

‘‘subsections (a)(1), (a)(2), and (b)’’.

The Commentary to § 6A1.3 is

amended in the third paragraph by

striking ‘‘117 U.S.’’ after ‘‘Watts,’’ both

places it appears and inserting ‘‘117 S.

Ct.’’.

Reason for Amendment: This

amendment corrects technical errors in

§§ 2B3.1, 2K2.1, and 6A1.3.

Part II—Proposed Amendment in

Response to the No Electronic Theft Act

of 1997

Synopsis of Proposed Amendment: In

section 2(g) of the No Electronic Theft

Act of 1997, Pub. L. 105B147, Congress

directed the Commission to (1) ‘‘ensure

that the applicable guideline range for a

defendant convicted of a crime against

intellectual property (including offenses

set forth at section 506(a) of title 17,

United States Code, and sections 2319,

2319A, and 2329 of title 18, United

States Code) is sufficiently stringent to

deter such a crime and to adequately

reflect the additional considerations set

forth in paragraph (2)’’; and (2) ‘‘ensure

that the guidelines provide for

consideration of the retail value and

quantity of the items with respect to

which the crime against intellectual

property was committed.’’

Three possible approaches for

implementing these directives are set

forth below. Option One is the result of

the Commission’s review and

consideration of the directives, after

taking into account pertinent hearing

testimony, written public comment, and
Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 / Notices 28209

other input of interested parties. Upon

the Commission’s request for input from

the Department of Justice, the

Department proposed Options Two and

Three as possible approaches for

carrying out the statutory directives.

The Commission invites comment on

each of these three proposals, as well as

any other comment on how the

congressional directives might best be

implemented. Additionally, the

Commission invites comment on

whether the Commission can and

should promulgate any of these

proposed amendments (or any other

amendments to the guidelines, policy

statements, and official commentary to

carry out these directives) pursuant to

the emergency amendment authority of

section 21 of the Sentencing Act of

1987.

Note: Persons commenting on this issue

may wish to consider whether the authority

of the Commission to adopt emergency

amendments to the guidelines in order to

implement the directives is sufficiently clear

inasmuch as the authority to act on an

emergency basis under section 21 of the

Sentencing Act of 1987, which was cited in

section 2(g) of the No Electronic Theft Act of

1997, has expired and may not have been

revived adequately by that section.

Proposed Amendment:

Option One [Commission Proposal]:

Strike § 2B5.3 and insert the

following:

§ 2B5.3. Criminal Infringement of

Copyright or Trademark

(a) Base Offense Level: 6

(b) Specific Offense Characteristics

(1) If (A) the offense involved (i) the

infringement of a copyright other than a

copyright violation under 18 U.S.C.

2319A, (ii) the infringement of both a

copyright and a trademark, or (iii)

palmed-off counterfeit goods; and (B)

the infringed value exceeded $2,000,

increase by the number of levels from

the monetary table in § 2F1.1 (Fraud and

Deceit) corresponding to that value.

(2) If (A) subsection (b)(1) does not

apply; and (B) the infringing value

exceeded $2,000, increase by the

number of levels from the monetary

table in § 2F1.1 corresponding to that

value.

[(3) If the offense involved online

electronic infringement, increase by 2

levels.]

[(4) If the offense was not committed

for commercial advantage or private

financial gain, decrease by [2] levels, but

not below level 6.]

[(5) If the offense involved the

conscious or reckless risk of serious

bodily injury or death, increase by [2]

levels. If the resulting offense level is

less than level [13][14], increase to level

[13][14]].

Commentary

Application Notes:

1. For purposes of this guideline—

Infringed value means the average

retail value of the infringed-upon item

multiplied by the number of infringing

items. Infringed-upon item means the

legitimate item with respect to which or

against which the crime against

intellectual property was committed.

Average retail value of the infringedupon item generally means the average

price that a well-informed consumer

typically would pay for the legitimate

item (which may be less than the

Manufacturer’s Suggested Retail Price).

In cases involving the interception of a

communication in violation of 18 U.S.C.

§ 2511, the average retail value of the

infringed-upon item means the price the

user would have paid if that

communication had been obtained

lawfully.

Infringing value means the average

retail value of the infringing item

multiplied by the number of infringing

items.

Infringing item means the item that

violates the copyright or trademark

laws.

Palmed-off counterfeit goods means

counterfeit goods that a consumer

reasonably would believe are the

legitimate items, because of price

comparability and apparent

substitutability.

Online electronic infringement

includes the unlawful producing,

reproducing, distributing, selling,

performing, or trafficking in copyrighted

or trademarked articles or services via

an electronic bulletin board, a

worldwide web site, or any online

facility.

Commercial advantage or private

financial gain includes receipt, or

expectation of receipt, of anything of

value, including the receipt of other

protected works.

2. The enhancement in subsection

(b)(2) applies to any infringement case

not covered by subsection (b)(1) and in

which the infringing value exceeded

$2,000. The types of cases to which

subsection (b)(2) is intended to apply

include, for example, most cases

involving trademark infringement, as

well as cases involving the unlawful

recording of a musical performance in

violation of 18 U.S.C. § 2319A.

3. There may be cases in which the

offense level substantially understates

or overstates the seriousness of the

offense or the culpability of the

defendant. In such cases, an upward or

downward departure, as appropriate,

may be warranted.

Background: This guideline treats

copyright and trademark violations

much like fraud. The enhancements in

subsections (b)(1) and (2) are intended

as an approximate determination of the

aggregate pecuniary harm resulting from

trafficking in goods or services that

violate the copyright or trademark laws.

The Electronic Communications

Privacy Act of 1986 prohibits the

interception of satellite transmission for

purposes of direct or indirect

commercial advantage or private

financial gain. Such violations are

similar to copyright offenses and are

therefore covered by this guideline.’’.

Option Two [Department of Justice

Proposal]:

Strike § 2B5.3 and insert the

following:

‘‘§ 2B5.3. Criminal Infringement of

Copyright or Trademark

(a) Base Offense Level: 6

(b) Specific Offense Characteristics

(1) If the economic harm exceeded

$2,000, increase by the corresponding

number of levels from the table in § 2F

1.1 (Fraud and Deceit).

(2) If the offense involved online

electronic infringement, increase by 2

levels.

(3) If the offense posed a threat to

public health and safety, increase by 2

levels.

Commentary

Statutory Provisions: 17 U.S.C.

§ 506(a); 18 U.S.C. 2318, 2319, 2319A,

2320, 2511. For additional statutory

provision(s), see Appendix A (Statutory

Index).

Application Notes:

1. For purposes of this guideline—

Infringed upon items means the items

(including phonorecords and computer

programs) with respect to which or

against which the crime against

intellectual property was committed.

Infringing items means the items that

violate the copyright or trademark laws;

often, infringing trademarks, and the

items bearing them, are referred to as

counterfeit and items that infringe

copyrights are referred to as pirated.

Retail value means the Manufacturer’s

Suggested Retail Price (MSRP).

Copies means both copies and

phonorecords.

Trafficked in includes transported,

transferred, distributed, sold or

otherwise disposed of.

2. Economic harm in 2318, 2319

(506(a)), and 2320 cases is the retail

value of the infringed upon items,

multiplied by the number of copies

produced and trafficked in. This

recognizes that infringement causes

losses not only for the trademark and

copyright owners, but for others in the

distribution chains of legitimate articles,

and for members of the public who are
28210 Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 / Notices

deceived into buying what they may

believe are legitimate articles. A single copy that is produced and

then sold by a single defendant counts

as one copy. 3. Economic harm in 2319A cases is

the retail value of the infringing items,

multiplied by the number of copies

produced (including the number of

primary unlawful fixations, i.e.,

‘masters,’ from which those copies are

made) and/or transmissions and/or the

number of copies sold, offered for sale,

distributed, offered for distribution,

rented, offered for rent, and trafficked

in. The value of infringing items is the

standard in these cases because

merchandise that violates § 2319A has

no legitimate counterpart. A single copy

that is produced and then sold by a

single defendant counts as one copy. 4. Online electronic infringement

includes the producing, reproducing,

distributing, selling, performing, or

trafficking in copyrighted or

trademarked articles or services via an

electronic bulletin board, a worldwide

web site, or any online facility. The ease

with which infringers can operate in the

online environment and the access they

have to limitless numbers of customers

gives them the capability of causing

substantial harm. For example, a

defendant may post copyrighted

material to an electronic bulletin board,

making it accessible for others to

illegally obtain, copy, and further

distribute. In such an instance, it may

not be possible to determine precisely

the number of items (copies)

downloaded by persons who access the

facility, but it is reasonable to assure,

based on the worldwide possibility for

distribution and the number of items

offered at the facility, that the harm is

substantial.

5. In many instances, items that

violate the trademark and copyright

laws also present public health and

safety hazards. These hazards can

appear in many contexts. For example,

counterfeit products, such as

automotive parts, airplane parts,

foodstuffs, pharmaceuticals, and

electrical devices, place members of the

public in danger. The enhancement

shall apply in cases in which the

products, if used in their intended

manner, would threaten public health

and safety. 6. An upward departure may be

warranted in cases in which the

economic harm underrepresents the

actual harm or would lead to an unfair

result. This Application Note applies in

infringement situations, other than

those referred to in Application Note 4,

in which the number of copies

produced and trafficked in is impossible

to calculate and the harm to the

copyright or trademark owner, others in

the legitimate distribution chains, and

the public is substantial. For example,

rather than operate as an individual, a

defendant may be part of a distribution

or manufacturing network in which he

or she supplies other distributors with

unlawful products or parts of products,

such as counterfeit handbags or watches

or their parts or pirated sound

recordings or motion pictures. In such

an instance, it may not be possible to

determine precisely the number of items

(copies) provided to other persons for

distribution, but it is reasonable, based

on the available facts (including the

number of persons in the distribution

network), that the number is large

enough to create substantial harm. The

upward departure provided for in this

Application Note is available regardless

of whether the conduct was for financial

gain. 7. A downward departure may be

warranted in cases in which the retail

price of the infringing items is less than

30% of the retail value of the infringed

upon item. In such cases, it may not be

reasonable to conclude that each sale of

an infringing item represents a lost sale

for the copyright or trademark owner or

others in the distribution chain. For

example, a counterfeit watch may retail

for $15, while the infringed upon watch

may retail for $5,000. A sentencing

calculation based on the retail value of

the infringed items may lead to an

unfair result.

Background: This guideline treats

copyright and trademark violations

much like fraud.

The Electronic Communications

Privacy Act of 1986 prohibits the

interception of satellite transmission for

purposes of direct or indirect

commercial advantage or private

financial gain. Such violations are

similar to copyright offenses and are,

therefore, covered by this guideline.’’. Option Three [Department of Justice

Proposal]:

Strike § 2B5.3 and insert the

following:

§ 2B5.3. Criminal Infringement of

Copyright or Trademark (a) Base Offense Level: 6

(b) Specific Offense Characteristics

(1) If the economic harm exceeded

$2,000, increase by the corresponding

number of levels from the table in

§ 2F1.1 (Fraud and Deceit).

(2) If the offense involved online

electronic infringement, increase by 2

levels.

(3) If the retail price of the infringing

items is less than 50% of the

manufacturer’s suggested retail price of

the infringed upon items, decrease by 2

levels; if the retail price of the infringing

items is less than 30% of the

manufacturer’s suggested retail price of

the infringed upon items, decrease by 4

levels.

Commentary

Statutory Provisions: 17 U.S.C.

§ 506(a), 18 U. S. C. 2318, 2319, 2319A,

2320, 2511. For additional statutory

provision(s), see Appendix A (Statutory

Index).

Application Notes:

1. For purposes of this guideline

Infringed upon items means the

legitimate items (including

phonorecords and computer programs)

with respect to which or against which

the crime against intellectual property

was committed.

Infringing items means the items that

violate the copyright or trademark laws;

often, infringing trademarks, and the

items bearing them, are referred to as

counterfeit and items that infringe

copyrights are referred to as pirated.

Copies means both copies and

phonorecords.

2. Economic harm in section 2318,

2319 (506(a)), and 2320 cases is the

manufacturer’s suggested retail price

(msrp) of the infringed upon items,

multiplied by the number of copies

involved in the offense. This recognizes

that the economic harm caused by

infringement affects not only the

trademark and copyright owners, but

also others in the distribution chains of

legitimate articles, and members of the

public who are deceived into buying

what they may believe are legitimate

articles.

Because there is no infringed upon

item in section 2319A cases, ‘economic

harm’ in those cases is the retail price

of the infringing items, multiplied by

the number of copies involved in the

offense (including the number of

primary unlawful recordings, i.e.,

‘masters,’ from which those copies are

made).

Economic harm in section 2511 caves

is the price the user or users would have

paid if the service had been obtained

lawfully.

3. Online electronic infringement

includes the producing, reproducing,

distributing, selling, performing, or

trafficking in copyrighted or

trademarked articles or services via an

electronic bulletin board, a worldwide

web site, or any online facility. The ease

with which infringers can operate in the

online environment and the access they

have to limitless numbers of customers

gives them the capability of causing

substantial harm.

4. An upward departure may he

warranted in cases in which the

unlawful conduct presents a reasonably
Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 / Notices 28211

foreseeable risk to public health or

safety. These hazards appear in many

contexts. For example, counterfeit

products, such as automotive parts,

airplane parts, foodstuffs,

pharmaceuticals, and electrical devices,

place members of the public in danger.

5. An upward departure may be

warranted in cases in which the

standard calculation of economic harm

under-represents the actual harm or

would lead to an unfair result. This

Application Note applies in

infringement situations, other than

those referred to in Application Note 3,

in which the number of copies involved

in the offense is impossible to calculate

and the harm to the copyright or

trademark owner, others in the

legitimate distribution chain, and the

public is substantial. For example,

rather that operate as an individual, a

defendant may be part of a distribution

or manufacturing network in which he

or she supplies other distributors with

unlawful products or parts of products,

such as counterfeit handbags or watches

or their parts or pirated sound

recordings or motion pictures or their

packaging, In such cases, it may not be

possible to determine precisely the

number of items (copies) provided to

other persons for distribution, but it is

reasonable, based on the available facts

(including the number of persons in the

distribution network), that the number

is large enough to create substantial

harm. The upward departure provided

for in this Application Note is available

regardless of whether the conduct was

for commercial advantage or financial

gain.

Background: This guideline treats

copyright and trademark violations

much like fraud.

The Electronic Communications

Privacy Act of 1986 prohibits the

interception of satellite transmission for

purposes of direct or indirect

commercial advantage or private

financial gain. Such violations are

similar to copyright offenses and are,

therefore, covered by this guideline.’’.

[FR Doc. 98–13584 Filed 5–20–98; 8:45 am]

BILLING CODE 2210–40–P