[Federal Register Volume 63, Number 98 (Thursday, May 21, 1998)]
[Notices]
[Pages 28202-28211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-13584]



[[Page 28201]]

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Part III





United States Sentencing Commission





_______________________________________________________________________



Amendments to the Sentencing Guidelines for United States Courts; 
Notice

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

[[Page 28202]]



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.

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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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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

[[Page 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, 
Sec. 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 two-level enhancement to Secs. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 two-level 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 mass-
marketed 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 two-level 
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

[[Page 28204]]

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 Sec. 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 Sec. 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 
Sec. 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 Sec. 2K2.1. 
The new provisions at Sec. 922(d) (sale of a firearm to a ``prohibited 
person'') and Sec. 922(g) (transporting, possession, and receipt of a 
firearm by a ``prohibited person'') affect Application Note 6 of 
Sec. 2K2.1, which defines ``prohibited person''. This part of the 
amendment conforms Application Note 6 of Sec. 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 Sec. 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 Sec. 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 
Sec. 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

[[Page 28205]]

offense are grouped together under Sec. 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 
Secs. 3D1.1-3D1.5 apply. See Sec. 3D1.1(b), comment. (n.1), and 
Sec. 3D1.2, comment. (n.1).) The combined sentence will then be 
constructed to provide a `total punishment' that satisfies the 
requirements both of Sec. 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 Sec. 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 Sec. 3C1.1 
(Obstruction of Justice) is made because of the operation of the rules 
set out in Application Note 3.''.
    The Commentary to Sec. 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 Sec. 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 Sec. 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 Secs. 3D1.1-3D1.5 apply. See Sec. 3D1.1(b), comment. (n.1), 
and Sec. 3D1.2, comment. (n.1).) The combined sentence will then be 
constructed to provide a `total punishment' that satisfies the 
requirements both of Sec. 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 Sec. 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 Sec. 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. Sec. 3146 (Penalty for failure to 
appear); 18 U.S.C. Sec. 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 Secs. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 
``Sec. 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 Sec. 5G1.2 is amended in the last paragraph by 
striking the first three sentences and inserting:

[[Page 28206]]

    ``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. Sec. 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 Sec. 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 Sec. 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. 
Sec. 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. Sec. 3146 
(Penalty for failure to appear); 18 U.S.C. Sec. 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. Sec. 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 Sec. 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 Secs. 3C1.1, 3D1.1, 3D1.2, and 5G1.2.
    5. Amendment: The Commentary to Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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, Sec. 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

[[Page 28207]]

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 Sec. 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., Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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) (non-violent 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

[[Page 28208]]

deportation pursuant to section 238(c)(5) of the Immigration and 
Nationality Act (8 U.S.C. Sec. 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. Sec. 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 Sec. 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. 
Sec. 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. 
Sec. 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 Sec. 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, Sec. 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 Sec. 5K2.0.
    11. Amendment: Section 2B3.2(b) is amended in subdivision (2) by 
striking ``(b)(6)'' and inserting ``(b)(7)''.
    The Commentary to Sec. 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 Sec. 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 
Secs. 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

[[Page 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 Sec. 2B5.3 and insert the following:
    Sec. 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 Sec. 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 Sec. 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 infringed-upon 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. Sec. 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. Sec. 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 Sec. 2B5.3 and insert the following:
    ``Sec. 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 Sec. 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. Sec. 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

[[Page 28210]]

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 Sec. 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 Sec. 2B5.3 and insert the following:
    Sec. 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 Sec. 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. Sec. 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

[[Page 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