30512 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

UNITED STATES SENTENCING

COMMISSION

Sentencing Guidelines for United

States Courts

AGENCY: United States Sentencing

Commission.

ACTION: Notice of: (A) promulgation of

temporary, emergency amendments,

effective May 1, 2001, for (1) offenses

involving the manufacture, importation,

exportation, or trafficking of ‘‘Ecstasy’’;

(2) offenses involving the manufacture,

importation, or trafficking of

amphetamine; (3) offenses involving the

trafficking of certain List I chemicals

that are used in the manufacture of

methamphetamine; and (4) offenses

involving peonage and human

trafficking; and (B) submission to

Congress of additional non-emergency

amendments to the sentencing

guidelines, effective November 1, 2001.

SUMMARY: The United States Sentencing

Commission hereby gives notice of the

following actions:

(A) Emergency Amendments.—

(1) ‘‘Ecstasy’’ Offenses.—Pursuant to

section 3664 of the Ecstasy AntiProliferation Act of 2000, Pub. L. 106—

310, the Commission has promulgated a

temporary, emergency amendment to

§ 2D1.1.

(2) Amphetamine Offenses.—Pursuant

to section 3611 of the

Methamphetamine Anti-Proliferation

Act of 2000, Pub. L. 106—310, the

Commission has promulgated a

temporary, emergency amendment to

§ 2D1.1 (Unlawful Manufacturing,

Importing, Exporting, or Trafficking

(Including Possession with Intent to

Commit These Offenses) Attempt and

Conspiracy).

(3) List I Chemical Offenses.—

Pursuant to section 3651 of the

Methamphetamine Anti-Proliferation

Act of 2000, the Commission has

promulgated a temporary, emergency

amendment to §§ 2D1.1 and 2D1.11

(Unlawfully Distributing, Importing,

Exporting or Possessing a Listed

Chemical; Attempt or Conspiracy).

(4) Human Trafficking Offenses.—

Pursuant to section 112(b) of the

Victims of Trafficking and Violence

Protection Act of 2000, Pub. L. 106—

386, the Commission has promulgated a

temporary, emergency amendment to

§§ 2G1.1 (Promoting Prostitution or

Prohibited Sexual Conduct), 2G2.1

(Sexually Exploiting a Minor by

Production of Sexually Explicit Visual

or Printed Material; Custodian

Permitting Minor to Engage in Sexually

Explicit Conduct; Advertisement for

Minors to Engage in Production), and

2H4.1 (Peonage, Involuntary Servitude,

and Slave Trade), and has promulgated

a new guideline at § 2H4.2 (Willful

Violations of the Migrant and Seasonal

Agricultural Worker Protection Act).

(B) Non-Emergency Amendments—

Pursuant to its authority under 28

U.S.C. 994(a) and (p) and several

congressional directives more fully

described herein, the Commission has

promulgated additional, non-emergency

amendments to the sentencing

guidelines, policy statements,

commentary, and statutory index.

This notice sets forth the amendments

and the season for each amendment.

DATES: The Commission has specified

an effective date of May 1, 2001, for the

emergency amendments set forth in Part

(A) of this notice and an effective date

of November 1, 2001, for the nonemergency amendments set forth in Part

(B) of this notice.

FOR FURTHER INFORMATION CONTACT:

Michael Courlander, Public Affairs

Officer, 202–502–4590. The

amendments set forth in this notice also

may be accessed through the

Commission’s website at www.ussc.gov.

SUPPLEMENTARY INFORMATION: The

United States Sentencing Commission is

an independent agency in the judicial

branch of the United States

Government. The Commission

promulgates sentencing guidelines and

policy statements for federal sentencing

courts pursuant to 28 U.S.C. 994(a). The

Commission also periodically reviews

and revises previously promulgated

guidelines pursuant to 28 U.S.C. 994(o)

and submits guidelines amendments to

the Congress not later than the first day

of May each year pursuant to 28 U.S.C.

994(p).

(A) Emergency Amendments.—In

January 2001, the Commission

published options for promulgating the

emergency amendments set forth herein

(see 66 FR 7962, January 26, 2001). The

Commission held a public hearing on

the proposed amendments in

Washington, DC, on March 19, 2001.

After a review of hearing testimony and

additional public comment, the

Commission promulgated the

emergency amendments set forth herein.

The Commission specified an effective

date of May 1, 2001, for these

amendments.

(1) ‘‘Ecstasy’’.—The Ecstasy AntiProliferation Act of 2000 instructed the

Commission to provide increased

penalties for the manufacture,

importation, exportation, or trafficking

of ‘‘Ecstasy’’. The directive specifically

required the Commission to increase the

base offense level for 3,4-

Methylenedioxymethamphetamine

(MDMA), 3,4-

Methylenedioxyamphetamine (MDA),

3,4-Methylenedioxy-Nethylamphetamine (MDEA), and

Paramethoxymethamphetamine (PMA).

The amendment amends the Drug

Equivalency Tables in 1A2D1.1 to

increase substantially the marihuana

equivalencies for the specified

controlled substances, which has the

effect of substantially increasing the

penalties for offenses involving

‘‘Ecstasy’’.

(2) Amphetamine.—Section 3611 of

the Methamphetamine AntiProliferation Act of 2000 directed the

Commission to provide increased

guideline penalties for amphetamine

offenses such that those penalities are

comparable to the base offense level for

methamphetamine offenses. This

amendment revises § 2D1.1 to include

amphetamine in the Drug Quantity

Table in subsection (c) of that guideline.

This amendment also treats

amphetamine and methamphetamine

identically, at a 1:1 ratio, because of the

similarities of the two substances.

(3) List I Chemicals.—Section 3651 of

the Methamphetamine AntiProliferation Act of 2000 directed the

Commission to ‘‘provide increased

penalties for offenses involving

ephedrine, phenylpropanolamine (PPA),

or pseudoephedrine (including their

salts, optical isomers, and salts of

optical isomers) to correspond to the

quality of controlled substance that

reasonably could have been

manufactured using the quality of

ephedrine, PPA, and pseudoephedrine

possessed or distributed.’’ This

amendment provides a new chemical

quantity table in § 2D1.11 specifically

for ephedrine, pseudoephedrine, and

phenylpropanolamine (PPA). The table,

which has a maximum based offense

level of level 38, ties the base offense

levels for these chemicals to the base

offense levels for methamphetamine

(actual) set forth in § 2D1.1. The

amendment also makes conforming

changes to the commentary in §§ 2D1.11

and 2D1.1.

(4) Human Trafficking.—This

amendment implements the

congressional directive in section 112(b)

of the Victims of Trafficking and

Violence Protection Act of 2000, Pub. L.

106–386. The directive requires the

Commission to amend, if appropriate,

the guidelines applicable to human

trafficking (i.e., peonage, involuntary

servitude, and forced labor) offenses. It

also requires the Commission to ensure

that the guidelines ‘‘are sufficiently

stringent to deter and adequately reflect

the heinous nature of these offenses.’’

This amendment (i) creates a new

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30513

guideline, § 2H4.2 (Willful Violations of

the Migrant and Seasonal Agricultural

Worker Protection Act); (ii) refers

violations of four new statutes, 18

U.S.C. 1589 (Forced Labor), 1590

(Trafficking with Respect to Peonage,

Involuntary Servitude or Forced Labor),

1591 (Sex Trafficking of Children by

Force, Fraud or Coercion) and 1952

(Unlawful Conduct with Respect to

Documents in Furtherance of Peonage,

Involuntary Servitude, or Forced Labor)

to the appropriate guidelines; and (iii)

makes changes, consistent with the

directive, which both enhance sentences

and reflect changes to three existing

statutes: 18 U.S.C. 1581(a) (Peonage),

1583 (Enticement into Slavery) and

1584 (Sale into Involuntary Servitude).

(B) Non-Emergency Amendments.—

Section 994 of title 28, United States

Code, authorizes the Commission to

promulgate sentencing guidelines and

policy statements for federal courts. See

28 U.S.C. 994(a). Additionally, 28 U.S.C.

994 directs the Commission periodically

to review and revise guidelines

previously promulgated (see 28 U.S.C.

994(o)) and authorizes its to submit

guidelines amendments to the Congress

at or after the beginning of a regular

session of Congress but not later than

May 1 (see 18 U.S.C. 994(p)). Absent

action of Congress to the contrary,

submitted amendments become

effective by operation of law on the date

specified by the Commission (generally

November 1 of the year in which the

amendments are submitted to Congress).

Notice of proposed amendments was

published in the Federal Register on

November 7, 2000 (see 65 FR 66792),

and January 26, 2001 (see 66 FR 7962).

The Commission held a public hearing

on the proposed amendments in

Washington, DC on March 19, 2001.

After a review of hearing testimony and

additional public comment, the

Commission promulgated the

amendments set forth herein (including

amendments to make permanent the

temporary, emergency amendments set

forth in Part (A) of this notice). On May

1, 2001, the Commission submitted

these amendments to Congress and

specified an effective date of November

1, 2001.

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

USSC Rule of Practice and Procedure 4.1.

Diana E. Murphy,

Chair.

(A) Emergency Amendments to the

Sentencing Guidelines, Policy

Statements, and Official Commentary,

Effective May 1, 2001.

1. Amendment: The Commentary to

§ 2D1.1 captioned ‘‘Application Notes’’

is amended in Note 10 in the Drug

Equivalency Tables in the subdivision

captioned ‘‘LSD, PCP, and Other

Schedule I and II Hallucinogens (and

their immediate precursors)* ’’ in the

line referenced to ‘‘MDA’’ by striking

‘‘50 gm’’ and inserting ‘‘500 gm’’; in the

line referenced to ‘‘MDMA’’ by striking

‘‘35 gm’’ and inserting ‘‘500 gm’’; in the

line referenced ‘‘MDEA’’ by striking ‘‘30

gm’’ and inserting ‘‘500 gm’’; and by

inserting ‘‘1 gm of

Paramethoxymethamphetamine/PMA =

500 gm of marihuana’’ after the line

referenced to ‘‘MDEA’’.

Reason for Amendment: This

amendment addresses the directive in

the Ecstasy Anti-Proliferation Act of

2000 (the ‘‘Act’’), section 3664 of Pub.

L. 106–310, which instructs the

Commission to provide, under

emergency amendment authority,

increased penalties for the manufacture,

importation, exportation, or trafficking

of Ecstasy. The directive specifically

requires the Commission to increase the

base offense level for 3,4-

Methylenedioxymethetamine (MDMA),

3,4-Methylenedioxyamphetamine

(MDA), 3,4-Methylenedioxy-Nethylamphetamine (MDEA),

Paramethoxymethamphetamine (PMA),

and any other controlled substance that

is marketed as Ecstasy and that has

either a chemical structure similar to

MDMA or an effect on the central

nervous system substantially similar to

or greater than MDMA.

The amendment addresses the

directive by amending the Drug

Equivalency Table in § 2D1.1,

Application Note 10, to increase

substantially the marihuana

equivalencies for the specified

controlled substances, which has the

effect of substantially increasing the

penalties for offenses involving Ecstasy.

The new penalties for Ecstasy trafficking

provide penalties which, gram for gram,

are more severe than those for powder

cocaine. Currently under the Drug

Equivalency Table, one gram of powder

cocaine has a marihuana equivalency of

200 grams. This amendment sets the

marihuana equivalency for one gram of

Ecstasy at 500 grams.

There are a combination of reasons

why the Commission has substantially

increased the penalties in response to

the congressional directive. Much

evidence received by the Commission

indicated that Ecstasy: (1) has powerful

pharmacological effects; (2) has the

capacity to cause lasting physical

harms, including brain damage; and (3)

is being abused by rapidly increasing

numbers of teenagers and young adults.

Indeed, the market for Ecstasy is

overwhelmingly comprised of people

under the age of 25 years.

Before voting to promulgate this

amendment, the Commission

considered whether the penalty levels

for Ecstasy should be set at the same

levels as for heroin (i.e., one gram of

heroin has a marihuana equivalency of

1000 grams) and decided that somewhat

lesser penalties were appropriate for

Ecstasy for a number of reasons: (1) The

potential for addiction is greater with

heroin; (2) heroin distribution often

involves violence while, at this time,

violence is not reported in Ecstasy

markets; (3) because it is a narcotic and

is often injected, the risk of death from

overdose is much greater from heroin;

and (4) because heroin is often injected,

there are more secondary health

consequences, such as infections and

the transmission of the human

immunodeficiency virus (HIV) and

hepatitis.

Finally, based on information

regarding Ecstasy trafficking patterns,

the penalty levels chosen are

appropriate and sufficient to target

serious and high-level traffickers and to

provide appropriate punishment,

deterrence, and incentives for

cooperation. The penalty levels chosen

for Ecstasy offenses provide five year

sentences for serious traffickers (those

whose relevant conduct involved at

least 800 pills) and ten year sentences

for high-level traffickers (those whose

relevant conduct involved at least 8,000

pills).

2. Amendment: Section 2D1.1(c)(1) is

amended by inserting after the fifth

entry the following:

‘‘15 KG or more of Amphetamine, or

1.5 KG or more of Amphetamine

(actual);’’.

Section 2D1.1(c)(2) is amended by

inserting after the fifth entry the

following:

‘‘At least 5 KG but less than 15 KG of

Amphetamine, or at least 500 G but less

than 1.5 KG of Amphetamine (actual);’’.

Section 2D1.1(c)(3) is amended by

inserting after the fifth entry the

following:

‘‘At least 1.5 KG but less than 5 KG

of Amphetamine, or at least 150 G but

less than 500 G of Amphetamine

(actual);’’.

Section 2D1.1(c)(4) is amended by

inserting after the fifth entry the

following:

‘‘At least 500 G but less than 1.5 KG

of Amphetamine, or at least 50 G but

less than 150 G of Amphetamine

(actual);’’.

Section 2D1.1(c)(5) is amended by

inserting after the fifth entry the

following:

‘‘At least 350 G but less than 500 G

of Amphetamine, or at least 35 G but

30514 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

less than 50 G of Amphetamine

(actual);’’.

Section 2D1.1(c)(6) is amended by

inserting after the fifth entry the

following:

‘‘At least 200 G but less than 350 G

of Amphetamine, or at least 20 G but

less than 35 G of Amphetamine

(actual);’’.

Section 2D1.1(c)(7) is amended by

inserting after the fifth entry the

following:

‘‘At least 50 G but less than 200 G of

Amphetamine, or at least 5 G but less

than 20 G of Amphetamine (actual);’’.

Section 2D1.1(c)(8) is amended by

inserting after the fifth entry the

following:

‘‘At least 40 G but less than 50 G of

Amphetamine, or at least 4 G but less

than 5 G of Amphetamine (actual);’’.

Section 2D1.1(c)(9) is amended by

inserting after the fifth entry the

following:

‘‘At least 30 G but less than 40 G of

Amphetamine, or at least 3 G but less

than 4 G of Amphetamine (actual);’’.

Section 2D1.1(c)(10) is amended by

inserting after the fifth entry the

following:

‘‘At least 20 G but less than 30 G of

Amphetamine, or at least 2 G but less

than 3 G of Amphetamine (actual);’’.

Section 2D1.1(c)(11) is amended by

inserting after the fifth entry the

following:

‘‘At least 10 G but less than 20 G of

Amphetamine, or at least 1 G but less

than 2 G of Amphetamine (actual);’’.

Section 2D1.1(c)(12) is amended by

inserting after the fifth entry the

following:

‘‘At least 5 G but less than 10 G of

Amphetamine, or at least 500 MG but

less than 1 G of Amphetamine

(actual);’’.

Section 2D1.1(c)(13) is amended by

inserting after the fifth entry the

following:

‘‘At least 2.5 G but less than 5 G of

Amphetamine, or at least 250 MG but

less than 500 MG of Amphetamine

(actual);’’.

Section 2D1.1(c)(14) is amended by

inserting after the fifth entry the

following:

‘‘Less than 2.5 G of Amphetamine, or

less than 250 MG of Amphetamine

(actual);’’.

Section 2D1.1(c) is amended in Note

(B) of the ‘‘Notes to Drug Quantity

Table’’ by inserting ‘‘, ‘Amphetamine

(actual)’,’’ after ‘‘terms ‘PCP (actual)’ ’’;

by inserting ‘‘, amphetamine,’’ after

‘‘substance containing PCP’’; and by

inserting ‘‘, amphetamine (actual),’’ after

‘‘weight of the PCP (actual)’’.

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’ is amended in

Note 9 by inserting ‘‘, amphetamine,’’

after ‘‘PCP’’.

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’ is amended in

Note 10 in the Drug Equivalency Tables

in the subdivision captioned ‘‘Cocaine

and Other Schedule I and II Stimulants

(and their immediate precursors)*’’ by

striking ‘‘200 gm’’ after ‘‘1 gm of

Amphetamine=’’ and inserting ‘‘2 kg’’;

and by inserting ‘‘1 gm of Amphetamine

(Actual) = 20 kg of marihuana’’ after the

line referenced to ‘‘Amphetamine’’.

Reason for Amendment: This

emergency amendment implements the

directive in the Methamphetamine AntiProliferation Act of 2000, section 3611

of Pub. L. 106–310 (the ‘‘Act’’), which

directs the Commission to provide,

under emergency amendment authority,

increased guideline penalties for

amphetamine such that those penalties

are comparable to the base offense level

for methamphetamine.

This amendment revised § 2D1.1 to

include amphetamine in the Drug

Quantity Table. This amendment also

treats amphetamine and

methamphetamine identically, at a 1:1

ratio (i.e., the same quantities of

amphetamine and methamphetamine

would result in the same base offense

level) because of the similarities of the

two substances. Specifically,

amphetamine and methamphetamine (1)

chemically are similar; (2) are produced

by a similar method and are trafficked

in a similar manner; (3) share similar

methods of use; (4) affect the same parts

of the brain; and (5) have similar

intoxicating effects. The amendment

also distinguishes between pure

amphetamine (i.e., amphetamine

(actual)) and amphetamine mixture in

the same manner, and at the same

quantities, as pure methamphetamine

(i.e., methamphetamine (actual)) and

methamphetamine mixture,

respectively. The amendment reflects

the view that the 1:1 ratio is appropriate

given the seriousness of these two

controlled substances.

3. Amendment: Section 2D1.11 is

amended by striking subsection (d),

captioned ‘‘Chemical Quantity Table*’’;

and by striking the Notes that follow

subsection (d), captioned ‘‘*Notes’’, and

inserting the following:

‘‘(d)(1) EPHEDRINE, PSEUDOEPHEDRINE, AND PHENYLPROPANOLAMINE QUANTITY TABLE *

[Methamphetamine and Amphetamine Precursor Chemicals]

Quantity

Base

offense

level

(1) 3 KG or more of Ephedrine; .......................................................................................................................................................... Level 38

3 KG or more of Phenylpropanolamine;

3 KG or More of Pseudoephedrine.

(2) At least 1 KG but less than 3 KG of Ephedrine; ........................................................................................................................... Level 36

At least 1 KG but less than 3 KG of Phenylpropanolamine;

At least 1 KG but less than 3 KG of Pseudoephedrine.

(3) At least 300 G but less than 1 KG of Ephedrine; .......................................................................................................................... Level 34

At least 300 G but less than 1 KG of Phenylpropanolamine;

At least 300 G but less than 1 KG of Pseudoephedrine.

(4) At least 100 G but less than 300 G of Ephedrine; ........................................................................................................................ Level 32

At least 100 G but less than 300 G of Phenylpropanolamine;

At least 100 G but less than 300 G of Pseudoephedrine.

(5) At least 70 G but less than 100 G of Ephedrine; .......................................................................................................................... Level 30

At least 70 G but less than 100 G of Phenylpropanolamine;

At least 70 G but less than 100 G of Pseudoephedrine.

(6) At least 40 G but less than 70 G of Ephedrine; ............................................................................................................................ Level 28

At least 40 G but less than 70 G of Phenylpropanolamine;

At least 40 G but less than 70 G of Pseudoephedrine.

(7) At least 10 G but less than 40 G of Ephedrine; ............................................................................................................................ Level 26

At least 10 G but less than 40 G of Phenylpropanolamine;

At least 10 G but less than 40 G of Pseudoephedrine.

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30515

‘‘(d)(1) EPHEDRINE, PSEUDOEPHEDRINE, AND PHENYLPROPANOLAMINE QUANTITY TABLE *—Continued

[Methamphetamine and Amphetamine Precursor Chemicals]

Quantity

Base

offense

level

(8) At least 8 G but less than 10 G of Ephedrine; .............................................................................................................................. Level 24

At least 8 G but less than 10 G of Phenylpropanolamine;

At least 8 G but less than 10 G of Pseudoephedrine.

(9) At least 6 G but less than 8 G of Ephedrine; ................................................................................................................................ Level 22

At least 6 G but less than 8 G of Phenylpropanolamine;

At least 6 G but less than 8 G of Pseudoephedrine.

(10) At least 4 G but less than 6 G of Ephedrine; .............................................................................................................................. Level 20

At least 4 G but less than 6 G of Phenylpropanolamine;

At least 4 G but less than 6 G of Pseudoephedrine.

(11) At least 2 G but less than 4 G of Ephedrine; .............................................................................................................................. Level 18

At least 2 G but less than 4 G of Phenylpropanolamine;

At least 2 G but less than 4 G of Pseudoephedrine.

(12) At least 1 G but less than 2 G of Ephedrine; .............................................................................................................................. Level 16

At least 1 G but less than 2 G of Phenylpropanolamine;

At least 1 G but less than 2 G of Pseudoephedrine.

(13) At least 500 MG but less than 1 G of Ephedrine; ....................................................................................................................... Level 14

At least 500 MG but less than 1 G of Phenylpropanolamine;

At least 500 MG but less than 1 G of Pseudoephedrine.

(14) Less than 500 MG of Ephedrine; ................................................................................................................................................. Level 12

Less than 500 MG of Phenylpropanolamine;

Less than 500 MG of Pseudoephedrine.

* Notes:

(A) Except as provided in Note (B), to calculate the base offense level in an offense that involves two or more chemicals, use the quantity of

the single chemical that results in the greatest offense level, regardless of whether the chemicals are set forth in different tables or in different

categories (i.e., list I or list II) under subsection (d) of this guideline.

(B) To calculate the base offense level in an offense that involves two or more chemicals each of which is set forth in the Ephedrine,

Pseudoephedrine, and Phenylpropanolamine Quantity Table, (i) aggregate the quantities of all such chemicals, and (ii) determine the base offense level corresponding to the aggregate quantity.

(C) In a case involving ephedrine, pseudoephedrine, or phenylpropanolamine tablets, use the weight of the ephedrine, pseudoephedrine, or

phenylpropanolamine contained in the tablets, not the weight of the entire tablets, in calculating the base offense level.’’.

(d)(2) CHEMICAL QUANTITY TABLE*

[All other precursor chemicals]

Listed chemicals and quantity

Base

offense

level

(1) List I Chemicals .............................................................................................................................................................................. Level 30

890 G or more of Benzaldehyde;

20 KG or more of Benzyl Cyanide;

200 G or more of Ergonovine;

400 G or more of Ergotamine;

20 KG or more of Ethylamine;

2.2 KG or more of Hydriodic Acid;

320 KG or more of Isosafrole;

200 G or more of Methylamine;

500 KG or more of N-Methylephedrine;

500 KG or more of N-Methylpseudoephedrine;

625 G or more of Nitroethane;

10 KG or more of Norpseudoephedrine;

20 KG or more of Phenylacetic Acid;

10 KG or more of Piperidine;

320 KG or more of Piperonal;

1.6 KG or more of Propionic Anhydride;

320 KG or more of Safrole;

400 KG or more of 3, 4-Methylenedioxyphenyl-2-propanone.

(2) List I Chemicals .............................................................................................................................................................................. Level 28

At least 267 G but less than 890 G of Benzaldehyde;

At least 6 KG but less than 20 KG of Benzyl Cyanide;

At least 60 G but less than 200 G of Ergonovine;

At least 120 G but less than 400 G of Ergotamine;

At least 6 KG but less than 20 KG of Ethylamine;

At least 660 G but less than 2.2 KG of Hydriodic Acid;

At least 96 KG but less than 320 KG of Isosafrole;

At least 60 G but less than 200 G of Methylamine;

30516 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

(d)(2) CHEMICAL QUANTITY TABLE*—Continued

[All other precursor chemicals]

Listed chemicals and quantity

Base

offense

level

At least 150 KG but less than 500 KG of N-Methylephedrine;

At least 150 KG but less than 500 KG of N-Methylpseudoephedrine;

At least 187.5 G but less than 625 G of Nitroethane;

At least 3 KG but less than 10 KG of Norpseudoephedrine;

At least 6 KG but less than 20 KG of Phenylacetic Acid;

At least 3 KG but less than 10 KG of Piperidine;

At least 96 KG but less than 320 KG of Piperonal;

At least 480 G but less than 1.6 KG of Propionic Anhydride;

At least 96 KG but less than 320 KG of Safrole;

At least 120 KG but less than 400 KG of 3,4-Methylenedioxyphenyl-2-propanone;

List II Chemicals

11 KG or more of Acetic Anhydride;

1175 KG or more of Acetone;

20 KG or more of Benzyl Chloride;

1075 KG or more of Ethyl Ether;

1200 KG or more of Methyl Ethyl Ketone;

10 KG or more of Potassium Permanganate;

1300 KG or more of Toluene. Level 26

(3) List I Chemicals

At least 89 G but less than 267 G of Benzaldehyde;

At least 2 KG but less than 6 KG of Benzyl Cyanide;

At least 20 G but less than 60 G of Ergonovine;

At least 40 G but less than 120 G of Ergotamine;

At least 2 KG but less than 6 KG of Ethylamine;

At least 220 G but less than 660 G of Hydriodic Acid;

At least 32 KG but less than 96 KG of Isosafrole;

At least 20 G but less than 60 G of Methylamine;

At least 50 KG but less than 150 KG of N-Methylephedrine;

At least 50 KG but less than 150 KG of N-Methylpseudoephedrine;

At least 62.5 G but less than 187.5 G of Nitroethane;

At least 1 KG but less than 3 KG of Norpseudoephedrine;

At least 2 KG but less than 6 KG of Phenylacetic Acid;

At least 1 KG but less than 3 KG of Piperidine;

At least 32 KG but less than 96 KG of Piperonal;

At least 160 G but less than 480 G of Propionic Anhydride;

At least 32 KG but less than 96 KG of Safrole;

At least 40 KG but less than 120 KG of 3,4-Methylenedioxyphenyl-2-propanone;

List II Chemicals

At least 3.3 KG but less than 11 KG of Acetic Anhydride;

At least 352.5 KG but less than 1175 KG of Acetone;

At least 6 KG but less than 20 KG of Benzyl Chloride;

At least 332.5 KG but less than 1075 KG of Ethyl Ether;

At least 360 KG but less than 1200 KG of Methyl Ethyl Ketone;

At least 3 KG but less than 10 KG of Potassium Permanganate;

At least 390 KG but less than 1300 KG of Toluene.

(4) List I Chemicals .............................................................................................................................................................................. Level 24

At least 62.3 G but less than 89 G of Benzaldehyde;

At least 1.4 KG but less than 2 KG of Benzyl Cyanide;

At least 14 G but less than 20 G of Ergonovine;

At least 28 G but less than 40 G of Ergotamine;

At least 1.4 KG but less than 2 KG of Ethylamine;

At least 154 G but less than 220 G of Hydriodic Acid;

At least 22.4 KG but less than 32 KG of Isosafrole;

At least 14 G but less than 20 G of Methylamine;

At least 35 KG but less than 50 KG of N-Methylephedrine;

At least 35 KG but less than 50 KG of N-Methylpseudoephedrine;

At least 43.8 G but less than 62.5 of Nitroethane;

At least 700 G but less than 1 KG of Norpseudoephedrine;

At least 1.4 KG but less than 2 KG of Phenylacetic Acid;

At least 700 G but less than 1 KG of Piperidine;

At least 22.4 KG but less than 32 KG of Piperonal;

At least 112 G but less than 160 G of Propionic Anhydride;

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30517

(d)(2) CHEMICAL QUANTITY TABLE*—Continued

(All Other Precursor Chemicals)

Listed chemicals and quantity

Base

offense

level

At least 22.4 KG but less than 32 KG of Safrole;

At least 28 KG but less than 40 KG of 3, 4-Methylenedioxyphenyl-2-propanone;

List II Chemicals

At least 1.1 KG but less than 3.3 KG of Acetic Anhydride;

At least 117.5 KG but less than 352.5 KG of Acetone;

At least 2 KG but less than 6 KG of Benzyl Chloride;

At least 107.5 but less than 322.5 KG of Ethyl Ether;

At least 120 KG but less than 360 KG of Methyl Ethyl Ketone;

At least 1 KG but less than 3 KG of Potassium Permanganate;

At least 130 KG but less than 390 KG of Toluene.

(5) List I Chemicals .............................................................................................................................................................................. Level 22

At least 35.6 G but less than 62.3 of Benzaldehyde;

At least 800 G but less than 1.4 KG of Benzyl Cyanide;

At least 8 G but less than 14 G of Ergonovine;

At least 16 G but less than 28 G of Ergotamine;

At least 800 G but less than 1.4 KG of Ethylamine;

At least 88 G but less than 154 G of Hydriodic Acid;

At least 12.8 KG but less than 22.4 KG of Isosafrole;

At least 8 G but less than 14 G of Methylamine;

At least 20 KG but less than 35 KG of N-Methylephedrine;

At least 20 KG but less than 35 KG of N-Methylpseudoephedrine;

At least 25 G but less than 43.8 G of Nitroethane;

At least 400 G but less than 700 G of Norpseudoephedrine;

At least 800 G but less than 1.4 KG of Phenylacetic Acid;

At least 400 G but less than 700 G of Piperidine;

At least 12.8 KG but less than 22.4 KG of Piperonal;

At least 64 G but less than 112 G of Propionic Anhydride;

At least 12.8 KG but less than 22.4 KG of Safrole;

At least 16 KG but less than 28KG of 3,4-Methylenedioxyphenyl-2-propanone;

List II Chemicals

At least 726 G but less than 1.1 KG of Acetic Anhydride;

At least 82.25 KG but less than 117.5 KG of Acetone;

At least 1.4 KG but less than 2 KG of Benzyl Chloride;

At least 75.25 KG but less than 107.5 KG of Ethyl Ether;

At least 84 KG but less than 120 KG of Methyl Ethyl Ketone;

At least 700 G but less than 1 KG of Potassium Permanganate;

At least 91 KG but less than 130 KG of Toluene.

(6) List I Chemicals .............................................................................................................................................................................. Level 20

At least 8.9 G but less than 35.6 G of Benzaldehyde;

At least 200 G but less than 800 G of Benzyl Cyanide;

At least 2 G but less than 8 G of Ergonovine;

At least 4 G but less than 16 G of Ergotamine;

At least 200 G but less than 800 G of Ethylamine;

At least 22 G but less than 88 G of Hydriodic Acid;

At least 3.2 KG but less than 12.8 KG of Isosafrole;

At least 2 G but less than 8 G of Methylamine;

At least 5 KG but less than 20 KG of N-Methylephedrine;

At least 5 KG but less than 20 KG of N-Methylpseudoephedrine;

At least 6.3 G but less than 25 G of Nitroethane;

At least 100 G but less than 400 of Norpseudoephedrine;

At least 200 G but less than 800 G of Phenylacetic Acid;

At least 100 G but less than 400 G of Piperidine;

At least 3.2 KG but less than 12.8 KG of Piperonal;

At least 16 G but less than 64 G of Propionic Anhydride;

At least 3.2 KG but less than 12.8 KG of Safrole;

At least 4 KG but less than 16 KG of 3,4-Methylenedioxyphenyl-2-propanone;

List II Chemicals

At least 440 G but less than 726 G of Acetic Anhydride;

At least 47 KG but less than 82.25 KG of Acetone;

30518 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

(d)(2) CHEMICAL QUANTITY TABLE*—Continued

[All Other Precursor Chemicals]

Listed chemicals and quantity

Base

offense

level

At least 800 G but less than 1.4 KG of Benzyl Chloride;

At least 43 KG but less than 75.25 KG of Ethyl Ether;

At least 48 KG but less than 84 KG of Methyl Ethyl Ketone;

At least 400 G but less than 700 g of Potassium Permanganate;

(7) List I Chemicals .............................................................................................................................................................................. Level 18

At least 7.1 G but less than 8.9 G of Benzaldehyde;

At least 160 G but less than 200 G of Benzyl Cyanide;

At least 1.6 G but less than 2 G of Ergonovine;

At least 3.2 G but less than 4 G of Ergotamine;

At least 160 G but less than 200 G of Ethylamine;

At least 17.6 G but less than 22 G of Hydriodic Acid;

At least 2.56 KG but less than 3.2 KG of Isosafrole;

At least 1.6 G but less than 2 G of Methylamine;

At least 4 KG but less than 5 KG of N-Methylephedrine;

At least 4 KG but less than 5 KG of N-Methylpseudoephedrine;

At least 5 G but less than 6.3 G of Nitroethane;

At least 80 G but less than 100 G of Norpseudoephedrine;

At least 160 G but less than 200 G of Phenylacetic Acid;

At least 80 G but less than 100 G of Piperidine;

At least 2.56 KG but less than 3.2 KG of Piperonal;

At least 12.8 G but less than 16G of Propionic Anhydride;

At least 2.56 KG but less than 3.2 KG of Safrole;

At least 3.2 KG but less than 4 KG of 3,4-Methylenedioxyphenyl-2-propanone;

List II Chemicals

At least 110 G but less than 440 G of Acetic Anhydride;

At least 11.75 KG but less than 47 KG of Acetone;

At least 200 G but less than 800 G of Benzyl Chloride;

At least 10.75 KG but less than 43 KG of Ethyl Ether;

At least 12 KG but less than 48 KG of Methyl Ethyl Ketone;

At least 100 G but less than 400 G of Potassium Permanganate;

At least 13 KG but less than 52 KG of Toluene.

(8) List I Chemicals .............................................................................................................................................................................. Level 16

3.6 KG or more of Anthranilic Acid;

At least 5.3 G but less than 7.1 G of Benzaldehyde;

At least 120 G but less than 160 G of Benzyl Cyanide;

At least 1.2 G but less than 1.6 G of Ergonovine;

At least 2.4 G but less than 3.2 G of Ergotamine;

At least 120 G but less than 160 G of Ethylamine;

At least 13.2 G but less than 17.6 G of Hydriodic Acid;

At least 1.92 KG but less than 2.56 KG of Isosafrole;

At least 1.2 G but less than 1.6 G of Methylamine;

4.8 KG or more of N-Acetylanthranilic Acid;

At least 3 KG but less than 4 KG of N-Methylephedrine;

At least 3 KG but less than 4 KG of N-Methylpseudoephedrine;

At least 3.8 G but less than 5 G of Nitroethane;

At least 60 G but less than 80 G of Norpseudoephedrine;

At least 120 G but less than 160 G of Phenylacetic Acid;

At least 60 G but less than 80 G of Piperidine;

At least 1.92 KG but less than 2.56 KG of Piperonal;

At least 9.6 G but less than 12.8 G of Propionic Anhydride;

At least 1.92 KG but less than 2.56 KG of Safrole;

At least 2.4 KG but less than 3.2 KG of 3, 4-MethylenedioxyphenyL-2-propanone;

List II Chemicals

At least 88 G but less than 110 G of Acetic Anhydride;

At least 9.4 KG but less than 11.75 KG of Acetone;

At least 160 G but less than 200 G of Benzyl Chloride;

At least 8.6 KG but less than 10.75 KG of Ethyl Ether;

At least 9.6 KG but less than 12 KG of Methyl Ethyl Ketone;

At least 80 G but less than 100 G of Potassium Permanganate;

At least 10.4 KG but less than 13 KG of Toluene.

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30519

(d)(2) CHEMICAL QUANTITY TABLE*—Continued

[All Other Precursor Chemicals]

Listed chemicals and quantity

Base

offense

level

(9) List I Chemicals .............................................................................................................................................................................. Level 14

At least 2.7 KG but less than 3.6 KG of Anthranilic Acid;

At least 3.6 G but less than 5.3 G of Benzaldehyde;

At least 80 G but less than 120 G of Benzyl Cyanide;

At least 800 MG but less than 1.2 G of Ergonovine;

At least 1.6 G but less than 2.4 G of Ergotamine;

At least 80 G but less than 120 G of Ethylamine;

At least 8.8 G but less than 13.2 G of Hydriodic Acid;

At least 1.44 KG but less than 1.92 KG of Isosafrole;

At least 800 MG but less than 1.2 G of Methylamine;

At least 3.6 KG but less than 4.8 KG of N-Acetylanthraniclic Acid;

At least 2.25 KG but less than 3 KG of N-Methylephedrine;

At least 2.25 KG but less than 3 KG of N-Methylpseudoephedrine;

At least 2.5 G but less than 3.8 G of Nitroethane;

At least 40 G but less than 60 G of Norpseudoephedrine;

At least 80 G but less than 120 G of Phenylacetic Acid;

At least 40 G but less than 60 G of Piperidine;

At least 1.44 KG but less than 1.92 KG of Piperonal;

At least 7.2 G but less than 9.6 G of Propionic Anhydride;

At least 1.44 KG but less than 1.92 KG of Safrole;

At least 1.8 KG but less than 2.4 KG of 3, 4-Methylenedioxyphenyl-2-propanone;

List II Chemicals

At least 66 G but less than 88 G of Acetic Anhydride;

At least 7.05 KG but less than 9.4 KG of Acetone;

At least 120 G but less than 160 G of Benzyl Chloride;

At least 6.45 KG but less than 8.6 KG of Ethyl Ether;

At least 7.2 KG but less than 9.6 KG of Methyl Ethyl Ketone;

At least 60 G but less than 80 G of Potassium Permanganate;

At least 7.8 KG but less than 10.4 KG of Toluene.

(10) List I Chemicals ............................................................................................................................................................................ Level 12

Less than 2.7 KG of Anthranilic Acid;

Less than 3.6 G of Benzaldehyde;

Less than 80 G of Benzyl Cyanide;

Less than 800 MG of Ergonovine;

Less than 1.6 G of Ergotamine;

Less than 80 G of Ethylamine;

Less than 8.8 G of Hydriodic Acid;

Less than 1.44 KG of Isosafrole;

Less than 800 MG of Methylamine;

Less than 3.6 KG of N-Acetylanthranilic Acid;

Less than 2.25 KG of N-Methylephedrine;

Less than 2.25 KG of N-Methylpseudoephedrine;

Less than 2.5 G of Nitroethane;

Less than 40 G of Norpseudoephedrine;

Less than 80 G of Phenylacetic Acid;

Less than 40 G of Piperidine;

Less than 1.44 KG of Piperonal;

Less than 7.2 G of Propionic Anhydride;

Less than 1.44 KG of Safrole;

Less than 1.8 KG of 3,4-Methylenedioxyphenyl-2-propanone;

List II Chemicals

Less than 66 G of Acetic Anhydride;

Less than 7.05 KG of Acetone;

Less than 120 G of Benzyl Chloride;

Less than 6.45 KG of Ethyl Ether;

Less than 7.2 KG of Methyl Ethyl Ketone;

Less than 60 G of Potassium Permanganate;

Less than 7.8 KG of Toluene.

* Notes:

(A) Except as provided in Note (B), to calculate the base offense level in an offense that involves two or more chemicals, use the quantity of

the single chemical that results in the greatest offense level, regardless of whether the chemicals are set forth in different tables or in different

categories ( i.e., list I or list II) under subsection (d) of this guideline.

30520 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

(B) To calculate the base offense level in an offense that involves two or more chemicals each of which is set forth in the Ephedrine,

Pseudoephedrine, and Phenylpropanolamine Quantity Table, (i) aggregate the quantities of all such chemicals, and (ii) determine the base offense level corresponding to the aggregate quantity.

(C) In a case involving ephedrine, pseudoephedrine, or phenylpropanolamine tablets, use the weight of the ephedrine, pseudoephedrine, or

phenylpropanolamine contained in the tablets, not the weight of the entire tablets, in calculating the base offense level.’’.

The commentary to § 2D1.11

captioned ‘‘Application Notes’’ is

amended by striking Note 4 in its

entirety and inserting the following:

‘‘4. Cases Involving Multiple

Chemicals.—

(A) Determining the Base Offense

Level for Two or More Chemicals.—

Except as provided in subdivision (B), if

the offense involves two or more

chemicals, use the quantity of the single

chemical that results in the greatest

offense level, regardless of whether the

chemicals are set forth in different

tables or in different categories. (i.e., list

I or list II) under subsection (d) of this

guideline.

Example: The defendant was in possession

of five kilograms of ephedrine and 300 grams

of hydriodic acid. Ephedrine and hydriodic

acid typically are used together in the same

manufacturing process to manufacture

methamphetamine. The base offense level for

each chemical is calculated separately and

the chemical with the higher base offense

level is used. Five kilograms of ephedrine

result in a base offense level of level 38; 300

grams of hydriodic acid result in a base

offense level of level 26. In this case, the base

offense level would be level 38.

(B) Determining the Base Offense

Level for Offenses involving Ephedrine,

Pseudoephedrine, or

Phenylpropanolamine.—If the offense

involves two or more chemicals each of

which is set forth in the Ephedrine,

Pseudoephedrine, and

Phenylpropanolamine Quantity Table,

(i) aggregate the quantities of all such

chemicals, and (ii) determine the base

offense level corresponding to the

aggregate quantity.

Example: The defendant was in possession

of 80 grams of ephedrine and 50 grams of

phenylpropanolamine, an aggregate quantity

of 130 grams of such chemicals. The base

offense level corresponding to that aggregate

quantity is level 32.

(C) Upward Departure.—In a case

involving two or more chemicals used

to manufacture different controlled

substances, or to manufacture one

controlled substance by different

manufacturing processes, an upward

departure may be warranted if the

offense level does not adequately

address the seriousness of the offense.’’.

The Commentary to § 2D1.11

captioned ‘‘Application Notes’’ is

amended by striking Notes 5 and 6 in

their entirety; and by redesignating

Notes 7 and 8 as Notes 5 and 6,

respectively.

The Commentary to § 2D1.11

captioned ‘‘Background’’ is amended in

the first sentence by inserting

‘‘(including ephedrine,

pseudoephedrine, and

phenylpropanolamine)’’ after ‘‘list I

chemicals’’.

The Commentary to 2D1.1 captioned

‘‘Application Notes’’ is amended in

Note 10 in the ‘‘Drug Equivalency

Tables’’ by inserting after the

subdivision captioned ‘‘Schedule V

Substances * * *’’ the following new

subdivision:

‘‘List I Chemicals (relating to the

manufacture of amphetamine or

methamphetamine)* * *

1 gm of Ephedrine = 10 kg of marihuana

1 gm of Phenylpropanolamine = 10 kg

of marihuana

1 gm of Pseudoephedrine = 10 kg of

marihuana

* * * Provided, that in a case

involving ephedrine, pseudoephedrine,

or phenylpropanolamine tablets, use the

weight of the ephedrine,

pseudoephedrine, or

phenylpropanolamine contained in the

tablets, not the weight of the entire

tablets, in calculating the base offense

level.’’.

Reason for Amendment: This

amendment is in response to the threepart directive in section 3651 of the

Methamphetamine Anti-Proliferation

Act of 2000, Pub. L. 106–310 (the

‘‘Act’’), regarding enhanced punishment

for trafficking in List I chemicals. That

section requires the Commission to

promulgate an amendment

implementing the directive under

emergency amendment authority.

First, this amendment provides a new

chemical quantity table specifically for

ephedrine, pseudoephedrine, and

phenylpropanolamine (PPA). The table

ties the base offense levels for these

chemicals to the base offense levels for

methamphetamine (actual) set forth in

§ 2D1.1, assuming a 50 percent actual

yield of the controlled substance from

the chemicals. (Methamphetamine

(actual) is used rather than

methamphetamine mixture because

ephedrine, pseudoephedrine, and PPA

produce methamphetamine (actual)).

This yield is based on information

provided by the Drug Enforcement

Administration (DEA) that the typical

yield of these substances for clandestine

laboratories is 50 to 75 percent.

This new chemical quantity table has

a maximum base offense level of level

38 (as opposed to a maximum base

offense level of level 30 for all other

precursor chemicals). Providing a

maximum base offense level of the level

38 complies with the directive to

establish penalties for these precursors

that ‘‘correspond to the quantity of

controlled substance that could have

reasonably been manufactured using the

quantity of ephedrine,

phenylpropanolamine, or

pseudoephedrine possessed or

distributed.’’ Additionally, this

adjustment will have an impact on the

relationship between §§ 2D1.1 and

2D1.11 by eliminating the six-level

distinction that currently exists between

offenses that involve intent to

manufacture methamphetamine and

offenses that involve an attempt to

manufacture methamphetamine, at least

for offenses involving ephedrine,

pseudoephedrine, and PPA.

This amendment eliminates the

Ephedrine Equivalency Table in

§ 2D1.11 and, in its place, provides an

instruction for the court to determine

the base offense level in cases involving

multiple precursors (other than

ephedrine, pseudoephedrine, or PPA)

by using the quantity of the single

chemical resulting in the greatest

offense level. An upward departure is

provided for cases in which the offense

level does not adequately address the

seriousness of the offense.

However, this amendment provides

an exception to the rule for offenses that

involve a combination of ephedrine,

pseudoephedrine, or PPA because these

chemicals often are used in the same

manufacturing process. In a case that

involves two or more of these

chemicals, the base offense level will be

determined using the total quantity of

these chemicals involved. The purpose

of this exception is twofold: (1) Any of

the three primary precursors in the same

table can be combined without

difficulty; and (2) studies conducted by

the DEA indicate that because the

manufacturing process for amphetamine

and methamphetamine is identical,

there are cases in which the different

precursors are included in the same

batch of drugs. If the chemical is PPA,

amphetamine results; and if the

chemical is ephedrine,

methamphetamine results.

Second, the amendment adds to the

Drug Equivalency Tables in § 2D1.1 a

conversion table for these precursor

chemicals, providing for a 50 percent

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30521

conversion ratio. This is based on data

from the DEA that the actual yield from

ephedrine, pseudoephedrine, or PPA

typically is in the range of 50 to 75

percent. The purpose of this part of the

amendment is to achieve the same

punishment level (as is achieved by the

first part of this amendment) for an

offense involving any of these precursor

chemicals when such offense involved

the manufacturer of methamphetamine

and, as a result, is sentenced under

§ 2D1.1 pursuant to the cross reference

in § a2D1.11.

Third, this amendment increases the

base offense level for Benzaldehyde,

Hydriodic Acid, Methylamine,

Nitroethane, and Norpseudoesphedrine

by re-calibrating these levels to the

appropriate quantity of

methamphetamine (actual) that could be

produced assuming a 50 percent yield of

chemical to drug and retaining a cap at

level 30. Previously, these chemicals

had been linked to methamphetamine

(mixture) penalty levels. Based on a

study conducted by the DEA, ephedrine

and pseudoephedrine are the primary

precursors used to make

methamphetamine in the United States.

Phenylproponolamine is the primary

precursor used to make amphetamine.

Unlike the five additional List I

chemicals, the chemical structures of

ephedrine, pseudoephedrine, and PPA

are so similar to the resulting drug (i.e.,

methamphetamine or amphetamine)

that the manufacture of

methamphetamine or amphetamine

from ephedrine, pseudoephedrine, or

PPA is a very simple one-step synthesis

which anyone can perform using a

variety of chemical reagents. The

manufacture of methamphetamine or

amphetamine from the five additional

List I chemicals is a more complex

process which requires a heightened

level of expertise.

4. Amendment: The Commentary to

§ 2G1.1 captioned ‘‘Statutory

Provisions’’ is amended by inserting

‘‘1591,’’ before ‘‘2421’’.

The Commentary to § 2G1.1 captioned

‘‘Application Notes’’ is amended in

Note 2 in the forth sentence by adding

‘‘(B)’’ after ‘‘purposes of subsection

(b)(1)’’.

The Commentary to § 2G1.1 captioned

‘‘Application Notes’’ is amended by

adding at the end the following:

‘‘12. Upward Departure Provisions.—

An upward departure may be warranted

in either of the following circumstances:

(A) The defendant was convicted

under 18 U.S.C. 1591 and the offense

involved a victim who had not attained

the age of 14 years.

(B) The offense involved more than 10

victims.’’.

The Commentary to § 2G1.1 captioned

‘‘Background’’ is amended by adding at

the end the following paragraph:

‘‘This guideline also covers offenses

under section 1591 of title 18, United

States Code. These offenses involve

recruiting or transporting a person in

interstate commerce knowing either that

(1) force, fraud, or coercion will be used

to cause the person to engage in a

commercial sex act; or (2) the person (A)

had not attained the age of 18 years; and

(B) will be caused to engage in a

commercial sex act.’’.

The Commentary to § 2G2.1 captioned

‘‘Statutory Provisions’’ is amended by

inserting ‘‘1591,’’ before ‘‘2251(a)’’.

The Commentary to § 2G2.1 captioned

‘‘Application Notes’’ is amended by

adding at the end the following:

‘‘6. Upward Departure Provisions.—

An upward departure may be warranted

in either of the following circumstances:

(A) The defendant was convicted

under 18 U.S.C. 1591 and the offense

involved a victim who had not attained

the age of 14 years.

(B) The offense involved more than 10

victims.’’.

Section 2H4.1 is amended by striking

subsection (a) in its entirety and

inserting the following:

‘‘(a) Base Offense Level (Apply the

greater):

(1) 22; or

(2) 18, if the defendant was convicted

of an offense under 18 U.S.C. 1592.’’.

Section 2H4.1(b) is amended by

striking subdivision (2) in its entirety

and inserting the following:

‘‘(2) If (A) a dangerous weapon was

used, increase by 4 levels; or (B) a

dangerous weapon was brandished, or

the use of a dangerous weapon was

threatened, increase by 2 levels.’’.

The Commentary to § 2H4.1 captioned

‘‘Statutory Provisions’’ is amended by

striking ‘‘1588’’ and inserting ‘‘1590,

1592’’.

The Commentary to § 2H4.1 captioned

‘‘Application Notes’’ is amended in

Note 1 in the second paragraph by

inserting ‘‘other’’ after ‘‘that a firearm

or’’; and by adding after ‘‘otherwise

used.’’ the following:

‘‘ ‘The use of a dangerous weapon was

threatened’ means that the use of a

dangerous weapon was threatened

regardless of whether a dangerous

weapon was present.’’.

Chapter Two, Part H, is amended in

Subpart 4 by adding at the end the

following:

‘‘§ 2H4.2. Willful Violations of the

Migrant and Seasonal Agricultural

Worker Protection Act

(a) Base Offense Level: 6

(b) Specific Offense Characteristics

(1) If the offense involved (i) serious

bodily injury, increase by 4 levels; or (ii)

bodily injury, increase by 2 levels.

(2) If the defendant committed any

part of the instant offense subsequent to

sustaining a civil or administrative

adjudication for similar misconduct,

increase by 2 levels.

Commentary

Statutory Provision: 29 U.S.C. 1851.

Application Notes

1. Definitions.—For purposes of

subsection (b)(1), ‘bodily injury’ and

‘serious bodily injury’ have the meaning

given those terms in Application Note 1

of the Commentary to § 1B1.1

(Application Instructions).

2. Application of Subsection (b)(2).—

Section 1851 of title 29, United States

Code, covers a wide range of conduct.

Accordingly, the enhancement in

subsection (b)(2) applies only if the

instant offense is similar to previous

misconduct that resulted in a civil or

administrative adjudication under the

provisions of the Migrant and Seasonal

Agricultural Worker Protection Act (29

U.S.C. § 1801 et. seq.).’’.

Section 5E1.1(a)(1) is amended by

inserting ‘‘§ 1593,’’ after ‘‘18 U.S.C.’’.

The Commentary to § 5E1.1 captioned

‘‘Background’’ is amended in the first

paragraph by inserting ‘‘§ 1593,’’ after

‘‘18 U.S.C.§§’’.

Appendix A (Statutory Index) is

amended in the line referenced to ‘‘18

U.S.C. § 241’’ by inserting ‘‘, 2H4.1’’

after ‘‘2H2.1’’.

Appendix A (Statutory Index) is

amended by inserting after the line

referenced to ‘‘18 U.S.C. 1588’’ the

following new lines:

18 U.S.C. 1590 2H4.1

18 U.S.C. 1591 2G1.1, 2G2.1

18 U.S.C. 1592 2H4.1’’.

Appendix A (Statutory Index) is

amended by inserting after the line

referenced to ‘‘29 U.S.C. 1141’’ the

following:

‘‘29 U.S.C. 1851 2H4.2’’.

Reason for Amendment: In

promulgating this amendment, the

Commission is cognizant of the

extraordinarily serious nature of

offenses that involve trafficking in

human lives. This amendment is in

response to the directive found at

section 112(b) of the Victims of

trafficking and Violence Protection Act

of 2000 (the ‘‘Act’’). Pub. L. 106–386.

The Commission expects to consider

further revisions and additions to the

specific offense characteristics and

punishment levels for these offenses,

such as the possibility of providing an

alternative base offense level in § 2G1.1

30522 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

(Promoting Prostitution or Prohibited

Sexual Conduct) for convictions under

18 U.S.C. 1591 involving victims under

the age of 14 years.

The directive confers emergency

authority on the Commission to amend

the federal sentencing guidelines to

reflect changes to 18 U.S.C. 1581(a)

(Peonage), 1583 (Enticement into

Slavery), and 1584 (Sale into

Involuntary Servitude). The

Commission also is directed to consider

how to address four new statutes: 18

U.S.C. 1589 (Forced Labor); 1590

(Trafficking with Respect to Peonage,

Involuntary Servitude or Forced Labor);

1591 (Sex Trafficking of Children by

Force, Fraud or Coercion); and 1592

(Unlawful Conduct with Respect to

Documents in Furtherance of Peonage,

Involuntary Servitude or Forced Labor).

Specifically, the Commission is

directed to ‘‘review and, if appropriate,

amend the sentencing guidelines

applicable to * * * the trafficking of

persons including * * * peonage,

involuntary servitude, slave trade

offenses, and possession, transfer or sale

of false immigration documents in

furtherance of trafficking, and the Fair

Labor Standards Act and the Migrant

and Seasonal Agricultural Worker

Protection Act.’’

The Commission further is directed to

‘‘take all appropriate measures to ensure

that these sentencing guidelines . . . are

sufficiently stringent to deter and

adequately reflect the heinous nature of

these offenses.’’ The Commission also is

directed to ‘‘consider providing

sentencing enhancements’’ in cases

which involve: (1) A large number of

victims; (2) a pattern of continued and

flagrant violations; (3) the use or

threatened use of a dangerous weapon;

or (4) the death or bodily injury of any

person.

To address this multi-faceted

directive, this amendment makes

changes to several existing guidelines

and creates a new guideline for criminal

violations of the Migrant and Seasonal

Agricultural Worker Protection Act.

Although the directive instructs the

Commission to amend the guidelines

applicable to the Fair Labor Standards

Act (29 U.S.C. 201 et. seq.), a criminal

violation of the Fair Labor Standards

Act is only a Class B misdemeanor. See

29 U.S.C. 216. Thus, the guidelines are

not applicable to those offenses.

The amendment references the new

offense at 18 U.S.C. 1591 to § 2G1.1.

Section 1591 punishes a defendant who

participates in the transporting or

harboring of a person, or who benefits

from participating in such a venture,

with the knowledge that force, fraud, or

coercion will be used to cause that

person to engage in a commercial sex

act or with knowledge that the person

is not 18 years old and will be forced

to engage in a commercial sex act.

Despite the statute’s inclusion in a

chapter of title 18 devoted mainly to

peonage offenses, section 1591 offenses

are more analogous to the offenses

referenced to the prostitution guideline.

Section 1591 cases alternatively have

been referred in Appendix A to § 2G2.1

(Sexually Exploiting a Minor by

Production of Sexually Explicit Visual

or Printed Material; Custodian

Permitting Minor to Engage in Sexually

Explicit Conduct; Advertisement for

Minors to Engage in Production). This

has been done in anticipation that some

portion of section 1591 cases will

involve children being forced or coerced

to engage in commercial sex acts for the

purpose of producing pornography.

Such offenses, as recognized by the

higher base offense level at § 2G2.1, are

more serious because they both involve

specific harm to an individual victim

and further an additional criminal

purpose, namely, commercial

pornography.

The amendment maintains the view

that § 2H4.1 (Peonage, Involuntary

Servitude, and Slave Trade) continues

to be an appropriate tool for

determining sentences for violations of

18 U.S.C. 1581, 1583, and 1584. Section

2H4.1 also is designed to cover offenses

under three new statutes, 18 U.S.C.

1589, 1590, and 1592. Section 1589

punishes defendants who provide or

obtain the labor or services of another

by the use of threats of serious harm or

physical restraint against a person, or by

a scheme or plan intended to make the

person believe that if he or she did not

perform the labor or services, he or she

would suffer physical restraint or

serious harm. This statute also applies

to defendants who provide or obtain

labor or services of another by abusing

or threatening abuse of the law or the

legal process. See 18 U.S.C. 1589.

Section 1590 punishes defendants

who harbor, transport, or are otherwise

involved in obtaining, a person for labor

or services. Section 1592 punishes a

defendant who knowingly possesses,

destroys, or removes an actual passport,

other immigration document, or

government identification document of

another person in the course of a

violation of § 1581 (peonage), § 1583

(enticement into slavery), § 1584 (sale

into involuntary servitude), § 1589

(forced labor), § 1590 (trafficking with

respect to these offenses), § 1591 (sex

trafficking of children by force, fraud or

coercion), § 1594(a) (attempts to violate

these offenses). Section 1592 also

punishes a defendant who, with intent

to violate § 1581, § 1583, § 1584, § 1589,

§ 1590, or § 1591, knowingly possesses,

destroys, or removes an actual passport,

other immigration document, or

government identification document of

another person. These statutes prohibit

the types of behaviors that have been

traditionally sentenced under § 2H4.1.

The amendment provides an

alternative, less punitive base offense

level of level 18 for those who violate

18 U.S.C. 1592, an offense which limits

participation in peonage cases to the

destruction or wrongful confiscation of

a passport or other immigration

document. This alternative, lower base

level reflects the lower statutory

maximum sentence for § 1592 offenses,

(i.e., 5 years).

Section 2H4.1(b)(2) has been

expanded to provide a 4-level increase

if a dangerous weapon was used and a

2-level increase if a dangerous weapon

was brandished or its use was

threatened. Currently, only actual use of

a dangerous weapon is covered. This

change reflects the directive to consider

an enhancement for the ‘‘use or

threatened use of a dangerous weapon.’’

The commentary to § 2H4.1 is amended

to clarify that the threatened use of a

dangerous weapon applies regardless of

whether a dangerous weapon was

actually present.

The amendment also creates a new

guideline, § 2H4.2 (Willful Violations of

the Migrant and Seasonal Agricultural

Worker Protection Act), in response to

the directive to amend the guidelines

applicable to such offenses. These

offenses, which have a statutory

maximum sentence of one year

imprisonment for first offenses and

three years’ imprisonment for

subsequent offenses, currently are not

referred to any specific guidelines. The

amendment provides a base offense

level of level 6 in recognition of the low

statutory maximum sentences set for

these cases by Congress. Further, these

offenses typically involve violations of

regulatory provisions. Setting the base

offense level at level 6 provides

consistency with guidelines for other

regulatory offenses. See, e.g., §§ 2N2.1

(Violations of Statutes and Regulations

Dealing With Any Food, Drug,

Biological Product, Device, Cosmetic, or

Agricultural Product) and 2N3.1

(Odometer Laws and Regulations).

Subsections (b)(1), an enhancement for

bodily injury, and (b)(2), an

enhancement applicable to defendants

who commit the instant offense after

previously sustaining a civil penalty for

similar misconduct, have been

established to respond to the directive

that the Commission consider

sentencing enhancement for these

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30523

offense characteristics. This section

addresses the Department of Justice’s

and the Department of Labor’s concern

regarding prior administrative and civil

adjudications.

This amendment also addresses that

portion of section 112 of the Act that

amends chapter 77 of title 18, United

States Code, to provide mandatory

restitution for peonage and involuntary

servitude offenses. The amendment

amends § 5E1.1 (Restitution) to include

a reference to 18 U.S.C. 1593 in the

guideline provision regarding

mandatory restitution.

By enactment of various sentencing

enhancements and encouraged upward

departures for areas of concern

identified by Congress, the Commission

has provided for more severe sentences

for perpetrators of human trafficking

offenses in keeping with the conclusion

that the offenses covered by this

amendment are both heinous in nature

and being committed with rapidly

increasing frequency.

(B) Amendments to the Sentencing

Guidelines, Policy Statements, and

Official Commentary, Effective

November 1, 2001.

1. Amendment: The Commentary to

§ 1B1.2 captioned ‘‘Application Notes’’

is amended in Note 1 in the third

sentence of the first paragraph by

inserting ‘‘(written or made orally on the

record)’’ after ‘‘agreement’’.

The Commentary to § 1B1.2 captioned

‘‘Application Notes’’ is amended in

Note 1 by striking the first two

sentences of the third paragraph and

inserting:

‘‘As set forth in the first paragraph of

this note, an exception to this general

rule is that if a plea agreement (written

or made orally on the record) contains

a stipulation that establishes a more

serious offense than the offense of

conviction, the guideline section

applicable to the stipulated offense is to

be used. A factual statement or a

stipulation contained in a plea

agreement (written or made orally on

the record) is a stipulation for purposes

of subsection (a) only if both the

defendant and the government

explicitly agree that the factual

statement or stipulation is a stipulation

for such purposes. However, a factual

statement or stipulation made after the

plea agreement has been entered, or

after any modification to the plea

agreement has been made, is not a

stipulation for purposes of subsection

(a).’’.

The Commentary to § 1B1.2 captioned

‘‘Application Notes’’ is amended in

Note 1 in the third paragraph by striking

‘‘may be imposed’’ and inserting ‘‘shall

be imposed’’.

The Commentary to § 1B1.2 captioned

‘‘Application Notes’’ is amended in

Note 1 in the second sentence of the

fourth paragraph by striking ‘‘cases

where’’ and inserting ‘‘a case in which’’.

Reason for Amendment: This

amendment addresses the circuit

conflict regarding whether admissions

made by a defendant during a guilty

plea hearing, without more, can be

considered stipulations for purposes of

subsection (a) of § 1B1.2 (Application

Instructions). Compare, e.g., United

States v. Nathan, 188 F.3d 190, 201 (3d

Cir. 1999) (statement made by

defendants during the factual-basis

hearing for a plea agreement do not

constitute stipulations for the purpose

of this enhancement; a statement is a

stipulation only if it is part of a

defendant’s written plea agreement or if

both the government and the defendant

explicitly agree at a factual-basis hearing

that the facts being placed on the record

are stipulations that might subject the

defendant to § 1B1.2(a)); United States

v. Saaverda, 148 F.3d 1311 (11th Cir.

1998) (same); United States v. McCall,

915 F.2d 811 (2d Cir. 1990) (same);

United States v. Gardner, 940 F.2d (10th

Cir. 1991) (requiring a ‘‘knowing

agreement by the defendant, as part of

a plea bargain, that facts supporting a

more serious offense occurred and could

be presented to the court’’), and United

States v. Rutter, 897 F.2d 1558, 1561

(10th Cir. 1990) (once the government

agrees to a plea bargain without

extracting an admission, facts admitted

by the defendant can be considered only

as relevant conduct in determining

appropriate guideline range, not as

stipulations under § 1B1.2(a)), with

United States v. Loos, 165 F.3d 504, 508

(7th Cir. 1998) (the objective behind

§ 1B1.2(a) is best answered by

interpreting ‘‘stipulations’’ to mean any

acknowledgment by the defendant that

the defendant committed the acts that

justify use of the more serious guideline,

not in the formal agreement); and

United States v. Domino, 62 F.3d 716

(5th Cir. 1995) (same).

This amendment represents a narrow

approach to the majority view that a

factual statement made by the defendant

during the plea colloquy must be made

as part of the plea agreement in order to

be considered a stipulation for purposes

of § 1B1.2(a). This approach lessens the

possibility that the plea agreement will

be modified during the course of the

plea proceeding without providing the

parties, especially the defendant, with

notice of the defendant’s potential

sentencing range.

2. Amendment: The Commentary to

§ 2A2.2 captioned ‘‘Application Notes’’

is amended by striking Notes 1 through

3 and inserting the following:

‘‘1. Definitions.—For purposes of

guideline:

‘Aggravated assault’ means a

felonious assault that involved (A) a

dangerous weapon with intent to cause

bodily injury (i.e., not merely to

frighten) with that weapon; (B) serious

bodily injury; or (C) an intent to commit

another felony.

‘Brandished,’ ‘bodily injury,’ ‘firearm;’

‘otherwise used,’ ‘permanent or life

threatening bodily injury,’ and ‘serious

bodily injury,’ have the meaning given

those terms in § 1B1.1 (Application

Instructions), Application Note 1.

‘Dangerous weapon’ has the meaning

given that term in § 1B.1, Application

Note 1, and includes any instrument

that is not ordinarily used as a weapon

(e.g., a car, a chair, or an ice pick) if

such an instrument is involved in the

offense with the intent to commit bodily

injury.

Application of Subsection (b)(2).—In

a case involving a dangerous weapon

with intent to cause bodily injury, the

court shall apply both the base offense

level and subsection (b)(2).

3. More than Minimal Planning.—For

purposes of subsection (b)(1), ‘more

than minimal planning’ means more

planning than is typical for commission

of the offense in a simple form. ‘More

than minimal planning’ also exists if

significant affirmative steps were taken

to conceal the offense, other than

conduct to which § 3C1.1 (Obstructing

or Impeding the Administration of

Justice) applies. For example, waiting to

commit the offense when no witnesses

were present would not alone constitute

more than minimal planning. By

contrast, luring the victim to a specific

location or wearing a ski mask to

prevent identification would constitute

more than minimal planning.’’.

The Commentary to § 2A2.2 captioned

‘‘Background’’ is amended by striking

the text of the background and inserting

the following:

‘‘This guideline covers felonious assaults

that are more serious than minor assaults

because of the presence of an aggravating

factor, i.e., serious bodily injury, the

involvement of a dangerous weapon with

intent to cause bodily injury, or the intent to

commit another felony. Such offenses

occasionally may involve planning or be

committed for hire. Consequently, the

structure follows § 2A2.1 (Assault with Intent

to Commit Murder, Attempted Murder). This

guideline also covers attempted

manslaughter and assault with intent to

commit manslaughter. Assault with intent to

commit murder is covered by § 2A2.1.

Assault with intent to commit rape is covered

by § 2A3.1 (Criminal Sexual Abuse; Attempt

to Commit Criminal Sexual Abuse.)

30524 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

An assault that involves the presence of a

dangerous weapon is aggravated in form

when the presence of the dangerous weapon

is coupled with the intent to cause bodily

injury. In such a case, the base offense level

and the weapon enhancement in subsection

(b)(2) take into account different aspects of

the offense, even if application of the base

offense level and the weapon enhancement is

based on the same conduct.’’.

Reason for Amendment: This

amendment responds to a circuit

conflict regarding whether the four-level

enhancement in subsection (b)(2)(B) of

§ 2A2.2 (Aggravated Assault) for use of

a dangerous weapon during an

aggravated assault is impermissible

double counting. Compare United

States v. Williams, 954 F.2d 204, 205–

08 (4th circ. 1992) (applying the

dangerous weapon enhancement under

§ 2A2.2(b)(2)(B) for defendant’s use of

his chair as a dangerous weapon did not

constitute impermissible double

counting even though that conduct

increased the defendant’s offense level

twice: first, by triggering the application

of the aggravated assault guideline, and

second, as the basis for the four-level

enhancement for use for a dangerous

weapon), with United States v. Hudson,

972 F.2d 504, 506–07 (2d Cir. 1992) (in

a case in which the use of an automobile

caused the crime to be classified as an

aggravated assault, the court may not

enhance the base offense level under

§ 2A2.2(b) for use of the same, noninherently dangerous weapon).

This amendment addresses the circuit

conflict by providing in the aggravated

assault guideline that (1) Both the base

offense level of level 15 and the weapon

use enhancement in subsection (b)(2)

shall apply to aggravated assaults that

involve a dangerous weapon with intent

to cause bodily harm; and (2) an

instrument, such as a car or chair, that

ordinarily is not used as a weapon may

qualify as a dangerous weapon for

purposes of the use of the aggravated

assault guideline and the application of

subsection (b)(2) when the defendant

involves it in the offense with the intent

to cause bodily harm.

3. Amendment: The Commentary to

§ 2A3.1 captioned ‘‘Application Notes’’

is amended by striking Note 5 and Note

7; and by redesignating Note 6 as Note

5.

Section 2A3.2(a) is amended by

striking subdivisions (1) and (2) and

inserting the following:

‘‘(1) 24, if the offense involved (A) a

violation of chapter 117 of title 18,

United States Code; and (B)(i) the

commission of a sexual act; or (ii) sexual

contact;

(2) 21, if the offense (A) involved a

violation of chapter 117 of title 18,

United States Code; but (B) did not

involve (i) the commission of a sexual

act; or (ii) sexual contact; or

(3) 18, otherwise.’’.

Section 2A3.2(b) is amended by

striking subdivision (4) and inserting

the following:

‘‘(4) If (A) subsection (a)(1) applies;

and (B) none of subsections (b)(1)

through (b)(3) applies, decrease by 6

levels.’’.

The Commentary to § 2A3.2 captioned

‘‘Application Notes’’ is amended in

Note 1 by striking ‘‘For purposes of this

guideline—’’ and inserting the

following: ‘‘Definitions.—For purposes

of this guideline:’’; and by inserting

before ‘‘ ‘Victim’ means’’ the following

new paragraphs:

‘‘ ‘Sexual act’ has the meaning given

that term in 18 U.S.C. 2246(2).

‘Sexual contact’ has the meaning

given that term in 18 U.S.C. 2246(3).’’.

The Commentary to § 2A3.2 captioned

‘‘Application Notes’’ is amended by

striking Note 2 and Note 8; by

redesignating Notes 3 through 7 as

Notes 2 through 6, respectively; and by

inserting after Note 6, as redesignated by

this amendment, the following:

‘‘7. Upward Departure

Consideration.—There may be cases in

which the offense level determined

under this guideline substantially

understates the seriousness of the

offense. In such cases, an upward

departure may be warranted. For

example, an upward departure may be

warranted if the defendant committed

the criminal sexual act in furtherance of

a commercial scheme such as

pandering, transporting persons for the

purpose of prostitution, or the

production of pornography.’’.

The Commentary to § 2A3.2 captioned

‘‘Application Notes’’ is amended in

Note 2, as redesignated by this

amendment, by inserting ‘‘Custody,

Care, and Supervisory Control

Enhancement.—’’ before ‘‘Subsection’’.

The Commentary to § 2A3.2 captioned

‘‘Application Notes’’ is amended in

Note 3, as redesignated by this

amendment, by inserting ‘‘Abuse of

Position of Trust.—’’ before ‘‘If the’’.

The Commentary to § 2A3.2 captioned

‘‘Application Notes’’ is amended in

Note 4, as redesignated by this

amendment, by inserting

‘‘Misrepresentation of Identity.—’’

before ‘‘The enhancement’’.

The Commentary to § 2A3.2 captioned

‘‘Application Notes’’ is amended in

Note 5, as redesignated by this

amendment, by inserting ‘‘Use of

Computer or Internet-Access Device.—’’

before ‘‘Subsection (b)(3) provides’’.

The Commentary to § 2A3.2 captioned

‘‘Applications Notes’’ is amended in

Note 6, as redesignated by this

amendment, by inserting ‘‘Cross

Reference.—’’ before ‘‘Subsection

(c)(1)’’.

The Commentary to § 2A3.3 captioned

‘‘Application Notes’’ is amended by

striking Note 4.

Section 2A3.4(b) is amended by

adding at the end the following:

‘‘(6) If the offense involved a violation

of chapter 117 of title 18, United States

Code, increase by 3 levels.’’.

The Commentary to § 2A3.4 captioned

‘‘Application Notes’’ is amended by

striking Note 8.

Section 3D1.2(d) is amended in the

second paragraph by inserting after

‘‘§§ 2E4.1, 2E5.1;’’ the following new

line: ‘‘§§ 2G2.2, 2G2.4;’’.

Chapter Four, Part B is amended by

adding at the end the following:

‘‘§ 4B1.5. Repeat and Dangerous Sex

Offender Against Minors

(a) In any case in which the

defendant’s instant offense of conviction

is a covered sex crime, § 4B1.1 (Career

Offender) does not apply, and the

defendant committed the instant offense

of conviction subsequent to sustaining

at least one sex offense conviction:

(1) The offense level shall be the

greater of:

(A) the offense level determined

under Chapters Two and Three; or

(B) the offense level from the table

below decreased by the number of levels

corresponding to any applicable

adjustment from § 3E1.1 (Acceptance of

Responsibility):

Offense statutory maximum Offense

level

(i) Life .............................................. 37

(ii) 25 years or more ....................... 34

(iii) 20 years or more, but less than

25 years ...................................... 32

(iv) 15 years or more, but less than

20 years ...................................... 29

(v) 10 years or more, but less than

15 years ...................................... 24

(vi) 5 years or more, but less than

10 years ...................................... 17

(vii) More than 1 year, but less

than 5 years ................................ 12

(2) The criminal history category shall

be the greater of: (A) the criminal

history category determined under

Chapter Four, Part A (Criminal History);

or (B) criminal history Category V.

(b) In any case in which the

defendant’s instant offense of conviction

is a covered sex crime, neither § 4B1.1

nor subsection (a) of this guideline

applies, and the defendant engaged in a

patter of activity involving prohibited

sexual conduct:

(1) The offense level shall be 5 plus

the offense level determined under

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30525

Chapters Two and Three. However, if

the resulting offense level is less than

level 22, the offense level shall be level

22, decreased by the number of levels

corresponding to any applicable

adjustment from § 3E1.1.

(2) The criminal history category shall

be the criminal history category

determined under Chapter Four, Part A.

Commentary

Application Notes

1. Definitions.—For purposes of this

guideline:

‘Minor’ means an individual who had

not attained the age of 18 years.

‘Minor victim’ includes (A) an

undercover law enforcement officer who

represented to the defendant that the

officer was a minor; or (B) any minor the

officer represented to the defendant

would be involved in the prohibited

sexual conduct.

2. Covered Sex Crime as Instant

Offense of Conviction.—For purposes of

this guideline, the instant offense of

conviction must be a covered sex crime,

i.e.: (A) an offense, perpetrated against

a minor, under (i) chapter 109A of title

18, United States Code; (ii) chapter 110

of such title, not including trafficking

in, receipt of, or possession of, child

pornography, or a recordkeeping

offense; (iii) chapter 117 of such title,

not including transmitting information

about a minor or filing a factual

statement about an alien individual; or

(B) an attempt or a conspiracy to

commit any offense described in

subdivisions (A)(i) through (iii) of this

note.

3. Application of Subsection (a).—

(A) Definitions.—For purposes of

subsection (a):

(i) ‘Offense statutory maximum’

means the maximum term of

imprisonment authorized for the instant

offense of conviction that is a covered

sex crime, including any increase in that

maximum term under a sentencing

enhancement provision (such as a

sentencing enhancement provision

contained in 18 U.S.C. 2247(a) or

2426(a)) that applies to that covered sex

crime because of the defendant’s prior

criminal record.

(ii) ‘Sex offense conviction’ (I) means

any offense described in 18 U.S.C.

2426(b)(1)(A) or (B), if the offense was

perpetrated against a minor; and (II)

does not include trafficking in, receipt

of, or possession of, child pornography.

‘Child pornography’ has the meaning

given that term in 18 U.S.C. 2256(8).

(B) Determination of Offense Statutory

Maximum in the Case of Multiple

Counts of Conviction.—In a case in

which more than one count of the

instant offense of conviction is a felony

that is a covered sex crime, the court

shall use the maximum authorized term

of imprisonment for the count that has

the greatest offense statutory maximum,

for purposes of determining the offense

statutory maximum under subsection

(a).

4. Application of Subsection (b).—

(A) Definition.—For purposes of

subsection (b), ‘prohibited sexual

conduct’ (i) means any offense

described in 18 U.S.C. 2426(b)(1)(A) or

(B); (ii) includes the production of child

pornography; (iii) includes trafficking in

child pornography only if, prior to the

commission of the instant offense of

conviction, the defendant sustained a

felony conviction for that trafficking in

child pornography; and (iv) does not

include receipt or possession of child

pornography. ‘Child pornography’ has

the meaning given that term in 18 U.S.C.

2256(8).

(B) Determination of Pattern of

Activity.—

(i) In General.—For purposes of

subsection (b), the defendant engaged in

a pattern of activity involving

prohibited sexual conduct if—

(I) on at least two separate occasions,

the defendant engaged in prohibited

sexual conduct with a minor; and

(II) there were at least two minor

victims of the prohibited sexual

conduct.

For example, the defendant engaged

in a pattern of activity involving

prohibited sexual conduct if there were

two separate occasions of prohibited

sexual conduct and each such occasion

involved a different minor, or if there

were two separate occasions of

prohibited sexual conduct involving the

same two minors.

(ii) Occasion of Prohibited Sexual

Conduct.—An occasion of prohibited

sexual conduct may be considered for

purposes of subsection (b) without

regard to whether the occasion (I)

occurred during the course of the

instant offense; or (II) resulted in a

conviction for the conduct that occurred

on that occasion.

5. Treatment and Monitoring.—

(A) Recommended Maximum Term of

Supervised Release.—The statutory

maximum term of supervised release is

recommended for offenders sentenced

under this guideline.

(B) Recommended Conditions of

Probation and Supervised Release.—

Treatment and monitoring are important

tools for supervising offenders and

should be considered as special

conditions of any term of probation or

supervised release that is imposed.

Background: The guideline is

intended to provide lengthy

incarceration for offenders who commit

sex offenses against minors and who

present a continuing danger to the

public. It applies to offenders whose

instant offense of conviction is a sex

offense committed against a minor

victim. The relevant criminal provisions

provide for increased statutory

maximum penalties for repeat sex

offenders and make those increased

statutory maximum penalties available

if the defendant previously was

convicted of any of several federal and

state sex offenses (see 18 U.S.C. 2247,

2426). In addition, section 632 of Pub.

L. 102–141 and section 505 of Pub. L.

105–314 directed the Commission to

ensure lengthy incarceration for

offenders who engage in a pattern of

activity involving the sexual abuse or

exploitation of minors.’’.

Section 5B1.3(d) is amended by

adding at the end the following:

‘‘(7) Sex Offenses

If the instant offense of conviction is

a sex offense, as defined in § 5D1.2

(Term of Supervised Release)—a

condition requiring the defendant to

participate in a program approved by

the United States Probation Office for

the treatment and monitoring of sex

offenders.’’.

Section 5D1.2 is amended by adding

after subsection (b) the following:

‘‘(c) If the instant offense of

conviction is a sex offense, the statutory

maximum term of supervised release is

recommended.’’.

The Commentary to § 5D1.2 captioned

‘‘Application Notes’’ is amended by

redesignating Notes 1 and 2 as Notes 2

and 3, respectively; by inserting before

Note 2, as redesignated by this

amendment, the following:

‘‘1. Definition.—For purposes of this

guideline, ‘sex offense’ means (A) an

offense, perpetrated against a minor,

under (i) chapter 109A of title 18,

United States Code; (ii) chapter 110 of

such title, not including a recordkeeping

offense; or (iii) chapter 117 of such title,

not including transmitting information

about a minor or filing a factual

statement about an alien individual; or

(B) an attempt or a conspiracy to

commit any offense described in

subdivisions (A)(i) through (iii) of this

note.’’; and in Note 2, as redesignated by

this amendment, by inserting ‘‘Safety

Valve Cases.—’’ before ‘‘A defendant’’;

and in Note 3, as redesignated by this

amendment, by inserting ‘‘Substantial

Assistance Cases.—’’ before ‘‘Upon

motion’’.

Section 5D1.3(d) is amended by

inserting at the end the following:

‘‘(7) Sex Offenses

If the instant offense of conviction is

a sex offense, as defined in § 5D1.2

30526 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

(Term of Supervised Release)—a

condition requiring the defendant to

participate in a program approved by

the United States Probation Office for

the treatment and monitoring of sex

offenders.’’.

Reason for Amendment: This is a

three-part amendment promulgated

primarily in response to the Protection

of Children from Sexual Predators Act

of 1998, Pub. L. 105–314 (the ‘‘Act’’),

which contains several directives to the

Commission. In furtherance of the

directives, the Commission initiated a

comprehensive examination of the

guidelines under which most sex crimes

are sentenced. Amendment 592,

effective November 1, 2000, addressed a

number of these directives. (See USSC

Guidelines Manual 2000 Supplement to

Appendix C, Amendment 592.)

The first part of the amendment

addresses the Act’s directive to increase

penalties in any case in which the

defendant engaged in a pattern of

activity of sexual abuse or sexual

exploitation of a minor. In response to

this directive, the amendment provides

a new Chapter Four (Criminal History

and Criminal Livelihood) guideline,

§ 4B1.5 (Repeat and Dangerous Sex

Offender Against Minors), that focuses

on repeat child sex offenders. This new

guideline works in a coordinated

manner with § 4B1.1 (Career Offender)

and creates a tiered approach to

punishing repeat child sex offenders.

The first tier, in § 4B1.5(a), aims to

incapacitate repeat child sex offenders

who have an instant offense of

conviction of sexual abuse of a minor

and a prior felony conviction for sexual

abuse of a minor (but to whom § 4B1.1

does not apply). This provision subjects

a defendant to the greater of the offense

level determined under Chapters Two

and Three or the offense level obtained

from a table that, like the table in

§ 4B1.1, bases the applicable offense

level on the statutory maximum for the

offense. In addition, the defendant is

subject to an enhanced criminal history

category of not less than Category V,

similar to § 4B1.1 (which provides for

Category VI). By statute, defendants

convicted of a federal sex offense are

subject to twice the statutory maximum

penalty for a subsequent sex offense

conviction. This guideline provision

effectuates the Commission’s and

Congress’s intent to punish repeat child

sex offenders severely.

The second tier, in § 4B1.5(b),

provides a five-level increase in the

offense level and a minimum offense

level of level 22 for defendants who are

not subject to either § 4B1.1 or to

§ 4B1.5(a) and who have engaged in a

pattern of activity involving prohibited

sexual conduct with minors. This part

of the guideline does not rely on prior

convictions to increase the penalty for

those who have a pattern of activity of

sexual abuse or exploitation of a minor.

The pattern of activity enhancement

requires that the defendant engaged in

prohibited sexual conduct on at least

two separate occasions and that at least

two minors were victims of the sexual

conduct. This provision is similar to the

existing five-level pattern of activity

enhancement in subsection (b)(4) of

§ 2G2.2 (Trafficking in Material

Involving the Sexual Exploitation of a

Minor; Receiving, Transporting,

Shipping, or Advertising Material

Involving the Sexual Exploitation of a

Minor; Possessing Material Involving

the Sexual Exploitation of a Minor with

Intent to Traffic) and effectuates the

Commission’s and Congress’s intent to

punish severely offenders who engage

in a pattern of activity involving the

sexual abuse or exploitation of minors.

Conforming amendments are made to

the criminal sexual abuse guidelines in

Chapter Two, Part A, Subpart 3 to delete

the upward departure provisions for

prior sentences for similar conduct; that

factor is now taken into account in the

new guideline.

In addition to creating a new

guideline, this part of the amendment

also modifies § 5D1.2 (Term of

Supervised Release) to provide that the

recommended term of supervised

release for a defendant convicted of a

sex crime is the maximum term

authorized by statute. Amendments to

§ § 5B1.3 (Conditions of Probation) and

5D1.3 (Conditions of Supervised

Release) effectuate the Commission’s

intent that offenders who commit sex

crimes receive appropriate treatment

and monitoring.

The second part of the amendment

addresses a circuit conflict regarding

whether multiple counts of possession,

receipt, or transportation of images

containing child pornography should be

grouped together pursuant to subsection

(a) or (b) of § 3D1.2 (Groups of Closely

Related Counts). Resolution of the

conflict depends, in part, on

determining who is the victim of the

offense: the child depicted in the

pornography images or society as a

whole. Six circuits have held that the

child depicted is the victim, and,

therefore, that the counts are not

grouped. See United States v. Norris,

159 F.3d 926 (5th Cir. 1998); United

States v. Hibbler, 159 F.3d 233 (6th Cir.

1998); United States v. Ketcham, 80

F.3d 789 (3d Cir. 1996); United States v.

Rugh, 968 F.2d 750 (8th Cir. 1992);

United States v. Boos, 127 F.3d 1207

(9th Cir. 1997), cert. denied, 522 U.S.

1066 (1998); and United States v.

Tillmon, 195 F.3d 640 (11th Cir. 1999).

In contrast, one circuit has held that

society as a whole is the victim of these

types of offenses, and, therefore, that

one count of interstate transportation of

child pornography does not group with

a count of interstate transportation of a

minor with intent to engage in illegal

sexual activity in a case in which the

child portrayed in the pornography was

the same child transported. See United

States v. Toler, 901 F.2d 399 (4th Cir.

1990).

In addressing the circuit conflict, the

Commission adopted a position that

provides for grouping of multiple counts

of child pornography distribution,

receipt, and possession pursuant to

§ 3D1.2(d). Grouping multiple counts of

these offenses pursuant to § 3D1.2(d) is

appropriate because these offenses

typically are continuous and ongoing

enterprises. This grouping provision

does not require the determination of

whether counts involve the same victim

in order to calculate a combined

adjusted offense level for multiple

counts of conviction which, particularly

in these kinds of cases, could be

complex and time consuming.

Consistent with the provisions of

subsection (a)(2) of § 1B1.3 (Relevant

Conduct), this approach provides that

additional images of child pornography

(often involved in the case, but outside

of the offense of conviction) shall be

considered by the court in determining

the appropriate sentence for the

defendant if the conduct related to those

images is part of the same course of

conduct or common scheme or plan.

The third part of the amendment

makes several modifications to § 2A3.2

(Criminal Sexual Abuse of a Minor

Under the Age of Sixteen Years

(Statutory Rape) or Attempt to Commit

Such Acts). The amendment responds to

the directive in the Act to provide an

enhancement for offenses under chapter

117 of title 18, United States Code,

involving the transportation of minors

for prostitution or prohibited sexual

conduct. The amendment increases the

offense levels in § 2A3.2 and in § 2A3.4

(Abusive Sexual Contact or Attempt to

Commit Abusive Sexual Contact). The

Act focuses on those individuals who

travel to meet or transport minors for

illegal sexual activity by providing

increased statutory maximum penalties

for those individuals. In response, the

increase in penalties in these guidelines

were geared toward those individuals.

Specifically, the amendment

distinguishes between chapter 117

offenses that involve the commission of

a sexual act or sexual contact and those

offenses (e.g., sting cases) that do not, by

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30527

providing an alternative base offense

level in § 2A3.2 for chapter 117 offenses

that also involve the commission of a

sexual act or sexual contact that is three

levels greater (i.e., level 24) than the

base offense level applicable to chapter

117 offenses that do not involve a sexual

act or sexual contact.

The amendment provides a threelevel increase in the base offense level

for offenses sentenced under § 2A3.2,

such that the base offense level (1) for

statutory rape unaccompanied by

aggravating conduct is increased from

level 15 to level 18; (2) for a chapter 117

offense (unaccompanied by a sexual act

or sexual contact) is increased from

level 18 to level 21; and (3) for a chapter

117 offense (accompanied by a sexual

act or sexual contact) results in a base

offense level of level 24. The

amendment reflects the seriousness

accorded criminal sexual abuse offenses

by Congress, which provided for

statutory maximum penalties of 15

years’ imprisonment (or 30 years’

imprisonment with a prior conviction

for a sex crime). A defendant who

transmits child pornography to a minor

as a means of enticing the minor to

engage in illegal sexual activity will

receive a sentence increase when that

defendant subsequently travels across

state lines to engage in illegal sexual

activity with that minor. Therefore, this

increase also maintains the

proportionality between §§ 2A3.2 and

2G2.2.

The third part of the amendment also

makes conforming changes to § 2A3.2 to

ensure that some chapter 117 offenses

that do not include aggravating conduct

receive the offense level applicable to

statutory rape in its basic form.

Technical changes made by the

amendment (such as the addition of

headings and the reordering of

applications notes) are not intended to

have substantive effect.

4. Amendment: Section 2A6.2(a) is

amended by striking ‘‘14’’ and inserting

‘‘18’’.

Section 2A6.2(c) is amended by

striking subdivision (1) and inserting

the following:

‘‘(1) If the offense involved the

commission of another criminal offense,

apply the offense guideline from

Chapter Two, Part A (Offenses Against

the Person) most applicable to that other

criminal offense, if the resulting offense

level is greater than that determined

above.’’.

The Commentary to § 2A6.2 captioned

‘‘Application Notes’’ is amended in

Note 1 by striking the 1-em dash and

inserting a colon; and by striking the

last paragraph and inserting the

following:

‘‘ ‘Stalking means (A) traveling with

the intent to kill, injure, harass, or

intimidate another person and, in the

course of, or as a result of, such travel,

placing the person in reasonable fear of

death or serious bodily injury to that

person or an immediate family member

of that person; or (B) using the mail or

any facility of interstate or foreign

commerce to engage in a course of

conduct that places that person in

reasonable fear of the death of, or

serious bodily injury to, that person or

an immediate family member of that

person. See 18 U.S.C. § 2261A.

‘Immediate family member’ (A) has the

meaning given that term in 18 U.S.C.

§ 115(c)(2); and (B) includes a spouse or

intimate partner. ‘Course of conduct’

and ‘spouse or intimate partner’ have

the meaning given those terms in 18

U.S.C. § 2266(2) and (7), respectively.’’.

The Commentary to § 1B1.5 captioned

‘‘Application Notes’’ is amended in

Note 3 by inserting after the first

sentence the following:

‘‘Consistent with the provisions of

§ 1B1.3 (Relevant Conduct), such other

offense includes conduct that may be a

state or local offense and conduct that

occurred under circumstances that

would constitute a federal offense had

the conduct taken place within the

territorial or maritime jurisdiction of the

United States.’’.

Reason for Amendment: This

amendment addresses section 1107 of

the Victims of Trafficking and Violence

Protection Act of 2000, Pub. L. 106–386

(the ‘‘Act’’). That section amends 18

U.S.C. 2261, 2261A, and 2262 to

broaden the reach of those statutes to

include international travel to stalk,

commit domestic violence, or violate a

protective order. Section 2261A also is

amended to broaden the category of

persons protected by this statute to

include intimate partners of the person

stalked. The Act also creates a new

offense at section 2261A(2) that

prohibits the use of the mail or any

facility of interstate or foreign commerce

to commit a stalking offense. Several

technical changes were also made to

these statutes.

The Act includes a directive to the

Commission to amend the federal

sentencing guidelines to reflect the

changes made to 18 U.S.C. 2261, with

specific consideration to be given to the

following factors: (1) whether the

guidelines relating to stalking offenses

should be modified in light of the

amendment made by this subsection;

and (2) whether any changes the

Commission may make to the guidelines

pursuant to clause (1) should also be

made with respect to offenses under

chapter 110A of title 18, United States

Code (staling and domestic violence

offenses).

For several reasons, the amendment

refers the new stalking by mail offense,

like other stalking offenses, to § 2A6.2

(Stalking or Domestic Violence). First,

the statutory penalties for stalking by

mail are the same as the statutory

penalties for other stalking offenses.

Second, although there was some

consideration to refer this new offense

to § 2A6.1 (Threatening or Harassing

Communications), stalking by mail

offenses differ significantly from

threatening communications in that the

former require the defendant’s intent to

kill, or injure a person, or place a person

in reasonable fear of death or serious

bodily injury. Third, referencing

stalking by mail offenses to § 2A6.1

could result in these offenses receiving

higher penalties than other stalking

offenses. For example, a defendant who

writes a threatening letter, violates a

protective order, and engages in some

conduct evidencing an intent to carry

out such threat, would receive an

offense level of level 20 under § 2A6.1.

A defendant who engages in stalking by

mail, violates a protective order, and

actually commits bodily injury on the

person who is the subject of the

protection order would have received,

prior to this amendment, an offense

level of level 18 under § 2A6.2. This

amendment reflects the policy judgment

that the second defendant should

receive punishment equal to, or perhaps

greater than, that received by the first

defendant. Accordingly, because of

concern for proportionality in

sentencing stalking and domestic

violence offenses relative to other

crimes, such as threatening or harassing

communications, this amendment

increases the base offense level in

§ 2A6.2 from level 14 to level 18. Setting

the base offense level at level 18 for

stalking and domestic violence crimes

ensures that these offenses are

sentenced at or above the offense levels

for offenses involving threatening and

harassing communications.

The amendment also conforms the

definition of ‘‘stalking’’ in Application

Note 1 of § 2A6.2 to the statutory

changes made by the Act. Additionally,

the amendment modifies the language of

subsection (c) in § 2A6.2 to clarify

application of the cross reference. This

change is consistent with the

amendment to Application Note 3 of

§ 1B1.5 (Interpretation of References to

Other Offense Guidelines), which also

clarifies the operation of cross

references generally.

These revisions are designed to clarify

that, unless otherwise specified, cross

references in Chapter Two (Offense

30528 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

Conduct) are to be determined

consistently with the provisions of

§ 1B1.3 (Relevant Conduct). Therefore,

in a case in which the guideline

includes a reference to use another

guideline if the conduct involved

another offense, the other offense

includes conduct that may be a state or

local offense and conduct that occurred

under circumstances that would

constitute a federal offense had the

conduct taken place within the

territorial or maritime jurisdiction of the

United States.

5. Amendment: Chapter Two is

amended by striking the heading to Part

B, the heading to Subpart 1 of Part B,

and the Introductory Commentary to

such subpart and inserting the

following:

‘‘PART B—BASIC ECONOMIC

OFFENSES

1. Theft, Embezzlement, Receipt of

Stolen Property, Property Destruction,

and Offenses Involving Fraud or Deceit

Introductory Commentary

These sections address basic forms of

property offenses: theft, embezzlement,

fraud, forgery, counterfeiting (other than

offenses involving altered or counterfeit

bearer obligations of the United States),

insider trading, transactions in stolen

goods, and simple property damage or

destruction. (Arson is dealt with

separately in Chapter Two, Part K

(Offenses Involving Public Safety)).

These guidelines apply to offenses

prosecuted under a wide variety of

federal statutes, as well as offenses that

arise under the Assimilative Crimes

Act.’’.

Chapter Two, Part B is amended by

striking § 2B1.1, and its accompanying

commentary, and inserting the

following:

‘‘§ 2B1.1. Larceny, Embezzlement, and

Other Forms of Theft; Offenses

Involving Stolen Property; Property

Damage or Destruction; Fraud and

Deceit; Forgery; Offenses Involving

Altered or Counterfeit Instruments

Other than Counterfeit Bearer

Obligations of the United States

(a) Base Offense Level: 6

(b) Specific Offense Characteristics

(1) If the loss exceeded $5,000,

increase the offense level as follows:

Loss (apply the greatest) Increase in

level

(A) $5,000 or less .................. no increase

(B) More than $5,000 ............. add 2

(C) More than $10,000 .......... add 4

(D) More than $30,000 .......... add 6

(E) More than $70,000 ........... add 8

(F) More than $120,000 ......... add 10

Loss (apply the greatest) Increase in

level

(G) More than $200,000 ........ add 12

(H) More than $400,000 ........ add 14

(I) More than $1,000,000 ....... add 16

(J) More than $2,500,000 ...... add 18

(K) More than $7,000,000 ...... add 20

(L) More than $20,000,000 .... add 22

(M) More than $50,000,000 ... add 24

(N) More than $100,000,000 add 26.

(2) (Apply the greater) If the offense—

(A) (i) involved more than 10, but less

than 50, victims; or (ii) was committed

through mass-marketing, increase by 2

levels; or

(B) involved 50 or more victims,

increase by 4 levels.

(3) If the offense involved a theft from

the person of another, increase by 2

levels.

(4) If the offense involved receiving

stolen property, and the defendant was

a person in the business of receiving

and selling stolen property, increase by

2 levels.

(5) If the offense involved

misappropriation of a trade secret and

the defendant knew or intended that the

offense would benefit a foreign

government, foreign instrumentality, or

foreign agent, increase by 2 levels.

(6) If the offense involved theft of,

damage to, or destruction of, property

from a national cemetery, increase by 2

levels.

(7) If the offense involved (A) a

misrepresentation that the defendant

was acting on behalf of a charitable,

educational, religious, or political

organization, or a government agency;

(B) a misrepresentation or other

fraudulent action during the course of a

bankruptcy proceeding; (C) a violation

of any prior, specific judicial or

administrative order, injunction, decree,

or process not addressed elsewhere in

the guidelines; or (D) a

misrepresentation to a consumer in

connection with obtaining, providing, or

furnishing financial assistance for an

institution of higher education, increase

by 2 levels. If the resulting offense level

is less than level 10, increase to level 10.

(8) If (A) the defendant relocated, or

participated in relocating, a fraudulent

scheme to another jurisdiction to evade

law enforcement or regulatory officials;

(B) a substantial part of a fraudulent

scheme was committed from outside the

United States; or (C) the offense

otherwise involved sophisticated

means, increase by 2 levels. If the

resulting offense level is less than level

12, increase to level 12.

(9) If the offense involved (A) the

possession or use of any device-making

equipment; (B) the production or

trafficking of any unauthorized access

device or counterfeit access device; or

(C)(i) the unauthorized transfer or use of

any means of identification unlawfully

to produce or obtain any other means of

identification; or (ii) the possession of 5

or more means of identification that

unlawfully were produced from, or

obtained by the use of, another means

of identification, increase by 2 levels. If

the resulting offense level is less than

level 12, increase to level 12.

(10) If the offense involved an

organized scheme to steal vehicles or

vehicle parts, and the offense level is

less than level 14, increase to level 14.

(11) If the offense involved (A) the

conscious or reckless risk of death or

serious bodily injury; or (B) possession

of a dangerous weapon (including a

firearm) in connection with the offense,

increase by 2 levels. If the resulting

offense level is less than level 14,

increase to level 14.

(12) (Apply the greater) If—

(A) the defendant derived more than

$1,000,000 in gross receipts from one or

more financial institutions as a result of

the offense, increase by 2 levels; or

(B) the offense substantially

jeopardized the safety and soundness of

a financial institution, increase by 4

levels.

If the resulting offense level

determined under subdivision (A) or (B)

is less than level 24, increase to level 24.

(c) Cross References

(1) If (A) a firearm, destructive device,

explosive material, or controlled

substance was taken, or the taking of

any such item was an object of the

offense; or (B) the stolen property

received, transported, transferred,

transmitted, or possessed was a firearm,

destructive device, explosive material,

or controlled substance, apply § 2D1.1

(Unlawful Manufacturing, Importing,

Exporting, or Trafficking (Including

Possession with Intent to Commit These

Offenses); Attempt or Conspiracy),

§ 2D2.1 (Unlawful Possession; Attempt

or Conspiracy), § 2K1.3 (Unlawful

Receipt, Possession, or Transportation

of Explosive Materials; Prohibited

Transactions Involving Explosive

Materials), or § 2K2.1 (Unlawful

Receipt, Possession, or Transportation

of Firearms or Ammunition; Prohibited

Transactions Involving Firearms or

Ammunition), as appropriate.

(2) If the offense involved arson, or

property damage by use of explosives,

apply § 2K1.4 (Arson; Property Damage

by Use of Explosives), if the resulting

offense level is greater than that

determined above.

(3) If (A) neither subdivision (1) nor

(2) of this subsection applies; (B) the

defendant was convicted under a statute

proscribing false, fictitious, or

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30529

fraudulent statements or representations

generally (e.g., 18 U.S.C. 1001, 1341,

1342, or 1343); and (C) the conduct set

forth in the count of conviction

establishes an offense specifically

covered by another guideline in Chapter

Two (Offense Conduct), apply that other

guideline.

(d) Special Instruction

(1) If the defendant is convicted under

18 U.S.C. 1030(a)(4) or (5), the

minimum guideline sentence,

notwithstanding any other adjustment,

shall be six months’ imprisonment.

Commentary

Statutory Provisions: 7 U.S.C. 6, 6b, 6c, 6h,

6o, 13, 23; 15 U.S.C. 50, 77e, 77q, 77x, 78j,

78ff, 80b–6, 1644, 6821; 18 U.S.C. 38, 225,

285–289, 471–473, 500, 510, 553(a)(1), 641,

656, 657, 659, 662, 1001–1008, 1010–1014,

1016–1022, 1025, 1026, 1028, 1029,

1030(a)(4)–(5), 1031, 1341–1344, 1361, 1363,

1702, 1703 (if vandalism or malicious

mischief, including destruction of mail, is

involved), 1708, 1831, 1832, 2113(b), 2312–

2317; 29 U.S.C. 501(c); 42 U.S.C. 1011; 49

U.S.C. 30170, 46317(a). For additional

statutory provision(s) see Appendix A

(Statutory Index).

Application Notes

1. Definitions.—For purposes of this

guideline:

‘‘Financial institution’’ includes any

institution described in 18 U.S.C. 20,

656, 657, 1005, 1006, 1007, or 1014; any

state or foreign bank, trust company,

credit union, insurance company,

investment company, mutual fund,

savings (building and loan) association,

union or employee pension fund; any

health, medical, or hospital insurance

association; brokers and dealers

registered, or required to be registered,

with the Securities and Exchange

Commission; futures commodity

merchants and commodity pool

operators registered, or required to be

registered, with the Commodity Futures

Trading Commission; and any similar

entity, whether or not insured by the

federal government. ‘‘Union or

employee pension fund’’ and ‘‘any

health, medical, or hospital insurance

association,’’ primarily include large

pension funds that serve many persons

(e.g., pension funds or large national

and international organizations, unions,

and corporations doing substantial

interstate business), and associations

that undertake to provide pension,

disability, or other benefits (e.g.,

medical or hospitalization insurance) to

large numbers of persons.

‘‘Firearm’’ and ‘‘destructive device’’

have the meaning given those terms in

the Commentary to § 1B1.1 (Application

Instructions).

‘‘Foreign instrumentality’’ and

‘‘foreign agent’’ have the meaning given

those terms in 18 U.S.C. 1839(1) and (2),

respectively.

‘‘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.

‘‘Theft from the person of another’’

means theft, without the use of force, of

property that was being held by another

person or was within arms’ reach.

Examples include pick-pocketing and

non-forcible purse-snatching, such as

the theft of a purse from a shopping cart.

‘‘Trade secret’’ has the meaning given

that term in 18 U.S.C. 1839(3).

2. Loss Under Subsection (b)(1).—

This application note applies to the

determination of loss under subsection

(b)(1).

(A) General Rule.—Subject to the

exclusions in subdivision (D), loss is the

greater of actual loss or intended loss.

(i) Actual Loss.—‘‘Actual loss’’ means

the reasonably foreseeable pecuniary

harm that resulted from the offense.

(ii) Intended Loss.—‘‘Intended loss’’

(I) means the pecuniary harm that was

intended to result from the offense; and

(II) includes intended pecuniary harm

that would have been impossible or

unlikely to occur (e.g., as in a

government sting operation, or an

insurance fraud in which the claim

exceeded the insured value).

(iii) Pecuniary Harm.—‘‘Pecuniary

harm’’ means harm that is monetary or

that otherwise is readily measurable in

money. Accordingly, pecuniary harm

does not include emotional distress,

harm to reputation, or other noneconomic harm.

(iv) Reasonably Foreseeable Pecuniary

Harm.—For purposes of this guideline,

‘‘reasonably foreseeable pecuniary

harm’’ means pecuniary harm that the

defendant knew or, under the

circumstances, reasonably should have

known, was a potential result of the

offense.

(v) Rules of Construction in Certain

Cases.—In the cases described in

subdivisions (I) through (III), reasonably

foreseeable pecuniary harm shall be

considered to include the pecuniary

harm specified for those cases as

follows:

(I) Product Substitution Cases.—In the

case of a product substitution offense,

the reasonably foreseeable pecuniary

harm includes the reasonably

foreseeable costs of making substitute

transactions and handling or disposing

of the product delivered, or of

retrofitting the product so that it can be

used for its intended purpose, and the

reasonably foreseeable costs of

rectifying the actual or potential

disruption to the victim’s business

operations caused by the product

substitution.

(II) Procurement Fraud Cases.—In the

case of a procurement fraud, such as a

fraud affecting a defense contract award,

reasonably foreseeable pecuniary harm

includes the reasonably foreseeable

administrative costs to the government

and other participants of repeating or

correct the procurement action affected,

plus any increased costs to procure the

product or service involved that was

reasonably foreseeable.

(III) Protected Computer Cases.—In

the case of an offense involving

unlawfully accessing, or exceeding

authorized access to, a ‘‘protected

computer’’ as defined in 18 U.S.C.

1030(e)(2), actual loss includes the

following pecuniary harm, regardless of

whether such pecuniary harm was

reasonably foreseeable: reasonable costs

to the victim of conducting a damage

assessment, and restoring the system

and data to their condition prior to the

offense, and any lost revenue due to

interruption of service.

(B) Gain.—The court shall use the

gain that resulted from the offense as an

alternative measure of loss only if there

is a loss but it reasonably cannot be

determined.

(C) Estimation of Loss.—The court

need only make a reasonable estimate of

the loss. The sentencing judge is in a

unique position to assess the evidence

and estimate the loss based upon that

evidence. For this reason, the court’s

loss determination is entitled to

appropriate deference. See 18 U.S.C.

3742(e) and (f).

The estimate of the loss shall be based

on available information, taking into

account, as appropriate and practicable

under the circumstances, factors such as

the following:

(i) The fair market value of the

property unlawfully taken or destroyed;

or, if the fair market value is

impracticable to determine or

inadequately measures the harm, the

cost to the victim of replacing that

property.

(ii) The cost of repairs to damaged

property.

(iii) The approximate number of

victims multiplied by the average loss to

each victim.

(iv) More general factors, such as the

scope and duration of the offense and

revenues generated by similar

operations.

(D) Exclusions from Loss.—Loss shall

not include the following:

30530 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

(i) Interest of any kind, finance

charges, late fees, penalties, amounts

based on an agreed-upon return or rate

of return, or other similar costs.

(ii) Costs to the government of, and

costs incurred by victims primarily to

aid the government in, the prosecution

and criminal investigation of an offense.

(E) Credits Against Loss.—Loss shall

be reduced by the following:

(i) The money returned, and the fair

market value of the property returned

and the services rendered, by the

defendant or other persons acting jointly

with the defendant, to the victim before

the offense was detected. The time of

detection of the offense is the earlier of

(I) the time the offense was discovered

by a victim or government agency; or (II)

the time the defendant knew or

reasonably should have known that the

offense was detected or about to be

detected by a victim or government

agency.

(ii) In a case involving collateral

pledged or otherwise provided by the

defendant, the amount the victim has

recovered at the time of sentencing from

disposition of the collateral, or if the

collateral has not been disposed of by

that time, the fair market value of the

collateral at the time of sentencing.

(F) Special Rules.—Notwithstanding

subdivision (A), the following special

rules shall be used to assist in

determining loss in the cases indicated:

(i) Stolen or Counterfeit Credit Cards

and Access Devices; Purloined Numbers

and Codes.—In a case involving any

counterfeit access device or

unauthorized access device, loss

includes any unauthorized charges

made with the counterfeit access device

or unauthorized access device and shall

be not less than $500 per access device.

However, if the unauthorized access

device is a means of

telecommunications access that

identifies a specific telecommunications

instrument or telecommunications

account (including an electronic serial

number/mobile identification number

(ESN/MIN) pair), and that means was

only possessed, and not used, during

the commission of the offense, loss shall

be not less than $100 per unused means.

For purposes of this subdivision,

‘counterfeit access device’ and

‘unauthorized access device’ have the

meaning given those terms in

Application Note 7(A).

(ii) Government Benefits.—In a case

involving government benefits (e.g.,

grants, loans, entitlement program

payments), loss shall be considered to

be not less than the value of the benefits

obtained by unintended recipients or

diverted to unintended uses, as the case

may be. For example, if the defendant

was the intended recipient of food

stamps having a value of $100 but

fraudulently received food stamps

having a value of $150, loss is $50.

(iii) Davis-Bacon Act Violations.—In a

case involving a Davis-Bacon Act

violation (i.e., a violation of 40 U.S.C.

276a, criminally prosecuted under 18

U.S.C. 1001), the value of benefits shall

be considered to be not less than the

difference between the legally required

wages and actual wages paid.

(iv) Ponzi and Other Fraudulent

Investment Schemes.—In a case

involving a fraudulent investment

scheme, such as a Ponzi scheme, loss

shall not be reduced by the money or

the value of the property transferred to

any individual investor in the scheme in

access of that investor’s principal

investment (i.e., the gain to an

individual investor in the scheme shall

not be used to offset the loss to another

individual investor in the scheme).

(v) Certain Other Unlawful

Misrepresentation Schemes.—In a case

involving a scheme in which (I) services

were fraudulently rendered to the

victim by persons falsely posing as

licensed professionals; (II) goods were

falsely represented as approved by a

governmental regulatory agency; or (III)

goods for which regulatory approval by

a government agency was required but

not obtained, or was obtained by fraud,

loss shall include the amount paid for

the property, services or goods

transferred, rendered, or

misrepresented, with no credit provided

for the value of those items or services.

(vi) Value of Controlled Substances.—

In a case involving controlled

substances, loss is the estimated street

value of the controlled substances.

(3) Victim and Mass-Marketing

Enhancement under Subsection (b)(2).—

(A) Definitions.—For purposes of

subsection (b)(2):

(i) ‘‘Mass-marketing’’ 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 (I) purchase goods or

services; (II) participate in a contest or

sweepstakes; or (III) invest for financial

profit. ‘‘Mass-marketing’’ includes, for

example, a telemarketing campaign that

solicits a large number of individuals to

purchase fraudulent life insurance

policies.

(ii) ‘‘Victim’’ means (I) any person

who sustained any part of the actual

loss determined under subsection (b)(1);

or (II) any individual who sustained

bodily injury as a result of the offense.

‘‘Person’’ includes individuals,

corporations, companies, associations,

firms, partnerships, societies, and joint

stock companies.

(B) Undelivered United States Mail.—

(i) In General.—In a case in which

undelivered United States mail was

taken, or the taking of such item was an

object of the offense, or in a case in

which the stolen property received,

transported, transferred, transmitted, or

possessed was undelivered United

States mail, ‘‘victim’’ means any person

(I) described in subdivision (A)(ii) of

this note; or (II) who was the intended

recipient, or addressee, of the

undelivered United States mail.

(ii) Special Rule.—A case described in

subdivision (B)(i) of this note that

involved a Postal Service (I) relay box;

(II) collection box; (III) delivery vehicle;

or (IV) satchel or cart, shall be

considered to have involved 50 or more

victims.

(iii) Definition.—‘‘Undelivered United

States mail’’ means mail that has not

actually been received by the addressee

or his agent (e.g., mail taken from the

addressee’s mail box).

(C) Vulnerable Victims.—If subsection

(b)(2)(B) applies, an enhancement under

§ 3A1.1(b)(2) shall not apply.

4. Enhancement for Business of

Receiving and Selling Stolen Property

under Subsection (b)(4).—For purposes

of subsection (b)(4), the court shall

consider the following non-exhaustive

list of factors in determining whether

the defendant was in the business of

receiving and selling stolen property:

(A) The regularity and sophistication

of the defendant’s activities.

(B) The value and size of the

inventory of stolen property maintained

by the defendant.

(C) The extent to which the

defendant’s activities encouraged or

facilitated other crimes.

(D) The defendant’s past activities

involving stolen property.

5. Application of Subsection (b)(7).—

(A) In General.—The adjustments in

subsection (b)(7) are alternative rather

than cumulative. If, in a particular case,

however, more than one of the

enumerated factors applied, an upward

departure may be warranted.

(B) Misrepresentations Regarding

Charitable and Other Institutions.—

Subsection (b)(7)(A) applies in any case

in which the defendant represented that

the defendant was acting to obtain a

benefit on behalf of a charitable

educational, religious, or political

organization, or a government agency

(regardless of whether the defendant

actually was associated with the

organization or government agency)

when, in fact, the defendant intended to

divert all or part of that benefit (e.g., for

the defendant’s personal gain).

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30531

Subsection (b)(7)(A) applies, for

example, to the following:

(i) A defendant who solicited

contributions for a non-existent famine

relief organization.

(ii) A defendant who solicited

donations from church members by

falsely claiming to be a fundraiser for a

religiously affiliated school.

(iii) A defendant, chief of a local fire

department, who conducted a public

fundraiser representing that the purpose

of the fundraiser was to procure

sufficient funds for a new fire engine

when, in fact, the defendant intended to

divert some of the funds for the

defendant’s personal benefit.

(C) Fraud in Contravention of Prior

Judicial Order.—Subsection (b)(7)(C)

provides an enhancement if the

defendant commits a fraud in

contravention of a prior, official judicial

or administrative warning, in the form

of an order, injunction, decree, or

process, to take or not to take a specified

action. A defendant who does not

comply with such a prior, official

judicial or administrative warning

demonstrates aggravated criminal intent

and deserves additional punishment. If

it is established that an entity the

defendant controlled was a party to the

prior proceeding that resulted in the

official judicial or administrative action,

and the defendant had knowledge of

that prior decree or order, this

enhancement applies even if the

defendant was not a specifically named

party in that prior case. For example, a

defendant whose business previously

was enjoined from selling a dangerous

product, but who nonetheless engaged

in fraudulent conduct to sell the

product, is subject to this enhancement.

This enhancement does not apply if the

same conduct resulted in an

enhancement pursuant to a provision

found elsewhere in the guidelines (e.g.,

a violation of a condition of release

addressed in § 2J1.7 (Commission of

Offense While on Release) or a violation

of probation addressed in § 4A1.1

(Criminal History Category)).

(D) College Scholarship Fraud.—For

purposes of subsection (b)(7)(D):

‘Financial assistance’ means any

scholarship, grant, loan, tuition,

discount, award, or other financial

assistance for the purpose of financing

an education.

‘Institution of higher education’ has

the meaning given that term in section

101 of the Higher Education Act of 1954

(20 U.S.C. 1001).

(E) Non-Applicability of

Enhancements.—

(i) Subsection (b)(7)(A).—If the

conduct that forms the basis for an

enhancement under subsection (b)(7)(A)

is the only conduct that forms the basis

for an adjustment under § 3B1.3 (Abuse

of Position of Trust or Use of Special

Skill), do not apply that adjustment

under § 3B1.3.

(ii) Subsection (b)(7)(B) and (C).—If

the conduct that forms the basis for an

enhancement under subsection (b)(7)(B)

or (C) is the only conduct that forms the

basis for an adjustment under § 3C1.1

(Obstructing or Impeding the

Administration of Justice), do not apply

that adjustment under § 3C1.1.

6. Sophisticated Means Enhancement

under Subsection (b)(8).—

(A) Definition of United States.—For

purposes of subsection (b)(8)(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.

(B) Sophisticated Means

Enhancement.—For purposes of

subsection (b)(8)(C), ‘sophisticated

means’ means especially complex or

especially intricate offense conduct

pertaining to the execution or

concealment of an offense. For example,

in a telemarketing scheme, locating the

main office of the scheme in one

jurisdiction but locating soliciting

operations in another jurisdiction

ordinarily indicates sophisticated

means. Conduct such as hiding assets or

transactions, or both, through the use of

fictitious entities, corporate shells, or

offshore financial accounts also

ordinarily indicates sophisticated

means.

(C) Non-Applicability of

Enhancement.—If the conduct that

forms the basis for an enhancement

under subsection (b)(8) is the only

conduct that forms the basis for an

adjustment under § 3C1.1, do not apply

that adjustment under § 3C1.1.

7. Application of Subsection (b)(9).—

(A) Definitions.—For purposes of

subsection (b)(9):

‘Counterfeit access device’ (i) has the

meaning given that term in 18 U.S.C.

1029(e)(2); and (ii) includes a

telecommunications instrument that has

been modified or altered to obtain

unauthorized use of

telecommunications service.

‘Telecommunications service’ has the

meaning given that term in 19 U.S.C.

1029(e)(9).

‘Device-making equipment’ has the

meaning given that term in 18 U.S.C.

1029(e)(6); and (ii) includes (I) any

hardware or software that has been

configured as described in 18 U.S.C.

1029(a)(9); and (II) a scanning receiver

referred to in 18 U.S.C. 1029(a)(8).

‘Scanning receiver’ has the meaning

given that term in 18 U.S.C. 1029(e)(8).

‘‘Means of identification’’ has the

meaning given that term in 18 U.S.C.

1028(d)(3), except that such means of

identification shall be of an actual (i.e.,

not fictitious) individual, other than the

defendant or a person for whose

conduct the defendant is accountable

under § 1B1.3 (Relevant Conduct).

‘‘Produce’’ includes manufacture,

design, alter, authenticate, duplicate, or

assemble. ‘‘Production’’ includes

manufacture, design, alteration,

authentication, duplication, or

assembly.

‘‘Unauthorized access device’’ has the

meaning given that term in 18 U.S.C.

1029(e)(3).

Identification Documents.—Offenses

involving identification documents,

false identification documents, and

means of identification, in violation of

18 U.S.C. 1028, also are covered by this

guideline. If the primary purpose of the

offense, under 18 U.S.C. 1028, was to

violate, or assist another to violate, the

law pertaining to naturalization,

citizenship, or legal resident status,

apply § 2L2.1 (Trafficking in a

Document Relating to Naturalization) or

§ 2L2.2 (Fraudulently Acquiring

Documents Relating to Naturalization),

as appropriate, rather than this

guideline.

(C) Application of Subsection

(b)(9)(C)(i).—

(i) In General.—Subsection (b)(9)(C)(i)

applies in a case in which a means of

identification of an individual other

than the defendant (or a person for

whose conduct the defendant is

accountable under § 1B1.3 (Relevant

Conduct)) is used without that

individual’s authorization unlawfully to

produce or obtain another means of

identification.

(ii) Examples.—Examples of conduct

to which subsection (b)(9)(C)(i) applies

are as follows:

(I) A defendant obtains an

individual’s name and social security

number from a source (e.g., from a piece

of mail taken from the individual’s

mailbox) and obtains a bank loan in that

individual’s name. In this example, the

account number of the bank loan is the

other means of identification that has

been obtained unlawfully.

(II) A defendant obtains an

individual’s name and address from a

source (e.g., from a diver’s license in a

stolen wallet) and applies for, obtains,

and subsequently uses a credit card in

that individual’s name. In this example,

the credit card is the other means of

identification that has been obtained

unlawfully.

30532 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

(iii) Nonapplicability of Subsection

(b)(9)(C)(i).—Examples of conduct to

which subsection (b)(9)(C)(i) does not

apply are as follows:

(I) A defendant uses a credit card from

a stolen wallet only to make a purchase.

In such a case, the defendant has not

used the stolen credit card to obtain

another means of identification.

(II) A defendant forges another

individual’s signature to cash a stolen

check. Forging another individual’s

signature is not producing another

means of identification.

(D) Application of Subsection

(b)(9)(C)(ii).—Subsection (b)(9)(C)(ii)

applies in any case in which the offense

involved the possession of 5 or more

means of identification that unlawfully

were produced or obtained, regardless

of the number of individuals in whose

name (or other identifying information)

the means of identification were so

produced or so obtained.

8. Chop Shop Enhancement under

Subsection (b)(10).—Subsection (b)(10)

provides a minimum offense level in the

case of an ongoing, sophisticated

operation (such as an auto theft ring or

‘chop shop’) to steal vehicles or vehicle

parts, or to receive stolen vehicles or

vehicle parts. ‘Vehicles’ refers to all

forms of vehicles, including aircraft and

watercraft.

9. Gross Receipts Enhancement under

Subsection (b)(12)(A).—

(A) In General.—For purposes of

subsection (b)(12)(A), the defendant

shall be considered to have derived

more than $1,000,000 in gross receipts

if the gross receipts to the defendant

individually, rather than to all

participants, exceeded $1,000,000.

(B) Definition.—‘Gross receipts from

the offense’ includes all property, real or

personal, tangible or intangible, which

is obtained directly or indirectly as a

result of such offense. See 18 U.S.C.

982(a)(4).

10. Enhancement for Substantially

Jeopardizing the Safety and Soundness

of a Financial Institution under

Subsection (b)(12)(B).—For purposes of

subsection (b)(12)(B), an offense shall be

considered to have substantially

jeopardized the safety and soundness of

a financial institution if, as a

consequence of the offense, the

institution (A) became insolvent; (B)

substantially reduced benefits to

pensioners or insureds; (C) was unable

on demand to refund fully any deposit,

payment, or investment; (D) was so

depleted of its assets as to be forced to

merge without another institution in

order to continue active operations; or

(E) was placed in substantial jeopardy of

any of subdivisions (A) through (D) of

this note.

11. Cross Reference in Subsection

(c)(3).—Subsection (c)(3) provides a

cross reference to another guideline in

Chapter Two (Offense Conduct) in cases

in which the defendant is convicted of

a general fraud statute, and the count of

conviction establishes an offense more

aptly covered by another guideline.

Sometimes, offenses involving

fraudulent statements are prosecuted

under 18 U.S.C. 1001, or similarly

general statute, although the offense is

also covered by a more specific statute.

Examples include false entries regarding

currency transactions, for which § 2S1.3

(Structuring Transactions to Evade

Reporting Requirements) likely would

be more apt, and false statements to a

customs officer, for which § 2T3.1

(Evading Import Duties or Restrictions

(Smuggling); Receiving or Trafficking in

Smuggled Property) likely would be

more apt. In certain other cases, the mail

or wire fraud statutes, or other relatively

broad statutes, are used primarily as

jurisdictional bases for the prosecution

of other offenses.

12. Continuing Financial Crimes

Enterprise.—If the defendant is

convicted under 18 U.S.C. 225 (relating

to a continuing financial crimes

enterprise), the offense level is that

applicable to the underlying series of

offenses comprising the ‘continuing

financial crimes enterprise’.

13. Partially Completed Offenses.—In

the case of a partially completed offense

(e.g., an offense involving a completed

theft or fraud that is part of a larger,

attempted theft or fraud), the offense

level is to be determined in accordance

with the provisions of § 2X1.1 (Attempt,

Solicitation, or Conspiracy) whether the

conviction is for the substantive offense,

the inchoate offense (attempt,

solicitation, or conspiracy), or both. See

Application Note 4 of the Commentary

to § 2X1.1.

14. Multiple Count Indictments.—

Some fraudulent schemes may result in

multiple-count indictments, depending

on the technical elements of the offense.

The cumulative loss produced by a

common scheme or course of conduct

should be used in determining the

offense level, regardless of the number

of counts of conviction. See Chapter

Three, Part D (Multiple Counts).

15. Departure Considerations.—

(A) Upward Departure

Considerations.—There may be cases in

which the offense level determined

under this guideline substantially

understates the seriousness of the

offense. In such cases, an upward

departure may be warranted. The

following is a non-exhaustive list of

factors that the court may consider in

determining whether an upward

departure is warranted:

(i) A primary objective of the offense

was an aggravating, non-monetary

objective. For example, a primary

objective of the offense was to inflict

emotional harm.

(ii) The offense caused or risked

substantial non-monetary harm. For

example, the offense caused physical

harm, psychological harm, or severe

emotional trauma, or resulted in a

substantial invasion of a privacy interest

(through, for example, the theft of

personal information such as medical,

educational, or financial records).

(iii) The offense involved a substantial

amount of interest of any kind, finance

charges, late fees, penalties, amounts

based on an agreed-upon return or rate

of return, or other similar costs, not

included in the determination of loss for

purposes of subsection (b)(1).

(iv) The offense created a risk of

substantial loss beyond the loss

determined for purposes of subsection

(b)(1).

(v) The offense endangered the

solvency or financial security of one or

more victims.

(vi) In a case involving stolen

information from a ‘protected

computer’, as defined in 18 U.S.C.

1030(e)(2), the defendant sought the

stolen information to further a broader

criminal purpose.

(vii) In a case involving access devices

or unlawfully produced or unlawfully

obtained means of identification:

(I) The offense caused substantial

harm to the victim’s reputation or credit

record, or the victim suffered a

substantial inconvenience related to

repairing the victim’s reputation or a

damaged credit record.

(II) An individual whose means of

identification the defendant used to

obtain unlawful means of identification

is erroneously arrested or denied a job

because an arrest record has been made

in that individual’s name.

(III) The defendant produced or

obtained numerous means of

identification with respect to one

individual and essentially assumed that

individual’s identity.

(B) Downward Departure

Consideration.—There may be cases in

which the offense level determined

under this guideline substantially

overstates the seriousness of the offense.

In such cases, a downward departure

may be warranted.

Background: This guideline covers

offenses involving theft, stolen property,

property damage or destruction, fraud,

forgery, and counterfeiting (other than

offenses involving altered or counterfeit

bearer obligations of the United Sates).

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30533

It also covers offenses involving altering

or removing motor vehicle identification

numbers, trafficking in automobiles or

automobile parts with altered or

obliterated identification numbers,

odometer laws and regulations,

obstructing correspondence, the

falsification of documents or records

relating to a benefit plan covered by the

Employment Retirement Income

Security Act, and the failure to

maintain, or falsification of, documents

required by the Labor Management

Reporting and Disclosure Act.

Because federal fraud statutes often

are broadly written, a single pattern of

offense conduct usually can be

prosecuted under several code sections,

as a result of which the offense of

conviction may be somewhat arbitrary.

Furthermore, most fraud statutes cover

a broad range of conduct with extreme

variation in severity. The specific

offense characteristics and cross

references contained in this guideline

are designed with these considerations

in mind.

The Commission has determined that,

ordinarily, the sentences of defendants

convicted of federal offenses should

reflect the nature and magnitude of the

loss caused or intended by their crimes.

Accordingly, along with other relevant

factors under the guidelines, loss serves

as a measure of the seriousness of the

offense and the defendant’s relative

culpability and is a principal factor in

determining the offense level under this

guideline.

Theft from the person of another, such

as pickpocketing or non-forcible pursesnatching, receives an enhanced

sentence because of the increase risk of

physical injury. This guideline does not

include an enhancement for thefts from

the person by means of force or fear;

such crimes are robberies and are

covered under § 2B3.1 (Robbery).

A minimum offense level of level 14

is provided for offenses involving an

organized scheme to steal vehicles or

vehicle parts. Typically, the scope of

such activity is substantial, but the

value of the property may be

particularly difficult to ascertain in

individual cases because the stolen

property is rapidly resold or otherwise

disposed of in the course of the offense.

Therefore, the specific offense

characteristic of ‘organized scheme’ is

used as an alternative to ‘loss’ in setting

a minimum offense level.

Use of false pretenses involving

charitable causes and government

agencies enhances the sentences of

defendants who take advantage of

victims’ trust in government or law

enforcement agencies or the generosity

and charitable motives of victims.

Taking advantage of a victim’s selfinterest does not mitigate the

seriousness of fraudulent conduct;

rather, defendants who exploit victims’

charitable impulses or trust in

government create particular social

harm. In a similar vein, a defendant who

has been subject to civil or

administrative proceedings for the same

or similar fraudulent conduct

demonstrates aggravated criminal intent

and is deserving of additional

punishment for not conforming with the

requirements of judicial process or

orders issued by federal, state, or local

administrative agencies.

Offenses that involve the use of

financial transactions or financial

accounts outside the United States in an

effort to conceal illicit profits and

criminal conduct involve a particularly

high level of sophistication and

complexity. These offenses are difficult

to detect and require costly

investigations and prosecutions.

Diplomatic processes often must be

used to secure testimony and evidence

beyond the jurisdiction of United States

courts. Consequently, a minimum

offense level of level 12 is provided for

these offenses.

Subsection (b)(6) implements the

instruction to the Commission in

section 2 of Public Law 105–101.

Subsection (b)(7)(D) implements, in a

broader form, the directive in section 3

of the College Scholarship Fraud

Prevention Act of 2000, Public law 106–

420.

Subsection (b)(8) implements, in a

broader form, the instruction to the

Commission in section 6(c)(2) of Public

Law 105–184.

Subsections (b)(9)(A) and (B)

implement the instruction to the

Commission in section 4 of the Wireless

Telephone Protection Act, Public Law

105–172.

Subsection (b)(9)(C) implements the

directive to the commission in section 4

of the Identity Theft and Assumption

Deterrence Act of 1998, Public Law

105–318. This subsection focuses

principally on an aggravated form of

identity theft known as ‘‘affirmative

identity theft’’ or ‘‘breeding’’, in which

a defendant uses another individual’s

name, social security number, or some

other form of identification (the ‘‘means

of identification’’) to ‘‘breed’’ (i.e.,

produce or obtain) new or additional

forms of identification. Because 18

U.S.C. 1028(d) broadly defines ‘‘means

of identification’’, the new or additional

forms of identification can include

items such as a driver’s license, a credit

card, or a bank loan. This subsection

provides a minimum offense level of

level 12, in part because of the

seriousness of the offense. The

minimum offense level accounts for the

fact that the means of identification that

were ‘‘bred’’ (i.e., produced or obtained)

often are within the defendant’s

exclusive control, making it difficult for

the individual victim to detect that the

victim’s identity has been ‘‘stolen.’’

Generally, the victim does not become

aware of the offense until certain harms

have already occurred (e.g., a damaged

credit rating or an inability to obtain a

loan). The minimum offense level also

accounts for the non-monetary harm

associated with these types of offenses,

much of which may be difficult or

impossible to quantify (e.g., harm to the

individual’s reputation or credit rating,

inconvenience, and other difficulties

resulting from the offense). The

legislative history of the Identity Theft

and Assumption Deterrence Act of 1998

indicates that Congress was especially

concerned with providing increased

punishment for this type of harm.

Subsection (b)(11)(B) implements, in a

broader form, the instruction to the

Commission in section 110512 of Public

Law 103–322.

Subsection (b)(12)(A) implements, in

a broader form, the instruction to the

Commission in section 2507 of Public

Law 101–647.

Subsection (b)(12)(B) implements, in a

broader form, the instruction to the

Commission in section 961(m) of Public

Law 101–73.

Subsection (d) implements the

instruction to the Commission in

section 805(c) of Public Law 104–132.’’.

Chapter Two, Part B is amended by

striking § 2B1.3 and its accompanying

commentary.

Chapter Two is amended by striking

the heading of Part F, § 2F1.1 and its

accompanying commentary, and § 2F1.2

and its accompanying commentary, and

by adding at the end of Part B the

following:

‘‘§ 2B1.4. Insider Trading

(a) Base Offense Level: 8

(b) Specific Offense Characteristic

(1) If the gain resulting from the

offense exceeded $5,000, increase by the

number of levels from the table in

§ 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount.

Commentary

Statutory Provisions: 15 U.S.C. 78j and 17

CFR 240.10b–5. For additional statutory

provisions(s), see Appendix A (Statutory

Index).

Application Note

1. Application of Subsection of

§ 3B1.3.—(Section 3B1.3 (Abuse of

30534 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

Position of Trust or Use of Special Skill)

should be applied only if the defendant

occupied and abused a position of

special trust. Examples might include a

corporate president or an attorney who

misused information regarding a

planned but unannounced takeover

attempt. It typically would not apply to

an ordinary ‘‘tippee’’.

Background: This guideline applies to

certain violations of Rule 10b-5 that are

commonly referred to as ‘inside trading’.

Insider trading is treated essentially as

a sophisticated fraud. Because the

victims and their losses are difficult if

not impossible to identify, the gain, i.e.,

the total increase in value realized

through trading in securities by the

defendant and persons acting in concert

with the defendant or to whom the

defendant provide inside information, is

employed instead of the victims’ losses.

Certain other offenses, e.g., 7 U.S.C.

13(e), that involve misuse of inside

information for personal gain also

appropriately may be covered by this

guideline.’’.

The Commentary to § 1B1.1 captioned

‘‘Application Notes’’ is amended in

Note 1 by striking subdivision (f); and

by redesignating subdivisions (g)

through (l) as subdivisions (f) through

(k), respectively.

The Commentary to § 1B1.1 captioned

‘‘Application Notes’’ is amended in

Note 4 in the second paragraph by

striking the last sentence.

The Commentary to § 1B1.2 captioned

‘‘Application Notes’’ is amended in

Note 1 in the fourth paragraph by

striking ‘‘§ 2B1.1 (Larceny,

Embezzlement, and Other Forms of

Theft)’’ and inserting ‘‘§ 2B1.1 (Theft,

Property Destruction, and Fraud)’’.

The Commentary to § 1B1.3 captioned

‘‘Application Notes’’ is amended in

Note 5 by striking ‘‘§ 2F1.1 (Fraud and

Deceit)’’ and inserting ‘‘§ 2B1.1(Theft,

Property Destruction, and Fraud)’’.

The Commentary to § 2B2.1 captioned

‘‘Application Notes’’ is amended in

Note 1 by striking ‘‘ ‘More than minimal

planning,’ ‘firearm,’ ’’ and inserting

‘‘ ‘Firearm,’ ’’.

The Commentary to § 2B1.1 captioned

‘‘Application Notes’’ is amended by

striking the text of Note 2 and inserting:

‘‘ ‘Loss’ ’’ means the value of the

property taken, damaged, or

destroyed.’’.

The Commentary to § 2B1.1 captioned

‘‘Application Notes’’ is amended by

adding at the end the following:

‘‘4. More than Minimal Planning.—

‘More than minimal planning’ means

more planning than is typical for

commission of the offense in a simple

form. ‘More than minimal planning’ also

exists if significant affirmative steps

were taken to conceal the offense, other

than conduct to which § 3C1.1

(Obstructing or Impeding the

Administration of Justice) applies.

‘More than minimal planning’ shall be

considered to be present in any case

involving repeated acts over a period of

time, unless it is clear that each instance

was purely opportune. For example,

checking the area to make sure no

witnesses were present would not alone

constitute more than minimal planning.

By contrast, obtaining building plans to

plot a particular course of entry, or

disabling an alarm system, would

constitute more than minimal

planning.’’.

Section 2B2.3(b) is amended by

striking subdivision (3) and inserting

the following:

‘‘(3) If (A) the offense involved

invasion of a protected computer; and

(B) the loss resulting from the invasion

(i) exceeded $2,000 but did not exceed

$5,000, increase by 1 level; or (ii)

exceeded $5,000, increase by the

number of levels from the table in

§ 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount.’’.

The Commentary to § 2B2.3 captioned

‘‘Application Notes’’ is amended in

Note 2 by striking ‘‘§ 2B1.1 (Larceny,

Embezzlement, and Other Forms of

Theft)’’ and inserting ‘‘§ 2B1.1 (Theft,

Property Destruction, and Fraud)’’.

The Commentary to § 2B3.1 captioned

‘‘Application Notes’’ is amended by

striking the text of Note 3 and inserting:

‘‘ ‘Loss’ means the value of the

property taken, damaged, or destroyed’’.

Section 2B3.(b) is amended by

striking subdivision (1) and inserting

the following:

‘‘(1) If the greater of the amount

obtained or demanded (A) exceeded

$2,000 but did not exceed $5,000,

increase by 1 level; or (B) exceeded

$5,000, increase by the number of levels

from the table in § 2B1.1 (Theft,

Property Destruction, and Fraud)

corresponding to that amount.’’.

Section 2B4.1(b) is amended by

striking subdivision (1) and inserting

the following:

‘‘(1) If the greater of the value of the

bribe or the improper benefit to be

conferred (A) exceeded $2,000 but did

not exceed $5,000, increase by 1 level;

or (B) exceeded $5,000, increase by the

number of levels from the table in

§ 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount.’’.

Section 2B5.1(b) is amended by

striking subdivision (1) and inserting

the following:

‘‘(1) If the face value of the counterfeit

items (A) exceeded $2,000 but did not

exceed $5,000, increase by 1 level; or (B)

exceeded $5,000, increase by the

number of levels from the table in

§ 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount.’’.

The Commentary to § 2B5.1 captioned

‘‘Application Notes’’ is amended in

Note 3 by inserting ‘‘Inapplicability to

Genuine but Fraudulently Altered

Instruments.—’’ before ‘‘ ‘Counterfeit,’ ’’;

and by striking ‘‘§ 2F1.1 (Fraud and

Deceit)’’ and inserting ‘‘§ 2B1.1 (Theft,

Property Destruction, and Fraud)’’.

Section 2B5.3(b) is amended by

striking subdivision (1) and inserting

the following:

‘‘(1) If the infringement amount (A)

exceeded $2,000 but did not exceed

$5,000, increase by 1 level; or (B)

exceeded $5,000, increase by the

number of levels from the table in

§ 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount.’’.

The Commentary to § 2B5.3 captioned

‘‘Background’’ is amended in the first

paragraph by striking ‘‘guidelines’’ and

inserting ‘‘guideline’’.

Section 2B6.1(b) is amended by

striking subdivision (1) and inserting

the following:

‘‘(1) If the retail value of the motor

vehicles or parts (A) exceeded $2,000

but did not exceed $5,000, increase by

1 level; or (B) exceeded $5,000, increase

by the number of levels from the table

in § 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount.’’.

The Commentary to § 2B6.1 captioned

‘‘Application Notes’’ is amended in

Note 1 by striking ‘‘§ 2B1.1 (Larceny,

Embezzlement, and Other Forms of

Theft)’’ and inserting ‘‘§ 2B1.1 (Theft,

Property Destruction, and Fraud)’’.

The Commentary to § 2B6.1 captioned

‘‘Application Notes’’ is amended in

Note 2 by striking ‘‘corresponding’’

before ‘‘number’’ and inserting ‘‘term

‘increase by the’’; and by striking

‘‘§ 2F1.1 (Fraud and Deceit)’’ and

inserting ‘‘§ 2B1.1 (Theft, Property

Destruction, and Fraud) corresponding

to that amount’’.

Section 2C1.1(b) is amended by

striking subdivision (2)(A) and inserting

the following:

‘‘(A) If the value of the payment, the

benefit received or to be received in

return for the payment, or the loss to the

government from the offense, whichever

is greatest (i) exceeded $2,000 but did

not exceed $5,000, increase by 1 level;

or (ii) exceeded $5,000, increase by the

number of levels from the table in

§ 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount.’’.

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30535

The Commentary to § 2C1.1 captioned

‘‘Application Notes’’ is amended in

Note 2 by striking ‘‘ ‘Loss’ is discussed

in the Commentary to § 2B1.1 (Larceny,

Embezzlement, and Other Forms of

Theft) and includes both actual and

intended loss’’ and inserting ‘‘ ‘Loss’, for

purposes of subsection (b)(2)(A), shall

be determined in accordance with

Application Note 2 of the Commentary

to § 2B1.1 (Theft, Property Destruction,

and Fraud)’’.

Section 2C1.2(b) is amended by

striking subdivision (2)(A) and inserting

the following:

‘‘(A) If the value of the gratuity (i)

exceeded $2,000 but did not exceed

$5,000, increase by 1 level; or (ii)

exceeded $5,000, increase by the

number of levels from the table in

§ 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount.’’.

Section 2C1.6(b) is amended by

striking subdivision (1) and inserting

the following:

‘‘(1) If the value of the gratuity (i)

exceeded $2,000 but did not exceed

$5,000, increase by 1 level; or (ii)

exceeded $5,000, increase by the

number of levels from the table in

§ 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount.’’.

Section 2C1.7(b) is amended by

striking subdivision (1)(A) and inserting

the following:

‘‘(A) If the loss to the government, or

the value of anything obtained or to be

obtained by a public official or others

acting with a public official, whichever

is greater (i) exceeded $2,000 but did

not exceed $5,000, increase by 1 level;

or (ii) exceeded $5,000, increase by the

number of levels from the table in

§ 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount.’’.

The Commentary to § 2C1.7 captioned

‘‘Application Notes’’ is amended by

striking the text of Note 3 and inserting:

‘‘ ‘Loss’, for purposes of subsection

(b)(1)(A), shall be determined in

accordance with Application Note 2 of

the Commentary to § 2B1.1 (Theft,

Property Destruction, and Fraud).’’.

Section 2E5.1(b) is amended by

striking subdivision (2) and inserting

the following:

‘‘(2) If the value of the prohibited

payment or the value of the improper

benefit to the payer, whichever is

greater (A) exceeded $2,000 but did not

exceed $5,000, increase by 1 level; or (B)

exceeded $5,000, increase by the

number of levels from the table in

§ 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount.’’.

Section 2G2.2(b)(2)(A) is amended by

striking ‘‘§ 2F1.1 (Fraud and Deceit)’’

and inserting ‘‘§ 2B1.1 (Theft, Property

Destruction, and Fraud)’’.

Section 2G3.1(b)(1)(A) is amended by

striking ‘‘§ 2F1.1 (Fraud and Deceit)’’

and inserting ‘‘§ 2B1.1 (Theft, Property

Destruction, and Fraud)’’.

Section 2G3.2(b)(2) is amended by

striking ‘‘at § 2F1.1(b)(1)’’ and inserting

‘‘in § 2B1.1 (Theft, Property Destruction,

and Fraud)’’.

Section 2H3.3(a) is amended by

striking the text of subdivision (2) and

inserting: ‘‘if the conduct was theft or

destruction of mail, apply § 2B1.1

(Theft, Property Destruction, and

Fraud).’’; and by striking subdivision

(3).

The Commentary to § 2H3.3 captioned

‘‘Background’’ is amended by striking

‘‘§ 2B1.1 (Larceny, Embezzlement, and

Other Forms of Theft) or § 2B1.3

(Property Damage or Destruction)’’ and

inserting ‘‘§ 2B1.1 (Theft, Property

Destruction, and Fraud)’’.

The Commentary to § 2J1.1 captioned

‘‘Application Notes’’ is amended in

Note 2 by striking ‘‘(Larceny,

Embezzlement, and Other Forms of

Theft)’’ and inserting ‘‘(Theft, Property

Destruction, and Fraud)’’.

Section 2K1.4(a) is amended by

striking the text of subdivision (3) and

inserting: ‘‘2 plus the offense level from

§ 2B1.1 (Theft, Property Destruction,

and Fraud).’’; and by striking

subdivision (4).

Section 2K1.4(b)(2) is amended by

striking ‘‘(4)’’ and inserting ‘‘(3)’’.

Section 2N2.1(b)(1) is amended by

striking ‘‘§ 2F1.1 (Fraud and Deceit)’’

and inserting ‘‘§ 2B1.1 (Theft, Property

Destruction, and Fraud)’’.

The Commentary to § 2N2.1 captioned

‘‘Statutory Provisions’’ is amended by

inserting ‘‘, 6810, 7734’’ after ‘‘150gg’’.

The Commentary to § 2N2.1 captioned

‘‘Application Notes’’ is amended in

Note 2 by inserting ‘‘theft, property

destruction, or’’ after ‘‘involved’’; and

by striking ‘‘theft, bribery, revealing

trade secrets, or destruction of property’’

and inserting ‘‘bribery’’.

The Commentary to § 2N2.1 captioned

‘‘Application Notes’’ is amended in

Note 4 by striking ‘‘§ 2F1.1 (Fraud and

Deceit)’’ and inserting ‘‘§ 2B1.1 (Theft,

Property Destruction, and Fraud)’’.

Section 2N3.1(b)(1) is amended by

striking ‘‘§ 2F1.1 (Fraud and Deceit)’’

and inserting ‘‘§ 2B1.1 (Theft, Property

Destruction, and Fraud)’’.

The Commentary to § 2N3.1 captioned

‘‘Background’’ is amended by striking

‘‘the guideline for fraud and deception,

§ 2F1.1,’’ and inserting ‘‘§ 2B1.1 (Theft,

Property Destruction, and Fraud)’’.

Section 2Q1.6(a)(2) is amended by

striking ‘‘§ 2B1.3 (Property Damage or

Destruction)’’ and inserting ‘‘§ 2B1.1

(Theft, Property Destruction, and

Fraud)’’.

Section 2Q2.1(b) is amended by

striking subdivision (3)(A) and inserting

the following:

‘‘(A) If the market value of the fish,

wildlife, or plants (i) exceeded $2,000

but did not exceed $5,000, increase by

1 level; or (ii) exceeded $5,000, increase

by the number of levels from the table

in § 2B1.1 (Theft, Property Destruction,

and Fraud) corresponding to that

amount; or ’’.

Section 2S1.3(a) is amended by

striking ‘‘§ 2F1.1 (Fraud and Deceit)’’

and inserting ‘‘§ 2B1.1 (Theft, Property

Destruction, and Fraud)’’.

Section 2T1.1(b)(2) is amended by

striking ‘‘concealment’’ and inserting

‘‘means’’; and by inserting after

‘‘levels.’’ the following: ‘‘If the resulting

offense level is less than level 12,

increase to level 12.’’.

Section 2T1.1(c)(1) is amended by

adding at the end the following:

‘‘(D) If the offense involved (i)

conduct described in subdivisions (A),

(B), or (C) of these Notes; and (ii) both

individual and corporate tax returns, the

tax loss is the aggregate tax loss from the

offenses added together.’’.

Section 2T1.1(c)(2) is amended in the

second paragraph by striking ‘‘Note’’

and inserting ‘‘Notes’’; by inserting

‘‘(A)’’ before ‘‘If’’; and by adding at the

end the following:

‘‘(B) If the offense involved (i)

conduct described in subdivision (A) of

these Notes; and (ii) both individual and

corporate tax returns, the tax loss is the

aggregate tax loss from the offenses

added together.’’.

The Commentary to § 2T1.1 captioned

‘‘Application Notes’’ is amended in

Note 1 in the first paragraph by inserting

‘‘, except in willful evasion of payment

cases under 26 U.S.C. 7201 and willful

failure to pay cases under 26 U.S.C.

7203’’ after ‘‘penalties’’.

The Commentary to § 2T1.1 captioned

‘‘Application Notes’’ is amended by

striking the text of Note 4 and inserting

the following:

‘‘Sophisticated Means

Enhancement.—For purposes of

subsection (b)(2), ‘sophisticated means’

means especially complex or especially

intricate offense conduct pertaining to

the execution or concealment of an

offense. Conduct such as hiding assets

or transactions, or both, through the use

of fictitious entities, corporate shells, or

offshore financial accounts ordinarily

indicates sophisticated means.’’.

The Commentary to § 2T1.1 captioned

‘‘Application Notes’’ is amended by

30536 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

striking the text of Note 7 and inserting

the following:

‘‘If the offense involved both

individual and corporate tax returns, the

tax loss is the aggregate tax loss from the

individual tax offense and the corporate

tax offense added together. Accordingly,

in a case in which a defendant fails to

report income derived from a

corporation on both the defendant’s

individual tax return and the

defendant’s corporate tax return, the tax

loss is the sum of (A) the unreported or

diverted amount multiplied by (i) 28%;

or (ii) the tax rate for the individual tax

offense, if sufficient information is

available to make a more accurate

assessment of that tax rate; and (B) the

unreported or diverted amount

multiplied by (i) 34%; or (ii) the tax rate

for the corporate tax offense, if sufficient

information is available to make a more

accurate assessment of that tax rate. For

example, the defendant, the sole owner

of a Subchapter C corporation,

fraudulently understates the

corporation’s income in the amount of

$100,000 on the corporation’s tax

return, diverts the funds to the

defendant’s own use, and does not

report these funds on the defendant’s

individual tax return. For purposes of

this example, assume the use of 34%

with respect to the corporate tax loss

and the use of 28% with respect to the

individual tax loss. The tax loss

attributable to the defendant’s corporate

tax return is $34,000 ($100,000

multiplied by 34%). The tax loss

attributable to the defendant’s

individual tax return is $28,000

($100,000 multiplied by 28%). The tax

loss for the offenses are added together

to equal $62,000 ($34,000 + $28,000).’’.

Section 2T1.4(b)(2) is amended by

striking ‘‘concealment’’ and inserting

‘‘means’’; and by inserting after

‘‘levels.’’ the following: ‘‘If the resulting

offense level is less than level 12,

increase to level 12.’’.

The Commentary to § 2T1.4 captioned

‘‘Application Notes’’ is amended by

striking the text of Note 3 and inserting

the following:

‘‘Sophisticated Means.—For purposes

of subsection (b)(2), ‘sophisticated

means’ means especially complex or

especially intricate offense conduct

pertaining to the execution or

concealment of an offense. Conduct

such as hiding assets or transactions, or

both, through the use of fictitious

entities, corporate shells, or offshore

financial accounts ordinarily indicates

sophisticated means.’’.

Section 2T1.6(b)(1) is amended by

striking ‘‘(Larceny, Embezzlement, and

Other Forms of Theft)’’ and inserting

‘‘(Theft, Property Destruction, and

Fraud)’’.

Section 2T3.1(b)(1) is amended by

striking ‘‘concealment’’ and inserting

‘‘means’’; and by inserting after

‘‘levels.’’ the following: ‘‘If the resulting

offense level is less than level 12,

increase to level 12.’’.

The Commentary to § 2T3.1 captioned

‘‘Application Notes’’ is amended by

striking the text of Note 3 and inserting

the following:

‘‘Sophisticated Means.—For purposes

of subsection (b)(1), ‘sophisticated

means’ means especially complex or

especially intricate offense conduct

pertaining to the execution or

concealment of an offense. Conduct

such as hiding assets or transactions, or

both, through the use of fictitious

entities, corporate shells, or offshore

financial accounts ordinarily indicates

sophisticated means.’’.

Section 2T4.1 is amended by striking

the text and inserting the following:

‘‘Tax loss (apply the greatest) Offense

level

(A) $2,000 or less ......................... 6

(B) More than $2,000 ................... 8

(C) More than $5,000 ................... 10

(D) More than $12,500 ................. 12

(E) More than $30,000 ................. 14

(F) More than $80,000 ................. 16

(G) More than $200,000 ............... 18

(H) More than $400,000 ............... 20

(I) More than $1,000,000 .............. 22

(J) More than $2,500,000 ............. 24

(K) More than $7,000,000 ............ 26

(L) More than $20,000,000 ........... 28

(M) More than $50,000,000 .......... 30

(N) More than $100,000,000 ........ 32.’’.

The Commentary to § 3B1.3 captioned

‘‘Application Notes’’ is amended by

adding after Note 3 the following:

‘‘4. The following additional

illustrations of an abuse of a position of

trust pertain to theft or embezzlement

from employee pension or welfare

benefit plans or labor unions:

(A) If the offense involved theft or

embezzlement from an employee

pension or welfare benefit plan and the

defendant was a fiduciary of the benefit

plan, an adjustment under this section

for abuse of a position of trust will

apply. ‘‘Fiduciary of the benefit plan’’ is

defined in 29 U.S.C. 1002(21)(A) to

mean a person who exercises any

discretionary authority or control in

respect to the management of such plan

or exercises authority or control in

respect to management or disposition of

its assets, or who renders investment

advice for a fee or other direct or

indirect compensation with respect to

any moneys or other property of such

plan, or has any authority or

responsibility to do so, or who has any

discretionary authority or responsibility

in the administration of such plan.

(B) If the offense involved theft or

embezzlement from a labor union and

the defendant was a union officer or

occupied a position of trust in the union

(as set forth in 29 U.S.C. 501(a)), an

adjustment under this section for an

abuse of a position of trust will apply.’’.

Section 3D1.2(d) is amended in the

second paragraph by striking ‘‘2B1.3’’

and inserting ‘‘2B1.4’’; and by striking

‘‘§§ 2F1.1, 2F1.2;’’.

The Commentary to § 3D1.2 captioned

‘‘Application Notes’’ is amended in

Note 6 in the third paragraph by striking

‘‘, and would include, for example,

larceny, embezzlement, forgery, and

fraud’’.

Section 3D1.3(b) is amended by

striking ‘‘(e.g., theft and fraud)’’.

The Commentary to § 3D1.3 captioned

‘‘Application Notes’’ is amended in

Note 3 by striking ‘‘(e.g., theft and

fraud)’’; and by striking the last

sentence.

The Commentary following § 3D1.5

captioned ‘‘Illustrations of the

Operation of the Multiple-Count Rules’’

is amended by striking Illustration 2;

and by redesignating Illustrations 3 and

4 as Illustrations 2 and 3, respectively.

The Commentary following § 3D1.5

captioned ‘‘Illustrations of the

Operation of the Multiple-Count Rules’’

is amended in Illustration 3, as

redesignated by this amendment, by

striking ‘‘§ 2F1.1 (Fraud and Deceit)’’

and inserting ‘‘§ 2B1.1 (Theft, Property

Destruction, and Fraud)’’; and by

striking ‘‘§ 2B4.1 or § 2F1.1’’ and

inserting ‘‘§ 2B1.1 or § 2B4.1’’.

The Commentary to § 8A1.2 captioned

‘‘Application Notes’’ is amended in

Note 3(i) by striking ‘‘§§ 2B1.1 (Larceny,

Embezzlement, and Other Forms of

Theft), 2F1.1 (Fraud and Deceit)’’ and

inserting ‘‘§ 2B1.1 (Theft, Property

Destruction, and Fraud)’’.

Section 8C2.1(a) is amended by

striking ‘‘2B1.3’’ and inserting ‘‘2B1.4’’;

and by striking ‘‘§§ 2F1.1, 2F1.2;’’.

The Commentary to § 8C2.1 captioned

‘‘Application Notes’’ is amended in

Note 2 by striking ‘‘§ 2F1.1 (Fraud and

Deceit)’’ each place it appears and

inserting ‘‘§ 2B1.1 (Theft, Property

Destruction, and Fraud)’’.

Appendix A (Statutory Index) is

amended in the line referenced to 7

U.S.C. § 6 by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 7 U.S.C.

§ 6b(A) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 7 U.S.C.

§ 6b(B) by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30537

In the line referenced to 7 U.S.C.

§ 6b(C) by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 7 U.S.C. § 6c

by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 7 U.S.C. § 6h

by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 7 U.S.C. § 6o

by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 7 U.S.C.

§ 13(a)(2) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 7 U.S.C.

§ 13(a)(3) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 7 U.S.C.

§ 13(a)(4) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 7 U.S.C.

§ 13(d) by striking ‘‘2F1.2’’ and inserting

‘‘2B1.4’’;

In the line referenced to 7 U.S.C.

§ 13(f) by striking ‘‘2F1.2’’ and inserting

‘‘2B1.4’’;

In the line referenced to 7 U.S.C. § 23

by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 7 U.S.C. § 270

by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 7 U.S.C.

§ 2024(b) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 7 U.S.C.

§ 2024(c) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

By inserting after the line referenced

to 7 U.S.C. § 6810 the following new

line:

‘‘7 U.S.C. § 7734 2N2.1’’;

In the line referenced to 12 U.S.C.

§ 631 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 15 U.S.C. § 50

by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 77e by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 77q by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 77x by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 78j by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’; and by striking ‘‘2F1.2’’ and

inserting ‘‘2B1.4’’;

In the line referenced to 15 U.S.C.

§ 78ff by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 80b–6 by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 158 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 645(a) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 645(b) by striking ‘‘, 2F1.1’’;

In the line referenced to 15 U.S.C.

§ 645(c) by striking ‘‘, 2F1.1’’;

In the line referenced to 15 U.S.C.

§ 714m(a) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 714m(b) by striking ‘‘, 2F1.1’’;

In the line referenced to 15 U.S.C.

§ 1281 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 1644 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 1681q by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 15 U.S.C.

§ 1693n(a) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

By inserting after the line referenced

to 15 U.S.C. § 2615 the following new

line:

‘‘15 U.S.C. § 6821 2B1.1’’;

In the line referenced to 16 U.S.C.

§ 114 by striking ‘‘, 2B1.3’’;

In the line referenced to 16 U.S.C.

§ 117c by striking ‘‘, 2B1.3’’;

In the line referenced to 16 U.S.C.

§ 123 by striking ‘‘2B1.3,’’;

In the line referenced to 16 U.S.C.

§ 146 by striking ‘‘2B1.3,’’;

In the line referenced to 16 U.S.C.

§ 413 by striking ‘‘, 2B1.3’’;

In the line referenced to 16 U.S.C.

§ 433 by striking ‘‘, 2B1.3’’;

In the line referenced to 16 U.S.C.

§ 831t(b) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 16 U.S.C.

§ 831t(c) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 32(a),(b) by striking ‘‘2B1.3’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 18 U.S.C. § 33

by striking ‘‘2B1.3’’and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C. § 37

by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

By inserting after the line referenced

to 18 U.S.C. § 37 the following new line:

‘‘18 U.S.C. § 38 2B1.1’’;

In the line referenced to 18 U.S.C. § 43

by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 112(a) by striking ‘‘2B1.3’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 152 by striking ‘‘2B4.1, 2F1.1’’ and

inserting ‘‘2B1.1, 2B4.1’’;

In the line referenced to 18 U.S.C.

§ 153 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 155 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 225 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 285 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 286 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 287 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 288 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 289 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 332 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 335 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 470 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 471 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 472 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 473 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 474 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 474A by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 476 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 477 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 478 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 479 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 480 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 481 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 482 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 483 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

30538 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

In the line referenced to 18 U.S.C.

§ 484 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 485 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 486 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 488 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 491 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 493 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 494 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 495 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 496 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 497 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 498 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 499 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 500 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 501 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 502 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 503 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 505 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 506 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 507 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 508 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 509 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 510 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 513 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 514 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 642 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’ and striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 656 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 657 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 659 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 663 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 665(a) by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 666(a)(1)(A) by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 709 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 712 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 911 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 914 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 915 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 917 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 970(a) by striking ‘‘2B1.3’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1001 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1002 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1003 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’ and striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 1004 by inserting ‘‘2B1.1,’’ before

‘‘2B5.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 1005 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1006 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1007 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1010 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1011 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1012 by inserting ‘‘2B1.1,’’ before

‘‘2C1.3’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 1013 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1014 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1015 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1016 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1017 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1018 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1019 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1020 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1021 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1022 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1023 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 1025 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1026 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1028 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1029 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1030(a)(4) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1030(a)(5) by striking ‘‘2B1.3’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1030(a)(6) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1031 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1032 by inserting ‘‘2B1.1,’’ before

‘‘2B4.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 1033 by striking ‘‘2F1.1,’’;

In the line referenced to 18 U.S.C.

§ 1035 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1341 by inserting ‘‘2B1.1,’’ before

‘‘2C1.7’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 1342 by inserting ‘‘2B1.1,’’ before

‘‘2C1.7’’; and by striking ‘‘, 2F1.1’’;

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30539

In the line referenced to 18 U.S.C.

§ 1343 by inserting ‘‘2B1.1,’’ before

‘‘2C1.7’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 1344 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1347 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1361 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1362 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1363 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1366 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1422 by inserting ‘‘2B1.1,’’ before

‘‘2C1.2’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 1702 by striking ‘‘2B1.3,’’;

In the line referenced to 18 U.S.C.

§ 1703 by striking ‘‘2B1.3,’’;

In the line referenced to 18 U.S.C.

§ 1704 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 1705 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1706 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1708 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 1712 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1716C by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1720 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1728 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1852 by striking ‘‘, 2B1.3’’;

In the line referenced to 18 U.S.C.

§ 1853 by striking ‘‘, 2B1.3’’;

In the line referenced to 18 U.S.C.

§ 1854 by striking ‘‘, 2B1.3’’;

In the line referenced to 18 U.S.C.

§ 1857 by striking ‘‘2B1.3,’’ and

inserting ‘‘2B1.1,’’;

In the line referenced to 18 U.S.C.

§ 1861 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1902 by striking ‘‘2F1.2’’ and inserting

‘‘2B1.4’’;

In the line referenced to 18 U.S.C.

§ 1919 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1920 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1923 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 1992 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 2071 by striking ‘‘, 2B1.3’’;

In the line referenced to 18 U.S.C.

§ 2072 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 2073 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 2197 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 2272 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 2275 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 2276 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 2280 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 2281 by striking ‘‘2B1.3’’ and inserting

‘‘2B1.1’’;

In the line referenced to 18 U.S.C.

§ 2314 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 2315 by striking ‘‘, 2F1.1’’;

In the line referenced to 18 U.S.C.

§ 2332a by striking ‘‘2B1.3’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 19 U.S.C.

§ 1434 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 19 U.S.C.

§ 1435 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 19 U.S.C.

§ 1436 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 19 U.S.C.

§ 1919 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 19 U.S.C.

§ 2316 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 20 U.S.C.

§ 1097(a) by striking ‘‘, 2F1.1’’;

In the line referenced to 20 U.S.C.

§ 1097(b) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 20 U.S.C.

§ 1097(d) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 21 U.S.C.

§ 333(a)(2) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 22 U.S.C.

§ 1980(g) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 22 U.S.C.

§ 2197(n) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 22 U.S.C.

§ 4221 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 25 U.S.C.

§ 450d by striking ‘‘, 2F1.1’’;

In the line referenced to 26 U.S.C.

§ 7208 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 26 U.S.C.

§ 7214 by inserting ‘‘2B1.1,’’ before

‘‘2C1.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 26 U.S.C.

§ 7232 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 29 U.S.C.

§ 1141 by inserting ‘‘2B1.1,’’ before

‘‘2B3.2’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 38 U.S.C.

§ 787 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 38 U.S.C.

§ 3502 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 41 U.S.C.

§ 423(e) by inserting ‘‘2B1.1,’’ before

‘‘2C1.1’’; and by striking ‘‘, 2F1.1’’;

In the line referenced to 42 U.S.C.

§ 408 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

By inserting after the line referenced

to 42 U.S.C. § 408 the following new

line:

‘‘42 U.S.C. § 1011 2B1.1’’;

In the line referenced to 42 U.S.C.

§ 1307(a) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 1307(b) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 1307a-7b by striking ‘‘, 2F1.1’’;

In the line referenced to 42 U.S.C.

§ 1383(d)(2) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 1383a(a) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 1383a(b) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 1395nn(a) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 1395nn(c) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 1396h(a) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 1713 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 1760(g) by striking ‘‘, 2F1.1’’;

30540 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

In the line referenced to 42 U.S.C.

§ 1761(o)(1) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 1761(o)(2) by striking ‘‘, 2F1.1’’;

In the line referenced to 42 U.S.C.

§ 3220(a) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 3220(b) by striking ‘‘, 2F1.1’’;

In the line referenced to 42 U.S.C.

§ 3426 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 3791 by striking ‘‘, 2F1.1’’;

In the line referenced to 42 U.S.C.

§ 3792 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 42 U.S.C.

§ 3795 by striking ‘‘, 2F1.1’’;

In the line referenced to 42 U.S.C.

§ 5157(a) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 45 U.S.C.

§ 359(a) by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 46 U.S.C.

§ 1276 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 49 U.S.C.

§ 121 by striking ‘‘2F1.1’’ and inserting

‘‘2B1.1’’;

In the line referenced to 49 U.S.C.

§ 11903 by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 49 U.S.C.

§ 11904 by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 49 U.S.C.

§ 14912 by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 49 U.S.C.

§ 16102 by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

By inserting after the line referenced

to 49 U.S.C. § 16104 the following new

line:

‘‘49 U.S.C. § 30170 2B1.1’’;

By inserting after the line referenced

to 49 U.S.C. § 46312 the following new

line:

‘‘49 U.S.C. § 46317(a) 2B1.1’’;

In the line referenced to 49 U.S.C.

§ 60123(d) by striking ‘‘2B1.3’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 49 U.S.C.

§ 80116 by striking ‘‘2F1.1’’ and

inserting ‘‘2B1.1’’;

In the line referenced to 49 U.S.C.

§ 80501 by striking ‘‘2B1.3’’ and

inserting ‘‘2B1.1’’; and

In the line referenced to 49 U.S.C.

App. § 1687(g) by striking ‘‘2B1.3’’ and

inserting ‘‘2B1.1’’.

Reason for Amendment: This

‘‘Economic Crime Package’’ is a six-part

amendment that is the result of

Commission study of economic crime

issues over a number of years. The

major parts of the amendment are: (1)

Consolidation of the theft, property

destruction, and fraud guidelines; (2) a

revised, common loss table for the

consolidated guideline, and a similar

table for tax offenses; (3) a revised,

common definition of loss for the

consolidated guideline; (4) revisions to

guidelines that refer to the loss table in

the consolidated guideline; (5) technical

and conforming amendments; and (6)

amendments regarding tax loss.

Consolidation of Theft, Property

Destruction, and Fraud; Miscellaneous

Revisions

The first part of this amendment

consolidates the guidelines for theft,

§ 2B1.1 (Larceny, Embezzlement, and

Other Forms of Theft; Receiving,

Transporting, Transferring,

Transmitting, or Possessing Stolen

Property), property destruction, § 2B1.3

(Property Damage or Destruction), and

fraud, § 2F1.1 (Fraud and Deceit;

Forgery; Offenses Involving Altered or

Counterfeit Instruments Other than

Counterfeit Bearer Obligations of the

United States) into one guideline,

§ 2B1.1 (Theft, Property Destruction,

and Fraud). Consolidation will provide

similar treatment for similar offenses for

which pecuniary harm is a major factor

in determining the offense level and,

therefore, decrease unwarranted

sentencing disparity that may be caused

by undue complexity in the guidelines.

Consolidation addresses concerns raised

over several years by probation officers,

judges, and practitioners about the

difficulties of determining for particular

cases, whether to apply § 2B1.1 or

§ 2F1.1 and the disparate sentencing

outcomes that can result depending on

that decision. Commentators have noted

that inasmuch as theft and fraud

offenses are conceptually similar, there

is no strong reason to sentence them

differently.

The base offense level for the

consolidated guideline is level 6. This

maintains the base offense level for

fraud offenses, but represents a twolevel increase for theft and property

destruction offenses, which prior to this

amendment was level 4. The increase of

two levels in the base offense levels for

theft and property destruction offenses

will have minimal impact for low-level

theft offenses involving offenders in

criminal history Category I or Category

II. Commission analysis indicates that

only a few defendants will move from

Zone A (where probation without

conditions of confinement is possible)

to Zone B or Zone C, and those that are

moved into a zone at higher offense

levels in the Sentencing Table generally

will have criminal history categories

above Category I. As a result, the

Commission decided against

promulgating a two-level reduction for

offenses involving loss amounts less

than $2,000.

The amendment deletes the two-level

enhancement for more than minimal

planning previously at §§ 2B1.1(b)(4)(A)

and 2F1.1(b)(2)(A). The two-fold reason

for this change was to obviate the need

for judicial fact-finding about this

frequently occurring enhancement and

to avoid the potential overlap between

the more than minimal planning

enhancement and the sophisticated

means enhancement previously at

§ 2F1.1(b)(6) and now, by this

amendment, at § 2B1.1(b)(8).

The amendment also eliminates the

alternative prong of the more than

minimal planning enhancement, at

§ 2F1.1(b)(2)(B) prior to this

amendment, which provided a two-level

increase if the offense involved more

than one victim. The amendment

replaces this enhancement with a

specific offense characteristic for

offenses that involved large numbers of

victims. This change addresses three

concerns. First, as a result of the

consolidation, the more-than-one-victim

enhancement, if retained, would apply

in cases that, prior to this amendment,

were not subject to such an

enhancement. Second, a two-level

increase in every case involving more

than one victim is arguably inconsistent

with the approach in subsection (b)(2) of

§ 3A1.1 (Hate Crime Motivation or

Vulnerable Victim), which provides a

two-level increase if the offense

involved a large number of vulnerable

victims. Third, in practice, the more

than minimal planning enhancement

was so closely linked with this

enhancement that the decision to

eliminate the former argues strongly for

also eliminating the latter.

The amendment provides a two-level

enhancement for offenses involving ten

or more, but fewer than 50, victims, and

a four-level increase for offenses

involving 50 or more victims. This

provision is designed to provide a

measured increment that results in

increased punishment for offenses

involving larger numbers of victims. Its

applicability to those cases in which

victims, both individuals and

organizations, sustain an actual loss

under subsection (b)(1) or sustain bodily

injury.

A special rule is provided for

application of the victim enhancement

for offenses involving United States

mail because of (i) the unique proof

problems often attendant to such

offenses, (ii) the frequently significant,

but difficult to quantify, non-monetary

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30541

losses in such offenses, and (iii) the

importance of maintaining the integrity

of the United States mail.

In addition, the amendment moves

the mass-marketing enhancement into

the new victim-related specific offense

characteristic, as an alternative to the

two-level adjustment for more than ten,

but fewer than 50, victims. The

provision is retained to remain

responsive to the congressional

directive that led to its original

promulgation and reflects the

Commission’s expectation that most

telemarketing cases, or similar massmarketing cases, will have at least ten

victims and, receive this enhancement.

The mass-marketing alternative

enhancement also will continue to

apply in cases in which mass-marketing

has been used to target a large number

of persons, regardless of the number of

persons who have sustained an actual

loss or injury.

In addition, the amendment provides

that if a victim enhancement applies,

the enhancement under § 3A1.1(b)(2) for

‘‘a large number of vulnerable victims’’

does not also apply because the more

serious conduct already would have

resulted in a higher penalty level.

In response to issues raised in a

circuit conflict, the amendment revises

the commentary related to subsection

(b)(4)(B) of § 2B1.1 to clarify the

meaning of ‘‘person in the business of

receiving and selling stolen property.’’

The amendment addresses an issue that

has arisen in case law regarding what

conduct receives a defendant for the 4-

level enhancement.

In determining the meaning of ‘‘in the

business of’’, some circuits apply what

has been termed the ‘‘fence test’’, under

which the court must consider (1) if the

stolen property was bought and sold,

and (2) to what extent the stolen

property transactions encouraged others

to commit property crimes. Other

circuits have adopted the ‘‘totality of the

circumstances test’’ that focuses on the

regularity and sophistication of the

defendant’s operation. Compare United

States v. Esquivel, 919 F.2d 957 (5th Cir.

1990), with United States v. St. Cyr, 997

F.2d 698 (1st Cir. 1992). Under either

test, courts consider the sophistication

and regularity of the business as well as

the control, volume, turnover,

relationship with thieves, and

connections with buyers. Although the

factors considered by all of these

circuits are similar, the approaches are

different.

After consideration, the Commission

adopted the totality of circumstances

approach because it is more objective

and more properly targets the conduct

of the individual who is actually in the

business of fencing. See United States v.

St. Cyr, supra.

In addition, this amendment resolves

a circuit conflict regarding the scope of

the enhancement in the consolidated

guideline for a misrepresentation that

the defendant was acting on behalf of a

charitable, educational, religious, or

political organization, or a government

agency. (Prior to this amendment, the

enhancement was at subsection (b)(4)(A)

of § 2F1.1). The conflict concerns

whether the misrepresentation

enhancement applies only in cases in

which the defendant does not have any

authority to act on behalf of the covered

organization or government agency or if

it applies more broadly to cases in

which the defendant has a legitimate

connection to the covered organization

or government agency, but

misrepresents that the defendant is

acting solely on behalf of that

organization or agency. Compare, e.g.,

United States v. Marcum, 16 F.3d 599

(4th Cir. 1994) (enhancement

appropriate even though defendant did

not misrepresent his authority to act on

behalf of the organization but rather

only misrepresented that he was

conducting an activity wholly on behalf

of the organization), with United States

v. Frazier, 53 F.3d 1105 (10th Cir. 1995)

(application of the enhancement is

limited to cases in which the defendant

exploits the victim by claiming to have

authority which in fact does not exist).

The amendment follows the broader

view of the Fourth Circuit. It provides

for application of the enhancement,

now, by this amendment, at

§ 2B1.1(b)(7)(A), if the defendant falsely

represented that the defendant was

acting to obtain a benefit for a covered

organization or agency when, in fact, the

defendant intended to divert all or part

of that benefit (for example, for the

defendant’s personal gain), regardless of

whether the defendant actually was

associated with the organization or

government agency. The Commission

determined that the enhancement was

appropriate in such cases because the

representation that the defendant was

acting to obtain a benefit for the

organization enables the defendant to

commit the offense. In the case of an

employee who also holds a position of

trust, the amendment provides an

application note instructing the court

not to apply § 3B1.3 (Abuse of Position

of Trust or Use of Special Skill) if the

same conduct forms the basis both for

the enhancement and the adjustment in

§ 3B1.3.

The amendment implements the

directive in section 3 of the College

Scholarship Fraud Prevention Act of

2000, Public Law 106–420, by providing

an additional alternative enhancement

that applies if the offense involves a

misrepresentation to a consumer in

connection with obtaining, providing, or

furnishing financial assistance for an

institution of higher education. The

enhancement targets the provider of the

financial assistance or scholarship

services, not the individual applicant

for such assistance or scholarship,

consistent with the intent of the

legislation.

This amendment makes two minor

substantive changes to the enhancement

for conscious or reckless risk of serious

bodily injury, now, by this amendment,

at subsection (b)(11)(A). First, it

increases the minimum offense level

from level 13 to level 14 to promote

proportionality within this guideline.

For example, within the theft and fraud

guidelines prior to this amendment,

there were other specific offense

characteristics that had a higher floor

offense level than the risk of bodily

injury enhancement: (1) ‘‘chop shops’’

(level 14); (2) jeopardizing the solvency

of a financial institution (level 24); and

(3) personally receiving more than

$1,000,000 from a financial institution

(level 24). Second, it inserts ‘‘death’’

before the term ‘‘or serious bodily

injury’’ to clarify that the risk of the

greater harm also is covered. Including

risk of death also provides consistency

with similar provisions in other parts of

the Guidelines Manual, where risk of

death is always included with risk of

serious bodily injury.

The amendment modifies the fourlevel increase and minimum offense

level of level 24 for a defendant who

personally derives more than $1,000,000

in gross receipts from an offense that

affected a financial institution, now, by

this amendment, at subsection

(b)(12)(A). The amendment retains the

minimum offense level but reduces the

four-level enhancement to two levels

because of the increased offense levels

that will result from the loss table for

the consolidated guideline. The twolevel increase was retained because

elimination of the enhancement entirely

would not provide an appropriate

punishment for those offenders

involved with losses that are in the

$1,000,000 to $2,500,000 range of loss.

The enhancement also was modified

to address issues about what it means to

‘‘affect’’ a financial institution and how

to apply the enhancement to a case in

which there are more than one financial

institution involved. Accordingly, the

revised provision focuses on whether

the defendant derived more than

$1,000,000 in gross receipts from one or

more financial institutions as a result of

the offense.

30542 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

The amendment includes a new cross

reference (subsection (c)(3)) that is more

generally applicable and intended to

apply whenever a broadly applicable

fraud statute is used to reach conduct

that is addressed more specifically in

another Chapter Two guideline. Prior to

this amendment, the fraud guideline

contained an application note that

instructed the user to move to another,

more appropriate Chapter Two

guideline, under specified

circumstances. Although this note was

not a cross reference, but rather a

reminder of the principles enunciated in

§ 1B1.2, it operated like a cross

reference in the sense that it required

use of a different guideline.

This amendment also makes a minor

revision (adding ‘‘in a broader form’’) to

the background commentary regarding

the implementation of the directive in

section 2507 of Public Law 101–647,

nullifying the effect of United States v.

Tomasino, 206 F. 3d 739 (7th Cir. 2000).

Loss Tables

The amendment provides revised loss

tables for this consolidated guideline

and for the tax offense guidelines. A

principle feature of the new tables is

that they expand the previously existing

one-level increments into two-level

increments, thus increasing the range of

losses that correspond to an individual

increment, compressing the table, and

reducing fact-finding. The new loss

tables also provide substantial increases

in penalties for moderate and higher

loss amounts, even, for fraud and theft

offenses, notwithstanding the

elimination of the two-level

enhancement for more than minimal

planning. These higher penalty levels

respond to comments received from the

Department of Justice, the Criminal Law

Committee of the Judicial Conference,

and others, that the offenses sentenced

under the guidelines consolidated by

this amendment under-punish

individuals involved with moderate and

high loss amounts, relative to penalty

levels for offenses of similar seriousness

sentenced under other guidelines.

Some offenders accountable for

relatively low dollar losses will receive

slightly lower offense levels under the

new loss table for the consolidated

guideline because of (1) the elimination

of the enhancement for more than

minimal planning; (2) the change from

one-level to two-level increments for

increasing loss amounts; (3) the

selection of the breakpoints for the loss

increments (including $5,000 as the first

loss amount that results in an increase);

and (4) the slope chosen for the

relationship between increases in loss

amount and increases in offense level at

the lower loss amounts. This

amendment reflects a decision by the

Commission that this effect on penalty

levels at lower loss amounts is

appropriate for several reasons: (1) The

lower offense levels provide appropriate

deterrence and punishment, generally,

(2) at lower offense levels more

defendants will be subject to the court’s

ability to fashion sentencing alternatives

as appropriate (see, e.g., § 5C1.1

(Imposition of a Term of

Imprisonment)); and (3) these penalty

levels may facilitate the payment of

restitution.

The loss table for the consolidated

guideline provides the first of

incremental increases for cases in which

loss exceeds $5,000, rather than $2,000

provided previously in § 2F1.1, or $100

provided previously in § 2B1.1. The

Commission believes this will reduce

the fact-finding burden on courts for

less serious offenses that are generally

subject to greater sentencing flexibility

because of the availability of

alternatives to incarceration.

The amendment also provides a

revised loss table in § 2T4.1 (Tax Table)

for tax offenses that ensures

significantly higher penalty levels for

offenses involving moderate and high

tax loss in a similar manner and degree

as the loss table for the consolidated

guideline. The new table is designed to

reflect more appropriately the

seriousness of tax offenses and to

maintain proportionality with the

offenses sentenced under the

consolidated guideline.

The tax loss table is similar to the loss

table for the consolidated guideline,

except it does not reduce generally any

sentences for offenders involved with

lower loss amounts. The tax table

provides its first increment for loss at

$2,000, rather than the $5,000 threshold

under the consolidated guideline (and

the $1,700 threshold under the tax loss

table prior to this amendment). These

differences are intended to avoid

unintended decreases that would occur

otherwise. The increases in the new tax

loss table for offenders involved with

lower loss amounts are intended to

maintain the long-standing treatment of

tax offenses relative to theft and fraud

offenses.

Definition of Loss

This amendment provides a new

definition of loss applicable to offenses

previously sentenced under §§ 2B1.1,

2B1.3, and 2F1.1. The revised definition

makes clarifying and substantive

revisions to the definitions of loss

previously in the commentary to

§§ 2B1.1 and 2F1.1, resolves a number

of circuit conflicts, addresses a variety

of application issues, and promotes

consistency in application.

Significantly, the new definition of

loss retains the core rule that loss is the

greater of actual and intended loss. The

Commission concluded that, for cases in

which intended loss is greater than

actual loss, the intended loss is a more

appropriate initial measure of the

culpability of the offender. Conversely,

in cases in which the actual loss is

greater, that amount is a more

appropriate measure of the seriousness

of the offense.

A definition is provided for intended

loss that is consistent with the rule

regarding the interaction of actual and

intended loss.

The amendment includes a resolution

of the circuit conflict relating to the

meaning and application of intended

loss.

The amendment resolves the conflict

to provide that intended loss includes

unlikely or impossible losses that are

intended, because their inclusion better

reflects the culpability of the offender.

Compare United States v. Geevers, 226

F.3d 186 (3d Cir. 2000) (agreeing with

the majority of circuits holding that

impossibility is not in and of itself a

limit on the intended loss for purposes

of calculating sentences under the

guidelines * * * impossibility does not

require a sentencing court to lower its

calculations of intended loss); and

United States v. Coffman, 94 F.3d 330

(7th Cir. 1996) (rejecting the argument

that a loss that cannot possibly occur

cannot be intended); United States v.

Koenig, 952 F.2d 267 (9th Cir. 1991)

(holding that § 2F1.1 only requires a

calculation of intended loss and does

not require a finding that the intentions

were realistic); United States v. Klisser,

190 F. 3d 34, 36 (2d Cir. 1999) (same);

United States v. Blitz, 151 F. 3d 1002,

1010 (9th Cir. 1998) (same); United

States v. Studevent, 116 F. 3d 1559,

1563 (D.C. Cir. 1997) (same); United

States v. Wai-Keung, 115 F. 3d 874, 877

(11th Cir. 1997) (same), with United

States v. Galbraith, 20 F. 3d 1054, 1059

(10th Cir. 1993) (because intended loss

only includes losses that are possible, in

an undercover sting operation the

intended loss is zero); and United States

v. Watkins, 994 F.2d 1192, 1196 (6th

Cir. 1993) (holding that a limitation on

the broad reach of the intended loss rule

is that the intended loss must have been

possible to be considered relevant).

Accordingly, concepts such as

‘‘economic reality’’ or ‘‘amounts put at

risk’’ will no longer be considerations in

the determination of intended loss. See

United States v. Bonanno, 146 F.3d 502

(7th Cir. 1998) (holding that the relevant

inquiry is how much the scheme put at

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30543

risk); and United States v. Wells, 127 F.

3d 739 (8th Cir. 1997) (citing United

States v. Morris, 18 F.3d 562 (8th Cir.

1994)) (holding that intended loss

properly was measured by the possible

loss the defendant intended, and did not

hinge on actual or net loss).

This amendment also resolves

differing circuit interpretations of the

standard of causation applicable for

actual loss, an issue that was not

addressed expressly in the prior

definition of actual loss. Various circuits

recognized three arguably inconsistent

standards for loss causation. First,

§ 1B1.3 (Relevant Conduct) provides

that a defendant is responsible for all

losses—foreseen or unforeseen—that

result from the defendant’s actions or

that result from the foreseeable actions

of co-participants. See United States v.

Sarno, 73 F.3d 1470 (9th Cir. 1995)

(holding that ‘‘[a] sentence calculated

pursuant to the loss tables * * * is

properly based on actual loss

notwithstanding the fact that this loss

may be greater than the intended,

expected or foreseeable loss’’), cert.

denied, 518 U.S. 1020 (1996); and

United States v. Lopreato, 83 F.3d 571

(2d Cir. 1996) (holding that in a bribery

case, the defendant is responsible for all

losses, foreseeable or not). A second

view is premised on the fact that prior

to this amendment commentary in

§ 2F1.1 limited the loss amount to the

value of the money, property, or

services unlawfully taken. See United

States v. Marlatt, 24 F.3d 1005 (7th Cir.

1994) (refusing to count foreseeable

losses in loss figure because they did

not represent the actual thing taken). A

third view is that the commentary’s

explicit inclusion of consequential

damages in the loss determination for

contract procurement and product

substitution cases implies that only nonconsequential or direct damages are

included in other cases. See United

States v. Thomas, 62 F.3d 1332 (11th

Cir. 1995), cert. denied, 516 U.S. 1166

(1996) (only non-consequential or direct

damages are included in loss). See also

United States v. Daddona, 34 F.3d 163

(3d Cir.), cert. denied, 513 U.S. 1002

(1994) (holding that merely incidental

or consequential damages may not be

counted in computing loss); and United

States v. Newman, 6 F.3d 623 (9th Cir.

1993) (holding that loss caused by the

defendant arsonist was only the value of

the property destroyed by the fire, not

costs of putting out the fire).

The amendment defines ‘‘actual loss’’

as the ‘‘reasonably foreseeable

pecuniary harm’’ that resulted from the

offense. The amendment incorporates

this causation standard that, at a

minimum, requires factual causation

(often called ‘‘but for’’ causation) and

provides a rule for legal causation (i.e.,

guidance to courts regarding how to

draw the line as to what losses should

be included and excluded from the loss

determination). Significantly, the

application of this causation standard in

the great variety of factual contexts in

which it is expected to occur

appropriately is entrusted to sentencing

judges.

‘‘Pecuniary harm’’ is defined in a

manner that excludes emotional

distress, harm to reputation, and other

non-economic harm, in order to

foreclose the laborious effort sometimes

necessary to quantify non-economic

harms (as in some tort proceedings, for

example).

‘‘Reasonably foreseeable pecuniary

harm’’ is defined to include pecuniary

harms that the defendant knew or,

under the circumstances, reasonably

should have known, was a potential

result of the offense. The Commission

determined that this standard better

ensures the inclusion in loss of those

harms that reflect the seriousness of the

offense and the culpability of the

offender.

The definition deletes the previous

rule that, by negative implication,

excludes consequential damages (except

in specified cases), thus resolving a

circuit conflict. Compare United States

v. Izydore, 167 F.3d 213 (5th Cir. 1999)

(the fact that the Commission prescribed

consequential losses in only specific

fraud cases, and not others, is strong

evidence that consequential damages

were omitted from the general loss

definition by design rather than

mistake), with United States v.

Gottfried, 58 F.3d 648 (D.C. Cir. 1995)

(holding that merely incidental or

consequential damages may not be

counted in computing loss). The

Commission decided, however, not to

use the term ‘‘consequential damages,’’

or any similar civil law distinction

between direct and indirect harms.

Rather, the Commission determined that

the reasonable foreseeability standard

provides sufficient guidance to courts as

to what type of harms are included in

loss.

In addition, this amendment

preserves the special provisions

addressing loss in protected computer

offenses and the inclusion of

consequential damages in product

substitution and contract procurement

offenses; however, these special cases

are re-characterized as rules of

construction to avoid any negative

implications regarding other types of

offenses.

The amendment reflects a decision by

the Commission that interest and

similar costs shall be excluded from

loss. However, the amendment provides

that a departure may be warranted in

the rare case in which exclusion of

interest will under-punish the offender.

Thus, the rule resolves the circuit split

regarding whether ‘‘bargained for’’

interest may be included in loss.

Compare United States v. Henderson,

19 F.3d 917 (5th Cir.), cert. denied, 513

U.S. 877 (1994) (holding that interest

should be included if the victim had a

reasonable expectation of receiving

interest from the transaction); United

States v. Gilberg, 75 F.3d 15 (1st Cir.

1996) (including in loss interest on

fraudulently procured mortgage loan);

and United States v. Sharma, 190 F.3d

220 (3d Cir. 1999) (holding that

Application Note 8 of § 2F1.1 requires

the exclusion of ‘‘opportunity cost’’

interest, but did not intend to exclude

bargained-for interest), with United

States v. Hoyle, 33 F.3d 415 (4th Cir.

1994), cert. denied, 513 U.S. 1133 (1995)

(excluding interest from the

determination of loss for sentencing

purposes); and United States v. Guthrie,

144 F.3d 1006 (6th Cir. 1998) (holding

that when the defendant concealed

assets in a bankruptcy proceeding, the

lower court’s determination that loss to

creditors included interest was

erroneous). This rule is consistent with

the general purpose of the loss

determination to serve as a rough

measurement of the seriousness of the

offense and culpability of the offender

and avoids unnecessary litigation

regarding the amount of interest to be

included.

The loss definition also excludes from

loss certain costs incurred by the

government and victims in connection

with criminal investigation and

prosecution of the offense. Such losses

are likely to occur in a broad range of

cases, would present a fact-finding

burden in those cases, and would not

contribute to the ability of loss to

perform its essential function.

The loss definition also provides for

the exclusion from loss of certain

economic benefits transferred to

victims, to be measured at the time of

detection. This provision codifies the

‘‘net loss’’ approach that has developed

in the case law, with some

modifications made for policy reasons.

This crediting approach is adopted

because the seriousness of the offense

and the culpability of a defendant is

better determined by using a net

approach. This approach recognizes that

the offender who transfers something of

value to the victim(s) generally is

committing a less serious offense than

an offender who does not.

30544 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

The amendment adopts ‘‘time of

detection’’ as the most appropriate and

least burdensome time for measuring

the value of the transferred benefits. The

Commission determined that valuing

such benefits at the time of transfer

would be especially problematic in

cases in which the offender

misrepresented the value of an item that

is difficult to value. Although the time

of detection standard will allow some

fluctuation in value which may inure to

the defendant’s benefit or detriment, the

Commission determined that, because

the time of detection is closer in time to

the sentencing and occurs at a point

when the authorities are aware of the

criminality, its use generally would

make it easier to determine a more

accurate value of the benefit.

The definition of ‘‘time of detection’’

was adopted because there may be

situations in which it is difficult to

prove that the defendant knew the

offense was detected even if it was

already discovered. In addition, the

words ‘‘about to be detected’’ are

included to cover those situations in

which the offense is not yet detected,

but the defendant knows it is about to

be detected. In such a case, it would be

inappropriate to credit the defendant

with benefits transferred to the victim

after that defendant’s awareness.

The definition of ‘‘loss’’ also provides

special rules for certain schemes. One

rule includes in loss (and excludes from

crediting) the benefits received by

victims of persons fraudulently

providing professional services. This

rule reverses case law that has allowed

crediting (or exclusion from loss) in

cases in which services were provided

by persons posing as attorneys and

medical personnel. See United States v.

Maurello, 76 F.3d 1304 (3d Cir. 1996)

(calculating loss by subtracting the

value of satisfactory legal services from

amount of fees paid to a person posing

as a lawyer); and United States v.

Reddeck, 22 F.3d 1504 (10th Cir. 1994)

(reducing loss by the value of education

received from a sham university). The

Commission determined that the

seriousness of these offenses and the

culpability of these offenders is best

reflected by a loss determination that

does not credit the value of the

unlicensed benefits provided. In

addition, this provision eliminates the

additional burden that would be

imposed on courts if required to

determine the value of these benefits.

Similarly, the definition of loss

provides a special rule that includes in

loss (and excludes from crediting) the

value of items that were falsely

represented as approved by a regulatory

agency, for which regulatory approval

was obtained by fraud, or for which

regulatory approval was required but

not obtained. The Commission

determined that the seriousness of these

offenses and the culpability of these

offenders is best reflected by a loss

determination that does not credit the

value of these items. This decision

reflects the importance of the regulatory

approval process to public health,

safety, and confidence.

Regarding investment schemes, the

amendment resolves a circuit conflict

regarding whether and how to credit

payments made to victims. Compare

United States v. Mucciante, 21 F.3d

1228 (2nd Cir. 1994) (under the

Guidelines, loss includes the value of all

property taken, even though all or part

of it was returned.); United States v.

Deavours, 219 F.3d 400 (5th Cir. 2000)

(intended loss is not reduced by any

sums returned to investors); and United

States v. Loayza, 107 F.3d 257 (4th

Cir.1997) (declining to follow the

approach of net loss and holding

defendants responsible for the value of

all property taken, even though all or a

part is returned), with United States v.

Holiusa, 13 F.3d 1043 (7th Cir.1994)

(holding that only the net loss should be

included in loss, thus allowing a credit

for returned interest), and United States

v. Orton, 73 F.3d 331 (11th Cir. 1996)

(only payments made to losing investors

should be credited, not payments to

investors who made a profit).

This amendment adopts the approach

of the Eleventh Circuit that excludes the

gain to any individual investor in the

scheme from being used to offset the

loss to other individual investors

because any gain realized by an

individual investor is designed to lure

others into the fraudulent scheme. See

United States v. Orton, supra.

The definition retains the rule

providing for the use of gain when loss

cannot reasonably be determined. It

clarifies that there must be a loss for

gain to be considered. In doing so, the

Commission resolved another circuit

conflict. Compare United States v.

Robie, 166 F.3d 444 (2d Cir. 1999)

(holding that use of defendant’s gain for

purposes of subsection (b)(1) is

improper if there is no economic loss to

the victim), with United States v. Haas,

171 F.3d 259 (5th Cir. 1999) (stating that

‘‘if the loss is either incalculable or zero,

the district court must determine the

§ 2F1.1 sentence enhancement by

estimating the gain to the defendant as

a result of his fraud’’). The Commission

decided not to expand the use of gain

to situations in which loss can be

determined but the gain is greater than

the loss because such instances should

occur infrequently, the efficiency of the

criminal operation as reflected in the

amount of gain ordinarily should not

determine the penalty level, and the

traditional use of loss is generally

adequate.

The amendment revises the special

rule on determining loss in cases

involving diversion of government

program benefits to resolve another

circuit conflict. The revision is intended

to clarify that loss in such cases only

includes amounts that were diverted

from intended recipients or uses, not

benefits received or used by authorized

persons. In other words, even if such

benefits flowed through an

unauthorized intermediary, as long as

they went to intended recipients for

intended uses, the amount of those

benefits should not be included in loss.

Compare United States v. Henry, 164

F.3d 1304 (10th Cir. 1999) (holding that

loss includes the value of gross benefits

paid, rather than the value of benefits

improperly received or diverted in

determining the loss), with United

States v. Peters, 59 F.3d 732 (8th Cir.

1995) (determining that loss is the value

of benefits diverted from intended

recipients); and United States v. Barnes,

117 F.3d 328 (7th Cir. 1997) (holding

that the sentence is calculated only on

the value of the government benefits

diverted from intended recipients or

users). This net loss approach is more

consistent with general rules for

determining loss.

Referring Guidelines for Theft and

Fraud

The amendment includes revisions to

the guidelines that, prior to this

amendment, referred to the loss tables

in § 2B1.1 or § 2F1.1. Pursuant to this

amendment, these guidelines will refer

to the loss tables in the consolidated

guideline. Prior to this amendment, the

referring guidelines used the tables in

§§ 2B1.1 and 2F1.1, which provided the

first loss increment for losses in excess

of $2,000. Because the consolidated loss

table provides the first loss increment

for losses in excess of $5,000, the

referring guidelines are amended to

provide a one-level increase in a case in

which the loss is more than $2,000, but

did not exceed $5,000. This increase is

provided to avoid a one-level decrease

that would otherwise occur for an

offense involving losses of more than

$2,000 but not more than $5,000.

Two referring guidelines (§§ 2B2.1

(Burglary of a Residence or a Structure

Other than a Residence) and 2B3.1

(Robbery)) that use the definition of loss

previously in § 2B1.1 will retain that

definition of loss rather than the new

loss definition in the consolidated

guideline. The existing definition has

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30545

not proven problematic for cases

sentenced under these guidelines.

Technical and Conforming

Amendments

The amendment includes a number of

technical and conforming amendments,

most of which are necessitated by the

consolidation and the deletion of the

more than minimal planning

enhancement.

Computing Tax Loss

This amendment addresses several

issues related to tax loss. It addresses a

circuit conflict regarding how tax loss

under § 2T1.1 (Tax Evasion) is

computed for cases that involve a

defendant’s under-reporting of income

on both individual and corporate tax

returns. Such a case often arises when

(1) the defendant fails to report, and pay

corporate income taxes on, income

earned by the corporation; (2) the

defendant diverts that unreported

corporate income for the defendant’s

personal use; and (3) the defendant fails

to report, and to pay personal income

taxes on, that diverted income. The

amendment provides that the amount of

the federal tax loss is the sum of the

federal income tax due from the

corporation and the amount of federal

income tax due from the individual.

The amendment thereby resolves a

circuit conflict as to the methodology

used to calculate tax loss in cases

involving a corporate diversion. Two

circuits use a sequential method to

aggregate the tax loss. Under this

method, the court determines the

corporate federal income tax that would

have been due, subtracts that amount

from the amount diverted to the

defendant personally, then determines

the personal federal income tax that

would have been due on the reduced

diverted amount. See United States v.

Harvey, 996 F.2d 919 (7th Cir. 1993);

and United States v. Martinez-Rios, 143

F.3d 662 (2d Cir. 1998). The

Commission adopted the alternative

method used in United States v. Cseplo,

42 F.3d 360 (6th Cir. 1994), in which the

court determines the corporate federal

income tax due on the diverted amount,

and adds that amount to the personal

federal income tax due on the total

amount diverted. This clarifies the prior

rule in Application Note 7 of § 2T1.1

that ‘‘if the offense involves both

individual and corporate tax returns, the

tax loss is the aggregate tax loss from the

offenses taken together’’ and reflects the

Commission’s conclusion that, in cases

of corporate diversions, the method for

computing total tax loss adopted by the

Sixth Circuit in Cseplo more accurately

reflects the seriousness of the total harm

caused by these offenses than would be

reflected by the alternative method.

In evasion-of-payment tax cases, the

Commission amended the definition of

‘‘tax loss’’ to include interest and

penalties because, in contrast to

evasion-of-assessment tax cases, such

amounts appropriately are included in

tax loss for such cases. This amendment

limits the inclusion of interest or

penalties to willful evasion of payment

cases under 26 U.S.C. 7201 and willful

failure to pay cases under 26 U.S.C.

7203. The nature of these cases is such

that the interest and penalties often

greatly exceed the assessed tax amount

constituting the bulk of the harm

associated with these offenses.

This amendment also revises the

sophisticated concealment enhancement

in subsection (b)(2) of §§ 2T1.1 (Tax

Evasion) and 2T1.4 (Aiding, Assisting,

Procuring, Counseling, or Advising Tax

Fraud) to conform to the sophisticated

means enhancement in the consolidated

guideline, including imposition of a

minimum offense level of level 12. This

revision is appropriate inasmuch as

certain tax offenses can be committed

using sophisticated means in addition to

being concealed in a sophisticated

manner. Indeed, tax offenses committed

in a sophisticated manner are more

serious offenses, and reflect a greater

culpability on the part of the offender

(just as a tax offense concealed in a

sophisticated manner reflects greater

culpability). Consequently, this revision

will allow the enhancement to apply to

a somewhat greater range of tax offenses

than the previously existing

sophisticated concealment

enhancement.

In addition, the amendment revises

‘‘offshore bank accounts’’ by

substituting ‘‘financial’’ for ‘‘bank’’, to

ensure that the enhancement applies to

conduct involving similar kinds of

accounts, consistent with language in

§ 2S1.1 (Laundering of Monetary

Instruments; Engaging in Monetary

Transactions in Property Derived from

Unlawful Activity). A similar revision is

made in § 2B1.1.

6. Amendment: Section 2B5.1(b)(2) is

amended by inserting ‘‘(A)’’ after

‘‘defendant’’; and by striking ‘‘, and the

offense level as determined above is less

than 15, increase to level 15.’’ and

inserting ‘‘; or (B) controlled or

possessed (i) counterfeiting paper

similar to a distinctive paper; or (ii) a

feature or device essentially identical to

a distinctive counterfeit deterrent,

increase by 2 levels.’’.

Section 2B5.1(b) is amended by

redesignating subdivisions (3) and (4) as

subdivisions (4) and (5), respectively;

and by inserting after subdivision (2) the

following:

‘‘(3) If subsection (b)(2)(A) applies,

and the offense level determined under

that subsection is less than level 15,

increase to level 15.’’.

The Commentary to § 2B5.1 captioned

‘‘Statutory Provisions’’ is amended by

inserting ‘‘A’’ after ‘‘474’’.

The Commentary to § 2B5.1 captioned

‘‘Application Notes’’ is amended by

striking Note 1 and inserting the

following:

‘‘1. Definitions.—For purposes of this

guideline:

‘Distinctive counterfeit deterrent’ and

‘distinctive paper’ have the meaning

given those terms in 18 U.S.C.

474A(c)(2) and (1), respectively.

‘United States’ means each of the fifty

states, the District of Columbia, the

Commonwealth of Puerto Rico, the

United States Virgin Islands, Guam, the

Northern Mariana Islands, and

American Samoa.’’.

The Commentary to § 2B5.1 captioned

‘‘Application Notes’’ is amended in

Note 2 by inserting ‘‘Applicability to

Counterfeit Bearer Obligations of the

United States.—’’ before ‘‘This

guideline’’.

The Commentary to § 2B5.1 captioned

‘‘Application Notes’’ is amended by

striking Note 4 and inserting the

following:

‘‘4. Inapplicability to Certain

Obviously Counterfeit Items.—

Subsection (b)(2)(A) does not apply to

persons who produce items that are so

obviously counterfeit that they are

unlikely to be accepted even if subjected

to only minimal scrutiny.’’.

The Commentary to § 2B5.1 captioned

‘‘Background’’ is amended by striking

‘‘(b)(3)’’ and inserting ‘‘(b)(4)’’.

Reason for Amendment: The

frequency of counterfeiting offenses has

increased significantly since 1995 due

to the increasing affordability and

availability of personal computers and

digital printers. This amendment

addresses concerns raised by the

Department of the Treasury and the

United States Secret Service regarding

both the operation of, and the penalties

provided by, § 2B5.1 (Offenses Involving

Counterfeit Bearer Obligations of the

United States). The amendment

increases penalties for counterfeiting

activity in two ways.

First, the amendment adds a two-level

enhancement for manufacturing, in

addition to the minimum offense level

of level 15 for manufacturing. This

change will ensure some degree of

additional punishment for all offenders

who engage in manufacturing activity.

Second, the amendment adds a twolevel enhancement (which would apply

30546 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

alternatively to the manufacturing

enhancement) if the offense involved

possessing or controlling (1) paper that

is similar to a distinctive paper used by

the United States for its currency,

obligations, or securities; or (2) a feature

or device that is essentially identical to

a distinctive counterfeit deterrent used

by the United States for its currency,

obligations, or securities. This

enhancement is justified because of the

higher statutory maximum penalties

under 18 U.S.C. 474A (i.e., a term of

imprisonment of up to 25 years

compared to 10, 15, and 20 years for

other counterfeiting offenses). In

addition, use of paper similar to

‘‘distinctive paper’’ and use of features

and devices essentially identical to

‘‘distinctive counterfeit deterrents’’

(both of which are defined in § 2B5.1

consistently with the statute) make the

counterfeit item more passable and the

offense more sophisticated.

In addition, the amendment deletes

the language in the commentary of

§ 2B5.1 that suggests that the

manufacturing adjustment does not

apply if the defendant ‘‘merely

photocopies’’. That commentary was

intended to make the manufacturing

minimum offense level of level 15

inapplicable to notes that are so

obviously counterfeit that they are

unlikely to be accepted. Particularly

with the advent of digital technology, it

cannot be said that photocopying

necessarily produces a note so

obviously counterfeit as to be

impassible.

7. Amendment: Section 2C1.3 is

amended in the title by adding ‘‘;

Payment or Receipt of Unauthorized

Compensation’’ after ‘‘Interest’’.

Section 2C1.3 is amended by adding

after subsection (b) the following:

‘‘ (c) Cross Reference.

(1) If the offense involved a bribe or

gratuity, apply § 2C1.1 (Offering, Giving,

Soliciting, or Receiving a Bribe;

Extortion Under Color of Official Right)

or § 2C1.2 (Offering, Giving, Soliciting,

or Receiving a Gratuity), as appropriate,

if the resulting offense level is greater

than the offense level determined

above.’’.

The Commentary to § 2C1.3 captioned

‘‘Statutory Provisions’’ is amended by

inserting ‘‘, 209, 1909’’ after ‘‘208’’.

The Commentary to § 2C1.3 captioned

‘‘Application Note’’ is amended in Note

1 by inserting ‘‘Abuse of Position of

Trust.—’’ before ‘‘Do not’’.

The Commentary to § 2C1.3 is

amended by striking the background.

Chapter Two, Part C is amended by

striking § 2C1.4 and its accompanying

commentary. Section 8C2.1(a) is

amended by striking ‘‘2C1.4,’’.

Reason for Amendment: The

amendment (1) consolidates §§ 2C1.3

(Conflict of Interest) and 2C1.4

(Payment or Receipt of Unauthorized

Compensation) covering payments to

obtain public office, to promote ease of

application; and (2) adds a cross

reference in § 2B1.1 (Theft, Property

Destruction, and Fraud) to § 2C1.1

(Offering, Giving, Soliciting, or

Receiving a Bribe; Extortion Under

Color of Official Right) and § 2C1.2

(Offering, Giving, Soliciting, or

Receiving a Gratuity) to account for

aggravating conduct often occurring in

offenses involving the unlawful

supplementation of the salary of various

federal officials and employees

committed in violation of 18 U.S.C. 209.

The amendment simplifies guideline

operation by consolidating §§ 2C1.3 and

2C1.4. Consolidation is appropriate

because the gravamen of the offenses

covered by §§ 2C1.3 and 2C1.4 is

similar: unauthorized receipt of a

payment in respect to an official act.

The cross reference to § 2C1.1 or § 2C1.2

was added by this amendment because

the cases to which these guidelines

apply usually involve a conflict of

interest offense that is associated with a

bribe or gratuity.

8. Amendment: Section 2D1.1(b)(5)

through (7), Notes 20 and 21 of the

Commentary to § 2D1.1 captioned

‘‘Application Notes’’, the ninth and

tenth paragraphs of the Commentary to

§ 2D1.1 captioned ‘‘Background’’, and

§ 2D1.10, effective December 16, 2001

(see USSC Guidelines Manual

Supplement to the 2000 Supplement to

Appendix C, Amendment 608), are

repromulgated with the following

changes:

Section 2D1.1(b) is amended by

striking subdivision (5); by

redesignating subdivisions (6) and (7) as

subdivisions (5) and (6), respectively; by

redesignating subdivisions (5)(A) and

(5)(B), as redesignated by this

amendment, as subdivisions (5)(B) and

(5)(C), respectively; and by inserting

before subdivision (5)(B), as

redesignated by this amendment, the

following:

‘‘(A) If the offense involved (i) an

unlawful discharge, emission, or release

into the environment of a hazardous or

toxic substance; or (ii) the unlawful

transportation, treatment, storage, or

disposal of a hazardous waste, increase

by 2 levels.’’.

Section 2D1.1(b)(5)(B), as

redesignated by this amendment, is

amended by striking ‘‘subsection

(b)(6)(B)’’ and inserting ‘‘subdivision

(C)’’.

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’ is amended by

striking Note 20 and inserting the

following:

‘‘20. Hazardous or Toxic

Substances.’’—Subsection (b)(5)(A)

applies if the conduct for which the

defendant is accountable under § 1B1.3

(Relevant Conduct) involved any

discharge, emission, release,

transportation, treatment, storage, or

disposal violation covered by the

Resource Conservation and Recovery

Act, 42 U.S.C. § 6928(d); the Federal

Water Pollution Control Act, 33 U.S.C.

1319(c); the Comprehensive

Environmental Response,

Compensation, and Liability Act, 42

U.S.C. § 9603(b); or 49 U.S.C. § 5124

(relating to violations of laws and

regulations enforced by the Department

of Transportation with respect to the

transportation of hazardous material). In

some cases, the enhancement under

subsection (b)(5)(A) may not account

adequately for the seriousness of the

environmental harm or other threat to

public health or safety (including the

health or safety of law enforcement and

cleanup personnel). In such cases, an

upward departure may be warranted.

Additionally, in determining the

amount of restitution under § 5E1.1

(Restitution) and in fashioning

appropriate conditions of probation and

supervision under §§ 5B1.3 (Conditions

of Probation) and 5D1.3 (Conditions of

Supervised Release), respectively, any

costs of environmental cleanup and

harm to individuals or property shall be

considered by the court in cases

involving the manufacture of

amphetamine or methamphetamine and

should be considered by the court in

cases involving the manufacture of a

controlled substance other than

amphetamine or methamphetamine. See

21 U.S.C. 853(q) (mandatory restitution

for cleanup costs relating to the

manufacture of amphetamine and

methamphetamine).’’.

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’ is amended in

Note 21(A) by striking ‘‘(b)(6)’’ and

inserting ‘‘(b)(5)(B) or (C)’’; by striking

‘‘may consider factors such as the

following’’ and inserting ‘‘shall include

consideration of the following factors’’;

by striking ‘‘or’’ after ‘‘at the

laboratory,’’ and inserting ‘‘and’’; by

striking ‘‘or’’ after ‘‘disposed,’’ and

inserting ‘‘and’’; by striking ‘‘or’’ after

‘‘the offense’’ and inserting ‘‘and’’; by

striking ‘‘amphetamine or

methamphetamine’’; and by inserting

‘‘whether the laboratory is located’’ after

‘‘e.g.,’’.

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’ is amended in

Note 21(B) by striking ‘‘(b)(6)(B)’’ and

inserting ‘‘(b)(5)(C)’’.

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30547

The Commentary to § 2D1.1 captioned

‘‘Background’’ is amended in the ninth

paragraph by inserting ‘‘(A)’’ after

‘‘(b)(5)’’; and in the tenth paragraph by

striking ‘‘Subsection (b)(6) implements’’

and inserting ‘‘Subsections (b)(5)(B) and

(C) implement, in a broader form,’’; and

by striking ‘‘878’’ and inserting ‘‘310’’.

The Commentary to § 2D1.10

captioned ‘‘Application Note’’ is

amended in Note 1 by striking ‘‘may

consider factors such as the following’’

and inserting ‘‘shall include

consideration of the following factors’’;

by striking ‘‘or’’ after ‘‘at the

laboratory,’’ and inserting ‘‘and’’; by

striking ‘‘or’’ after ‘‘disposed,’’ and

inserting ‘‘and’’; by striking ‘‘or’’ after

‘‘the offense’’ and inserting ‘‘and’’; by

striking ‘‘amphetamine or

methamphetamine’’; and by inserting

‘‘whether the laboratory is located’’ after

‘‘e.g.,’’.

The Commentary to § 2D1.10

captioned ‘‘Background’’ is amended by

striking ‘‘878’’ and inserting ‘‘310’’.

Reason for Amendment: The

Commission promulgated an emergency

amendment addressing the directive in

section 102 (the ‘‘substantial risk

directive’’) of the Methamphetamine

Anti-Proliferation Act of 2000, Pub. L.

106–310 (the ‘‘Act’’), with an effective

date of December 16, 2000. (See USSC

Guidelines Manual Supplement to the

2000 Supplement to Appendix C,

Amendment 608.) This amendment

repromulgates the emergency

amendment, with modifications, as a

permanent amendment.

The substantial risk directive instructs

the Commission to amend the federal

sentencing guidelines with respect to

any offense relating to the manufacture,

attempt to manufacture, or conspiracy to

manufacture amphetamine or

methamphetamine in (1) the Controlled

Substances Act, 21 U.S.C. 801–90; (2)

the Controlled Substances Import and

Export Act, 21 U.S.C. 951–71; or (3) the

Maritime Drug Law Enforcement Act, 46

U.S.C. App. 1901–04.

The Act requires the Commission, in

carrying out the substantial risk

directive, to provide the following

enhancements—

(A) if the offense created a substantial

risk of harm to human life (other than

a life described in subparagraph (B)) or

the environment, increase the base

offense level for the offense—

(i) by not less than 3 offense levels

above the applicable level in effect on

the date of the enactment of this Act; or

(ii) if the resulting base offense level

after an increase under clause (i) would

be less than level 27, to not less than

level 27; or

(B) if the offense created a substantial

risk of harm to the life of a minor or

incompetent, increase the base offense

level for the offense—

(i) by not less than 6 offense levels

above the applicable level in effect on

the date of the enactment of this Act; or

(ii) if the resulting base offense level

after an increase under clause (i) would

be less than level 30, to not less than

level 30.

The emergency amendment provided

enhancements in §§ 2D1.1 (Unlawful

Manufacturing, Importing, Exporting, or

Trafficking (Including Possession with

Intent to Commit These Offenses);

Attempt or Conspiracy) and 2D1.10

(Endangering Human Life While

Illegally Manufacturing a Controlled

Substance) that also apply in the case of

an attempt or a conspiracy to

manufacture amphetamine or

methamphetamine. The amendment did

not amend § 2D1.11 (Unlawfully

Distributing, Importing, Exporting or

Possessing a Listed Chemical; Attempt

or Conspiracy) or § 2D1.12 (Unlawful

Possession, Manufacture, Distribution,

or Importation of Prohibited Flask or

Equipment). Although offenses that

involve the manufacture of

amphetamine or methamphetamine also

are referenced in Appendix A (Statutory

Index) to §§ 2D1.11 and 2D1.12, the

cross references in these guidelines,

which apply if the offense involved the

manufacture of a controlled substance,

will result in application of § 2D1.1 and

accordingly, the enhancements.

The basic structure of the emergency

amendment to §§ 2D1.1 and 2D1.10

tracked the structure of the substantial

risk directive. Accordingly, in § 2D1.1,

the amendment provided a three-level

increase and a minimum offense level of

level 27 if the offense (1) involved the

manufacture of amphetamine or

methamphetamine; and (2) created a

substantial risk of harm either to human

life or the environment. For offenses

that created a substantial risk of harm to

the life of a minor or an incompetent,

the amendment provided a six-level

increase and a minimum offense level of

level 30.

However, the structure of the

emergency amendment to § 2D1.10

differed from the structure of the

emergency amendment to § 2D1.1 with

respect to the first prong of the

enhancement (regarding substantial risk

of harm to human life or to the

environment). Specifically, the

emergency amendment provided a

three-level increase and a minimum

offense level of level 27 if the offense

involved the manufacture of

amphetamine or methamphetamine

without making application of the

enhancement dependent upon whether

the offense also involved a substantial

risk of either harm to human life or the

environment. Consideration of whether

the offense involves a substantial risk of

harm to human life also is unnecessary

because § 2D1.10 applies only to

convictions under 21 U.S.C. 858, and

the creation of a substantial risk of harm

to human life is an element of an offense

under 21 U.S.C. 858. Therefore, the base

offense level already takes into account

the substantial risk of harm to human

life. Consideration of whether the

offense involved a substantial risk of

harm to the environment was

unnecessary because the directive

predicated application of the

enhancement on substantial risk of

harm either to human life or to the

environment, and the creation of a

substantial risk of harm to human life

necessarily is taken into account as an

element of the offense.

Neither the substantial risk directive

nor any statutory provision defines

‘‘substantial risk of harm.’’ Based on an

analysis of relevant case law that

interpreted ‘‘substantial risk of harm,’’

the emergency amendment provided

commentary setting forth factors that

may be relevant in determining whether

a particular offense created a substantial

risk of harm. The definition of

‘‘incompetent’’ was modeled after

several state statutes.

This permanent amendment repromulgates, with modifications, the

emergency amendment regarding the

substantial risk directive. This

amendment differs from the emergency

amendment in several respects:

First, in § 2D1.1, this amendment

treats the existing specific offense

characteristic in § 2D1.1(b)(5), relating

to a two-level enhancement for

environmental violations occurring in

the course of a drug trafficking offense,

as an alternative to the three-level

enhancement for substantial risk of

harm to human life or the environment.

This portion of the amendment is in

response to an issue related to the

substantial risk directive regarding how

to implement it in a manner consistent

with the earlier environmental hazard

directive in section 303 of the

Comprehensive Methamphetamine

Control Act, Pub. L. 104–237. The

emergency amendment made the

enhancements cumulative. However,

this permanent amendment makes the

new guideline provision alternative

with the pre-existing enhancement for

environmental hazards in § 2D1.1.

Second, in § 2D1.1, this amendment

lists four factors that the court ‘‘shall’’,

as opposed to ‘‘may’’, consider to

determine whether subsection (b)(6)(A)

30548 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

or (B) applies. Similarly, in § 2D1.10,

this amendment lists four factors the

court ‘‘shall’’ consider to determine

whether subsection (b)(1)(B) applies.

The list of four factors was identified by

the Commission to assist the courts in

defining the meaning of ‘‘substantial

risk of harm’’ for offenses related to the

production and trafficking of precursor

chemicals and the manufacture of

amphetamine and methamphetamine.

Third, in § 2D1.1, this amendment

provides that the court (1) shall consider

any costs of environmental cleanup and

harm to individuals and property in

cases involving the manufacture of

amphetamine or methamphetamine in

determining the amount of restitution

under § 5E1.1 (Restitution) and in

fashioning appropriate conditions of

probation and supervision under

§§ 5B1.3 (Conditions of Probation) and

5D1.3 (Conditions of Supervised

Release), and (2) should consider such

costs and harms in cases involving the

manufacture of a controlled substance

other than amphetamine or

methamphetamine.

The amendment also makes a minor

technical change in the background

commentary.

9. Amendment: The subdivision

captioned ‘‘LSD, PCP, and Other

Schedule I and II Hallucinogens (and

their immediate precursors)*’’ of the

Drug Equivalency Tables of Note 10 of

the Commentary to § 2D1.1 captioned

‘‘Application Notes’’, effective May 1,

2001 (see USSC Guidelines Manual

Supplement to the 2000 Supplement to

Appendix C Amendment 609), is

repromulgated without change.

Reason for Amendment: This

amendment repromulgates (as a

permanent amendment) without change

the emergency amendment previously

promulgated that addressed the

directive in section 3664 of the Ecstasy

Anti-Proliferation Act of 2000, Pub. L.

106–310 (the ‘‘Act’’). (See USSC

Guidelines Manual Supplement to the

2000 Supplement to Appendix C,

Amendment 609). That directive

instructs the Commission to provide

increased penalties for the manufacture,

importation, exportation, or trafficking

of ‘‘Ecstasy’’. The directive specifically

requires the Commission to increase the

base offense level for 3,4-

Methylenedioxymethamphetamine

(MDMA), 3,4-

Methylenedioxyamphetamine (MDA),

3,4-Methylenedioxy-Nethylamphetamine (MDEA),

Paramethoxymethamphetamine (PMA),

and any other controlled substance that

is marketed as ‘‘Ecstasy’’ and that has

either a chemical structure similar to

MDMA or an effect on the central

nervous system substantially similar to

or greater than MDMA.

The amendment addresses the

directive by amending the Drug

Equivalency Tables in § 2D1.1,

Application Note 10, to increase

substantially the marihuana

equivalencies for the specified

controlled substances, which has the

effect of substantially increasing the

penalties for offenses involving

‘‘Ecstasy’’. The new penalties for

‘‘Ecstasy’’ trafficking provide penalties

which, gram for gram, are more severe

than those for powder cocaine. Under

the Drug Equivalency Tables, one gram

of powder cocaine has a marihuana

equivalency of 200 grams. This

amendment sets the marihuana

equivalency for one gram of ‘‘Ecstasy’’ at

500 grams.

There is a combination of reasons

why the Commission has substantially

increased the penalties in response to

the congressional directive. Much

evidence received by the Commission

indicated that ‘‘Ecstasy’’ (1) has

powerful pharmacological effects; (2)

has the capacity to cause lasting

physical harms, including brain

damage; and (3) is being abused by

rapidly increasing numbers of teenagers

and young adults. Indeed, the market for

‘‘Ecstasy’’ is overwhelmingly comprised

of persons under the age of 25 years.

The Commission considered whether

the penalty levels for ‘‘Ecstasy’’ should

be set at the same levels as for heroin

(one gram of heroin has a marihuana

equivalency of 1000 grams) and decided

that somewhat lesser penalties were

appropriate for ‘‘Ecstasy’’ for a number

of reasons: (1) The potential for

addiction is greater with heroin; (2)

heroin distribution often involves

violence while, at this time, violence is

not reported in ‘‘Ecstasy’’ markets; (3)

because heroin is a narcotic and is often

injected, the risk of death from overdose

is much greater than for ‘‘Ecstasy’’; and

(4) because heroin is often injected,

there are more secondary health

consequences, such as infections and

the transmission of the human

immunodeficiency virus (HIV) and

hepatitis than for ‘‘Ecstasy’’.

Finally, based on information

regarding ‘‘Ecstasy’’ trafficking patterns,

the penalty levels chosen are

appropriate and sufficient to target

serious and high-level traffickers and to

provide appropriate punishment,

deterrence, and incentives for

cooperation. The penalty levels chosen

for ‘‘Ecstasy’’ offenses provide five year

sentences for serious traffickers (those

whose relevant conduct involved

approximately 800 pills) and ten year

sentences for high-level traffickers

(those whose relevant conduct involved

approximately 8,000 pills).

10. Amendment: Section 2D1.1(b)(4)

is amended by inserting ‘‘amphetamine

or’’ before ‘‘methamphetamine’’ each

place it appears.

The Commentary to § 2D1.1 captioned

‘‘Statutory Provisions’’ is amended by

inserting ‘‘; 49 U.S.C. 46317(b)’’ after

‘‘960(a), (b)’’.

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’ is amended in

Note 19 by inserting ‘‘amphetamine or’’

before ‘‘methamphetamine’’.

Appendix A (Statutory Index), as

amended by amendment 5, is further

amended by inserting after the line

referenced to 49 U.S.C. 46317(a) the

following new line:

‘‘49 U.S.C. 46317(b) 2D1.1’’.

The sixth entry, relating to

Amphetamine and Amphetamine

(actual), in each of subdivisions (1)

through (14) of section 2D1.1(c), Note

(B) of the ‘‘*Notes to Drug Quantity

Table’’ in § 2D1.1(c), Note 9 of the

Commentary to § 2D1.1 captioned

‘‘Application Notes’’, and the

subdivision captioned ‘‘Cocaine and

Other Schedule I and II Stimulants (and

their immediate precursors)*’’ of the

Drug Equivalency Tables in Note 10 of

the Commentary to § 2D1.1 captioned

‘‘Application Notes’’, effective May 1,

2001 (see USSC Guidelines Manual

Supplement to the 2000 Supplement to

Appendix C Supplement, Amendment

610), are repromulgated with the

following change:

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’ is amended in

Note 10 in the Drug Equivalency Tables

in the subdivision captioned ‘‘Cocaine

and Other Schedule I and II Stimulants

(and their immediate precursors)*’’ by

striking ‘‘1 gm of Dextroamphetamine =

200 gm of marihuana’’.

Reason for Amendment: This

amendment repromulgates as a

permanent amendment the emergency

amendment previously promulgated to

implement the directive in section 3611

of the Methamphetamine AntiProliferation Act of 2000, Pub. L. 106–

310 (the ‘‘Act’’), which directs the

Commission to provide increased

guideline penalties for amphetamine

offenses such that those penalties are

comparable to the base offense level for

methamphetamine offenses. The

directive provided the Commission

emergency amendment authority. (See

USSC Guidelines Manual Supplement

to the 2000 Supplement to Appendix C,

Amendment 610.)

This amendment revises § 2D1.1 to

include amphetamine in the Drug

Quantity Table in § 2D1.1 (Unlawful

Manufacturing, Importing, Exporting, or

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30549

Trafficking (Including Possession with

Intent to Commit These Offenses);

Attempt or Conspiracy). This

amendment also treats amphetamine

and methamphetamine identically, at a

1:1 ratio (i.e., the same quantities of

amphetamine and methamphetamine

will result in the same base offense

level) because of the similarities of the

two substances. Specifically,

amphetamine and methamphetamine (1)

are chemically similar; (2) are produced

by a similar method and are trafficked

in a similar manner; (3) share similar

methods of use; (4) affect the same parts

of the brain; and (5) have similar

intoxicating effects. The amendment

also distinguishes between pure

amphetamine (i.e., amphetamine

(actual)) and amphetamine mixture in

the same manner, and at the same

quantities, as pure methamphetamine

(i.e., methamphetamine (actual)) and

methamphetamine mixture,

respectively. The Commission

determined that the 1:1 ratio is

appropriate given the similarity of these

two controlled substances.

This amendment differs from the

emergency amendment in that it also (1)

amends § 2D1.1(b)(4) to make the

enhancement for the importation of

methamphetamine applicable to

amphetamine offenses as well, and

makes a conforming change in the

commentary to § 2D1.1 in Application

Note 19; (2) deletes as unnecessary the

marihuana equivalency for

dextroamphetamine in the Drug

Equivalency Tables in § 2D1.1; and (3)

amends Appendix A (Statutory Index)

to refer a new offense at 49 U.S.C.

46317(b), (prohibiting transportation of

controlled substances by aircraft) to

§ 2D1.1.

11. Amendment: Section 2D1.1(c)(1)

is amended by striking the period after

‘‘Hashish Oil’’ and inserting a semicolon; and by adding at the end the

following: ‘‘30,000,000 units or more of

Schedule I or II Depressants; 1,875,000

units or more of Flunitrazepam.’’.

Section 2D1.1(c)(2) is amended by

striking the period after ‘‘Hashish Oil’’

and inserting a semi-colon; and by

adding at the end the following: ‘‘At

least 10,000,000 but less than

30,000,000 units of Schedule I or II

Depressants; At least 625,000 but less

than 1,875,000 units of Flunitrazepam.’’.

Section 2D1.1(c)(3) is amended by

striking the period after ‘‘Hashish Oil’’

and inserting a semi-colon; and by

adding at the end the following: ‘‘At

least 3,000,000 but less than 10,000,000

units of Schedule I or II Depressants; At

least 187,500 but less than 625,000 units

of Flunitrazepam.’’.

Section 2D1.1(c)(4) is amended by

striking the period after ‘‘Hashish Oil’’

and inserting a semi-colon; and by

adding at the end the following: ‘‘At

least 1,000,000 but less than 3,000,000

units of Schedule I or II Depressants; At

least 62,500 but less than 187,500 units

of Flunitrazepam.’’.

Section 2D1.1(c)(5) is amended by

striking the period after ‘‘Hashish Oil’’

and inserting a semi-colon; and by

adding at the end the following: ‘‘At

least 700,000 but less than 1,000,000

units of Schedule I or II Depressants; At

least 43,750 but less than 62,500 units

of Flunitrazepam.’’.

Section 2D1.1(c)(6) is amended by

striking the period after ‘‘Hashish Oil’’

and inserting a semi-colon; and by

adding at the end the following: ‘‘At

least 400,000 but less than 700,000 units

of Schedule I or II Depressants; At least

25,000 but less than 43,750 units of

Flunitrazepam.’’.

Section 2D1.1(c)(7) is amended by

striking the period after ‘‘Hashish Oil’’

and inserting a semi-colon; and by

adding at the end the following: ‘‘At

least 100,000 but less than 400,000 units

of Schedule I or II Depressants; At least

6,250 but less than 25,000 units of

Flunitrazepam.’’.

Section 2D1.1(c)(8) is amended by

striking the period after ‘‘Hashish Oil’’

and inserting a semi-colon; and by

adding at the end the following: ‘‘At

least 80,000 but less than 100,000 units

of Schedule I or II Depressants; At least

5,000 but less than 6,250 units of

Flunitrazepam.’’.

Section 2D1.1(c)(9) is amended by

striking the period after ‘‘Hashish Oil’’

and inserting a semi-colon; and by

adding at the end the following: ‘‘At

least 60,000 but less than 80,000 units

of Schedule I or II Depressants; At least

3,750 but less than 5,000 units of

Flunitrazepam.’’.

Section 2D1.1(c)(10) is amended in

the line referenced to Schedule I or II

Depressants by striking ‘‘40,000 or

more’’ and inserting ‘‘At least 40,000 but

less than 60,000’’; and in the line

referenced to Flunitrazepam, by striking

‘‘2,500 or more’’ and inserting ‘‘At least

2,500 but less than 3,750’’.

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’ is amended in

Note 10 in the Drug Equivalency Tables

in the subdivision captioned

‘‘Flunitrazepam**’’ in the heading by

striking ‘‘**’’ after ‘‘Flunitrazepam’’;

and by striking the following:

‘‘** Provided, that the combined

equivalent weight of flunitrazepam, all

Schedule I or II depressants, Schedule

III substances, Schedule IV substances,

and Schedule V substances shall not

exceed 99.99 kilograms of marihuana.’’.

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’ is amended in

Note 10 in the Drug Equivalency Tables

in the subdivision captioned ‘‘Schedule

I or II Depressants***’’ in the heading

by striking ‘‘***’’ after ‘‘Schedule I or II

Depressants’’; and by striking the

following:

‘‘***Provided, that the combined

equivalent weight of all Schedule I or II

depressants, Schedule III substances,

Schedule IV substances (except

flunitrazepam), and Schedule V

substances shall not exceed 59.99

kilograms of marihuana.’’.

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’ is amended in

Note 10 in the Drug Equivalency Tables

in the subdivision captioned ‘‘Schedule

III Substances ’’ by striking

‘‘Schedule I or II depressants,’’ after

‘‘Schedule III Substances,’’.

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’ is amended in

Note 17 by striking ‘‘(e.g., the maximum

offense level in the Drug Quantity Table

for flunitrazepam is level 20)’’.

Reason for Amendment: This

amendment implements the Hillory J.

Farias and Samantha Reid Date-Rape

Drug Prohibition Act of 2000, Pub. L.

106–172 (the ‘‘Act’’), which provides

the emergency scheduling of gamma

hydroxybutyric acid (‘‘GHB’’) as a

Schedule I controlled substance under

the Controlled Substances Act when the

drug is used illicitly. The Act also

amended section 401(b)(1)(C) of the

Controlled Substances Act, 21 U.S.C.

841(b)(1)(C), and section 1010(b)(3) of

the Controlled Substances Import and

Export Act, 21 U.S.C. 960(b)(3), to

provide penalties of not more than 20

years’ imprisonment for an offense that

involves GHB.

This amendment eliminates the

maximum base offense level of level 20

in the Drug Quantity Table of § 2D1.1

(Unlawful Manufacturing, Importing,

Exporting, or Trafficking (Including

Possession with Intent to Commit These

Offenses); Attempt or Conspiracy) for

Schedule I and II depressants (including

GHB). The same change is made with

respect to flunitrazepam, which, for

sentencing purposes, is tied to Schedule

I and II depressants. The Commission

determined that increased penalties for

the more serious offenses involving

Schedule I and II depressants are

appropriate.

Corresponding changes to the Drug

Equivalency Tables in § 2D1.1 were

made for both Flunitrazepam and

Schedule I or II depressants by

eliminating the maximum marihuana

equivalency when offenses involving

these controlled substances also involve

30550 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

offenses for controlled substances in

Schedules III, IV, or V.

12. Amendment: Section 2D1.1(b)(6),

as redesignated by amendment 8, is

amended by inserting ‘‘subsection (a)

of’’ after ‘‘(1)–(5) of’’; and by striking

‘‘and the offense level determined above

is level 26 or greater’’.

The Commentary to § 2D1.1 captioned

‘‘Application Notes’’, as amended by

amendments 8, 10, and 11, is further

amended by striking Note 14; and by

redesignating Notes 15 through 21 as

Notes 14 through 20, respectively.

Section 5C1.2 is amended in the first

paragraph by striking ‘‘In’’ and inserting

‘‘(a) Except as provided in subsection

(b), in’’.

Section 5C1.2 is amended by inserting

after subsection (a), as so designated by

this amendment, the following:

‘‘(b) In the case of a defendant (1) who

meets the criteria set forth in subsection

(a); and (2) for whom the statutorily

required minimum sentence is at least

five years, the offense level applicable

from Chapters Two (Offense Conduct)

and Three (Adjustments) shall be not

less than level 17.’’.

The Commentary to § 5C1.2 captioned

‘‘Application Notes’’ is amended in

Note 2 by striking ‘‘subdivision’’ and

inserting ‘‘subsection (a)’’.

The Commentary to § 5C1.2 captioned

‘‘Application Notes’’ is amended in

Note 3 by striking ‘‘subdivisions’’ and

inserting ‘‘subsection (a)’’; and striking

‘‘subdivision’’ and inserting ‘‘subsection

(a)’’.

The Commentary to § 5C1.2 captioned

‘‘Application Notes’’ is amended in

Notes 4 through 7 by striking

‘‘subdivision’’ each place it appears and

inserting ‘‘subsection (a)’’.

Reason for Amendment: This

amendment expands the eligibility for

the two-level reduction in subsection

(b)(6) of § 2D1.1 (Unlawful

Manufacturing, Importing, Exporting, or

Trafficking (Including Possession with

Intent to Commit These Offenses);

Attempt or Conspiracy) for persons who

meet the criteria set forth in § 5C1.2

(Limitation on Applicability of Statutory

Minimum Sentences in Certain Cases) to

include defendants with an offense level

less than level 26. The Commission

determined that limiting the

applicability of this reduction to

defendants with an offense level of level

26 or greater is inconsistent with the

general principles underlying this twolevel reduction (and the related safety

valve provision, see 18 U.S.C. 3553(f)) to

provide lesser punishment for first time,

nonviolent offenders.

This amendment also establishes in

§ 5C1.2 a minimum offense level of level

17 for a defendant who meets the

requirements set forth in § 5C1.2, and

for whom the statutorily required

minimum sentence is at least five years,

in order to comply more strictly with

the directive to the Commission at

section 80001(b) of the Violent Crime

Control and Law Enforcement Act of

1994, Pub. L. 103–322.

13. Amendment: The subdivision

captioned ‘‘List I Chemicals (relating to

the manufacture of amphetamine or

methamphetamine)** *****’’ in the

Drug Equivalency Tables in Note 10 of

the Commentary to § 2D1.1 captioned

‘‘Application Notes’’ and § 2D1.11,

effective May 1, 2001 (see USSC

Guidelines Manual Supplement to the

2000 Supplement to Appendix C,

Amendment 611), are repromulgated

with the following changes:

Section 2D1.11 is amended in the

heading to subsection (d)(1) by striking

‘‘(d)(1)’’ before ‘‘Ephedrine,’’ and

inserting ‘‘(d)’’.

Section 2D1.11 is amended in the

heading to subsection (d)(2) by striking

‘‘(d)(2)’’ before ‘‘Chemical’’ and

inserting ‘‘(e)’’.

Section 2D1.11(e)(1), as redesignated

by this amendment, is amended by

striking the period after ‘‘3, 4-

Methylenedioxyphenyl-2-propanone’’

and inserting a semicolon; and by

adding at the end the following: ‘‘10,000

KG or more of Gamma-butyrolactone.’’.

Section 2D1.11(e)(2), as redesignated

by this amendment, is amended in the

subdivision captioned ‘‘List I

Chemicals’’ by adding at the end the

following: ‘‘At least 3,000 KG but less

than 10,000 KG of Gammabutyrolactone;’’; and in the subdivision

captioned ‘‘List II Chemicals’’ by

striking the period after ‘‘Toluene’’ and

inserting a semi-colon; and by adding at

the end the following: ‘‘376.2 G or more

of Iodine.’’.

Section 2D1.11(e)(3), as redesignated

by this amendment, is amended in the

subdivision captioned ‘‘List I

Chemicals’’ by adding at the end the

following: ‘‘At least 1,000 KG but less

than 3,000 KG of Gammabutyrolactone;’’; and in the subdivision

captioned ‘‘List II Chemicals’’ by

striking the period after ‘‘Toluene’’ and

inserting a semi-colon; and by adding at

the end the following: ‘‘At least 125.4 G

but less than 376.2 G of Iodine.’’.

Section 2D1.11(e)(4), as redesignated

by this amendment, is amended in the

subdivision captioned ‘‘List I

Chemicals’’ by adding at the end the

following: ‘‘At least 700 KG but less

than 1,000 KG of Gammabutyrolactone;’’; and in the subdivision

captioned ‘‘List II Chemicals’’ by

striking the period after ‘‘Toluene’’ and

inserting a semi-colon; and by adding at

the end the following: ‘‘At least 87.8 G

but less than 125.4 G of Iodine.’’.

Section 2D1.11(e)(5), as redesignated

by this amendment, is amended in the

subdivision captioned ‘‘List I

Chemicals’’ by adding at the end the

following: ‘‘At least 400 KG but less

than 700 KG of Gamma-butyrolactone;’’;

and in the subdivision captioned ‘‘List

II Chemicals’’ by striking the period

after ‘‘Toluene’’ and inserting a semicolon; and by adding at the end the

following: ‘‘At least 50.2 G but less than

87.8 G of Iodine.’’.

Section 2D1.11(e)(6), as redesignated

by this amendment, is amended in the

subdivision captioned ‘‘List I

Chemicals’’ by adding at the end the

following: ‘‘At least 100 KG but less

than 400 KG of Gamma-butyrolactone;’’;

and in the subdivision captioned ‘‘List

II Chemicals’’ by striking the period

after ‘‘Toluene’’ and inserting a semicolon; and by adding at the end the

following: ‘‘At least 12.5 G but less than

50.2 G of Iodine.’’.

Section 2D1.11(e)(7), as redesignated

by this amendment, is amended in the

subdivision captioned ‘‘List I

Chemicals’’ by adding at the end the

following: ‘‘At least 80 KG but less than

100 KG of Gamma-butyrolactone;’’; and

in the subdivision captioned ‘‘List II

Chemicals’’ by striking the period after

‘‘Toluene’’ and inserting a semi-colon;

and by adding at the end the following:

‘‘At least 10 G but less than 12.5 G of

Iodine. ‘‘.

Section 2D1.11(e)(8), as redesignated

by this amendment, is amended in the

subdivision captioned ‘‘List I

Chemicals’’ by adding at the end the

following: ‘‘At least 60 KG but less than

80 KG of Gamma-butyrolactone;’’; and

in the subdivision captioned ‘‘List II

Chemicals’’ by striking the period after

‘‘Toluene’’ and inserting a semi-colon;

and by adding at the end the following:

‘‘At least 7.5 G but less than 10 G of

Iodine.’’.

Section 2D1.11(e)(9), as redesignated

by this amendment, is amended in the

subdivision captioned ‘‘List I

Chemicals’’ by adding at the end the

following:

‘‘At least 40 KG but less than 60 KG

of Gamma-butyrolactone;’’; and in the

subdivision captioned ‘‘List II

Chemicals’’ by striking the period after

‘‘Toluene’’ and inserting a semi-colon;

and by adding at the end the following:

‘‘At least 5 G but less than 7.5 G of

Iodine.’’.

Section 2D1.11(e)(10), as redesignated

by this amendment, is amended in the

subdivision captioned ‘‘List I

Chemicals’’ by adding at the end the

following: ‘‘Less than 40 KG of Gammabutyrolactone;’’; and in the subdivision

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30551

captioned ‘‘List II Chemicals’’ by

striking the period after ‘‘Toluene’’ and

inserting a semi-colon; and by adding at

the end the following: ‘‘Less than 5 G of

Iodine.’’.

Reason for Amendment: This

amendment repromulgates, with

additional changes, the emergency

amendment previously promulgated in

response to the three-part directive in

section 3651 of the Methamphetamine

Anti-Proliferation Act of 2000, Pub. L.

106–310 (the ‘‘Act’’), regarding

enhanced punishment for trafficking in

List I chemicals. (See Guidelines

Manual Supplement to the 2000

Supplement to Appendix C,

Amendment 611). That section provided

the Commission emergency amendment

authority to implement the directive.

This amendment provides a new

chemical quantity table in § 2D1.11

(Unlawfully Distributing, Importing,

Exporting or Possessing a Listed

Chemical; Attempt or Conspiracy)

specifically for ephedrine,

pseudoephedrine, and

phenylpropanolamine (PPA). The table

ties the base offense levels for these

chemicals to the base offense levels for

methamphetamine (actual) set forth in

§ 2D1.1 (Unlawful Manufacturing,

Importing, Exporting, or Trafficking

(Including Possession with Intent to

Commit These Offenses); Attempt or

Conspiracy), assuming a 50 percent

actual yield of the controlled substance

from the chemicals. (Methamphetamine

(actual) is used rather than

methamphetamine mixture because

ephedrine and pseudoephedrine

produce methamphetamine (actual), and

PPA produces amphetamine (actual)).

This yield is based on information

provided by the Drug Enforcement

Administration (DEA) that the typical

yield of these substances for clandestine

laboratories is 50 to 75 percent.

This new chemical quantity table has

a maximum base offense level of level

38 (as opposed to a maximum base

offense level of level 30 for all other

precursor chemicals). Providing a

maximum base offense level of level 38

complies with the directive to establish

penalties for these precursors that

‘‘correspond to the quantity of

controlled substance that reasonably

could have been manufactured using the

quantity of ephedrine,

phenylpropanolamine, or

pseudoephedrine possessed or

distributed.’’ Additionally, this

eliminates the six-level distinction that

currently exists between precursor

chemical offenses that involve intent to

manufacture amphetamine or

methamphetamine and such offenses

that also involve an actual attempt to

manufacture amphetamine or

methamphetamine.

This amendment eliminates the

Ephedrine Equivalency Table in

§ 2D1.11 and, in its place, provides a

general rule for the court to determine

the base offense level in cases involving

multiple precursors (other than

ephedrine, pseudoephedrine, or PPA)

by using the quantity of the single

chemical resulting in the greatest

offense level. An upward departure is

provided for cases in which the offense

level does not adequately address the

seriousness of the offense.

However, this amendment provides

an exception to that general rule for

offenses that involve a combination of

ephedrine, pseudoephedrine, or PPA

because these chemicals often are used

in the same manufacturing process. In a

case that involves two or more of these

chemicals, the base offense level will be

determined using the total quantity of

these chemicals involved. The purpose

of this exception is twofold: (1) Any of

the three primary precursors in the same

table can be combined without

difficulty; and (2) studies conducted by

the DEA indicate that because the

manufacturing process for amphetamine

is essentially identical to the

manufacturing process for

methamphetamine, there are cases in

which the different precursors are

included in the same batch of drugs. If

the chemical is PPA, amphetamine

results; if the chemical is ephedrine or

pseudoephedrine, methamphetamine

results.

The amendment also adds to the Drug

Equivalency Tables in § 2D1.1 a

conversion table for these precursor

chemicals, providing for a 50 percent

conversion ratio. This is based on data

from the DEA that the actual yield from

ephedrine, pseudoephedrine, or PPA

typically is in the range of 50 to 75

percent. The purpose of this part of the

amendment is to achieve the same

punishment level (as is achieved by the

first part of this amendment) for an

offense involving any of these precursor

chemicals when such offense involved

the manufacture of amphetamine or

methamphetamine and, as a result, is

sentenced under § 2D1.1 pursuant to the

cross reference in § 2D1.11.

This amendment also increases the

base offense level for Benzaldehyde,

Hydriodic Acid, Methylamine,

Nitroethane, and Norpseudoephedrine

by re-calibrating these levels to the

appropriate quantity of

methamphetamine (actual) that could be

produced assuming a 50 percent yield of

chemical to drug and retaining a cap at

level 30. Previously, these chemicals

had been linked to methamphetamine

(mixture) penalty levels. Based on a

study conducted by the DEA, ephedrine

and pseudoepehdrine are the primary

precursors used to make

methamphetamine in the United States.

Phenylproponolamine is the primary

precursor used to make amphetamine.

Unlike the five additional List I

chemicals, the chemical structures of

ephedrine, pseudoephedrine, and PPA

are so similar to the resulting drug (i.e.,

methamphetamine or amphetamine)

that the manufacture of

methamphetamine or amphetamine

from ephedrine, pseudoephedrine, or

PPA is a very simple one-step synthesis

which anyone can perform using a

variety of chemical reagents. The

manufacture of methamphetamine or

amphetamine from the five additional

List I chemicals is a more complex

process which requires a heightened

level of expertise.

This amendment adds to the

emergency amendment in two ways.

First, it amends the Chemical Quantity

Table in § 2D1.11 to include gammabutyrolactone (GBL), a precursor for

gamma hydroxybutyric acid (GHB), as a

List I chemical. This change is in

response to the Hillory J. Farias and

Samantha Reid Date Rape Prohibition

Act of 2000, Pub. L. 106–172, which

added GBL to the list of List 1 chemicals

in section 401 (b)(1)(C) of the Controlled

Substances Act, 21 U.S.C. 841(b)(1)(C).

Offense levels for GBL were established

in the same manner as other List I

chemicals. The offense level for a

specific quantity of GHB that can be

produced from a given quantity of GBL,

assuming a 50 percent yield, was

determined using the Drug Quantity

Table in § 2D1.1. From this offense

level, six levels were subtracted to

reflect the fact that an attempt to

manufacture is not a required element of

these offenses and, therefore, they are

less serious offenses than offenses

covered by § 2D1.1.

Second, the amendment adds iodine

to the Chemical Quantity Table in

§ 2D1.1 in response to a recent

classification of iodine as a List II

chemical. Iodine is used to produce

hydrogen iodide which, in the presence

of water, becomes hydriodic acid, a List

I chemical that is a reagent used in the

production of amphetamine and

methamphetamine. The penalties for

iodine were established based upon its

conversion to hydriodic acid.

14. Amendment: Section 2D1.12 is

amended in the title by inserting

‘‘Transportation, Exportation,’’ after

‘‘Distribution,’’; and by striking ‘‘or

Equipment’’ and inserting ‘‘, Equipment,

Chemical, Product, or Material’’.

30552 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

Section 2D1.12(a)(1), (a)(2), and (b)(1)

are amended by inserting ‘‘flask,’’ after

‘‘prohibited’’ each place it appears; and

by inserting ‘‘, chemical, product, or

material’’ after ‘‘equipment’’ each place

it appears.

The Commentary to § 2D1.12

captioned ‘‘Statutory Provisions’’ is

amended by inserting ‘‘§ ’’ before ‘‘843’’;

and by inserting ‘‘, 864’’ after ‘‘(7)’’.

The Commentary to § 2D1.12

captioned ‘‘Application Notes’’ is

amended by striking the text of Note 1

and inserting the following:

‘‘If the offense involved the large-scale

manufacture, distribution,

transportation, exportation, or

importation of prohibited flasks,

equipment, chemicals, products, or

material, an upward departure may be

warranted.’’.

Appendix A (Statutory Index) is

amended by inserting after the line

referenced to 21 U.S.C. § 863 the

following:

‘‘21 U.S.C. 864–2D1.12’’.

Reason for Amendment: This

amendment addresses the new offense,

in section 423 of the Controlled

Substances Act, 21 U.S.C. 864, of

stealing or transporting across state lines

anhydrous ammonia knowing,

intending, or having reasonable cause to

believe that such anhydrous ammonia

will be used to manufacture a controlled

substance. This new offense, created by

section 3653 of the Methamphetamine

Anti-Proliferation Act of 2000, Pub. L.

106–310, carries the statutory penalties

contained in section 403(d) of the

Controlled Substances Act, 21 U.S.C.

843, i.e., not more than four years’

imprisonment (or not more than eight

years’ imprisonment in the case of

certain prior convictions), or not more

than ten years’ imprisonment (or not

more than 20 years’ imprisonment in

the case of certain prior convictions) if

the offense involved the manufacture of

methamphetamine.

The amendment references the new

offense to § 2D1.12 (Unlawful

Possession, Manufacture, Distribution,

or Importation of Prohibited Flask or

Equipment; Attempt or Conspiracy).

Reference to this guideline is

appropriate because the new offense is

similar to other offenses that already are

referenced to the guideline and have the

same penalty structure, such as 21

U.S.C. 843(a)(6), which among other

things, makes it unlawful to possess any

chemical, product, or material that may

be used to manufacture a controlled

substance. In addition, this amendment

expands the coverage of Application

Note 1 to also apply to cases involving

the transportation and exportation of

prohibited chemicals, products, or

material. Finally, the amendment makes

minor, non-substantive changes to the

guideline in order to fully incorporate

the new and existing offenses.

15. Amendment: Sections 2G1.1,

2G2.1, 2H4.1, 2H4.2, and 5E1.1, and

each line in Appendix A (Statutory

Index) referenced to 18 U.S.C. 241,

1589, 1590, 1591, or 1592, or to 29

U.S.C. 1851, effective May 1, 2001 (see

USSC Guidelines Manual Supplement

to the 2000 Supplement to Appendix C,

Amendment 612), are repromulgated

with the following changes:

Section 5E1.1(a)(1) is amended by

inserting ‘‘, or 21 U.S.C. 853(q)’’ after

‘‘3663A’’.

The Commentary to § 5E1.1 captioned

‘‘Background’’ is amended in the first

paragraph by inserting ‘‘, and 21 U.S.C.

853(q)’’ after ‘‘3663A’’.

Reason for Amendment: This

amendment repromulgates as a

permanent amendment the previously

promulgated emergency amendment on

human trafficking. (See USSC

Guidelines Manual Supplement to the

2000 Supplement to Appendix C,

Amendment 612.) The amendment

implements the congressional directive

in section 112(b) of the Victims of

Trafficking and Violence Protection Act

of 2000, Pub. L. 106–386 (the ‘‘Act’’).

The directive requires the

Commission to amend, if appropriate,

the guidelines applicable to human

trafficking (i.e., peonage, involuntary

servitude, and forced labor) offenses. It

also requires the Commission to ensure

that the guidelines ‘‘are sufficiently

stringent to deter and adequately reflect

the heinous nature of these offenses.’’ In

compliance with the directive, the

amendment (1) creates a new guideline,

§ 2H4.2 (Willful Violations of the

Migrant and Seasonal Agricultural

Worker Protection Act); (2) refers

violations of four new statutes, 18

U.S.C. 1589 (Forced Labor), 1590

(Trafficking with Respect to Peonage,

Involuntary Servitude or Forced Labor),

1591 (Sex Trafficking of Children by

Force, Fraud or Coercion), and 1592

(Unlawful Conduct with Respect to

Documents in Furtherance of Peonage,

Involuntary Servitude, or Forced Labor)

to the appropriate guidelines; and (3)

makes changes, consistent with the

directive, which both enhance sentences

and reflect changes to three existing

statutes: 18 U.S.C. 1581(a) (Peonage),

1583 (Enticement into Slavery) and

1584 (Sale into Involuntary Servitude).

To address this multi-faceted

directive, the amendment makes

changes to several existing guidelines

and creates a new guideline for criminal

violations of the Migrant and Seasonal

Agricultural Worker Protection Act.

Although the directive instructs the

Commission to amend the guidelines

applicable to the Fair Labor Standards

Act (29 U.S.C. 201 et. seq.), a criminal

violation of the Fair Labor Standards

Act is only a Class B misdemeanor. See

29 U.S.C. 216. Thus, the guidelines are

not applicable to those offenses.

The amendment references the new

offense at 18 U.S.C. 1591 to § 2G1.1

(Promoting Prostitution or Prohibited

Sexual Conduct). Section 1591 provides

criminal penalties for a defendant who

participates in the transporting or

harboring of a person, or who benefits

from participating in such a venture,

with the knowledge that force, fraud, or

coercion will be used to cause that

person to engage in a commercial sex

act or with knowledge that the person

is not 18 years old and will be forced

to engage in a commercial sex act.

Despite the statute’s inclusion in a

chapter of title 18 devoted mainly to

peonage offenses, section 1591 offenses

are more analogous to the offenses

referenced to the prostitution guideline.

Section 1591 cases alternatively have

been referred in Appendix A (Statutory

Index) to § 2G2.1 (Sexually Exploiting a

Minor by Production of Sexually

Explicit Visual or Printed Material;

Custodian Permitting Minor to Engage

in Sexually Explicit Conduct;

Advertisement for Minors to Engage in

Production). This has been done in

anticipation that some portion of section

1591 cases will involve forcing or

coercing children to engage in

commercial sex acts for the purpose of

producing pornography. Such offenses,

as recognized by the higher base offense

level at § 2G2.1, are more serious

because they both involve specific harm

to an individual victim and further an

additional criminal purpose, namely,

commercial pornography.

The amendment maintains the view

that § 2H4.1 (Peonage, Involuntary

Servitude, and Slave Trade) continues

to be an appropriate tool for

determining sentences for violations of

18 U.S.C. 1581, 1583, and 1584. Section

2H4.1 also is designed to cover offenses

under three new statutes: 18 U.S.C.

1589, 1590, and 1592. Section 1589

provides criminal penalties for a

defendant who provides or obtains the

labor or services of another by the use

of threats of serious harm or physical

restraint against a person, or by a

scheme or plan intended to make the

person believe that physical restraint or

serious harm would result from not

performing the labor or services. This

statute also applies to defendants who

provide or obtain labor or services of

another by abusing or threatening abuse

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30553

of the law or the legal process. See 18

U.S.C. 1589.

Section 1590 provides criminal

penalties for a defendant who harbors,

transports, or is otherwise involved in

obtaining, a person for labor or services.

Section 1592 provides criminal

penalties for a defendant who

knowingly possesses, destroys, or

removes an actual passport, other

immigration document, or government

identification document of another

person in the course of a violation of

§ 1581 (peonage), § 1583 (enticement

into slavery), § 1584 (sale into

involuntary servitude), § 1589 (forced

labor), § 1590 (trafficking with respect to

these offenses), § 1591 (sex trafficking of

children by force, fraud, or coercion), or

§ 1594(a) (attempts to violate these

offenses). Section 1592 also provides

criminal penalties for a defendant who,

with intent to violate § 1581, § 1583,

§ 1584, § 1589, § 1590, or § 1591,

knowingly possesses, destroys, or

removes an actual passport, other

immigration document, or government

identification document of another

person. These statutes prohibit the types

of behaviors that traditionally have been

sentenced under § 2H4.1.

The amendment provides an

alternative, less punitive base offense

level of level 18 for those who violate

18 U.S.C. 1592, an offense which limits

participation in peonage cases to the

destruction or wrongful confiscation of

a passport or other immigration

document. This alternative, lower base

level reflects the lower statutory

maximum sentence for section 1592

offenses (i.e., 5 years’ imprisonment).

Section 2H4.1(b)(2) has been

expanded to provide a four-level

increase if a dangerous weapon was

used and a two-level increase if a

dangerous weapon was brandished or

its use was threatened. Prior to this

amendment, only actual use of a

dangerous weapon was covered. This

change reflects the directive to consider

an enhancement for the use or

threatened use of a dangerous weapon.

The commentary to § 2H4.1 is amended

to clarify that the threatened use of a

dangerous weapon applies regardless of

whether a dangerous weapon was

actually present.

The amendment also creates a new

guideline, § 2H4.2 (Willful Violations of

the Migrant and Seasonal Agricultural

Worker Protection Act), in response to

the directive to amend the guidelines

applicable to such offenses. These

offenses, which have a statutory

maximum sentence of one year

imprisonment for first offenses and

three years’ imprisonment for

subsequent offenses, were not, prior to

this amendment, referred to any specific

guideline. The amendment provides a

base offense level of level 6 in

recognition of the low statutory

maximum sentences set for these cases

by Congress. Further, these offenses

typically involve violations of

regulatory provisions. Setting the base

offense level at level 6 provides

consistency with guidelines for other

regulatory offenses. See, e.g., §§ 2N2.1

(Violations of Statutes and Regulations

Dealing With Any Food, Drug,

Biological Product, Device, Cosmetic, or

Agricultural Product) and 2N3.1

(Odometer Laws and Regulations).

Subsections (b)(1), an enhancement for

bodily injury, and (b)(2), an

enhancement applicable to defendants

who commit the instant offense after

previously sustaining a civil penalty for

similar misconduct, have been

established to respond to the directive

that the Commission consider

sentencing enhancement for this

aggravated conduct. This provision

addresses the Department of Justice’s

and the Department of Labor’s concern

regarding the need for enhanced

penalties in cases involving prior

administrative and civil adjudications.

This amendment also addresses that

portion of section 112 of the Act that

amends chapter 77 of title 18, United

States Code, to provide mandatory

restitution for peonage and involuntary

servitude offenses. The amendment

amends § 5E1.1 (Restitution) to include

a reference to 18 U.S.C. 1593 in the

guideline provision regarding

mandatory restitution.

By enactment of various sentencing

enhancements and encouraged upward

departures for areas of concern

identified by Congress, the Commission

has provided for more severe sentences

for perpetrators of human trafficking

offenses in keeping with the conclusion

that the offenses covered by this

amendment are both heinous in nature

and being committed with increasing

frequency.

In addition, to repromulgating the

emergency amendment, this amendment

responds to section 3613 of the

Methamphetamine Anti-Proliferation

Act of 2000, Pub. L. 106–310, that

amends 21 U.S.C. 853(q) to provide

mandatory restitution for offenses

involving the manufacture of

methamphetamine. Accordingly, the

amendment amends § 5E1.1

(Restitution) to include a reference to 21

U.S.C. 853(q) in the guideline provision

regarding mandatory restitution.

16. Amendment: Section 2H3.1 is

amended in the title by striking ‘‘or’’

and inserting a semicolon; and by

inserting ‘‘; Disclosure of Tax Return

Information’’ after ‘‘Eavesdropping’’.

Section 2H3.1 is amended by striking

subsection (a) and inserting the

following:

‘‘(a) Base Offense Level (Apply the

greater):

(1) 9; or

(2) 6, if the defendant was convicted

of 26 U.S.C. 7213A or 26 U.S.C. 7216.’’.

Section 2H3.1(b)(1) is amended by

striking ‘‘conduct’’ and inserting

‘‘offense’’.

Section 2H3.1(c)(1) is amended by

striking ‘‘conduct’’ and inserting

‘‘offense’’; and by striking ‘‘that offense’’

and inserting ‘‘that other offense’’.

The Commentary to § 2H3.1 captioned

‘‘Statutory Provisions’’ is amended by

inserting ‘‘26 U.S.C. 7213(a)(1)–(3),

(a)(5), (d), 7213A, 7216;’’ after ‘‘2511;’’.

The Commentary to § 2H3.1 captioned

‘‘Application Note’’ is amended by

striking ‘‘Note’’ and inserting ‘‘Notes’’;

by redesignating Note 1 as Note 2; and

by inserting before Note 2, as

redesignated by this amendment, the

following:

‘‘1. Definitions.—For purposes of this

guideline, ‘tax return’ and ‘tax return

information’ have the meaning given the

terms ‘return’ and ‘return information’

in 26 U.S.C. 6103(b)(1) and (2),

respectively.’’.

The Commentary to § 2H3.1 captioned

‘‘Application Notes’’ as re-captioned by

this amendment, is amended in Note 2,

as redesignated by this amendment, by

inserting ‘‘Satellite Cable

Transmissions.—’’ before ‘‘If the’’.

The Commentary to § 2H3.1 captioned

‘‘Background’’ is amended by adding at

the end the following additional

paragraph:

‘‘This section also refers to conduct

relating to the disclosure and inspection

of tax returns and tax return

information, which is proscribed by 26

U.S.C. 7213(a)(1)–(3), (5), (d), 7213A,

and 7216. These statutes provide for a

maximum term of imprisonment of five

years for most types of disclosure of tax

return information, but provide a

maximum term of imprisonment of one

year for violations of 26 U.S.C. 7213A

and 7216.’’.

Appendix A (Statutory Index) is

amended by inserting after the line

referenced to 26 U.S.C. 7212(b) the

following new lines:

‘‘26 U.S.C. § 7213(a)(1) 2H3.1

26 U.S.C. § 7213(a)(2) 2H3.1

26 U.S.C. § 7213(a)(3) 2H3.1

26 U.S.C. § 7213(a)(5) 2H3.1

26 U.S.C. § 7213(d) 2H3.1

26 U.S.C. § 7213A 2H3.1’’;

And by inserting after the line

referenced to 26 U.S.C. § 7215 the

following new line:

30554 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

‘‘26 U.S.C. § 7216 2H3.1’’.

Reason for Amendment: This

amendment responds to the Internal

Revenue Service Restructuring and

Reform Act of 1998, Public Law 105–

206 (‘‘the Act’’). The Act created new

tax offenses pertaining to the unlawful

disclosure of tax-related information

contained on computer software and to

unlawful requests for tax audits. In

addition, the Taxpayer Browsing

Protection Act of 1997, Public Law 105–

35, created another tax offense

pertaining to the unlawful inspection of

tax information.

Specifically, Public Law 105–35

expanded 26 U.S.C. 7213 to prohibit

federal and state employees and certain

other persons from disclosing taxrelated computer software. Public Law

105–35 also created an offense at 26

U.S.C. 7213A making it unlawful for

federal and state employees and certain

other persons to inspect tax return

information in any way other than that

authorized under the Internal Revenue

Code.

This is a two-part amendment. First,

this amendment updates Appendix A

(Statutory Index) by referring most of

these offenses to § 2H3.1 (Interception of

Communications and Eavesdropping).

Prior to this amendment, no guideline

provision or statutory reference was

expressly promulgated to address tax

offenses that implicated privacy

interests. Under subsection (a) of

§ 1B1.2 (Applicable Guidelines) and

under § 2X5.1 (Other Offenses), courts

are required to use the most analogous

offense guideline from Chapter Two

(Offense Conduct) in each pending case

brought under a statute having no

reference in the guidelines’ statutory

index.

In general, the guideline most

analogous for these offenses is § 2H3.1.

Section 2H3.1 concerns offenses against

privacy and, in large measure, these taxrelated offenses are devoted to

protecting taxpayer privacy interests.

Section 2H3.1 also contains a cross

reference to ‘‘another offense’’ if a

greater offense level will result.

Second, this amendment adds a threelevel decrease in the base offense level

under § 2H3.1 for the least serious types

of offense behavior, in which there was

no intent to harm or obtain pecuniary

gain. The base offense level for § 2H3.1

is level 9 with a range of 4 to 10 months

(in criminal history Category I). The

Commission determined that a base

offense level of level 9 is too severe for

the misdemeanor offenses contained in

26 U.S.C. §§ 7213A (Unauthorized

Inspection) and 7216 (Unauthorized

Disclosure), and the three-level decrease

addresses this concern.

17. Amendment: Section 2K1.3(a) is

amended by striking the text of

subdivision (3) and inserting the

following:

‘‘16, if the defendant (A) was a

prohibited person at the time the

defendant committed the instant

offense; or (B) knowingly distributed

explosive materials to a prohibited

person; or’’.

The Commentary to § 2K1.3 captioned

‘‘Statutory Provisions’’ is amended by

inserting ‘‘(l)-(o), (p)(2),’’ after ‘‘(i),’’.

The Commentary to § 2K1.3 captioned

‘‘Application Notes’’ is amended by

striking the text of Note 3 and inserting

the following:

‘‘For purposes of subsection (a)(3),

‘prohibited person’ means any person

described in 18 U.S.C. 842(i).’’.

Section 2K2.1(a)(4)(B) is amended by

striking ‘‘is’’ after ‘‘(i)’’ and inserting

‘‘was’’; and by inserting ‘‘at the time the

defendant committed the instant

offense’’ after ‘‘prohibited person’’.

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

striking ‘‘is’’ after ‘‘(A)’’ and inserting

‘‘was’’; and by inserting ‘‘at the time the

defendant committed the instant

offense’’ after ‘‘prohibited person’’.

The Commentary to § 2K2.1 captioned

‘‘Application Notes’’ is amended by

striking the text of Note 6 and inserting

the following:

‘‘For purposes of subsections (a)(4)(B)

and (a)(6), ‘prohibited person’ means

any person described in 18 U.S.C. 922(g)

or 922(n).’’.

Reason for Amendment: This

amendment makes two revisions

regarding the definition of ‘‘prohibited

person’’ in subsection (a)(3) of § 2K1.3

(Unlawful Receipt, Possession, or

Transportation of Explosive Materials;

Prohibited Transactions Involving

Explosive Materials) and subsections

(a)(4)(B) and (a)(6) of § 2K2.1 (Unlawful

Receipt, Possession, or Transportation

of Firearms or Ammunition; Prohibited

Transactions Involving Firearms or

Ammunition). First, the amendment

adopts the definitions of prohibited

person found in specific statutes for

explosive and firearm offenses. (There is

no uniform statutory definition of

prohibited person.) The relevant

statutory provision for § 2K1.3 is 18

U.S.C. § 842(i), and the relevant

statutory provisions for § 2K2.1 are 18

U.S.C. 922(g) and (n).

Second, the amendment clarifies that

the pertinent alternative base offense

level applies only when the offender

attains the requisite status prior to

committing the instant offense. This

clarification is consistent with the

amendment on prior felonies, which

provides for increased punishment only

when the offender sustains certain

felony convictions prior to committing

the instant offense.

18. Amendment: Section 2K1.3(a)(1)

is amended by striking ‘‘had at least two

prior felony convictions of either a

crime of violence or a controlled

substance offense; or’’ and inserting

‘‘committed any part of the instant

offense subsequent to sustaining at least

two felony convictions of either a crime

of violence or a controlled substance

offense;’’;

Section 2K1.3(a)(2) is amended by

striking ‘‘had one prior felony

conviction of either a crime of violence

or a controlled substance offense; or’

and inserting ‘committed any part of the

instant offense subsequent to sustaining

one felony conviction of either a crime

of violence or a controlled substance

offense;’’.

The Commentary to § 2K1.3 captioned

‘‘Application Notes’’ is amended by

striking the text of Note 2 and inserting

the following:

‘‘For purposes of this guideline:

‘‘Controlled substance offense’’ has

the meaning given that term in

§ 4B1.2(b) and Application Note 1 of the

Commentary to § 4B1.2 (Definitions of

Terms Used in Section 4B1.1).

‘Crime of violence’ has the meaning

given that term in § 4B1.2(a) and

Application Note 1 of the Commentary

to § 4B1.2.

‘Felony conviction’ means a prior

adult federal or state conviction for an

offense punishable by death or

imprisonment for a term exceeding one

year, regardless of whether such offense

is specifically designated as a felony

and regardless of the actual sentence

imposed. A conviction for an offense

committed at age eighteen years or older

is an adult conviction. A conviction for

an offense committed prior to age

eighteen years is an adult conviction if

it is classified as an adult conviction

under the laws of the jurisdiction in

which the defendant was convicted

(e.g., a federal conviction for an offense

committed prior to the defendant’s

eighteenth birthday is an adult

conviction if the defendant was

expressly proceeded against as an

adult).’’.

The Commentary to § 2K1.3 captioned

‘‘Application Notes’’ is amended in

Note 9 by inserting before the first

paragraph the following:

‘‘For purposes of applying subsection

(a)(1) or (2), use only those felony

convictions that receive criminal history

points under § 4A1.1(a), (b), or (c). In

addition, for purposes of applying

subsection (a)(1), use only those felony

convictions that are counted separately

under § 4A1.1(a), (b), or (c). See

§ 4A1.2(a)(2); § 4A1.2, comment. (n.3).’’.

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30555

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

striking ‘‘had at least two prior felony

convictions of either a crime of violence

or a controlled substance offense; or’’

and inserting ‘‘committed any part of

the instant offense subsequent to

sustaining at least two felony

convictions of either a crime of violence

or a controlled substance offense;’’.

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

striking ‘‘had at least two prior felony

convictions of either a crime of violence

or a controlled substance offense; or’’

and inserting ‘‘committed any part of

the instant offense subsequent to

sustaining at least two felony

convictions of either a crime of violence

or a controlled substance offense;’’.

Section 2K2.1(a)(3) is amended by

striking ‘‘had one prior felony

conviction of either a crime of violence

or controlled substance offense; or’’ and

inserting ‘‘committed any part of the

instant offense subsequent to sustaining

one felony conviction of either a crime

of violence or a controlled substance

offense;’’.

Section 2K2.1(a)(4)(A) is amended by

striking ‘‘had one prior felony

conviction of either a crime of violence

or controlled substance offense; or’’ and

inserting ‘‘committed any part of the

instant offense subsequent to sustaining

one felony conviction of either a crime

of violence or a controlled substance

offense; or’’.

Section 2K2.1(a) is amended in

subdivision (4)(B) by striking ‘‘; or’’ after

‘‘922(d)’’ and inserting a semi-colon; in

subdivision (5), by striking ‘‘; or’’ after

‘‘921(a)(30)’’ and inserting a semi-colon;

and in subdivision (6) by striking ‘‘; or’’

after ‘‘§ 922(d)’’ and inserting a semicolon.

The Commentary to § 2K2.1 captioned

‘‘Application Notes’’ is amended by

striking Note 5 and inserting the

following:

‘‘5. For purposes of this guideline:

‘‘Controlled substance offense’’ has

the meaning given that term in

§ 4B1.2(b) and Application Note 1 of the

Commentary to § 4B1.2 (Definitions of

Terms Used in Section 4B1.1).

‘‘Crime of violence’’ has the meaning

given that term in § 4B1.2(a) and

Application Note 1 of the Commentary

to § 4B1.2.

‘‘Felony conviction’’ means a prior

adult federal or state conviction for an

offense punishable by death or

imprisonment for a term exceeding one

year, regardless of whether such offense

is specifically designated as a felony

and regardless of the actual sentence

imposed. A conviction for an offense

committed at age eighteen years or older

is an adult conviction. A conviction for

an offense committed prior to age

eighteen years is an adult conviction if

it is classified as an adult conviction

under the laws of the jurisdiction in

which the defendant was convicted

(e.g., a federal conviction for an offense

committed prior to the defendant’s

eighteenth birthday is an adult

conviction if the defendant was

expressly proceeded against as an

adult).’’.

The Commentary to § 2K2.1 captioned

‘‘Application Notes’’ is amended in

Note 15 by inserting before the first

paragraph the following:

‘‘For purposes of applying subsection

(a)(1), (2), (3), or (4)(A), use only those

felony convictions that receive criminal

history points under § 4A1.1(a), (b), or

(c). In addition, for purposes of applying

subsection (a)(1) and (a)(2), use only

those felony convictions that are

counted separately under § 4A1.1(a), (b),

or (c). See § 4A1.2(a)(2); § 4A1.2,

comment. (n.3).’’.

Reason for Amendment: This

amendment modifies subsections (a)(1)

and (a)(2) of § 2K1.3 (Unlawful Receipt,

Possession, or Transportation of

Explosive Materials; Prohibited

Transactions Involving Explosive

Materials) and subsections (a)(1), (a)(2),

(a)(3) and (a)(4)(A) of § 2K2.1 (Unlawful

Receipt, Possession or Transportation of

Firearms or Ammunition) to resolve a

circuit conflict regarding whether a

crime committed after the commission

of the instant offense and before

sentencing for the instant offense is

counted as a prior felony conviction for

purposes of determining the defendant’s

base offense level. Compare United

States v. Pugh, 158 F.3d 1308, 1311

(D.C. Cir. 1998) (finding the guideline

language ambiguous but the

commentary language clear, thereby

counting prior felony conviction that

was sentenced prior to sentencing for

the instant federal offense, even if the

defendant committed the prior felony

offense after the instant federal offense);

United States v. McCary, 14 F.3d 1502,

1506 (10th Cir. 1994) (the defendant’s

base offense level is to be determined on

the basis of the defendant’s status as of

the date the district court imposed

sentence, not the date of the offense for

which he had previously been

convicted); and United States v.

Laihben, 167 F.3d 1364 (11th Cir. 1999)

(district court properly considered

defendant’s conviction, which occurred

after commission of, but before

sentencing, on the federal firearms

offense, in determining offense level),

with United States v. Barton, 100 F.3d

43, 46 (6th Cir. 1996) (defendant’s state

drug crime, which was committed after

federal offense of being a felon in

possession of firearm, could not have

been counted as prior felony conviction

under § 2K2.1(a), even though defendant

was convicted and sentenced on state

offense prior to sentencing on federal

charge; only those convictions that

occur prior to the commission of the

firearm offense may be counted against

the defendant in determining the base

offense level)) and United States v.

Oetken, 241 F.3d 1057 (8th Cir. 2001)

(only convictions that occur prior to the

commission of the offense qualify as

‘‘prior convictions’’).

The amendment adopts the minority

view that an offense committed after the

commission of any part of the offense

cannot be counted as a prior felony

conviction. The amendment clarifies, in

§ 2K1.3(a)(1) and (a)(2) and in

§ 2K2.1(a)(1), (a)(2), (a)(3) and (a)(4)(A),

that the instant offense must have been

committed subsequent to sustaining the

prior felony conviction. In so doing, this

amendment adopts a rule that is

consistent with the requirements

concerning the use of prior convictions

under §§ 4B1.1 (Career Offender) and

4B1.2 (Definitions of Terms Used in

Section 4B1.1).

This amendment also clarifies that in

cases in which more than one prior

felony conviction is required for

application of the base offense level in

§ 2K1.3 or § 2K2.1, the prior felony

convictions must be counted separately

under Chapter Four (Criminal History

and Criminal Livelihood).

The amendment makes

nonsubstantive clarifying changes in the

definitions of ‘‘controlled substance

offense’’, ‘‘crime of violence’’, and

‘‘felony conviction’’ for purposes of

§§ 2K1.3 and 2K2.1.

19. Amendment: Section 2K2.1(b)(1)

is amended in the table by striking

subdivisions (A) through (F) and

inserting the following:

‘‘(A) 3–7 ................................. add 2

(B) 8–24 ................................. add 4

(C) 25–99 ............................... add 6

(D) 100–199 ........................... add 8

(E) 200 or more ..................... add 10.’’.

The Commentary to § 2K2.1 captioned

‘‘Application Notes’’ is amended in

Note 16 by striking ‘‘significantly’’ and

inserting ‘‘substantially’’; and by

striking ‘‘fifty’’ and inserting ‘‘200’’.

Reason for Amendment: This

amendment responds to a

recommendation from the Bureau of

Alcohol, Tobacco and Firearms (ATF) to

increase the penalties in § 2K2.1

(Unlawful Receipt, Possession or

Transportation of Firearms or

Ammunition) for offenses involving

more than 100 firearms.

The amendment modifies the firearms

table at § 2K2.1(b)(1), to provide

enhancements in two-level increments.

30556 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

Prior to this amendment, the table

provided enhancements in one-level

increments. This change has the effect

of compressing the table by providing a

wider range in each subdivision of the

table for the number of firearms

involved in the offense. Compressing

the table in this manner diminishes

some of the fact-finding required to

determine how many firearms were

involved in the offense and provides

some increase in penalties. The

amendment provides additional twolevel increases for offenses that involve

either 100–199 firearms, or 200 or more

firearms. These increases are provided

to ensure adequate and proportionate

punishment in cases that involve large

numbers of firearms.

The proposed amendment also makes

a conforming change to Application

Note 16 of § 2K2.1 regarding upward

departures.

20. Amendment: Chapter Two, Part L,

Subpart 1 is amended by striking

§ 2L1.2, and its accompanying

commentary, and inserting the

following:

‘‘§ 2L1.2. Unlawfully Entering or

Remaining in the United States

(a) Base Offense Level: 8

(b) Specific Offense Characteristic

(1) Apply the Greatest:

If the defendant previously was

deported, or unlawfully remained in the

United States, after—

(A) a conviction for a felony that is (i)

a drug trafficking offense for which the

sentence imposed exceeded 13 months;

(ii) a crime of violence; (iii) a firearms

offense; (iv) a child pornography

offense; (v) a national security or

terrorism offense; (vi) a human

trafficking offense; or (vii) an alien

smuggling offense committed for profit,

increase by 16 levels;

(B) a conviction for a felony drug

trafficking offense for which the

sentence imposed was 13 months or

less, increase by 12 levels;

(C) a conviction for an aggravated

felony, increase by 8 levels;

(D) a conviction for any other felony,

increase by 4 levels; or

(E) three or more convictions for

misdemeanors that are crimes of

violence or drug trafficking offenses,

increase by 4 levels.

Commentary

Statutory Provisions: 8 U.S.C. 1325(a)

(second or subsequent offense only), 8 U.S.C.

1326. For additional statutory provision(s),

see Appendix A (Statutory Index).

Application Notes

1. Application of Subsection (b)(1).—

(A) In General.’’For purposes of

subsection (b)(1):

(i) A defendant shall be considered to

be deported after a conviction if the

defendant has been removed or has

departed the United States while an

order of exclusion, deportation, or

removal was outstanding.

(ii) A defendant shall be considered to

be deported after a conviction if the

deportation was subsequent to the

conviction, regardless of whether the

deportation was in response to the

conviction.

(iii) A defendant shall be considered

to have unlawfully remained in the

United States if the defendant remained

in the United States following a removal

order issued after a conviction,

regardless of whether the removal order

was in response to the conviction.

(iv) If all or any part of a sentence of

imprisonment was probated, suspended,

deferred, or stayed, ‘sentence imposed’

refers only to the portion that was not

probated, suspended, deferred, or

stayed.

(B) Definitions.—For purposes of

subsection (b)(1):

(i) ‘Committed for profit’ means

committed for payment or expectation

of payment.

(ii) ‘Crime of violence’—

(I) means an offense under federal,

state, or local law that has as an element

the use, attempted use, or threatened

use of physical force against the person

of another; and

(II) includes murder, manslaughter,

kidnapping, aggravated assault, forcible

sex offenses (including sexual abuse of

a minor), robbery, arson, extortion,

extortionate extension of credit, and

burglary of a dwelling.

(iii) ‘Drug trafficking offense’ means

an offense under federal, state, or local

law that prohibits the manufacture,

import, export, distribution, or

dispensing of a controlled substance (or

a counterfeit substance) or the

possession of a controlled substance (or

a counterfeit substance) with intent to

manufacture, import, export, distribute,

or dispense.

(iv) ‘Felony’ means any federal, state,

or local offense punishable by

imprisonment for a term exceeding one

year.

(v) ‘Firearms offense’ means any of

the following:

(I) An offense under federal, state, or

local law that prohibits the importation,

distribution, transportation, or

trafficking of a firearm described in 18

U.S.C. 921, or of an explosive material

as defined in 18 U.S.C. 841(c).

(II) An offense under federal, state, or

local law that prohibits the possession

of a firearm described in 26 5845(a), or

of an explosive material as defined in 18

841(c).

(III) A violation of 18 U.S.C. 844(h).

(IV) A violation of 18 U.S.C. 924(c).

(V) A violation of 18 U.S.C. 929(a).

2. Application of Subsection

(b)(1)(C).—For purposes of subsection

(b)(1)(C), ‘aggravated felony’ has the

meaning given that term in 8 U.S.C.

1101(a)(43), without regard to the date

of conviction of the aggravated felony.

3. Application of Subsection

(b)(1)(E).—For purposes of subsection

(b)(1)(E):

(A) ‘Misdemeanor’ means any federal,

state, or local offense punishable by a

term of imprisonment of one year or

less.

(B) ‘Three or more convictions’ means

at least three convictions for offenses

that (i) were separated by an intervening

arrest; (ii) did not occur on the same

occasion; (iii) were not part of a single

common scheme or plan; or (iv) were

not consolidated for trial or sentencing.

4. Aiding and Abetting, Conspiracies,

and Attempts.—Prior convictions of

offenses counted under subsection (b)(1)

include the offenses of aiding and

abetting, conspiring, and attempting, to

commit such offenses.

5. Computation of Criminal History

Points.—A conviction taken into

account under subsection (b)(1) is not

excluded from consideration of whether

that conviction receives criminal history

points pursuant to Chapter Four, Part A

(Criminal History).’’.

Reason for Amendment: This

amendment responds to concerns raised

by a number of judges, probation

officers, and defense attorneys,

particularly in districts along the

southwest border between the United

States and Mexico, that § 2L1.2

(Unlawfully Entering or Remaining in

the United States) sometimes results in

disproportionate penalties because of

the 16-level enhancement provided in

the guideline for a prior conviction for

an aggravated felony. The

disproportionate penalties result

because the breadth of the definition of

‘‘aggravated felony’’ provided in 8

U.S.C. 1101(a)(43), which is

incorporated into the guideline by

reference, means that a defendant who

previously was convicted of murder, for

example, receives the same 16-level

enhancement as a defendant previously

convicted of simple assault. The

Commission also observed that the

criminal justice system has been

addressing this inequity on an ad hoc

basis in such cases by increased use of

departures.

This amendment responds to these

concerns by providing a more graduated

sentencing enhancement of between 8

levels and 16 levels, depending on the

seriousness of the prior aggravated

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30557

felony and the dangerousness of the

defendant. In doing so, the Commission

determined that the 16-level

enhancement is warranted if the

defendant previously was deported, or

unlawfully remained in the United

States, after a conviction for certain

serious offenses, specifically, a drug

trafficking offense for which the

sentence imposed exceeded 13 months,

a felony that is a crime of violence, a

felony that is a firearms offense, a felony

that is a national security or terrorism

offense, a felony that is a human

trafficking offense, and a felony that is

an alien smuggling offense committed

for profit. Other felony drug trafficking

offenses will receive a 12-level

enhancement. All other aggravated

felony offenses will receive an 8-level

enhancement.

This amendment also deletes an

application note providing that a

downward departure may be warranted

based on the seriousness of the offense

if the 16-level enhancement applied and

(1) the defendant has previously been

convicted of only one felony offense; (2)

such offense was not a crime of violence

or firearms offense; and (3) the term of

imprisonment for such offenses did not

exceed one year. The Commission

determined that the graduation of the

16-level enhancement based on the

seriousness of the prior conviction

negated the need for this departure

provision. As a result, this amendment

may have the indirect result of reducing

the departure rate for cases sentenced

under § 2L1.2. In addition, this

amendment renders moot a circuit

conflict regarding whether the three

criteria set forth in the application note

are the exclusive basis for a downward

departure from the 16-level

enhancement. Compare United States v.

Sanchez-Rodriguez, 161 F.3d 556 (9th

Cir. 1998) (holding that Application

Note 5 to § 2L1.2 does not limit the

circumstances under which a

downward departure from the 16-level

enhancement is warranted); and United

States v. Alfaro-Zayas, 196 F.3d 1338

(11th Cir. 1999) (same), with United

States v. Tappin, 205 F.3d 536 (2d Cir.

2000) (holding that a defendant must

satisfy all three criteria set forth in

Application Note 5 in § 2L1.2 to receive

a downward departure from the 16-level

enhancement).

This amendment also makes a number

of other minor changes to § 2L1.2, to

provide guidance regarding the

application of the enhancement for the

commission of three or more prior

misdemeanors and to provide

definitions for terms used in the

guideline.

21. Amendment: The heading to

Chapter Two, Part M is amended by

adding at the end ‘‘And Weapons of

Mass Destruction’’.

Section 2M5.1 is amended by striking

subsection (a) and inserting the

following:

‘‘(a) Base Offense Level (Apply the

greater):

(1) 26, if national security controls or

controls relating to the proliferation of

nuclear, biological, or chemical

weapons or materials were evaded; or

(2) 14, otherwise.’’.

Section 2M5.2(a)(1) is amended by

striking ‘‘22’’ and inserting ‘‘26’’.

The heading to Chapter Two, Part M,

Subpart 6 is amended by striking

‘‘Atomic Energy’’ and inserting

‘‘Nuclear, Biological, And Chemical

Weapons And Materials, And Other

Weapons of Mass Destruction’’.

Chapter Two, Part M is amended by

striking § 2M6.1 and inserting the

following:

‘‘§ 2M6.1. Unlawful Production,

Development, Acquisition, Stockpiling,

Alteration, Use, Transfer, or Possession

of Nuclear Material, Weapons, or

Facilities, Biological Agents, Toxins, or

Delivery Systems, Chemical Weapons,

or Other Weapons of Mass Destruction;

Attempt or Conspiracy

(a) Base Offense Level (Apply the

Greatest):

(1) 42, if the offense was committed

with intent (A) to injure the United

States; or (B) to aid a foreign nation or

a foreign terrorist organization;

(2) 28, if subsections (a)(1) and (a)(3)

do not apply; or

(3) 20, if the offense (A) involved a

threat to use a nuclear weapon, nuclear

material, or nuclear by-product material,

a chemical weapon, a biological agent,

toxin, or delivery system, or a weapon

of mass destruction; but (B) did not

involve any conduct evidencing an

intent or ability to carry out the threat.

(b) Specific Offense Characteristics

(1) If (A) subsection (a)(2) or (a)(3)

applies; and (B) the offense involved a

threat to use, or otherwise involved (i)

a select biological agent; (ii) a listed

precursor or a listed toxic chemical; (iii)

nuclear material or nuclear byproduct

material; or (iv) a weapon of mass

destruction that contains any agent,

precursor, toxic chemical, or material

referred to in subdivision (i), (ii), or (iii),

increase by 2 levels.

(2) If (A) subsection (a)(2) applies; and

(B)(i) any victim died or sustained

permanent or life-threatening bodily

injury, increase by 4 levels; (ii) any

victim sustained serious bodily injury,

increase by 2 levels; or (iii) the degree

of injury is between that specified in

subdivisions (i) and (ii), increase by 3

levels.

(3) If (A) subsection (a)(2) or (a)(3)

applies; and (B) the offense resulted in

(i) substantial disruption of public,

governmental, or business functions or

services; or (ii) a substantial expenditure

of funds to clean up, decontaminate, or

otherwise respond to the offense,

increase by 4 levels.

(c) Cross References

(1) If the offense resulted in death,

apply § 2A1.1 (First Degree Murder) if

the death was caused intentionally or

knowingly, or § 2A1.2 (Second Degree

Murder) otherwise, if the resulting

offense level is greater than that

determined above.

(2) If the offense was tantamount to

attempted murder, apply § 2A2.1

(Assault with Intent to Commit Murder;

Attempted Murder), if the resulting

offense level is greater than that

determined above.

(d) Special Instruction

(1) If the defendant is convicted of a

single count involving (A) conduct that

resulted in the death or permanent, lifethreatening, or serious bodily injury of

more than one victim, or (B) conduct

tantamount to the attempted murder of

more than one victim, Chapter Three,

Part D (Multiple Counts) shall be

applied as if such conduct in respect to

each victim had been contained in a

separate count of conviction.

Commentary

Statutory Provisions: 18 U.S.C. 175, 229, 831,

842(p)(2), 2332a (only with respect to

weapons of mass destruction as defined in 18

U.S.C. 2332a(c)(2)(B), (C), and (D), but

including any biological agent, toxin, or

vector); 42 U.S.C. 2077(b), 2122, 2131. For

additional statutory provision(s), see

Appendix A (Statutory Index).

Application Notes

1. Definitions.’’For purposes of this

guideline:

‘Biological agent’ has the meaning

given that term in 18 U.S.C. 178(1).

‘Chemical weapon’ has the meaning

given that term in 18 U.S.C. 229F(1).

‘Foreign terrorist organization’ (A)

means an organization that engages in

terrorist activity that threatens the

security of a national of the United

States or the national security of the

United States; and (B) includes an

organization designated by the Secretary

of State as a foreign terrorist

organization pursuant to section 219 of

the Immigration and Nationality Act (8

U.S.C. 1219). ‘‘National of the United

States’’ has the meaning given that term

in section 101(a)(22) of the Immigration

and Nationality Act (8 U.S.C.

1101(a)(22)).

30558 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

‘Listed precursor or a listed toxic

chemical’ means a precursor or a toxic

chemical, respectively, listed in

Schedule I of the Annex on Chemicals

to the Chemical Weapons Convention.

See 18 U.S.C. 229F(6)(B), (8)(B).

‘Precursor’ has the meaning given that

term in 18 U.S.C. 229F(6)(A). ‘Toxic

chemical’ has the meaning given that

term in 18 U.S.C. 229F(8)(A).

‘Nuclear byproduct material’ has the

meaning given that term in 18 U.S.C.

§ 831(f)(2).

‘Nuclear material’ has the meaning

given that term in 18 U.S.C. 831(f)(1).

‘Select biological agent’ means a

biological agent or toxin identified by

the Secretary of Health and Human

Services on the select agent list

established pursuant to section 511(d) of

the Antiterrorism and Effective Death

Penalty Act, Pub. L. 104–132. See 42

CFR part 72.

‘Toxin’ has the meaning given that

term in 18 U.S.C. 178(2).

‘Vector’ has the meaning given that

term in 18 U.S.C. 178(4).

‘Weapon of mass destruction’ has the

meaning given that term in 18 U.S.C.

2332a(c)(2)(B), (C), and (D).

2. Threat Cases.—Subsection (a)(3)

applies in cases that involved a threat to

use a weapon, agent, or material covered

by this guideline but that did not

involve any conduct evidencing an

intent or ability to carry out the threat.

For example, subsection (a)(3) would

apply in a case in which the defendant

threatened to contaminate an area with

anthrax and also dispersed into the area

a substance that appeared to be anthrax

but that the defendant knew to be

harmless talcum powder. In such a case,

the dispersal of talcum powder does not

evidence an intent on the defendant’s

part to carry out the threat. In contrast,

subsection (a)(3) would not apply in a

case in which the defendant threatened

to contaminate an area with anthrax and

also dispersed into the area a substance

that the defendant believed to be

anthrax but that in fact was harmless

talcum powder. In such a case, the

dispersal of talcum powder was conduct

evidencing an intent to carry out the

threat because of the defendant’s belief

that the talcum powder was anthrax.

Subsection (a)(3) shall not apply in

any case involving both a threat to use

any weapon, agent, or material covered

by this guideline and the possession of

that weapon, agent, or material. In such

a case, possession of the weapon, agent,

or material is conduct evidencing an

intent to use that weapon, agent, or

material.

3. Application of Special

Instruction.—Subsection (d) applies in

any case in which the defendant is

convicted of a single count involving

(A) the death or permanent, lifethreatening, or serious bodily injury of

more than one victim, or (B) conduct

tantamount to the attempted murder of

more than one victim, regardless of

whether the offense level is determined

under this guideline or under another

guideline in Chapter Two (Offense

Conduct) by use of a cross reference

under subsection (c).’’.

The Commentary to § 2X1.1 captioned

‘‘Application Notes’’ is amended in

Note 1 by inserting after the line

referenced to ‘‘§ 2E5.1;’’ the following:

‘‘§ 2M6.1;’’.

The Commentary to § 2X1.1 captioned

‘‘Application Notes’’ is amended in

Note 1 by inserting after the line

referenced to ‘‘§ 2H1.1’’ the following:

‘‘§ 2M6.1;’’.

Appendix A (Statutory Index) is

amended by inserting after the line

referenced to 18 U.S.C. § 842(l)-(o) the

following new line:

‘‘18 U.S.C. § 842(p)(2) 2K1.3,

2M6.1’’;

By inserting after the line referenced

to 18 U.S.C. § 155 the following new

line:

‘‘18 U.S.C. § 175 2M6.1’’;

By inserting after the line referenced

to 18 U.S.C. § 228 the following new

line:

‘‘18 U.S.C. § 229 2M6.1’’;

In the line referenced to 18 U.S.C.

§ 2332a by striking ‘‘2A1.1, 2A1.2,

2A1.3, 2A1.4, 2A1.5, 2A2.1, 2A2.2,

2B1.3,’’ and by inserting ‘‘, 2M6.1’’ after

‘‘2K1.4’’; and

By inserting after the line referenced

to 50 U.S.C. App. § 462 the following

new line:

‘‘50 U.S.C. App. § 1701 2M5.1,

2M5.2’’.

Reason for Amendment: This

amendment responds to a statutory

provision expressing a sense of Congress

and addresses two offenses relating to

biological and chemical weapons.

Specifically, the amendment responds

to section 1423(a) of the National

Defense Authorization Act for Fiscal

Year 1997, Public Law 104–201, that

expressed a sense of Congress that

guideline penalties are inadequate for

certain offenses involving the

importation and exportation of nuclear,

chemical, and biological weapons,

materials, or technologies by providing

a four-level increase for those offenses

in subsection (a)(1) of both §§ 2M5.1

(Evasion of Export Controls) and 2M5.2

(Exportation of Arms, Munitions, or

Military Equipment or Services Without

a Required Validated Export License).

This increase serves to make the penalty

structure for those offenses proportional

to other national security guidelines in

Chapter Two, Part M. In addition,

Appendix A (Statutory Index) is

amended to refer one of the offenses, 50

U.S.C. 1701 (which prior to this

amendment was not referenced in the

Statutory Index), to both §§ 2M5.1 and

2M5.2.

The amendment also substantially

revises § 2M6.1 to incorporate offenses

at 18 U.S.C. § 175, relating to biological

weapons, and 18 U.S.C. 229, relating to

chemical weapons. Specifically, the

amendment modifies § 2M6.1 as

follows:

First, the amendment provides three

alternative base offense levels. The first

alternative base offense level of level 42

applies if the offense was committed

with the intent to injure the United

States or to aid a foreign government or

foreign terrorist organization and

incorporates the 12-level enhancement

previously at subsection (b)(1).

Therefore, this change does not affect

the overall offense level for these

offenses. ‘‘Foreign terrorist

organizations’’ are added because such

groups are investing in the acquisition

of unconventional weapons such as

nuclear, biological, and chemical agents.

This first alternative base offense level

is expected to apply to cases previously

covered by the guideline (i.e., the

acquisition of nuclear material from

nuclear facilities in order to assist

foreign governments, thereby creating a

threat to the national security), as well

as to cases that implicate the national

security and involve biological and

chemical weapons and other weapons of

mass destruction.

The amendment provides that, if the

base offense level of level 42 applies,

none of the adjustments in subsection

(b) shall apply. However, if death

results, the cross reference allows for

the possibility of a greater offense level

through application of the first degree

murder guideline.

The second alternative base offense

level of level 28 applies to those cases

that do not threaten the national

security of the United States, and is

expected to apply in most cases.

The third alternative base offense

level of level 20 applies to cases which

involve a threat to use a nuclear,

biological, or chemical weapon or

material, or other weapon of mass

destruction, but do not involve any

conduct evidencing an intent or ability

to carry out the threat and, accordingly,

are less serious offenses.

Second, the amendment provides a

two-level enhancement in subsection

(b)(1) if the offense or threat involved

particularly dangerous types of nuclear,

chemical, and biological weapons and

materials that are defined in the

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30559

guideline commentary by reference to

the applicable statutory and regulatory

provisions. This enhancement reflects

the distinctions already made in

international treaties, provisions of title

18, United States Code, relevant

regulatory schemes, and the fact that

certain types of weapons and materials

are inherently more lethal and pose a

greater threat to the public safety.

Third, the amendment provides a

four-level enhancement in subsection

(b)(2) if any victim died or sustained

permanent or life-threatening bodily

injury, and a two-level enhancement if

any victim sustained serious bodily

injury. If the degree of injury is between

permanent or life-threatening bodily

injury and serious bodily injury, a threelevel enhancement is provided. This

enhancement is modeled after the

enhancement found in § 2N1.1

(Tampering or Attempting to Tamper

Involving Risk of Death or Bodily

Injury).

Fourth, the amendment provides a

four-level enhancement for cases

involving a substantial disruption of

public, governmental, or business

functions or services, or the substantial

expenditure of funds to clean up,

decontaminate, or otherwise respond to

the offense.

Fifth, the amendment provides two

cross references, applicable if the

resulting offense level is greater and

either death resulted (in which case the

first or second degree murder guideline

would apply), or if the offense was

tantamount to attempted murder (in

which case the attempted murder

guideline would apply). These cross

references are also modeled after the

cross reference found in § 2N1.1.

Sixth, the amendment provides a

special instruction that if the defendant

is convicted of one count involving the

death of, serious bodily injury to, or

attempted murder of, more than one

victim, the grouping rules will be

applied as if the defendant had been

convicted of separate counts for each

such victim.

Seventh, the amendment amends

Appendix A to refer violations of 18

U.S.C. § 175 and 229 to § 2M6.1 and to

delete a number of guideline references

for violations of 18 U.S.C. 2332a and

instead provide a reference for that

offense to §§ 2K1.4 (Arson; Property

Damage by Use of Explosives) and

2M6.1 (in the case of other weapons of

mass destruction).

Finally, the amendment amends the

title of § 2M6.1 to include attempts and

conspiracies, and adds § 2M6.1 under

the sections addressing attempts and

conspiracies in Application Note 1 of

§ 2X1.1 (Attempt, Solicitation, or

Conspiracy) to indicate that attempts

and conspiracies are covered expressly

by the § 2M6.1 offense guideline.

22. Amendment: Chapter Two, Part S

is amended by striking § 2S1.1, and its

accompanying commentary, and

inserting the following:

‘‘§ 2S1.1. Laundering of Monetary

Instruments; Engaging in Monetary

Transactions in Property Derived from

Unlawful Activity

(a) Base Offense Level:

(1) The offense level for the

underlying offense from which the

laundered funds were derived, if (A) the

defendant committed the underlying

offense (or would be accountable for the

underlying offense under subsection

(a)(1)(A) of § 1B1.3 (Relevant Conduct));

and (B) the offense level for that offense

can be determined; or

(2) 8 plus the number of offense levels

from the table in § 2B1.1 (Theft,

Property Destruction, and Fraud)

corresponding to the value of the

laundered funds, otherwise.

(b) Specific Offense Characteristics

(1) If (A) subsection (a)(2) applies; and

(B) the defendant knew or believed that

any of the laundered funds were the

proceeds of, or were intended to

promote (i) an offense involving the

manufacture, importation, or

distribution of a controlled substance or

a listed chemical; (ii) a crime of

violence; or (iii) an offense involving

firearms, explosives, national security,

terrorism, or the sexual exploitation of

a minor, increase by 6 levels.

(2) (Apply the Greatest):

(A) If the defendant was convicted

under 18 U.S.C. § 1957, increase by 1

level.

(B) If the defendant was convicted

under 18 U.S.C. § 1956, increase by 2

levels.

(C) If (i) subsection (a)(2) applies; and

(ii) the defendant was in the business of

laundering funds, increase by 4 levels.

(3) If (A) subsection (b)(2)(B) applies;

and (B) the offense involved

sophisticated laundering, increase by 2

levels.

Commentary

Statutory Provisions: 18 U.S.C. 1956, 1957.

For additional statutory provision(s), see

Appendix A (Statutory Index).

Application Notes

1. Definitions.—For purposes of this

guideline:

‘Crime of violence’ has the meaning

given that term in subsection (a)(1) of

§ 4B1.2 (Definitions of Terms Used in

Section 4B1.1).

‘Criminally derived funds’ means any

funds derived, or represented by a law

enforcement officer, or by another

person at the direction or approval of an

authorized Federal official, to be

derived from conduct constituting a

criminal offense.

‘Laundered funds’ means the

property, funds, or monetary instrument

involved in the transaction, financial

transaction, monetary transaction,

transportation, transfer, or transmission

in violation of 18 U.S.C. 1956 or 1957.

‘Laundering funds’ means making a

transaction, financial transaction,

monetary transaction, or transmission,

or transporting or transferring property,

funds, or a monetary instrument in

violation of 18 U.S.C. 1956 or 1957.

‘Sexual exploitation of a minor’

means an offense involving (A)

promoting prostitution by a minor; (B)

sexually exploiting a minor by

production of sexually explicit visual or

printed material; (C) distribution of

material involving the sexual

exploitation of a minor, or possession of

material involving the sexual

exploitation of a minor with intent to

distribute; or (D) aggravated sexual

abuse, sexual abuse, or abusive sexual

contact involving a minor. ‘‘Minor’’

means an individual under the age of 18

years.

2. Application of Subsection (a)(1).—

(A) Multiple Underlying Offenses.—In

cases in which subsection (a)(1) applies

and there is more than one underlying

offense, the offense level for the

underlying offense is to be determined

under the procedures set forth in

Application Note 3 of the Commentary

to § 1B1.5 (Interpretation of References

to Other Offense Guidelines).

(B) Defendants Accountable for

Underlying Offense.—In order for

subsection (a)(1) to apply, the defendant

must have committed the underlying

offense or be accountable for the

underlying offense under

§ 1B1.3(a)(1)(A). The fact that the

defendant was involved in laundering

criminally derived funds after the

commission of the underlying offense,

without additional involvement in the

underlying offense, does not establish

that the defendant committed, aided,

abetted, counseled, commanded,

induced, procured, or willfully caused

the underlying offense.

3. Application of Subsection (a)(2).—

(A) In General.—Subsection (a)(2)

applies to any case in which (i) the

defendant did not commit the

underlying offense; or (ii) the defendant

committed the underlying offense (or

would be accountable for the underlying

offense under § 1B1.3(a)(1)(A)), but the

offense level for the underlying offense

30560 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

is impossible or impracticable to

determine.

(B) Commingled Funds.—In a case in

which a transaction, financial

transaction, monetary transaction,

transportation, transfer, or transmission

results in the commingling of

legitimately derived funds with

criminally derived funds, the value of

the laundered funds, for purposes of

subsection (a)(2), is the amount of the

criminally derived funds, not the total

amount of the commingled funds, if the

defendant provides sufficient

information to determine the amount of

criminally derived funds without

unduly complicating or prolonging the

sentencing process. If the amount of the

criminally derived funds is difficult or

impracticable to determine, the value of

the laundered funds, for purposes of

subsection (a)(2), is the total amount of

the commingled funds.

4. Enhancement for Business of

Laundering Funds.—

(A) In General.—The court shall

consider the totality of the

circumstances to determine whether a

defendant who did not commit the

underlying offense was in the business

of laundering funds, for purposes of

subsection (b)(2)(C).

(B) Factors to Consider.—The

following is a non-exhaustive list of

factors that may indicate the defendant

was in the business of laundering funds

for purposes of subsection (b)(2)(C):

(i) The defendant regularly engaged in

laundering funds.

(ii) The defendant engaged in

laundering funds during an extended

period of time.

(iii) The defendant engaged in

laundering funds from multiple sources.

(iv) The defendant generated a

substantial amount of revenue in return

for laundering funds.

(v) At the time the defendant

committed the instant offense, the

defendant had one or more prior

convictions for an offense under 18

U.S.C. 1956 or 1957, or under 31 U.S.C.

5313, 5314, 5316, 5324 or 5326, or any

similar offense under state law, or an

attempt or conspiracy to commit any

such federal or state offense. A

conviction taken into account under

subsection (b)(2)(C) is not excluded

from consideration of whether that

conviction receives criminal history

points pursuant to Chapter Four, Part A

(Criminal History).

(vi) During the course of an

undercover government investigation,

the defendant made statements that the

defendant engaged in any of the conduct

described in subdivisions (i) through

(iv).

5. (A) Sophisticated Laundering under

Subsection (b)(3).—For purposes of

subsection (b)(3), ‘sophisticated

laundering’ means complex or intricate

offense conduct pertaining to the

execution or concealment of the 18

U.S.C. 1956 offense.

Sophisticated laundering typically

involves the use of—

(i) fictitious entities;

(ii) shell corporations;

(iii) two or more levels (i.e., layering)

of transactions, transportation, transfers,

or transmissions, involving criminally

derived funds that were intended to

appear legitimate; or

(iv) offshore financial accounts.

(B) Non-Applicability of

Enhancement.—If subsection (b)(3)

applies, and the conduct that forms the

basis for an enhancement under the

guideline applicable to the underlying

offense is the only conduct that forms

the basis for application of subsection

(b)(3) of this guideline, do not apply

subsection (b)(3) of this guideline.

6. Grouping of Multiple Counts.—In a

case in which the defendant is

convicted of a count of laundering funds

and a count for the underlying offense

from which the laundered funds were

derived, the counts shall be grouped

pursuant to subsection (c) of § 3D1.2

(Groups of Closely-Related Counts).’’.

Chapter Two, Part S is amended by

striking section 2S1.2, and its

accompanying commentary.

The Commentary to § 2S1.3 captioned

‘‘Statutory Provisions’’ is amended by

inserting ‘‘18 U.S.C. § 1960;’’ before ‘‘26

U.S.C. § 7203’’; and by inserting ‘‘,

5326’’ after ‘‘5324’’.

Appendix A (Statutory Index) is

amended in the line referenced to 18

U.S.C. 1957 and the line referenced to

21 U.S.C. 854 by striking ‘‘2S1.2’’ and

inserting ‘‘2S1.1’’; by inserting after the

line referenced to 18 U.S.C. 1959 the

following new line:

‘‘18 U.S.C. 1960—2S1.3’’;

And by inserting after the line

referenced to 31 U.S.C. 5324 the

following new line:

‘‘31 U.S.C. 5326 2S1.3, 2T2.2’’.

The Commentary to § 1B1.3 captioned

‘‘Application Notes’’ is amended in

Note 6 in the first paragraph by striking

the second sentence and inserting the

following:

‘‘For example, in § 2S1.1 (Laundering

of Monetary Instruments; Engaging in

Monetary Transactions in Property

Derived from Unlawful Activity),

subsection (b)(2)(B) applies if the

defendant ‘‘is convicted under 18 U.S.C.

1956’.’’.

The Commentary to § 1B1.3 captioned

‘‘Application Notes’’ is amended in

Note 6 in the second paragraph by

striking the last sentence and inserting

the following:

‘‘For example, § 2S1.1(b)(2)(B) (which

is applicable only if the defendant is

convicted under 18 U.S.C. 1956) would

be applied in determining the offense

level under § 2X3.1 (Accessory After the

Fact) in a case in which the defendant

was convicted of accessory after the fact

to a violation of 18 U.S.C. 1956.’’.

Section 3D1.2(d) is amended in the

second paragraph by striking ‘‘2S1.2,’’.

Section 8C2.1(a) is amended by

striking ‘‘2S1.2,’’.

The Commentary to § 8C2.4 captioned

‘‘Application Notes’’ is amended in

Note 5 by striking ‘‘; 2S1.1 (Laundering

of Monetary Instruments); and 2S1.2

(Engaging in Monetary Transactions in

Property Derived from Specified

Unlawful Activity)’’.

The Commentary to § 8C2.4 captioned

‘‘Background’’ is amended in the

seventh sentence by striking ‘‘and

money laundering’’.

Reason for Amendment: This

amendment consolidates the money

laundering guidelines, §§ 2S1.1

(Laundering of Monetary Instruments)

and 2S1.2 (Engaging in Monetary

Transactions in Property Derived from

Specified Unlawful Activity), into one

guideline that applies to convictions

under 18 U.S.C. 1956 or 1957, or 21

U.S.C. 854. The amendment responds in

several ways to concerns that the

penalty structure existing prior to this

amendment for such offenses did not

reflect adequately the culpability of the

defendant or the seriousness of the

money laundering conduct because the

offense level for money laundering was

determined without sufficient

consideration of the defendant’s

involvement in, or the relative

seriousness of, the underlying offense.

This amendment is designed to promote

proportionality by providing increased

penalties for defendants who launder

funds derived from more serious

underlying criminal conduct, such as

drug trafficking, crimes of violence, and

fraud offenses that generate relatively

high loss amounts, and decreased

penalties for defendants who launder

funds derived from less serious

underlying criminal conduct, such as

basic fraud offenses that generate

relatively low loss amounts.

First, this amendment ties offense

levels for money laundering more

closely to the underlying conduct that

was the source of the criminally derived

funds by separating money laundering

offenders into two categories for

purposes of determining the base

offense level. For direct money

launderers (offenders who commit or

would be accountable under

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30561

§ 1B1.3(a)(1)(A) (Relevant Conduct) for

the underlying offense which generated

the criminal proceeds), subsection (a)(1)

sets the base offense level at the offense

level in Chapter Two (Offense Conduct)

for the underlying offense (i.e., the base

offense level, specific offense

characteristics, cross references, and

special instructions for the underlying

offense). For third party money

launderers (offenders who launder the

proceeds generated from underlying

offenses that the defendant did not

commit or would not be accountable for

under § 1B1.3(a)(1)(A)), subsection (a)(2)

sets the base offense level at level 8,

plus an increase based on the value of

the laundered funds from the table in

subsection (b)(1) of § 2B1.1 (Theft,

Fraud, Property Destruction).

Second, in addition to the base

offense level calculation, this

amendment provides an enhancement

designed to reflect the differing

seriousness of the underlying conduct

that was the source of the criminally

derived funds. Subsection (b)(1)

provides a six-level enhancement for

third party money launderers who knew

or believed that any of the laundered

funds were the proceeds of, or were

intended to promote, certain types of

more serious underlying criminal

conduct; specifically, drug trafficking,

crimes of violence, offenses involving

firearms, explosives, national security,

terrorism, and the sexual exploitation of

a minor. The Commission determined

that defendants who knowingly launder

the proceeds of these more serious

underlying offenses are substantially

more culpable than third party

launderers of criminally derived

proceeds of less serious underlying

offenses.

Third, this amendment provides three

alternative enhancements, with the

greatest applicable enhancement to be

applied. These enhancements are

designed to (1) ensure that all direct

money launderers receive additional

punishment for committing both the

money laundering offense and the

underlying offense, and (2) reflect the

differing seriousness of money

laundering conduct depending on the

nature and sophistication of the offense.

Specifically, subsection (b)(2)(A)

provides a one-level increase if the

defendant was convicted under 18

U.S.C. 1957, and subsection (b)(2)(B)

provides a two-level increase if the

defendant was convicted under 18

U.S.C. 1956. The one-level difference

between these two enhancements

reflects the fact that 18 U.S.C. 1956 has

a statutory maximum penalty (20 years’

imprisonment) that is twice as long as

the statutory maximum penalty for

violations of 18 U.S.C. 1957 (10 years’

imprisonment). In addition, subsection

(b)(3) provides an additional two-level

increase if subsection (b)(2)(B) applies

and the offense involved sophisticated

laundering such as the use of fictitious

entities, shell corporations, two or more

levels of transactions, or offshore

financial accounts. The Commission

determined that, similar to fraud and tax

offenses that involve sophisticated

means, see subsection (b)(8) of § 2B1.1

(Theft, Property Destruction, and

Fraud), subsection (b)(2) of § 2T1.1 (Tax

Evasion; Willful Failure to File Return,

Supply Information, or Pay Tax;

Fraudulent or False Returns,

Statements, or Other Documents),

violations of 18 U.S.C. 1956 that involve

sophisticated laundering warrant

additional punishment because such

offenses are more difficult and time

consuming for law enforcement to

detect than less sophisticated

laundering. As a result of the

enhancements provided by subsections

(b)(2)(A), (b)(2)(B), and (b)(3), all direct

money launderers will receive an

offense level that is one to four levels

greater than the Chapter Two offense

level for the underlying offense,

depending on the statute of conviction

and sophistication of the money

laundering offense conduct.

With respect to third party money

launderers, subsection (b)(2)(C) provides

a four-level enhancement if the

defendant is ‘‘in the business’’ of

laundering funds. The Commission

determined that, similar to a

professional ‘‘fence’’, see

§ 2B1.1(b)(4)(B), defendants who

routinely engage in laundering funds on

behalf of others, and who gain

financially from engaging in such

transactions, warrant substantial

additional punishment because they

encourage the commission of additional

criminal conduct.

Fourth, this amendment contains an

application note expressly providing

instructions regarding the grouping of

money laundering counts with a count

of conviction for the underlying offense.

In a case in which the defendant is to

be sentenced on a count of conviction

for money laundering and a count of

conviction for the underlying offense

that generated the laundered funds, this

application note instructs that such

counts shall be grouped pursuant to

subsection (c) of § 3D1.2 (Groups of

Closely-Related Counts), thereby

resolving a circuit conflict on this issue.

Compare United States v. Cusumano,

943 F.2d 305 (3d Cir. 1991), cert.

denied, 502 U.S. 1036 (1992) (affirming

decision to group under § 3D1.2(b)

money laundering count with other

offenses that ‘‘were all part of one

scheme to obtain money’’ from an

employee benefit fund); United States v.

Leonard, 61 F.3d 1181 (5th Cir. 1995)

(affirming decision to group fraud and

money laundering offenses under

§ 3D1.2(d) because defendant’s money

laundering activity and fraudulent

telemarketing scheme constituted the

same common plan and had the same

victims); and United States v. Wilson,

98 F.3d 281 (7th Cir. 1996) (district

court erred in not grouping money

laundering and mail fraud convictions

under § 3D1.2(d)), with United States v.

Kneeland, 148 F.3d 6 (1st Cir. 1998)

(affirming district court decision not to

group fraud and money laundering

counts under § 3D1.2(d) because the

offense level for fraud, unlike money

laundering, is determined ‘‘largely on

the basis of total amount of harm or

loss’’); United States v. Napoli, 179 F.3d

1 (2d Cir. 1999), cert. denied, 528 U.S.

1162 (2000) (affirming decision not to

group wire fraud and money laundering

counts under § 3D1.2(b) or (d) because

the offenses have different victims and

the offense level for money laundering,

unlike fraud, is not based primarily on

the amount of money involved); United

States v. Hildebrand, 152 F.3d 756 (8th

Cir.), cert. denied, 525 U.S. 1033 (1998)

(finding that money laundering and

fraud counts should not be grouped

because the fraud and money

laundering guidelines do not measure

the same types of harm); United States

v. Hanley, 190 F.3d 1017 (9th Cir. 1999)

(affirming decision not to group money

laundering and wire fraud counts under

§ 3D1.2(d) because the guidelines for

such offenses measure harm differently);

and United States v. Johnson, 971 F.2d

562 (10th Cir. 1992) (district court erred

in grouping money laundering and

fraud counts under § 3D1.2(d) because

the measurement of harm for fraud is

not the same as that for money

laundering).

Finally, this amendment provides that

convictions under 18 U.S.C. 1960 are

referenced to § 2S1.3 (Structuring

Transactions to Evade Reporting

Requirements). Operation of money

transmitting businesses without an

appropriate license is proscribed by 18

U.S.C. 1960, as are failures to comply

with certain reporting requirements

issued under 31 U.S.C. 5330. The

Commission determined that offenses

involving these regulatory requirements

serve many of the same purposes as

Currency Transaction Reports, Currency

and Monetary Instrument Reports,

Reports of Foreign Bank and Financial

Accounts, and Reports of Cash

Payments over $10,000 Received in a

30562 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

Trade or Business, violations regarding

which currently are referenced to

§ 2S1.3, and that, therefore, violations of

18 U.S.C. § 1960 also should be

referenced to § 2S1.3.

23. Amendment: The Commentary to

§ 3B1.2 is amended by striking Notes 1

through 4 and the background and

inserting the following:

‘‘1. Definition.—For purposes of this

guideline, ‘participant’ has the meaning

given that term in Application Note 1 of

§ 3B1.1 (Aggravating Role).

2. Requirement of Multiple

Participants.—This guideline is not

applicable unless more than one

participant was involved in the offense.

See the Introductory Commentary to

this Part (Role in the Offense).

Accordingly, an adjustment under this

guideline may not apply to a defendant

who is the only defendant convicted of

an offense unless that offense involved

other participants in addition to the

defendant and the defendant otherwise

qualifies for such an adjustment.

3. Applicability of Adjustment.—

(A) Substantially Less Culpable than

Average Participant.—This section

provides a range of adjustments for a

defendant who plays a part in

committing the offense that makes him

substantially less culpable than the

average participant.

A defendant who is accountable

under § 1B1.3 (Relevant Conduct) only

for the conduct in which the defendant

personally was involved and who

performs a limited function in concerted

criminal activity is not precluded from

consideration for an adjustment under

this guideline. For example, a defendant

who is convicted of a drug trafficking

offense, whose role in that offense was

limited to transporting or storing drugs

and who is accountable under § 1B1.3

only for the quantity of drugs the

defendant personally transported or

stored is not precluded from

consideration for an adjustment under

this guideline.

(B) Conviction of Significantly Less

Serious Offense.—If a defendant has

received a lower offense level by virtue

of being convicted of an offense

significantly less serious than warranted

by his actual criminal conduct, a

reduction for a mitigating role under

this section ordinarily is not warranted

because such defendant is not

substantially less culpable than a

defendant whose only conduct involved

the less serious offense. For example, if

a defendant whose actual conduct

involved a minimal role in the

distribution of 25 grams of cocaine (an

offense having a Chapter Two offense

level of level 14 under § 2D1.1

(Unlawful Manufacturing, Importing,

Exporting, or Trafficking (Including

Possession with Intent to Commit These

Offenses); Attempt or Conspiracy)) is

convicted of simple possession of

cocaine (an offense having a Chapter

Two offense level of level 6 under

§ 2D2.1 (Unlawful Possession; Attempt

or Conspiracy)), no reduction for a

mitigating role is warranted because the

defendant is not substantially less

culpable than a defendant whose only

conduct involved the simple possession

of cocaine.

(C) Fact-Based Determination.—The

determination whether to apply

subsection (a) or subsection (b), or an

intermediate adjustment, involves a

determination that is heavily dependent

upon the facts of the particular case. As

with any other factual issue, the court,

in weighing the totality of the

circumstances, is not required to find,

based solely on the defendant’s bare

assertion, that such a role adjustment is

warranted.

4. Minimal Participant.—Subsection

(a) applies to a defendant described in

Application Note 3(A) who plays a

minimal role in concerted activity. It is

intended to cover defendants who are

plainly among the least culpable of

those involved in the conduct of a

group. Under this provision, the

defendant’s lack of knowledge or

understanding of the scope and

structure of the enterprise and of the

activities of others is indicative of a role

as minimal participant. It is intended

that the downward adjustment for a

minimal participant will be used

infrequently.

5. Minor Participant.—Subsection (b)

applies to a defendant described in

Application Note 3(A) who is less

culpable than most other participants,

but whose role could not be described

as minimal.’’.

Reason for Amendment: This

amendment resolves a circuit conflict

regarding whether a defendant who is

accountable under § 1B1.3 (Relevant

Conduct) only for conduct in which the

defendant personally was involved, and

who performs a limited function in

concerted criminal activity, is precluded

from consideration for an adjustment

under § 3B1.2 (Mitigating Role).

Compare United States v. Burnett, 66

F.3d 137 (7th Cir. 1995) (‘‘where a

defendant is sentenced only for the

amount of drugs he handled, he is not

entitled to a § 3B1.2 reduction’’), with

United States v. Rodriguez De Varon,

175 F.3d 930 (11th Cir. 1999) (a

defendant is not automatically

precluded from consideration for a

mitigating role adjustment in a case in

which the defendant is held accountable

solely for the amount of drugs he

personally handled). Although this

circuit conflict arose in the context of a

drug offense, the amendment resolves it

in a manner that makes the rule

applicable to all types of offenses.

The amendment adopts the approach

articulated by the Eleventh Circuit in

United States v. Rodriguez De Varon,

supra, that § 3B1.2 does not

automatically preclude a defendant

from being considered for a mitigating

role adjustment in a case in which the

defendant is held accountable under

§ 1B1.3 solely for the amount of drugs

the defendant personally handled. In

considering a § 3B1.2 adjustment, a

court must measure the defendant’s role

against the relevant conduct for which

the defendant is held accountable at

sentencing, whether or not other

defendants are charged.

In contrast to the holding in United

States v. Burnett, supra, this

amendment allows the court to apply

traditional analysis on the applicability

of a reduction pursuant to § 3B1.2, even

in a case in which a defendant is held

liable under § 1B1.3 only for conduct

(such as drug quantities) in which the

defendant was involved personally.

The substantive impact of this

amendment in resolving the circuit

conflict is to provide, in the context of

a drug courier, for example, that the

court is not precluded from considering

a § 3B1.2 adjustment simply because the

defendant’s role in the offense was

limited to transporting or storing drugs,

and the defendant was accountable

under § 1B1.3 only for the quantity of

drugs the defendant personally

transported or stored. The amendment

does not require that such a defendant

receive a reduction under § 3B1.2, or

suggest that such a defendant can

receive a reduction based only on those

facts; rather, the amendment provides

only that such a defendant is not

precluded from consideration for such a

reduction if the defendant otherwise

qualifies for the reduction pursuant to

the terms of § 3B1.2.

In addition to resolving the circuit

conflict, the amendment makes the

following non-substantive revisions to

§ 3B1.2 to clarify guideline application:

(1) Incorporating commentary from the

Introduction to Chapter Three, Part B

(Role in the Offense) that there must be

more than one participant before

application of a mitigating role

adjustment may be considered; (2)

incorporating into this guideline the

definition of ‘‘participant’’ from § 3B1.1

(Aggravating Role); (3) moving into an

application note significant background

commentary that has been cited

frequently in appellate decisions; (4)

adding a section on fact-based

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30563

determinations to Application Note 3

that emphasizes the significant judicial

role in decision-making on the

applicability of § 3B1.2; (5) maintaining

commentary language that the minimal

role adjustment is intended to be used

infrequently; and (6) making technical

amendments to the Commentary to

clarify applicable rules (such as the

addition of headings for, and the

reordering of, application notes in the

commentary) that are intended to have

no substantive impact.

The language regarding ‘‘average

participant’’ is moved from the

Background into Application Note 3(A)

to provide guidance as to the

applicability of § 3B1.2. For a reduction

to apply, the court, at a minimum, must

make a factual determination that the

defendant’s role was significantly less

culpable than the average participant.

24. Amendment: The Commentary to

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

amended in Note 3 in the first sentence

of the second paragraph by striking ‘‘In’’

and inserting ‘‘However, in’’; and by

inserting ‘‘other than a case of failure to

appear for service of sentence,’’ after

‘‘offense and the failure to appear,’’.

The Commentary to § 2M3.9

captioned ‘‘Application Notes’’ is

amended by inserting after Note 2 the

following:

‘‘3. A term of imprisonment imposed

for a conviction under 50 U.S.C. § 421

shall be imposed consecutively to any

other term of imprisonment.’’.

Reason for Amendment: This

amendment makes two minor technical

changes. First, the amendment makes an

editorial change in the commentary to

§ 2J1.6 (Failure to Appear by Defendant)

to improve the transition between the

first and second paragraphs of

Application Note 3. Second, the

amendment adds an application note to

§ 2M3.9 (Disclosure of Information

Identifying a Covert Agent) that

implements the consecutive sentencing

requirement of 50 U.S.C. 421, relating to

the disclosure of information identifying

a covert agent.

[FR Doc. 01–13966 Filed 6–5–01; 8:45 am]

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