Sentencing Guidelines for United States Courts, 4197-4210 [2013-01085]

Download as PDF Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices January 24, 2013 Board Meeting; Approval of Minutes of the One Hundred Forty-Fifth Meeting (October 24, 2012) of the Board of Directors; Chairman’s Report; President’s Report; Status Reports on Libya Trip, USIP work on the Rule of Law-Libya, Transition in Iraq, Update on Egypt; Congressional Overview; Strategic Plan; Board Executive Session; Other General Issues. CONTACT: Tessie F. Higgs, Executive Office, Telephone: (202) 429–3836. AGENDA: Dated: January 11, 2013. Michael Graham, Senior Vice President for Management, United States Institute of Peace. [FR Doc. 2013–01017 Filed 1–17–13; 8:45 am] BILLING CODE 6820–AR–M UNITED STATES SENTENCING COMMISSION Sentencing Guidelines for United States Courts United States Sentencing Commission. ACTION: Notice of proposed amendments to sentencing guidelines, policy statements, and commentary. Request for public comment, including public comment regarding retroactive application of any of the proposed amendments. Notice of public hearing. AGENCY: Pursuant to section 994(a), (o), and (p) of title 28, United States Code, the United States Sentencing Commission is considering promulgating certain amendments to the sentencing guidelines, policy statements, and commentary. This notice sets forth the proposed amendments and, for each proposed amendment, a synopsis of the issues addressed by that amendment. This notice also sets forth a number of issues for comment, some of which are set forth together with the proposed amendments; some of which are set forth independent of any proposed amendment; and one of which (regarding retroactive application of proposed amendments) is set forth in the SUPPLEMENTARY INFORMATION portion of this notice. The proposed amendments and issues for comment in this notice are as follows: (1) A proposed amendment to § 2B1.1 (Theft, Property Destruction, and Fraud) regarding offenses involving pre-retail medical products to implement the directive in the SAFE DOSES Act, Public Law 112–186 (October 5, 2012), and a related issue for comment; (2) an issue for comment on mstockstill on DSK4VPTVN1PROD with SUMMARY: VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 the directive in section 3 of the Foreign and Economic Espionage Penalty Enhancement Act of 2012, Public Law 112–ll, relating to offenses involving stolen trade secrets or economic espionage; (3) proposed changes to the guidelines applicable to offenses involving counterfeit or adulterated drugs or counterfeit military parts, including (A) a proposed amendment on offenses involving counterfeit military goods and services, including options to amend § 2B5.3 (Criminal Infringement of Copyright or Trademark) or Appendix A (Statutory Index) with respect to such offenses to address the statutory changes to 18 U.S.C. 2320 made by section 818 of the National Defense Authorization Act for Fiscal Year 2012, Public Law 112–81 (December 31, 2011); (B) a proposed amendment on offenses involving counterfeit drugs, including options to amend § 2B5.3 or Appendix A with respect to such offenses to address the statutory changes to 18 U.S.C. 2320, and to implement the directive to the Commission, in section 717 of the Food and Drug Administration Safety and Innovation Act, Public Law 112–144 (July 9, 2012); and (C) a proposed amendment on offenses involving adulterated drugs, including options to amend § 2N2.1 (Violations of Statutes and Regulations Dealing With Any Food, Drug, Biological Product, Device, Cosmetic, Agricultural Product, or Consumer Product) or Appendix A with respect to such offenses to address the statutory changes to 21 U.S.C. 333 in section 716 of such Act; and related issues for comment; (4) a proposed amendment to § 2T1.1 (Tax Evasion; Willful Failure to File Return, Supply Information, or Pay Tax; Fraudulent or False Returns, Statements, or Other Documents) to respond to a circuit conflict over whether a sentencing court, in calculating the tax loss in a tax case, may subtract the unclaimed deductions that the defendant legitimately could have claimed if he or she had filed an accurate tax return, and related issues for comment; (5) a proposed amendment and issues for comment in response to two circuit conflicts relating to the circumstances under which the defendant is eligible for a third level of reduction under subsection (b) of § 3E1.1 (Acceptance of Responsibility), including (A) a proposed amendment to § 3E1.1 to respond to a circuit conflict over whether the court has discretion to deny the third level of reduction when the government has filed the motion described in subsection (b), which would recognize that the court does have such discretion; and (B) an issue PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 4197 for comment on a circuit conflict over whether the government has discretion to withhold making a motion under subsection (b) when there is no evidence that the government was required to prepare for trial; (6) a proposed amendment to § 5G1.3 (Imposition of a Sentence on a Defendant Subject to an Undischarged Term of Imprisonment) to respond to Setser v. United States, ll U.S. ll (March 28, 2012), which held that a federal court in imposing sentence generally has discretion to order that the sentence run consecutive to (or concurrently with) an anticipated, but not yet imposed, term of imprisonment; and (7) a proposed amendment and related issue for comment in response to miscellaneous issues arising from legislation recently enacted and to address technical and stylistic issues in the guidelines, including (A) proposed changes to Appendix A (Statutory Index) to address certain criminal provisions in the Federal Aviation Administration Modernization and Reform Act of 2012, Public Law 112–95 (February 14, 2012); the Child Protection Act of 2012, Public Law 112– 206 (December 7, 2012); the Federal Restricted Buildings and Grounds Improvement Act of 2011, Public Law 112–98 (March 8, 2012); and the Ultralight Aircraft Smuggling Prevention Act of 2012, Public Law 112–93 (February 10, 2012); (B) a proposed change to Appendix A (Statutory Index) to address offenses under 18 U.S.C. 554; (C) proposed changes to guidelines in Chapter Two, Part J (Offenses Involving the Administration of Justice) to address an application issue involving the interaction of those guidelines with adjustments in Chapter Three, Part C (Obstruction and Related Adjustments); and (D) technical and stylistic changes. DATES: (1) Written Public Comment.—Written public comment regarding the proposed amendments and issues for comment set forth in this notice, including public comment regarding retroactive application of any of the proposed amendments, should be received by the Commission not later than March 19, 2013. (2) Public Hearing.—The Commission plans to hold a public hearing regarding the proposed amendments and issues for comment set forth in this notice. Further information regarding the public hearing, including requirements for testifying and providing written testimony, as well as the location, time, and scope of the hearing, will be E:\FR\FM\18JAN1.SGM 18JAN1 mstockstill on DSK4VPTVN1PROD with 4198 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices provided by the Commission on its Web site at www.ussc.gov. ADDRESSES: Public comment should be sent to: United States Sentencing Commission, One Columbus Circle NE., Suite 2–500, Washington, DC 20002– 8002, Attention: Public Affairs. FOR FURTHER INFORMATION CONTACT: Jeanne Doherty, Public Affairs Officer, Telephone: (202) 502–4502. 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 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 guideline amendments to the Congress not later than the first day of May each year pursuant to 28 U.S.C. 994(p). The proposed amendments in this notice are presented in one of two formats. First, some of the amendments are proposed as specific revisions to a guideline or commentary. Bracketed text within a proposed amendment indicates a heightened interest on the Commission’s part in comment and suggestions regarding alternative policy choices; for example, a proposed enhancement of [2][4][6] levels indicates that the Commission is considering, and invites comment on, alternative policy choices regarding the appropriate level of enhancement. Similarly, bracketed text within a specific offense characteristic or application note means that the Commission specifically invites comment on whether the proposed provision is appropriate. Second, the Commission has highlighted certain issues for comment and invites suggestions on how the Commission should respond to those issues. The Commission requests public comment regarding whether, pursuant to 18 U.S.C. 3582(c)(2) and 28 U.S.C. 994(u), any proposed amendment published in this notice should be included in subsection (c) of ’1B1.10 (Reduction in Term of Imprisonment as a Result of Amended Guideline Range (Policy Statement)) as an amendment that may be applied retroactively to previously sentenced defendants. The Commission lists in ’1B1.10(c) the specific guideline amendments that the court may apply retroactively under 18 U.S.C. 3582(c)(2). The background commentary to ’1B1.10 lists the purpose of the amendment, the magnitude of the change in the guideline range made by the amendment, and the difficulty of VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 applying the amendment retroactively to determine an amended guideline range under ’1B1.10(b) as among the factors the Commission considers in selecting the amendments included in ’1B1.10(c). To the extent practicable, public comment should address each of these factors. Additional information pertaining to the proposed amendments described in this notice may be accessed through the Commission’s Web site at www.ussc.gov. Authority: 28 U.S.C. 994(a), (o), (p), (x); USSC Rules of Practice and Procedure, Rule 4.4. Patti B. Saris, Chair. 1. Pre-Retail Medical Products Synopsis of Proposed Amendment This proposed amendment responds to the SAFE DOSES Act, Public Law 112B186 (October 5, 2012), which created a new criminal offense at 18 U.S.C. 670 for theft of pre-retail medical products, increased statutory penalties for certain related offenses when a preretail medical product is involved, and contained a directive to the Commission to ‘‘review and, if appropriate, amend’’ the federal sentencing guidelines and policy statements applicable to the new offense and the related offenses ‘‘to reflect the intent of Congress that penalties for such offenses be sufficient to deter and punish such offenses, and appropriately account for the actual harm to the public from these offenses.’’ New Offense at 18 U.S.C. 670 The new offense at section 670 makes it unlawful for any person in (or using any means or facility of) interstate or foreign commerce to— (1) Embezzle, steal, or by fraud or deception obtain, or knowingly and unlawfully take, carry away, or conceal a pre-retail medical product; (2) knowingly and falsely make, alter, forge, or counterfeit the labeling or documentation (including documentation relating to origination or shipping) of a pre-retail medical product; (3) knowingly possess, transport, or traffic in a pre-retail medical product that was involved in a violation of paragraph (1) or (2); (4) with intent to defraud, buy, or otherwise obtain, a pre-retail medical product that has expired or been stolen; (5) with intent to defraud, sell, or distribute, a pre-retail medical product that is expired or stolen; or (6) attempt or conspire to violate any of paragraphs (1) through (5). PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 The offense generally carries a statutory maximum term of imprisonment of three years. If the offense is an ‘‘aggravated offense,’’ however, higher statutory maximum terms of imprisonment are provided. The offense is an ‘‘aggravated offense’’ if— (1) The defendant is employed by, or is an agent of, an organization in the supply chain for the pre-retail medical product; or (2) the violation— (A) involves the use of violence, force, or a threat of violence or force; (B) involves the use of a deadly weapon; (C) results in serious bodily injury or death, including serious bodily injury or death resulting from the use of the medical product involved; or (D) is subsequent to a prior conviction for an offense under section 670. Specifically, the higher statutory maximum terms of imprisonment are: (1) Five years, if— (A) the defendant is employed by, or is an agent of, an organization in the supply chain for the pre-retail medical product; or (B) the violation (i) involves the use of violence, force, or a threat of violence or force, (ii) involves the use of a deadly weapon, or (iii) is subsequent to a prior conviction for an offense under section 670. (2) 15 years, if the value of the medical products involved in the offense is $5,000 or greater. (3) 20 years, if both (1) and (2) apply. (4) 30 years, if the offense results in serious bodily injury or death, including serious bodily injury or death resulting from the use of the medical product involved. The proposed amendment amends Appendix A (Statutory Index) to reference the new offense at 18 U.S.C. 670 to § 2B1.1 (Theft, Property Destruction, and Fraud). In addition, the possibility of providing an additional reference to § 2A1.4 (Involuntary Manslaughter) is bracketed. The proposed amendment also adds a new specific offense characteristic to § 2B1.1. The new specific offense characteristic provides an enhancement of [2][4] levels if the offense involves a pre-retail medical product [and (A) the offense involved (i) the use of violence, force, or a threat of violence or force; or (ii) the use of a deadly weapon; (B) the offense resulted in serious bodily injury or death, including serious bodily injury or death resulting from the use of the medical product involved; or (C) the defendant was employed by, or was an agent of, an organization in the supply chain for the pre-retail medical E:\FR\FM\18JAN1.SGM 18JAN1 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices product]. It also provides a minimum offense level of level 14. It also amends the commentary to § 2B1.1 to specify that the term ‘‘pre-retail medical product’’ has the meaning given that term in section 670(e). Issue for Comment A multi-part issue for comment is also included on whether any changes to the guidelines instead of, or in addition to, the changes in the proposed amendment should be made to respond to the new offense, the statutory penalty increases made by the Act, and the directive to the Commission. mstockstill on DSK4VPTVN1PROD with Proposed Amendment Section 2B1.1(b) is amended by redesignating paragraphs (14) through (18) as (15) through (19), respectively; by inserting after paragraph (13) the following: ‘‘(14) If the offense involved a preretail medical product [and (A) the offense involved the use of (i) violence, force, or a threat of violence or force; or (ii) a deadly weapon; (B) the offense resulted in serious bodily injury or death, including serious bodily injury or death resulting from the use of the medical product involved; or (C) the defendant was employed by, or was an agent of, an organization in the supply chain for the pre-retail medical product], increase by [2][4] levels. If the resulting offense level is less than level 14, increase to level 14.’’; and in paragraph (16)(B) (as so redesignated) by striking ‘‘(b)(15)(B)’’ and inserting ‘‘(b)(16)(B)’’. The Commentary to § 2B1.1 captioned ‘‘Application Notes’’ is amended in Note 1 by inserting after the paragraph beginning ‘‘ ’Personal information’ means’’ the following: ‘‘ ‘Pre-retail medical product’ has the meaning given that term in 18 U.S.C. 670(e).’’; and by inserting after the paragraph beginning ‘‘ ‘Publicly trade company’ means’’ the following: ‘‘ ‘Supply chain’ has the meaning given that term in 18 U.S.C. 670(e).’’. The Commentary to § 2B1.1 captioned ‘‘Background’’ is amended by inserting after the paragraph beginning ‘‘Subsection (b)(12)’’ the following: ‘‘Subsection (b)(14) implements the directive to the Commission in section 7 of Public Law 112B186.’’; in the paragraph beginning ‘‘Subsection (b)(14)(B)’’ by striking ‘‘(b)(14)(B)’’ and inserting ‘‘(b)(15)(B)’’; in the paragraph beginning ‘‘Subsection (b)(15)(A)’’ by striking ‘‘(b)(15)(A)’’ and inserting ‘‘(b)(16)(A)’’; in the paragraph beginning ‘‘Subsection (b)(15)(B)(i)’’ by striking ‘‘(b)(15)(B)(i)’’ and inserting VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 ‘‘(b)(16)(B)(i)’’; in the paragraph beginning ‘‘Subsection (b)(16)’’ by striking ‘‘(b)(16)’’ and inserting ‘‘(b)(17)’’; and in the paragraph beginning ‘‘Subsection (b)(17)’’ by striking ‘‘(b)(17)’’ and inserting ‘‘(b)(18)’’, and striking ‘‘(b)(17)(B)’’ and inserting ‘‘(b)(18)(B)’’. Appendix A (Statutory Index) is amended by inserting after the line referenced to 18 U.S.C. 669 the following: ‘‘18 U.S.C. 670 [2A1.4,] 2B1.1’’. Issue for Comment 1. In addition to creating the new offense under section 670, the Act increased penalties for some related offenses when those offenses involve a pre-retail medical product. In particular, the Act added an increased penalty provision to each of the following statutes: (A) 18 U.S.C. 659 (theft from interstate or foreign shipments by carrier), which is referenced to § 2B1.1. (B) 18 U.S.C. 1952 (travel in aid of racketeering), which is referenced to § 2E1.2 (Interstate or Foreign Travel or Transportation in Aid of a Racketeering Enterprise). (C) 18 U.S.C. 1957 (money laundering in aid of racketeering), which is referenced to § 2S1.1 (Laundering of Monetary Instruments; Engaging in Monetary Transactions in Property Derived from Unlawful Activity). (D) 18 U.S.C. 2117 (breaking or entering facilities of carriers in interstate or foreign commerce), which is referenced to § 2B2.1 (Burglary of a Residence or a Structure Other than a Residence). (E) 18 U.S.C. 2314 (transportation of stolen goods) and 2315 (sale or receipt of stolen goods), each of which are referenced to both §§ 2B1.1 and 2B1.5 (Theft of, Damage to, or Destruction of, Cultural Heritage Resources or Paleontological Resources; Unlawful Sale, Purchase, Exchange, Transportation, or Receipt of Cultural Heritage Resources or Paleontological Resources). For each of these existing statutes, the Act amended the penalty provision to provide that if the offense involved a pre-retail medical product, the punishment for the offense shall be the same as the punishment for an offense under section 670, unless the punishment under the existing statute is greater. An additional statutory provision identified in the directive to the Commission (but not amended by the Act) is 18 U.S.C. 2118 (robberies and burglaries involving controlled substances), which contains several PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 4199 distinct offenses. The guidelines to which these various offenses are referenced include §§ 2A1.1, 2A2.1, 2A2.2, 2B2.1, 2B3.1 (Robbery), and 2X1.1. The directive to the Commission provided that the Commission shall ‘‘review and, if appropriate, amend’’ the federal sentencing guidelines and policy statements applicable to offenses under section 670; under section 2118 of title 18, United States Code; or under any other section amended by the Act ‘‘to reflect the intent of Congress that penalties for such offenses be sufficient to deter and punish such offenses, and appropriately account for the actual harm to the public from these offenses.’’ The Act further states that, in carrying out the directive, the Commission shall— (1) Consider the extent to which the Federal sentencing guidelines and policy statements appropriately reflect— (A) The serious nature of such offenses; (B) The incidence of such offenses; and (C) The need for an effective deterrent and appropriate punishment to prevent such offenses; (2) Consider establishing a minimum offense level under the Federal sentencing guidelines and policy statements for offenses covered by this Act; (3) Account for any additional aggravating or mitigating circumstances that might justify exceptions to the generally applicable sentencing ranges; (4) Ensure reasonable consistency with other relevant directives, Federal sentencing guidelines and policy statements; (5) Make any necessary conforming changes to the Federal sentencing guidelines and policy statements; and (6) Ensure that the Federal sentencing guidelines and policy statements adequately meet the purposes of sentencing set forth in section 3553(a)(2) of title 18, United States Code. Issue for Comment The Commission seeks comment on whether any changes to the guidelines instead of, or in addition to, the changes in the proposed amendment should be made to respond to the new offense, the statutory penalty increases made by the Act, and the directive to the Commission. (1) First, the Commission seeks comment on the guideline or guidelines to which offenses under section 670, and other offenses covered by the directive, should be referenced. In particular: E:\FR\FM\18JAN1.SGM 18JAN1 mstockstill on DSK4VPTVN1PROD with 4200 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices (A) The proposed amendment would reference offenses under section 670 to § 2B1.1, and brackets the possibility of an additional reference to § 2A1.4. Should the Commission reference section 670 to one or more guidelines— such as § 2B5.3 (Criminal Infringement of Copyright or Trademark), § 2N1.1 (Tampering or Attempting to Tamper Involving Risk of Death or Bodily Injury), or § 2N2.1 (Violations of Statutes and Regulations Dealing With Any Food, Drug, Biological Product, Device, Cosmetic, Agricultural Product, or Consumer Product)—instead of, or in addition to, the proposed reference(s) to § 2A1.4 and § 2B1.1? If so, which ones? (B) Similarly, should the Commission reference any of the other offenses covered by the directive to one or more guidelines instead of, or in addition to, the guideline or guidelines to which they are currently referenced? If so, which ones? (2) Second, the Commission seeks comment on the proposed amendment to § 2B1.1, which would provide a new specific offense characteristic if the offense involves a pre-retail medical product [and (A) the offense involved the use of (i) violence, force, or a threat of violence or force; or (ii) a deadly weapon; (B) the offense resulted in serious bodily injury or death, including serious bodily injury or death resulting from the use of the medical product involved; or (C) the defendant was employed by, or was an agent of, an organization in the supply chain for the pre-retail medical product]. In particular: (A) If the Commission were to promulgate the proposed amendment, how should the new specific offense characteristic interact with other specific offense characteristics in § 2B1.1? In particular, how should it interact with— (i) The specific offense characteristic at § 2B1.1(b)(13)(B), which provides a 2level enhancement and a minimum offense level of 14 if the offense involved an organized scheme to steal or to receive stolen goods or chattels that are part of a cargo shipment; and (ii) The specific offense characteristic currently at § 2B1.1(b)(14), which provides a 2-level enhancement and a minimum offense level 14 if the offense involved a risk of death or serious bodily injury or possession of a dangerous weapon? Should the new specific offense characteristic be fully cumulative with these current specific offense characteristics, or should the impact be less than fully cumulative in cases where more than one apply? VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 (B) Does the proposed amendment adequately respond to requirement (2) of the directive that the Commission consider establishing a minimum offense level for offenses covered by the Act? If not, what minimum offense level, if any, should the Commission provide for offenses covered by the Act, and under what circumstances should it apply? (C) Does the proposed amendment adequately respond to requirement (3) of the directive that the Commission account for the aggravating and mitigating circumstances involved in the offenses covered by the Act? If not, what aggravating and mitigating circumstances should be accounted for, and what new provisions, or changes to existing provisions should be made to account for them? (D) Does the proposed amendment adequately respond to the other requirements of the directive, in paragraphs (1), (4), (5), and (6)? If not, what other changes, if any, should the Commission make to the guidelines to respond to the directive? (3) Section 670(e) defines the term ‘‘pre-retail medical product’’ to mean ‘‘a medical product that has not yet been made available for retail purchase by a consumer.’’ The proposed amendment would adopt this statutory definition. The Commission seeks comment on this definition. Is this definition adequately clear? If not, in what situations is this definition likely to be unclear and what guidance, if any, should the Commission provide to address such situations? Does the definition of the term ‘‘supply chain’’ (see 18 U.S.C. 670(e) (stating that the term ‘‘supply chain’’ includes ‘‘manufacturer, wholesaler, repacker, own-labeled distributor, private-label distributor, jobber, broker, drug trader, transportation company, hospital, pharmacy, or security company’’)) inform the determination of whether the medical product has been made available for retail purchase by a consumer? (4) The Commission seeks comment on how, if at all, the guidelines should be amended to account for the aggravating factor in section 670 that increases the statutory maximum term of imprisonment if the defendant is employed by, or is an agent of, an organization in the supply chain for the pre-retail medical product. Is this factor already adequately addressed by existing provisions in the guidelines, such as the adjustment in § 3B1.3 (Abuse of Position of Trust or Use of Special Skill)? If not, how, if at all, should the Commission amend the guidelines to account for this factor? PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 (5) Finally, the Commission seeks comment on what changes, if any, it should make to the guidelines to which the other offenses covered by the directive are referenced to account for the statutory changes or the directive, or both. For example, if the Commission were to promulgate the proposed amendment to § 2B1.1, adding a new specific offense characteristic to that guideline, should the Commission provide a similar specific offense characteristic in the other guidelines to which the other offenses covered by the directive are referenced? 2. Trade Secrets Issue for Comment 1. Section 3 of the Foreign and Economic Espionage Penalty Enhancement Act of 2012, Public Law 112–ll, contains a directive to the Commission on offenses involving stolen trade secrets or economic espionage. The Commission seeks comment on what, if any, changes to the guidelines are appropriate to respond to the directive. The Directive Section 3(a) of the Act directs the Commission to ‘‘review and, if appropriate, amend’’ the guidelines ‘‘applicable to persons convicted of offenses relating to the transmission or attempted transmission of a stolen trade secret outside of the United States or economic espionage, in order to reflect the intent of Congress that penalties for such offenses under the Federal sentencing guidelines and policy statements appropriately, reflect the seriousness of these offenses, account for the potential and actual harm caused by these offenses, and provide adequate deterrence against such offenses.’’ Section 3(b) of the Act states that, in carrying out the directive, the Commission shall— ‘‘(1) consider the extent to which the Federal sentencing guidelines and policy statements appropriately account for the simple misappropriation of a trade secret, including the sufficiency of the existing enhancement for these offenses to address the seriousness of this conduct; ‘‘(2) consider whether additional enhancements in the Federal sentencing guidelines and policy statements are appropriate to account for— ‘‘(A) the transmission or attempted transmission of a stolen trade secret outside of the United States; and ‘‘(B) the transmission or attempted transmission of a stolen trade secret outside of the United States that is committed or attempted to be E:\FR\FM\18JAN1.SGM 18JAN1 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices mstockstill on DSK4VPTVN1PROD with committed for the benefit of a foreign government, foreign instrumentality, or foreign agent; ‘‘(3) ensure the Federal sentencing guidelines and policy statements reflect the seriousness of these offenses and the need to deter such conduct; ‘‘(4) ensure reasonable consistency with other relevant directives, Federal sentencing guidelines and policy statements, and related Federal statutes; ‘‘(5) make any necessary conforming changes to the Federal sentencing guidelines and policy statements; and ‘‘(6) ensure that the Federal sentencing guidelines adequately meet the purposes of sentencing as set forth in section 3553(a)(2) of title 18, United States Code.’’. The Offenses Described in the Directive Offenses described in the directive— the transmission or attempted transmission of a stolen trade secret outside the United States; and economic espionage—may be punished under 18 U.S.C. 1831 (Economic espionage), which requires as an element of the offense that the defendant specifically intend or know that the offense ‘‘will benefit any foreign government, foreign instrumentality, or foreign agent’’. Offenses described in the directive may also be punished under 18 U.S.C. 1832 (Trade secrets), which does not require such specific intent or knowledge, but does require that the trade secret relate to a product in interstate or foreign commerce. Section 2 of the Act amended section 1831 to raise the maximum fine imposable for such an offense. The maximum fine for an individual was raised from $500,000 to $5,000,000, and the maximum fine for an organization was raised from $10,000,000 to either $10,000,000 or ‘‘3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided’’, whichever is greater. The statutory maximum terms of imprisonment are 15 years for a section 1831 offense and 10 years for a section 1832 offense. Offenses under sections 1831 and 1832 are referenced in Appendix A (Statutory Index) to § 2B1.1 (Theft, Property Destruction, and Fraud). Offenses described in the directive may also be punished under other criminal statutes relating to trade secrets under specific circumstances. Examples of two such statutes are 18 U.S.C. 1905 (class A misdemeanor for disclosure of confidential information, including trade secrets, by public employees) and 7 U.S.C. 136h (class A misdemeanor for VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 disclosure of trade secrets involving insecticides, by Environmental Protection Agency employees). Section 1905 is referenced in Appendix A (Statutory Index) to § 2H3.1 (Interception of Communications; Eavesdropping; Disclosure of Certain Private or Protected Information). Section 136h is not referenced in Appendix A (Statutory Index). Applicable Provisions in the Guidelines The following provisions in the guidelines, among others, address offenses involving trade secrets: (1) Section 2B1.1(b)(5) contains a 2level enhancement that applies ‘‘[i]f 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’’. (2) Application Note 3(C)(ii) of the Commentary to § 2B1.1 provides that, in a case involving trade secrets or other proprietary information, the court when estimating loss for purposes of the loss enhancement in § 2B1.1(b)(1) should consider, among other factors, ‘‘the cost of developing that information or the reduction in the value of that information that resulted from the offense.’’ Request for Comment The Commission seeks comment on what, if any, changes to the guidelines should be made to respond to the directive. In particular, the Commission seeks comment on the following: (1) What offenses, if any, other than sections 1831 and 1832 should the Commission consider in responding to the directive? What guidelines, if any, other than § 2B1.1 should the Commission consider amending in response to the directive? (2) What should the Commission consider in reviewing the seriousness of the offenses described in the directive, the potential and actual harm caused by these offenses, and the need to provide adequate deterrence against such offenses? (3) Do the guidelines appropriately account for the simple misappropriation of a trade secret? Is the existing enhancement at § 2B1.1(b)(5), which provides a 2-level enhancement ‘‘[i]f 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,’’ sufficient to address the seriousness of the conduct involved in the offenses described in the directive? (4) Should the Commission provide one or more additional enhancements to PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 4201 account for (A) the transmission or attempted transmission of a stolen trade secret outside of the United States; and (B) the transmission or attempted transmission of a stolen trade secret outside of the United States that is committed or attempted to be committed for the benefit of a foreign government, foreign instrumentality, or foreign agent? If so, under what circumstances should such an enhancement apply, and what level of enhancement should apply? (5) Should the Commission restructure the existing 2-level enhancement in subsection (b)(5) into a tiered enhancement that directs the court to apply the greatest of the following: (A) An enhancement of 2 levels if the offense involved the simple misappropriation of a trade secret; (B) An enhancement of 4 levels if the defendant transmitted or attempted to transmit the stolen trade secret outside of the United States; and (C) An enhancement of [5][6] levels if the defendant committed economic espionage, i.e., the defendant knew or intended that the offense would benefit a foreign government, foreign instrumentality, or foreign agent? (6) Should the Commission provide a minimum offense level of [14][16] if the defendant transmitted or attempted to transmit stolen trade secrets outside of the United States or committed economic espionage? 3. Counterfeit and Adulterated Drugs; Counterfeit Military Parts Synopsis of Proposed Amendment This proposed amendment responds to two recent Acts that made changes to 18 U.S.C. 2320 (Trafficking in counterfeit goods and services). One Act provided higher penalties for offenses involving counterfeit military goods and services; the other Act provided higher penalties for offenses involving counterfeit drugs, and also included a directive to the Commission. The proposed amendment also responds to recent statutory changes to 21 U.S.C. 333 (Penalties for violations of the Federal Food, Drug, and Cosmetics Act) that provide higher penalties for offenses involving intentionally adulterated drugs. A&B. 18 U.S.C. 2320 and Offenses Involving Counterfeit Military Goods and Services and Counterfeit Drugs In general, section 2320 prohibits trafficking in goods or services using a counterfeit mark, and provides a statutory maximum term of imprisonment of 10 years (or, for a E:\FR\FM\18JAN1.SGM 18JAN1 mstockstill on DSK4VPTVN1PROD with 4202 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices repeat offender, 20 years). If the offender knowingly or recklessly causes or attempts to cause serious bodily injury or death, the statutory maximum is increased to 20 years (if serious bodily injury) or to any term of years or life (if death). Offenses under section 2320 are referenced in Appendix A (Statutory Index) to § 2B5.3 (Criminal Infringement of Copyright or Trademark). Two recent Acts made changes to section 2320. First, section 818 of the National Defense Authorization Act for Fiscal Year 2012, Public Law 112–81 (December 31, 2011), amended section 2320 to add a new subsection (a)(3) that prohibits trafficking in counterfeit military goods and services, the use, malfunction, or failure of which is likely to cause serious bodily injury or death, the disclosure of classified information, impairment of combat operations, or other significant harm to a combat operation, a member of the Armed Forces, or national security. A ‘‘counterfeit military good or service’’ is a good or service that uses a counterfeit mark and that (A) is falsely identified or labeled as meeting military specifications, or (B) is intended for use in a military or national security application. See 18 U.S.C. 2320(f)(4). An individual who commits an offense under subsection (a)(3) involving a counterfeit military good or service is subject to a statutory maximum term of imprisonment of 20 years, or 30 years for a second or subsequent offense. See 18 U.S.C. 2320(b)(3). Second, section 717 of the Food and Drug Administration Safety and Innovation Act, Public Law 112–144 (July 9, 2012), amended section 2320 to add a new subsection (a)(4) that prohibits trafficking in a counterfeit drug. A ‘‘counterfeit drug’’ is a drug, as defined by section 201 of the Federal Food, Drug, and Cosmetic Act, that uses a counterfeit mark. See 18 U.S.C. 2320(f)(6). An individual who commits an offense under subsection (a)(4) involving a counterfeit drug is subject to the same statutory maximum term of imprisonment as for an offense involving a counterfeit military good or service—20 years, or 30 years for a second or subsequent offense. See 18 U.S.C. 2320(b)(3). Section 717 of that Act also contained a directive to the Commission to ‘‘review and amend, if appropriate’’ the guidelines and policy statements applicable to persons convicted of an offense described in section 2320(a)(4)— i.e., offenses involving counterfeit drugs—‘‘in order to reflect the intent of Congress that such penalties be increased in comparison to those currently provided by the guidelines VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 and policy statements’’. See Public Law 112–144, § 717(b). In addition, section 717(b)(2) provides that, in responding to the directive, the Commission shallC (A) Ensure that the sentencing guidelines and policy statements reflect the intent of Congress that the guidelines and policy statements reflect the serious nature of offenses under section 2320(a)(4) and the need for an effective deterrent and appropriate punishment to prevent such offenses; (B) Consider the extent to which the guidelines may or may not appropriately account for the potential and actual harm to the public resulting from the offense; (C) Assure reasonable consistency with other relevant directives and with other sentencing guidelines; (D) Account for any additional aggravating or mitigating circumstances that might justify exceptions to the generally applicable sentencing ranges; (E) Make any necessary conforming changes to the sentencing guidelines; and (F) Assure that the guidelines adequately meet the purposes of sentencing as set forth in section 3553(a)(2) of title 18, United States Code. Parts A and B of the proposed amendment respond to the statutory changes to section 2320 made by these Acts and implement the directive. A. Counterfeit Military Goods and Services Part A addresses the issue of counterfeit military goods and services and contains four options. The first three options each add a new specific offense characteristic to § 2B5.3. Each of these three options provides an enhancement of [2][4] levels and a minimum offense level of level 14, but they apply to different circumstances. Option 1 closely tracks the statutory language. It applies only if the offense involves a counterfeit military good or service ‘‘the use, malfunction, or failure of which is likely to cause serious bodily injury or death, the disclosure of classified information, impairment of combat operations, or other significant harm to a combat operation, a member of the Armed Forces, or to national security.’’ Option 2 applies to any offense that involves a counterfeit military good or service. Option 3 is not limited to counterfeit military goods or services. It applies if the defendant knew the offense involved (A) a critical infrastructure; or (B) a product sold for use in national defense or national security or by law enforcement. PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 Option 4 takes a different approach than the first three options. It references offenses under section 2320(a)(3) to § 2M2.3 (Destruction of, or Production of Defective, National Defense Material, Premises, or Utilities), with the possibility of an additional reference to § 2M2.1 (Destruction of, or Production of Defective, War Material, Premises, or Utilities) also bracketed. B. Counterfeit Drugs Part B addresses the issue of counterfeit drugs and contains three options. Option 1 adds a new specific offense characteristic to § 2B5.3. It provides an enhancement of [2][4] levels and a minimum offense level of level 14 if the offense involves a counterfeit drug. Option 2 revises the specific offense characteristic currently at § 2B5.3(b)(5), which provides an enhancement of 2 levels, and a minimum offense level of level 14, 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. As revised, this specific offense characteristic would have three tiers and an instruction to apply the greatest. The first tier would provide an enhancement of 2 levels, and a minimum offense level of 12, if the offense involved a counterfeit drug. The second tier would provide an enhancement of 2 levels, and a minimum offense level of 14, if the offense involved possession of a dangerous weapon in connection with the offense. The third tier would provide an enhancement of 4 levels, and a minimum offense level of 14, if the offense involved the conscious or reckless risk of death or serious bodily injury. Options 1 and 2 each would also amend the Commentary to § 2B5.3 to indicate that a departure may be warranted it the offense resulted in death or serious bodily injury. Option 3 takes a different approach than the first two options. It references offenses under section 2320(a)(4) to § 2N1.1 (Tampering or Attempting to Tamper Involving Risk of Death or Bodily Injury). C. 21 U.S.C. 333 and Offenses Involving Intentionally Adulterated Drugs In general, section 333(b) involves prescription drug marketing violations under the Federal Food, Drug, and Cosmetic Act and provides a statutory maximum term of imprisonment of 10 years. Offenses under section 333(b) are referenced in Appendix A (Statutory Index) to § 2N2.1 (Violations of Statutes E:\FR\FM\18JAN1.SGM 18JAN1 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices and Regulations Dealing With Any Food, Drug, Biological Product, Device, Cosmetic, Agricultural Product, or Consumer Product). Section 716 of the Food and Drug Administration Safety and Innovation Act, Public Law 112–144 (July 9, 2012), amended 21 U.S.C. 333 to add a new penalty provision at subsection (b)(7). Subsection (b)(7) applies to any person who knowingly and intentionally adulterates a drug such that the drug is adulterated under certain provisions of 21 U.S.C. 351 and has a reasonable probability of causing serious adverse health consequences or death to humans or animals. It provides a statutory maximum term of imprisonment of 20 years. Part C of the proposed amendment presents two options for addressing the offense under section 333(b)(7). Option 1 establishes a new alternative base offense level of level 14 in § 2N2.1 for cases in which the defendant is convicted under section 333(b)(7). Option 2 amends Appendix A (Statutory Index) to reference offenses under section 333(b)(7) to § 2N1.1 (Tampering or Attempting to Tamper Involving Risk of Death or Bodily Injury). Issues for Comment Finally, the proposed amendment provides a series of issues for comment on offenses involving counterfeit military goods and services under section 2320, counterfeit drugs under section 2320, and intentionally adulterated drugs under section 333(b)(7). Proposed Amendment mstockstill on DSK4VPTVN1PROD with (A) Offenses Under Section 2320 Involving Counterfeit Military Goods and Services Option 1: Section 2B5.3(b) is amended by redesignating paragraph (5) as (6) and inserting after paragraph (4) the following: ‘‘(5) If the offense involved a counterfeit military good or service the use, malfunction, or failure of which is likely to cause serious bodily injury or death, the disclosure of classified information, impairment of combat operations, or other significant harm to a combat operation, a member of the Armed Forces, or to national security, increase by [2][4] levels. If the resulting offense level is less than level 14, increase to level 14.’’. The Commentary to § 2B1.1 captioned ‘‘Application Notes’’ is amended in Note 1 by inserting after the paragraph beginning ‘‘ ‘Commercial advantage’’ the following: VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 ‘‘ ‘Counterfeit military good or service’ has the meaning given that term in 18 U.S.C. 2320(f)(4).’’. Option 2: Section 2B5.3(b) is amended by redesignating paragraph (5) as (6) and inserting after paragraph (4) the following: ‘‘(5) If the offense involved a counterfeit military good or service, increase by [2][4] levels. If the resulting offense level is less than level 14, increase to level 14.’’. The Commentary to § 2B1.1 captioned ‘‘Application Notes’’ is amended in Note 1 by inserting after the paragraph beginning ‘‘Commercial advantage’’ the following: ‘‘ ‘Counterfeit military good or service’ has the meaning given that term in 18 U.S.C. 2320(f)(4).’’. Option 3: Section 2B5.3(b) is amended by redesignating paragraph (5) as (6) and inserting after paragraph (4) the following: ‘‘(5) If [the defendant knew] the offense involved a good or service used to maintain or operate a critical infrastructure; or used by or for a government entity in furtherance of the administration of justice, national defense, or national security, increase by [2][4] levels. If the resulting offense level is less than level 14, increase to level 14.’’. The Commentary to § 2B1.1 captioned ‘‘Application Notes’’ is amended by redesignating Notes 3 and 4 as 4 and 5, respectively; and by inserting after Note 2 the following: ‘‘3. Application of Subsection (b)(5).— (A) Definitions.—In subsection (b)(5): ‘Critical infrastructure’ means systems and assets vital to national defense, national security, economic security, public health or safety, or any combination of those matters. A critical infrastructure may be publicly or privately owned. Examples of critical infrastructures include gas and oil production, storage, and delivery systems, water supply systems, telecommunications networks, electrical power delivery systems, financing and banking systems, emergency services (including medical, police, fire, and rescue services), transportation systems and services (including highways, mass transit, airlines, and airports), and government operations that provide essential services to the public. ‘Government entity’ has the meaning given that term in 18 U.S.C. 1030(e)(9). (B) Application.—Subsection (b)(5) applies to offenses in which the good or service was important in furthering the administration of justice, national defense, national security, economic PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 4203 security, or public health or safety. The enhancement ordinarily would apply, for example, in a case in which the defendant sold counterfeit semiconductors for use in a military system. But it ordinarily would not apply in a case in which the defendant sold counterfeit toner cartridges for use in printers at military headquarters.’’. Option 4: Appendix A (Statutory Index) is amended by striking the line referenced to 18 U.S.C. 2320 and inserting the following: ‘‘18 U.S.C. 2320(a)(1),(2) 2B5.3 18 U.S.C. 2320(a)(3) [2M2.1,] 2M2.3’’. (B) Offenses Under Section 2320 Involving Counterfeit Drugs Option 1: Section 2B5.3(b) is amended by redesignating paragraph (5) as (6) and inserting after paragraph (4) the following: ‘‘(5) If the offense involved a counterfeit drug, increase by [2][4] levels. If the resulting offense level is less than level 14, increase to level 14.’’. The Commentary to § 2B5.3 captioned ‘‘Application Notes’’ is amended in Note 1 by inserting after the paragraph beginning ‘‘ ’Commercial advantage’’ the following: ‘‘ ‘Counterfeit drug’ has the meaning given that term in 18 U.S.C. 2320(f)(6).’’; and in Note 4 by adding at the end the following: ‘‘(D) The offense resulted in death or serious bodily injury.’’. Option 2: Section 2B5.3(b) is amended by amending paragraph (5) to read as follows: ‘‘(5) (Apply the Greatest): (A) If the offense involved a counterfeit drug, increase by 2 levels. If the resulting offense level is less than level 12, increase to level 12. (B) If the offense involved 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. (C) If the offense involved the conscious or reckless risk of death or serious bodily injury, increase by 4 levels. If the resulting offense level is less than level 14, increase to level 14.’’. The Commentary to § 2B1.1 captioned ‘‘Application Notes’’ is amended in Note 1 by inserting after the paragraph beginning ‘‘ ’Commercial advantage’’ the following: ‘‘ ’Counterfeit drug’ has the meaning given that term in 18 U.S.C. 2320(f)(6).’’; and in Note 4 by adding at the end the following: ‘‘(D) The offense resulted in death or serious bodily injury.’’. E:\FR\FM\18JAN1.SGM 18JAN1 4204 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices Option 3: Appendix A (Statutory Index) is amended by striking the line referenced to 18 U.S.C. 2320 and inserting the following: ‘‘18 U.S.C. 2320(a)(1),(2) 2B5.3 18 U.S.C. 2320(a)(4) 2N1.1’’. (C) Offenses Under Section 333(b)(7) Involving Intentionally Adulterated Drugs Section 2N2.1 is amended by amending subsection (a) to read as follows: ‘‘(a) Base Offense Level: (Apply the Greater) (1) 14, if the defendant was convicted under 21 U.S.C. 333(b)(7); or (2) 6, otherwise.’’; and in subsection (c)(1) by inserting ‘‘[, if the resulting offense level is greater than that determined above]’’ before the period at the end. Option 2: Appendix A (Statutory Index) is amended by striking the line referenced to 21 U.S.C. 333(b) and inserting the following: ‘‘21 U.S.C. 333(b)(1)B(6) 2N2.1 21 U.S.C. 333(b)(7) 2N1.1’’. Issues for Comment mstockstill on DSK4VPTVN1PROD with 1. Offenses Under 18 U.S.C. 2320 Involving Counterfeit Military Goods and Services Options 1, 2, and 3 of the proposed amendment would provide a new specific offense characteristic in § 2B5.3 for offenses involving counterfeit military goods and services. If the Commission were to adopt Option 1, 2, or 3, how should this new specific offense characteristic interact with other specific offense characteristics in § 2B5.3? In particular, how should it interact with the specific offense characteristic currently at § 2B5.3(b)(5), which provides a 2-level enhancement and a minimum offense level 14 if the offense involved a risk of death or serious bodily injury or possession of a dangerous weapon? Should the new specific offense characteristic be fully cumulative with the current one, or should they be less than fully cumulative in cases where both apply? Option 2 of the proposed amendment would apply to any case in which the offense involved a counterfeit military good or service. Is the scope of this option overly broad? Are there types of cases involving a counterfeit military good or service that should not be covered by Option 2? If so, what types of cases? For example, should the Commission provide an application note for Option 2 similar to the proposed application note 3(B) VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 contained in Option 3, requiring that the counterfeit military good or service be important in furthering national security? Option 3 of the proposed amendment would apply to any case in which the offense involved a good or service used to maintain or operate a critical infrastructure, or used by or for a government entity in furtherance of the administration of justice, national defense, or national security. The language used in this option parallels the language regarding critical infrastructure in § 2B1.1 (Theft, Property Destruction, and Fraud). In this new context, is the scope of this language overly broad? Are there types of cases that should not be covered by Option 3? If so, what types of cases? Option 4 of the proposed amendment would reference offenses under section 2320 that involve counterfeit military goods or services (e.g., offenses described in section 2320(a)(3)) to [§ 2M2.1 (Destruction of, or Production of Defective, War Material, Premises, or Utilities) and] § 2M2.3 (Destruction of, or Production of Defective, National Defense Material, Premises, or Utilities). If the Commission were to adopt Option 4, what changes, if any, should the Commission make to those guidelines to better account for such offenses? 2. Offenses Under 18 U.S.C. 2320 Involving Counterfeit Drugs (and Response to Directive) Option 1 of the proposed amendment would provide a new specific offense characteristic in § 2B5.3 for offenses involving counterfeit drugs. If the Commission were to adopt Option 1, how should this new specific offense characteristic interact with other specific offense characteristics in § 2B5.3? In particular, how should it interact with the specific offense characteristic currently at § 2B5.3(b)(5), which provides a 2-level enhancement and a minimum offense level 14 if the offense involved a risk of death or serious bodily injury or possession of a dangerous weapon? Should the new specific offense characteristic be fully cumulative with the current one, or should they be less than fully cumulative in cases where both apply? Option 3 of the proposed amendment would reference offenses under section 2320 that involve counterfeit drugs (e.g., offenses described in section 2320(a)(4)) to § 2N1.1 (Tampering or Attempting to Tamper Involving Risk of Death or Serious Bodily Injury). If the Commission were to adopt Option 3, what changes, if any, should the Commission make to that guideline to better account for such offenses? PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 In addition, to assist the Commission in determining how best to respond to the directive, the Commission seeks comment on offenses under section 2320 involving counterfeit drugs. What actual and potential harms to the public do such offenses pose? What aggravating and mitigating circumstances may be involved in such offenses that are not already adequately addressed in the guidelines? For example, if death or serious bodily injury resulted from the offense, should that circumstance be addressed by a departure provision, by a specific offense characteristic, by a cross-reference to another guideline (e.g., a homicide guideline), or in some other manner? Does the new specific offense characteristic in Option 1, or the revised specific offense characteristic in Option 2, adequately respond to the directive? If not, what changes, if any, should the Commission make to § 2B5.3 to better account for offenses under section 2320(a)(4) and the factors identified in the directive? In the alternative, does Option 3 of the proposed amendment—referencing offenses involving counterfeit drugs to § 2N1.1—adequately respond to the directive? If not, what changes, if any, should the Commission make to § 2N1.1 to better account for offenses under section 2320(a)(4) and the factors identified in the directive? 3. Offenses Under 21 U.S.C. 333(b)(7) Involving Intentionally Adulterated Drugs Option 2 of the proposed amendment amends Appendix A (Statutory Index) to reference offenses under section 333(b)(7) to § 2N1.1 (Tampering or Attempting to Tamper Involving Risk of Death or Bodily Injury). Section 2N1.1 provides a base offense level of 25 and an enhancement of 2 to 4 levels if the victim sustained serious bodily injury, depending on whether the injury was permanent or life-threatening. Section 2N1.1 also contains cross-references to other guidelines and a special instruction for certain cases involving more than one victim. If the Commission were to reference offenses under section 333(b)(7) to § 2N1.1, as the proposed amendment provides, what changes, if any, should the Commission make to § 2N1.1 to better account for offenses under section 333(b)(7)? Option 1 of the proposed amendment contemplates that offenses under section 333(b)(7) would be referenced to § 2N2.1. Section 2N2.1 provides a base offense level 6 and an enhancement for repeat offenders under 21 U.S.C. 331. It also provides a cross reference to E:\FR\FM\18JAN1.SGM 18JAN1 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices § 2B1.1 (Theft, Property Destruction, and Fraud) if the offense involved fraud and a cross reference to any other offense guideline if the offense was committed in furtherance of, or to conceal, an offense covered by that other offense guideline. If offenses under section 333(b)(7) are to be sentenced under § 2N2.1, what changes, if any, should the Commission make to § 2N2.1? For example, should the Commission adopt Option 1, which would provide an alternative base offense level of 14 if the defendant was convicted under section 333(b)(7)? Should the Commission provide a different alternative base offense level instead? Or should the Commission provide additional specific offense characteristics, additional cross references, or a combination of such provisions to better account for offenses under section 333(b)(7)? If so, what provisions should the Commission provide? Finally, the Commission seeks comment comparing and contrasting offenses involving intentionally adulterated drugs under section 333(b)(7) and offenses involving counterfeit drugs under section 2320(a)(4). How do these offenses compare to each other in terms of the conduct involved in the offense, the culpability of the offenders, the actual and potential harms posed by the offense, and other factors relevant to sentencing? Which offenses should be treated more seriously by the guidelines and which should be treated less seriously? mstockstill on DSK4VPTVN1PROD with 4. Tax Deductions Synopsis of Proposed Amendment This proposed amendment addresses a circuit conflict over whether a sentencing court, in calculating the tax loss in a tax case, may subtract the unclaimed deductions that the defendant legitimately could have claimed if he or she had filed an accurate tax return. Circuits have disagreed over whether the tax loss in such a case may be reduced by the defendant’s legitimate but unclaimed deductions. Specifically, the issue is whether a defendant is allowed to present evidence of unclaimed deductions that would have the effect of reducing the tax loss for purposes of the guidelines and thereby reducing the ultimate sentence, or whether the defendant is categorically barred from offering such evidence. The Tenth Circuit recently joined the Second Circuit in holding that a sentencing court may give the defendant credit for a legitimate but unclaimed VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 deduction. See United States v. Hoskins, 654 F.3d 1086, 1094 (10th Cir. 2011) (‘‘But where defendant offers convincing proof—where the court’s exercise is neither nebulous nor complex—nothing in the Guidelines prohibits a sentencing court from considering evidence of unclaimed deductions in analyzing a defendant’s estimate of the tax loss suffered by the government.’’); United States v. Martinez-Rios, 143 F.3d 662, 671 (2d Cir. 1998) (‘‘the sentencing court need not base its tax loss calculation on gross unreported income if it can make a more accurate determination of the intended loss and that determination of the tax loss involves giving the defendant the benefit of legitimate but unclaimed deductions’’); United States v. Gordon, 291 F.3d 181, 187 (2d Cir. 2002) (applying Martinez-Rios, the court held that the district erred when it refused to consider potential unclaimed deductions in its sentencing analysis). These cases generally reason that where a defendant offers convincing proof— where the court’s exercise is neither nebulous nor complex—nothing in the Guidelines prohibits a sentencing court from considering evidence of unclaimed deductions in analyzing a defendant’s estimate of the tax loss suffered by the government. See Hoskins, 654 F.3d at 1094–95. Six other circuits—the Fourth, Fifth, Seventh, Eighth, Ninth, and Eleventh— have reached the opposite conclusion, finding that a defendant may not present evidence of unclaimed deductions to reduce the tax loss. See United States v. Delfino, 510 F.3d 468, 473 (4th Cir. 2007) (‘‘The law simply does not require the district court to engage in [speculation as to what deductions would have been allowed], nor does it entitle the Delfinos to the benefit of deductions they might have claimed now that they stand convicted of tax evasion.’’); United States v. Phelps, 478 F.3d 680, 682 (5th Cir. 2007) (holding that the defendant could not reduce tax loss by taking a social security tax deduction that he did not claim on the false return); United States v. Chavin, 316 F.3d 666, 679 (7th Cir. 2002) (holding that the definition of tax loss ‘‘excludes consideration of unclaimed deductions’’); United States v. Psihos, 683 F.3d 777, 781–82 (7th Cir. 2012) (following Chavin in disallowing consideration of unclaimed deductions); United States v. Sherman, 372 F.App’x 668, 676–77 (8th Cir. 2010); United States v. Blevins, 542 F.3d 1200, 1203 (8th Cir. 2008) (declining to decide ‘‘whether an unclaimed tax benefit may ever offset tax loss,’’ but finding the PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 4205 district court properly declined to reduce tax loss based on taxpayers’ unclaimed deductions); United States v. Yip, 592 F.3d 1035, 1041 (9th Cir. 2010) (‘‘We hold that § 2T1.1 does not entitle a defendant to reduce the tax loss charged to him by the amount of potentially legitimate, but unclaimed, deductions even if those deductions are related to the offense.’’); United States v. Clarke, 562 F.3d 1158, 1164 (11th Cir. 2009) (holding that the defendant was not entitled to a tax loss calculation based on a filing status other than the one he actually used; ‘‘[t]he district court did not err in computing the tax loss based on the fraudulent return Clarke actually filed, and not on the tax return Clarke could have filed but did not.’’). The proposed amendment presents three options for resolving the conflict. They would amend the Commentary to § 2T1.1 (Tax Evasion; Willful Failure to File Return, Supply Information, or Pay Tax; Fraudulent or False Returns, Statements, or Other Documents), as follows: Option 1 provides that the determination of the tax loss shall account for any credit, deduction, or exemption to which the defendant was entitled, whether or not the defendant claimed the deduction at the time the tax offense was committed. Option 2 provides that the determination of the tax loss shall not account for any credit, deduction, or exemption, unless the defendant was entitled to the credit, deduction, or exemption and claimed the credit, deduction, or exemption at the time the tax offense was committed. Option 3 provides that the determination of the tax loss shall not account for any unclaimed credit, deduction, or exemption, unless the defendant demonstrates by contemporaneous documentation that the defendant was entitled to the credit, deduction, or exemption. Issues for comment are also included. Proposed Amendment The Commentary to § 2T1.1 captioned ‘‘Application Notes’’ is amended by redesignating Notes 3 through 7 as 4 through 8, respectively, and by inserting after Note 2 the following: Option 1: ‘‘3. Credits, Deductions, and Exemptions.—The determination of the tax loss shall account for any credit, deduction, or exemption to which the defendant was entitled, whether or not the defendant claimed the deduction at the time the tax offense was committed.’’. Option 2: E:\FR\FM\18JAN1.SGM 18JAN1 4206 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices mstockstill on DSK4VPTVN1PROD with ‘‘3. Credits, Deductions, and Exemptions.—The determination of the tax loss shall not account for any credit, deduction, or exemption, unless the defendant was entitled to the credit, deduction, or exemption and claimed the credit, deduction, or exemption at the time the tax offense was committed.’’. Option 3: ‘‘3. Credits, Deductions, and Exemptions.—The determination of the tax loss shall not account for any unclaimed credit, deduction, or exemption, unless the defendant demonstrates by contemporaneous documentation that the defendant was entitled to the credit, deduction, or exemption.’’. Issues for Comment 1. If the Commission were to adopt Option 1 or 3, what requirements, if any, should be met before an unclaimed deduction is counted, other than the requirement that the unclaimed deduction be legitimate? In particular: (A) Should a legitimate but unclaimed deduction be counted only if the defendant establishes that the deduction would have been claimed if an accurate return had been filed? If so, should this determination be a subjective one (e.g., this particular defendant would have claimed the deduction) or an objective one (e.g., a reasonable taxpayer in the defendant’s position would have claimed the deduction)? (B) Should a legitimate but unclaimed deduction be counted only if it is related to the offense? See United States v. Hoskins, 654 F.3d 1086, 1095 n.9 (10th Cir. 2011) (‘‘We must emphasize, however, that § 2T1.1 does not permit a defendant to benefit from deductions unrelated to the offense at issue.’’); see also United States v. Yip, 592 F.3d 1035, 1040 (9th Cir. 2010) (‘‘[D]eductions are not permissible if they are unintentionally created or are unrelated to the tax violation, because such deductions are not part of the ‘object of the offense’ or intended loss.’’). (C) Are there differences among the various types of tax offenses that would make it appropriate to have different rules on the use of unclaimed deductions? If so, what types of tax offenses warrant different rules, and what should those different rules be? Additionally, are there certain cases in which the legitimacy of the deductions, credits, or exemptions and the likelihood that the defendant would have claimed them had an accurate return been filed is evident by the nature of the crime? For example, if a restaurant owner failed to report some VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 gross receipts and made some payments to employees or vendors in cash, but actually keeps two sets of books (one accurate and one fraudulent), should the unclaimed deductions reflected in the accurate set of books be counted? 2. The proposed amendment presents options for resolving the circuit conflict, each of which is based on whether a defendant’s tax loss may be reduced by unclaimed ‘‘credits, deductions, or exemptions.’’ The Commission seeks comment regarding whether this list of potential offsets provides sufficient clarity as to what the court may or may not consider depending on which option is chosen. In particular, should the Commission expand the language to clarify that the list includes any type of deduction? See, e.g., United States v. Psihos, 683 F.3d 777, 781–82 (7th Cir. 2012) (noting a dispute between the parties regarding whether the unclaimed cash payments at issue were to be used in computing adjusted gross income (an ‘‘above-the-line’’ deduction) or to be used in computing taxable income (a ‘‘below-the-line’’ deduction)). 5. Acceptance of Responsibility Synopsis of Proposed Amendment This proposed amendment and issue for comment address two circuit conflicts involving the guideline for acceptance of responsibility, § 3E1.1 (Acceptance of Responsibility). A defendant who clearly demonstrates acceptance of responsibility receives a 2-level reduction under subsection (a) of § 3E1.1. The two circuit conflicts both involve the circumstances under which the defendant is eligible for a third level of reduction under subsection (b) of § 3E1.1. Subsection (b) provides: (b) If the defendant qualifies for a decrease under subsection (a), the offense level determined prior to the operation of subsection (a) is level 16 or greater, and upon motion of the government stating that the defendant has assisted authorities in the investigation or prosecution of his own misconduct by timely notifying authorities of his intention to enter a plea of guilty, thereby permitting the government to avoid preparing for trial and permitting the government and the court to allocate their resources efficiently, decrease the offense level by 1 additional level. This is the language of the guideline after it was directly amended by Congress in section 401(g) of the PROTECT Act, Public Law 108–21, effective April 30, 2003. The PROTECT Act also directly amended Application Note 6 (including adding the last paragraph of that application note), and PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 the Background Commentary. Section 401(j)(4) of the PROTECT Act states, ‘‘At no time may the Commission promulgate any amendment that would alter or repeal the amendments made by subsection (g) of this section.’’ Whether the Court Has Discretion To Deny the Third Level of Reduction Circuits have disagreed over whether the court has discretion to deny the third level of reduction for acceptance of responsibility when the government has filed a motion under subsection (b) and the defendant is otherwise eligible. The Seventh Circuit recently held that if the government makes the motion (and the other two requirements of subsection (b) are met, i.e., the defendant qualifies for the 2-level decrease and the offense level is level 16 or greater), the third level of reduction must be awarded. See United States v. Mount, 675 F.3d 1052 (7th Cir. 2012). The Fifth Circuit has held to the contrary, that the decision whether to grant the third level of reduction ‘‘is the district court’s—not the government’s— even though the court may only do so on the government’s motion.’’ See United States v. Williamson, 598 F.3d 227, 230 (5th Cir. 2010). The proposed amendment adopts the approach of the Fifth Circuit by recognizing that the court has discretion to deny the third level of reduction. Specifically, it amends Application Note 6 to § 3E1.1 by adding a statement that ‘‘The court may grant the motion if the court determines that the defendant has assisted authorities in the investigation or prosecution of his own misconduct by timely notifying authorities of his intention to enter a plea of guilty, thereby permitting the government to avoid preparing for trial and permitting the government and the court to allocate their resources efficiently. In such a case, the 1-level decrease under subsection (b) applies.’’ An issue for comment is also provided on whether the Commission should instead resolve this issue in a different manner. Whether the Government Has Discretion To Withhold Making a Motion Circuits have also disagreed over whether the government has discretion to withhold making a motion under subsection (b) when there is no evidence that the government was required to prepare for trial. An issue for comment is also provided on whether the Commission should resolve this circuit conflict and, if so, how it should do so. E:\FR\FM\18JAN1.SGM 18JAN1 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices Proposed Amendment The Commentary to § 3E1.1 captioned ‘‘Application Notes’’ is amended in Note 6, in the paragraph beginning ‘‘Because the Government’’, by adding at the end the following: ‘‘The court may grant the motion if the court determines that the defendant has assisted authorities in the investigation or prosecution of his own misconduct by timely notifying authorities of his intention to enter a plea of guilty, thereby permitting the government to avoid preparing for trial and permitting the government and the court to allocate their resources efficiently. In such a case, the 1-level decrease under subsection (b) applies.’’. The Commentary to § 3E1.1 captioned ‘‘Background’’ is amended in the paragraph beginning ‘‘Section 401(g)’’ by inserting ‘‘first sentence of the’’ before ‘‘last paragraph’’. Issues for Comment mstockstill on DSK4VPTVN1PROD with 1. Whether the Court Has Discretion To Deny the Third Level of Reduction The Commission seeks comment on whether it should resolve this circuit conflict in a manner other than that provided in the proposed amendment. If so, how should the conflict be resolved and how should the Commission amend the guidelines to do so? 2. Whether the Government Has Discretion To Withhold Making a Motion Circuits have also disagreed over whether the government has discretion to withhold making a motion under subsection (b) when there is no evidence that the government was required to prepare for trial. The Second and Fourth Circuits have held that the government may withhold the motion only if it determines that it has been required to prepare for trial. See United States v. Lee, 653 F.3d 170, 173–174 (2d Cir. 2011) (government withheld the motion because it was required to prepare for a Fatico hearing; court held this was ‘‘an unlawful reason’’); United States v. Divens, 650 F.3d 343, 346 (4th Cir. 2011) (government withheld the motion because the defendant failed to sign an appellate waiver; court held the defendant was ‘‘entitled’’ to the motion and the reduction). The majority of circuits, in contrast, have held that § 3E1.1 recognizes that the government has an interest both in being permitted to avoid preparing for trial and in being permitted to allocate its resources efficiently, see § 3E1.1(b), and that both are legitimate government interests that justify the withholding of VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 the motion. See, e.g., United States v. Collins, 683 F.3d 697, 704–708 (6th Cir. 2012) (government withheld the motion because it was required to litigate pretrial motion to suppress evidence; court held the government did not abuse its discretion); United States v. Newson, 515 F.3d 374 (5th Cir. 2008) (government withheld the motion because the defendant refused to waive right to appeal; court held the government did not abuse its discretion); United States v. Johnson, 581 F.3d 994 (9th Cir. 2009) (same). The Commission seeks comment on whether it should resolve this circuit conflict and, if so, how it should do so. 8. Setser Synopsis of Proposed Amendment A federal court imposing a sentence on a defendant generally has discretion to order that the sentence run consecutive to (or, in the alternative, concurrently with) a term of imprisonment previously imposed but not yet discharged. See 18 U.S.C. 3584(a); USSG § 5G1.3, comment. (backg’d.). Recently, the Supreme Court held that a federal court also generally has discretion to order that the sentence run consecutive to (or concurrently with) an anticipated, but not yet imposed, term of imprisonment. See Setser v. United States, __ U.S. __ (March 28, 2012). For cases in which there is a term of imprisonment previously imposed but not yet discharged, § 5G1.3 (Imposition of a Sentence on a Defendant Subject to an Undischarged Term of Imprisonment) provides guidance to the court in determining whether the sentence for the instant offense should run consecutive to (or, in the alternative, concurrently with) the undischarged term of imprisonment. This proposed amendment responds to Setser by ensuring that § 5G1.3 also applies to cases covered by Setser, i.e., cases in which there is an anticipated, but not yet imposed, term of imprisonment. The proposed amendment revises § 5G1.3 in two ways. First, when the offense with the undischarged term of imprisonment is relevant conduct to the instant offense and resulted in an increase in the Chapter Two or Three offense level for the instant offense, the instant offense already includes an incremental punishment to account for the prior offense. Accordingly, subsection (b) of § 5G1.3 provides that the court generally should order the sentence for the instant offense to run concurrently with the undischarged term of imprisonment. The proposed amendment ensures that PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 4207 subsection (b) also applies to a case in which there is an anticipated, but not yet imposed, term of imprisonment for an offense that is relevant conduct to the instant offense and resulted in an increase in the Chapter Two or Three offense level for the instant offense. Second, when the offense with the undischarged term of imprisonment is not covered by subsection (b), the sentence for the instant offense may be imposed to run concurrently, partially concurrently, or consecutively to the prior undischarged term of imprisonment to achieve a reasonable punishment for the instant offense. See § 5G1.3(c) (Policy Statement). The proposed amendment ensures that subsection (c) also applies to any other case in which there is an anticipated, but not yet imposed, term of imprisonment. Conforming changes to the relevant application notes, to the background commentary, and to the heading of the guideline are also made. Proposed Amendment Section 5G1.3 is amended in the heading by inserting after ‘‘Undischarged’’ the following: ‘‘or Anticipated’’; in subsection (b) by inserting after ‘‘resulted’’ the following: ‘‘or is anticipated to result’’; in subsection (b)(2) by inserting after ‘‘to the remainder of the undischarged term of imprisonment’’ the following: ‘‘or to the anticipated term of imprisonment, as applicable’’; and in subsection (c) by inserting after ‘‘an undischarged term of imprisonment’’ the following: ‘‘or an anticipated term of imprisonment’’; and by striking ‘‘prior undischarged term of imprisonment’’ and inserting ‘‘undischarged term of imprisonment or to the anticipated term of imprisonment, as applicable,’’. The Commentary to section 5G1.3 captioned ‘‘Application Notes’’ is amended in Note 3(A) by inserting after ‘‘undischarged term of imprisonment’’ the following: ‘‘or to the anticipated but not yet imposed term of imprisonment, as applicable’’; in Note 3(A)(ii) by striking ‘‘prior undischarged’’ and inserting ‘‘undischarged or anticipated’’; in Note 3(A)(iv) by striking ‘‘prior’’ and by inserting after ‘‘imposed’’ the following: ‘‘, or the fact that the anticipated sentence may be imposed,’’; in Note 3(B) by striking ‘‘prior’’ and in the last sentence by inserting after ‘‘undischarged’’ both places it appears the following: ‘‘or anticipated’’; in Note 3(C) by inserting after ‘‘Undischarged’’ the following: ‘‘or Anticipated’’; by striking ‘‘has had’’; by inserting ‘‘has been or is anticipated to be’’ before ‘‘revoked’’; and by inserting ‘‘that has E:\FR\FM\18JAN1.SGM 18JAN1 4208 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices been, or that is anticipated to be,’’ before ‘‘imposed for the revocation’’; and in Note 3(D) by inserting after ‘‘undischarged’’ the following: ‘‘or anticipated.’’ The Commentary to section 5G1.3 captioned ‘‘Background’’ is amended by striking ‘‘In a case in which’’ and all that follows through ‘‘Exercise of that authority,’’ and inserting the following: ‘‘Federal courts generally ‘have discretion to select whether the sentences they impose will run concurrently or consecutively with respect to other sentences that they impose, or that have been imposed in other proceedings, including state proceedings.’ See Setser v. United States, 132 S.Ct. 1463, 1468 (2012); 18 U.S.C. 3584(a). Federal courts also generally have discretion to order that the sentences they impose will run concurrently or consecutively with other sentences that are anticipated but not yet imposed. See Setser, 132 S.Ct. at 1468. Exercise of that discretion,’’. 7. Miscellaneous and Technical Synopsis of Proposed Amendment This proposed amendment responds to recently enacted legislation and miscellaneous and technical guideline issues. mstockstill on DSK4VPTVN1PROD with A. Recently Enacted Legislation Part A amends Appendix A (Statutory Index) to provide guideline references for four offenses not currently referenced in Appendix A that were established or revised by recently enacted legislation. They are as follows: 1. 18 U.S.C. 39A. Section 311 of the Federal Aviation Administration Modernization and Reform Act of 2012, Public Law 112–95 (February 14, 2012), established a new criminal offense at 18 U.S.C. 39A (Aiming a laser pointer at an aircraft). The offense applies to whoever knowingly aims the beam of a laser pointer at an aircraft in the special aircraft jurisdiction of the United States or at the flight path of such an aircraft. The statutory maximum term of imprisonment is five years. The proposed amendment amends Appendix A (Statutory Index) to reference section 39A offenses to § 2A5.2 (Interference with Flight Crew or Flight Attendant). 2. 18 U.S.C. 1514(c). Section 3(a) of the Child Protection Act of 2012, Public Law 112–206 (December 7, 2012), established a new offense at 18 U.S.C. 1514(c) that makes it a criminal offense to knowingly and intentionally violate or attempt to violate an order issued under section 1514 (Civil action to restrain harassment of a victim or VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 witness). The new offense has a statutory maximum term of imprisonment of five years. The proposed amendment amends Appendix A (Statutory Index) to reference the new offense at section 1514(c) to § 2J1.2 (Obstruction of Justice). 3. 18 U.S.C. 1752. The Federal Restricted Buildings and Grounds Improvement Act of 2011, Public Law 112–98 (March 8, 2012), amended the criminal offense at 18 U.S.C. 1752 (Restricted building or grounds). As so amended, the statute defines ‘‘restricted buildings or grounds’’ to mean any restricted area (A) of the White House or its grounds, or the Vice President’s residence or its grounds; (B) of a building or grounds where the President or other person protected by the United States Secret Service is or will be temporarily visiting; or (C) of a building or grounds restricted in conjunction with an event designated as a special event of national significance. The statute makes it a crime to enter or remain; to impede or disrupt the orderly conduct of business or official functions; to obstruct or impede ingress or egress; or to engage in any physical violence against any person or property. The Act did not change the statutory maximum term of imprisonment, which is ten years if the person used or carried a deadly or dangerous weapon or firearm or if the offense results in significant bodily injury, and one year in any other case. The proposed amendment amends Appendix A (Statutory Index) to reference section 1752 offenses to § 2A2.4 (Obstructing or Impeding Officers) and § 2B2.3 (Trespass). 4. 19 U.S.C. 1590. The Ultralight Aircraft Smuggling Prevention Act of 2012, Public Law 112–93 (February 10, 2012), amended the criminal offense at 19 U.S.C. 1590 (Aviation smuggling) to provide a more specific definition of the term ‘‘aircraft’’ (i.e., to include ultralight aircraft) and to cover attempts and conspiracies. Section 1590 makes it unlawful for the pilot of an aircraft to transport, or for any individual on board any aircraft to possess, merchandise knowing that the merchandise will be introduced into the United States contrary to law. It is also unlawful for a person to transfer merchandise between an aircraft and a vessel on the high seas or in the customs waters of the United States unlawfully. The Act did not change the statutory maximum terms of imprisonment, which are 20 years if any of the merchandise involved was a controlled substance, see § 1590(c)(2), and five years otherwise, see § 1590(c)(1). PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 The proposed amendment amends Appendix A (Statutory Index) to reference section 1590 offenses to § 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or Trafficking (Including Possession with Intent to Commit These Offenses); Attempt or Conspiracy) and § 2T3.1 (Evading Import Duties or Restrictions (Smuggling); Receiving or Trafficking in Smuggled Property). The proposed amendment also includes an issue for comment on the offenses described above. B. Interaction Between Offense Guidelines in Chapter Two, Part J and Certain Adjustments in Chapter Three, Part C Part B responds to an application issue that arises in cases in which the defendant is sentenced under an offense guideline in Chapter Two, Part J (Offenses Involving the Administration of Justice) and the defendant may also be subject to an adjustment under Chapter Three, Part C (Obstruction and Related Adjustments). In the Commentary to four of the Chapter Two, Part J offense guidelines, there is an application note stating that Chapter Three, Part C, does not apply, unless the defendant obstructed the investigation or trial of the instant offense. See §§ 2J1.2, comment. (n.2(A)); 2J1.3, comment. (n.2); § § 2J1.6, comment. (n.2); 2J1.9, comment. (n.1). These application notes in Chapter Two, Part J, originated when Chapter Three, Part C, contained only one guideline— § 3C1.1 (Obstructing or Impeding the Administration of Justice). Chapter Three, Part C, now contains three additional guidelines, and these application notes in Chapter Two, Part J, appear to encompass these three additional guidelines as well and generally prohibit the court from applying them. See, e.g., United States v. Duong, 665 F.3d 364 (1st Cir. January 6, 2012) (‘‘Thus, according to the literal terms of Application Note 2, ‘Chapter 3, Part C’—presumably including section 3C1.3 C—‘does not apply.’ ’’). The First Circuit in Duong, however, determined that the application note in § 2J1.6 was in conflict with § 3C1.3 (Commission of Offense While on Release) and its underlying statute, 18 U.S.C. 3147, and indicated that the Commission’s stated purpose in establishing § 3C1.3 ‘‘was not to bring that guideline within the purview of Application Note 2 of section 2J1.6’’. Id. at 368. Accordingly, the First Circuit held that the application note must be disregarded. Id. Consistent with Duong, the proposed amendment clarifies the scope of E:\FR\FM\18JAN1.SGM 18JAN1 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices mstockstill on DSK4VPTVN1PROD with Application Note 2 by striking the general reference to Chapter Three, Part C, and replacing it with a specific reference to § 3C1.1. It makes the same change to the corresponding application notes in §§ 2J1.2, 2J1.3, and 2J1.9, and conforming changes to other parts of the Commentary in those guidelines. C. Appendix A (Statutory Index) References for Offenses Under 18 U.S.C. 554 Section 554 of title 18, United States Code (Smuggling goods from the United States), makes it unlawful to export or send from the United States (or attempt to do so) any merchandise, article, or object contrary to any law or regulation of the United States. It also makes it unlawful to receive, conceal, buy, sell, or in any manner facilitate the transportation, concealment, or sale of such merchandise, article, or object, prior to exportation, knowing the same to be intended for exportation contrary to any law or regulation of the United States. Offenses under section 554 have a statutory maximum term of imprisonment of ten years, and they are referenced in Appendix A (Statutory Index) to three guidelines: § § 2B1.5 (Theft of, Damage to, or Destruction of, Cultural Heritage Resources or Paleontological Resources; Unlawful Sale, Purchase, Exchange, Transportation, or Receipt of Cultural Heritage Resources or Paleontological Resources), 2M5.2 (Exportation of Arms, Munitions, or Military Equipment or Services Without Required Validated Export License), and 2Q2.1 (Offenses Involving Fish, Wildlife, and Plants). The Department of Justice in its annual letter to the Commission has proposed that section 554 offenses should also be referenced to a fourth guideline, § 2M5.1. The Department indicates that section 554 is used to prosecute a range of export offenses related to national security and that some cases would more appropriately be sentenced under § 2M5.1 than § 2M5.2. For example, when the section 554 offense involves a violation of export controls on arms, munitions, or military equipment (e.g., export controls under the Arms Export Control Act, 22 U.S.C. 2778), the section 554 offense may appropriately be sentenced under § 2M5.2, because other offenses involving a violation of export controls on arms, munitions, or military equipment (such as offenses under 22 U.S.C. 2778) are referenced to § 2M5.2. In contrast, when the section 554 offense involves a violation of export controls not involving munitions (e.g., violations of economic sanctions or other export controls under the VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 International Emergency Economic Powers Act, 50 U.S.C. 1705), the Department proposes that the section 554 offense be sentenced under § 2M5.1 rather than under § 2M5.2, because other offenses involving evasion of export controls (such as offenses under 50 U.S.C. 1705) are referenced to § 2M5.1 (among other guidelines). Part C of the proposed amendment amends Appendix A (Statutory Index) to broaden the range of guidelines to which offenses under 18 U.S.C. 554 are referenced. Specifically, it adds a reference to § 2M5.1. The proposed amendment also brackets the possibility of adding a reference to § 2M5.3 (Providing Material Support or Resources to Designated Foreign Terrorist Organizations or Specially Designated Global Terrorists, or For a Terrorist Purpose). D. Technical and Stylistic Changes Part D makes certain technical and stylistic changes to the Guidelines Manual. First, it amends the Commentary to § 2B1.1 (Theft, Property Destruction, and Fraud) to provide updated references to the definitions contained in 7 U.S.C. 1a, which were renumbered by Public Law 111–203 (July 21, 2010). Second, it amends the Notes to the Drug Quantity Table in § 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or Trafficking (Including Possession with Intent to Commit These Offenses); Attempt or Conspiracy) to provide updated references to the definition of tetrahydrocannabinols contained in 21 C.F.R. § 1308.11(d), which were renumbered by 75 FR 79296 (December 20, 2010). Third, it makes several stylistic revisions in the Guidelines Manual to change ‘‘court martial’’ to ‘‘courtmartial’’. Proposed Amendment (A) Recently Enacted Legislation Appendix A (Statutory Index) is amended by inserting after the line referenced to 18 U.S.C. 38 the following: ‘‘18 U.S.C. 39A 2A5.2’’; by inserting after the line referenced to 18 U.S.C. 1513 the following: ‘‘18 U.S.C. 1514(c) 2J1.2’’; by inserting after the line referenced to 18 U.S.C. 1751(e) the following: ‘‘18 U.S.C. 1752 2A2.4, 2B2.3’’; and by inserting after the line referenced to 19 U.S.C. 1586(e) the following: ‘‘19 U.S.C. 1590 2D1.1, 2T3.1’’. (B) Interaction Between 2J and 3C The Commentary to § 2J1.2 captioned ‘‘Application Notes’’ is amended in PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 4209 Note 2(A) by striking ‘‘Inapplicability of Chapter Three, Part C’’ and inserting ‘‘Inapplicability of § 3C1.1’’; and striking ‘‘Chapter Three, Part C (Obstruction and Related Adjustments)’’ and inserting ‘‘ § 3C1.1 (Obstructing or Impeding the Administration of Justice)’’. The Commentary to ‘‘2J1.3 captioned ‘‘Application Notes’’ is amended in Note 2 by striking ‘‘Chapter Three, Part C (Obstruction and Related Adjustments)’’ and inserting ‘‘ § 3C1.1 (Obstructing or Impeding the Administration of Justice)’’; and in Note 3 by striking ‘‘Chapter Three, Part C (Obstruction and Related Adjustments)’’ and inserting ‘‘§ 3C1.1’’. The Commentary to § 2J1.6 captioned ‘‘Application Notes’’ is amended in Note 2 by striking ‘‘Chapter Three, Part C (Obstruction and Related Adjustments)’’ and inserting ‘‘ § 3C1.1 (Obstructing or Impeding the Administration of Justice)’’. The Commentary to § 2J1.9 captioned ‘‘Application Notes’’ is amended in Note 1 by striking ‘‘Chapter Three, Part C (Obstruction and Related Adjustments) ’’ and inserting ‘‘§ 3C1.1 (Obstructing or Impeding the Administration of Justice) ’’; and in Note 2 by striking ‘‘Chapter Three, Part C (Obstruction and Related Adjustments) ’’ and inserting ‘‘§ 3C1.1’’. (C) 18 U.S.C. 554 Appendix A (Statutory Index) is amended by striking the line referenced to 18 U.S.C. 554 and inserting the following: ‘‘18 U.S.C. 554 2B1.5, 2M5.1, 2M5.2, [2M5.3,] 2Q2.1’’. (D) Technical and Stylistic Changes The Commentary to § 2B1.1 captioned ‘‘Application Notes’’ is amended in Note 14(A) by striking ‘‘1a(5) ’’ both places it appears and inserting ‘‘1a(11) ’’; by striking ‘‘1a(6) ’’ both places it appears and inserting ‘‘1a(12) ’’; by striking ‘‘1a(26) ’’ both places it appears and inserting ‘‘1a(28)’’; by striking ‘‘1a(23) ’’ both places it appears and inserting ‘‘1a(31) ’’. Section 2D1.1(c) is amended in the Notes to Drug Quantity Table, in each of Notes (H) and (I), by striking ‘‘1308.11(d)(30) ’’ and inserting ‘‘1308.11(d)(31) ’’. The Commentary to § 4A1.1 captioned ‘‘Application Notes’’ is amended in each of Notes 2 and 3 by striking ‘‘court martial’’ and inserting ‘‘court-martial’’. Section 4A1.2(g) is amended by striking ‘‘court martial’’ and inserting ‘‘court-martial’’. E:\FR\FM\18JAN1.SGM 18JAN1 4210 Federal Register / Vol. 78, No. 13 / Friday, January 18, 2013 / Notices mstockstill on DSK4VPTVN1PROD with Issue for Comment 1. Part A of the proposed amendment would reference offenses under 18 U.S.C. 39A, 18 U.S.C. 1514(c), 18 U.S.C. 1752, and 19 U.S.C. 1590 to various guidelines. The Commission invites comment on offenses under these statutes, including in particular the conduct involved in such offenses and the nature and seriousness of the harms posed by such offenses. Do the guidelines covered by the proposed amendment adequately account for these offenses? If not, what revisions to the guidelines would be appropriate to VerDate Mar<15>2010 16:52 Jan 17, 2013 Jkt 229001 account for these offenses? In particular, should the Commission provide one or more new alternative base offense levels, specific offense characteristics, or departure provisions in one or more of these guidelines to better account for these offenses? If so, what should the Commission provide? Similarly, are there any guideline application issues that the Commission should address for cases involving these statutes? For example, the proposed amendment would reference offenses under 19 U.S.C. 1590 to § 2D1.1 and § 2T3.1. In a section 1590 case PO 00000 Frm 00091 Fmt 4703 Sfmt 9990 sentenced under § 2T3.1, should the use of an aircraft be considered a form of ‘‘sophisticated means,’’ such that the defendant should receive the specific offense characteristic at § 2T3.1(b)(1), which provides an increase of 2 levels and a minimum offense level of 12 if the offense involved sophisticated means? If not, then under what circumstances (if any) should the defendant in a section 1590 case receive that specific offense characteristic? [FR Doc. 2013–01085 Filed 1–17–13; 8:45 am] BILLING CODE 2210–40–P E:\FR\FM\18JAN1.SGM 18JAN1

Agencies

[Federal Register Volume 78, Number 13 (Friday, January 18, 2013)]
[Notices]
[Pages 4197-4210]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01085]


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UNITED STATES SENTENCING COMMISSION


Sentencing Guidelines for United States Courts

AGENCY: United States Sentencing Commission.

ACTION: Notice of proposed amendments to sentencing guidelines, policy 
statements, and commentary. Request for public comment, including 
public comment regarding retroactive application of any of the proposed 
amendments. Notice of public hearing.

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SUMMARY: Pursuant to section 994(a), (o), and (p) of title 28, United 
States Code, the United States Sentencing Commission is considering 
promulgating certain amendments to the sentencing guidelines, policy 
statements, and commentary. This notice sets forth the proposed 
amendments and, for each proposed amendment, a synopsis of the issues 
addressed by that amendment. This notice also sets forth a number of 
issues for comment, some of which are set forth together with the 
proposed amendments; some of which are set forth independent of any 
proposed amendment; and one of which (regarding retroactive application 
of proposed amendments) is set forth in the SUPPLEMENTARY INFORMATION 
portion of this notice.
    The proposed amendments and issues for comment in this notice are 
as follows: (1) A proposed amendment to Sec.  2B1.1 (Theft, Property 
Destruction, and Fraud) regarding offenses involving pre-retail medical 
products to implement the directive in the SAFE DOSES Act, Public Law 
112-186 (October 5, 2012), and a related issue for comment; (2) an 
issue for comment on the directive in section 3 of the Foreign and 
Economic Espionage Penalty Enhancement Act of 2012, Public Law 112-----
, relating to offenses involving stolen trade secrets or economic 
espionage; (3) proposed changes to the guidelines applicable to 
offenses involving counterfeit or adulterated drugs or counterfeit 
military parts, including (A) a proposed amendment on offenses 
involving counterfeit military goods and services, including options to 
amend Sec.  2B5.3 (Criminal Infringement of Copyright or Trademark) or 
Appendix A (Statutory Index) with respect to such offenses to address 
the statutory changes to 18 U.S.C. 2320 made by section 818 of the 
National Defense Authorization Act for Fiscal Year 2012, Public Law 
112-81 (December 31, 2011); (B) a proposed amendment on offenses 
involving counterfeit drugs, including options to amend Sec.  2B5.3 or 
Appendix A with respect to such offenses to address the statutory 
changes to 18 U.S.C. 2320, and to implement the directive to the 
Commission, in section 717 of the Food and Drug Administration Safety 
and Innovation Act, Public Law 112-144 (July 9, 2012); and (C) a 
proposed amendment on offenses involving adulterated drugs, including 
options to amend Sec.  2N2.1 (Violations of Statutes and Regulations 
Dealing With Any Food, Drug, Biological Product, Device, Cosmetic, 
Agricultural Product, or Consumer Product) or Appendix A with respect 
to such offenses to address the statutory changes to 21 U.S.C. 333 in 
section 716 of such Act; and related issues for comment; (4) a proposed 
amendment to Sec.  2T1.1 (Tax Evasion; Willful Failure to File Return, 
Supply Information, or Pay Tax; Fraudulent or False Returns, 
Statements, or Other Documents) to respond to a circuit conflict over 
whether a sentencing court, in calculating the tax loss in a tax case, 
may subtract the unclaimed deductions that the defendant legitimately 
could have claimed if he or she had filed an accurate tax return, and 
related issues for comment; (5) a proposed amendment and issues for 
comment in response to two circuit conflicts relating to the 
circumstances under which the defendant is eligible for a third level 
of reduction under subsection (b) of Sec.  3E1.1 (Acceptance of 
Responsibility), including (A) a proposed amendment to Sec.  3E1.1 to 
respond to a circuit conflict over whether the court has discretion to 
deny the third level of reduction when the government has filed the 
motion described in subsection (b), which would recognize that the 
court does have such discretion; and (B) an issue for comment on a 
circuit conflict over whether the government has discretion to withhold 
making a motion under subsection (b) when there is no evidence that the 
government was required to prepare for trial; (6) a proposed amendment 
to Sec.  5G1.3 (Imposition of a Sentence on a Defendant Subject to an 
Undischarged Term of Imprisonment) to respond to Setser v. United 
States, ---- U.S. ---- (March 28, 2012), which held that a federal 
court in imposing sentence generally has discretion to order that the 
sentence run consecutive to (or concurrently with) an anticipated, but 
not yet imposed, term of imprisonment; and (7) a proposed amendment and 
related issue for comment in response to miscellaneous issues arising 
from legislation recently enacted and to address technical and 
stylistic issues in the guidelines, including (A) proposed changes to 
Appendix A (Statutory Index) to address certain criminal provisions in 
the Federal Aviation Administration Modernization and Reform Act of 
2012, Public Law 112-95 (February 14, 2012); the Child Protection Act 
of 2012, Public Law 112-206 (December 7, 2012); the Federal Restricted 
Buildings and Grounds Improvement Act of 2011, Public Law 112-98 (March 
8, 2012); and the Ultralight Aircraft Smuggling Prevention Act of 2012, 
Public Law 112-93 (February 10, 2012); (B) a proposed change to 
Appendix A (Statutory Index) to address offenses under 18 U.S.C. 554; 
(C) proposed changes to guidelines in Chapter Two, Part J (Offenses 
Involving the Administration of Justice) to address an application 
issue involving the interaction of those guidelines with adjustments in 
Chapter Three, Part C (Obstruction and Related Adjustments); and (D) 
technical and stylistic changes.

DATES: 
    (1) Written Public Comment.--Written public comment regarding the 
proposed amendments and issues for comment set forth in this notice, 
including public comment regarding retroactive application of any of 
the proposed amendments, should be received by the Commission not later 
than March 19, 2013.
    (2) Public Hearing.--The Commission plans to hold a public hearing 
regarding the proposed amendments and issues for comment set forth in 
this notice. Further information regarding the public hearing, 
including requirements for testifying and providing written testimony, 
as well as the location, time, and scope of the hearing, will be

[[Page 4198]]

provided by the Commission on its Web site at www.ussc.gov.

ADDRESSES: Public comment should be sent to: United States Sentencing 
Commission, One Columbus Circle NE., Suite 2-500, Washington, DC 20002-
8002, Attention: Public Affairs.

FOR FURTHER INFORMATION CONTACT: Jeanne Doherty, Public Affairs 
Officer, Telephone: (202) 502-4502.

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 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 guideline 
amendments to the Congress not later than the first day of May each 
year pursuant to 28 U.S.C. 994(p).
    The proposed amendments in this notice are presented in one of two 
formats. First, some of the amendments are proposed as specific 
revisions to a guideline or commentary. Bracketed text within a 
proposed amendment indicates a heightened interest on the Commission's 
part in comment and suggestions regarding alternative policy choices; 
for example, a proposed enhancement of [2][4][6] levels indicates that 
the Commission is considering, and invites comment on, alternative 
policy choices regarding the appropriate level of enhancement. 
Similarly, bracketed text within a specific offense characteristic or 
application note means that the Commission specifically invites comment 
on whether the proposed provision is appropriate. Second, the 
Commission has highlighted certain issues for comment and invites 
suggestions on how the Commission should respond to those issues.
    The Commission requests public comment regarding whether, pursuant 
to 18 U.S.C. 3582(c)(2) and 28 U.S.C. 994(u), any proposed amendment 
published in this notice should be included in subsection (c) of 
'1B1.10 (Reduction in Term of Imprisonment as a Result of Amended 
Guideline Range (Policy Statement)) as an amendment that may be applied 
retroactively to previously sentenced defendants. The Commission lists 
in '1B1.10(c) the specific guideline amendments that the court may 
apply retroactively under 18 U.S.C. 3582(c)(2). The background 
commentary to '1B1.10 lists the purpose of the amendment, the magnitude 
of the change in the guideline range made by the amendment, and the 
difficulty of applying the amendment retroactively to determine an 
amended guideline range under '1B1.10(b) as among the factors the 
Commission considers in selecting the amendments included in 
'1B1.10(c). To the extent practicable, public comment should address 
each of these factors.
    Additional information pertaining to the proposed amendments 
described in this notice may be accessed through the Commission's Web 
site at www.ussc.gov.

    Authority: 28 U.S.C. 994(a), (o), (p), (x); USSC Rules of 
Practice and Procedure, Rule 4.4.

Patti B. Saris,
Chair.

1. Pre-Retail Medical Products

Synopsis of Proposed Amendment

    This proposed amendment responds to the SAFE DOSES Act, Public Law 
112B186 (October 5, 2012), which created a new criminal offense at 18 
U.S.C. 670 for theft of pre-retail medical products, increased 
statutory penalties for certain related offenses when a pre-retail 
medical product is involved, and contained a directive to the 
Commission to ``review and, if appropriate, amend'' the federal 
sentencing guidelines and policy statements applicable to the new 
offense and the related offenses ``to reflect the intent of Congress 
that penalties for such offenses be sufficient to deter and punish such 
offenses, and appropriately account for the actual harm to the public 
from these offenses.''
New Offense at 18 U.S.C. 670
    The new offense at section 670 makes it unlawful for any person in 
(or using any means or facility of) interstate or foreign commerce to--
    (1) Embezzle, steal, or by fraud or deception obtain, or knowingly 
and unlawfully take, carry away, or conceal a pre-retail medical 
product;
    (2) knowingly and falsely make, alter, forge, or counterfeit the 
labeling or documentation (including documentation relating to 
origination or shipping) of a pre-retail medical product;
    (3) knowingly possess, transport, or traffic in a pre-retail 
medical product that was involved in a violation of paragraph (1) or 
(2);
    (4) with intent to defraud, buy, or otherwise obtain, a pre-retail 
medical product that has expired or been stolen;
    (5) with intent to defraud, sell, or distribute, a pre-retail 
medical product that is expired or stolen; or
    (6) attempt or conspire to violate any of paragraphs (1) through 
(5).
    The offense generally carries a statutory maximum term of 
imprisonment of three years. If the offense is an ``aggravated 
offense,'' however, higher statutory maximum terms of imprisonment are 
provided. The offense is an ``aggravated offense'' if--
    (1) The defendant is employed by, or is an agent of, an 
organization in the supply chain for the pre-retail medical product; or
    (2) the violation--
    (A) involves the use of violence, force, or a threat of violence or 
force;
    (B) involves the use of a deadly weapon;
    (C) results in serious bodily injury or death, including serious 
bodily injury or death resulting from the use of the medical product 
involved; or
    (D) is subsequent to a prior conviction for an offense under 
section 670.
    Specifically, the higher statutory maximum terms of imprisonment 
are:
    (1) Five years, if--
    (A) the defendant is employed by, or is an agent of, an 
organization in the supply chain for the pre-retail medical product; or
    (B) the violation (i) involves the use of violence, force, or a 
threat of violence or force, (ii) involves the use of a deadly weapon, 
or (iii) is subsequent to a prior conviction for an offense under 
section 670.
    (2) 15 years, if the value of the medical products involved in the 
offense is $5,000 or greater.
    (3) 20 years, if both (1) and (2) apply.
    (4) 30 years, if the offense results in serious bodily injury or 
death, including serious bodily injury or death resulting from the use 
of the medical product involved.
    The proposed amendment amends Appendix A (Statutory Index) to 
reference the new offense at 18 U.S.C. 670 to Sec.  2B1.1 (Theft, 
Property Destruction, and Fraud). In addition, the possibility of 
providing an additional reference to Sec.  2A1.4 (Involuntary 
Manslaughter) is bracketed.
    The proposed amendment also adds a new specific offense 
characteristic to Sec.  2B1.1. The new specific offense characteristic 
provides an enhancement of [2][4] levels if the offense involves a pre-
retail medical product [and (A) the offense involved (i) the use of 
violence, force, or a threat of violence or force; or (ii) the use of a 
deadly weapon; (B) the offense resulted in serious bodily injury or 
death, including serious bodily injury or death resulting from the use 
of the medical product involved; or (C) the defendant was employed by, 
or was an agent of, an organization in the supply chain for the pre-
retail medical

[[Page 4199]]

product]. It also provides a minimum offense level of level 14. It also 
amends the commentary to Sec.  2B1.1 to specify that the term ``pre-
retail medical product'' has the meaning given that term in section 
670(e).
Issue for Comment
    A multi-part issue for comment is also included on whether any 
changes to the guidelines instead of, or in addition to, the changes in 
the proposed amendment should be made to respond to the new offense, 
the statutory penalty increases made by the Act, and the directive to 
the Commission.

Proposed Amendment

    Section 2B1.1(b) is amended by redesignating paragraphs (14) 
through (18) as (15) through (19), respectively; by inserting after 
paragraph (13) the following:
    ``(14) If the offense involved a pre-retail medical product [and 
(A) the offense involved the use of (i) violence, force, or a threat of 
violence or force; or (ii) a deadly weapon; (B) the offense resulted in 
serious bodily injury or death, including serious bodily injury or 
death resulting from the use of the medical product involved; or (C) 
the defendant was employed by, or was an agent of, an organization in 
the supply chain for the pre-retail medical product], increase by 
[2][4] levels. If the resulting offense level is less than level 14, 
increase to level 14.''; and

in paragraph (16)(B) (as so redesignated) by striking ``(b)(15)(B)'' 
and inserting ``(b)(16)(B)''.

    The Commentary to Sec.  2B1.1 captioned ``Application Notes'' is 
amended in Note 1 by inserting after the paragraph beginning `` 
'Personal information' means'' the following:
    `` `Pre-retail medical product' has the meaning given that term in 
18 U.S.C. 670(e).''; and by inserting after the paragraph beginning `` 
`Publicly trade company' means'' the following:
    `` `Supply chain' has the meaning given that term in 18 U.S.C. 
670(e).''.
    The Commentary to Sec.  2B1.1 captioned ``Background'' is amended 
by inserting after the paragraph beginning ``Subsection (b)(12)'' the 
following:
    ``Subsection (b)(14) implements the directive to the Commission in 
section 7 of Public Law 112B186.'';

in the paragraph beginning ``Subsection (b)(14)(B)'' by striking 
``(b)(14)(B)'' and inserting ``(b)(15)(B)''; in the paragraph beginning 
``Subsection (b)(15)(A)'' by striking ``(b)(15)(A)'' and inserting 
``(b)(16)(A)''; in the paragraph beginning ``Subsection (b)(15)(B)(i)'' 
by striking ``(b)(15)(B)(i)'' and inserting ``(b)(16)(B)(i)''; in the 
paragraph beginning ``Subsection (b)(16)'' by striking ``(b)(16)'' and 
inserting ``(b)(17)''; and in the paragraph beginning ``Subsection 
(b)(17)'' by striking ``(b)(17)'' and inserting ``(b)(18)'', and 
striking ``(b)(17)(B)'' and inserting ``(b)(18)(B)''.

    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to 18 U.S.C. 669 the following:
    ``18 U.S.C. 670 [2A1.4,] 2B1.1''.

Issue for Comment

    1. In addition to creating the new offense under section 670, the 
Act increased penalties for some related offenses when those offenses 
involve a pre-retail medical product. In particular, the Act added an 
increased penalty provision to each of the following statutes:
    (A) 18 U.S.C. 659 (theft from interstate or foreign shipments by 
carrier), which is referenced to Sec.  2B1.1.
    (B) 18 U.S.C. 1952 (travel in aid of racketeering), which is 
referenced to Sec.  2E1.2 (Interstate or Foreign Travel or 
Transportation in Aid of a Racketeering Enterprise).
    (C) 18 U.S.C. 1957 (money laundering in aid of racketeering), which 
is referenced to Sec.  2S1.1 (Laundering of Monetary Instruments; 
Engaging in Monetary Transactions in Property Derived from Unlawful 
Activity).
    (D) 18 U.S.C. 2117 (breaking or entering facilities of carriers in 
interstate or foreign commerce), which is referenced to Sec.  2B2.1 
(Burglary of a Residence or a Structure Other than a Residence).
    (E) 18 U.S.C. 2314 (transportation of stolen goods) and 2315 (sale 
or receipt of stolen goods), each of which are referenced to both 
Sec. Sec.  2B1.1 and 2B1.5 (Theft of, Damage to, or Destruction of, 
Cultural Heritage Resources or Paleontological Resources; Unlawful 
Sale, Purchase, Exchange, Transportation, or Receipt of Cultural 
Heritage Resources or Paleontological Resources).
    For each of these existing statutes, the Act amended the penalty 
provision to provide that if the offense involved a pre-retail medical 
product, the punishment for the offense shall be the same as the 
punishment for an offense under section 670, unless the punishment 
under the existing statute is greater.
    An additional statutory provision identified in the directive to 
the Commission (but not amended by the Act) is 18 U.S.C. 2118 
(robberies and burglaries involving controlled substances), which 
contains several distinct offenses. The guidelines to which these 
various offenses are referenced include Sec. Sec.  2A1.1, 2A2.1, 2A2.2, 
2B2.1, 2B3.1 (Robbery), and 2X1.1.
    The directive to the Commission provided that the Commission shall 
``review and, if appropriate, amend'' the federal sentencing guidelines 
and policy statements applicable to offenses under section 670; under 
section 2118 of title 18, United States Code; or under any other 
section amended by the Act ``to reflect the intent of Congress that 
penalties for such offenses be sufficient to deter and punish such 
offenses, and appropriately account for the actual harm to the public 
from these offenses.'' The Act further states that, in carrying out the 
directive, the Commission shall--
    (1) Consider the extent to which the Federal sentencing guidelines 
and policy statements appropriately reflect--
    (A) The serious nature of such offenses;
    (B) The incidence of such offenses; and
    (C) The need for an effective deterrent and appropriate punishment 
to prevent such offenses;
    (2) Consider establishing a minimum offense level under the Federal 
sentencing guidelines and policy statements for offenses covered by 
this Act;
    (3) Account for any additional aggravating or mitigating 
circumstances that might justify exceptions to the generally applicable 
sentencing ranges;
    (4) Ensure reasonable consistency with other relevant directives, 
Federal sentencing guidelines and policy statements;
    (5) Make any necessary conforming changes to the Federal sentencing 
guidelines and policy statements; and
    (6) Ensure that the Federal sentencing guidelines and policy 
statements adequately meet the purposes of sentencing set forth in 
section 3553(a)(2) of title 18, United States Code.
Issue for Comment
    The Commission seeks comment on whether any changes to the 
guidelines instead of, or in addition to, the changes in the proposed 
amendment should be made to respond to the new offense, the statutory 
penalty increases made by the Act, and the directive to the Commission.
    (1) First, the Commission seeks comment on the guideline or 
guidelines to which offenses under section 670, and other offenses 
covered by the directive, should be referenced. In particular:

[[Page 4200]]

    (A) The proposed amendment would reference offenses under section 
670 to Sec.  2B1.1, and brackets the possibility of an additional 
reference to Sec.  2A1.4. Should the Commission reference section 670 
to one or more guidelines--such as Sec.  2B5.3 (Criminal Infringement 
of Copyright or Trademark), Sec.  2N1.1 (Tampering or Attempting to 
Tamper Involving Risk of Death or Bodily Injury), or Sec.  2N2.1 
(Violations of Statutes and Regulations Dealing With Any Food, Drug, 
Biological Product, Device, Cosmetic, Agricultural Product, or Consumer 
Product)--instead of, or in addition to, the proposed reference(s) to 
Sec.  2A1.4 and Sec.  2B1.1? If so, which ones?
    (B) Similarly, should the Commission reference any of the other 
offenses covered by the directive to one or more guidelines instead of, 
or in addition to, the guideline or guidelines to which they are 
currently referenced? If so, which ones?
    (2) Second, the Commission seeks comment on the proposed amendment 
to Sec.  2B1.1, which would provide a new specific offense 
characteristic if the offense involves a pre-retail medical product 
[and (A) the offense involved the use of (i) violence, force, or a 
threat of violence or force; or (ii) a deadly weapon; (B) the offense 
resulted in serious bodily injury or death, including serious bodily 
injury or death resulting from the use of the medical product involved; 
or (C) the defendant was employed by, or was an agent of, an 
organization in the supply chain for the pre-retail medical product]. 
In particular:
    (A) If the Commission were to promulgate the proposed amendment, 
how should the new specific offense characteristic interact with other 
specific offense characteristics in Sec.  2B1.1? In particular, how 
should it interact with--
    (i) The specific offense characteristic at Sec.  2B1.1(b)(13)(B), 
which provides a 2-level enhancement and a minimum offense level of 14 
if the offense involved an organized scheme to steal or to receive 
stolen goods or chattels that are part of a cargo shipment; and
    (ii) The specific offense characteristic currently at Sec.  
2B1.1(b)(14), which provides a 2-level enhancement and a minimum 
offense level 14 if the offense involved a risk of death or serious 
bodily injury or possession of a dangerous weapon?
    Should the new specific offense characteristic be fully cumulative 
with these current specific offense characteristics, or should the 
impact be less than fully cumulative in cases where more than one 
apply?
    (B) Does the proposed amendment adequately respond to requirement 
(2) of the directive that the Commission consider establishing a 
minimum offense level for offenses covered by the Act? If not, what 
minimum offense level, if any, should the Commission provide for 
offenses covered by the Act, and under what circumstances should it 
apply?
    (C) Does the proposed amendment adequately respond to requirement 
(3) of the directive that the Commission account for the aggravating 
and mitigating circumstances involved in the offenses covered by the 
Act? If not, what aggravating and mitigating circumstances should be 
accounted for, and what new provisions, or changes to existing 
provisions should be made to account for them?
    (D) Does the proposed amendment adequately respond to the other 
requirements of the directive, in paragraphs (1), (4), (5), and (6)? If 
not, what other changes, if any, should the Commission make to the 
guidelines to respond to the directive?
    (3) Section 670(e) defines the term ``pre-retail medical product'' 
to mean ``a medical product that has not yet been made available for 
retail purchase by a consumer.'' The proposed amendment would adopt 
this statutory definition. The Commission seeks comment on this 
definition. Is this definition adequately clear? If not, in what 
situations is this definition likely to be unclear and what guidance, 
if any, should the Commission provide to address such situations? Does 
the definition of the term ``supply chain'' (see 18 U.S.C. 670(e) 
(stating that the term ``supply chain'' includes ``manufacturer, 
wholesaler, repacker, own-labeled distributor, private-label 
distributor, jobber, broker, drug trader, transportation company, 
hospital, pharmacy, or security company'')) inform the determination of 
whether the medical product has been made available for retail purchase 
by a consumer?
    (4) The Commission seeks comment on how, if at all, the guidelines 
should be amended to account for the aggravating factor in section 670 
that increases the statutory maximum term of imprisonment if the 
defendant is employed by, or is an agent of, an organization in the 
supply chain for the pre-retail medical product. Is this factor already 
adequately addressed by existing provisions in the guidelines, such as 
the adjustment in Sec.  3B1.3 (Abuse of Position of Trust or Use of 
Special Skill)? If not, how, if at all, should the Commission amend the 
guidelines to account for this factor?
    (5) Finally, the Commission seeks comment on what changes, if any, 
it should make to the guidelines to which the other offenses covered by 
the directive are referenced to account for the statutory changes or 
the directive, or both. For example, if the Commission were to 
promulgate the proposed amendment to Sec.  2B1.1, adding a new specific 
offense characteristic to that guideline, should the Commission provide 
a similar specific offense characteristic in the other guidelines to 
which the other offenses covered by the directive are referenced?

2. Trade Secrets

Issue for Comment

    1. Section 3 of the Foreign and Economic Espionage Penalty 
Enhancement Act of 2012, Public Law 112-----, contains a directive to 
the Commission on offenses involving stolen trade secrets or economic 
espionage. The Commission seeks comment on what, if any, changes to the 
guidelines are appropriate to respond to the directive.
The Directive
    Section 3(a) of the Act directs the Commission to ``review and, if 
appropriate, amend'' the guidelines ``applicable to persons convicted 
of offenses relating to the transmission or attempted transmission of a 
stolen trade secret outside of the United States or economic espionage, 
in order to reflect the intent of Congress that penalties for such 
offenses under the Federal sentencing guidelines and policy statements 
appropriately, reflect the seriousness of these offenses, account for 
the potential and actual harm caused by these offenses, and provide 
adequate deterrence against such offenses.''
    Section 3(b) of the Act states that, in carrying out the directive, 
the Commission shall--
    ``(1) consider the extent to which the Federal sentencing 
guidelines and policy statements appropriately account for the simple 
misappropriation of a trade secret, including the sufficiency of the 
existing enhancement for these offenses to address the seriousness of 
this conduct;
    ``(2) consider whether additional enhancements in the Federal 
sentencing guidelines and policy statements are appropriate to account 
for--
    ``(A) the transmission or attempted transmission of a stolen trade 
secret outside of the United States; and
    ``(B) the transmission or attempted transmission of a stolen trade 
secret outside of the United States that is committed or attempted to 
be

[[Page 4201]]

committed for the benefit of a foreign government, foreign 
instrumentality, or foreign agent;
    ``(3) ensure the Federal sentencing guidelines and policy 
statements reflect the seriousness of these offenses and the need to 
deter such conduct;
    ``(4) ensure reasonable consistency with other relevant directives, 
Federal sentencing guidelines and policy statements, and related 
Federal statutes;
    ``(5) make any necessary conforming changes to the Federal 
sentencing guidelines and policy statements; and
    ``(6) ensure that the Federal sentencing guidelines adequately meet 
the purposes of sentencing as set forth in section 3553(a)(2) of title 
18, United States Code.''.
The Offenses Described in the Directive
    Offenses described in the directive--the transmission or attempted 
transmission of a stolen trade secret outside the United States; and 
economic espionage--may be punished under 18 U.S.C. 1831 (Economic 
espionage), which requires as an element of the offense that the 
defendant specifically intend or know that the offense ``will benefit 
any foreign government, foreign instrumentality, or foreign agent''. 
Offenses described in the directive may also be punished under 18 
U.S.C. 1832 (Trade secrets), which does not require such specific 
intent or knowledge, but does require that the trade secret relate to a 
product in interstate or foreign commerce.
    Section 2 of the Act amended section 1831 to raise the maximum fine 
imposable for such an offense. The maximum fine for an individual was 
raised from $500,000 to $5,000,000, and the maximum fine for an 
organization was raised from $10,000,000 to either $10,000,000 or ``3 
times the value of the stolen trade secret to the organization, 
including expenses for research and design and other costs of 
reproducing the trade secret that the organization has thereby 
avoided'', whichever is greater.
    The statutory maximum terms of imprisonment are 15 years for a 
section 1831 offense and 10 years for a section 1832 offense. Offenses 
under sections 1831 and 1832 are referenced in Appendix A (Statutory 
Index) to Sec.  2B1.1 (Theft, Property Destruction, and Fraud).
    Offenses described in the directive may also be punished under 
other criminal statutes relating to trade secrets under specific 
circumstances. Examples of two such statutes are 18 U.S.C. 1905 (class 
A misdemeanor for disclosure of confidential information, including 
trade secrets, by public employees) and 7 U.S.C. 136h (class A 
misdemeanor for disclosure of trade secrets involving insecticides, by 
Environmental Protection Agency employees). Section 1905 is referenced 
in Appendix A (Statutory Index) to Sec.  2H3.1 (Interception of 
Communications; Eavesdropping; Disclosure of Certain Private or 
Protected Information). Section 136h is not referenced in Appendix A 
(Statutory Index).
Applicable Provisions in the Guidelines
    The following provisions in the guidelines, among others, address 
offenses involving trade secrets:
    (1) Section 2B1.1(b)(5) contains a 2-level enhancement that applies 
``[i]f 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''.
    (2) Application Note 3(C)(ii) of the Commentary to Sec.  2B1.1 
provides that, in a case involving trade secrets or other proprietary 
information, the court when estimating loss for purposes of the loss 
enhancement in Sec.  2B1.1(b)(1) should consider, among other factors, 
``the cost of developing that information or the reduction in the value 
of that information that resulted from the offense.''
Request for Comment
    The Commission seeks comment on what, if any, changes to the 
guidelines should be made to respond to the directive. In particular, 
the Commission seeks comment on the following:
    (1) What offenses, if any, other than sections 1831 and 1832 should 
the Commission consider in responding to the directive? What 
guidelines, if any, other than Sec.  2B1.1 should the Commission 
consider amending in response to the directive?
    (2) What should the Commission consider in reviewing the 
seriousness of the offenses described in the directive, the potential 
and actual harm caused by these offenses, and the need to provide 
adequate deterrence against such offenses?
    (3) Do the guidelines appropriately account for the simple 
misappropriation of a trade secret? Is the existing enhancement at 
Sec.  2B1.1(b)(5), which provides a 2-level enhancement ``[i]f 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,'' sufficient to address the 
seriousness of the conduct involved in the offenses described in the 
directive?
    (4) Should the Commission provide one or more additional 
enhancements to account for (A) the transmission or attempted 
transmission of a stolen trade secret outside of the United States; and 
(B) the transmission or attempted transmission of a stolen trade secret 
outside of the United States that is committed or attempted to be 
committed for the benefit of a foreign government, foreign 
instrumentality, or foreign agent? If so, under what circumstances 
should such an enhancement apply, and what level of enhancement should 
apply?
    (5) Should the Commission restructure the existing 2-level 
enhancement in subsection (b)(5) into a tiered enhancement that directs 
the court to apply the greatest of the following:
    (A) An enhancement of 2 levels if the offense involved the simple 
misappropriation of a trade secret;
    (B) An enhancement of 4 levels if the defendant transmitted or 
attempted to transmit the stolen trade secret outside of the United 
States; and
    (C) An enhancement of [5][6] levels if the defendant committed 
economic espionage, i.e., the defendant knew or intended that the 
offense would benefit a foreign government, foreign instrumentality, or 
foreign agent?
    (6) Should the Commission provide a minimum offense level of 
[14][16] if the defendant transmitted or attempted to transmit stolen 
trade secrets outside of the United States or committed economic 
espionage?

3. Counterfeit and Adulterated Drugs; Counterfeit Military Parts

Synopsis of Proposed Amendment

    This proposed amendment responds to two recent Acts that made 
changes to 18 U.S.C. 2320 (Trafficking in counterfeit goods and 
services). One Act provided higher penalties for offenses involving 
counterfeit military goods and services; the other Act provided higher 
penalties for offenses involving counterfeit drugs, and also included a 
directive to the Commission. The proposed amendment also responds to 
recent statutory changes to 21 U.S.C. 333 (Penalties for violations of 
the Federal Food, Drug, and Cosmetics Act) that provide higher 
penalties for offenses involving intentionally adulterated drugs.
A&B. 18 U.S.C. 2320 and Offenses Involving Counterfeit Military Goods 
and Services and Counterfeit Drugs
    In general, section 2320 prohibits trafficking in goods or services 
using a counterfeit mark, and provides a statutory maximum term of 
imprisonment of 10 years (or, for a

[[Page 4202]]

repeat offender, 20 years). If the offender knowingly or recklessly 
causes or attempts to cause serious bodily injury or death, the 
statutory maximum is increased to 20 years (if serious bodily injury) 
or to any term of years or life (if death). Offenses under section 2320 
are referenced in Appendix A (Statutory Index) to Sec.  2B5.3 (Criminal 
Infringement of Copyright or Trademark).
    Two recent Acts made changes to section 2320. First, section 818 of 
the National Defense Authorization Act for Fiscal Year 2012, Public Law 
112-81 (December 31, 2011), amended section 2320 to add a new 
subsection (a)(3) that prohibits trafficking in counterfeit military 
goods and services, the use, malfunction, or failure of which is likely 
to cause serious bodily injury or death, the disclosure of classified 
information, impairment of combat operations, or other significant harm 
to a combat operation, a member of the Armed Forces, or national 
security. A ``counterfeit military good or service'' is a good or 
service that uses a counterfeit mark and that (A) is falsely identified 
or labeled as meeting military specifications, or (B) is intended for 
use in a military or national security application. See 18 U.S.C. 
2320(f)(4). An individual who commits an offense under subsection 
(a)(3) involving a counterfeit military good or service is subject to a 
statutory maximum term of imprisonment of 20 years, or 30 years for a 
second or subsequent offense. See 18 U.S.C. 2320(b)(3).
    Second, section 717 of the Food and Drug Administration Safety and 
Innovation Act, Public Law 112-144 (July 9, 2012), amended section 2320 
to add a new subsection (a)(4) that prohibits trafficking in a 
counterfeit drug. A ``counterfeit drug'' is a drug, as defined by 
section 201 of the Federal Food, Drug, and Cosmetic Act, that uses a 
counterfeit mark. See 18 U.S.C. 2320(f)(6). An individual who commits 
an offense under subsection (a)(4) involving a counterfeit drug is 
subject to the same statutory maximum term of imprisonment as for an 
offense involving a counterfeit military good or service--20 years, or 
30 years for a second or subsequent offense. See 18 U.S.C. 2320(b)(3).
    Section 717 of that Act also contained a directive to the 
Commission to ``review and amend, if appropriate'' the guidelines and 
policy statements applicable to persons convicted of an offense 
described in section 2320(a)(4)--i.e., offenses involving counterfeit 
drugs--``in order to reflect the intent of Congress that such penalties 
be increased in comparison to those currently provided by the 
guidelines and policy statements''. See Public Law 112-144, Sec.  
717(b). In addition, section 717(b)(2) provides that, in responding to 
the directive, the Commission shallC
    (A) Ensure that the sentencing guidelines and policy statements 
reflect the intent of Congress that the guidelines and policy 
statements reflect the serious nature of offenses under section 
2320(a)(4) and the need for an effective deterrent and appropriate 
punishment to prevent such offenses;
    (B) Consider the extent to which the guidelines may or may not 
appropriately account for the potential and actual harm to the public 
resulting from the offense;
    (C) Assure reasonable consistency with other relevant directives 
and with other sentencing guidelines;
    (D) Account for any additional aggravating or mitigating 
circumstances that might justify exceptions to the generally applicable 
sentencing ranges;
    (E) Make any necessary conforming changes to the sentencing 
guidelines; and
    (F) Assure that the guidelines adequately meet the purposes of 
sentencing as set forth in section 3553(a)(2) of title 18, United 
States Code.
    Parts A and B of the proposed amendment respond to the statutory 
changes to section 2320 made by these Acts and implement the directive.
A. Counterfeit Military Goods and Services
    Part A addresses the issue of counterfeit military goods and 
services and contains four options. The first three options each add a 
new specific offense characteristic to Sec.  2B5.3. Each of these three 
options provides an enhancement of [2][4] levels and a minimum offense 
level of level 14, but they apply to different circumstances.
    Option 1 closely tracks the statutory language. It applies only if 
the offense involves a counterfeit military good or service ``the use, 
malfunction, or failure of which is likely to cause serious bodily 
injury or death, the disclosure of classified information, impairment 
of combat operations, or other significant harm to a combat operation, 
a member of the Armed Forces, or to national security.''
    Option 2 applies to any offense that involves a counterfeit 
military good or service.
    Option 3 is not limited to counterfeit military goods or services. 
It applies if the defendant knew the offense involved (A) a critical 
infrastructure; or (B) a product sold for use in national defense or 
national security or by law enforcement.
    Option 4 takes a different approach than the first three options. 
It references offenses under section 2320(a)(3) to Sec.  2M2.3 
(Destruction of, or Production of Defective, National Defense Material, 
Premises, or Utilities), with the possibility of an additional 
reference to Sec.  2M2.1 (Destruction of, or Production of Defective, 
War Material, Premises, or Utilities) also bracketed.
B. Counterfeit Drugs
    Part B addresses the issue of counterfeit drugs and contains three 
options.
    Option 1 adds a new specific offense characteristic to Sec.  2B5.3. 
It provides an enhancement of [2][4] levels and a minimum offense level 
of level 14 if the offense involves a counterfeit drug.
    Option 2 revises the specific offense characteristic currently at 
Sec.  2B5.3(b)(5), which provides an enhancement of 2 levels, and a 
minimum offense level of level 14, 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. As revised, this specific offense characteristic 
would have three tiers and an instruction to apply the greatest. The 
first tier would provide an enhancement of 2 levels, and a minimum 
offense level of 12, if the offense involved a counterfeit drug. The 
second tier would provide an enhancement of 2 levels, and a minimum 
offense level of 14, if the offense involved possession of a dangerous 
weapon in connection with the offense. The third tier would provide an 
enhancement of 4 levels, and a minimum offense level of 14, if the 
offense involved the conscious or reckless risk of death or serious 
bodily injury.
    Options 1 and 2 each would also amend the Commentary to Sec.  2B5.3 
to indicate that a departure may be warranted it the offense resulted 
in death or serious bodily injury.
    Option 3 takes a different approach than the first two options. It 
references offenses under section 2320(a)(4) to Sec.  2N1.1 (Tampering 
or Attempting to Tamper Involving Risk of Death or Bodily Injury).
C. 21 U.S.C. 333 and Offenses Involving Intentionally Adulterated Drugs
    In general, section 333(b) involves prescription drug marketing 
violations under the Federal Food, Drug, and Cosmetic Act and provides 
a statutory maximum term of imprisonment of 10 years. Offenses under 
section 333(b) are referenced in Appendix A (Statutory Index) to Sec.  
2N2.1 (Violations of Statutes

[[Page 4203]]

and Regulations Dealing With Any Food, Drug, Biological Product, 
Device, Cosmetic, Agricultural Product, or Consumer Product).
    Section 716 of the Food and Drug Administration Safety and 
Innovation Act, Public Law 112-144 (July 9, 2012), amended 21 U.S.C. 
333 to add a new penalty provision at subsection (b)(7). Subsection 
(b)(7) applies to any person who knowingly and intentionally 
adulterates a drug such that the drug is adulterated under certain 
provisions of 21 U.S.C. 351 and has a reasonable probability of causing 
serious adverse health consequences or death to humans or animals. It 
provides a statutory maximum term of imprisonment of 20 years.
    Part C of the proposed amendment presents two options for 
addressing the offense under section 333(b)(7). Option 1 establishes a 
new alternative base offense level of level 14 in Sec.  2N2.1 for cases 
in which the defendant is convicted under section 333(b)(7). Option 2 
amends Appendix A (Statutory Index) to reference offenses under section 
333(b)(7) to Sec.  2N1.1 (Tampering or Attempting to Tamper Involving 
Risk of Death or Bodily Injury).
Issues for Comment
    Finally, the proposed amendment provides a series of issues for 
comment on offenses involving counterfeit military goods and services 
under section 2320, counterfeit drugs under section 2320, and 
intentionally adulterated drugs under section 333(b)(7).

Proposed Amendment

(A) Offenses Under Section 2320 Involving Counterfeit Military Goods 
and Services
    Option 1:
    Section 2B5.3(b) is amended by redesignating paragraph (5) as (6) 
and inserting after paragraph (4) the following:
    ``(5) If the offense involved a counterfeit military good or 
service the use, malfunction, or failure of which is likely to cause 
serious bodily injury or death, the disclosure of classified 
information, impairment of combat operations, or other significant harm 
to a combat operation, a member of the Armed Forces, or to national 
security, increase by [2][4] levels. If the resulting offense level is 
less than level 14, increase to level 14.''.
    The Commentary to Sec.  2B1.1 captioned ``Application Notes'' is 
amended in Note 1 by inserting after the paragraph beginning `` 
`Commercial advantage'' the following:
    `` `Counterfeit military good or service' has the meaning given 
that term in 18 U.S.C. 2320(f)(4).''.
    Option 2:
    Section 2B5.3(b) is amended by redesignating paragraph (5) as (6) 
and inserting after paragraph (4) the following:
    ``(5) If the offense involved a counterfeit military good or 
service, increase by [2][4] levels. If the resulting offense level is 
less than level 14, increase to level 14.''.
    The Commentary to Sec.  2B1.1 captioned ``Application Notes'' is 
amended in Note 1 by inserting after the paragraph beginning 
``Commercial advantage'' the following:
    `` `Counterfeit military good or service' has the meaning given 
that term in 18 U.S.C. 2320(f)(4).''.
    Option 3:
    Section 2B5.3(b) is amended by redesignating paragraph (5) as (6) 
and inserting after paragraph (4) the following:
    ``(5) If [the defendant knew] the offense involved a good or 
service used to maintain or operate a critical infrastructure; or used 
by or for a government entity in furtherance of the administration of 
justice, national defense, or national security, increase by [2][4] 
levels. If the resulting offense level is less than level 14, increase 
to level 14.''.
    The Commentary to Sec.  2B1.1 captioned ``Application Notes'' is 
amended by redesignating Notes 3 and 4 as 4 and 5, respectively; and by 
inserting after Note 2 the following:
    ``3. Application of Subsection (b)(5).--
    (A) Definitions.--In subsection (b)(5):
    `Critical infrastructure' means systems and assets vital to 
national defense, national security, economic security, public health 
or safety, or any combination of those matters. A critical 
infrastructure may be publicly or privately owned. Examples of critical 
infrastructures include gas and oil production, storage, and delivery 
systems, water supply systems, telecommunications networks, electrical 
power delivery systems, financing and banking systems, emergency 
services (including medical, police, fire, and rescue services), 
transportation systems and services (including highways, mass transit, 
airlines, and airports), and government operations that provide 
essential services to the public.
    `Government entity' has the meaning given that term in 18 U.S.C. 
1030(e)(9).
    (B) Application.--Subsection (b)(5) applies to offenses in which 
the good or service was important in furthering the administration of 
justice, national defense, national security, economic security, or 
public health or safety. The enhancement ordinarily would apply, for 
example, in a case in which the defendant sold counterfeit 
semiconductors for use in a military system. But it ordinarily would 
not apply in a case in which the defendant sold counterfeit toner 
cartridges for use in printers at military headquarters.''.
    Option 4:
    Appendix A (Statutory Index) is amended by striking the line 
referenced to 18 U.S.C. 2320 and inserting the following:
    ``18 U.S.C. 2320(a)(1),(2) 2B5.3
    18 U.S.C. 2320(a)(3) [2M2.1,] 2M2.3''.
(B) Offenses Under Section 2320 Involving Counterfeit Drugs
    Option 1:
    Section 2B5.3(b) is amended by redesignating paragraph (5) as (6) 
and inserting after paragraph (4) the following:
    ``(5) If the offense involved a counterfeit drug, increase by 
[2][4] levels. If the resulting offense level is less than level 14, 
increase to level 14.''.
    The Commentary to Sec.  2B5.3 captioned ``Application Notes'' is 
amended in Note 1 by inserting after the paragraph beginning `` 
'Commercial advantage'' the following:
    `` `Counterfeit drug' has the meaning given that term in 18 U.S.C. 
2320(f)(6).''; and in Note 4 by adding at the end the following:
    ``(D) The offense resulted in death or serious bodily injury.''.
    Option 2:
    Section 2B5.3(b) is amended by amending paragraph (5) to read as 
follows:
    ``(5) (Apply the Greatest):
    (A) If the offense involved a counterfeit drug, increase by 2 
levels. If the resulting offense level is less than level 12, increase 
to level 12.
    (B) If the offense involved 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.
    (C) If the offense involved the conscious or reckless risk of death 
or serious bodily injury, increase by 4 levels. If the resulting 
offense level is less than level 14, increase to level 14.''.
    The Commentary to Sec.  2B1.1 captioned ``Application Notes'' is 
amended in Note 1 by inserting after the paragraph beginning `` 
'Commercial advantage'' the following:
    `` 'Counterfeit drug' has the meaning given that term in 18 U.S.C. 
2320(f)(6).''; and in Note 4 by adding at the end the following:
    ``(D) The offense resulted in death or serious bodily injury.''.

[[Page 4204]]

    Option 3:
    Appendix A (Statutory Index) is amended by striking the line 
referenced to 18 U.S.C. 2320 and inserting the following:
    ``18 U.S.C. 2320(a)(1),(2) 2B5.3
    18 U.S.C. 2320(a)(4) 2N1.1''.
(C) Offenses Under Section 333(b)(7) Involving Intentionally 
Adulterated Drugs
    Section 2N2.1 is amended by amending subsection (a) to read as 
follows:
    ``(a) Base Offense Level: (Apply the Greater)
    (1) 14, if the defendant was convicted under 21 U.S.C. 333(b)(7); 
or
    (2) 6, otherwise.''; and

in subsection (c)(1) by inserting ``[, if the resulting offense level 
is greater than that determined above]'' before the period at the end.

    Option 2:
    Appendix A (Statutory Index) is amended by striking the line 
referenced to 21 U.S.C. 333(b) and inserting the following:
    ``21 U.S.C. 333(b)(1)B(6) 2N2.1
    21 U.S.C. 333(b)(7) 2N1.1''.
Issues for Comment
1. Offenses Under 18 U.S.C. 2320 Involving Counterfeit Military Goods 
and Services
    Options 1, 2, and 3 of the proposed amendment would provide a new 
specific offense characteristic in Sec.  2B5.3 for offenses involving 
counterfeit military goods and services. If the Commission were to 
adopt Option 1, 2, or 3, how should this new specific offense 
characteristic interact with other specific offense characteristics in 
Sec.  2B5.3? In particular, how should it interact with the specific 
offense characteristic currently at Sec.  2B5.3(b)(5), which provides a 
2-level enhancement and a minimum offense level 14 if the offense 
involved a risk of death or serious bodily injury or possession of a 
dangerous weapon? Should the new specific offense characteristic be 
fully cumulative with the current one, or should they be less than 
fully cumulative in cases where both apply?
    Option 2 of the proposed amendment would apply to any case in which 
the offense involved a counterfeit military good or service. Is the 
scope of this option overly broad? Are there types of cases involving a 
counterfeit military good or service that should not be covered by 
Option 2? If so, what types of cases? For example, should the 
Commission provide an application note for Option 2 similar to the 
proposed application note 3(B) contained in Option 3, requiring that 
the counterfeit military good or service be important in furthering 
national security?
    Option 3 of the proposed amendment would apply to any case in which 
the offense involved a good or service used to maintain or operate a 
critical infrastructure, or used by or for a government entity in 
furtherance of the administration of justice, national defense, or 
national security. The language used in this option parallels the 
language regarding critical infrastructure in Sec.  2B1.1 (Theft, 
Property Destruction, and Fraud). In this new context, is the scope of 
this language overly broad? Are there types of cases that should not be 
covered by Option 3? If so, what types of cases?
    Option 4 of the proposed amendment would reference offenses under 
section 2320 that involve counterfeit military goods or services (e.g., 
offenses described in section 2320(a)(3)) to [Sec.  2M2.1 (Destruction 
of, or Production of Defective, War Material, Premises, or Utilities) 
and] Sec.  2M2.3 (Destruction of, or Production of Defective, National 
Defense Material, Premises, or Utilities). If the Commission were to 
adopt Option 4, what changes, if any, should the Commission make to 
those guidelines to better account for such offenses?
2. Offenses Under 18 U.S.C. 2320 Involving Counterfeit Drugs (and 
Response to Directive)
    Option 1 of the proposed amendment would provide a new specific 
offense characteristic in Sec.  2B5.3 for offenses involving 
counterfeit drugs. If the Commission were to adopt Option 1, how should 
this new specific offense characteristic interact with other specific 
offense characteristics in Sec.  2B5.3? In particular, how should it 
interact with the specific offense characteristic currently at Sec.  
2B5.3(b)(5), which provides a 2-level enhancement and a minimum offense 
level 14 if the offense involved a risk of death or serious bodily 
injury or possession of a dangerous weapon? Should the new specific 
offense characteristic be fully cumulative with the current one, or 
should they be less than fully cumulative in cases where both apply?
    Option 3 of the proposed amendment would reference offenses under 
section 2320 that involve counterfeit drugs (e.g., offenses described 
in section 2320(a)(4)) to Sec.  2N1.1 (Tampering or Attempting to 
Tamper Involving Risk of Death or Serious Bodily Injury). If the 
Commission were to adopt Option 3, what changes, if any, should the 
Commission make to that guideline to better account for such offenses?
    In addition, to assist the Commission in determining how best to 
respond to the directive, the Commission seeks comment on offenses 
under section 2320 involving counterfeit drugs. What actual and 
potential harms to the public do such offenses pose? What aggravating 
and mitigating circumstances may be involved in such offenses that are 
not already adequately addressed in the guidelines? For example, if 
death or serious bodily injury resulted from the offense, should that 
circumstance be addressed by a departure provision, by a specific 
offense characteristic, by a cross-reference to another guideline 
(e.g., a homicide guideline), or in some other manner?
    Does the new specific offense characteristic in Option 1, or the 
revised specific offense characteristic in Option 2, adequately respond 
to the directive? If not, what changes, if any, should the Commission 
make to Sec.  2B5.3 to better account for offenses under section 
2320(a)(4) and the factors identified in the directive?
    In the alternative, does Option 3 of the proposed amendment--
referencing offenses involving counterfeit drugs to Sec.  2N1.1--
adequately respond to the directive? If not, what changes, if any, 
should the Commission make to Sec.  2N1.1 to better account for 
offenses under section 2320(a)(4) and the factors identified in the 
directive?
3. Offenses Under 21 U.S.C. 333(b)(7) Involving Intentionally 
Adulterated Drugs
    Option 2 of the proposed amendment amends Appendix A (Statutory 
Index) to reference offenses under section 333(b)(7) to Sec.  2N1.1 
(Tampering or Attempting to Tamper Involving Risk of Death or Bodily 
Injury). Section 2N1.1 provides a base offense level of 25 and an 
enhancement of 2 to 4 levels if the victim sustained serious bodily 
injury, depending on whether the injury was permanent or life-
threatening. Section 2N1.1 also contains cross-references to other 
guidelines and a special instruction for certain cases involving more 
than one victim.
    If the Commission were to reference offenses under section 
333(b)(7) to Sec.  2N1.1, as the proposed amendment provides, what 
changes, if any, should the Commission make to Sec.  2N1.1 to better 
account for offenses under section 333(b)(7)?
    Option 1 of the proposed amendment contemplates that offenses under 
section 333(b)(7) would be referenced to Sec.  2N2.1. Section 2N2.1 
provides a base offense level 6 and an enhancement for repeat offenders 
under 21 U.S.C. 331. It also provides a cross reference to

[[Page 4205]]

Sec.  2B1.1 (Theft, Property Destruction, and Fraud) if the offense 
involved fraud and a cross reference to any other offense guideline if 
the offense was committed in furtherance of, or to conceal, an offense 
covered by that other offense guideline. If offenses under section 
333(b)(7) are to be sentenced under Sec.  2N2.1, what changes, if any, 
should the Commission make to Sec.  2N2.1? For example, should the 
Commission adopt Option 1, which would provide an alternative base 
offense level of 14 if the defendant was convicted under section 
333(b)(7)? Should the Commission provide a different alternative base 
offense level instead? Or should the Commission provide additional 
specific offense characteristics, additional cross references, or a 
combination of such provisions to better account for offenses under 
section 333(b)(7)? If so, what provisions should the Commission 
provide?
    Finally, the Commission seeks comment comparing and contrasting 
offenses involving intentionally adulterated drugs under section 
333(b)(7) and offenses involving counterfeit drugs under section 
2320(a)(4). How do these offenses compare to each other in terms of the 
conduct involved in the offense, the culpability of the offenders, the 
actual and potential harms posed by the offense, and other factors 
relevant to sentencing? Which offenses should be treated more seriously 
by the guidelines and which should be treated less seriously?

4. Tax Deductions

Synopsis of Proposed Amendment

    This proposed amendment addresses a circuit conflict over whether a 
sentencing court, in calculating the tax loss in a tax case, may 
subtract the unclaimed deductions that the defendant legitimately could 
have claimed if he or she had filed an accurate tax return.
    Circuits have disagreed over whether the tax loss in such a case 
may be reduced by the defendant's legitimate but unclaimed deductions. 
Specifically, the issue is whether a defendant is allowed to present 
evidence of unclaimed deductions that would have the effect of reducing 
the tax loss for purposes of the guidelines and thereby reducing the 
ultimate sentence, or whether the defendant is categorically barred 
from offering such evidence.
    The Tenth Circuit recently joined the Second Circuit in holding 
that a sentencing court may give the defendant credit for a legitimate 
but unclaimed deduction. See United States v. Hoskins, 654 F.3d 1086, 
1094 (10th Cir. 2011) (``But where defendant offers convincing proof--
where the court's exercise is neither nebulous nor complex--nothing in 
the Guidelines prohibits a sentencing court from considering evidence 
of unclaimed deductions in analyzing a defendant's estimate of the tax 
loss suffered by the government.''); United States v. Martinez-Rios, 
143 F.3d 662, 671 (2d Cir. 1998) (``the sentencing court need not base 
its tax loss calculation on gross unreported income if it can make a 
more accurate determination of the intended loss and that determination 
of the tax loss involves giving the defendant the benefit of legitimate 
but unclaimed deductions''); United States v. Gordon, 291 F.3d 181, 187 
(2d Cir. 2002) (applying Martinez-Rios, the court held that the 
district erred when it refused to consider potential unclaimed 
deductions in its sentencing analysis). These cases generally reason 
that where a defendant offers convincing proof--where the court's 
exercise is neither nebulous nor complex--nothing in the Guidelines 
prohibits a sentencing court from considering evidence of unclaimed 
deductions in analyzing a defendant's estimate of the tax loss suffered 
by the government. See Hoskins, 654 F.3d at 1094-95.
    Six other circuits--the Fourth, Fifth, Seventh, Eighth, Ninth, and 
Eleventh--have reached the opposite conclusion, finding that a 
defendant may not present evidence of unclaimed deductions to reduce 
the tax loss. See United States v. Delfino, 510 F.3d 468, 473 (4th Cir. 
2007) (``The law simply does not require the district court to engage 
in [speculation as to what deductions would have been allowed], nor 
does it entitle the Delfinos to the benefit of deductions they might 
have claimed now that they stand convicted of tax evasion.''); United 
States v. Phelps, 478 F.3d 680, 682 (5th Cir. 2007) (holding that the 
defendant could not reduce tax loss by taking a social security tax 
deduction that he did not claim on the false return); United States v. 
Chavin, 316 F.3d 666, 679 (7th Cir. 2002) (holding that the definition 
of tax loss ``excludes consideration of unclaimed deductions''); United 
States v. Psihos, 683 F.3d 777, 781-82 (7th Cir. 2012) (following 
Chavin in disallowing consideration of unclaimed deductions); United 
States v. Sherman, 372 F.App'x 668, 676-77 (8th Cir. 2010); United 
States v. Blevins, 542 F.3d 1200, 1203 (8th Cir. 2008) (declining to 
decide ``whether an unclaimed tax benefit may ever offset tax loss,'' 
but finding the district court properly declined to reduce tax loss 
based on taxpayers' unclaimed deductions); United States v. Yip, 592 
F.3d 1035, 1041 (9th Cir. 2010) (``We hold that Sec.  2T1.1 does not 
entitle a defendant to reduce the tax loss charged to him by the amount 
of potentially legitimate, but unclaimed, deductions even if those 
deductions are related to the offense.''); United States v. Clarke, 562 
F.3d 1158, 1164 (11th Cir. 2009) (holding that the defendant was not 
entitled to a tax loss calculation based on a filing status other than 
the one he actually used; ``[t]he district court did not err in 
computing the tax loss based on the fraudulent return Clarke actually 
filed, and not on the tax return Clarke could have filed but did 
not.'').
    The proposed amendment presents three options for resolving the 
conflict. They would amend the Commentary to Sec.  2T1.1 (Tax Evasion; 
Willful Failure to File Return, Supply Information, or Pay Tax; 
Fraudulent or False Returns, Statements, or Other Documents), as 
follows:
    Option 1 provides that the determination of the tax loss shall 
account for any credit, deduction, or exemption to which the defendant 
was entitled, whether or not the defendant claimed the deduction at the 
time the tax offense was committed.
    Option 2 provides that the determination of the tax loss shall not 
account for any credit, deduction, or exemption, unless the defendant 
was entitled to the credit, deduction, or exemption and claimed the 
credit, deduction, or exemption at the time the tax offense was 
committed.
    Option 3 provides that the determination of the tax loss shall not 
account for any unclaimed credit, deduction, or exemption, unless the 
defendant demonstrates by contemporaneous documentation that the 
defendant was entitled to the credit, deduction, or exemption.
    Issues for comment are also included.

Proposed Amendment

    The Commentary to Sec.  2T1.1 captioned ``Application Notes'' is 
amended by redesignating Notes 3 through 7 as 4 through 8, 
respectively, and by inserting after Note 2 the following:
    Option 1:
    ``3. Credits, Deductions, and Exemptions.--The determination of the 
tax loss shall account for any credit, deduction, or exemption to which 
the defendant was entitled, whether or not the defendant claimed the 
deduction at the time the tax offense was committed.''.
    Option 2:

[[Page 4206]]

    ``3. Credits, Deductions, and Exemptions.--The determination of the 
tax loss shall not account for any credit, deduction, or exemption, 
unless the defendant was entitled to the credit, deduction, or 
exemption and claimed the credit, deduction, or exemption at the time 
the tax offense was committed.''.
    Option 3:
    ``3. Credits, Deductions, and Exemptions.--The determination of the 
tax loss shall not account for any unclaimed credit, deduction, or 
exemption, unless the defendant demonstrates by contemporaneous 
documentation that the defendant was entitled to the credit, deduction, 
or exemption.''.
Issues for Comment
    1. If the Commission were to adopt Option 1 or 3, what 
requirements, if any, should be met before an unclaimed deduction is 
counted, other than the requirement that the unclaimed deduction be 
legitimate? In particular:
    (A) Should a legitimate but unclaimed deduction be counted only if 
the defendant establishes that the deduction would have been claimed if 
an accurate return had been filed? If so, should this determination be 
a subjective one (e.g., this particular defendant would have claimed 
the deduction) or an objective one (e.g., a reasonable taxpayer in the 
defendant's position would have claimed the deduction)?
    (B) Should a legitimate but unclaimed deduction be counted only if 
it is related to the offense? See United States v. Hoskins, 654 F.3d 
1086, 1095 n.9 (10th Cir. 2011) (``We must emphasize, however, that 
Sec.  2T1.1 does not permit a defendant to benefit from deductions 
unrelated to the offense at issue.''); see also United States v. Yip, 
592 F.3d 1035, 1040 (9th Cir. 2010) (``[D]eductions are not permissible 
if they are unintentionally created or are unrelated to the tax 
violation, because such deductions are not part of the `object of the 
offense' or intended loss.'').
    (C) Are there differences among the various types of tax offenses 
that would make it appropriate to have different rules on the use of 
unclaimed deductions? If so, what types of tax offenses warrant 
different rules, and what should those different rules be? 
Additionally, are there certain cases in which the legitimacy of the 
deductions, credits, or exemptions and the likelihood that the 
defendant would have claimed them had an accurate return been filed is 
evident by the nature of the crime? For example, if a restaurant owner 
failed to report some gross receipts and made some payments to 
employees or vendors in cash, but actually keeps two sets of books (one 
accurate and one fraudulent), should the unclaimed deductions reflected 
in the accurate set of books be counted?
    2. The proposed amendment presents options for resolving the 
circuit conflict, each of which is based on whether a defendant's tax 
loss may be reduced by unclaimed ``credits, deductions, or 
exemptions.'' The Commission seeks comment regarding whether this list 
of potential offsets provides sufficient clarity as to what the court 
may or may not consider depending on which option is chosen. In 
particular, should the Commission expand the language to clarify that 
the list includes any type of deduction? See, e.g., United States v. 
Psihos, 683 F.3d 777, 781-82 (7th Cir. 2012) (noting a dispute between 
the parties regarding whether the unclaimed cash payments at issue were 
to be used in computing adjusted gross income (an ``above-the-line'' 
deduction) or to be used in computing taxable income (a ``below-the-
line'' deduction)).

5. Acceptance of Responsibility

Synopsis of Proposed Amendment

    This proposed amendment and issue for comment address two circuit 
conflicts involving the guideline for acceptance of responsibility, 
Sec.  3E1.1 (Acceptance of Responsibility). A defendant who clearly 
demonstrates acceptance of responsibility receives a 2-level reduction 
under subsection (a) of Sec.  3E1.1. The two circuit conflicts both 
involve the circumstances under which the defendant is eligible for a 
third level of reduction under subsection (b) of Sec.  3E1.1. 
Subsection (b) provides:
    (b) If the defendant qualifies for a decrease under subsection (a), 
the offense level determined prior to the operation of subsection (a) 
is level 16 or greater, and upon motion of the government stating that 
the defendant has assisted authorities in the investigation or 
prosecution of his own misconduct by timely notifying authorities of 
his intention to enter a plea of guilty, thereby permitting the 
government to avoid preparing for trial and permitting the government 
and the court to allocate their resources efficiently, decrease the 
offense level by 1 additional level.
    This is the language of the guideline after it was directly amended 
by Congress in section 401(g) of the PROTECT Act, Public Law 108-21, 
effective April 30, 2003. The PROTECT Act also directly amended 
Application Note 6 (including adding the last paragraph of that 
application note), and the Background Commentary. Section 401(j)(4) of 
the PROTECT Act states, ``At no time may the Commission promulgate any 
amendment that would alter or repeal the amendments made by subsection 
(g) of this section.''
Whether the Court Has Discretion To Deny the Third Level of Reduction
    Circuits have disagreed over whether the court has discretion to 
deny the third level of reduction for acceptance of responsibility when 
the government has filed a motion under subsection (b) and the 
defendant is otherwise eligible.
    The Seventh Circuit recently held that if the government makes the 
motion (and the other two requirements of subsection (b) are met, i.e., 
the defendant qualifies for the 2-level decrease and the offense level 
is level 16 or greater), the third level of reduction must be awarded. 
See United States v. Mount, 675 F.3d 1052 (7th Cir. 2012).
    The Fifth Circuit has held to the contrary, that the decision 
whether to grant the third level of reduction ``is the district 
court's--not the government's--even though the court may only do so on 
the government's motion.'' See United States v. Williamson, 598 F.3d 
227, 230 (5th Cir. 2010).
    The proposed amendment adopts the approach of the Fifth Circuit by 
recognizing that the court has discretion to deny the third level of 
reduction. Specifically, it amends Application Note 6 to Sec.  3E1.1 by 
adding a statement that ``The court may grant the motion if the court 
determines that the defendant has assisted authorities in the 
investigation or prosecution of his own misconduct by timely notifying 
authorities of his intention to enter a plea of guilty, thereby 
permitting the government to avoid preparing for trial and permitting 
the government and the court to allocate their resources efficiently. 
In such a case, the 1-level decrease under subsection (b) applies.''
    An issue for comment is also provided on whether the Commission 
should instead resolve this issue in a different manner.
Whether the Government Has Discretion To Withhold Making a Motion
    Circuits have also disagreed over whether the government has 
discretion to withhold making a motion under subsection (b) when there 
is no evidence that the government was required to prepare for trial. 
An issue for comment is also provided on whether the Commission should 
resolve this circuit conflict and, if so, how it should do so.

[[Page 4207]]

Proposed Amendment

    The Commentary to Sec.  3E1.1 captioned ``Application Notes'' is 
amended in Note 6, in the paragraph beginning ``Because the 
Government'', by adding at the end the following: ``The court may grant 
the motion if the court determines that the defendant has assisted 
authorities in the investigation or prosecution of his own misconduct 
by timely notifying authorities of his intention to enter a plea of 
guilty, thereby permitting the government to avoid preparing for trial 
and permitting the government and the court to allocate their resources 
efficiently. In such a case, the 1-level decrease under subsection (b) 
applies.''.
    The Commentary to Sec.  3E1.1 captioned ``Background'' is amended 
in the paragraph beginning ``Section 401(g)'' by inserting ``first 
sentence of the'' before ``last paragraph''.

Issues for Comment

1. Whether the Court Has Discretion To Deny the Third Level of 
Reduction
    The Commission seeks comment on whether it should resolve this 
circuit conflict in a manner other than that provided in the proposed 
amendment. If so, how should the conflict be resolved and how should 
the Commission amend the guidelines to do so?
2. Whether the Government Has Discretion To Withhold Making a Motion
    Circuits have also disagreed over whether the government has 
discretion to withhold making a motion under subsection (b) when there 
is no evidence that the government was required to prepare for trial.
    The Second and Fourth Circuits have held that the government may 
withhold the motion only if it determines that it has been required to 
prepare for trial. See United States v. Lee, 653 F.3d 170, 173-174 (2d 
Cir. 2011) (government withheld the motion because it was required to 
prepare for a Fatico hearing; court held this was ``an unlawful 
reason''); United States v. Divens, 650 F.3d 343, 346 (4th Cir. 2011) 
(government withheld the motion because the defendant failed to sign an 
appellate waiver; court held the defendant was ``entitled'' to the 
motion and the reduction).
    The majority of circuits, in contrast, have held that Sec.  3E1.1 
recognizes that the government has an interest both in being permitted 
to avoid preparing for trial and in being permitted to allocate its 
resources efficiently, see Sec.  3E1.1(b), and that both are legitimate 
government interests that justify the withholding of the motion. See, 
e.g., United States v. Collins, 683 F.3d 697, 704-708 (6th Cir. 2012) 
(government withheld the motion because it was required to litigate 
pretrial motion to suppress evidence; court held the government did not 
abuse its discretion); United States v. Newson, 515 F.3d 374 (5th Cir. 
2008) (government withheld the motion because the defendant refused to 
waive right to appeal; court held the government did not abuse its 
discretion); United States v. Johnson, 581 F.3d 994 (9th Cir. 2009) 
(same).
    The Commission seeks comment on whether it should resolve this 
circuit conflict and, if so, how it should do so.
8. Setser

Synopsis of Proposed Amendment

    A federal court imposing a sentence on a defendant generally has 
discretion to order that the sentence run consecutive to (or, in the 
alternative, concurrently with) a term of imprisonment previously 
imposed but not yet discharged. See 18 U.S.C. 3584(a); USSG Sec.  
5G1.3, comment. (backg'd.). Recently, the Supreme Court held that a 
federal court also generally has discretion to order that the sentence 
run consecutive to (or concurrently with) an anticipated, but not yet 
imposed, term of imprisonment. See Setser v. United States, ---- U.S. 
---- (March 28, 2012).
    For cases in which there is a term of imprisonment previously 
imposed but not yet discharged, Sec.  5G1.3 (Imposition of a Sentence 
on a Defendant Subject to an Undischarged Term of Imprisonment) 
provides guidance to the court in determining whether the sentence for 
the instant offense should run consecutive to (or, in the alternative, 
concurrently with) the undischarged term of imprisonment. This proposed 
amendment responds to Setser by ensuring that Sec.  5G1.3 also applies 
to cases covered by Setser, i.e., cases in which there is an 
anticipated, but not yet imposed, term of imprisonment. The proposed 
amendment revises Sec.  5G1.3 in two ways.
    First, when the offense with the undischarged term of imprisonment 
is relevant conduct to the instant offense and resulted in an increase 
in the Chapter Two or Three offense level for the instant offense, the 
instant offense already includes an incremental punishment to account 
for the prior offense. Accordingly, subsection (b) of Sec.  5G1.3 
provides that the court generally should order the sentence for the 
instant offense to run concurrently with the undischarged term of 
imprisonment. The proposed amendment ensures that subsection (b) also 
applies to a case in which there is an anticipated, but not yet 
imposed, term of imprisonment for an offense that is relevant conduct 
to the instant offense and resulted in an increase in the Chapter Two 
or Three offense level for the instant offense.
    Second, when the offense with the undischarged term of imprisonment 
is not covered by subsection (b), the sentence for the instant offense 
may be imposed to run concurrently, partially concurrently, or 
consecutively to the prior undischarged term of imprisonment to achieve 
a reasonable punishment for the instant offense. See Sec.  5G1.3(c) 
(Policy Statement). The proposed amendment ensures that subsection (c) 
also applies to any other case in which there is an anticipated, but 
not yet imposed, term of imprisonment.
    Conforming changes to the relevant application notes, to the 
background commentary, and to the heading of the guideline are also 
made.

Proposed Amendment

    Section 5G1.3 is amended in the heading by inserting after 
``Undischarged'' the following: ``or Anticipated''; in subsection (b) 
by inserting after ``resulted'' the following: ``or is anticipated to 
result''; in subsection (b)(2) by inserting after ``to the remainder of 
the undischarged term of imprisonment'' the following: ``or to the 
anticipated term of imprisonment, as applicable''; and in subsection 
(c) by inserting after ``an undischarged term of imprisonment'' the 
following: ``or an anticipated term of imprisonment''; and by striking 
``prior undischarged term of imprisonment'' and inserting 
``undischarged term of imprisonment or to the anticipated term of 
imprisonment, as applicable,''.
    The Commentary to section 5G1.3 captioned ``Application Notes'' is 
amended in Note 3(A) by inserting after ``undischarged term of 
imprisonment'' the following: ``or to the anticipated but not yet 
imposed term of imprisonment, as applicable''; in Note 3(A)(ii) by 
striking ``prior undischarged'' and inserting ``undischarged or 
anticipated''; in Note 3(A)(iv) by striking ``prior'' and by inserting 
after ``imposed'' the following: ``, or the fact that the anticipated 
sentence may be imposed,''; in Note 3(B) by striking ``prior'' and in 
the last sentence by inserting after ``undischarged'' both places it 
appears the following: ``or anticipated''; in Note 3(C) by inserting 
after ``Undischarged'' the following: ``or Anticipated''; by striking 
``has had''; by inserting ``has been or is anticipated to be'' before 
``revoked''; and by inserting ``that has

[[Page 4208]]

been, or that is anticipated to be,'' before ``imposed for the 
revocation''; and in Note 3(D) by inserting after ``undischarged'' the 
following: ``or anticipated.''
    The Commentary to section 5G1.3 captioned ``Background'' is amended 
by striking ``In a case in which'' and all that follows through 
``Exercise of that authority,'' and inserting the following: ``Federal 
courts generally `have discretion to select whether the sentences they 
impose will run concurrently or consecutively with respect to other 
sentences that they impose, or that have been imposed in other 
proceedings, including state proceedings.' See Setser v. United States, 
132 S.Ct. 1463, 1468 (2012); 18 U.S.C. 3584(a). Federal courts also 
generally have discretion to order that the sentences they impose will 
run concurrently or consecutively with other sentences that are 
anticipated but not yet imposed. See Setser, 132 S.Ct. at 1468. 
Exercise of that discretion,''.

7. Miscellaneous and Technical

Synopsis of Proposed Amendment

    This proposed amendment responds to recently enacted legislation 
and miscellaneous and technical guideline issues.
A. Recently Enacted Legislation
    Part A amends Appendix A (Statutory Index) to provide guideline 
references for four offenses not currently referenced in Appendix A 
that were established or revised by recently enacted legislation. They 
are as follows:
    1. 18 U.S.C. 39A. Section 311 of the Federal Aviation 
Administration Modernization and Reform Act of 2012, Public Law 112-95 
(February 14, 2012), established a new criminal offense at 18 U.S.C. 
39A (Aiming a laser pointer at an aircraft). The offense applies to 
whoever knowingly aims the beam of a laser pointer at an aircraft in 
the special aircraft jurisdiction of the United States or at the flight 
path of such an aircraft. The statutory maximum term of imprisonment is 
five years.
    The proposed amendment amends Appendix A (Statutory Index) to 
reference section 39A offenses to Sec.  2A5.2 (Interference with Flight 
Crew or Flight Attendant).
    2. 18 U.S.C. 1514(c). Section 3(a) of the Child Protection Act of 
2012, Public Law 112-206 (December 7, 2012), established a new offense 
at 18 U.S.C. 1514(c) that makes it a criminal offense to knowingly and 
intentionally violate or attempt to violate an order issued under 
section 1514 (Civil action to restrain harassment of a victim or 
witness). The new offense has a statutory maximum term of imprisonment 
of five years.
    The proposed amendment amends Appendix A (Statutory Index) to 
reference the new offense at section 1514(c) to Sec.  2J1.2 
(Obstruction of Justice).
    3. 18 U.S.C. 1752. The Federal Restricted Buildings and Grounds 
Improvement Act of 2011, Public Law 112-98 (March 8, 2012), amended the 
criminal offense at 18 U.S.C. 1752 (Restricted building or grounds). As 
so amended, the statute defines ``restricted buildings or grounds'' to 
mean any restricted area (A) of the White House or its grounds, or the 
Vice President's residence or its grounds; (B) of a building or grounds 
where the President or other person protected by the United States 
Secret Service is or will be temporarily visiting; or (C) of a building 
or grounds restricted in conjunction with an event designated as a 
special event of national significance. The statute makes it a crime to 
enter or remain; to impede or disrupt the orderly conduct of business 
or official functions; to obstruct or impede ingress or egress; or to 
engage in any physical violence against any person or property. The Act 
did not change the statutory maximum term of imprisonment, which is ten 
years if the person used or carried a deadly or dangerous weapon or 
firearm or if the offense results in significant bodily injury, and one 
year in any other case.
    The proposed amendment amends Appendix A (Statutory Index) to 
reference section 1752 offenses to Sec.  2A2.4 (Obstructing or Impeding 
Officers) and Sec.  2B2.3 (Trespass).
    4. 19 U.S.C. 1590. The Ultralight Aircraft Smuggling Prevention Act 
of 2012, Public Law 112-93 (February 10, 2012), amended the criminal 
offense at 19 U.S.C. 1590 (Aviation smuggling) to provide a more 
specific definition of the term ``aircraft'' (i.e., to include 
ultralight aircraft) and to cover attempts and conspiracies. Section 
1590 makes it unlawful for the pilot of an aircraft to transport, or 
for any individual on board any aircraft to possess, merchandise 
knowing that the merchandise will be introduced into the United States 
contrary to law. It is also unlawful for a person to transfer 
merchandise between an aircraft and a vessel on the high seas or in the 
customs waters of the United States unlawfully. The Act did not change 
the statutory maximum terms of imprisonment, which are 20 years if any 
of the merchandise involved was a controlled substance, see Sec.  
1590(c)(2), and five years otherwise, see Sec.  1590(c)(1).
    The proposed amendment amends Appendix A (Statutory Index) to 
reference section 1590 offenses to Sec.  2D1.1 (Unlawful Manufacturing, 
Importing, Exporting, or Trafficking (Including Possession with Intent 
to Commit These Offenses); Attempt or Conspiracy) and Sec.  2T3.1 
(Evading Import Duties or Restrictions (Smuggling); Receiving or 
Trafficking in Smuggled Property).
    The proposed amendment also includes an issue for comment on the 
offenses described above.
B. Interaction Between Offense Guidelines in Chapter Two, Part J and 
Certain Adjustments in Chapter Three, Part C
    Part B responds to an application issue that arises in cases in 
which the defendant is sentenced under an offense guideline in Chapter 
Two, Part J (Offenses Involving the Administration of Justice) and the 
defendant may also be subject to an adjustment under Chapter Three, 
Part C (Obstruction and Related Adjustments).
    In the Commentary to four of the Chapter Two, Part J offense 
guidelines, there is an application note stating that Chapter Three, 
Part C, does not apply, unless the defendant obstructed the 
investigation or trial of the instant offense. See Sec. Sec.  2J1.2, 
comment. (n.2(A)); 2J1.3, comment. (n.2); Sec.  Sec.  2J1.6, comment. 
(n.2); 2J1.9, comment. (n.1). These application notes in Chapter Two, 
Part J, originated when Chapter Three, Part C, contained only one 
guideline--Sec.  3C1.1 (Obstructing or Impeding the Administration of 
Justice).
    Chapter Three, Part C, now contains three additional guidelines, 
and these application notes in Chapter Two, Part J, appear to encompass 
these three additional guidelines as well and generally prohibit the 
court from applying them. See, e.g., United States v. Duong, 665 F.3d 
364 (1st Cir. January 6, 2012) (``Thus, according to the literal terms 
of Application Note 2, `Chapter 3, Part C'--presumably including 
section 3C1.3 C--`does not apply.' ''). The First Circuit in Duong, 
however, determined that the application note in Sec.  2J1.6 was in 
conflict with Sec.  3C1.3 (Commission of Offense While on Release) and 
its underlying statute, 18 U.S.C. 3147, and indicated that the 
Commission's stated purpose in establishing Sec.  3C1.3 ``was not to 
bring that guideline within the purview of Application Note 2 of 
section 2J1.6''. Id. at 368. Accordingly, the First Circuit held that 
the application note must be disregarded. Id.
    Consistent with Duong, the proposed amendment clarifies the scope 
of

[[Page 4209]]

Application Note 2 by striking the general reference to Chapter Three, 
Part C, and replacing it with a specific reference to Sec.  3C1.1. It 
makes the same change to the corresponding application notes in 
Sec. Sec.  2J1.2, 2J1.3, and 2J1.9, and conforming changes to other 
parts of the Commentary in those guidelines.
C. Appendix A (Statutory Index) References for Offenses Under 18 U.S.C. 
554
    Section 554 of title 18, United States Code (Smuggling goods from 
the United States), makes it unlawful to export or send from the United 
States (or attempt to do so) any merchandise, article, or object 
contrary to any law or regulation of the United States. It also makes 
it unlawful to receive, conceal, buy, sell, or in any manner facilitate 
the transportation, concealment, or sale of such merchandise, article, 
or object, prior to exportation, knowing the same to be intended for 
exportation contrary to any law or regulation of the United States. 
Offenses under section 554 have a statutory maximum term of 
imprisonment of ten years, and they are referenced in Appendix A 
(Statutory Index) to three guidelines: Sec.  Sec.  2B1.5 (Theft of, 
Damage to, or Destruction of, Cultural Heritage Resources or 
Paleontological Resources; Unlawful Sale, Purchase, Exchange, 
Transportation, or Receipt of Cultural Heritage Resources or 
Paleontological Resources), 2M5.2 (Exportation of Arms, Munitions, or 
Military Equipment or Services Without Required Validated Export 
License), and 2Q2.1 (Offenses Involving Fish, Wildlife, and Plants).
    The Department of Justice in its annual letter to the Commission 
has proposed that section 554 offenses should also be referenced to a 
fourth guideline, Sec.  2M5.1. The Department indicates that section 
554 is used to prosecute a range of export offenses related to national 
security and that some cases would more appropriately be sentenced 
under Sec.  2M5.1 than Sec.  2M5.2. For example, when the section 554 
offense involves a violation of export controls on arms, munitions, or 
military equipment (e.g., export controls under the Arms Export Control 
Act, 22 U.S.C. 2778), the section 554 offense may appropriately be 
sentenced under Sec.  2M5.2, because other offenses involving a 
violation of export controls on arms, munitions, or military equipment 
(such as offenses under 22 U.S.C. 2778) are referenced to Sec.  2M5.2.
    In contrast, when the section 554 offense involves a violation of 
export controls not involving munitions (e.g., violations of economic 
sanctions or other export controls under the International Emergency 
Economic Powers Act, 50 U.S.C. 1705), the Department proposes that the 
section 554 offense be sentenced under Sec.  2M5.1 rather than under 
Sec.  2M5.2, because other offenses involving evasion of export 
controls (such as offenses under 50 U.S.C. 1705) are referenced to 
Sec.  2M5.1 (among other guidelines).
    Part C of the proposed amendment amends Appendix A (Statutory 
Index) to broaden the range of guidelines to which offenses under 18 
U.S.C. 554 are referenced. Specifically, it adds a reference to Sec.  
2M5.1. The proposed amendment also brackets the possibility of adding a 
reference to Sec.  2M5.3 (Providing Material Support or Resources to 
Designated Foreign Terrorist Organizations or Specially Designated 
Global Terrorists, or For a Terrorist Purpose).
D. Technical and Stylistic Changes
    Part D makes certain technical and stylistic changes to the 
Guidelines Manual.
    First, it amends the Commentary to Sec.  2B1.1 (Theft, Property 
Destruction, and Fraud) to provide updated references to the 
definitions contained in 7 U.S.C. 1a, which were renumbered by Public 
Law 111-203 (July 21, 2010).
    Second, it amends the Notes to the Drug Quantity Table in Sec.  
2D1.1 (Unlawful Manufacturing, Importing, Exporting, or Trafficking 
(Including Possession with Intent to Commit These Offenses); Attempt or 
Conspiracy) to provide updated references to the definition of 
tetrahydrocannabinols contained in 21 C.F.R. Sec.  1308.11(d), which 
were renumbered by 75 FR 79296 (December 20, 2010).
    Third, it makes several stylistic revisions in the Guidelines 
Manual to change ``court martial'' to ``court-martial''.

Proposed Amendment

(A) Recently Enacted Legislation
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to 18 U.S.C. 38 the following:
    ``18 U.S.C. 39A 2A5.2'';
    by inserting after the line referenced to 18 U.S.C. 1513 the 
following:
    ``18 U.S.C. 1514(c) 2J1.2'';
    by inserting after the line referenced to 18 U.S.C. 1751(e) the 
following:
    ``18 U.S.C. 1752 2A2.4, 2B2.3''; and
    by inserting after the line referenced to 19 U.S.C. 1586(e) the 
following:
    ``19 U.S.C. 1590 2D1.1, 2T3.1''.
(B) Interaction Between 2J and 3C
    The Commentary to Sec.  2J1.2 captioned ``Application Notes'' is 
amended in Note 2(A) by striking ``Inapplicability of Chapter Three, 
Part C'' and inserting ``Inapplicability of Sec.  3C1.1''; and striking 
``Chapter Three, Part C (Obstruction and Related Adjustments)'' and 
inserting `` Sec.  3C1.1 (Obstructing or Impeding the Administration of 
Justice)''.
    The Commentary to ``2J1.3 captioned ``Application Notes'' is 
amended in Note 2 by striking ``Chapter Three, Part C (Obstruction and 
Related Adjustments)'' and inserting `` Sec.  3C1.1 (Obstructing or 
Impeding the Administration of Justice)''; and in Note 3 by striking 
``Chapter Three, Part C (Obstruction and Related Adjustments)'' and 
inserting ``Sec.  3C1.1''.
    The Commentary to Sec.  2J1.6 captioned ``Application Notes'' is 
amended in Note 2 by striking ``Chapter Three, Part C (Obstruction and 
Related Adjustments)'' and inserting `` Sec.  3C1.1 (Obstructing or 
Impeding the Administration of Justice)''.
    The Commentary to Sec.  2J1.9 captioned ``Application Notes'' is 
amended in Note 1 by striking ``Chapter Three, Part C (Obstruction and 
Related Adjustments) '' and inserting ``Sec.  3C1.1 (Obstructing or 
Impeding the Administration of Justice) ''; and in Note 2 by striking 
``Chapter Three, Part C (Obstruction and Related Adjustments) '' and 
inserting ``Sec.  3C1.1''.
(C) 18 U.S.C. 554
    Appendix A (Statutory Index) is amended by striking the line 
referenced to 18 U.S.C. 554 and inserting the following:
    ``18 U.S.C. 554 2B1.5, 2M5.1, 2M5.2, [2M5.3,] 2Q2.1''.
(D) Technical and Stylistic Changes
    The Commentary to Sec.  2B1.1 captioned ``Application Notes'' is 
amended in Note 14(A) by striking ``1a(5) '' both places it appears and 
inserting ``1a(11) ''; by striking ``1a(6) '' both places it appears 
and inserting ``1a(12) ''; by striking ``1a(26) '' both places it 
appears and inserting ``1a(28)''; by striking ``1a(23) '' both places 
it appears and inserting ``1a(31) ''.
    Section 2D1.1(c) is amended in the Notes to Drug Quantity Table, in 
each of Notes (H) and (I), by striking ``1308.11(d)(30) '' and 
inserting ``1308.11(d)(31) ''.
    The Commentary to Sec.  4A1.1 captioned ``Application Notes'' is 
amended in each of Notes 2 and 3 by striking ``court martial'' and 
inserting ``court-martial''.
    Section 4A1.2(g) is amended by striking ``court martial'' and 
inserting ``court-martial''.

[[Page 4210]]

Issue for Comment

    1. Part A of the proposed amendment would reference offenses under 
18 U.S.C. 39A, 18 U.S.C. 1514(c), 18 U.S.C. 1752, and 19 U.S.C. 1590 to 
various guidelines. The Commission invites comment on offenses under 
these statutes, including in particular the conduct involved in such 
offenses and the nature and seriousness of the harms posed by such 
offenses. Do the guidelines covered by the proposed amendment 
adequately account for these offenses? If not, what revisions to the 
guidelines would be appropriate to account for these offenses? In 
particular, should the Commission provide one or more new alternative 
base offense levels, specific offense characteristics, or departure 
provisions in one or more of these guidelines to better account for 
these offenses? If so, what should the Commission provide?
    Similarly, are there any guideline application issues that the 
Commission should address for cases involving these statutes? For 
example, the proposed amendment would reference offenses under 19 
U.S.C. 1590 to Sec.  2D1.1 and Sec.  2T3.1. In a section 1590 case 
sentenced under Sec.  2T3.1, should the use of an aircraft be 
considered a form of ``sophisticated means,'' such that the defendant 
should receive the specific offense characteristic at Sec.  
2T3.1(b)(1), which provides an increase of 2 levels and a minimum 
offense level of 12 if the offense involved sophisticated means? If 
not, then under what circumstances (if any) should the defendant in a 
section 1590 case receive that specific offense characteristic?

[FR Doc. 2013-01085 Filed 1-17-13; 8:45 am]
BILLING CODE 2210-40-P