Sentencing Guidelines for United States Courts, 26425-26435 [2013-10678]

Download as PDF Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Notices DEPARTMENT OF THE TREASURY Internal Revenue Service Proposed Collection: Comment Request for Regulation Project Internal Revenue Service (IRS), Treasury. ACTION: Notice and request for comments. AGENCY: The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning, Final Election of Reduced Research Credit. DATES: Written comments should be received on or before July 5, 2013 to be assured of consideration. ADDRESSES: Direct all written comments to Yvette B. Lawrence, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224. FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of the regulations should be directed to Kerry Dennis, (202) 927– 9368, or at Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington DC 20224, or through the Internet, at Kerry.Dennis@irs.gov. SUPPLEMENTARY INFORMATION: Title: Final Election of Reduced Research Credit. OMB Number: 1545–1155. Regulation Project Number: TD 8282. Abstract: This regulation relates to the manner of making an election under section 280C(3) of the Internal Revenue Code. Taxpayers making this election must reduce their section 41(a) research credit, but are not required to reduce their deductions for qualified research expenses, as required in paragraphs (1) and (2) of section 280C(c). Current Actions: There is no change to this existing regulation. Type of Review: Extension of a currently approved collection. Affected Public: Individuals and business or other for-profit organizations. Estimated Number of Respondents: 200. Estimated Time per Respondent: 15 minutes. Estimated Total Annual Burden Hours: 50. The following paragraph applies to all of the collections of information covered by this notice: mstockstill on DSK4VPTVN1PROD with NOTICES SUMMARY: VerDate Mar<15>2010 17:06 May 03, 2013 Jkt 229001 An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Request for Comments: Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency’s estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Approved: April 29, 2013. Yvette B. Lawrence, IRS Reports Clearance Officer. BILLING CODE 4830–01–P UNITED STATES SENTENCING COMMISSION Sentencing Guidelines for United States Courts United States Sentencing Commission. ACTION: Notice of submission to Congress of amendments to the sentencing guidelines effective November 1, 2013. AGENCY: Pursuant to its authority under 28 U.S.C. 994(p), the Commission has promulgated amendments to the sentencing guidelines, policy statements, commentary, and statutory index. This notice sets forth the amendments and the reason for each amendment. DATES: The Commission has specified an effective date of November 1, 2013, for the amendments set forth in this notice. PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 FOR FURTHER INFORMATION CONTACT: Jeanne Doherty, Public Affairs Officer, 202–502–4502. The amendments set forth in this notice also may be accessed through the Commission’s Web site at www.ussc.gov. The United States Sentencing Commission is an independent agency in the judicial branch of the United States Government. The Commission promulgates sentencing guidelines and policy statements for federal sentencing courts pursuant to 28 U.S.C. 994(a). The Commission also periodically reviews and revises previously promulgated guidelines pursuant to 28 U.S.C. 994(o) and generally submits guideline amendments to Congress pursuant to 28 U.S.C. 994(p) not later than the first day of May each year. Absent action of Congress to the contrary, submitted amendments become effective by operation of law on the date specified by the Commission (generally November 1 of the year in which the amendments are submitted to Congress). Notice of proposed amendments was published in the Federal Register on January 18, 2013 (see 78 FR 4197). The Commission held a public hearing on the proposed amendments in Washington, DC, on March 13, 2013. On April 30, 2013, the Commission submitted these amendments to Congress and specified an effective date of November 1, 2013. SUPPLEMENTARY INFORMATION: Authority: 28 U.S.C. 994(a), (o), and (p); USSC Rules of Practice and Procedure 4.1. [FR Doc. 2013–10578 Filed 5–3–13; 8:45 am] SUMMARY: 26425 Patti B. Saris, Chair. 1. Amendment: Section 2B1.1(b) is amended by striking paragraph (5); by renumbering paragraphs (6) through (8) as (5) through (7); by renumbering paragraphs (13) through (18) as (14) through (19); by inserting after paragraph (12) the following: ‘‘(13) (Apply the greater) If the offense involved misappropriation of a trade secret and the defendant knew or intended— (A) that the trade secret would be transported or transmitted out of the United States, increase by 2 levels; or (B) that the offense would benefit a foreign government, foreign instrumentality, or foreign agent, increase by 4 levels. If subparagraph (B) applies and the resulting offense level is less than level 14, increase to level 14.’’; and in paragraph (16) (as so renumbered) by striking ‘‘(b)(15)(B)’’ and inserting ‘‘(b)(16)(B)’’. The Commentary to § 2B1.1 captioned ‘‘Application Notes’’ is amended in E:\FR\FM\06MYN1.SGM 06MYN1 mstockstill on DSK4VPTVN1PROD with NOTICES 26426 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Notices Note 6 by striking ‘‘(b)(7)’’ both places it appears and inserting ‘‘(b)(6)’’; in Note 10 by striking ‘‘(b)(13)’’ both places it appears and inserting ‘‘(b)(14)’’; in Note 11 by striking ‘‘(b)(15)(A)’’ both places it appears and inserting ‘‘(b)(16)(A)’’; in Note 12 by striking ‘‘(b)(15)(B)’’ and inserting ‘‘(b)(16)(B)’’; in Note 12(A) by striking ‘‘(b)(15)(B)(i)’’ and inserting ‘‘(b)(16)(B)(i)’’; in Note 12(B) by striking ‘‘(b)(15)(B)(ii)’’ and inserting ‘‘(b)(16)(B)(ii)’’; in Note 13 by striking ‘‘(b)(17)’’ both places it appears and inserting ‘‘(b)(18)’’; in Note 13(B) by striking ‘‘(b)(17)(A)(iii)’’ both places it appears and inserting ‘‘(b)(18)(A)(iii)’’, and by striking ‘‘(b)(15)(B)’’ both places it appears and inserting ‘‘(b)(16)(B)’’; in Note 14 by striking ‘‘(b)(18)’’ each place it appears and inserting ‘‘(b)(19)’’; and in Note 19(B) by striking ‘‘(b)(17)(A)(iii)’’ and inserting ‘‘(b)(18)(A)(iii)’’. The Commentary to § 2B1.1 captioned ‘‘Background’’ is amended by striking ‘‘(b)(6)’’, ‘‘(b)(8)’’, ‘‘(b)(14)(B)’’, ‘‘(b)(15)(A)’’, ‘‘(b)(15)(B)(i)’’, ‘‘(b)(16)’’, ‘‘(b)(17)’’, and ‘‘(b)(17)(B)’’ and inserting ‘‘(b)(5)’’, ‘‘(b)(7)’’, ‘‘(b)(15)(B)’’, ‘‘(b)(16)(A)’’, ‘‘(b)(16)(B)(i)’’, ‘‘(b)(17)’’, ‘‘(b)(18)’’, and ‘‘(b)(18)(B)’’, respectively; and by inserting before the paragraph that begins ‘‘Subsection (b)(15)(B)’’ (as so amended) the following: ‘‘Subsection (b)(13) implements the directive in section 3 of Public Law 112–269.’’. Reason for Amendment: This amendment responds to section 3 of the Foreign and Economic Espionage Penalty Enhancement Act of 2012, Public Law 112–269 (enacted January 14, 2013), which contains a directive to the Commission regarding offenses involving stolen trade secrets or economic espionage. 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 consider, among other things, whether the guidelines adequately address the simple misappropriation of a trade secret; the transmission or attempted transmission VerDate Mar<15>2010 17:06 May 03, 2013 Jkt 229001 of a stolen trade secret outside of the United States; and 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. The offenses described in the directive may be prosecuted under 18 U.S.C. § 1831 (Economic espionage), which requires that the defendant specifically intend or know that the offense ‘‘will benefit any foreign government, foreign instrumentality, or foreign agent,’’ and 18 U.S.C. § 1832 (Theft of trade secrets), which does not require such specific intent or knowledge. The statutory maximum terms of imprisonment are 15 years for a section 1831 offense and 10 years for a section 1832 offense. Both offenses are referenced in Appendix A (Statutory Index) to § 2B1.1 (Theft, Property Destruction, and Fraud). In response to the directive, the amendment revises the existing specific offense characteristic at § 2B1.1(b)(5), which provides an enhancement of two levels ‘‘[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,’’ in two ways. First, it broadens the scope of the enhancement to provide a 2-level increase for trade secret offenses in which the defendant knew or intended that the trade secret would be transported or transmitted out of the United States. Second, it increases the severity of the enhancement to provide a 4-level enhancement and a minimum offense level of 14 for trade secret offenses in which the defendant knew or intended that the offense would benefit a foreign government, foreign instrumentality, or foreign agent. The enhancement also is redesignated as subsection (b)(13). In responding to the directive, the Commission consulted with individuals or groups representing law enforcement, owners of trade secrets, victims of economic espionage offenses, the United States Department of Justice, the United States Department of Homeland Security, the United States Department of State, the Office of the United States Trade Representative, the Federal Public and Community Defenders, and standing advisory groups, among others. The Commission also considered relevant data and literature. The Commission received public comment and testimony that the transmission of stolen trade secrets outside of the United States creates significant obstacles to effective PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 investigation and prosecution and causes both increased harm to victims and more general harms to the nation. With respect to the victim, civil remedies may not be readily available or effective, and the transmission of a stolen trade secret outside of the United States substantially increases the risk that the trade secret will be exploited by a foreign competitor. In contrast, the simple movement of a stolen trade secret within a domestic multinational company (e.g., from a United States office to an overseas office of the same company) may not pose the same risks or harms. More generally, the Commission heard that foreign actors increasingly target United States companies for trade secret theft and that such offenses pose a growing threat to the nation’s global competitiveness, economic growth, and national security. Accordingly, the Commission determined that a 2-level enhancement is warranted for cases in which the defendant knew or intended that a stolen trade secret would be transported or transmitted outside of the United States. The Commission also received public comment and testimony that cases involving economic espionage (i.e., trade secret offenses that benefit foreign governments or entities under the substantial control of foreign governments) are particularly serious. In such cases, the United States is unlikely to obtain a foreign government’s cooperation when seeking relief for the victim, and offenders backed by a foreign government likely will have significant financial resources to combat civil remedies. In addition, a foreign government’s involvement increases the threat to the nation’s economic and national security. Accordingly, the Commission determined that the existing enhancement for economic espionage should be increased from 2 to 4 levels and that such offenses should be subject to a minimum offense level of 14. This heightened enhancement is consistent with the higher statutory maximum penalties and fines applicable to such offenses and the Commission’s established treatment of economic espionage as a more serious form of trade secret theft. Consistent with the directive, the Commission also considered whether the guidelines appropriately account for the simple misappropriation of a trade secret. The Commission determined that such offenses are adequately accounted for by existing provisions in the Guidelines Manual, such as the loss table in § 2B1.1(b)(1), the sophisticated means enhancement at § 2B1.1(b)(10), E:\FR\FM\06MYN1.SGM 06MYN1 mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Notices and the adjustment for abuse of position of trust or use of special skill at § 3B1.3. 2. Amendment: Section 2B1.1 is amended by inserting before paragraph (9) the following new paragraph: ‘‘(8) (Apply the greater) If— (A) the offense involved conduct described in 18 U.S.C. § 670, increase by 2 levels; or (B) the offense involved conduct described in 18 U.S.C. § 670, and the defendant was employed by, or was an agent of, an organization in the supply chain for the pre-retail medical product, increase by 4 levels.’’; The Commentary to § 2B1.1 captioned ‘‘Application Notes’’ is amended in Note 1 by inserting after the paragraph that begins ‘‘ ‘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 that begins ‘‘ ‘Publicly traded company’ means’’ the following: ‘‘ ‘Supply chain’ has the meaning given that term in 18 U.S.C. § 670(e).’’; in Note 3(F)(i) by striking ‘‘Note 9(A)’’ and inserting ‘‘Note 10(A)’’; and by renumbering Notes 7 through 19 as 8 through 20; by inserting after Note 6 the following: ‘‘7. Application of Subsection (b)(8)(B).—If subsection (b)(8)(B) applies, do not apply an adjustment under § 3B1.3 (Abuse of Position of Trust or Use of Special Skill).’’; and in Note 20 (as so renumbered) by adding at the end of subparagraph (A)(ii) as the last sentence the following: ‘‘Similarly, an upward departure would be warranted in a case involving conduct described in 18 U.S.C. § 670 if the offense resulted in serious bodily injury or death, including serious bodily injury or death resulting from the use of the pre-retail medical product.’’. The Commentary to § 2B1.1 captioned ‘‘Background’’ is amended by inserting before the paragraph that begins ‘‘Subsection (b)(9)(D)’’ the following: ‘‘Subsection (b)(8) implements the directive to the Commission in section 7 of Public Law 112–186.’’. However, if § 2B1.1(b) already contains a paragraph (8) because the renumbering of paragraphs by Amendment 1 of this document has not taken effect, renumber the new paragraph inserted into § 2B1.1(b) as paragraph (8A) rather than paragraph (8), and revise the Commentary so that the new Note 7 inserted into the Application Notes and the new paragraph inserted into the Background refer to subsection (b)(8A) rather than subsection (b)(8). Appendix A (Statutory Index) is amended by inserting after the line VerDate Mar<15>2010 17:06 May 03, 2013 Jkt 229001 referenced to 18 U.S.C. § 669 the following: ‘‘18 U.S.C. § 670 2B1.1’’. Reason for Amendment: This amendment responds to the Strengthening and Focusing Enforcement to Deter Organized Stealing and Enhance Safety Act of 2012, Public Law 112–186 (enacted October 5, 2012) (the ‘‘Act’’), which addressed various offenses involving ‘‘pre-retail medical products,’’ defined as ‘‘a medical product that has not yet been made available for retail purchase by a consumer.’’ The Act 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. 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 PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 26427 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 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). The Commission concluded that § 2B1.1 is the appropriate guideline because the elements of the new offense include theft or fraud. Response to Directive Section 7 of the Act directs 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.’’ The amendment amends § 2B1.1 to address offenses involving pre-retail medical products in two ways. First, the amendment adds a new specific offense characteristic at § 2B1.1(b)(8) that provides a twopronged enhancement with an instruction to apply the greater. Prong (A) provides a 2-level enhancement if the offense involved conduct described in 18 U.S.C. § 670. Prong (B) provides a 4-level enhancement if the offense involved conduct described in 18 U.S.C. § 670 and the defendant was employed by, or an agent of, an organization in the supply chain for the pre-retail product. Accompanying this new specific offense characteristic is new Commentary providing that, if prong (B) applies, ‘‘do not apply an adjustment under § 3B1.3 (Abuse of Position of Trust or Use of Special Skill).’’ E:\FR\FM\06MYN1.SGM 06MYN1 mstockstill on DSK4VPTVN1PROD with NOTICES 26428 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Notices Based on public comment, testimony and sentencing data, the Commission concluded that an enhancement differentiating fraud and theft offenses involving medical products from those involving other products is warranted by the additional risk such offenses pose to public health and safety. In addition, such offenses undermine the public’s confidence in the medical regulatory and distribution system. The Commission also concluded that the risks and harms it identified would be present in any theft or fraud offense involving a pre-retail medical product, regardless of the offense of conviction. Therefore application of the new specific offense characteristic is not limited to offenses charged under 18 U.S.C. § 670. The amendment provides a 4-level enhancement for defendants who commit such offenses while employed in the supply chain for the pre-retail medical product. Such defendants are subject to an increased statutory maximum and the Commission determined that a heightened enhancement should apply to reflect the likelihood that the defendant’s position in the supply chain facilitated the commission or concealment of the offense. Defendants who receive the 4level enhancement are not subject to the adjustment at § 3B1.3 because the new enhancement adequately accounts for the concerns covered by § 3B1.3. The Commission determined that existing specific offense characteristics generally account for other aggravating factors included in the Act, such as loss, use or threat of force, risk of death or serious bodily injury, and weapon involvement, and therefore additional new specific offense characteristics are not necessary. See, e.g., ’’§§ 2B1.1(b)(1), (b)(3), and (b)(15) (as redesignated by the amendment). Second, it amends the upward departure provisions in the Commentary to § 2B1.1 at Application Note 19(A) to provide—as an example of a case in which an upward departure would be warranted—a case ‘‘involving conduct described in 18 U.S.C. § 670 if the offense resulted in serious bodily injury or death, including serious bodily injury or death resulting from the use of the pre-retail medical product.’’ Public comment and testimony indicated that § 2B1.1 may not adequately account for the harm created by theft or fraud offenses involving pre-retail medical products when such serious bodily injury or death actually occurs as a result of the offense. For example, some pre-retail medical products are stolen as part of a scheme to re-sell them into the supply chain, but if the products have VerDate Mar<15>2010 17:06 May 03, 2013 Jkt 229001 not been properly stored in the interim, their subsequent use can seriously injure the individual consumers who buy and use them. Thus, the amendment expands the scope of the existing upward departure provision to address such harms and to clarify that an upward departure is appropriate in such cases not only if serious bodily injury or death occurred during the theft or fraud, but also if such serious bodily injury or death resulted from the victim’s use of a pre-retail medical product that had previously been obtained by theft or fraud. Finally, the proposed amendment amends the Commentary to § 2B1.1 to provide relevant definitions and make other conforming changes. 3. Amendment: Section 2B5.3(b) is amended by renumbering paragraph (5) as (6); by inserting after paragraph (4) the following: ‘‘(5) If the offense involved a counterfeit drug, increase by 2 levels.’’; and by inserting after paragraph (6) (as so renumbered) the following: ‘‘(7) If the offense involved a counterfeit military good or service the use, malfunction, or failure of which is likely to cause (A) the disclosure of classified information; (B) impairment of combat operations; or (C) other significant harm to (i) a combat operation, (ii) a member of the Armed Forces, or (iii) national security, increase by 2 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 that begins ‘‘’Commercial advantage’’ the following: ‘‘’Counterfeit drug’ has the meaning given that term in 18 U.S.C. § 2320(f)(6). ‘‘’Counterfeit military good or service’ has the meaning given that term in 18 U.S.C. § 2320(f)(4).’’; by renumbering Notes 3 and 4 as 4 and 5; by inserting after Note 2 the following: ‘‘3. Application of Subsection (b)(7).— In subsection (b)(7), ‘other significant harm to a member of the Armed Forces’ means significant harm other than serious bodily injury or death. In a case in which 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, subsection (b)(6)(A) (conscious or reckless risk of serious bodily injury or death) would apply.’’; and in Note 5 (as so renumbered) by adding at the end the following: ‘‘(D) The offense resulted in death or serious bodily injury.’’. The Commentary to § 2B5.3 captioned ‘‘Background’’ is amended by inserting PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 after the paragraph that begins ‘‘Subsection (b)(1)’’ the following: ‘‘ Subsection (b)(5) implements the directive to the Commission in section 717 of Public Law 112B144.’’. 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)–(6) 2N2.1 21 U.S.C. § 333(b)(7) 2N1.1’’. Reason for Amendment: This amendment responds to two recent Acts that made changes to 18 U.S.C. § 2320 (Trafficking in counterfeit goods or services). One Act increased penalties for offenses involving counterfeit military goods and services; the other increased penalties for offenses involving counterfeit drugs and included a directive to the Commission. The 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 increase penalties for offenses involving intentionally adulterated drugs. Section 2320 and Counterfeit Military Goods and Services First, the amendment responds to changes to section 2320 made by the National Defense Authorization Act for Fiscal Year 2012, Public Law 112–81 (enacted December 31, 2011) (the ‘‘NDAA’’). 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 20 years for a second or subsequent offense. If the offender knowingly or recklessly causes or attempts to cause serious bodily injury or death, the statutory maximum is increased to 20 years or any term of years or life, respectively. Offenses under section 2320 are referenced in Appendix A (Statutory Index) to § 2B5.3 (Criminal Infringement of Copyright or Trademark). Section 818 of the NDAA 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 defined as 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 E:\FR\FM\06MYN1.SGM 06MYN1 mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Notices under subsection (a)(3) 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). The legislative history of the NDAA indicates that Congress amended section 2320 because of concerns about national security and the protection of United States servicemen and women. After reviewing the legislative history, public comment, testimony, and data, the Commission determined that an offense involving counterfeit military goods and services that jeopardizes the safety of United States troops and compromises mission effectiveness warrants increased punishment. Specifically, the amendment addresses offenses involving counterfeit military goods and services by amending § 2B5.3 to create a new specific offense characteristic at subsection (b)(7). Subsection (b)(7) provides a 2-level enhancement and a minimum offense level of 14 if the offense involves a counterfeit military good or service the use, malfunction, or failure of which is likely to cause 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. The Commission set the minimum offense level at 14 so that it would be proportionate to the minimum offense level in the enhancement for ‘‘conscious or reckless risk of death or serious bodily injury’’ at subsection (b)(5)(A). That enhancement is moved from (b)(5)(A) to (b)(6)(A) by the amendment. Although section 2320(a)(3) includes offenses that are likely to cause ‘‘serious bodily injury or death,’’ the new specific offense characteristic does not because the Commission determined that such risk of harm is adequately addressed by the existing enhancement for offenses involving the ‘‘conscious or reckless risk of death or serious bodily injury.’’ Consistent with that approach, the amendment includes commentary providing that the ‘‘other significant harm’’ specified in subsection (b)(7) does not include death or serious bodily injury and that § 2B5.3(b)(6)(A) would apply 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. Section 2320 and Counterfeit Drugs Second, the amendment responds to changes made by section 717 of the Food and Drug Administration Safety and Innovation Act, Public Law 112– 144 (enacted July 9, 2012) (the VerDate Mar<15>2010 17:06 May 03, 2013 Jkt 229001 ‘‘FDASIA’’), which 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 (21 U.S.C. § 321), that uses a counterfeit mark. See 18 U.S.C. § 2320(f)(6). An individual who commits an offense under subsection (a)(4) 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 the FDASIA 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, § 717(b)(1). In addition, section 717(b)(2) provides that, in responding to the directive, the Commission shall, among other things, ensure that the guidelines reflect the serious nature of section 2320(a)(4) offenses and consider the extent to which the guidelines account for the potential and actual harm to the public resulting from such offenses. After reviewing the legislative history of the FDASIA, public comment, testimony, and data, the Commission determined that offenses involving counterfeit drugs involve a threat to public safety and undermine the public’s confidence in the drug supply chain. Furthermore, unlike many other goods covered by the infringement guideline, offenses involving counterfeit drugs circumvent a regulatory scheme established to protect the health and safety of the public. Accordingly, the amendment responds to the directive by adding a new specific offense characteristic at § 2B5.3(b)(5) that provides a 2-level enhancement if the offense involves a counterfeit drug. Offenses Resulting in Death or Serious Bodily Injury Third, the amendment amends the Commentary to ’2B5.3 to add a new upward departure consideration if the offense resulted in death or serious bodily injury. The addition of this departure consideration recognizes the distinction between an offense involving the risk of death or serious bodily injury and one in which death or serious bodily injury actually results. PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 26429 Departures for these reasons are already authorized in the guidelines, see §§ 5K2.1 (Death) (Policy Statement), 5K2.2 (Physical Injury) (Policy Statement), but the amendment is intended to heighten awareness of the availability of a departure in such cases. Section 333 and Offenses Involving Intentionally Adulterated Drugs Finally, the amendment provides a statutory reference for the new offense at 21 U.S.C. 333(b)(7) created by section 716 of the FDASIA. Section 333(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. The 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). The Commission concluded that offenses under section 333(b)(7) are similar to tampering offenses under 18 U.S.C. § 1365 (Tampering with consumer products), which are referenced to ’2N1.1. In addition, the public health harms that Congress intended to target in adulteration cases are similar to those targeted by violations of section 1365(a) and are best addressed under § 2N1.1. 4. Amendment: The Commentary to § 2T1.1 captioned ‘‘Application Notes’’ is amended in Note 1 by inserting ‘‘Tax Loss.—’’ at the beginning; in Note 2 by inserting ‘‘Total Tax Loss Attributable to the Offense.—’’ at the beginning, and by redesignating subdivisions (a) through (e) as (A) through (E); by inserting after Note 2 the following: ‘‘3. Unclaimed Credits, Deductions, and Exemptions.—In determining the tax loss, the court should account for the standard deduction and personal and dependent exemptions to which the defendant was entitled. In addition, the court should account for any unclaimed credit, deduction, or exemption that is needed to ensure a reasonable estimate of the tax loss, but only to the extent that (A) the credit, deduction, or exemption was related to the tax offense and could have been claimed at the time the tax offense was committed; (B) the credit, deduction, or exemption is reasonably and practicably ascertainable; and (C) the defendant presents information to support the credit, deduction, or exemption sufficiently in advance of sentencing to provide an adequate opportunity to E:\FR\FM\06MYN1.SGM 06MYN1 mstockstill on DSK4VPTVN1PROD with NOTICES 26430 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Notices evaluate whether it has sufficient indicia of reliability to support its probable accuracy (see § 6A1.3 (Resolution of Disputed Factors) (Policy Statement)). However, the court shall not account for payments to third parties made in a manner that encouraged or facilitated a separate violation of law (e.g., ‘under the table’ payments to employees or expenses incurred to obstruct justice). The burden is on the defendant to establish any such credit, deduction, or exemption by a preponderance of the evidence. See § 6A1.3, comment.’’; by striking ‘‘3. ‘Criminal activity’ means’’ and inserting the following: ‘‘4. Application of Subsection (b)(1) (Criminal Activity).—‘Criminal activity’ means’’; by striking ‘‘4. Sophisticated Means Enhancement.C’’ and inserting the following: ‘‘5. Application of Subsection (b)(2) (Sophisticated Means).—’’; by striking ‘‘5. A ‘credit claimed’’ and all that follows through the end of Note 6 and inserting the following: ‘‘6. Other Definitions.—For purposes of this section: A ‘credit claimed against tax’ is an item that reduces the amount of tax directly. In contrast, a ‘deduction’ is an item that reduces the amount of taxable income. ‘Gross income’ has the same meaning as it has in 26 U.S.C. § 61 and 26 CFR § 1.61.’’; and in Note 7 by inserting ‘‘Aggregation of Individual and Corporate Tax Loss.—’’ at the beginning. Reason for Amendment: This amendment responds to a circuit conflict regarding whether a sentencing court, in calculating tax loss as defined in § 2T1.1 (Tax Evasion; Willful Failure to File Return, Supply Information, or Pay Tax; Fraudulent or False Returns, Statements, or Other Documents), may consider previously unclaimed credits, deductions, and exemptions that the defendant legitimately could have claimed if he or she had filed an accurate tax return. The Tenth and Second Circuits have held that a sentencing court may give the defendant credit for a legitimate but unclaimed deduction. These circuit courts generally reason that, while a district court need not speculate about unclaimed deductions if the defendant offers weak support, nothing in the guidelines prohibits a sentencing court from considering evidence of unclaimed deductions where a defendant offers convincing proof. See United States v. Hoskins, 654 F.3d 1086, 1094 (10th Cir. 2011) (‘‘[W]here defendant offers convincing proof—where the court’s exercise is neither nebulous nor complex—nothing in the Guidelines VerDate Mar<15>2010 17:06 May 03, 2013 Jkt 229001 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) (holding that ‘‘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 court erred when it refused to consider potential unclaimed deductions in its sentencing analysis). Six other circuit courts—the Fourth, Fifth, Seventh, Eighth, Ninth, and Eleventh—have reached the opposite conclusion, directly or indirectly holding that a court may not consider unclaimed deductions to reduce the tax loss. These circuit courts generally reason that the ‘‘object of the [defendant’s] offense’’ is established by the amount stated on the fraudulent return, and that courts should not be required to reconstruct the defendant’s return based on speculation regarding the many hypothetical ways the defendant could have completed the return. 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, 677 (7th Cir. 2002) (‘‘Here, the object of [the defendant]’s offense was the amount by which he underreported and fraudulently stated his tax liability on his return; reference to other unrelated mistakes on the return such as unclaimed deductions tells us nothing about the amount of loss to the government that his scheme intended to create.’’); 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 PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 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 § 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, 1165 (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 amendment resolves the conflict by amending the Commentary to § 2T1.1 to establish a new application note regarding the consideration of unclaimed credits, deductions, or exemptions in calculating a defendant’s tax loss. This amendment reflects the Commission’s view that consideration of legitimate unclaimed credits, deductions, or exemptions, subject to certain limitations and exclusions, is most consistent with existing provisions regarding the calculation of tax loss in § 2T1.1. See, e.g., USSG § 2T1.1, comment. (n.1) (‘‘the guidelines contemplate that the court will simply make a reasonable estimate based on the available facts’’); USSG § 2T1.1, comment. (backg’d.) (‘‘a greater tax loss is obviously more harmful to the treasury and more serious than a smaller one with otherwise similar characteristics’’); USSG § 2T1.1, comment. (n.1) (allowing a sentencing court to go beyond the presumptions set forth in the guideline if ‘‘the government or defense provides sufficient information for a more accurate assessment of the tax loss,’’ and providing ‘‘the court should use any method of determining the tax loss that appears appropriate to reasonably calculate the loss that would have resulted had the offense been successfully completed’’). The new application note first provides that courts should always account for the standard deduction and personal and dependent exemptions to which the defendant was entitled. The Commission received public comment and testimony that such deductions and exemptions are commonly considered and accepted by the government during the course of its investigation and during the course of plea negotiations. Consistent with this standard practice, the Commission determined that E:\FR\FM\06MYN1.SGM 06MYN1 mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Notices accounting for these generally undisputed and readily verifiable deductions and exemptions where they are not previously claimed (most commonly where the offense involves a failure to file a tax return) is appropriate. The new application note further provides that courts should also account for any other previously unclaimed credit, deduction, or exemption that is needed to ensure a reasonable estimate of the tax loss, but only to the extent certain conditions are met. First, the credit, deduction, or exemption must be one that was related to the tax offense and could have been claimed at the time the tax offense was committed. This condition reflects the Commission’s determination that a defendant should not be permitted to invoke unforeseen or after-the-fact changes or characterizations—such as offsetting losses that occur before or after the relevant tax year or substituting a more advantageous depreciation method or filing status—to lower the tax loss. To permit a defendant to optimize his return in this manner would unjustly reward defendants, and could require unjustifiable speculation and complexity at the sentencing hearing. Second, the otherwise unclaimed credit, deduction, or exemption must be reasonably and practicably ascertainable. Consistent with the instruction in Application Note 1, this condition reaffirms the Commission’s position that sentencing courts need only make a reasonable estimate of tax loss. In this regard, the Commission recognized that consideration of some unclaimed credits, deductions, or exemptions could require sentencing courts to make unnecessarily complex tax determinations, and therefore concluded that limiting consideration of unclaimed credits, deductions, or exemptions to those that are reasonably and practicably ascertainable is appropriate. Third, the defendant must present information to support the credit, deduction, or exemption sufficiently in advance of sentencing to provide an adequate opportunity to evaluate whether it has sufficient indicia of reliability to support its probable accuracy. Consistent with the principles set forth in § 6A1.3 (Resolution of Disputed Factors) (Policy Statement), this condition ensures that the parties have an adequate opportunity to present information relevant to the court’s consideration of any unclaimed credits, deductions, or exemptions raised at sentencing. In addition, the new application note provides that certain categories of VerDate Mar<15>2010 17:06 May 03, 2013 Jkt 229001 credits, deductions, or exemptions shall not be considered by the court in any case. In particular, ‘‘the court shall not account for payments to third parties made in a manner that encouraged or facilitated a separate violation of law (e.g., ‘under the table’ payments to employees or expenses incurred to obstruct justice).’’ The Commission determined that payments made in this manner result in additional harm to the tax system and the legal system as a whole. Therefore, to use them to reduce the tax loss would unjustifiably benefit the defendant and would result in a tax loss figure that understates the seriousness of the offense and the culpability of the defendant. Finally, the application note makes clear that the burden is on the defendant to establish any credit, deduction, or exemption permitted under this new application note by a preponderance of the evidence, which is also consistent with the commentary in § 6A1.3. 5. Amendment: The Commentary to § 3E1.1 captioned ‘‘Application Notes’’ is amended in Note 6 by adding at the end of the paragraph that begins ‘‘Because the Government’’ the following as the last sentence: ‘‘The government should not withhold such a motion based on interests not identified in § 3E1.1, such as whether the defendant agrees to waive his or her right to appeal.’’; and by adding after the paragraph that begins ‘‘Because the Government’’ the following new paragraph: ‘‘If the government files such a motion, and the court in deciding whether to grant the motion also 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, the court should grant the motion.’’. The Commentary to § 3E1.1 captioned ‘‘Background’’ is amended in the paragraph that begins ‘‘Section 401(g)’’ by striking ‘‘the last paragraph’’ and inserting ‘‘the first sentence of the second paragraph’’. Reason for Amendment: This amendment addresses two circuit conflicts involving the guideline for acceptance of responsibility, § 3E1.1 (Acceptance of Responsibility). A defendant who clearly demonstrates acceptance of responsibility for his offense receives a 2-level reduction under subsection (a) of § 3E1.1. The two circuit conflicts both involve the circumstances under which the PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 26431 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. The first circuit conflict involves the government’s discretion under subsection (b) and, in particular, whether the government may withhold a motion based on an interest not identified in § 3E1.1, such as the defendant’s refusal to waive his right to appeal. The second conflict involves the court’s discretion under subsection (b) and, in particular, whether the court may decline to apply the third level of reduction when the government has moved for it. These circuit conflicts are unusual in that they involve guideline and commentary provisions that Congress directly amended. See section 401(g) of the Prosecutorial Remedies and Other Tools to end the Exploitation of Children Today Act of 2003, Public Law 108–21 (the ‘‘PROTECT Act’’); see also USSG App. C, Amendment 649 (effective April 30, 2003) (implementing amendments to the guidelines made directly by the PROTECT Act). They also implicate a congressional directive to the Commission not to ‘‘alter or repeal’’ the congressional amendments. See section 401(j)(4) of the PROTECT Act. Accordingly, in considering these conflicts, the Commission has not only reviewed public comment, sentencing data, case law, and the other types of information it ordinarily considers, but has also studied the operation of § 3E1.1 before the PROTECT Act, the congressional action to amend § 3E1.1, and the legislative history of that congressional action. The Government’s Discretion to Withhold the Motion The first circuit conflict involves the government’s discretion under subsection (b) and, in particular, whether the government may withhold a motion based on an interest not identified in § 3E1.1, such as the defendant’s refusal to waive his right to appeal. E:\FR\FM\06MYN1.SGM 06MYN1 mstockstill on DSK4VPTVN1PROD with NOTICES 26432 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Notices Several circuits have held that a defendant’s refusal to sign an appellate waiver is a legitimate reason for the government to withhold a § 3E1.1(b) motion. See, e.g., United States v. Johnson, 581 F.3d 994, 1002 (9th Cir. 2009) (holding that ‘‘allocation and expenditure of prosecutorial resources for the purposes of defending an appeal is a rational basis’’ for such refusal); United States v. Deberry, 576 F.3d 708, 711 (7th Cir. 2009) (holding that requiring the defendant to sign an appeal waiver would avoid ‘‘expense and uncertainty’’ on appeal); United States v. Newson, 515 F.3d 374, 378 (5th Cir. 2008) (holding that the government’s interests under § 3E1.1 encompass not only the government’s time and effort at prejudgment stage but also at post-judgment proceedings). In contrast, the Fourth Circuit has held that a defendant’s refusal to sign an appellate waiver is not a legitimate reason for the government to withhold a § 3E1.1(b) motion. See United States v. Divens, 650 F.3d 343, 348 (4th Cir. 2011) (stating that ‘‘the text of § 3E1.1(b) reveals a concern for the efficient allocation of trial resources, not appellate resources’’ [emphasis in original]); see also United States v. Davis, No. 12–3552, slip op. at 5, __ F.3d __ (7th Cir., April 9, 2013) (Rovner, J., concurring) (‘‘insisting that [the defendant] waive his right to appeal before he may receive the maximum credit under the Guidelines for accepting responsibility serves none of the interests identified in section 3E1.1’’). The majority in Davis called for the conflict to be resolved, stating: ‘‘Resolution of this conflict is the province of the Supreme Court or the Sentencing Commission.’’ Davis, slip op. at 3, __ F.3d at __ (per curiam). The Second Circuit, stating that the Fourth Circuit’s reasoning in Divens applies ‘‘with equal force’’ to the defendant’s request for an evidentiary hearing on sentencing issues, held that the government may not withhold a § 3E1.1 motion based upon such a request. See United States v. Lee, 653 F.3d 170, 175 (2d Cir. 2011). The PROTECT Act added Commentary to § 3E1.1 stating that ‘‘[b]ecause the Government is in the best position to determine whether the defendant has assisted authorities in a manner that avoids preparing for trial, an adjustment under subsection (b) may only be granted upon a formal motion by the Government at the time of sentencing.’’ See § 3E1.1, comment. (n.6). The PROTECT Act also amended § 3E1.1(b) to provide that the government motion state, among other things, that the defendant’s notification VerDate Mar<15>2010 17:06 May 03, 2013 Jkt 229001 of his intention to enter a plea of guilty permitted ‘‘the government to avoid preparing for trial and . . . the government and the court to allocate their resources efficiently . . .’’. In its study of the PROTECT Act, the Commission could discern no congressional intent to allow decisions under § 3E1.1 to be based on interests not identified in § 3E1.1. Furthermore, consistent with Divens and the concurrence in Davis, the Commission determined that the defendant’s waiver of his or her right to appeal is an example of an interest not identified in § 3E1.1. Accordingly, this amendment adds an additional sentence to the Commentary stating that ‘‘[t]he government should not withhold such a motion based on interests not identified in § 3E1.1, such as whether the defendant agrees to waive his or her right to appeal.’’ The Court’s Discretion to Deny the Motion The second conflict involves the court’s discretion under subsection (b) and, in particular, whether the court may decline to apply the third level of reduction when the government has moved for it. The Seventh Circuit has 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). In contrast, the Fifth Circuit has held that the district court retains discretion to deny the motion. See United States v. Williamson, 598 F.3d 227, 230 (5th Cir. 2010). In Williamson, the defendant was convicted after jury trial but successfully appealed. After remand, he pled guilty to a lesser offense. The government moved for the third level of reduction, but the court declined to grant it because ‘‘regardless of however much additional trial preparation the government avoided through Williamson’s guilty plea following remand, the preparation for the initial trial and the use of the court’s resources for that trial meant that the § 3E1.1(b) benefits to the government and the court were not obtained’’. Id. at 231. The Fifth Circuit affirmed, holding 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’’. Id. at 230. This amendment amends the Commentary to § 3E1.1 by adding the following statement: ‘‘If the government PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 files such a motion, and the court in deciding whether to grant the motion also 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, the court should grant the motion.’’ In its study of the PROTECT Act, the Commission could discern no congressional intent to take away from the court its responsibility under § 3E1.1 to make its own determination of whether the conditions were met. In particular, both the language added to the Commentary by the PROTECT Act and the legislative history of the PROTECT Act speak in terms of allowing the court discretion to ‘‘grant’’ the third level of reduction. See USSG § 3E1.1, comment. (n.6) (stating that the third level of reduction ‘‘may only be granted upon a formal motion by the Government’’); H.R. Rep. No. 108–66, at 59 (2003) (Conf. Rep.) (stating that the PROTECT Act amendment would ‘‘only allow courts to grant an additional third point reduction for ‘acceptance of responsibility’ upon motion of the government.’’). In addition, the Commission observes that one of the considerations in § 3E1.1(b) is whether the defendant’s actions permitted the court to allocate its resources efficiently, and the court is in the best position to make that determination. Accordingly, consistent with congressional intent, this amendment recognizes that the court continues to have discretion to decide whether to grant the third level of reduction. Finally, and as mentioned above, the Commission in its study of the PROTECT Act could discern no congressional intent to allow decisions under § 3E1.1 to be based on interests not identified in § 3E1.1. For that reason, this amendment indicates that, if the government has filed the motion and the court also determines that the circumstances identified in § 3E1.1 are present, the court should grant the motion. 6. Amendment: The Commentary to § 5G1.3 captioned ‘‘Background’’ is amended by striking ‘‘In a case in which’’ and all that follows through ‘‘Exercise of that authority,’’ and inserting ‘‘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 E:\FR\FM\06MYN1.SGM 06MYN1 mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Notices 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 with or consecutively to other state sentences that are anticipated but not yet imposed. See Setser, 132 S. Ct. at 1468. Exercise of that discretion’’. Reason for Amendment: This amendment responds to a recent Supreme Court decision that federal courts have discretion to order that the sentence run consecutively to (or concurrently with) an anticipated, but not yet imposed, state sentence. See Setser v. United States, 132 S. Ct. 1463, 1468 (2012). The discretion recognized in Setser for anticipated state sentences is similar to the discretion that federal courts have under 18 U.S.C. § 3584 for previously imposed sentences. Under section 3584, a federal court imposing a sentence generally has discretion to order that the sentence run consecutively to (or, in the alternative, concurrently with) a term of imprisonment previously imposed but not yet discharged. See 18 U.S.C. § 3584(a). Section 5G1.3 (Imposition of a Sentence on a Defendant Subject to an Undischarged Term of Imprisonment) provides guidance to the court in determining whether, and how, to use the discretion under section 3584, i.e., whether the sentence should run consecutively to (or, in the alternative, concurrently with) the prior undischarged term of imprisonment. The amendment amends the background commentary to § 5G1.3 to include a statement that, in addition to the discretion provided by section 3584, federal courts also generally have discretion under Setser to order that the sentences they impose will run consecutively to or concurrently with other state sentences that are anticipated but not yet imposed. Determining whether, and how, to use this discretion will depend on the adequacy of the information available. See Setser, 132 S.Ct. at 1471 n.6 (‘‘Of course, a district court should exercise the power to impose anticipatory consecutive (or concurrent) sentences intelligently. In some situations, a district court may have inadequate information and may forbear, but in other situations, that will not be the case.’’). Adding this statement to the guideline that applies to the court’s discretion under section 3584 is intended to provide heightened awareness of the court’s similar discretion under Setser. 7. Amendment: The Commentary to § 2B1.1 captioned ‘‘Application Notes’’ is amended in Note 15 (as renumbered by Amendment 2) by striking ‘‘1a(5)’’ VerDate Mar<15>2010 17:06 May 03, 2013 Jkt 229001 both places it appears and inserting ‘‘1a(11)’’; by striking ‘‘1a(6)’’ both places it appears and inserting ‘‘1a(12)’’; by striking ‘‘1a(20)’’ both places it appears and inserting ‘‘1a(28)’’; and by striking ‘‘1a(23)’’ both places it appears and inserting ‘‘1a(31)’’. Section 2B2.3(b) is amended by striking paragraph (1) and inserting the following: ‘‘(1) (Apply the greater) If— (A) the trespass occurred (i) at a secure government facility; (ii) at a nuclear energy facility; (iii) on a vessel or aircraft of the United States; (iv) in a secure area of an airport or a seaport; (v) at a residence; (vi) at Arlington National Cemetery or a cemetery under the control of the National Cemetery Administration; (vii) at any restricted building or grounds; or (viii) on a computer system used (I) to maintain or operate a critical infrastructure; or (II) by or for a government entity in furtherance of the administration of justice, national defense, or national security, increase by 2 levels; or (B) the trespass occurred at the White House or its grounds, or the Vice President’s official residence or its grounds, increase by 4 levels.’’. The Commentary to § 2B2.3 captioned ‘‘Application Notes’’ is amended in Note 1 by inserting after the paragraph that begins ‘‘ ‘Protected computer’ means’’ the following: ‘‘ ‘Restricted building or grounds’ has the meaning given that term in 18 U.S.C. § 1752.’’; and in Note 2 by inserting ‘‘Application of Subsection (b)(3).—’’ at the beginning. The Notes to the Drug Quantity Table in § 2D1.1(c) are amended in each of Notes (H) and (I) by striking ‘‘1308.11(d)(30)’’ and inserting ‘‘1308.11(d)(31)’’. The Commentary to § 2J1.2 captioned ‘‘Application Notes’’ is amended in Note 2(A) by striking ‘‘Chapter Three, Part C’’ in the heading and inserting ‘‘§ 3C1.1’’; and by striking ‘‘Chapter Three, Part C (Obstruction and Related Adjustments)’’ and inserting ‘‘§ 3C1.1 (Obstructing or Impeding the Administration of Justice)’’. The Commentary to § 2J1.3 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 PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 26433 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’’. 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’’ both places it appears and inserting ‘‘court-martial’’. 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’’; in the line referenced to 18 U.S.C. § 554 by inserting ‘‘2M5.1,’’ after ‘‘2B1.5,’’; 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(d)(1) 2T3.1 19 U.S.C. § 1590(d)(2) 2D1.1’’. Reason for Amendment: This amendment responds to recently enacted legislation and miscellaneous and technical guideline issues. Aiming a Laser Pointer at an Aircraft First, the amendment responds to Section 311 of the FAA Modernization and Reform Act of 2012, Public Law 112–95 (enacted February 14, 2012), which 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 amendment amends Appendix A (Statutory Index) to reference section 39A offenses to § 2A5.2 (Interference with Flight Crew Member or Flight Attendant; Interference with Dispatch, Navigation, Operation, or Maintenance of Mass Transportation Vehicle). Section 2A5.2 is the most analogous guideline because the offense involves interference with an aircraft in flight. E:\FR\FM\06MYN1.SGM 06MYN1 26434 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Notices Restraining the Harassment of a Victim or Witness Second, the amendment responds to section 3(a) of the Child Protection Act of 2012, Public Law 112–206 (enacted December 7, 2012), which 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 amendment amends Appendix A (Statutory Index) to reference section 1514(c) offenses to § 2J1.2 (Obstruction of Justice). Section 2J1.2 is the most analogous guideline because the offense involves interference with judicial proceedings. mstockstill on DSK4VPTVN1PROD with NOTICES Restricted Buildings and Grounds Third, the amendment responds to the Federal Restricted Buildings and Grounds Improvement Act of 2011, Public Law 112–98 (enacted March 8, 2012), which 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 official 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 amendment amends Appendix A (Statutory Index) to reference section 1752 offenses to § 2A2.4 (Obstructing or Impeding Officers) and § 2B2.3 (Trespass). These guidelines are most analogous because the elements of offenses under section 1752 involve either trespass at certain locations (i.e., locations permanently or temporarily protected by the Secret Service) or interference with official business at such locations, or both. The amendment also amends § 2B2.3(b)(1) to ensure that a trespass VerDate Mar<15>2010 17:06 May 03, 2013 Jkt 229001 under section 1752 provides a 4-level enhancement if the trespass occurred at the White House or the Vice President’s official residence, or a 2-level enhancement if the trespass occurred at any other location permanently or temporarily protected by the Secret Service. Section 2B2.3(b)(1) provides a 2-level enhancement if the trespass occurred at locations that involve a significant federal interest, such as nuclear facilities, airports, and seaports. A trespass at a location protected by the Secret Service is no less serious than a trespass at other locations that involve a significant federal interest and warrants an equivalent enhancement of 2 levels. Section 2B2.3(b)(1) also provides a 2-level enhancement if the trespass occurred at a residence. A trespass at the residence of the President or the Vice President is more serious and poses a greater risk of harm than a trespass at an ordinary residence and warrants an enhancement of 4 levels. Aviation Smuggling Fourth, the amendment responds to the Ultralight Aircraft Smuggling Prevention Act of 2012, Public Law 112–93 (enacted February 10, 2012), which amended the criminal offense at 19 U.S.C. § 1590 (Aviation smuggling) to clarify that the term ‘‘aircraft’’ includes ultralight aircraft and to cover attempts and conspiracies. Section 1590 makes it unlawful for the pilot of an aircraft to transport merchandise, 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(d)(2), and five years otherwise, see § 1590(d)(1). The amendment amends Appendix A (Statutory Index) to reference offenses under section 1590(d)(1) to § 2T3.1 (Evading Import Duties or Restrictions (Smuggling); Receiving or Trafficking in Smuggled Property). In such cases, § 2T3.1 is the most analogous guideline because the offense involves smuggling. The amendment also amends Appendix A (Statutory Index) to reference offenses under section 1590(d)(2) to § 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or Trafficking (Including Possession with Intent to Commit These Offenses); Attempt or Conspiracy). In such cases, § 2D1.1 is the most analogous guideline because controlled PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 substances are involved in these offenses. Interaction Between Offense Guidelines in Chapter Two, Part J, and Certain Adjustments in Chapter Three, Part C Fifth, the amendment responds to an application issue that may arise 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). Specifically, there are application notes in four Chapter Two, Part J guidelines that, it has been argued, preclude the court from applying adjustments in Chapter Three, Part C. See, e.g., United States v. Duong, 665 F.3d 364 (1st Cir. 2012) (observing that, ‘‘according to the literal terms’’ of the application notes, an adjustment under Chapter Three, Part C ‘‘ ‘does not apply’ ’’, but ‘‘reject[ing] that premise’’). The amendment amends the relevant application notes in Chapter Two, Part J (see §§ 2J1.2, comment. (n.2(A)); 2J1.3, comment. (n.2); 2J1.6, comment. (n.2); 2J1.9, comment. (n.1)) to clarify the Commission’s intent that they restrict the court from applying § 3C1.1 (Obstructing or Impeding the Administration of Justice) but do not restrict the court from applying §§ 3C1.2, 3C1.3, and 3C1.4. These changes resolve the application issue consistent with Duong and promote clarity and consistency in the application of these adjustments. Export Offenses Under 18 U.S.C. § 554 Sixth, the amendment broadens the range of guidelines to which export offenses under 18 U.S.C. § 554 (Smuggling goods from the United States) are referenced. Section 554 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, E:\FR\FM\06MYN1.SGM 06MYN1 Federal Register / Vol. 78, No. 87 / Monday, May 6, 2013 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES 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 amendment amends Appendix A (Statutory Index) to add § 2M5.1 (Evasion of Export Controls; Financial Transactions with Countries Supporting International Terrorism) to the list of guidelines to which offenses under section 554 are referenced. Not all offenses under section 554 involve munitions, cultural resources, or wildlife, so a reference to an additional guideline is warranted. For example, a section 554 offense may be based on the export of ordinary commercial goods in VerDate Mar<15>2010 17:06 May 03, 2013 Jkt 229001 violation of economic sanctions or on the export of ‘‘dual-use’’ goods (i.e., goods that have both commercial and military applications). For such cases, the additional reference to § 2M5.1 promotes clarity and consistency in guideline application, and the penalty structure of § 2M5.1 provides appropriate distinctions between offenses that violate national security controls and offenses that do not. Technical and Stylistic Changes Finally, the amendment 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 PO 00000 Frm 00120 Fmt 4703 Sfmt 9990 26435 renumbered by Public Law 111B203 (enacted 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 CFR 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’’. The changes are not substantive. [FR Doc. 2013–10678 Filed 5–3–13; 8:45 am] BILLING CODE 2210–40–P E:\FR\FM\06MYN1.SGM 06MYN1

Agencies

[Federal Register Volume 78, Number 87 (Monday, May 6, 2013)]
[Notices]
[Pages 26425-26435]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-10678]


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UNITED STATES SENTENCING COMMISSION


Sentencing Guidelines for United States Courts

AGENCY: United States Sentencing Commission.

ACTION: Notice of submission to Congress of amendments to the 
sentencing guidelines effective November 1, 2013.

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SUMMARY: Pursuant to its authority under 28 U.S.C. 994(p), the 
Commission has promulgated amendments to the sentencing guidelines, 
policy statements, commentary, and statutory index. This notice sets 
forth the amendments and the reason for each amendment.

DATES: The Commission has specified an effective date of November 1, 
2013, for the amendments set forth in this notice.

FOR FURTHER INFORMATION CONTACT: Jeanne Doherty, Public Affairs 
Officer, 202-502-4502. The amendments set forth in this notice also may 
be accessed through the Commission's Web site at www.ussc.gov.

SUPPLEMENTARY INFORMATION: The United States Sentencing Commission is 
an independent agency in the judicial branch of the United States 
Government. The Commission promulgates sentencing guidelines and policy 
statements for federal sentencing courts pursuant to 28 U.S.C. 994(a). 
The Commission also periodically reviews and revises previously 
promulgated guidelines pursuant to 28 U.S.C. 994(o) and generally 
submits guideline amendments to Congress pursuant to 28 U.S.C. 994(p) 
not later than the first day of May each year. Absent action of 
Congress to the contrary, submitted amendments become effective by 
operation of law on the date specified by the Commission (generally 
November 1 of the year in which the amendments are submitted to 
Congress).
    Notice of proposed amendments was published in the Federal Register 
on January 18, 2013 (see 78 FR 4197). The Commission held a public 
hearing on the proposed amendments in Washington, DC, on March 13, 
2013. On April 30, 2013, the Commission submitted these amendments to 
Congress and specified an effective date of November 1, 2013.

    Authority: 28 U.S.C. 994(a), (o), and (p); USSC Rules of 
Practice and Procedure 4.1.

Patti B. Saris,
Chair.
    1. Amendment: Section 2B1.1(b) is amended by striking paragraph 
(5); by renumbering paragraphs (6) through (8) as (5) through (7); by 
renumbering paragraphs (13) through (18) as (14) through (19); by 
inserting after paragraph (12) the following:
    ``(13) (Apply the greater) If the offense involved misappropriation 
of a trade secret and the defendant knew or intended--
    (A) that the trade secret would be transported or transmitted out 
of the United States, increase by 2 levels; or
    (B) that the offense would benefit a foreign government, foreign 
instrumentality, or foreign agent, increase by 4 levels.
    If subparagraph (B) applies and the resulting offense level is less 
than level 14, increase to level 14.''; and in paragraph (16) (as so 
renumbered) by striking ``(b)(15)(B)'' and inserting ``(b)(16)(B)''.
    The Commentary to Sec.  2B1.1 captioned ``Application Notes'' is 
amended in

[[Page 26426]]

Note 6 by striking ``(b)(7)'' both places it appears and inserting 
``(b)(6)''; in Note 10 by striking ``(b)(13)'' both places it appears 
and inserting ``(b)(14)''; in Note 11 by striking ``(b)(15)(A)'' both 
places it appears and inserting ``(b)(16)(A)''; in Note 12 by striking 
``(b)(15)(B)'' and inserting ``(b)(16)(B)''; in Note 12(A) by striking 
``(b)(15)(B)(i)'' and inserting ``(b)(16)(B)(i)''; in Note 12(B) by 
striking ``(b)(15)(B)(ii)'' and inserting ``(b)(16)(B)(ii)''; in Note 
13 by striking ``(b)(17)'' both places it appears and inserting 
``(b)(18)''; in Note 13(B) by striking ``(b)(17)(A)(iii)'' both places 
it appears and inserting ``(b)(18)(A)(iii)'', and by striking 
``(b)(15)(B)'' both places it appears and inserting ``(b)(16)(B)''; in 
Note 14 by striking ``(b)(18)'' each place it appears and inserting 
``(b)(19)''; and in Note 19(B) by striking ``(b)(17)(A)(iii)'' and 
inserting ``(b)(18)(A)(iii)''.
    The Commentary to Sec.  2B1.1 captioned ``Background'' is amended 
by striking ``(b)(6)'', ``(b)(8)'', ``(b)(14)(B)'', ``(b)(15)(A)'', 
``(b)(15)(B)(i)'', ``(b)(16)'', ``(b)(17)'', and ``(b)(17)(B)'' and 
inserting ``(b)(5)'', ``(b)(7)'', ``(b)(15)(B)'', ``(b)(16)(A)'', 
``(b)(16)(B)(i)'', ``(b)(17)'', ``(b)(18)'', and ``(b)(18)(B)'', 
respectively; and by inserting before the paragraph that begins 
``Subsection (b)(15)(B)'' (as so amended) the following:
    ``Subsection (b)(13) implements the directive in section 3 of 
Public Law 112-269.''.
    Reason for Amendment: This amendment responds to section 3 of the 
Foreign and Economic Espionage Penalty Enhancement Act of 2012, Public 
Law 112-269 (enacted January 14, 2013), which contains a directive to 
the Commission regarding offenses involving stolen trade secrets or 
economic espionage.
    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 
consider, among other things, whether the guidelines adequately address 
the simple misappropriation of a trade secret; the transmission or 
attempted transmission of a stolen trade secret outside of the United 
States; and 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.
    The offenses described in the directive may be prosecuted under 18 
U.S.C. Sec.  1831 (Economic espionage), which requires that the 
defendant specifically intend or know that the offense ``will benefit 
any foreign government, foreign instrumentality, or foreign agent,'' 
and 18 U.S.C. Sec.  1832 (Theft of trade secrets), which does not 
require such specific intent or knowledge. The statutory maximum terms 
of imprisonment are 15 years for a section 1831 offense and 10 years 
for a section 1832 offense. Both offenses are referenced in Appendix A 
(Statutory Index) to Sec.  2B1.1 (Theft, Property Destruction, and 
Fraud).
    In response to the directive, the amendment revises the existing 
specific offense characteristic at Sec.  2B1.1(b)(5), which provides an 
enhancement of two levels ``[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,'' in two ways. First, it broadens the scope of the enhancement 
to provide a 2-level increase for trade secret offenses in which the 
defendant knew or intended that the trade secret would be transported 
or transmitted out of the United States. Second, it increases the 
severity of the enhancement to provide a 4-level enhancement and a 
minimum offense level of 14 for trade secret offenses in which the 
defendant knew or intended that the offense would benefit a foreign 
government, foreign instrumentality, or foreign agent. The enhancement 
also is redesignated as subsection (b)(13).
    In responding to the directive, the Commission consulted with 
individuals or groups representing law enforcement, owners of trade 
secrets, victims of economic espionage offenses, the United States 
Department of Justice, the United States Department of Homeland 
Security, the United States Department of State, the Office of the 
United States Trade Representative, the Federal Public and Community 
Defenders, and standing advisory groups, among others. The Commission 
also considered relevant data and literature.
    The Commission received public comment and testimony that the 
transmission of stolen trade secrets outside of the United States 
creates significant obstacles to effective investigation and 
prosecution and causes both increased harm to victims and more general 
harms to the nation. With respect to the victim, civil remedies may not 
be readily available or effective, and the transmission of a stolen 
trade secret outside of the United States substantially increases the 
risk that the trade secret will be exploited by a foreign competitor. 
In contrast, the simple movement of a stolen trade secret within a 
domestic multinational company (e.g., from a United States office to an 
overseas office of the same company) may not pose the same risks or 
harms. More generally, the Commission heard that foreign actors 
increasingly target United States companies for trade secret theft and 
that such offenses pose a growing threat to the nation's global 
competitiveness, economic growth, and national security. Accordingly, 
the Commission determined that a 2-level enhancement is warranted for 
cases in which the defendant knew or intended that a stolen trade 
secret would be transported or transmitted outside of the United 
States.
    The Commission also received public comment and testimony that 
cases involving economic espionage (i.e., trade secret offenses that 
benefit foreign governments or entities under the substantial control 
of foreign governments) are particularly serious. In such cases, the 
United States is unlikely to obtain a foreign government's cooperation 
when seeking relief for the victim, and offenders backed by a foreign 
government likely will have significant financial resources to combat 
civil remedies. In addition, a foreign government's involvement 
increases the threat to the nation's economic and national security. 
Accordingly, the Commission determined that the existing enhancement 
for economic espionage should be increased from 2 to 4 levels and that 
such offenses should be subject to a minimum offense level of 14. This 
heightened enhancement is consistent with the higher statutory maximum 
penalties and fines applicable to such offenses and the Commission's 
established treatment of economic espionage as a more serious form of 
trade secret theft.
    Consistent with the directive, the Commission also considered 
whether the guidelines appropriately account for the simple 
misappropriation of a trade secret. The Commission determined that such 
offenses are adequately accounted for by existing provisions in the 
Guidelines Manual, such as the loss table in Sec.  2B1.1(b)(1), the 
sophisticated means enhancement at Sec.  2B1.1(b)(10),

[[Page 26427]]

and the adjustment for abuse of position of trust or use of special 
skill at Sec.  3B1.3.
    2. Amendment: Section 2B1.1 is amended by inserting before 
paragraph (9) the following new paragraph:
    ``(8) (Apply the greater) If--
    (A) the offense involved conduct described in 18 U.S.C. Sec.  670, 
increase by 2 levels; or
    (B) the offense involved conduct described in 18 U.S.C. Sec.  670, 
and the defendant was employed by, or was an agent of, an organization 
in the supply chain for the pre-retail medical product, increase by 4 
levels.'';
    The Commentary to Sec.  2B1.1 captioned ``Application Notes'' is 
amended in Note 1 by inserting after the paragraph that begins `` 
`Personal information' means'' the following:
    `` `Pre-retail medical product' has the meaning given that term in 
18 U.S.C. Sec.  670(e).''; and by inserting after the paragraph that 
begins `` `Publicly traded company' means'' the following:
    `` `Supply chain' has the meaning given that term in 18 U.S.C. 
Sec.  670(e).''; in Note 3(F)(i) by striking ``Note 9(A)'' and 
inserting ``Note 10(A)''; and by renumbering Notes 7 through 19 as 8 
through 20; by inserting after Note 6 the following:
    ``7. Application of Subsection (b)(8)(B).--If subsection (b)(8)(B) 
applies, do not apply an adjustment under Sec.  3B1.3 (Abuse of 
Position of Trust or Use of Special Skill).''; and in Note 20 (as so 
renumbered) by adding at the end of subparagraph (A)(ii) as the last 
sentence the following: ``Similarly, an upward departure would be 
warranted in a case involving conduct described in 18 U.S.C. Sec.  670 
if the offense resulted in serious bodily injury or death, including 
serious bodily injury or death resulting from the use of the pre-retail 
medical product.''.
    The Commentary to Sec.  2B1.1 captioned ``Background'' is amended 
by inserting before the paragraph that begins ``Subsection (b)(9)(D)'' 
the following:
    ``Subsection (b)(8) implements the directive to the Commission in 
section 7 of Public Law 112-186.''.
    However, if Sec.  2B1.1(b) already contains a paragraph (8) because 
the renumbering of paragraphs by Amendment 1 of this document has not 
taken effect, renumber the new paragraph inserted into Sec.  2B1.1(b) 
as paragraph (8A) rather than paragraph (8), and revise the Commentary 
so that the new Note 7 inserted into the Application Notes and the new 
paragraph inserted into the Background refer to subsection (b)(8A) 
rather than subsection (b)(8).
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to 18 U.S.C. Sec.  669 the following:
    ``18 U.S.C. Sec.  670 2B1.1''.
    Reason for Amendment: This amendment responds to the Strengthening 
and Focusing Enforcement to Deter Organized Stealing and Enhance Safety 
Act of 2012, Public Law 112-186 (enacted October 5, 2012) (the 
``Act''), which addressed various offenses involving ``pre-retail 
medical products,'' defined as ``a medical product that has not yet 
been made available for retail purchase by a consumer.'' The Act 
created a new criminal offense at 18 U.S.C. Sec.  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.

New Offense at 18 U.S.C. Sec.  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 amendment amends Appendix A (Statutory Index) to reference the 
new offense at 18 U.S.C. Sec.  670 to Sec.  2B1.1 (Theft, Property 
Destruction, and Fraud). The Commission concluded that Sec.  2B1.1 is 
the appropriate guideline because the elements of the new offense 
include theft or fraud.

Response to Directive

    Section 7 of the Act directs 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.'' The amendment 
amends Sec.  2B1.1 to address offenses involving pre-retail medical 
products in two ways.
    First, the amendment adds a new specific offense characteristic at 
Sec.  2B1.1(b)(8) that provides a two-pronged enhancement with an 
instruction to apply the greater. Prong (A) provides a 2-level 
enhancement if the offense involved conduct described in 18 U.S.C. 
Sec.  670. Prong (B) provides a 4-level enhancement if the offense 
involved conduct described in 18 U.S.C. Sec.  670 and the defendant was 
employed by, or an agent of, an organization in the supply chain for 
the pre-retail product. Accompanying this new specific offense 
characteristic is new Commentary providing that, if prong (B) applies, 
``do not apply an adjustment under Sec.  3B1.3 (Abuse of Position of 
Trust or Use of Special Skill).''

[[Page 26428]]

    Based on public comment, testimony and sentencing data, the 
Commission concluded that an enhancement differentiating fraud and 
theft offenses involving medical products from those involving other 
products is warranted by the additional risk such offenses pose to 
public health and safety. In addition, such offenses undermine the 
public's confidence in the medical regulatory and distribution system. 
The Commission also concluded that the risks and harms it identified 
would be present in any theft or fraud offense involving a pre-retail 
medical product, regardless of the offense of conviction. Therefore 
application of the new specific offense characteristic is not limited 
to offenses charged under 18 U.S.C. Sec.  670.
    The amendment provides a 4-level enhancement for defendants who 
commit such offenses while employed in the supply chain for the pre-
retail medical product. Such defendants are subject to an increased 
statutory maximum and the Commission determined that a heightened 
enhancement should apply to reflect the likelihood that the defendant's 
position in the supply chain facilitated the commission or concealment 
of the offense. Defendants who receive the 4-level enhancement are not 
subject to the adjustment at Sec.  3B1.3 because the new enhancement 
adequately accounts for the concerns covered by Sec.  3B1.3. The 
Commission determined that existing specific offense characteristics 
generally account for other aggravating factors included in the Act, 
such as loss, use or threat of force, risk of death or serious bodily 
injury, and weapon involvement, and therefore additional new specific 
offense characteristics are not necessary. See, e.g., ''Sec. Sec.  
2B1.1(b)(1), (b)(3), and (b)(15) (as redesignated by the amendment).
    Second, it amends the upward departure provisions in the Commentary 
to Sec.  2B1.1 at Application Note 19(A) to provide--as an example of a 
case in which an upward departure would be warranted--a case 
``involving conduct described in 18 U.S.C. Sec.  670 if the offense 
resulted in serious bodily injury or death, including serious bodily 
injury or death resulting from the use of the pre-retail medical 
product.'' Public comment and testimony indicated that Sec.  2B1.1 may 
not adequately account for the harm created by theft or fraud offenses 
involving pre-retail medical products when such serious bodily injury 
or death actually occurs as a result of the offense. For example, some 
pre-retail medical products are stolen as part of a scheme to re-sell 
them into the supply chain, but if the products have not been properly 
stored in the interim, their subsequent use can seriously injure the 
individual consumers who buy and use them. Thus, the amendment expands 
the scope of the existing upward departure provision to address such 
harms and to clarify that an upward departure is appropriate in such 
cases not only if serious bodily injury or death occurred during the 
theft or fraud, but also if such serious bodily injury or death 
resulted from the victim's use of a pre-retail medical product that had 
previously been obtained by theft or fraud.
    Finally, the proposed amendment amends the Commentary to Sec.  
2B1.1 to provide relevant definitions and make other conforming 
changes.
    3. Amendment: Section 2B5.3(b) is amended by renumbering paragraph 
(5) as (6); by inserting after paragraph (4) the following:
    ``(5) If the offense involved a counterfeit drug, increase by 2 
levels.''; and by inserting after paragraph (6) (as so renumbered) the 
following:
    ``(7) If the offense involved a counterfeit military good or 
service the use, malfunction, or failure of which is likely to cause 
(A) the disclosure of classified information; (B) impairment of combat 
operations; or (C) other significant harm to (i) a combat operation, 
(ii) a member of the Armed Forces, or (iii) national security, increase 
by 2 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 that begins 
``'Commercial advantage'' the following:
    ``'Counterfeit drug' has the meaning given that term in 18 U.S.C. 
Sec.  2320(f)(6).
    ``'Counterfeit military good or service' has the meaning given that 
term in 18 U.S.C. Sec.  2320(f)(4).''; by renumbering Notes 3 and 4 as 
4 and 5; by inserting after Note 2 the following:
    ``3. Application of Subsection (b)(7).--In subsection (b)(7), 
`other significant harm to a member of the Armed Forces' means 
significant harm other than serious bodily injury or death. In a case 
in which 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, subsection (b)(6)(A) (conscious or reckless 
risk of serious bodily injury or death) would apply.''; and in Note 5 
(as so renumbered) by adding at the end the following:
    ``(D) The offense resulted in death or serious bodily injury.''.
    The Commentary to Sec.  2B5.3 captioned ``Background'' is amended 
by inserting after the paragraph that begins ``Subsection (b)(1)'' the 
following:
    `` Subsection (b)(5) implements the directive to the Commission in 
section 717 of Public Law 112B144.''.
    Appendix A (Statutory Index) is amended by striking the line 
referenced to 21 U.S.C. Sec.  333(b) and inserting the following:
    ``21 U.S.C. Sec.  333(b)(1)-(6) 2N2.1
    21 U.S.C. Sec.  333(b)(7) 2N1.1''.
    Reason for Amendment: This amendment responds to two recent Acts 
that made changes to 18 U.S.C. Sec.  2320 (Trafficking in counterfeit 
goods or services). One Act increased penalties for offenses involving 
counterfeit military goods and services; the other increased penalties 
for offenses involving counterfeit drugs and included a directive to 
the Commission. The amendment also responds to recent statutory changes 
to 21 U.S.C. Sec.  333 (Penalties for violations of the Federal Food, 
Drug, and Cosmetics Act) that increase penalties for offenses involving 
intentionally adulterated drugs.

Section 2320 and Counterfeit Military Goods and Services

    First, the amendment responds to changes to section 2320 made by 
the National Defense Authorization Act for Fiscal Year 2012, Public Law 
112-81 (enacted December 31, 2011) (the ``NDAA''). 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 20 years for a second or subsequent offense. If the offender 
knowingly or recklessly causes or attempts to cause serious bodily 
injury or death, the statutory maximum is increased to 20 years or any 
term of years or life, respectively. Offenses under section 2320 are 
referenced in Appendix A (Statutory Index) to Sec.  2B5.3 (Criminal 
Infringement of Copyright or Trademark).
    Section 818 of the NDAA 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 defined as 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. Sec.  2320(f)(4). An individual who commits an offense

[[Page 26429]]

under subsection (a)(3) 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. Sec.  2320(b)(3).
    The legislative history of the NDAA indicates that Congress amended 
section 2320 because of concerns about national security and the 
protection of United States servicemen and women. After reviewing the 
legislative history, public comment, testimony, and data, the 
Commission determined that an offense involving counterfeit military 
goods and services that jeopardizes the safety of United States troops 
and compromises mission effectiveness warrants increased punishment.
    Specifically, the amendment addresses offenses involving 
counterfeit military goods and services by amending Sec.  2B5.3 to 
create a new specific offense characteristic at subsection (b)(7). 
Subsection (b)(7) provides a 2-level enhancement and a minimum offense 
level of 14 if the offense involves a counterfeit military good or 
service the use, malfunction, or failure of which is likely to cause 
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. The Commission set the 
minimum offense level at 14 so that it would be proportionate to the 
minimum offense level in the enhancement for ``conscious or reckless 
risk of death or serious bodily injury'' at subsection (b)(5)(A). That 
enhancement is moved from (b)(5)(A) to (b)(6)(A) by the amendment.
    Although section 2320(a)(3) includes offenses that are likely to 
cause ``serious bodily injury or death,'' the new specific offense 
characteristic does not because the Commission determined that such 
risk of harm is adequately addressed by the existing enhancement for 
offenses involving the ``conscious or reckless risk of death or serious 
bodily injury.'' Consistent with that approach, the amendment includes 
commentary providing that the ``other significant harm'' specified in 
subsection (b)(7) does not include death or serious bodily injury and 
that Sec.  2B5.3(b)(6)(A) would apply 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.

Section 2320 and Counterfeit Drugs

    Second, the amendment responds to changes made by section 717 of 
the Food and Drug Administration Safety and Innovation Act, Public Law 
112-144 (enacted July 9, 2012) (the ``FDASIA''), which 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 (21 U.S.C. 
Sec.  321), that uses a counterfeit mark. See 18 U.S.C. Sec.  
2320(f)(6). An individual who commits an offense under subsection 
(a)(4) 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 the FDASIA 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)(1). In addition, section 717(b)(2) provides that, in responding 
to the directive, the Commission shall, among other things, ensure that 
the guidelines reflect the serious nature of section 2320(a)(4) 
offenses and consider the extent to which the guidelines account for 
the potential and actual harm to the public resulting from such 
offenses.
    After reviewing the legislative history of the FDASIA, public 
comment, testimony, and data, the Commission determined that offenses 
involving counterfeit drugs involve a threat to public safety and 
undermine the public's confidence in the drug supply chain. 
Furthermore, unlike many other goods covered by the infringement 
guideline, offenses involving counterfeit drugs circumvent a regulatory 
scheme established to protect the health and safety of the public. 
Accordingly, the amendment responds to the directive by adding a new 
specific offense characteristic at Sec.  2B5.3(b)(5) that provides a 2-
level enhancement if the offense involves a counterfeit drug.

Offenses Resulting in Death or Serious Bodily Injury

    Third, the amendment amends the Commentary to '2B5.3 to add a new 
upward departure consideration if the offense resulted in death or 
serious bodily injury. The addition of this departure consideration 
recognizes the distinction between an offense involving the risk of 
death or serious bodily injury and one in which death or serious bodily 
injury actually results. Departures for these reasons are already 
authorized in the guidelines, see Sec. Sec.  5K2.1 (Death) (Policy 
Statement), 5K2.2 (Physical Injury) (Policy Statement), but the 
amendment is intended to heighten awareness of the availability of a 
departure in such cases.

Section 333 and Offenses Involving Intentionally Adulterated Drugs

    Finally, the amendment provides a statutory reference for the new 
offense at 21 U.S.C. 333(b)(7) created by section 716 of the FDASIA. 
Section 333(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. Sec.  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.
    The 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). The 
Commission concluded that offenses under section 333(b)(7) are similar 
to tampering offenses under 18 U.S.C. Sec.  1365 (Tampering with 
consumer products), which are referenced to '2N1.1. In addition, the 
public health harms that Congress intended to target in adulteration 
cases are similar to those targeted by violations of section 1365(a) 
and are best addressed under Sec.  2N1.1.
    4. Amendment: The Commentary to Sec.  2T1.1 captioned ``Application 
Notes'' is amended in Note 1 by inserting ``Tax Loss.--'' at the 
beginning; in Note 2 by inserting ``Total Tax Loss Attributable to the 
Offense.--'' at the beginning, and by redesignating subdivisions (a) 
through (e) as (A) through (E); by inserting after Note 2 the 
following:
    ``3. Unclaimed Credits, Deductions, and Exemptions.--In determining 
the tax loss, the court should account for the standard deduction and 
personal and dependent exemptions to which the defendant was entitled. 
In addition, the court should account for any unclaimed credit, 
deduction, or exemption that is needed to ensure a reasonable estimate 
of the tax loss, but only to the extent that (A) the credit, deduction, 
or exemption was related to the tax offense and could have been claimed 
at the time the tax offense was committed; (B) the credit, deduction, 
or exemption is reasonably and practicably ascertainable; and (C) the 
defendant presents information to support the credit, deduction, or 
exemption sufficiently in advance of sentencing to provide an adequate 
opportunity to

[[Page 26430]]

evaluate whether it has sufficient indicia of reliability to support 
its probable accuracy (see Sec.  6A1.3 (Resolution of Disputed Factors) 
(Policy Statement)).
    However, the court shall not account for payments to third parties 
made in a manner that encouraged or facilitated a separate violation of 
law (e.g., `under the table' payments to employees or expenses incurred 
to obstruct justice).
    The burden is on the defendant to establish any such credit, 
deduction, or exemption by a preponderance of the evidence. See Sec.  
6A1.3, comment.''; by striking ``3. `Criminal activity' means'' and 
inserting the following:
    ``4. Application of Subsection (b)(1) (Criminal Activity).--
`Criminal activity' means''; by striking ``4. Sophisticated Means 
Enhancement.C'' and inserting the following:
    ``5. Application of Subsection (b)(2) (Sophisticated Means).--''; 
by striking ``5. A `credit claimed'' and all that follows through the 
end of Note 6 and inserting the following:
    ``6. Other Definitions.--For purposes of this section:
    A `credit claimed against tax' is an item that reduces the amount 
of tax directly. In contrast, a `deduction' is an item that reduces the 
amount of taxable income. `Gross income' has the same meaning as it has 
in 26 U.S.C. Sec.  61 and 26 CFR Sec.  1.61.''; and in Note 7 by 
inserting ``Aggregation of Individual and Corporate Tax Loss.--'' at 
the beginning.
    Reason for Amendment: This amendment responds to a circuit conflict 
regarding whether a sentencing court, in calculating tax loss as 
defined in Sec.  2T1.1 (Tax Evasion; Willful Failure to File Return, 
Supply Information, or Pay Tax; Fraudulent or False Returns, 
Statements, or Other Documents), may consider previously unclaimed 
credits, deductions, and exemptions that the defendant legitimately 
could have claimed if he or she had filed an accurate tax return.
    The Tenth and Second Circuits have held that a sentencing court may 
give the defendant credit for a legitimate but unclaimed deduction. 
These circuit courts generally reason that, while a district court need 
not speculate about unclaimed deductions if the defendant offers weak 
support, nothing in the guidelines prohibits a sentencing court from 
considering evidence of unclaimed deductions where a defendant offers 
convincing proof. See United States v. Hoskins, 654 F.3d 1086, 1094 
(10th Cir. 2011) (``[W]here 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) (holding that ``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 court erred when it refused to consider potential 
unclaimed deductions in its sentencing analysis).
    Six other circuit courts--the Fourth, Fifth, Seventh, Eighth, 
Ninth, and Eleventh--have reached the opposite conclusion, directly or 
indirectly holding that a court may not consider unclaimed deductions 
to reduce the tax loss. These circuit courts generally reason that the 
``object of the [defendant's] offense'' is established by the amount 
stated on the fraudulent return, and that courts should not be required 
to reconstruct the defendant's return based on speculation regarding 
the many hypothetical ways the defendant could have completed the 
return. 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, 677 (7th Cir. 2002) (``Here, the object of [the 
defendant]'s offense was the amount by which he underreported and 
fraudulently stated his tax liability on his return; reference to other 
unrelated mistakes on the return such as unclaimed deductions tells us 
nothing about the amount of loss to the government that his scheme 
intended to create.''); 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, 1165 (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 amendment resolves the conflict by amending the Commentary to 
Sec.  2T1.1 to establish a new application note regarding the 
consideration of unclaimed credits, deductions, or exemptions in 
calculating a defendant's tax loss. This amendment reflects the 
Commission's view that consideration of legitimate unclaimed credits, 
deductions, or exemptions, subject to certain limitations and 
exclusions, is most consistent with existing provisions regarding the 
calculation of tax loss in Sec.  2T1.1. See, e.g., USSG Sec.  2T1.1, 
comment. (n.1) (``the guidelines contemplate that the court will simply 
make a reasonable estimate based on the available facts''); USSG Sec.  
2T1.1, comment. (backg'd.) (``a greater tax loss is obviously more 
harmful to the treasury and more serious than a smaller one with 
otherwise similar characteristics''); USSG Sec.  2T1.1, comment. (n.1) 
(allowing a sentencing court to go beyond the presumptions set forth in 
the guideline if ``the government or defense provides sufficient 
information for a more accurate assessment of the tax loss,'' and 
providing ``the court should use any method of determining the tax loss 
that appears appropriate to reasonably calculate the loss that would 
have resulted had the offense been successfully completed'').
    The new application note first provides that courts should always 
account for the standard deduction and personal and dependent 
exemptions to which the defendant was entitled. The Commission received 
public comment and testimony that such deductions and exemptions are 
commonly considered and accepted by the government during the course of 
its investigation and during the course of plea negotiations. 
Consistent with this standard practice, the Commission determined that

[[Page 26431]]

accounting for these generally undisputed and readily verifiable 
deductions and exemptions where they are not previously claimed (most 
commonly where the offense involves a failure to file a tax return) is 
appropriate.
    The new application note further provides that courts should also 
account for any other previously unclaimed credit, deduction, or 
exemption that is needed to ensure a reasonable estimate of the tax 
loss, but only to the extent certain conditions are met. First, the 
credit, deduction, or exemption must be one that was related to the tax 
offense and could have been claimed at the time the tax offense was 
committed. This condition reflects the Commission's determination that 
a defendant should not be permitted to invoke unforeseen or after-the-
fact changes or characterizations--such as offsetting losses that occur 
before or after the relevant tax year or substituting a more 
advantageous depreciation method or filing status--to lower the tax 
loss. To permit a defendant to optimize his return in this manner would 
unjustly reward defendants, and could require unjustifiable speculation 
and complexity at the sentencing hearing.
    Second, the otherwise unclaimed credit, deduction, or exemption 
must be reasonably and practicably ascertainable. Consistent with the 
instruction in Application Note 1, this condition reaffirms the 
Commission's position that sentencing courts need only make a 
reasonable estimate of tax loss. In this regard, the Commission 
recognized that consideration of some unclaimed credits, deductions, or 
exemptions could require sentencing courts to make unnecessarily 
complex tax determinations, and therefore concluded that limiting 
consideration of unclaimed credits, deductions, or exemptions to those 
that are reasonably and practicably ascertainable is appropriate.
    Third, the defendant must present information to support the 
credit, deduction, or exemption sufficiently in advance of sentencing 
to provide an adequate opportunity to evaluate whether it has 
sufficient indicia of reliability to support its probable accuracy. 
Consistent with the principles set forth in Sec.  6A1.3 (Resolution of 
Disputed Factors) (Policy Statement), this condition ensures that the 
parties have an adequate opportunity to present information relevant to 
the court's consideration of any unclaimed credits, deductions, or 
exemptions raised at sentencing.
    In addition, the new application note provides that certain 
categories of credits, deductions, or exemptions shall not be 
considered by the court in any case. In particular, ``the court shall 
not account for payments to third parties made in a manner that 
encouraged or facilitated a separate violation of law (e.g., `under the 
table' payments to employees or expenses incurred to obstruct 
justice).'' The Commission determined that payments made in this manner 
result in additional harm to the tax system and the legal system as a 
whole. Therefore, to use them to reduce the tax loss would 
unjustifiably benefit the defendant and would result in a tax loss 
figure that understates the seriousness of the offense and the 
culpability of the defendant.
    Finally, the application note makes clear that the burden is on the 
defendant to establish any credit, deduction, or exemption permitted 
under this new application note by a preponderance of the evidence, 
which is also consistent with the commentary in Sec.  6A1.3.
    5. Amendment: The Commentary to Sec.  3E1.1 captioned ``Application 
Notes'' is amended in Note 6 by adding at the end of the paragraph that 
begins ``Because the Government'' the following as the last sentence: 
``The government should not withhold such a motion based on interests 
not identified in Sec.  3E1.1, such as whether the defendant agrees to 
waive his or her right to appeal.''; and by adding after the paragraph 
that begins ``Because the Government'' the following new paragraph:
    ``If the government files such a motion, and the court in deciding 
whether to grant the motion also 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, the court should grant the motion.''.
    The Commentary to Sec.  3E1.1 captioned ``Background'' is amended 
in the paragraph that begins ``Section 401(g)'' by striking ``the last 
paragraph'' and inserting ``the first sentence of the second 
paragraph''.
    Reason for Amendment: This amendment addresses two circuit 
conflicts involving the guideline for acceptance of responsibility, 
Sec.  3E1.1 (Acceptance of Responsibility). A defendant who clearly 
demonstrates acceptance of responsibility for his offense 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.
    The first circuit conflict involves the government's discretion 
under subsection (b) and, in particular, whether the government may 
withhold a motion based on an interest not identified in Sec.  3E1.1, 
such as the defendant's refusal to waive his right to appeal. The 
second conflict involves the court's discretion under subsection (b) 
and, in particular, whether the court may decline to apply the third 
level of reduction when the government has moved for it.
    These circuit conflicts are unusual in that they involve guideline 
and commentary provisions that Congress directly amended. See section 
401(g) of the Prosecutorial Remedies and Other Tools to end the 
Exploitation of Children Today Act of 2003, Public Law 108-21 (the 
``PROTECT Act''); see also USSG App. C, Amendment 649 (effective April 
30, 2003) (implementing amendments to the guidelines made directly by 
the PROTECT Act). They also implicate a congressional directive to the 
Commission not to ``alter or repeal'' the congressional amendments. See 
section 401(j)(4) of the PROTECT Act. Accordingly, in considering these 
conflicts, the Commission has not only reviewed public comment, 
sentencing data, case law, and the other types of information it 
ordinarily considers, but has also studied the operation of Sec.  3E1.1 
before the PROTECT Act, the congressional action to amend Sec.  3E1.1, 
and the legislative history of that congressional action.

The Government's Discretion to Withhold the Motion

    The first circuit conflict involves the government's discretion 
under subsection (b) and, in particular, whether the government may 
withhold a motion based on an interest not identified in Sec.  3E1.1, 
such as the defendant's refusal to waive his right to appeal.

[[Page 26432]]

    Several circuits have held that a defendant's refusal to sign an 
appellate waiver is a legitimate reason for the government to withhold 
a Sec.  3E1.1(b) motion. See, e.g., United States v. Johnson, 581 F.3d 
994, 1002 (9th Cir. 2009) (holding that ``allocation and expenditure of 
prosecutorial resources for the purposes of defending an appeal is a 
rational basis'' for such refusal); United States v. Deberry, 576 F.3d 
708, 711 (7th Cir. 2009) (holding that requiring the defendant to sign 
an appeal waiver would avoid ``expense and uncertainty'' on appeal); 
United States v. Newson, 515 F.3d 374, 378 (5th Cir. 2008) (holding 
that the government's interests under Sec.  3E1.1 encompass not only 
the government's time and effort at prejudgment stage but also at post-
judgment proceedings).
    In contrast, the Fourth Circuit has held that a defendant's refusal 
to sign an appellate waiver is not a legitimate reason for the 
government to withhold a Sec.  3E1.1(b) motion. See United States v. 
Divens, 650 F.3d 343, 348 (4th Cir. 2011) (stating that ``the text of 
Sec.  3E1.1(b) reveals a concern for the efficient allocation of trial 
resources, not appellate resources'' [emphasis in original]); see also 
United States v. Davis, No. 12-3552, slip op. at 5, ---- F.3d ---- (7th 
Cir., April 9, 2013) (Rovner, J., concurring) (``insisting that [the 
defendant] waive his right to appeal before he may receive the maximum 
credit under the Guidelines for accepting responsibility serves none of 
the interests identified in section 3E1.1''). The majority in Davis 
called for the conflict to be resolved, stating: ``Resolution of this 
conflict is the province of the Supreme Court or the Sentencing 
Commission.'' Davis, slip op. at 3, ---- F.3d at ---- (per curiam). The 
Second Circuit, stating that the Fourth Circuit's reasoning in Divens 
applies ``with equal force'' to the defendant's request for an 
evidentiary hearing on sentencing issues, held that the government may 
not withhold a Sec.  3E1.1 motion based upon such a request. See United 
States v. Lee, 653 F.3d 170, 175 (2d Cir. 2011).
    The PROTECT Act added Commentary to Sec.  3E1.1 stating that 
``[b]ecause the Government is in the best position to determine whether 
the defendant has assisted authorities in a manner that avoids 
preparing for trial, an adjustment under subsection (b) may only be 
granted upon a formal motion by the Government at the time of 
sentencing.'' See Sec.  3E1.1, comment. (n.6). The PROTECT Act also 
amended Sec.  3E1.1(b) to provide that the government motion state, 
among other things, that the defendant's notification of his intention 
to enter a plea of guilty permitted ``the government to avoid preparing 
for trial and . . . the government and the court to allocate their 
resources efficiently . . .''.
    In its study of the PROTECT Act, the Commission could discern no 
congressional intent to allow decisions under Sec.  3E1.1 to be based 
on interests not identified in Sec.  3E1.1. Furthermore, consistent 
with Divens and the concurrence in Davis, the Commission determined 
that the defendant's waiver of his or her right to appeal is an example 
of an interest not identified in Sec.  3E1.1. Accordingly, this 
amendment adds an additional sentence to the Commentary stating that 
``[t]he government should not withhold such a motion based on interests 
not identified in Sec.  3E1.1, such as whether the defendant agrees to 
waive his or her right to appeal.''

The Court's Discretion to Deny the Motion

    The second conflict involves the court's discretion under 
subsection (b) and, in particular, whether the court may decline to 
apply the third level of reduction when the government has moved for 
it.
    The Seventh Circuit has 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).
    In contrast, the Fifth Circuit has held that the district court 
retains discretion to deny the motion. See United States v. Williamson, 
598 F.3d 227, 230 (5th Cir. 2010). In Williamson, the defendant was 
convicted after jury trial but successfully appealed. After remand, he 
pled guilty to a lesser offense. The government moved for the third 
level of reduction, but the court declined to grant it because 
``regardless of however much additional trial preparation the 
government avoided through Williamson's guilty plea following remand, 
the preparation for the initial trial and the use of the court's 
resources for that trial meant that the Sec.  3E1.1(b) benefits to the 
government and the court were not obtained''. Id. at 231. The Fifth 
Circuit affirmed, holding 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''. Id. 
at 230.
    This amendment amends the Commentary to Sec.  3E1.1 by adding the 
following statement: ``If the government files such a motion, and the 
court in deciding whether to grant the motion also 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, the court should grant the 
motion.''
    In its study of the PROTECT Act, the Commission could discern no 
congressional intent to take away from the court its responsibility 
under Sec.  3E1.1 to make its own determination of whether the 
conditions were met. In particular, both the language added to the 
Commentary by the PROTECT Act and the legislative history of the 
PROTECT Act speak in terms of allowing the court discretion to 
``grant'' the third level of reduction. See USSG Sec.  3E1.1, comment. 
(n.6) (stating that the third level of reduction ``may only be granted 
upon a formal motion by the Government''); H.R. Rep. No. 108-66, at 59 
(2003) (Conf. Rep.) (stating that the PROTECT Act amendment would 
``only allow courts to grant an additional third point reduction for 
`acceptance of responsibility' upon motion of the government.''). In 
addition, the Commission observes that one of the considerations in 
Sec.  3E1.1(b) is whether the defendant's actions permitted the court 
to allocate its resources efficiently, and the court is in the best 
position to make that determination. Accordingly, consistent with 
congressional intent, this amendment recognizes that the court 
continues to have discretion to decide whether to grant the third level 
of reduction.
    Finally, and as mentioned above, the Commission in its study of the 
PROTECT Act could discern no congressional intent to allow decisions 
under Sec.  3E1.1 to be based on interests not identified in Sec.  
3E1.1. For that reason, this amendment indicates that, if the 
government has filed the motion and the court also determines that the 
circumstances identified in Sec.  3E1.1 are present, the court should 
grant the motion.
    6. Amendment: The Commentary to Sec.  5G1.3 captioned 
``Background'' is amended by striking ``In a case in which'' and all 
that follows through ``Exercise of that authority,'' and inserting 
``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

[[Page 26433]]

proceedings.' See Setser v. United States, 132 S. Ct. 1463, 1468 
(2012); 18 U.S.C. Sec.  3584(a). Federal courts also generally have 
discretion to order that the sentences they impose will run 
concurrently with or consecutively to other state sentences that are 
anticipated but not yet imposed. See Setser, 132 S. Ct. at 1468. 
Exercise of that discretion''.
    Reason for Amendment: This amendment responds to a recent Supreme 
Court decision that federal courts have discretion to order that the 
sentence run consecutively to (or concurrently with) an anticipated, 
but not yet imposed, state sentence. See Setser v. United States, 132 
S. Ct. 1463, 1468 (2012).
    The discretion recognized in Setser for anticipated state sentences 
is similar to the discretion that federal courts have under 18 U.S.C. 
Sec.  3584 for previously imposed sentences. Under section 3584, a 
federal court imposing a sentence generally has discretion to order 
that the sentence run consecutively to (or, in the alternative, 
concurrently with) a term of imprisonment previously imposed but not 
yet discharged. See 18 U.S.C. Sec.  3584(a). Section 5G1.3 (Imposition 
of a Sentence on a Defendant Subject to an Undischarged Term of 
Imprisonment) provides guidance to the court in determining whether, 
and how, to use the discretion under section 3584, i.e., whether the 
sentence should run consecutively to (or, in the alternative, 
concurrently with) the prior undischarged term of imprisonment.
    The amendment amends the background commentary to Sec.  5G1.3 to 
include a statement that, in addition to the discretion provided by 
section 3584, federal courts also generally have discretion under 
Setser to order that the sentences they impose will run consecutively 
to or concurrently with other state sentences that are anticipated but 
not yet imposed. Determining whether, and how, to use this discretion 
will depend on the adequacy of the information available. See Setser, 
132 S.Ct. at 1471 n.6 (``Of course, a district court should exercise 
the power to impose anticipatory consecutive (or concurrent) sentences 
intelligently. In some situations, a district court may have inadequate 
information and may forbear, but in other situations, that will not be 
the case.''). Adding this statement to the guideline that applies to 
the court's discretion under section 3584 is intended to provide 
heightened awareness of the court's similar discretion under Setser.
    7. Amendment: The Commentary to Sec.  2B1.1 captioned ``Application 
Notes'' is amended in Note 15 (as renumbered by Amendment 2) 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(20)'' both places it appears and inserting ``1a(28)''; 
and by striking ``1a(23)'' both places it appears and inserting 
``1a(31)''.
    Section 2B2.3(b) is amended by striking paragraph (1) and inserting 
the following:
    ``(1) (Apply the greater) If--
    (A) the trespass occurred (i) at a secure government facility; (ii) 
at a nuclear energy facility; (iii) on a vessel or aircraft of the 
United States; (iv) in a secure area of an airport or a seaport; (v) at 
a residence; (vi) at Arlington National Cemetery or a cemetery under 
the control of the National Cemetery Administration; (vii) at any 
restricted building or grounds; or (viii) on a computer system used (I) 
to maintain or operate a critical infrastructure; or (II) by or for a 
government entity in furtherance of the administration of justice, 
national defense, or national security, increase by 2 levels; or
    (B) the trespass occurred at the White House or its grounds, or the 
Vice President's official residence or its grounds, increase by 4 
levels.''.
    The Commentary to Sec.  2B2.3 captioned ``Application Notes'' is 
amended in Note 1 by inserting after the paragraph that begins `` 
`Protected computer' means'' the following:
    `` `Restricted building or grounds' has the meaning given that term 
in 18 U.S.C. Sec.  1752.''; and in Note 2 by inserting ``Application of 
Subsection (b)(3).--'' at the beginning.
    The Notes to the Drug Quantity Table in Sec.  2D1.1(c) are amended 
in each of Notes (H) and (I) by striking ``1308.11(d)(30)'' and 
inserting ``1308.11(d)(31)''.
    The Commentary to Sec.  2J1.2 captioned ``Application Notes'' is 
amended in Note 2(A) by striking ``Chapter Three, Part C'' in the 
heading and inserting ``Sec.  3C1.1''; and 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.  2J1.3 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''.
    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'' both 
places it appears and inserting ``court-martial''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to 18 U.S.C. Sec.  38 the following:
    ``18 U.S.C. Sec.  39A 2A5.2''; in the line referenced to 18 U.S.C. 
Sec.  554 by inserting ``2M5.1,'' after ``2B1.5,''; by inserting after 
the line referenced to 18 U.S.C. Sec.  1513 the following:
    ``18 U.S.C. Sec.  1514(c) 2J1.2''; by inserting after the line 
referenced to 18 U.S.C. Sec.  1751(e) the following:
    ``18 U.S.C. Sec.  1752 2A2.4, 2B2.3''; and by inserting after the 
line referenced to 19 U.S.C. Sec.  1586(e) the following:
    ``19 U.S.C. Sec.  1590(d)(1) 2T3.1
    19 U.S.C. Sec.  1590(d)(2) 2D1.1''.
    Reason for Amendment: This amendment responds to recently enacted 
legislation and miscellaneous and technical guideline issues.

Aiming a Laser Pointer at an Aircraft

    First, the amendment responds to Section 311 of the FAA 
Modernization and Reform Act of 2012, Public Law 112-95 (enacted 
February 14, 2012), which 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 amendment amends Appendix A (Statutory Index) to reference 
section 39A offenses to Sec.  2A5.2 (Interference with Flight Crew 
Member or Flight Attendant; Interference with Dispatch, Navigation, 
Operation, or Maintenance of Mass Transportation Vehicle). Section 
2A5.2 is the most analogous guideline because the offense involves 
interference with an aircraft in flight.

[[Page 26434]]

Restraining the Harassment of a Victim or Witness

    Second, the amendment responds to section 3(a) of the Child 
Protection Act of 2012, Public Law 112-206 (enacted December 7, 2012), 
which 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 amendment amends Appendix A (Statutory Index) to reference 
section 1514(c) offenses to Sec.  2J1.2 (Obstruction of Justice). 
Section 2J1.2 is the most analogous guideline because the offense 
involves interference with judicial proceedings.

Restricted Buildings and Grounds

    Third, the amendment responds to the Federal Restricted Buildings 
and Grounds Improvement Act of 2011, Public Law 112-98 (enacted March 
8, 2012), which amended the criminal offense at 18 U.S.C. Sec.  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 official 
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 amendment amends Appendix A (Statutory Index) to reference 
section 1752 offenses to Sec.  2A2.4 (Obstructing or Impeding Officers) 
and Sec.  2B2.3 (Trespass). These guidelines are most analogous because 
the elements of offenses under section 1752 involve either trespass at 
certain locations (i.e., locations permanently or temporarily protected 
by the Secret Service) or interference with official business at such 
locations, or both.
    The amendment also amends Sec.  2B2.3(b)(1) to ensure that a 
trespass under section 1752 provides a 4-level enhancement if the 
trespass occurred at the White House or the Vice President's official 
residence, or a 2-level enhancement if the trespass occurred at any 
other location permanently or temporarily protected by the Secret 
Service. Section 2B2.3(b)(1) provides a 2-level enhancement if the 
trespass occurred at locations that involve a significant federal 
interest, such as nuclear facilities, airports, and seaports. A 
trespass at a location protected by the Secret Service is no less 
serious than a trespass at other locations that involve a significant 
federal interest and warrants an equivalent enhancement of 2 levels. 
Section 2B2.3(b)(1) also provides a 2-level enhancement if the trespass 
occurred at a residence. A trespass at the residence of the President 
or the Vice President is more serious and poses a greater risk of harm 
than a trespass at an ordinary residence and warrants an enhancement of 
4 levels.

Aviation Smuggling

    Fourth, the amendment responds to the Ultralight Aircraft Smuggling 
Prevention Act of 2012, Public Law 112-93 (enacted February 10, 2012), 
which amended the criminal offense at 19 U.S.C. Sec.  1590 (Aviation 
smuggling) to clarify that the term ``aircraft'' includes ultralight 
aircraft and to cover attempts and conspiracies. Section 1590 makes it 
unlawful for the pilot of an aircraft to transport merchandise, 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(d)(2), and five years otherwise, see Sec.  1590(d)(1). The 
amendment amends Appendix A (Statutory Index) to reference offenses 
under section 1590(d)(1) to Sec.  2T3.1 (Evading Import Duties or 
Restrictions (Smuggling); Receiving or Trafficking in Smuggled 
Property). In such cases, Sec.  2T3.1 is the most analogous guideline 
because the offense involves smuggling. The amendment also amends 
Appendix A (Statutory Index) to reference offenses under section 
1590(d)(2) to Sec.  2D1.1 (Unlawful Manufacturing, Importing, 
Exporting, or Trafficking (Including Possession with Intent to Commit 
These Offenses); Attempt or Conspiracy). In such cases, Sec.  2D1.1 is 
the most analogous guideline because controlled substances are involved 
in these offenses.

Interaction Between Offense Guidelines in Chapter Two, Part J, and 
Certain Adjustments in Chapter Three, Part C

    Fifth, the amendment responds to an application issue that may 
arise 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). 
Specifically, there are application notes in four Chapter Two, Part J 
guidelines that, it has been argued, preclude the court from applying 
adjustments in Chapter Three, Part C. See, e.g., United States v. 
Duong, 665 F.3d 364 (1st Cir. 2012) (observing that, ``according to the 
literal terms'' of the application notes, an adjustment under Chapter 
Three, Part C `` `does not apply' '', but ``reject[ing] that 
premise'').
    The amendment amends the relevant application notes in Chapter Two, 
Part J (see Sec. Sec.  2J1.2, comment. (n.2(A)); 2J1.3, comment. (n.2); 
2J1.6, comment. (n.2); 2J1.9, comment. (n.1)) to clarify the 
Commission's intent that they restrict the court from applying Sec.  
3C1.1 (Obstructing or Impeding the Administration of Justice) but do 
not restrict the court from applying Sec. Sec.  3C1.2, 3C1.3, and 
3C1.4. These changes resolve the application issue consistent with 
Duong and promote clarity and consistency in the application of these 
adjustments.

Export Offenses Under 18 U.S.C. Sec.  554

    Sixth, the amendment broadens the range of guidelines to which 
export offenses under 18 U.S.C. Sec.  554 (Smuggling goods from the 
United States) are referenced. Section 554 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,

[[Page 26435]]

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 amendment amends Appendix A (Statutory Index) to add Sec.  
2M5.1 (Evasion of Export Controls; Financial Transactions with 
Countries Supporting International Terrorism) to the list of guidelines 
to which offenses under section 554 are referenced. Not all offenses 
under section 554 involve munitions, cultural resources, or wildlife, 
so a reference to an additional guideline is warranted. For example, a 
section 554 offense may be based on the export of ordinary commercial 
goods in violation of economic sanctions or on the export of ``dual-
use'' goods (i.e., goods that have both commercial and military 
applications). For such cases, the additional reference to Sec.  2M5.1 
promotes clarity and consistency in guideline application, and the 
penalty structure of Sec.  2M5.1 provides appropriate distinctions 
between offenses that violate national security controls and offenses 
that do not.

Technical and Stylistic Changes

    Finally, the amendment 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 111B203 (enacted 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 CFR 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''. The changes are not substantive.
[FR Doc. 2013-10678 Filed 5-3-13; 8:45 am]
BILLING CODE 2210-40-P