[Federal Register Volume 66, Number 18 (Friday, January 26, 2001)]
[Notices]
[Pages 7962-8017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1505]



[[Page 7961]]

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Part II





Sentencing Commission





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Sentencing Guidelines for United States Courts; Notice

  Federal Register / Vol. 66, No. 18 / Friday, January 26, 2001 / 
Notices  

[[Page 7962]]


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SENTENCING COMMISSION


Sentencing Guidelines for United States Courts

AGENCY: United States Sentencing Commission.

ACTION: Notice of (A) proposed temporary, emergency amendments to 
sentencing guidelines, policy statements, and commentary; (B) proposed 
permanent, non-emergency amendments to sentencing guidelines, policy 
statements, and commentary. Request for public comment. Notice of 
public hearing.

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SUMMARY: Pursuant to section 994(a), (o), and (p) of title 28, United 
States Code, and section 3664 of Pub. L. 106-310 (with respect to 
proposed emergency amendment #1), section 3611 of Pub. L. 106-310 (with 
respect to proposed emergency amendment #2), section 3651 of Pub. L. 
106-310 (with respect to proposed emergency amendment #3), and section 
112(b) of Pub. L. 106-386 (with respect to proposed emergency amendment 
#4) the Commission is considering promulgating certain amendments to 
the sentencing guidelines, policy statements, and commentary. This 
notice sets forth the proposed amendments and, for each proposed 
amendment, a synopsis of the issues addressed by that amendment.

DATES: Written public comment on the proposed emergency amendments in 
part (A) should be received by the Commission not later than February 
5, 2001. Written public comment on the proposed permanent, non-
emergency amendments in part (B), and on the proposed amendments in 
part (A) for purposes of promulgating those amendments as permanent, 
non-emergency amendments, should be received by the Commission not 
later than March 26, 2001. The Commission requests that, to the extent 
practicable, commentators submit written public comment on the proposed 
permanent, non-emergency amendments not later than March 9, 2001, in 
order for the Commission to consider that comment before its public 
hearing scheduled for the March 19-20, 2001 session. Note that the 
Commission may, at its February 2001 public meeting, revise the 
deadline for submission of written public comment to provide for an 
earlier deadline than the deadline published in this notice. See USSC 
Rules of Practice and Procedure, Rule 1.2.
    The Commission plans to hold a public hearing on the proposed 
permanent, non-emergency amendments during its March 2001 session in 
Washington, DC. The public hearing will be held at the Thurgood 
Marshall Federal Judiciary Building, One Columbus Circle, NE., 
Washington, DC 20002-8002. A person who desires to testify at the 
public hearing should notify Michael Courlander, Public Affairs 
Officer, at (202) 502-4590, not later than March 9, 2001. Written 
testimony for the public hearing must be received by the Commission not 
later than March 9, 2001. Timely submission of written testimony is a 
requirement for testifying at the public hearing. The Commission 
requests that, to the extent practicable, commentators submit an 
electronic version of the comment and of the testimony for the public 
hearing.

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

FOR FURTHER INFORMATION CONTACT: Michael Courlander, Public Affairs 
Officer, Telephone: (202) 502-4590.

SUPPLEMENTARY INFORMATION: The United States Sentencing Commission is 
an independent agency in the judicial branch of the United States 
Government. The Commission promulgates sentencing guidelines and policy 
statements for federal sentencing courts pursuant to 28 U.S.C. 994(a). 
The Commission also periodically reviews and revises previously 
promulgated guidelines pursuant to 28 U.S.C. 994(o) and submits 
guideline amendments to the Congress not later than the first day of 
May each year pursuant to 28 U.S.C. 994(p). This year, the Commission 
may submit non-emergency amendments to the Congress not later than May 
1, 2001.
    The Commission seeks comment on the proposed amendments, 
alternative proposed amendments, issues for comment, and any other 
aspect of the sentencing guidelines, policy statements, and commentary.
    The Commission also requests public comment regarding whether the 
Commission should specify for retroactive application to previously 
sentenced defendants any of the proposed, permanent, non-emergency 
amendments published in this notice and in the Federal Register notice 
of November 7, 2000 (see 65 FR 66792). The Commission requests comment 
regarding which, if any, of the proposed non-emergency amendments that 
may result in a lower guideline range should be made retroactive to 
previously sentenced defendants pursuant to Sec. 1B1.10 (Reduction in 
Term of Imprisonment as a Result of Amended Guideline Range).
    The proposed amendments are presented in this notice in one of two 
formats. First, some of the amendments are proposed as specific 
revisions to a guideline or commentary. Bracketed text within a 
proposed amendment indicates a heightened interest on the Commission's 
part for comment and suggestions for alternative policy choices; for 
example, a proposed enhancement of [2] levels indicates that the 
Commission is considering, and invites comment on, alternative policy 
choices regarding the appropriate level of enhancement. Similarly, 
bracketed text within a specific offense characteristic or application 
note means that the Commission specifically invites comment on whether 
the proposed provision is appropriate. Second, the Commission has 
highlighted certain issues for comment and invites suggestions for how 
the Commission should respond to those issues.
    Reports and other additional information pertaining to the proposed 
amendments described in this notice may be accessed through the 
Commission's website at www.ussc.gov.

    Authority:  28 U.S.C. Sec. 994(a), (o), (p), (x); section 112(b) 
of Pub. L. 106-386; and sections 3611, 3651, and 3664 of Pub. L. 
106-310; USSC Rules of Practice and Procedure, Rules 4.3, 4.4.

Diana E. Murphy,
Chair.

Proposed Amendments to the Sentencing Guidelines

Part (A): Proposed Temporary, Emergency Amendments and Intent To 
Make Permanent Each of the Proposed Temporary, Emergency Amendments

    The Commission hereby gives notice of, and requests comment on, its 
intent to promulgate each of the proposed amendments set forth in this 
Part as a temporary, emergency amendment and after promulgation as an 
emergency amendment, to promulgate each such amendment as a permanent, 
non-emergency amendment.

Proposed Amendment: Ecstasy

    1. Synopsis of Proposed Amendment: This proposed amendment 
addresses the directive in the Ecstasy Anti-Proliferation Act of 2000 
(the ``Act''), section 3664 of Pub. L. 106-310, which instructs the 
Commission to provide, under emergency amendment authority, increased 
penalties for the manufacture, importation, exportation, or trafficking 
of Ecstasy. The directive specifically requires the Commission to 
increase the base offense level for 3,4-methylenedioxy methamphetamine 
(MDMA), 3,4-methylenedioxy

[[Page 7963]]

amphetamine (MDA), 3,4-methylenedioxy-N-ethylamphetamine (MDEA), 
paramethoxy-methamphetamine (PMA), and any other controlled substance 
that is marketed as Ecstasy and that has either a chemical structure 
similar to MDMA or an effect on the central nervous system 
substantially similar to or greater than MDMA.
    The proposed amendment addresses the directive by amending the Drug 
Equivalency Table in Sec. 2D1.1, Application Note 10, to increase the 
marihuana equivalencies for the specified controlled substances. The 
increased equivalencies make the penalties for these substances 
comparable to other drugs of abuse. The increases also satisfy the 
sense of Congress in the Act that the penalties for these substances, 
particularly for high-level traffickers, are too low.
    An issue for comment regarding whether the Commission should base 
the penalties of Ecstasy on the penalties for other drugs of abuse, 
such as powder cocaine, methamphetamine mixture, or mescaline follows 
the proposed amendment.

Proposed Amendment

    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 10 in the Drug Equivalency Tables in the subdivision 
captioned ``LSD, PCP, and Other Schedule I and II Hallucinogens (and 
their immediate precursors)*'' in the line referenced to ``MDA'' by 
striking ``50 gm'' and inserting ``1 kg''; in the line referenced to 
``MDMA'' by striking ``35 gm'' and inserting ``1 kg''; in the line 
referenced ``MDEA'' by striking ``30 gm'' and inserting ``1 kg''; and 
by inserting ``1 gm of Paramethoxymethamphetamine/PMA = 1 kg of 
marihuana'' after the line referenced to ``MDEA''.
    Issue for Comment: It has been represented to the Commission that 
Ecstasy (i.e., MDMA, MDEA, MDA and PMA) is similar in its 
hallucinogenic effect on the user to mescaline, and also has been 
described as having an added stimulant component that can elevate heart 
rate, blood pressure, and body temperature. It has also been suggested 
that the drug is neither physically nor psychologically addictive. The 
Commission invites comment on these representations and on the 
appropriate penalty structure for Ecstasy. The proposed amendment 
treats Ecstasy as being of comparable seriousness to heroin, providing 
a marihuana equivalency for Ecstasy that is the same as heroin. 
Accordingly, for sentencing purposes, 1 gm of Ecstasy will be the 
equivalent of 1 kg of marihuana. Should the Commission alternatively 
treat Ecstasy comparably to some other major drug of abuse? For 
example, should the Commission treat Ecstasy as being of comparable 
seriousness to powder cocaine (which would result in a marihuana 
equivalency for Ecstasy of 200 gm) or methamphetamine mixture (which 
would result in a marihuana equivalency for Ecstasy of 2 kg)? Or should 
the penalty be comparable to that for mescaline (which would result in 
a marihuana equivalency for Ecstasy of 10 gm) or some multiple of the 
penalty for mescaline? Comment also is requested regarding whether the 
Drug Quantity Table in Sec. 2D1.1 should be revised with respect to 
Ecstacy to provide additional incremental penalties (perhaps with 
exponential quantity increases) so as to punish more severely those 
offenders who traffic in larger quantities.

Proposed Amendment: Amphetamine

    2. Synopsis of Proposed Amendment: This proposed amendment 
implements the directive in the Methamphetamine Anti-Proliferation Act 
of 2000, section 3611 of Pub. L. 106-310 (the ``Act''), which directs 
the Commission to provide, under emergency amendment authority, 
increased guideline penalties for amphetamine such that those penalties 
are comparable to the base offense level for methamphetamine.
    There are no mandatory minimum sentences for amphetamine offenses. 
Currently, a quantity of amphetamine is sentenced at the same level as 
an equal quantity of powder cocaine. That is, with no or minimal 
criminal history, an offender convicted of trafficking 500 grams of 
amphetamine would receive a guideline range of 63 to 78 months, based 
solely on the weight of the drug. A weight of 5,000 grams (5 
kilograms), and the lowest criminal history category, would result in a 
sentencing range of 121 to 151 months. The mathematical relationships 
between the weight of amphetamine and the current five- and ten-year 
quantity thresholds for methamphetamine-mix and methamphetamine-actual 
are 10-to-1 and 100-to-1, respectively.
    The proposed amendment provides two options for implementing the 
directive. Both options propose to treat amphetamine and 
methamphetamine identically, at a 1:1 ratio (i.e., the same quantities 
of amphetamine and methamphetamine would result in the same base 
offense level) because of the similarities of the two substances. 
Specifically, amphetamine and methamphetamine (A) chemically are 
similar; (B) are produced by a similar method, and are trafficked in a 
similar manner; (C) share similar methods of use; (D) affect the same 
parts of the brain; and (E) have similar intoxicating effects. Both 
options also distinguish between pure amphetamine (i.e., amphetamine 
(actual)) and amphetamine mixture in the same manner, and at the same 
quantities, as pure methamphetamine (i.e., methamphetamine (actual) and 
methamphetamine mixture).
    Although both options ultimately achieve the same penalty increase, 
the proposed options differ in how they implement the directive. Option 
One amends the Drug Equivalency Table of Sec. 2D1.1 (Unlawful 
Manufacturing, Importing, Exporting, or Trafficking (Including 
Possession with Intent to Commit These Offenses); Attempt or 
Conspiracy). To determine the offense level under this option, the 
quantity of amphetamine (actual or mixture) is converted to its 
marijuana weight equivalency using the Drug Equivalency Tables. Option 
Two, on the other hand, amends Sec. 2D1.1 specifically to include 
amphetamine in the Drug Quantity Table.
    Included in both options is a reference to the controlled substance 
dextroamphetamine, which is a substance quite similar to amphetamine. 
Currently, dextroamphetamine has the same marihuana equivalency as 
amphetamine mixture. The proposed amendment (A) distinguishes between 
dextroamphetamine mixture and dextroamphetamine (actual); and (B) 
provides penalties for the dextroamphetamine mixture and 
dextroamphetamine (actual) that are the same as amphetamine mixture and 
amphetamine (actual), respectively.
    Two issues for comment follows the proposed amendment. The first 
requests comment regarding whether the Commission should provide an 
alternative quantity ratio between amphetamine and methamphetamine. The 
second requests comment regarding whether Sec. 2D1.1(b)(4) should be 
amended to include amphetamine and dextroamphetamine.

Proposed Amendment

Option 1
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 10 in the Drug Equivalency Tables in the subdivision 
captioned ``Cocaine and Other Schedule I and II Stimulants (and their 
immediate precursors)*'' by striking ``200 gm'' after ``1 gm of 
Amphetamine ='' and inserting ``2 kg'';

[[Page 7964]]

by inserting ``1 gm of Amphetamine (Actual) = 20 kg of marihuana'' 
after the line referenced to ``Amphetamine''; by striking ``200 gm'' 
after ``1 gm of Dextroamphetamine ='' and inserting ``2 kg''; and by 
inserting ``1 gm of Dextroamphetamine (Actual) = 20 kg of marihuana'' 
after the line referenced to ``Dextroamphetamine''.
Option 2
    Section 2D1.1(c)(1) is amended by inserting after the fifth entry 
the following:
    ``15 KG or more of Amphetamine, or 1.5 KG or more of Amphetamine 
(actual), or 15 KG or more of Dextroamphetamine, or 1.5 KG or more of 
Dextroamphetamine (actual);''.
    Section 2D1.1(c)(2) is amended by inserting after the fifth entry 
the following:
    ``At least 5 KG but less than 15 KG of Amphetamine, or at least 500 
G but less than 1.5 KG of Amphetamine (actual), or at least 5 KG but 
less than 15 KG of Dextroamphetamine, or at least 500 G but less than 
1.5 KG of Dextroamphetamine (actual);''.
    Section 2D1.1(c)(3) is amended by inserting after the fifth entry 
the following:
    ``At least 1.5 KG but less than 5 KG of Amphetamine, or at least 
150 G but less than 500 G of Amphetamine (actual), or at least 1.5 KG 
but less than 5 KG of Dextroamphetamine, or at least 150 G but less 
than 500 G of Dextroamphetamine (actual);''.
    Section 2D1.1(c)(4) is amended by inserting after the fifth entry 
the following:
    ``At least 500 G but less than 1.5 KG of Amphetamine, or at least 
50 G but less than 150 G of Amphetamine (actual), or at least 500 G but 
less than 1.5 KG of Dextroamphetamine, or at least 50 G but less than 
150 G of Dextroamphetamine (actual);''.
    Section 2D1.1(c)(5) is amended by inserting after the fifth entry 
the following:
    ``At least 350 G but less than 500 G of Amphetamine, or at least 35 
G but less than 50 G of Amphetamine (actual), or at least 350 G but 
less than 500 G of Dextroamphetamine, or at least 35 G but less than 50 
G of Dextroamphetamine (actual);''.
    Section 2D1.1(c)(6) is amended by inserting after the fifth entry 
the following:
    ``At least 200 G but less than 350 G of Amphetamine, or at least 20 
G but less than 35 G of Amphetamine (actual), or at least 200 G but 
less than 350 G of Dextroamphetamine, or at least 20 G but less than 35 
G of Dextroamphetamine (actual);''.
    Section 2D1.1(c)(7) is amended by inserting after the fifth entry 
the following:
    ``At least 50 G but less than 200 G of Amphetamine, or at least 5 G 
but less than 20 G of Amphetamine (actual), or at least 50 G but less 
than 200 G of Dextroamphetamine, or at least 5 G but less than 20 G of 
Dextroamphetamine (actual);''.
    Section 2D1.1(c)(8) is amended by inserting after the fifth entry 
the following:
    ``At least 40 G but less than 50 G of Amphetamine, or at least 4 G 
but less than 5 G of Amphetamine (actual), or at least 40 G but less 
than 50 G of Dextroamphetamine, or at least 4 G but less than 5 G of 
Dextroamphetamine (actual);''.
    Section 2D1.1(c)(9) is amended by inserting after the fifth entry 
the following:
    ``At least 30 G but less than 40 G of Amphetamine, or at least 3 G 
but less than 4 G of Amphetamine (actual), or at least 30 G but less 
than 40 G of Dextroamphetamine, or at least 3 G but less than 4 G of 
Dextroamphetamine (actual);''.
    Section 2D1.1(c)(10) is amended by inserting after the fifth entry 
the following:
    ``At least 20 G but less than 30 G of Amphetamine, or at least 2 G 
but less than 3 G of Amphetamine (actual), or at least 20 G but less 
than 30 G of Dextroamphetamine or at least 2 G but less than 3 G of 
Dextroamphetamine (actual);''.
    Section 2D1.1(c)(11) is amended by inserting after the fifth entry 
the following:
    ``At least 10 G but less than 20 G of Amphetamine, or at least 1 G 
but less than 2 G of Amphetamine (actual), or at least 10 G but less 
than 20 G of Dextroamphetamine, or at least 1 G but less than 2 G of 
Dextroamphetamine (actual);''.
    Section 2D1.1(c)(12) is amended by inserting after the fifth entry 
the following:
    ``At least 5 G but less than 10 G of Amphetamine, or at least 500 
MG but less than 1 G of Amphetamine (actual), or at least 5 G but less 
than 10 G of Dextroamphetamine, or at least 500 MG but less than 1 G of 
Dextroamphetamine (actual);''.
    Section 2D1.1(c)(13) is amended by inserting after the fifth entry 
the following:
    ``At least 2.5 G but less than 5 G of Amphetamine, or at least 250 
MG but less than 500 MG of Amphetamine (actual), or at least 2.5 G but 
less than 5 G of Dextroamphetamine, or at least 250 MG but less than 
500 MG of Dextraomphetamine (actual);''.
    Section 2D1.1(c)(14) is amended by inserting after the fifth entry 
the following:
    ``Less than 2.5 G of Amphetamine, or less than 250 MG of 
Amphetamine (actual), or less than 2.5 G of Dextroamphetamine, or less 
than 250 MG of Dextraomphetamine (actual);''.
    Section 2D1.1(c) is amended in Note (B) of the ``Notes to Drug 
Quantity Table'', by inserting ``, ``Amphetamine (actual), 
``Dextroamphetamine (actual)','' after ``terms ``PCP (actual)''; by 
inserting ``, amphetamine, dextroamphetamine,'' after ``substance 
containing PCP''; and by inserting ``, amphetamine (actual), 
dextroamphetamine (actual),'' after ``weight of the PCP (actual)''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 9 by inserting ``, amphetamine, dextroamphetamine,'' 
after ``PCP''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 10 in the Drug Equivalency Tables in the subdivision 
captioned ``Cocaine and Other Schedule I and II Stimulants (and their 
immediate precursors)'' by striking ``200 gm'' after ``1 gm of 
Amphetamine = and inserting ``2 kg''; by inserting ``1 gm of 
Amphetamine (Actual) = 20 kg of marihuana'' after the line referenced 
to ``Amphetamine''; by striking ``200 gm'' after ``1 gm of 
Dextroamphetamine ='' and inserting ``2 kg''; and by inserting ``1 gm 
of Dextroamphetamine (Actual) = 20 kg of marihuana'' after the line 
referenced to ``Dextramphetamine''.

Issues for Comment

    (1) In response to the directive in the Methamphetamine Anti-
Proliferation Act of 2000 that instructs the Commission to provide, 
under emergency amendment authority, increased guideline penalties for 
amphetamine such that those penalties are comparable to the base 
offense level for methamphetamine, the Commission has proposed two 
amendment options that use a 1:1 ratio between amphetamine and 
methamphetamine (i.e., the same quantities of amphetamine and 
methamphetamine will result in the imposition of the same base offense 
level from the Drug Quantity Table in Sec. 2D1.1). The Commission 
invites comment on whether some alternative ratio should be used. For 
example, should the Commission use a 2:1 ratio or a 5:1 ratio between 
amphetamine and methamphetamine, and if so, why?
    (2) Section 2D1.1(b)(4) currently provides a two-level enhancement 
if the

[[Page 7965]]

offense involved the importation of methamphetamine or the manufacture 
of methamphetamine from listed chemicals that the defendant knew were 
imported unlawfully. The Commission invites comment regarding whether 
this enhancement should be amended to include the importation of 
amphetamine or the manufacture of amphetamine from listed chemicals 
that the defendant knew were imported unlawfully. If so, should the 
Commission also include the importation of dextroamphetamine or the 
manufacture of dextroamphetamine from listed chemicals that the 
defendant knew were imported unlawfully, particularly because 
dextroamphetamine is so similar to amphetamine and would be treated the 
same as amphetamine under the proposed amendment options?

Proposed Amendment: Trafficking in List I Chemicals

    3. Synopsis of Proposed Amendment: This proposed amendment 
addresses the three-part directive in the Methamphetamine Anti-
Proliferation Act of 2000, section 3651 of Pub. L. 106-310 (the 
``Act''), regarding enhanced punishment for trafficking in List I 
chemicals. That section requires the Commission to promulgate an 
amendment implementing the directive under emergency amendment 
authority.
    First, the directive instructs the Commission ``to provide 
increased penalties for offenses involving ephedrine, 
phenylpropanolamine (PPA), or pseudoephedrine (including their salts, 
optical isomers, and salts of optical isomers) to correspond to the 
quantity of controlled substance that reasonably could have been 
manufactured using the quantity of ephedrine, PPA, and pseudoephedrine 
possessed or distributed.'' In response to this directive, the proposed 
amendment provides a new chemical table specifically for ephedrine, 
pseudoephedrine, and PPA. The table ties the base offense levels for 
these chemicals to the base offense levels for methamphetamine (actual) 
set forth in Sec. 2D1.1, assuming a 50 percent yield of the controlled 
substance from the chemicals. Methamphetamine (actual) is used rather 
than methamphetamine mixture because ephedrine, PPA, and 
pseudoephedrine produce methamphetamine (actual).
    This new table has a maximum base offense level of level 38 (as 
opposed to a maximum base offense level of 30 for all other precursor 
chemicals). Providing a maximum base offense level of level 38 
increases the sentences for ephedrine, pseudoephedrine, and PPA by 
linking the theoretical yield of these chemicals to methamphetamine 
(actual) instead of methamphetamine (mixture) as had been done in the 
past. Additionally, this adjustment will have an impact on the 
relationship between Secs. 2D1.1 and 2D1.11 by eliminating the six-
level distinction that currently exists between offenses that involve 
possession of these precursor chemicals with intent to manufacture 
methamphetamine and offenses that involve an attempt to manufacture 
methamphetamine, at least for offenses involving ephedrine, PPA, and 
pseudoephedrine.
    In order to address cases that involve more than one chemical, the 
proposed amendment eliminates the ephedrine equivalency table and 
instead proposes a rule that would require the court to determine the 
base offense level by using the quantity of the single chemical that 
results in the greatest base offense level. An upward departure is 
provided for cases in which the offense level does not adequately 
address the seriousness of the offense.
    However, the proposed amendment provides an exception to this rule 
for offenses that involve a combination of ephedrine, pseudoephedrine, 
or phenylpropanolamine because these chemicals often are used in the 
same manufacturing process. In a case that involves two or more of 
these chemicals, the base offense level will be determined using the 
total quantity of the chemicals involved, based on an ephedrine 
equivalency.
    Second, the directive instructs the Commission ``to establish, 
based on scientific, law enforcement, and other data the Commission 
considers appropriate, a table in which the quantity of controlled 
substance that could reasonably have been manufactured shall be 
determined by using a table of manufacturing conversion ratios for 
ephedrine, PPA, and pseudoephedrine.'' In response to the directive, 
the proposed amendment adds to the Drug Equivalency Tables in 
Sec. 2D1.1 a conversion table for ephedrine, PPA, and pseudoephedrine 
for cases that are cross-referenced out of Sec. 2D1.11 because the 
offense involved the manufacture of methamphetamine. This table, which 
provides for a 50 percent conversion ratio for ephedrine, PPA, and 
pseudoephedrine, was developed using data from the Drug Enforcement 
Agency, Office of Diversion Control, as published on the web site of 
the Office of National Drug Control Policy (ONDCP). These data indicate 
that the actual yield of methamphetamine from ephedrine and 
pseudoephedrine is ``typically in the range of 50 to 75 percent''.
    Third, the directive instructs the Commission ``to increase 
penalties for offenses involving any List I chemical other than 
ephedrine, PPA, and pseudoephedrine, such that those penalties reflect 
the dangerous nature of such offenses, the need for aggressive law 
enforcement action to fight such offenses, and the extreme dangers 
associated with unlawful activity involving methamphetamine and 
amphetamine.'' In response to this directive, the proposed amendment 
increases the base offense level for Benzaldehyde, Hydriodic Acid, 
Methylamine, Nitroethane, and Norpseudoephedrine by two levels. These 
five additional List I chemicals also are associated with 
methamphetamine and amphetamine production. The maximum base offense 
level for these five chemicals will increase from level 30 to level 32. 
All other List I chemicals will remain at their current maximum base 
offense level of level 30.
    An issue for comment follows the proposed amendment regarding 
whether, as an alternative, the maximum base offense level in the 
proposed Ephedrine, Pseudoephedrine, Phenylpropanolamine Table in 
Sec. 2D1.11 should be set lower than the maximum base offense level in 
Sec. 2D1.1. This reduction would maintain the existing distinction 
between offenses involving possession of precursor chemicals with 
intent to manufacture versus attempt to manufacture for ephedrine, PPA, 
and pseudoephedrine currently captured by the maximum base offense 
level of 30 in Sec. 2D1.11. The original relationship between 
controlled substances in Sec. 2D1.1 and list I chemicals in Sec. 2D1.11 
presumed a 50 percent yield of controlled substances from each chemical 
and then reduced the entire table by eight levels. The eight level 
distinction later was reduced to six levels in response to a 
congressional directive.

Proposed Amendment

    Section 2D1.11(d) is amended by striking the Chemical Quantity 
Table and the Notes that follow the Table in their entirety and 
inserting the following:

[[Page 7966]]



   (d)(1) Ephedrine, Pseudoephedrine, and Phenylpropanolamine Quantity
                                 Table*
          [Methamphetamine and amphetamine precursor chemicals]
------------------------------------------------------------------------
                Quantity                        Base offense level
------------------------------------------------------------------------
(1) 3 KG or more of Ephedrine; 3 KG or    Level 38.
 more of Phenylpropanolamine; 3 KG or
 more of Pseudoephedrine.
(2) At least 1 KG but less than 3 KG of   Level 36.
 Ephedrine; At least 1 KG but less than
 3 KG of Phenylpropanolamine; At least 1
 KG but less than 3 KG of
 Pseudoephedrine.
(3) At least 300 G but less than 1 KG of  Level 34.
 Ephedrine; At least 300 G but less than
 1 KG of Phenylpropanolamine; At least
 300 G but less than 1 KG of
 Pseudoephedrine.
(4) At least 100 G but less than 300 G    Level 32.
 of Ephedrine; At least 100 G but less
 than 300 G of Phenylpropanolamine; At
 least 100 G but less than 300 G of
 Pseudoephedrine.
(5) At least 70 G but less than 100 G of  Level 30.
 Ephedrine; At least 70 G but less than
 100 G of Phenylpropanolamine; At least
 70 G but less than 100 G of
 Pseuodoephedrine.
(6) At least 40 G but less than 70 G of   Level 28.
 Ephedrine; At least 40 G but less than
 70 G of Phenylpropanolamine; At least
 40 G but less than 70 G of
 Pseudoephedrine.
(7) At least 10 G but less than 40 G of   Level 26.
 Ephedrine; At least 10 G but less than
 40 G of Phenylpropanolamine; At least
 10 G but less than 40 G of
 Pseudoephedrine.
(8) At least 8 G but less than 10 G of    Level 24.
 Ephedrine; At least 8 G but less than
 10 G of Phenylpropanolamine; At least 8
 G but less than 10 G of Pseudoephedrine.
(9) At least 6 G but less than 8 G of     Level 22.
 Ephedrine; At least 6 G but less than 8
 G of Phenylpropanolamine; At least 6 G
 but less than 8 G of Pseudoephedrine.
(10) At least 4 G but less than 6 G of    Level 20.
 Ephedrine; At least 4 G but less than 6
 G of Phenylpropanolamine; At least 4 G
 but less than 6 G of Pseudoephedrine.
(11) At least 2 G but less than 4 G of    Level 18.
 Ephedrine; At least 2 G but less than 4
 G of Phenylpropanolamine; At least 2 G
 but less than 4 G of Pseudoephedrine.
(12) At least 1 G but less than 2 G of    Level 16.
 Ephedrine; At least 1 G but less than 2
 G of Phenylpropanolamine; At least 1 G
 but less than 2 G of Pseudoephedrine.
(13) At least 500 MG but less than 1 G    Level 14.
 of Ephedrine; At least 500 MG but less
 than 1 G of Phenylpropanolamine; At
 least 500 MG but less than 1 G of
 Pseudoephedrine.
(14) Less than 500 MG of Ephedrine; Less  Level 12
 than 500 MG of Phenylpropanolamine;
 Less than 500 MG of Pseudoephedrine.
------------------------------------------------------------------------


                    (d)(2) Chemical Quantity Table *
                     [All other precursor chemicals]
------------------------------------------------------------------------
      Listed chemicals and quantity             Base offense level
------------------------------------------------------------------------
(1) List I Chemicals:...................  Level 32.
    51 KG or more of Benzaldehyde;
    132 KG or more of Hydriodic Acid;
    12 KG or more of Methylamine;
    37.8 KG or more of Nitroethane;
    600 KG or more of
     Norpseudoephedrine.
(2) List I Chemicals:...................  Level 30.
    At least 17 KG but less than 51 KG
     of Benzaldehyde;
    20 KG or more of Benzyl Cyanide;
    200 G or more of Ergonovine;
    400 G or more of Ergotamine;
    20 KG or more of Ethylamine;
    At least 44 KG but less than 132 KG
     of Hydriodic Acid;
    320 KG or more of Isosafrole;
    At least 4 KG but less than 12 KG of
     Methylamine;
    500 KG or more of N-Methylephedrine;
    500 KG or more of N-
     Methylpseudoephedrine;
    At least 12.6 KG but less than 37.8
     KG of Nitroethane;
    At least 200 KG but less than 600 KG
     of Norpseudoephedrine;
    20 KG or more of Phenylacetic Acid;
    10 KG or more of Piperidine;
    320 KG or more of Piperonal;
    1.6 KG or more of Propionic
     Anhydride;
    320 KG or more of Safrole;
    400 KG or more of 3, 4-
     Methylenedioxyphenyl-2-propanone.
(3) List I Chemicals:...................  Level 28.
    At least 5.3 KG but less than 17.8
     KG of Benzaldehyde;
    At least 6 KG but less than 20 KG of
     Benzyl Cyanide;
    At least 60 G but less than 200 G of
     Ergonovine;
    At least 120 G but less than 400 G
     of Ergotamine;
    At least 6 KG but less than 20 KG of
     Ethylamine;
    At least 13.2 KG but less than 44 KG
     of Hydriodic Acid;
    At least 96 KG but less than 320 KG
     of Isosafrole;
    At least 1.2 KG but less than 4 KG
     of Methylamine;
    At least 150 KG but less than 500 KG
     of N-Methylephedrine;
    At least 150 KG but less than 500 KG
     of N-Methylpseudoephedrine;

[[Page 7967]]

 
    At least 3.8 KG but less than 12.6
     KG of Nitroethane;
    At least 60 KG but less than 200 KG
     of Norpseudoephedrine;
    At least 6 KG but less than 20 KG of
     Phenylacetic Acid;
    At least 3 KG but less than 10 KG of
     Piperidine;
    At least 96 KG but less than 320 KG
     of Piperonal;
    At least 480 G but less than 1.6 KG
     of Propionic Anhydride;
    At least 96 KG but less than 320 KG
     of Safrole;
    At least 120 KG but less than 400 KG
     of 3, 4-Methylenedioxyphenyl-2-
     propanone;
List II Chemicals:
    11 KG or more of Acetic Anhydride;
    1175 KG or more of Acetone;
    20 KG or more of Benzyl Chloride;
    1075 KG or more of Ethyl Ether;
    1200 KG or more of Methyl Ethyl
     Ketone;
    10 KG or more of Potassium
     Permanganate;
    1300 KG or more of Toluene.
(4) List I Chemicals:...................  Level 26.
    At least 1.8 KG but less than 5.3 KG
     of Benzaldehyde;
    At least 2 KG but less than 6 KG of
     Benzyl Cyanide;
    At least 20 G but less than 60 G of
     Ergonovine;
    At least 40 G but less than 120 G of
     Ergotamine;
    At least 2 KG but less than 6 KG of
     Ethylamine;
    At least 4.4 KG but less than 13.2
     KG of Hydriodic Acid;
    At least 32 KG but less than 96 KG
     of Isosafrole;
    At least 400 G but less than 1.2 KG
     of Methylamine;
    At least 50 KG but less than 150 KG
     of N-Methylephedrine;
    At least 50 KG but less than 150 KG
     of N-Methylpseudoephedrine;
    At least 1.3 KG but less than 3.8 KG
     of Nitroethane;
    At least 20 KG but less than 60 KG
     of Norpseudoephedrine;
    At least 2 KG but less than 6 KG of
     Phenylacetic Acid;
    At least 1 KG but less than 3 KG of
     Piperidine;
    At least 32 KG but less than 96 KG
     of Piperonal;
    At least 160 G but less than 480 G
     of Propionic Anhydride;
    At least 32 KG but less than 96 KG
     of Safrole;
    At least 40 KG but less than 120 KG
     of 3, 4-Methylenedioxyphenyl-2-
     propanone;
List II Chemicals:
    At least 3.3 KG but less than 11 KG
     of Acetic Anhydride;
    At least 352.5 KG but less than 1175
     KG of Acetone;
    At least 6 KG but less than 20 KG of
     Benzyl Chloride;
    At least 322.5 KG but less than 1075
     KG of Ethyl Ether;
    At least 360 KG but less than 1200
     KG of Methyl Ethyl Ketone;
    At least 3 KG but less than 10 KG of
     Potassium Permanganate;
    At least 390 KG but less than 1300
     KG of Toluene.
(5) List I Chemicals:...................  Level 24.
    At least 1.2 KG but less than 1.8 KG
     of Benzaldehyde;
    At least 1.4 KG but less than 2 KG
     of Benzyl Cyanide;
    At least 14 G but less than 20 G of
     Ergonovine;
    At least 28 G but less than 40 G of
     Ergotamine;
    At least 1.4 KG but less than 2 KG
     of Ethylamine;
    At least 3.08 KG but less than 4.4
     KG of Hydriodic Acid;
    At least 22.4 KG but less than 32 KG
     of Isosafrole;
    At least 280 G but less than 400 G
     of Methylamine;
    At least 35 KG but less than 50 KG
     of N-Methylephedrine;
    At least 35 KG but less than 50 KG
     of N-Methylpseudoephedrine;
    At least 879 G but less than 1.3 KG
     of Nitroethane;
    At least 14 KG but less than 20 KG
     of Norpseudoephedrine;
    At least 1.4 KG but less than 2 KG
     of Phenylacetic Acid;
    At least 700 G but less than 1 KG of
     Piperidine;
    At least 22.4 KG but less than 32 KG
     of Piperonal;
    At least 112 G but less than 160 G
     of Propionic Anhydride;
    At least 22.4 KG but less than 32 KG
     of Safrole;
    At least 28 KG but less than 40 KG
     of 3, 4-Methylenedioxyphenyl-2-
     propanone;
List II Chemicals:
    At least 1.1 KG but less than 3.3 KG
     of Acetic Anhydride;
    At least 117.5 KG but less than
     352.5 KG of Acetone;
    At least 2 KG but less than 6 KG of
     Benzyl Chloride;
    At least 107.5 KG but less than
     322.5 KG of Ethyl Ether;
    At least 120 KG but less than 360 KG
     of Methyl Ethyl Ketone;
    At least 1 KG but less than 3 KG of
     Potassium Permanganate;
    At least 130 KG but less than 390 KG
     of Toluene.

[[Page 7968]]

 
(6) List I Chemicals:...................  Level 22.
    At least 712 G but less than 1.2 KG
     of Benzaldehyde;
    At least 800 G but less than 1.4 KG
     of Benzyl Cyanide;
    At least 8 G but less than 14 G of
     Ergonovine;
    At least 16 G but less than 28 G of
     Ergotamine;
    At least 800 G but less than 1.4 KG
     of Ethylamine;
    At least 1.76 KG but less than 3.08
     KG of Hydriodic Acid;
    At least 12.8 KG but less than 22.4
     KG of Isosafrole;
    At least 160 G but less than 280 G
     of Methylamine;
    At least 20 KG but less than 35 KG
     of N-Methylephedrine;
    At least 20 KG but less than 35 KG
     of N-Methylpseudoephedrine;
    At least 503 G but less than 879 G
     of Nitroethane;
    At least 8 KG but less than 14 KG of
     Norpseudoephedrine;
    At least 800 G but less than 1.4 KG
     of Phenylacetic Acid;
    At least 400 G but less than 700 G
     of Piperidine;
    At least 12.8 KG but less than 22.4
     KG of Piperonal;
    At least 64 G but less than 112 G of
     Propionic Anhydride;
    At least 12.8 KG but less than 22.4
     KG of Safrole;
    At least 16 KG but less than 28 KG
     of 3, 4-Methylenedioxyphenyl-2-
     propanone;
List II Chemicals:
    At least 726 G but less than 1.1 KG
     of Acetic Anhydride;
    At least 82.25 KG but less than
     117.5 KG of Acetone;
    At least 1.4 KG but less than 2 KG
     of Benzyl Chloride;
    At least 75.25 KG but less than
     107.5 KG of Ethyl Ether;
    At least 84 KG but less than 120 KG
     of Methyl Ethyl Ketone;
    At least 700 G but less than 1 KG of
     Potassium Permanganate;
    At least 91 KG but less than 130 KG
     of Toluene.
(7) List I Chemicals:...................  Level 20.
    At least 178 G but less than 712 G
     of Benzaldehyde;
    At least 200 G but less than 800 G
     of Benzyl Cyanide;
    At least 2 G but less than 8 G of
     Ergonovine;
    At least 4 G but less than 16 G of
     Ergotamine;
    At least 200 G but less than 800 G
     of Ethylamine;
    At least 440 G but less than 1.76 KG
     of Hydriodic Acid;
    At least 3.2 KG but less than 12.8
     KG of Isosafrole;
    At least 40 G but less than 160 G of
     Methylamine;
    At least 5 KG but less than 20 KG of
     N-Methylephedrine;
    At least 5 KG but less than 20 KG of
     N-Methylpseudoephedrine;
    At least 126 G but less than 503 G
     of Nitroethane;
    At least 2 KG but less than 8 KG of
     Norpseudoephedrine;
    At least 200 G but less than 800 G
     of Phenylacetic Acid;
    At least 100 G but less than 400 G
     of Piperidine;
    At least 3.2 KG but less than 12.8
     KG of Piperonal;
    At least 16 G but less than 64 G of
     Propionic Anhydride;
    At least 3.2 KG but less than 12.8
     KG of Safrole;
    At least 4 KG but less than 16 KG of
     3,4-Methylenedioxyphenyl-2-
     propanone;
List II Chemicals:
    At least 440 G but less than 726 G
     of Acetic Anhydride;
    At least 47 KG but less than 82.25
     KG of Acetone;
    At least 800 G but less than 1.4 KG
     of Benzyl Chloride;
    At least 43 KG but less than 75.25
     KG of Ethyl Ether;
    At least 48 KG but less than 84 KG
     of Methyl Ethyl Ketone;
    At least 400 G but less than 700 G
     of Potassium Permanganate;
    At least 52 KG but less than 91 KG
     of Toluene.
(8) List I Chemicals:...................  Level 18.
    At least 142 G but less than 178 G
     of Benzaldehyde;
    At least 160 G but less than 200 G
     of Benzyl Cyanide;
    At least 1.6 G but less than 2 G of
     Ergonovine;
    At least 3.2 G but less than 4 G of
     Ergotamine;
    At least 160 G but less than 200 G
     of Ethylamine;
    At least 352 G but less than 440 G
     of Hydriodic Acid;
    At least 2.56 KG but less than 3.2
     KG of Isosafrole;
    At least 32 G but less than 40 G of
     Methylamine;
    At least 4 KG but less than 5 KG of
     N-Methylephedrine;
     At least 4 KG but less than 5 KG of
     N-Methylpseudoephedrine;
     At least 100 G but less than 126 G
     of Nitroethane;
     At least 1.6 KG but less than 2 KG
     of Norpseudoephedrine;
     At least 160 G but less than 200 G
     of Phenylacetic Acid;
     At least 80 G but less than 100 G
     of Piperidine;
     At least 2.56 KG but less than 3.2
     KG of Piperonal;

[[Page 7969]]

 
     At least 12.8 G but less than 16 G
     of Propionic Anhydride;
     At least 2.56 KG but less than 3.2
     KG of Safrole;
     At least 3.2 KG but less than 4 KG
     of 3,4-Methylenedioxyphenyl-2-
     propanone;
List II Chemicals:
     At least 110 G but less than 440 G
     of Acetic Anhydride;
     At least 11.75 KG but less than 47
     KG of Acetone;
     At least 200 G but less than 800 G
     of Benzyl Chloride;
     At least 10.75 KG but less than 43
     KG of Ethyl Ether;
     At least 12 KG but less than 48 KG
     of Methyl Ethyl Ketone;
     At least 100 G but less than 400 G
     of Potassium Permanganate;
     At least 13 KG but less than 52 KG
     of Toluene.
 (9) List I Chemicals:..................  Level 16.
     3.6 KG or more of Anthranilic Acid;
     At least 107 G but less than 142 G
     of Benzaldehyde;
     At least 120 G but less than 160 G
     of Benzyl Cyanide;
     At least 1.2 G but less than 1.6 G
     of Ergonovine;
     At least 2.4 G but less than 3.2 G
     of Ergotamine;
     At least 120 G but less than 160 G
     of Ethylamine;
     At least 264 G but less than 352 G
     of Hydriodic Acid;
     At least 1.92 KG but less than 2.56
     KG of Isosafrole;
     At least 24 G but less than 32 G of
     Methylamine;
     4.8 KG or more of N-
     Acetylanthranilic Acid;
     At least 3 KG but less than 4 KG of
     N-Methylephedrine;
     At least 3 KG but less than 4 KG of
     N-Methylpseudoephedrine;
     At least 75 G but less than 100 G
     of Nitroethane;
     At least 1.2 KG but less than 1.6
     KG of Norpseudoephedrine;
     At least 120 G but less than 160 G
     of Phenylacetic Acid;
     At least 60 G but less than 80 G of
     Piperidine;
     At least 1.92 KG but less than 2.56
     KG of Piperonal;
     At least 9.6 G but less than 12.8 G
     of Propionic Anhydride;
     At least 1.92 KG but less than 2.56
     KG of Safrole;
     At least 2.4 KG but less than 3.2
     KG of 3,4-Methylenedioxyphenyl-2-
     propanone;
 List II Chemicals:
     At least 88 G but less than 110 G
     of Acetic Anhydride;
     At least 9.4 KG but less than 11.75
     KG of Acetone;
     At least 160 G but less than 200 G
     of Benzyl Chloride;
     At least 8.6 KG but less than 10.75
     KG of Ethyl Ether;
     At least 9.6 KG but less than 12 KG
     of Methyl Ethyl Ketone;
     At least 80 G but less than 100 G
     of Potassium Permanganate;
     At least 10.4 KG but less than 13
     KG of Toluene.
 (10) List I Chemicals:.................  Level 14.
     At least 2.7 KG but less than 3.6
     KG of Anthranilic Acid;
     At least 71.2 G but less than 107 G
     of Benzaldehyde;
     At least 80 G but less than 120 G
     of Benzyl Cyanide;
     At least 800 MG but less than 1.2 G
     of Ergonovine;
     At least 1.6 G but less than 2.4 G
     of Ergotamine;
     At least 80 G but less than 120 G
     of Ethylamine;
     At least 176 G but less than 264 G
     of Hydriodic Acid;
     At least 1.44 KG but less than 1.92
     KG of Isosafrole;
     At least 16 G but less than 24 G of
     Methylamine;
     At least 3.6 KG but less than 4.8
     KG of N-Acetylanthranilic Acid;
     At least 2.25 KG but less than 3 KG
     of N-Methylephedrine;
     At least 2.25 KG but less than 3 KG
     of N-Methylpseudoephedrine;
     At least 56.25 G but less than 75 G
     of Nitroethane;
     At least 800 G but less than 1.2 KG
     of Norpseudoephedrine;
     At least 80 G but less than 120 G
     of Phenylacetic Acid;
    At least 40 G but less than 60 G of
     Piperidine;
    At least 1.44 KG but less than 1.92
     KG of Piperonal;
    At least 7.2 G but less than 9.6 G
     of Propionic Anhydride;
    At least 1.44 KG but less than 1.92
     KG of Safrole;
    At least 1.8 KG but less than 2.4 KG
     of 3, 4-Methylenedioxyphenyl-2-
     propanone;
List II Chemicals:
    At least 66 G but less than 88 G of
     Acetic Anhydride;
    At least 7.05 KG but less than 9.4
     KG of Acetone;
    At least 120 G but less than 160 G
     of Benzyl Chloride;
    At least 6.45 KG but less than 8.6
     KG of Ethyl Ether;
    At least 7.2 KG but less than 9.6 KG
     of Methyl Ethyl Ketone;
    At least 60 G but less than 80 G of
     Potassium Permanganate;
    At least 7.8 KG but less than 10.4
     KG of Toluene.
(11) List I Chemicals:

[[Page 7970]]

 
    Less than 2.7 KG of Anthranilic
     Acid;
    Less than 71.2 G of Benzaldehyde;
    Less than 80 G of Benzyl Cyanide;
    Less than 800 MG of Ergonovine;
    Less than 1.6 G of Ergotamine;
    Less than 80 G of Ethylamine;
    Less than 176 G of Hydriodic Acid;
    Less than 1.44 KG of Isosafrole;
    Less than 16 G of Methylamine;
    Less than 3.6 KG of N-
     Acetylanthranilic Acid;
    Less than 2.25 KG of N-
     Methylephedrine;
    Less than 2.25 KG of N-
     Methylpseudoephedrine;
    Less than 56.25 G of Nitroethane;
    Less than 800 G of
     Norpseudoephedrine;
    Less than 80 G of Phenylacetic Acid;
    Less than 40 G of Piperidine;
    Less than 1.44 KG of Piperonal;
    Less than 7.2 G of Propionic
     Anhydride;
    Less than 1.44 KG of Safrole;
    Less than 1.8 KG of 3, 4-
     Methylenedioxyphenyl-2-propanone;
List II Chemicals:
    Less than 66 G of Acetic Anhydride;
    Less than 7.05 KG of Acetone;
    Less than 120 G of Benzyl Chloride;
    Less than 6.45 KG of Ethyl Ether;
    Less than 7.2 KG of Methyl Ethyl
     Ketone;
    Less than 60 G of Potassium
     Permanganate;
    Less than 7.8 KG of Toluene.
------------------------------------------------------------------------

*Notes:
    (A) Except as provided in subdivision (B), to calculate the base 
offense level in an offense that involves two or more chemicals, use 
the quantity of the single chemical that results in the greatest 
offense level, regardless of whether the chemicals are set forth in 
different tables or in different categories (i.e. list I or list II) 
under subsection (d) of this guideline.
    (B) To calculate the base offense level in an offense that 
involves two or more chemicals set forth in the Ephedrine, 
Pseudoephedrine, and Phenylpropanolamine Quantity Table, (i) convert 
each chemical to its ephedrine equivalency using the table below; 
(ii) add the quantities that result from that equivalency; and (iii) 
use the Ephedrine, Pseudoephedrine, and Phenylpropanolamine Quantity 
Table to determine the base offense level.
Pseudoephedrine and Phenylpropanolamine Equivalency Table
1 gm of Pseudoephedrine=1 gm of Ephedrine
1 gm of Phenylpropanolamine=1 gm of Ephedrine

    (C) In a case involving ephedrine, pseudoephedrine, or 
phenylpropanolamine tablets, use the weight of the ephedrine, 
pseudoephedrine, or phenylpropanolamine contained in the tablets, not 
the weight of the entire tablets, in calculating the base offense 
level.''.
    The Commentary to Sec. 2D1.11 captioned ``Application Notes'' is 
amended by striking the text of Note 4 in its entirety and inserting 
the following:
    ``(A) Determining the Base Offense Level for Two or More 
Chemicals.--Except as provided in subdivision B, if the offense 
involves two or more chemicals, use the quantity of the single chemical 
that results in the greatest offense level, regardless of whether the 
chemicals are set forth in different tables or in different categories 
(i.e., list I or list II) under subsection (d) of this guideline.

    Example:  The defendant was in possession of five kilograms of 
ephedrine and 300 grams of hydriodic acid. Ephedrine and hydriodic 
acid typically are used together in the same manufacturing process 
to manufacture methamphetamine. The base offense level for each 
chemical is calculated separately and the chemical with the higher 
base offense level is used. Five kilograms of ephedrine result in a 
base offense level of level 38; 300 grams of hydriodic acid result 
in a base offense level of 16. In this case, the base offense level 
would be level 38.

    (B) Determining the Base Offense Level for Offenses Involving 
Ephedrine, Pseudoephedrine, or Phenylpropanolamine.--If the offense 
involves two or more chemicals set forth in the Ephedrine, 
Pseudoephedrine, and Phenylpropanolamine Quantity Table, (i) convert 
each chemical to its ephedrine equivalency; (ii) add the quantities 
that result from that equivalency; and (iii) use the Ephedrine, 
Pseudoephedrine, and Phenylpropanolamine Quantity Table to determine 
the base offense level.

    Example:  The defendant was in possession of 80 grams of 
ephedrine and 50 grams of phenylpropanolamine. The 50 grams of 
phenylpropanolamine converts to 50 grams of ephedrine, which when 
added to the quantity of ephedrine, results in a total of 130 grams 
of ephedrine. In this case, the base offense level would be level 
32.

    (C) Upward Departure.--In a case involving two or more chemicals 
used to manufacture different controlled substances, or to manufacture 
one controlled substance by different manufacturing processes, an 
upward departure may be warranted if the offense level does not 
adequately address the seriousness of the offense.''.
    The Commentary to Sec. 2D1.11 captioned ``Application Notes'' is 
amended by striking Notes 5 and 6 in their entirety; and by 
redesignating Notes 7 and 8 as Notes 5 and 6, respectively.
    The Commentary to Sec. 2D1.11 captioned ``Background'' is amended 
in the first sentence by inserting

[[Page 7971]]

``(including ephedrine, pseudoephedrine, and phenylpropanolamine)'' 
after ``list I chemicals''.
    The Commentary to 2D1.1 captioned ``Application Notes'' is amended 
in Note 10 in the ``Drug Equivalency Tables'' by inserting after the 
subdivision captioned ``Schedule V Substances'' the following new 
subdivision:
List I Chemicals (Relating to the Manufacture of Amphetamine or 
Methamphetamine) * * *
1 gm of Ephedrine=10 kg of marihuana
1 gm of Phenylpropanolamine=10 kg of marihuana
1 gm of Pseudoephedrine=10 kg of marihuana
    * * * Provided, that in a case involving ephedrine, 
pseudoephedrine, or phenylpropanolamine tablets, use the weight of the 
ephedrine, pseudoephedrine, or phenylpropanolamine contained in the 
tablets, not the weight of the entire tablets, in calculating the base 
offense level.''.

Issues for Comment

    (1) Currently, there is a six level difference between the base 
offense levels in the Drug Quantity Table of Sec. 2D1.1 and the 
Chemical Quantity Table in Sec. 2D1.11. (The original relationship 
between controlled substances in Sec. 2D1.1 and list I chemicals in 
Sec. 2D1.11 presumed a 50 percent yield of controlled substances from 
each chemical and then reduced the entire table in Sec. 2D1.11 by eight 
levels. The eight level distinction was later reduced to six levels as 
a result of a congressional directive.) This six level difference 
effectively creates a distinction between offenses involving possession 
of precursor chemicals with intent to manufacture a controlled 
substance and offenses involving an actual attempt to manufacture a 
controlled substance. However, the proposed amendment essentially will 
eliminate this distinction for cases involving ephedrine, 
pseudoephedrine, and phenylpropanolamine by (1) Eliminating that six-
level difference in offense level from the Sec. 2D1.1 offense level 
that corresponds to the amount of controlled substance that could be 
manufactured from a given quantity of precursor chemical (assuming a 
50% yield); and (2) setting the maximum base offense level at level 38, 
the maximum base offense level provided for the manufacture of 
methamphetamine in Sec. 2D1.1. The Commission invites comment regarding 
whether the maximum base offense level for the proposed Ephedrine, 
Pseudoephedrine, Phenylpropanolamine Table in Sec. 2D1.11 should be 
lower than level 38. A lower maximum base offense level would maintain 
a distinction between offenses involving possession of precursor 
chemicals with intent to manufacture methamphetamine and offenses 
involving an actual attempt to manufacture methamphetamine.
    (2) In response to the congressional directive to increase 
penalties for offenses involving List I chemicals other than ephedrine, 
PPA, and pseudoephedrine, the Commission invites comment regarding 
whether, in addition to or instead of the proposed amendment, the 
penalty structure in Sec. 2D1.11 should be changed to increase 
penalties for Benzaldehyde, Hydriodic Acid, Methylamine, Nitroethane, 
and Norpseudoephedrine at each quantity level in the Chemical Quantity 
Table, and if so, by how much.

Proposed Amendment: Human Trafficking

    4. Synopsis of Proposed Amendment: This amendment implements the 
directive found at section 112(b) of the Victims of Trafficking and 
Violence Protection Act of 2000 (the ``Act''), Pub. L. 106-386.
    The directive confers emergency authority on the Commission to 
amend the federal sentencing guidelines to reflect changes to 18 U.S.C. 
1581(a) (Peonage), 1583 (Enticement into Slavery), and 1584 (Sale into 
Involuntary Servitude). The Commission is also directed to consider how 
to address four new statutes: 18 U.S.C. 1589 (Forced Labor); 18 U.S.C. 
1590 (Trafficking with Respect to Peonage, Involuntary Servitude or 
Forced Labor); 18 U.S.C. 1591 (Sex Trafficking of Children by Force, 
Fraud or Coercion); and 18 U.S.C. Sec. 1592 (Unlawful Conduct with 
Respect to Documents in Furtherance of Peonage, Involuntary Servitude 
or Forced Labor).
    Specifically, the Commission is directed to ``review and, if 
appropriate, amend the sentencing guidelines applicable to * * * the 
trafficking of persons including * * * peonage, involuntary servitude, 
slave trade offenses, and possession, transfer or sale of false 
immigration documents in furtherance of trafficking, and the Fair Labor 
Standards Act and the Migrant and Seasonal Agricultural Worker 
Protection Act.''
    The Commission is directed to ``take all appropriate measures to 
ensure that these sentencing guidelines * * * are sufficiently 
stringent to deter and adequately reflect the heinous nature of these 
offenses.'' The Commission is also directed to ``consider providing 
sentencing enhancements'' in cases which involve: (A) a large number of 
victims; (B) a pattern of continued and flagrant violations; (C) the 
use or threatened use of a dangerous weapon; or (D) the death or bodily 
injury of any person.
    To address this multi-faceted directive, this proposed amendment 
makes changes to several existing guidelines and creates a new 
guideline for criminal violations of the Migrant and Seasonal 
Agricultural Worker Protection Act. Although the directive instructs 
the Commission to amend the guidelines applicable to the Fair Labor 
Standards Act (29 U.S.C. 201 et. seq.), a criminal violation of the Act 
is only a Class B misdemeanor. See 29 U.S.C. 216. Thus, the guidelines 
are not applicable to those offenses.
    The proposed amendment references the new offense at 18 U.S.C. 1591 
to Sec. 2G1.1 (Promoting Prostitution or Prohibited Sexual Conduct). 
Section 1591 punishes a defendant who participates in the transporting 
or harboring of a person, or who benefits from participating in such a 
venture, with the knowledge that force, fraud or coercion will be used 
to cause that person to engage in a commercial sex act or with 
knowledge that the person is not 18 years old and will be forced to 
engage in a commercial sex act. Despite the statute's inclusion in a 
chapter of title 18 devoted mainly to peonage offenses, section 1591 
offenses are analogous to the offenses referenced to the prostitution 
guideline.
    Section 2G1.1(b)(2) is proposed to be amended to include a [6][9] 
level increase for victimization of children who have not attained the 
age of 12 years, a [4][6] level increase for victimization of children 
who have not attained the age of 14 years, and a [2][3] level increase 
for children who have not attained the age of 16 years. This change 
increases by [2][5] levels the punishment for victimization of a child 
under 12 years of age and creates an additional category of victims--
children between the ages of 12 and 14 years. These changes were 
proposed in recognition of Congress's distinction in section 1591 
between offenses involving minors under 14 years of age (statutory cap 
of ``any term of years or life'') and offenses involving minors between 
14 and 18 years of age (statutory cap of ``not more than 20 years''). 
This change conforms the guidelines to the penalties of section 1591.
    The special instruction at Sec. 2G1.1(d)(2) has been added to 
ensure that attempts to violate section 1591 are

[[Page 7972]]

not to be referred to Sec. 2X1.1 (Attempt, Solicitation, or 
Conspiracy). This change implements Congress's direction in 18 U.S.C. 
1594 that ``whoever attempts to violate section * * * 1591 shall be 
punishable in the same manner as a completed violation of that 
section.''
    An additional application note--Application Note 12--has been added 
to Sec. 2G1.1 to provide an encouraged upward departure when an offense 
``involved substantially more than [6][10][25] victims.'' This 
encouraged upward departure was added in response to Congress's 
directive that the Commission consider enhanced sentencing in cases 
which involve ``a large number of victims.'' A departure note is 
provided, rather than an enhancement, because of the current special 
grouping rule in Sec. 2G1.1(d)(1) regarding multiple victims that 
requires that counts involving different victims not be grouped.
    Section 1591 cases have been alternatively referred in Appendix A 
to Sec. 2G2.1 (Sexually Exploiting a Minor by Production of Sexually 
Explicit Visual or Printed Material). This has been done in 
anticipation that some portion of section 1591 cases will involve 
children being forced or coerced to engage in commercial sex acts for 
the purpose of producing pornography. Such offenses, as recognized by 
the higher base offense level at Sec. 2G2.1, are more serious because 
they both involve specific harm to an individual victim and further an 
additional criminal purpose, commercial pornography. In the interest of 
consistency and proportionality, the same changes have been made to 
Sec. 2G2.1 as those discussed above for Sec. 2G1.1.
    The proposed amendment conforms to the view that Sec. 2H4.1 
(Peonage, Involuntary Servitude, and Slave Trade) continues to be an 
appropriate tool for determining sentences for violations of 18 U.S.C. 
1581, 1583, and 1584 . Section 2H4.1 is also designed to cover offenses 
under three new statutes, 18 U.S.C. 1589, 1590, and 1592. Section 1589 
punishes defendants who provide or obtain the labor services of another 
by the use of threats of serious harm or physical restraint against a 
person, or by a scheme or plan intended to make the person believe that 
if he or she did not perform the labor or services, he or she would 
suffer physical restraint or serious harm. This statute also applies to 
defendants who provide or obtain labor services of another by abusing 
or threatening abuse of the law or the legal process. See 18 U.S.C. 
1589. Section 1590 punishes defendants who harbor, transport, or are 
otherwise involved in obtaining, a person for labor or services. 
Section 1592 punishes a defendant who knowingly possesses, destroys, or 
removes an actual passport, other immigration document, or government 
identification document of another person in the course of a violation 
of Secs. 1581 (peonage), 1583 (enticement into slavery), 1584 (sale 
into involuntary servitude), 1589 (forced labor), 1590 (trafficking 
with respect to these offenses), 1591 (sex trafficking of children by 
force, fraud or coercion), or 1594(a) (attempts to violate these 
offenses). Section 1592 also punishes a defendant who, with intent to 
violate Sec. 1581, Sec. 1583, Sec. 1584, Sec. 1589, Sec. 1590, or 
Sec. 1591, knowingly possesses, destroys, or removes an actual 
passport, other immigration document, or government identification 
document of another person. These statutes prohibit the types of 
behaviors which have been traditionally sentenced under Sec. 2H4.1.
    The proposed amendment provides an alternative, less punitive base 
offense level for those who violate 18 U.S.C. 1592, an offense which 
limits participation in peonage cases to the destruction or wrongful 
confiscation of a passport or other immigration document. This 
alternative, lower base level reflects the lower statutory maximum 
sentence set for section 1592 offenses (i.e., 5 years). The amendment 
proposes level [15] as the appropriate level because similar offenses 
involving documents are punishable at level 15 under Sec. 2L2.1 
(Trafficking in a Document Relating to Naturalization, Citizenship or 
Legal Resident Status or a United States Passport). However, the 
proposed amendment also includes an additional, bracketed base offense 
level of [18].
    Section 2H4.1(b)(2) has been expanded to provide a 2-level increase 
if a dangerous weapon was brandished or its use was threatened, with an 
increase to 4 levels for actual use. Currently, only actual use of a 
dangerous weapon is covered. This change reflects Congress's directive 
to consider an enhancement for the ``use or threatened use of a 
dangerous weapon.''
    The proposed amendment adds an enhancement at Sec. 2H4.1(b)(3), for 
offenses involving more than [6][10][25] victims. This change reflects 
Congress's directive to consider an enhancement for cases ``involving a 
large number of victims.'' Also, Sec. 2H4.1, Application Note 3, which 
formerly provided an encouraged upward departure for offenses involving 
more than 10 victims, has been altered to encourage departure ``if the 
offense involved substantially more than [6][10][25] victims.''
    The proposed amendment also adds Sec. 2H4.1 to the list of 
guidelines in Sec. 2X1.1 that expressly cover attempts and 
conspiracies. This change implements Congress's direction in 18 U.S.C. 
1594 that ``whoever attempts to violate Sec. 1581, Sec. 1583, 
Sec. 1584, Sec. 1589, Sec. 1590, or Sec. 1591 shall be punishable in 
the same manner as a completed violation of that section.'' With the 
exception of section 1591, all the specified statutes are referenced to 
Sec. 2H4.1. Conforming amendments are made to the title of Sec. 2H4.1.
    The proposed amendment creates a new guideline, Sec. 2H4.2 (Willful 
Violations of the Migrant and Seasonal Agricultural Worker Protection 
Act), in response to Congress's directive to amend the guidelines 
applicable to such offenses. These offenses, which have a statutory 
maximum sentence of one year imprisonment for first offenses and three 
years imprisonment for subsequent offenses, currently are not referred 
to any specific guideline. The Department of Justice and Department of 
Labor both recommend creation of a discrete guideline for these 
offenses. The proposed base offense level (level [4][6]) has been 
proposed in recognition of the small statutory maximum sentences set 
for these cases by Congress. Similarly, Sec. 2H4.2(b)(1), an 
enhancement for bodily injury, and Sec. 2H4.2(b)(2), an enhancement for 
offenders who commit their offenses after previously sustaining a civil 
penalty for similar misconduct, have been established to respond to 
Congress's directive that the Commission consider sentencing 
enhancement for these offense characteristics. This section addresses 
the Department of Justice's and the Department of Labor's concern 
regarding prior administrative and civil adjudications.
    This proposed amendment also addresses that portion of section 112 
of the Act that amends chapter 77 of title 18, United States Code, to 
provide mandatory restitution for peonage and involuntary servitude 
offenses. The proposed amendment amends Sec. 5E1.1 (Restitution) to 
include a reference to 18 U.S.C. 1593 in the guideline provision 
regarding mandatory restitution.

Proposed Amendment

    Section 2G1.1 is amended by striking subsection (b)(2) in its 
entirety and inserting the following:
    ``[(2) If the offense involved a victim who had (A) not attained 
the age of 12 years, increase by [6][9] levels; (B) attained the age of 
12 years but not attained the age of 14 years, increase by [4][6] 
levels; or (C) attained the age of 14

[[Page 7973]]

years but had not attained the age of 16 years, increase by [2][3] 
levels.]''.
    Section 2G1.1(d) is amended by adding at the end the following:
    ``(2) If the defendant was convicted of an attempt to commit an 
offense under 18 U.S.C. 1591, do not apply Sec. 2X1.1 (Attempt, 
Solicitation, or Conspiracy (Not Covered by a Specific Offense 
Guideline)).''.
    The Commentary to Sec. 2G1.1 captioned ``Statutory Provisions'' is 
amended by inserting ``1591,'' before ``2421''.
    The Commentary to Sec. 2G1.1 captioned ``Application Notes'' is 
amended in Note 2 in the fourth sentence by adding ``(B)'' after 
``purposes of subsection (b)(1).''.
    The Commentary to Sec. 2G1.1 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``[12.Upward Departure.--If the offense involved substantially more 
than [6][10][25] victims, an upward departure may be warranted.]''.
    The Commentary to Sec. 2G1.1 captioned ``Background'' is amended by 
adding at the end the following paragraph:
    ``This guideline also covers offenses under section 1591 of title 
18, United States Code. These offenses involve recruiting or 
transporting a person in interstate commerce knowing either that (A) 
force, fraud, or coercion will be used to cause the person to engage in 
a commercial sex act; or (B) the person (i) had not attained the age of 
18 years; and (ii) will be caused to engage in a commercial sex act.''.
    Section 2G2.1 is amended by striking subsection (b)(1) in its 
entirety and inserting the following:
    ``[(1) If the offense involved a victim who had (A) not attained 
the age of 12 years, increase by [6][9] levels; (B) attained the age of 
12 years but not attained the age of 14 years, increase by [4][6] 
levels; or (C) attained the age of 14 years but had not attained the 
age of 16 years, increase by [2][3] levels.]''.
    Section 2G2.1(c) is amended by adding at the end the following:
    ``(2) If the defendant was convicted of an attempt to commit an 
offense under 18 U.S.C. 1591, do not apply Sec. 2X1.1 (Attempt, 
Solicitation, or Conspiracy (Not Covered by a Specific Offense 
Guideline)).''.
    The Commentary to Sec. 2G2.1 captioned ``Statutory Provisions'' is 
amended by inserting ``1591,'' before ``2251(a)''.
    The Commentary to Sec. 2G2.1 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``[6. Upward Departure.--If the offense involved substantially more 
than [6][10][25] victims, an upward departure may be warranted.]''.
    Section 2H4.1 is amended in the title by adding ``; Attempt or 
Conspiracy'' after ``Trade''.
    Section 2H4.1(a) is amended by striking ``22'' and inserting the 
following:
    ``(1) 22; or
    (2) [15][18], if the defendant was convicted only of an offense 
under 18 U.S.C. 1592.''.
    Section 2H4.1(b) is amended by striking subdivision (2) in its 
entirety and inserting the following:
    ``[(2) If (i) a dangerous weapon was used, increase by 4 levels; or 
(ii) a dangerous weapon was brandished or its use was threatened, 
increase by 2 levels.]''.
    Section 2H4.1(b) is amended by redesignating subdivisions (3) and 
(4) as subdivisions (4) and (5), respectively, and inserting after 
subdivision (2) the following:
    ``[(3) If the offense involved more than [6][10][25] victims, 
increase by [2][4] levels.]''.
    The Commentary to Sec. 2H4.1 captioned ``Statutory Provisions'' is 
amended by striking ``1588'' and inserting ``1590, 1592''.
    The Commentary to Sec. 2H4.1 captioned ``Application Notes'' is 
amended by striking the text of Note 3 in its entirety and inserting 
the following:
    ``Upward Departure.'' If the offense involved substantially more 
than [6][10][25] victims, an upward departure may be warranted.''.
    The Commentary to Sec. 2X1.1 captioned ``Application Notes'' is 
amended in Note 1 in the second paragraph by inserting after ``2E5.1;'' 
the following new lines:
    ``Sec. 2G1.1 (if the defendant was convicted of an attempt to 
commit an offense under 18 U.S.C. 1591 (See 18 U.S.C. 1594(a));
    Sec. 2H4.1;''.
    The Commentary to Sec. 2X1.1 captioned ``Application Notes'' is 
amended in Note 1 in the third paragraph by inserting ``2H4.1'' after 
``2H1.1''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to ``18 U.S.C. 1588'' the following new lines:

``18 U.S.C. 1589  2H4.1
18 U.S.C. 1590  2H4.1
18 U.S.C. 1591  2G1.1, 2G2.1
18 U.S.C. 1592  2H4.1''.

    Chapter Two, Part H, is amended in Subpart 4 by adding at the end 
the following:
``Sec. 2H4.2.  Willful Violations of the Migrant and Seasonal 
Agricultural Worker Protection Act
    (a) Base Offense Level: [4][6].
    (b) Specific Offense Characteristics.
    (1) If the offense involved (i) serious bodily injury, increase by 
[4] levels; or (ii) bodily injury, increase by [2] levels.
    (2) If the defendant committed any part of the instant offense 
subsequent to sustaining a civil or administrative adjudication for 
similar misconduct, increase by [2] levels.
Commentary
Statutory Provision: 29 U.S.C. 1851
    Application Notes:
    1. Definitions.--For purposes of subsection (b)(1), ``bodily 
injury'' and ``serious bodily injury'' have the meaning given those 
terms in Application Note 1 of the Commentary to Sec. 1B1.1 
(Application Instructions).
    2. Application of Subsection (b)(2).--Section 1851 of title 29, 
United States Code, covers a wide range of conduct. Accordingly, the 
enhancement in subsection (b)(2) applies only if the instant offense is 
similar to previous misconduct that resulted in a civil or 
administrative adjudication under the provisions of the Migrant and 
Seasonal Agricultural Worker Protection Act (29 U.S.C. 1801 et 
seq.).''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to ``29 U.S.C. 1141'' the following:

``29 U.S.C. 1851  2H4.2''.

    Section 5E1.1(a)(1) is amended by inserting ``Sec. 1593,'' after 
``18 U.S.C.''.
    The Commentary to Sec. 5E1.1 captioned ``Background'' is amended in 
the first paragraph by inserting ``1593,'' after ``18 U.S.C. Secs. ''.

Part (B): Proposed Non-Emergency Amendments

Proposed Amendment: Sexual Predators

    5. Synopsis of Proposed Amendment: This is a three-part amendment 
that includes:
    (A) Amendments to implement the ``pattern of activity'' directive 
in the Protection of Children from Sexual Predators Act of 1998, Pub. 
L. 105-314 (the ``Act''), and related amendments.
    (B) Amendments related to grouping certain child pornography counts 
of conviction.
    (C) Amendments to implement the directive in the Act to provide an 
enhancement for transportation offenses under chapter 117 of title 18, 
United States Code, and other related amendments.

Part (A): Enhancement for Pattern of Activity

    Synopsis: Part A proposes several options, including a possible 
combination of approaches to satisfy the

[[Page 7974]]

Congressional directive in the Act that requires the Commission to 
increase the penalties in any case in which the defendant engaged in a 
pattern of activity involving the sexual abuse or exploitation of a 
minor. There are many types of conduct that may indicate that a 
defendant is a high risk sex offender engaging in a pattern of 
prohibited sexual conduct. Each of these components considers various 
aspects of sex offenders and the types of activity involved in a 
pattern of behavior. There are four options presented by this amendment 
that could be used either in combination or alone to implement the 
directive. In addition to these four options, the proposal amends the 
guideline covering terms of supervised release, Sec. 5D1.2, to provide 
that the term of supervised release for a defendant convicted of a sex 
crime shall be the maximum term authorized by statute.
    The first option would create a new Chapter Four guideline, 
Sec. 4B1.5, that aims to incapacitate high risk sex offenders who have 
an instant offense of conviction of sexual abuse and a prior felony 
conviction for sexual abuse. Two options are contained within this 
option. Option 1A sanctions defendants whose instant offense of 
conviction and prior conviction involve prohibited sexual conduct. In 
contrast to option 1B, option 1A increases the defendant's criminal 
history to not less than category IV or V, as opposed to criminal 
history category VI. Option 1A also includes a wider range of offenses 
involving prohibited sexual conduct. Under Option 1A, chapter 109A 
offenses are bracketed for either (1) possible exclusion from the scope 
of instant offenses of conviction that would trigger the guideline, or 
(2) limiting those offenses to those that are perpetrated against a 
minor. Excluding chapter 109A offenses focuses application of the 
guideline to those defendants who use the internet or other interstate 
means to prey on minors.
    Option 1B tracks legislation from the 106th Congress that proposed 
a mandatory minimum life sentence for defendants whose instant offense 
of conviction and prior conviction involved direct sexual contact. This 
option provides for sentences at or near the statutory maximum for 
these types of defendants.
    The second option would create a Chapter Four guideline, 
Sec. 4B1.6, that provides a five-level increase (and a minimum offense 
level of level 32) for defendants who engage in a pattern of activity 
involving prohibited sexual conduct. This guideline requires that (1) 
the defendant's instant offense of conviction is a sex crime; and (2) 
the defendant previously has engaged in two or more instances of 
prohibited sexual conduct, whether or not that conduct resulted in a 
conviction.
    The third option would provide a Chapter Two specific offense 
characteristic in the sexual abuse guidelines. This specific offense 
characteristic mirrors the current pattern of activity adjustment in 
Sec. 2G2.2 (Trafficking in Material Involving the Sexual Exploitation 
of a Minor). A defendant who abuses or exploits a minor on two or more 
occasions will receive a two-level increase in offense level pursuant 
to this enhancement.
    The fourth option provides language encouraging an upward departure 
for a defendant who commits repeated acts of sexual abuse of the same 
minor. This component would allow courts to sanction a defendant for a 
pattern of multiple acts of abuse of the same victim over a period of 
time.

Proposed Amendment

    (1) Option 1: Chapter Four, Part B, is amended by adding at the end 
the following:
``Sec. 4B1.5. Repeat and Dangerous Sex Offender
    (a) A defendant is a repeat and dangerous sex offender if--
    (1) The instant offense of conviction is a sex crime; and
    (2) The defendant committed the instant offense of conviction 
subsequent to sustaining at least one sex offense conviction.
    (b) If (1) a repeat and dangerous sex offender is not a career 
offender pursuant to Sec. 4B1.1 (Career Offender); and (2) the offense 
level for that repeat and dangerous sex offender from the table below 
is greater than the offense level otherwise applicable, the offense 
level from the table below shall apply.

------------------------------------------------------------------------
                                                                Offense
                  Offense statutory maximum                      level
------------------------------------------------------------------------
(A) Life.....................................................       [37]
(B) 25 years or more.........................................       [34]
(C) 20 years or more, but less than 25 years.................       [32]
(D) 15 years or more, but less than 20 years.................       [29]
(E) 10 years or more, but less than 15 years.................       [24]
(F) 5 years or more, but less than 10 years..................       [17]
(G) More than 1 year, but less than 5 years..................       [12]
------------------------------------------------------------------------

    (c) If an adjustment from Sec. 3E1.1 (Acceptance of Responsibility) 
applies, decrease the applicable offense level in subsection (b) by the 
number of levels corresponding to that adjustment.
    (d) A repeat and dangerous sex offender's criminal history category 
in every case shall be [Option 1A: not less than Category [IV][V]] 
[Option 1B: Category VI].
Commentary
    Application Notes:
    1. Definitions.--For purposes of this guideline:
    `Offense Statutory Maximum' means the maximum term of imprisonment 
authorized for the instant offense of conviction that is a sex crime, 
including any increase in that maximum term under a sentencing 
enhancement provision that applies to that sex crime because of the 
defendant's prior criminal record (such as the sentencing enhancement 
provisions contained in 18 U.S.C. Secs. 2247(a) and 2426(a)).
    [Option 1A:
    `Sex offense conviction' has the meaning given that term in 18 
U.S.C. Sec. 2426, but such term does not include trafficking in, 
receipt of, or possession of, child pornography.
    2. Requirement of Sex Crime as Instant Offense of Conviction.--For 
purposes of subsection (a)(1), the instant offense of conviction must 
be an instant offense of conviction under [chapter 109A,] [chapter 109A 
perpetrated against a minor,] chapter 110 (not including trafficking 
in, receipt of, or possession of, child pornography, or recordkeeping 
offenses), or chapter 117 (not including transmitting information about 
a minor or filing a factual statement about alien individual), of title 
18, United States Code, or an attempt or a conspiracy to commit such an 
offense.]
    [Option 1B:
    `Sex offense conviction' means a prior conviction for (A) any sex 
crime referred to in Application Note 2; or (B) any offense under State 
law consisting of conduct that would have been such a sex crime if the 
conduct had occurred within the special maritime and territorial 
jurisdiction of the United States. The term ``State'' has the meaning 
given that term in 18 U.S.C. Sec. 2426(b)(2).
    2. Requirement of Sex Crime as Instant Offense of Conviction.--For 
purposes of subsection (a)(1), the instant offense of conviction must 
be an instant offense of conviction under 18 U.S.C. Sec. 2241, 
Sec. 2242, Sec. 2243, Sec. 2244, Sec. 2245, Sec. 2251A, or Sec. 2423, 
including an attempt or conspiracy to commit such an offense.]
    3. Determination of Prior Sex Offense Convictions Under Subsection 
(a)(2).--For purposes of subsection (a)(2), the date that a defendant 
sustained a conviction shall be the date that the

[[Page 7975]]

guilt of the defendant was established, whether by guilty plea, trial 
or plea of nolo contendere.
    4. Determination of Offense Statutory Maximum in the Case of 
Multiple Counts of Conviction.--In a case in which more than one count 
of the instant offense of conviction is a felony that is a sex crime, 
the court shall use the maximum authorized term of imprisonment for the 
count that has the greatest offense statutory maximum, for purposes of 
determining the offense statutory maximum under subsection (b).
    [5. Departure Provision.--There may be cases in which reliable 
information indicates that the guideline sentence resulting from 
application of this guideline either understates or overstates the 
likelihood that the defendant will commit another sexual offense, or 
the seriousness of the defendant's criminal history. In such cases, an 
upward or a downward departure, respectively, may be warranted. Such 
reliable information may include, for example, risk assessments and 
other expert testimony regarding the likelihood of recidivism.]''.
    (2) Option 2:
    Chapter Four, Part B, [as amended by this amendment,] is amended by 
adding at the end the following:
``Sec. 4B1.6  Sexual Predator
    If--
    (a) the defendant is not a career offender pursuant to Sec. 4B1.1 
(Career Offender) and is not a repeat and dangerous sex offender 
pursuant to Sec. 4B1.5 (Repeat and Dangerous Sex Offender); and
    (b)(1) the instant offense of conviction is a sex offense that the 
defendant committed as part of a pattern of activity involving 
prohibited sexual conduct [with a minor]; [[and][or] (2) the instant 
offense of conviction is a sex offense and the defendant is a sexual 
predator],

increase by [5] levels; but if the resulting offense level is less than 
[32][30], increase to level [32][30].
Commentary
    Application Notes:
    1. Definitions.--For purposes of this guideline:
    `Sex offense' means an offense under [chapter 109A,] [chapter 109A 
perpetrated against a minor,] chapter 110 (not including trafficking, 
receipt, or possession of, child pornography), or chapter 117 of title 
18, United States Code, or an attempt or a conspiracy to commit any 
such offense.
    `Pattern of activity' means any combination of two or more prior 
separate instances of prohibited sexual conduct by the defendant with a 
minor victim other than a minor victim of the instant offense of 
conviction, whether or not the conduct resulted in a conviction for 
such conduct.
    `Prohibited sexual conduct' (A) means any sexual activity for which 
a person can be charged with a criminal offense; (B) includes the 
production of child pornography; (C) includes trafficking in child 
pornography if the defendant has a prior felony conviction for 
trafficking in child pornography; and (D) does not include possession 
of child pornography. `Child pornography' has the meaning given that 
term in 18 U.S.C. 2256(8).
    [2. Sexual Predator Determination.--For purposes of this guideline, 
the defendant is a sexual predator if the court determines, under the 
totality of the circumstances, that the defendant is likely to continue 
to engage in prohibited sexual conduct with minors in the future. [In 
making this determination, the court may rely on information such as 
expert psychosexual evaluations and other reliable evidence.]]
    Background: This guideline is intended to provide lengthy 
incarceration for offenders who present a continuing danger to the 
public. It applies to any offender whose instant offense of conviction 
is a sex offense, regardless of the specific sex offense of conviction 
or Chapter Two guideline under which the offender is sentenced. The 
relevant criminal provisions provide for increased statutory maximum 
penalties for repeat sex offenders and make those increased statutory 
maximum penalties available if the defendant was convicted of any of 
several federal and state sex offenses (see 18 U.S.C. 2247, 2426). In 
addition, section 632 of Pub. L. 102-141 and section 505 of Pub. L. 
105-314 directed the Commission to ensure lengthy incarceration for 
offenders who engage in a pattern of activity involving the sexual 
abuse or exploitation of minors.
    [The guideline is intended to target those dangerous offenders for 
whom future sex offending is likely. Research has shown that recidivism 
rates vary depending on characteristics of the offender that may be 
determined at the time of sentencing, such as a proven sexual 
preference for minors or other psychopathy. Psychosexual evaluations by 
certified professionals using empirically-validated risk assessment 
instruments may be useful to identify those offenders who are most 
likely to reoffend.]
    The statutory maximum term of supervised release is recommended for 
offenders sentenced under this guideline. In addition, treatment and 
monitoring are important tools for supervising offenders and should be 
considered as special conditions of the term of supervised release that 
is imposed.]''.
    (3) Option Three: Section 2A3.1(b) is amended by adding at the end 
the following:
    ``(7) If the defendant engaged in a pattern of activity involving 
the sexual abuse or exploitation of a minor, increase by [2] levels.''.
    The Commentary to Sec. 2A3.1 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``8. Pattern of Activity Enhancement.--
    `Pattern of activity involving the sexual abuse or exploitation of 
a minor' means any combination of two or more separate instances of the 
sexual abuse or sexual exploitation of a minor by the defendant, 
whether or not the abuse or exploitation (A) occurred during the course 
of the offense; (B) involved the same or different victims; or (C) 
resulted in a conviction for such conduct.
    `Sexual abuse or exploitation' means conduct constituting criminal 
sexual abuse of a minor, sexual exploitation of a minor (including 
trafficking in material relating to the sexual abuse or exploitation of 
a minor), abusive sexual contact of a minor, any similar offense under 
state law, any offense involving the promotion or enticement of minors 
to engage in sexual activity, or an attempt or a conspiracy to commit 
any of the above offenses.
    If the defendant engaged in the sexual abuse or exploitation of a 
minor at any time (whether or not such abuse or exploitation occurred 
during the course of the offense or resulted in a conviction for such 
conduct) and subsection (b)(7) does not apply, an upward departure may 
be warranted. In addition, an upward departure may be warranted if the 
defendant received an enhancement under subsection (b)(7) but that 
enhancement does not adequately reflect the seriousness of the sexual 
abuse or exploitation involved or the likelihood of recidivism.
    Prior convictions taken into account under subsection (b)(7) are 
also counted for purposes of determining criminal history points 
pursuant to Chapter Four, Part A (Criminal History).''.
    Section 2A3.2(b) is amended by adding at the end the following:
    ``(5) If the defendant engaged in a pattern of activity involving 
the sexual abuse or exploitation of a minor, increase by [2] levels.''.

[[Page 7976]]

    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``9. Pattern of Activity Enhancement.--
    `Pattern of activity involving the sexual abuse or exploitation of 
a minor' means any combination of two or more separate instances of the 
sexual abuse or sexual exploitation of a minor by the defendant, 
whether or not the abuse or exploitation (A) occurred during the course 
of the offense; (B) involved the same or different victims; or (C) 
resulted in a conviction for such conduct.
    `Sexual abuse or exploitation' means conduct constituting criminal 
sexual abuse of a minor, sexual exploitation of a minor (including 
trafficking in material relating to the sexual abuse or exploitation of 
a minor), abusive sexual contact of a minor, any similar offense under 
state law, any offense involving the promotion or enticement of minors 
to engage in sexual activity, or an attempt or a conspiracy to commit 
any of the above offenses.
    If the defendant engaged in the sexual abuse or exploitation of a 
minor at any time (whether or not such abuse or exploitation occurred 
during the course of the offense or resulted in a conviction for such 
conduct) and subsection (b)(5) does not apply, an upward departure may 
be warranted. In addition, an upward departure may be warranted if the 
defendant received an enhancement under subsection (b)(5) but that 
enhancement does not adequately reflect the seriousness of the sexual 
abuse or exploitation involved or the likelihood of recidivism.
    Prior convictions taken into account under subsection (b)(5) are 
also counted for purposes of determining criminal history points 
pursuant to Chapter Four, Part A (Criminal History).''.
    Section 2A3.3(b) is amended by adding at the end the following:
    ``(3) If the defendant engaged in a pattern of activity involving 
the sexual abuse or exploitation of a minor, increase by [2] levels.''.
    The Commentary to Sec. 2A3.3 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``5. Pattern of Activity Enhancement.--
    `Pattern of activity involving the sexual abuse or exploitation of 
a minor' means any combination of two or more separate instances of the 
sexual abuse or sexual exploitation of a minor by the defendant, 
whether or not the abuse or exploitation (A) occurred during the course 
of the offense; (B) involved the same or different victims; or (C) 
resulted in a conviction for such conduct.
    `Sexual abuse or exploitation' means conduct constituting criminal 
sexual abuse of a minor, sexual exploitation of a minor (including 
trafficking in material relating to the sexual abuse or exploitation of 
a minor), abusive sexual contact of a minor, any similar offense under 
state law, any offense involving the promotion or enticement of minors 
to engage in sexual activity, or an attempt or a conspiracy to commit 
any of the above offenses.
    If the defendant engaged in the sexual abuse or exploitation of a 
minor at any time (whether or not such abuse or exploitation occurred 
during the course of the offense or resulted in a conviction for such 
conduct) and subsection (b)(3) does not apply, an upward departure may 
be warranted. In addition, an upward departure may be warranted if the 
defendant received an enhancement under subsection (b)(3) but that 
enhancement does not adequately reflect the seriousness of the sexual 
abuse or exploitation involved or the likelihood of recidivism.
    Prior convictions taken into account under subsection (b)(3) are 
also counted for purposes of determining criminal history points 
pursuant to Chapter Four, Part A (Criminal History).''.
    Section 2A3.4(b) is amended by adding at the end the following:
    ``(6) If the defendant engaged in a pattern of activity involving 
the sexual abuse or exploitation of a minor, increase by [2] levels.''.
    The Commentary to Sec. 2A3.4 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``9. Pattern of Activity Enhancement.--
    `Pattern of activity involving the sexual abuse or exploitation of 
a minor' means any combination of two or more separate instances of the 
sexual abuse or sexual exploitation of a minor by the defendant, 
whether or not the abuse or exploitation (A) occurred during the course 
of the offense; (B) involved the same or different victims; or (C) 
resulted in a conviction for such conduct.
    `Sexual abuse or exploitation' means conduct constituting criminal 
sexual abuse of a minor, sexual exploitation of a minor (including 
trafficking in material relating to the sexual abuse or exploitation of 
a minor), abusive sexual contact of a minor, any similar offense under 
state law, any offense involving the promotion or enticement of minors 
to engage in sexual activity, or an attempt or a conspiracy to commit 
any of the above offenses.
    If the defendant engaged in the sexual abuse or exploitation of a 
minor at any time (whether or not such abuse or exploitation occurred 
during the course of the offense or resulted in a conviction for such 
conduct) and subsection (b)(6) does not apply, an upward departure may 
be warranted. In addition, an upward departure may be warranted if the 
defendant received an enhancement under subsection (b)(6) but that 
enhancement does not adequately reflect the seriousness of the sexual 
abuse or exploitation involved or the likelihood of recidivism.
    Prior convictions taken into account under subsection (b)(6) are 
also counted for purposes of determining criminal history points 
pursuant to Chapter Four, Part A (Criminal History).''.
    (4) Option Four: The Commentary to Sec. 2A3.1 captioned 
``Application Notes'' is amended by adding at the end the following:
    ``8. Upward Departure Provision.--If the defendant committed 
repeated acts of sexual abuse of the same minor over a period of time 
and the court determines that the guideline has not adequately taken 
these repeated acts into account, an upward departure may be 
warranted.''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``9. Upward Departure Provision.--If the defendant committed 
repeated acts of sexual abuse of the same minor over a period of time 
and the court determines that the guideline has not adequately taken 
these repeated acts into account, an upward departure may be 
warranted.''.
    The Commentary to Sec. 2A3.3 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``5. Upward Departure Provision.--If the defendant committed 
repeated acts of sexual abuse of the same minor over a period of time 
and the court determines that the guideline has not adequately taken 
these repeated acts into account, an upward departure may be 
warranted.''.
    The Commentary to Sec. 2A3.4 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``9. Upward Departure Provision.--If the defendant committed 
repeated acts of sexual abuse of the same minor over a period of time 
and the court determines that the guideline has not adequately taken 
these repeated acts into account, an upward departure may be 
warranted.''.
    (5) Conforming Amendments: The Commentary to Sec. 2A3.1 captioned 
``Application Notes'' is amended by striking Notes 5 and 7 in their 
entirety; and by redesignating Note 6 as Note 5.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended by striking Note 8.

[[Page 7977]]

    The Commentary to Sec. 2A3.3 captioned ``Application Notes'' is 
amended by striking Note 4.
    The Commentary to Sec. 2A3.4 captioned ``Application Notes'' is 
amended by striking Note 8.
    (6) Supervised Release Provision: Section 5D1.2 is amended by 
striking subsection (b) in its entirety and inserting the following:
    ``(b) Except as otherwise provided--
    (1) The term of supervised release imposed shall be not less than 
any statutorily required term of supervised release; and
    (2) If the instant offense of conviction is a sex offense, the term 
of supervised release shall be the maximum term of supervised release 
authorized by statute.''.
    The Commentary to Sec. 5D1.2 captioned ``Application Notes'' is 
amended in Note 1 by inserting ``Safety Valve Cases.--'' before ``A 
defendant who qualifies''; in Note 2 by inserting ``Supervised Release 
Cases.--'' before ``Upon motion of the Government''; by redesignating 
Notes 1 and 2 as Notes 2 and 3, respectively; and by inserting before 
Note 2, as redesignated by this amendment, the following:
    ``1. Definition.--For purposes of this guideline, the term `sex 
offense' means an offense under [chapter 109A,] [chapter 109A 
perpetrated against a minor,] chapter 110 (not including trafficking, 
receipt, or possession of, child pornography), or chapter 117 of title 
18, United States Code, or an attempt or a conspiracy to commit any 
such offense.''.
    Issue for Comment: Option Two proposes a new guideline at 
Sec. 4B1.6 that would provide a five-level increase and a minimum 
offense level of level [32] if the defendant is a sexual predator. As 
highlighted by the bracketed language ``[and][or]'' in 
Sec. 4B1.6(b)(2), the Commission invites comment regarding whether the 
court must find both that the defendant is a sexual predator and that 
the defendant engaged in a pattern of activity involving sexual abuse 
or exploitation, or whether a finding of one of these factors would be 
sufficient in order for the five-level increase to apply.

Part (B): Grouping

    Synopsis: Part B of the proposed amendment resolves a circuit 
conflict regarding who the ``victim'' is in child pornography cases for 
purposes of grouping of multiple counts. The amendment proposes two 
options for resolving the circuit conflict on the grouping of multiple 
counts of child pornography trafficking, receipt, and possession. 
Option One would allow grouping of child pornography trafficking and 
possession counts pursuant to Sec. 3D1.2(d). This grouping provision 
does not require a determination of whether counts involve the same 
victim in order to calculate a combined adjusted offense level for 
multiple counts of conviction. Option Two would not permit the grouping 
of multiple counts of child pornography trafficking and possession 
pursuant to Sec. 3D1.2. This option is based on the premise that 
multiple acts of possession or trafficking represent separate instances 
of fear and risk of harm, and would require the assignment of units 
pursuant to Sec. 3D1.4.

Proposed Amendment

    (1) Option One: Section 3D1.2(d) is amended by inserting after 
``Secs. 2F1.1, 2F1.2;'' the following new line:
    ``Secs. 2G2.2, 2G2.4;''.
    (2) Option Two: The Commentary to Sec. 2G2.1 captioned 
``Application Notes'' is amended in Note 2 by adding at the end the 
following new paragraph:
    ``Similarly, [multiple counts involving the exploitation of the 
same minor are not to be grouped under Sec. 3D1.2 and] counts involving 
the production of material involving the exploitation of a minor are 
not to be grouped under Sec. 3D1.2 with counts involving the 
trafficking of material involving the exploitation of a minor, even in 
cases in which the production count and the trafficking count involve 
the same minor (i.e., cases that involve both a count of producing 
material involving the exploitation of a minor and a count of 
trafficking in the same material). In such cases, the harm involved in 
producing the material is separate and distinct from the harm involved 
in trafficking in that material.''.
    The Commentary to Sec. 2G2.2 captioned ``Application Notes'' is 
amended by adding at the end the following application note:
    ``4. For purposes of Chapter Three, Part D (Multiple Counts), 
multiple counts involving trafficking in, receiving, transporting, 
shipping, advertising, or possessing with the intent to distribute, 
material involving the exploitation of a minor are not to be grouped 
under Sec. 3D1.2 (Groups of Closely Related Counts). Such counts do not 
involve `substantially the same harm' for purposes of Sec. 3D1.2.
    Similarly, such counts are not to be grouped under Sec. 3D1.2 with 
counts involving the production of material involving the exploitation 
of a minor, even in cases in which the production count and the 
trafficking count involve the same minor (i.e., cases that involve both 
a count of producing material involving the exploitation of a minor and 
a count of trafficking in the same material). In such cases, the harm 
involved in producing the material is separate and distinct from the 
harm involved in trafficking in that material.''.
    The Commentary to Sec. 2G2.4 captioned ``Application Notes'' is 
amended by adding at the end the following application note:
    ``3. For purposes of Chapter Three, Part D (Multiple Counts), 
multiple counts involving the possession of material involving the 
exploitation of a minor are not to be grouped under Sec. 3D1.2 (Groups 
of Closely Related Counts). Such counts do not involve `substantially 
the same harm' for purposes of Sec. 3D1.2.''.
    Section 3D1.2(d) is amended by inserting ``, 2G2.2, 2G2.4;'' after 
``2G2.1''.

Part (C): Enhancement for Transportation Offenses and Other 
Amendments

    Synopsis: Part C of the proposed amendment responds to the 
directive in the Act to provide an enhancement for offenses under 
chapter 117 of title 18, United States Code, involving the 
transportation of minors for prostitution or prohibited sexual conduct. 
Pursuant to the authority in the Act and pursuant to the Commission's 
general authority under 28 U.S.C. 994 to promulgate guideline 
amendments, the amendment proposes a number of offense level increases 
in Sec. 2A3.2, the ``statutory rape'' guideline, and in Sec. 2A3.4, the 
abusive sexual contact guideline. Specifically, the amendment proposes 
to do the following:
    (1) Distinguish between chapter 117 violations that involve the 
commission of an underlying sexual act and those violations (e.g., 
sting cases) that do not, by providing in an alternative base offense 
level in Sec. 2A3.2 three additional levels for chapter 117 violations 
that also involve an underlying sexual act.
    (2) Provide an across-the-board three-level increase in the base 
offense level for offenses sentenced under Sec. 2A3.2, such that the 
base offense level (A) for statutory rape in its most basic form 
unaccompanied by aggravating conduct is increased from level 15 to 
level 18; (B) for a chapter 117 violation (unaccompanied by a sexual 
act) is increased from level 18 to level 21; and (C) a chapter 117 
violation (accompanied by a sexual act) results in a base offense level 
of level 24. This increase also maintains the proportionality between 
Secs. 2A3.2 and 2G2.2.
    (3) Provide an enhancement of 2 levels if the offense involved 
incest as

[[Page 7978]]

an additional enhancement to the two-level enhancement for custody, 
care, or supervisory control, and provide in the Commentary a 
definition of ``incest'' that tracks that found in the Model Penal 
Code. A review of the 228 case files from FY 99 that involved sex 
crimes against children revealed that 26% of the offenders were parents 
or relatives of the victim. Additionally, 45 other offenders were 
either the boyfriend/girlfriend of the parent, or a step-parent or step 
grandparent of the victim.
    (4) Amend the Statutory Index to include a reference to the 
statutory rape guideline, Sec. 2A3.2, for chapter 117 offenses. Often 
in ``sting'' cases, the defendant travels across state lines in order 
to meet a minor for what the defendant believes will be an encounter 
involving consensual sexual activity.
    (5) Make conforming changes to the existing three-level decrease 
for chapter 117 violations that do not include aggravating conduct so 
that such violations receive the offense level applicable to statutory 
rape in its basic form.
    (6) Make technical changes (such as the addition of headings and 
the reordering of applications notes) not intended to have substantive 
effect.
    In addition, the amendment proposes to amend the guideline covering 
the production of child pornography, Sec. 2G2.1, to provide additional 
enhancements to account for aggravating conduct that may be present in 
such cases, specifically, the production of sadistic or masochistic 
material, serious bodily injury, or the trafficking of produced 
materials. Note that the addition of the enhancement in Sec. 2G2.1 for 
the production of sadistic or masochistic material would result in the 
grouping of child pornography trafficking and production counts of 
conviction under Sec. 3D1.2(c), contrary to the proposal in Option 2 of 
Part B of this amendment. These amendments also are intended to restore 
proportionality in sentences between child pornography production 
offenses and child pornography trafficking offenses.

Proposed Amendment

    Section 2A3.1(b) is amended by adding at the end the following:
    ``(7) If the offense involved incest, increase by 2 levels.''.
    The Commentary to Sec. 2A3.1 captioned ``Application Notes'' is 
amended in Note 1 by striking ``For purposes of this guideline--'' and 
inserting the following:
    ``Definitions.--For purposes of this guideline:
    `Incest' means any sexual act between the defendant and the victim 
in any case in which the defendant-victim relationship is that of (A) 
ancestor-descendant (e.g., parent-child and grandparent-child); (B) 
brother-sister of the whole or half blood; (C) sister-brother of the 
whole or half blood; (D) uncle-nephew of the whole blood; (E) uncle-
niece of the whole blood; (F) aunt-nephew of the whole blood; or (G) 
aunt-niece of the whole blood. The relationships referred to in this 
definition include blood relationships without regard to legitimacy, 
the relationship of parent-child by adoption, and the relationship of 
step parent-step child.''; and by inserting after ``18 U.S.C. 
2256(8).'' the following new paragraph:
    `` `Sexual act' has the meaning given that term in 18 U.S.C. 
2246(2).''.
    The Commentary to Sec. 2A3.1 captioned ``Application Notes'' is 
amended in Note 2 by inserting ``Custody, Care, and Supervisory Control 
Enhancement.--'' before ``Subsection''.
    Section 2A3.2(a) is amended by redesignating subdivisions (1) and 
(2) as subdivisions (2) and (3), respectively; and by inserting after 
``Base Offense Level:'' the following:
    ``(1) [24], if the offense involved a violation of chapter 117 of 
title 18, United States Code and the commission, or attempted 
commission, of a sexual act;''.
    Section 2A3.2(a) is amended in redesignated subdivision (2) by 
striking ``18'' and inserting ``[21]''; and by inserting ``, but not 
the commission, or attempted commission, of a sexual act'' before the 
semicolon.
    Section 2A3.2(a) is amended in redesignated subdivision (3) by 
striking ``15'' and inserting ``[18]''.
    Section 2A3.2(b) is amended by striking subdivision (4) in its 
entirety and inserting the following:
    ``(4) If (A) none of subsections (b)(1) through (b)(3) applies; and 
(B) subsection (a)(1) applies, decrease by 6 levels.'';
    By redesignating subdivision (4) as subdivision (5); and by 
inserting after subdivision (3) the following:
    ``(4) If the offense involved incest, increase by 2 levels.''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in Note 1 by striking ``For purposes of this guideline--'' and 
inserting the following:
    ``Definitions.--For purposes of this guideline:
    `Incest' means any sexual act between the defendant and the victim 
in any case in which the defendant-victim relationship is that of (A) 
ancestor-descendant (e.g., parent-child and grandparent-child); (B) 
brother-sister of the whole or half blood; (C) sister-brother of the 
whole or half blood; (D) uncle-nephew of the whole blood; (E) uncle-
niece of the whole blood; (F) aunt-nephew of the whole blood; or (G) 
aunt-niece of the whole blood. The relationships referred to in this 
definition include blood relationships without regard to legitimacy, 
the relationship of parent-child by adoption, and the relationship of 
step parent-step child.''; and by inserting after ``(sexual abuse)'' 
the following paragraph:
    `` `Sexual act' has the meaning given that term in 18 U.S.C. 
2246(2).''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended by striking Note 2 in its entirety; and by redesignating Notes 
3 through 7 as Notes 2 through 6, respectively.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in redesignated Note 2 (formerly Note 3) by inserting 
``Custody, Care, and Supervisory Control Enhancement.--'' before 
``Subsection''; and by inserting ``(A)'' after ``(b)(1)''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in redesignated Note 3 (formerly Note 4) by inserting ``Abuse 
of Position of Trust.--''
before ``If the''; and by inserting ``(A) or (B)'' after ``(b)(1)''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in redesignated Note 4 (formerly Note 5) by inserting 
``Misrepresentation of Identity.--'' before ``The enhancement''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in redesignated Note 5 (formerly Note 6) by inserting ``Use of 
Computer or Internet-Access Device.--'' before ``Subsection (b)(3) 
provides''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in redesignated Note 6 (formerly Note 7) by inserting ``Cross 
Reference.--'' before ``Subsection (c)(1)''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended by striking Note 8 in its entirety and inserting the following:
    ``7. Upward Departure Considerations.--There may be cases in which 
the offense level determined under this guideline substantially 
understates the seriousness of the offense. In such cases, an upward 
departure may be warranted. The following is a non-exhaustive list of 
factors that the court may consider in determining whether an upward 
departure is warranted:

[[Page 7979]]

    (A) The defendant's criminal history includes a prior sentence for 
conduct that is similar to the instant offense.
    (B) The defendant committed the criminal sexual act in furtherance 
of a commercial scheme such as pandering, transporting persons for the 
purpose of prostitution, or the production of pornography.''.
    Section 2A3.4(b) is amended by adding at the end the following:
    ``(6) If the offense involved incest, increase by 2 levels.
    (7) If the offense involved a violation of chapter 117 of title 18, 
United States Code, increase by 3 levels.''.
    The Commentary to Sec. 2A3.4 captioned ``Application Notes'' is 
amended in Note 1 by striking ``For purposes of this guideline--'' and 
inserting the following:
    ``Definitions.--For purposes of this guideline:
    `Incest' means any sexual act between the defendant and the victim 
in any case in which the defendant-victim relationship is that of (A) 
ancestor-descendant (e.g., parent-child and grandparent-child); (B) 
brother-sister of the whole or half blood; (C) sister-brother of the 
whole or half blood; (D) uncle-nephew of the whole blood; (E) uncle-
niece of the whole blood; (F) aunt-nephew of the whole blood; or (G) 
aunt-niece of the whole blood. The relationships referred to in this 
definition include blood relationships without regard to legitimacy, 
the relationship of parent-child by adoption, and the relationship of 
step parent-step child.'';

and by inserting at the end the following:
`` `Sexual act' has the meaning given that term in 18 U.S.C. 
Sec. 2246(2).''.
    Section 2G2.1(b) is amended by adding at the end the following:
    ``(4) If (A) the offense involved the production of sexually 
explicit material that portrays sadistic or masochistic conduct or 
other depictions of violence; or (B) the victim sustained serious 
bodily injury, increase by [2][4] levels.
    (5) If the offense involved any distribution of the sexually 
explicit material, increase by [2] levels.''.
    The Commentary to Sec. 2G2.1 captioned ``Application Notes'' is 
amended by striking Note 1 in its entirety and inserting the following:
    ``1. Definitions.--For purposes of this guideline:
    `Minor' means an individual who had not attained the age of 18 
years.
    `Distribution' has the meaning given that term in Application Note 
1 of the Commentary to Sec. 2G2.2 (Trafficking in Material Involving 
the Sexual Exploitation of a Minor; Receiving, Transporting, 
Advertising, or Possessing Material Involving the Sexual Exploitation 
of a Minor with Intent to Traffic).''.
    Appendix A (Statutory Index) is amended in the line referenced to 
``18 U.S.C. Sec. 2423(b)'' by inserting ``, 2A3.4'' after ``2A3.3''.

Issues for Comment

    (1) The Commission invites comment on whether and, if so, to what 
extent, the guidelines covering sexual abuse, Secs. 2A3.1 (Criminal 
Sexual Abuse), 2A3.2 (Criminal Sexual Abuse of a Minor (Statutory 
Rape)), 2A3.3 (Criminal Sexual Abuse of a Ward), and 2A3.4 (Abusive 
Sexual Contact), should be amended to provide an enhancement if the 
offense involved the transportation, persuasion, inducement, 
enticement, or coercion of a child to engage in prohibited sexual 
conduct. Do enhancements added to these guidelines (that became 
effective November 1, 2000) for use of a computer and/or 
misrepresentation of a criminal participant's identity sufficiently 
provide an appropriate enhancement, or is an additional enhancement in 
these guidelines for other aggravating conduct needed?
    (2) The Commission invites comment on whether and, if so, to what 
extent, the guidelines covering sexual abuse, Secs. 2A3.1 (Criminal 
Sexual Abuse), 2A3.2 (Criminal Sexual Abuse of a Minor (Statutory 
Rape)), 2A3.3 (Criminal Sexual Abuse of a Ward), and 2A3.4 (Abusive 
Sexual Contact), should be amended to provide an enhancement in order 
to maintain proportionality between these guidelines and the guidelines 
covering pornography offenses, particularly, 2G2.2 (Trafficking In 
Material Involving the Sexual Exploitation of a Minor).

Proposed Amendment: Stalking and Domestic Violence

    6. Synopsis of Proposed Amendment: This proposed amendment 
addresses section 1107 of the Victims of Trafficking and Violence Act 
2000 (the ``Act''), Pub. L. 106-386. That section amends 18 U.S.C. 
2261, 2261A, and 2262 to broaden the reach of these statutes to include 
international travel to stalk, commit domestic violence, or violate a 
protective order. Section 2261A also is amended to broaden the category 
of persons protected by this statute to include intimate partners of 
the person. The Act also amends section 2261A to provide a new offense 
at section 2262A(2) which prohibits the use of the mail or any facility 
of interstate or foreign commerce to commit a stalking offense. Several 
technical changes were also made to these statutes.
    The Act also includes a directive to the Commission to amend the 
federal sentencing guidelines to reflect the changes made to 18 U.S.C. 
2261 with specific consideration to be given to the following factors:
    (i) Whether the Federal Sentencing Guidelines relating to stalking 
offences should be modified in light of the amendment made by this 
subsection; and
    (ii) Whether any changes the Commission may make to the Federal 
Sentencing Guidelines pursuant to clause (i) should also be made with 
respect to offenses under chapter 110A of title 18, United States Code 
(stalking and domestic violence offenses).
    This proposed amendment increases the base offense level in 
Sec. 2A6.2 (Stalking or Domestic Violence) and adds a cross reference 
to Sec. 1B1.5 (Interpretation of References to Other Offense 
Guidelines).
    For several reasons, the proposed amendment treats the new stalking 
by mail offense the same under the guidelines as other stalking 
offenses and covers it under Sec. 2A6.2 (Stalking or Domestic 
Violence). First, the statutory penalties for stalking by mail are the 
same as the statutory penalties for other stalking offenses. Second, 
although there was some consideration to referring this new offense to 
Sec. 2A6.1 (Threatening or Harassing Communications), stalking by mail 
offenses differ significantly from threatening communications in that 
stalking by mail offenses require the defendant's intent to kill, or 
injure a person, or place a person in reasonable fear of death or 
serious bodily injury. Third, referencing stalking by mail offenses to 
Sec. 2A6.1, could possibly result in these offenses receiving higher 
penalties than other stalking offenses. For example, a defendant who 
writes a threatening letter, violates a protective order and engages in 
some conduct evidencing an intent to carry out such threat, receives an 
offense level of level 20 under Sec. 2A6.1. A defendant who commits a 
stalking offense, violates a protective order, and actually commits 
bodily injury on the person who is the subject of the protection order, 
receives an offense level of level 18 under Sec. 2A6.2. Arguably, the 
second defendant should receive punishment, equal to, or perhaps 
greater than that received by the first defendant.
    Because of the concern with regard to the proportionality in 
sentencing stalking and domestic violence offenses vis-a-vis other 
crimes, such as

[[Page 7980]]

threatening or harassing communications, this amendment proposes to 
increase the base offense level in Sec. 2A6.2 from level 14 to level 
[16][18]. Setting the base offense level at level [16] [18] for 
stalking and domestic violence crimes ensures that these offenses are 
sentenced at or above the offense levels for offenses involving 
threatening and harassing communications.
    This amendment also amends Application Note 3 to Sec. 1B1.5 
(Interpretation of References to Other Offense Guidelines) to clarify 
generally the operation of cross references. A review of the 16 cases 
sentenced under this guideline in fiscal years 1998 and 1999 indicated 
that there is some confusion as to whether a cross reference can and 
should be applied to conduct that is not within federal jurisdiction 
(e.g., conduct in violation of state or local law) as is often the case 
in stalking and domestic violence offenses. This new application note 
makes clear that, unless otherwise specified, cross references in 
Chapter Two are to be determined consistent with the provisions of 
Sec. 1B1.3 (Relevant Conduct). Therefore, in a case in which the 
guideline includes a reference to use another guideline if the conduct 
involved another offense, the other offense includes conduct that may 
be a state or local offense or conduct that occurred under 
circumstances that would constitute a federal offense had the conduct 
taken place within the territorial or maritime jurisdiction of the 
United States.

Proposed Amendment

    Section 2A6.2(a) is amended by striking ``14'' and inserting 
``[16][18]''.
    The Commentary to Sec. 2A6.2 captioned ``Application Notes'' is 
amended in Note 1 by striking the last paragraph in its entirety and 
inserting:
    ``Stalking' means (A) traveling with the intent to kill, injure, 
harass, or intimidate another person and, in the course of, or as a 
result of, such travel, placing the person in reasonable fear of death 
or serious bodily injury to that person, the person's immediate family, 
including that person's spouse or intimate partner; or (B) using the 
mail or any facility of interstate or foreign commerce to engage in a 
course of conduct that places that person in reasonable fear of the 
death of, or serious bodily injury to, any of the persons described in 
subdivision (A) of this note. See 18 U.S.C. Sec. 2261A. `Immediate 
family' has the meaning set forth in 18 U.S.C. Sec. 115(c)(2). `Course 
of conduct' and `spouse or intimate partner' have the meaning given 
those terms in 18 U.S.C. Sec. 2266(2) and (7), respectively.''.
    The Commentary to Sec. 1B1.5 captioned ``Application Notes'' is 
amended in Note 3 by inserting after the first sentence the following:
    ``Consistent with the provisions of Sec. 1B1.3 (Relevant Conduct), 
such other offense includes conduct that may be a state or local 
offense or conduct that occurred under circumstances that would 
constitute a federal offense had the conduct taken place within the 
territorial or maritime jurisdiction of the United States.''.

Proposed Amendment: Re-Promulgation of Emergency Amendment Regarding 
Enhanced Penalties for Amphetamine or Methamphetamine Laboratory 
Operators as Permanent Amendment

    7. Synopsis of Proposed Amendment: This proposed amendment 
addresses the ``substantial risk'' directive in the Methamphetamine and 
Club Drug Anti-Proliferation Act of 2000 (the ``Act''), section 102 of 
Pub. L. 106-310.
    The Act requires the Commission to promulgate amendments under 
emergency amendment authority. Although the Act generally provides that 
the Commission shall promulgate various amendments ``as soon as 
practicable,'' the substantial risk directive specifically requires 
that the amendment implementing the directive shall apply ``to any 
offense occurring on or after the date that is 60 days after the date 
of the enactment'' of the Act. Because of ex post facto concerns raised 
by this 60-day clause, the Commission promulgated an amendment in 
November 2000 that implemented the substantial risk directive. The 
amendment became effective December 16, 2000.
    The directive instructs the Commission to amend the federal 
sentencing guidelines with respect to any offense relating to the 
manufacture, attempt to manufacture, or conspiracy to manufacture 
amphetamine or methamphetamine in (A) the Controlled Substances Act (21 
U.S.C. 801 et seq.); (B) the Controlled Substances Import and Export 
Act (21 U.S.C. 951 et seq.); or (C) the Maritime Drug Law Enforcement 
Act (46 U.S.C. App. 1901 et seq.).
    In carrying out this directive, the Act requires the Commission to 
provide the following enhancements--
    (A) if the offense created a substantial risk of harm to human life 
(other than a life described in subparagraph (B)) or the environment, 
increase the base offense level for the offense--
    (i) By not less than 3 offense levels above the applicable level in 
effect on the date of the enactment of this Act; or
    (ii) If the resulting base offense level after an increase under 
clause (i) would be less than level 27, to not less than level 27; or
    (B) If the offense created a substantial risk of harm to the life 
of a minor or incompetent, increase the base offense level for the 
offense--
    (i) By not less than 6 offense levels above the applicable level in 
effect on the date of the enactment of this Act; or
    (ii) if the resulting base offense level after an increase under 
clause (i) would be less than level 30, to not less than level 30.
    Three options are now presented to implement the directive on a 
permanent basis.
    Option 1.--Option 1 proposes to re-promulgate the emergency 
amendment without any changes. The pertinent parts of Option 1 are as 
follows:
    (1) Guidelines Amended.--The amendment provides new enhancements in 
Secs. 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or 
Trafficking) and 2D1.10 (Endangering Human Life While Illegally 
Manufacturing a Controlled Substance) that also apply in the case of an 
attempt or a conspiracy to manufacture amphetamine or methamphetamine. 
The amendment does not amend Sec. 2D1.11 (Unlawfully Distributing, 
Importing, Exporting or Possessing a Listed Chemical) or Sec. 2D1.12 
(Unlawful Possession, Manufacture, Distribution, or Importation or 
Prohibited Flask or Equipment). Although offenses that involve the 
manufacture of amphetamine or methamphetamine also are referenced in 
Appendix (A) (Statutory Index) to Secs. 2D1.11 and 2D1.12, the cross 
reference in these guidelines, which applies if the offense involved 
the manufacture of a controlled substance, will result in application 
of Sec. 2D1.1 and accordingly, the new enhancements.
    (2) Structure.--The basic structure of the amendment to Secs. 2D1.1 
and 2D1.10 tracks the structure of the directive. Accordingly, in 
Sec. 2D1.1, the amendment provides a three-level increase and a minimum 
offense level of level 27 if the offense (A) involved the manufacture 
of amphetamine or methamphetamine; and (B) created a substantial risk 
of either harm to human life or the environment. For offenses that 
created a substantial risk of harm to the life of a minor or an 
incompetent, the amendment provides a six-level increase and a minimum 
offense level of 30.
    However, the structure of the amendment in Sec. 2D1.10 differs from 
that

[[Page 7981]]

in Sec. 2D1.1 with respect to the first prong of the enhancement 
(regarding substantial risk of harm to human life or to the 
environment). Specifically, the amendment provides a three-level 
increase and a minimum offense level of level 27 if the offense 
involved the manufacture of amphetamine or methamphetamine without 
making application of the enhancement dependent upon whether the 
offense also involved a substantial risk of either harm to human life 
or the environment. Consideration of whether the offense involved a 
substantial risk of harm to human life is unnecessary because 
Sec. 2D1.10 applies only to convictions under 21 U.S.C. 858, and the 
creation of a substantial risk of harm to human life is an element of a 
Sec. 858 offense. Therefore, the base offense level already takes into 
account the substantial risk of harm to human life. Consideration of 
whether the offense involved a substantial risk of harm to the 
environment is unnecessary because the directive predicated application 
of the enhancement on substantial risk of harm either to human life or 
to the environment, and the creation of a substantial risk of harm to 
human life is necessarily present because it is an element of the 
offense.
    (3) Determining ``Substantial Risk of Harm''.--Neither the 
directive nor any statutory provision defines ``substantial risk of 
harm''. Based on an analysis of relevant case law that interpreted 
``substantial risk of harm'', the amendment provides commentary setting 
forth factors that may be relevant in determining whether a particular 
offense created a substantial risk of harm.
    (4) Definitions.--The definition of ``incompetent'' is modeled 
after several state statutes, which proved useful for purposes of this 
amendment.
    The definition of ``minor'' has the meaning given that term in 
Application Note 1 of the Commentary to Sec. 2A3.1 (Criminal Sexual 
Abuse).
    Option 2.--Option 2 proposes to expand the emergency amendment, as 
set forth in Option 1, to apply to the manufacture of all controlled 
substances rather than only amphetamine or methamphetamine. Although 
the directive specifically instructs the Commission to provide 
increased penalties for the manufacture of amphetamine and 
methamphetamine, the Commission may, under its general promulgation 
authority, expand the scope of an emergency amendment when it re-
promulgates the amendment as a permanent amendment. The reason for the 
proposed expansion is that if the manufacture of any controlled 
substance creates a substantial risk of harm to human life or the 
environment, there is a strong argument that the increased penalties 
should apply regardless of the type of controlled substances involved 
in the offense. The pertinent parts of Option 2 are as follows:
    (1) Sec. 2D1.1.--The enhancement in subsection (b)(6) is proposed 
to apply to the manufacture of any controlled substance, not just to 
the manufacture of amphetamine or methamphetamine. The expansion to all 
controlled substances in Sec. 2D1.1 is rather straightforward. 
Conforming changes are made to the Commentary, but the amendment to 
Sec. 2D1.1 otherwise remains the same as the emergency amendment.
    (2) Sec. 2D1.10.--Option 2's proposed expansion to all controlled 
substances in Sec. 2D1.10 requires a restructuring of the guideline (as 
it was amended by the emergency amendment).
    First, Option 2 proposes to increase the alternative base offense 
level in subsection (a)(1) from ``3 plus'' to ``6 plus the offense 
level from the Drug Quantity Table in Sec. 2D1.1''. This proposed 
increase corresponds to the proposed deletion of subsection (b)(1)(A) 
of the emergency amendment. As explained above in the description of 
Option 1 under ``Structure,'' subsection (b)(1)(A) provides a three-
level increase ``if the offense involved the manufacture of amphetamine 
or methamphetamine,'' without making application of the enhancement 
dependent upon whether the offense also involved a substantial risk of 
either harm to human life or the environment. However, if the emergency 
amendment is to be expanded to apply to the manufacture of all 
controlled substances, this enhancement no longer is appropriate. In 
order not to lose the three-level increase that was provided by this 
enhancement, the three levels from this enhancement are built into the 
alternative base offense level in subsection (a)(1).
    Second, Option 2 proposes two alternatives for addressing the 
minimum offense level of level 27 that also was provided by the 
enhancement in subsection (b)(1)(A). Option 2(a) increases the current 
alternative base offense level in subsection (a)(2) from level 20 to 
level 27. Although this option is consistent with expanding the entire 
emergency amendment to all controlled substances, the impact of this 
change is likely to be significant for lower level drug offenders. 
Option 2(b) proposes to add an additional alternative base offense 
level of level 27 if the offense involved the manufacture of 
amphetamine or methamphetamine, but maintains the alternative base 
offense level 20 for all other controlled substances. Although this 
option has less of an impact on lower level drug offenders than Option 
2(a), it is not consistent with the approach otherwise taken in Option 
2 of expanding the emergency amendment to cover all controlled 
substances.
    Finally, Option 2 makes the enhancement that applies if the offense 
created a substantial risk of harm to the life of a minor or an 
incompetent applicable to all controlled substances. Conforming 
amendments are made to the Commentary.
    Option 3.--This option assumes that the manufacture of amphetamine 
or methamphetamine is inherently dangerous and poses a substantial risk 
of harm to human life or the environment. Thus, the statutorily 
directed minimum enhancement and minimum offense level is automatic for 
the manufacture of amphetamine or methamphetamine. For all other 
controlled substances, it must be proved that the manufacturing process 
created the substantial risk of harm.
    This option also combines the substantial risk enhancement with the 
environmental damage enhancement in Sec. 2D1.1(b)(5).

Proposed Amendment

    Option 1:
    Sections 2D1.1 and 2D1.10, as amended by Amendment 608 (see 
Supplement to the 2000 Supplement to Appendix C), are repromulgated 
with the following minor, editorial changes:
    The Commentary to Sec. 2D1.1 captioned ``Background'' is amended by 
striking ``Public Law 106-878'' and inserting ``Public Law 106-310''.
    The Commentary to Sec. 2D1.10 captioned ``Background'' is amended 
by striking ``Public Law 106-878'' and inserting ``Public Law 106-
310''.
    Option 2:
    Section 2D1.1(b)(6)(A) is amended in subdivision (i) by striking 
``amphetamine or methamphetamine'' and inserting ``a controlled 
substance''.
    Section 2D1.1(b)(6)(B) is amended in subdivision (i) by striking 
``amphetamine or methamphetamine'' and inserting ``a controlled 
substance''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 20 by inserting ``Hazardous or Toxic Substances.--
''before ``Subsection (b)(5) applies''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in the heading to Note 21 by striking ``Amphetamine and 
Methamphetamine'' and inserting ``Controlled Substances''.

[[Page 7982]]

    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 21(A)(iv) by striking ``amphetamine or 
methamphetamine'' and inserting ``illicit''.
    The Commentary to Sec. 2D1.1 captioned ``Background'' is amended by 
inserting ``, in a broader form,'' after ``Subsection (b)(6) 
implements''.
    Section 2D1.10 is amended by striking subdivisions (a) and (b) in 
their entirety and inserting the following:
    ``(a) Base Offense Level (Apply the greater):
    (1) 6 plus the offense level from the Drug Quantity Table in 
Sec. 2D1.1; or
    [Option 2(a): (2) 27.]
    [Option 2(b): (2) 27, if the offense involved the manufacture of 
amphetamine or methamphetamine; or
    (3) 20, otherwise.]
    (b) Specific Offense Characteristic
    (1) If the offense created a substantial risk of harm to the life 
of a minor or an incompetent, increase by 3 levels. If the resulting 
offense level is less than level 30, increase to level 30.''
    The Commentary to Sec. 2D1.10 captioned ``Application Notes'' is 
amended in the heading to Note 1 by striking ``Associated with the 
Manufacture of Amphetamine and Methamphetamine''.
    The Commentary to Sec. 2D1.10 captioned ``Application Notes'' is 
amended in Note 1(A)(iv) by striking ``amphetamine or methamphetamine 
laboratory'' and inserting ``illicit''.
    The Commentary to Sec. 2D1.10 captioned ``Background'' is amended 
by striking ``Subsection'' and inserting ``Subsections (a)(2) and''; by 
striking ``implements'' and inserting ``implement , in a broader 
form,''; and by striking ``Public Law 106-878'' and inserting ``Public 
Law 106-310''.
    Option 3:
    Section 2D1.1(b) is amended by redesignating subdivision (7) as 
(6); and by striking subdivisions (5) and (6) in their entirety and 
inserting the following:
    ``(5) (Apply the greater):
    (A) If the offense involved (i) an unlawful discharge, emission, or 
release into the environment of a hazardous or toxic substance; or (ii) 
the unlawful transportation, treatment, storage, or disposal of a 
hazardous waste, increase by 2 levels.
    (B) If the offense (i) involved the manufacture of amphetamine or 
methamphetamine; or (ii)(I) involved the manufacture of a controlled 
substance other than amphetamine or methamphetamine; and (II) created a 
substantial risk of harm to human life or the environment, increase by 
3 levels. If the resulting offense level is less than level 27, 
increase to level 27.
    (C) If the offense (i) involved the manufacture of a controlled 
substance; and (ii) created a substantial risk of harm to the life of a 
minor or an incompetent, increase by 6 levels. If the resulting offense 
level is less than level 30, increase to level 30.''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 20 by inserting ``(A)'' after ``Subsection (b)(5)''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in the heading to Note 21 by striking ``Amphetamine and 
Methamphetamine'' and inserting ``Controlled Substances''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes is 
amended in Note 21(A) by striking ``subsection (b)(6)'' and inserting 
``subsections (b)(5)(B) and (b)(5)(C)''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 21(A)(iv) by striking ``amphetamine or 
methamphetamine'' and inserting ``illicit''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 21 subdivision (B) by striking ``(b)(6)'' and inserting 
``(b)(5)''.
    The Commentary to Sec. 2D1.1 captioned ``Background'' is amended by 
inserting ``(A)'' after ``Subsection (b)(5)''; by striking ``Subsection 
(b)(6)'' and inserting ``Subsections (b)(5)(B) and (b)(5)(C)''; by 
striking implements'' and inserting ``implement, in a broader form,''; 
and by striking ``Public Law 106-878'' and inserting ``Public Law 106-
310''.
    Section 2D1.10(a) is amended in subdivision (2) by striking ``20'' 
and inserting ``27''.
    Section 2D1.10(b) is amended by striking subdivision (1) in its 
entirety and inserting the following:
    ``(1) If the offense created a substantial risk of harm to the life 
of a minor or an incompetent, increase by 3 levels. If the resulting 
offense level is less than level 30, increase to level 30.''
    The Commentary to 2D1.10 captioned ``Application Notes'' is amended 
in the title to Note 1 by striking ``Associated with the Manufacture of 
Amphetamine and Methamphetamine''.
    The Commentary to 2D1.10 captioned ``Application Notes'' is amended 
in Note 1(A)(iv) by striking ``amphetamine or methamphetamine'' and 
inserting ``illicit''.
    The Commentary to 2D1.10 captioned ``Background'' is amended by 
striking ``Subsection'' and inserting ``Subsections (a)(2) and''; by 
striking ``implements'' and inserting ``implement, in a broader 
form,''; and by striking ``Public Law 106-878'' and inserting ``Public 
Law 106-310''.
    Issue for Comment: The Commission invites comment regarding whether 
it should provide, for controlled substances other than amphetamine or 
methamphetamine, an upward departure rather than an enhancement 
provision if the manufacture of the controlled substance created a 
substantial risk of harm to human life or the environment.

Proposed Amendment: Mandatory Restitution for Amphetamine and 
Methamphetamine Offenses

    8. Synopsis of Proposed Amendment: This proposed amendment 
implements the provision in the Methamphetamine Anti-Proliferation Act 
of 2000, section 3613 of Pub. L. 106-310, that amends 21 U.S.C. 853(q) 
to provide mandatory restitution for offenses that involve the 
manufacture of methamphetamine. The proposed amendment amends 
Sec. 5E1.1 (Restitution) to include a reference to 21 U.S.C. 
Sec. 853(q) in the guideline provision regarding mandatory restitution.

Proposed Amendment

    Section 5E1.1 is amended in subsection (a)(1) by inserting ``, or 
21 U.S.C. Sec. 853(q)'' after ``3663A''.
    The Commentary to Sec. 5E1.1 captioned ``Background'' is amended in 
the first paragraph by inserting ``, and 21 U.S.C. Sec. 853(q)'' after 
``3663A''.

Proposed Amendment: Safety Valve

    9. Synopsis of Proposed Amendment: This amendment proposes to 
delete the language in Sec. 2D1.1(b)(6) that limits application of the 
safety valve to defendants at offense levels 26 and greater. The 
proposed amendment also deletes commentary that is outdated because of 
the operation of Sec. 5C1.2 (Limitation on Applicability on Statutory 
Minimum Sentences in Certain Cases). Conforming changes are made to 
Sec. 5C1.2.

Proposed Amendment

    Section 2D1.1(b)(6) is amended by striking ``subdivisions (1)-(5)'' 
and inserting ``subsections (a)(1)-(5)''; and by striking ``and the 
offense level determined above is level 26 or greater''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended by striking Note 14 in its entirety; and by redesignating Notes 
15 through 20 as Notes 14 through 19, respectively.
    Section 5C1.2 is amended in the first paragraph by striking ``In'' 
and inserting ``(a) Except as provided in subsection (b), in''.
    Section 5C1.2 is amended by inserting after subsection (a), as so 
designated by this amendment, the following:

[[Page 7983]]

    ``(b) In the case of a defendant (1) who meets the criteria set 
forth in subsection (a); and (2) for whom the statutorily required 
minimum sentence is at least five years, the offense level applicable 
from Chapters Two (Offense Conduct) and Three (Adjustments) shall be 
not less than level 17.''.
    The Commentary to Sec. 5C1.2 captioned ``Application Notes'' is 
amended in Notes 2 through 7 by striking ``subdivision'' each place it 
appears and inserting ``subsection (a)''; and by striking 
``subdivisions'' in Note 3 and inserting ``subsection (a)''.

Proposed Amendment: Anhydrous Ammonia

    10. Synopsis of Proposed Amendment: This proposed amendment 
addresses the new offense, at section 423 of the Controlled Substances 
Act (21 U.S.C. 864), of stealing or transporting across state lines 
anhydrous ammonia knowing, intending, or having reasonable cause to 
believe that such anhydrous ammonia will be used to manufacture a 
controlled substance. This new offense, created by the Methamphetamine 
Anti-Proliferation Act of 2000, section 3653 of Pub. L. 106-310, 
carries the statutory penalties contained in section 403 of the 
Controlled Substances Act (21 U.S.C. 843), i.e., not more than fours 
years' imprisonment (or not more than eight years' imprisonment in the 
case of certain prior convictions) or not more than 10 years' 
imprisonment (or not more than 20 years' imprisonment in the case of 
certain prior convictions) if the offense involved the manufacture of 
methamphetamine.
    The proposed amendment references the new offense to Sec. 2D1.12 
(Unlawful Possession, Manufacture, Distribution, or Importation of 
Prohibited Flask or Equipment; Attempt or Conspiracy). Reference to 
this guideline is appropriate because the new offense is similar to 
other offenses already referenced to the guideline and having the same 
penalty structure, such as 21 U.S.C. 843(a)(6), which among other 
things makes it unlawful to possess any chemical, product, or material 
which may be used to manufacture a controlled substance. The proposed 
amendment also makes minor, non-substantive changes to the guideline in 
order to fully reference the new and existing offenses into the 
guideline.

Proposed Amendment

    Section 2D1.12 is amended in the heading by inserting 
``Transportation, Exportation,'' after ``Distribution,''; by striking 
``or'' before ``Equipment'' and inserting a comma; and by inserting ``, 
Chemical, Product, or Material'' after ``Equipment''.
    Section 2D1.12 is amended in each of subsections (a)(1), (a)(2), 
and (b)(1), by inserting ``flask,'' after ``prohibited''; and by 
inserting ``, chemical, product, or material'' after ``equipment''.
    The Commentary to Sec. 2D1.12 captioned ``Statutory Provisions'' is 
amended by inserting ``Sec. '' before ``843''; and by inserting ``, 
864'' after ``(7)''.
    The Commentary to Sec. 2D1.12 captioned ``Application Notes'' is 
amended by striking the text of Note 1 in its entirety and inserting 
the following:
    ``If the offense involved the large-scale [(A)] manufacture, 
distribution, transportation, exportation, or importation of prohibited 
flasks, equipment, chemicals, products, or material [; or (B) theft of 
anhydrous ammonia,] an upward departure may be warranted.''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to ``21 U.S.C. Sec. 863'' the following:
    ``21 U.S.C. Sec. 864 2D1.12''.
    Issue for Comment: The Commission invites comment regarding whether 
the enhancement at Sec. 2D1.12(b)(1) is sufficient to account for the 
seriousness of attempting or intending to manufacture methamphetamine 
through the use of anhydrous ammonia. Should, for example, subsection 
(b)(1) of Sec. 2D1.12 provide for an enhancement of up to [10] levels, 
or should an alternative method be provided to account for the 
seriousness of using anhydrous ammonia, such as a cross reference to 
Sec. 2D1.11 using a conversion to methamphetamine if anhydrous ammonia 
is involved? Generally, what is the most appropriate penalty structure 
for offenses involving anhydrous ammonia?

Proposed Amendment: GHB

    11. Synopsis of Proposed Amendment: This proposed amendment 
implements the Hillory J. Farias and Samantha Reid Date-Rape Drug 
Prohibition Act of 2000, Pub. L. 106-172 (the ``Act''), which provides 
the emergency scheduling of gamma hydroxybutyric acid (``GHB'') as a 
Schedule I controlled substance under the Controlled Substances Act 
when the drug is used illicitly. (There are approved applications of 
GHB under the Federal Food, Drug, and Cosmetic Act, for which the drug 
is scheduled in Schedule III.) The Act also amended section 
401(b)(1)(C) of the Controlled Substances Act (21 U.S.C. 841(b)(1)(C)) 
and section 1010(b)(3) of the Controlled Substances Import and Export 
Act (21 U.S.C. Sec. 960(b)(3)) to provide penalties of not more than 20 
years for an offense that involves GHB. Additionally, the Act added 
gamma butyrolactone (``GBL'') to the list of List I chemicals in 
section 401(b)(1)(C) of the Controlled Substances Act (21 U.S.C. 
841(b)(1)(C)).
    Under the current structure of the Drug Quantity Table in 
Sec. 2D1.1, GHB and other Schedule I and II depressants, with statutory 
maximum terms of imprisonment of 20 years, are sentenced identically to 
Schedule III substances, which have a five-year statutory maximum. The 
guidelines provide a maximum offense level of level 20 for these 
substances, which equates to a sentencing range of 33 to 44 months for 
offenders with minimal or no criminal history (Criminal History 
Category I). The lack of penalty distinctions between offenses with 
such divergent statutory maxima raises proportionality concerns. 
Recognizing the need to provide higher penalties for the more serious 
offenses involving Schedule I and II depressants, the proposed 
amendment eliminates the maximum base offense level of level 20 in the 
Drug Quantity Table of Sec. 2D1.1 for Schedule I and II depressants 
(including GHB). The same change is made with respect to flunitrazepam, 
which, for sentencing purposes, is tied to Schedule I and II 
depressants.
    The proposed amendment also amends the Chemical Quantity Table in 
Sec. 2D1.11 to include GBL, a precursor for GHB, as a List I chemical. 
Offense levels for GBL were established in the same fashion as other 
list I chemicals. The offense level for a specific quantity of GHB that 
can be produced from a given quantity of GBL, assuming a 50 percent 
yield, was determined using the Drug Quantity Table in Sec. 2D1.1. From 
this offense level, six levels were subtracted. This result identifies 
the corresponding offense level in the Chemical Quantity Table in 
Sec. 2D1.11.
    The proposed amendment also adds Iodine to the Chemical Quantity 
Table in response to a recent classification of iodine as a List II 
chemical. Iodine is used to produce hydrogen iodide which, in the 
presence of water, becomes hydriodic acid, a list I chemical that is a 
reagent used in the production of amphetamine and methamphetamine. The 
penalties for Iodine were established based upon its conversion to 
hydriodic acid.

Proposed Amendment

(1) Uncap Schedule I and II Depressants
    Section 2D1.1(c)(1) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by inserting at the end 
the following:

[[Page 7984]]

    ``30,000,000 units or more of Schedule I or II Depressants; 
1,875,000 units or more of Flunitrazepam.''.
    Section 2D1.1(c)(2) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by inserting at the end 
the following:
    ``At least 10,000,000 but less than 30,000,000 units of Schedule I 
or II Depressants; At least 625,000 but less than 1,875,000 units of 
Flunitrazepam.''.
    Section 2D1.1(c)(3) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by inserting at the end 
the following:
    ``At least 3,000,000 but less than 10,000,000 units of Schedule I 
or II Depressants; At least 187,500 but less than 625,000 units of 
Flunitrazepam.''.
    Section 2D1.1(c)(4) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by inserting at the end 
the following:
    ``At least 1,000,000 but less than 3,000,000 units of Schedule I or 
II Depressants; At least 62,500 but less than 187,500 units of 
Flunitrazepam.''.
    Section 2D1.1(c)(5) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by inserting at the end 
the following:
    ``At least 700,000 but less than 1,000,000 units of Schedule I or 
II Depressants; At least 43,750 but less than 62,500 units of 
Flunitrazepam.''.
    Section 2D1.1(c)(6) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by inserting at the end 
the following:
    ``At least 400,000 but less than 700,000 units of Schedule I or II 
Depressants; At least 25,000 but less than 43,750 units of 
Flunitrazepam.''.
    Section 2D1.1(c)(7) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by inserting at the end 
the following:
    ``At least 100,000 but less than 400,000 units of Schedule I or II 
Depressants; At least 6,250 but less than 25,000 units of 
Flunitrazepam.''
    Section 2D1.1(c)(8) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by inserting at the end 
the following:
    ``At least 80,000 but less than 100,000 units of Schedule I or II 
Depressants; At least 5,000 but less than 6,250 units of 
Flunitrazepam.''.
    Section 2D1.1(c)(9) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by inserting at the end 
the following:
    ``At least 60,000 but less than 80,000 units of Schedule I or II 
Depressants; At least 3,750 but less than 5,000 units of 
Flunitrazepam.''.
    Section 2D1.1(c)(10) is amended in the line referenced to Schedule 
I or II Depressants by striking ``40,000 or more'' and inserting ``At 
least 40,000 but less than 60,000''; and in the line referenced to 
Flunitrazepam, by striking ``2,500 or more'' and inserting ``At least 
2,500 but less than 3,750''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 10 in the Drug Equivalency Tables in the subdivision 
captioned ``Flunitrazepam * * * '' in the heading by striking `` * * * 
'' after ``Flunitrazepam''; and by striking the following:
    `` * * * Provided, that the combined equivalent weight of 
flunitrazepam, all Schedule I or II depressants, Schedule III 
substances, Schedule IV substances, and Schedule V substances shall not 
exceed 99.99 kilograms of marihuana.''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 10 in the Drug Equivalency Tables in the subdivision 
captioned ``Schedule I or II Depressants * * * '' in the heading by 
striking ``* * * '' after ``Schedule I or II Depressants''; and by 
striking the following:
    `` * * * Provided, that the combined equivalent weight of all 
Schedule I or II depressants, Schedule III substances, Schedule IV 
substances (except flunitrazepam), and Schedule V substances shall not 
exceed 59.99 kilograms of marihuana.''.
(2) Adding GBL and Iodine to the Chemical Quantity Table in Sec. 2D1.11
    Section 2D1.11(d)(1) is amended by inserting at the end the 
following:
    ``10,000 KG or more of Gamma-butyrolactone.''.
    Section 2D1.11(d)(2) is amended in the subdivision captioned ``List 
I Chemicals'' by inserting at the end the following:
    ``At least 3,000 KG but less than 10,000 KG of Gamma-
butyrolactone;'';
    and in the subdivision captioned ``List II Chemicals'' by striking 
the period after ``Toluene'' and inserting a semi-colon; and by 
inserting at the end the following:
    ``7.52 KG or more of Iodine.''.
    Section 2D1.11(d)(3) is amended in the subdivision captioned ``List 
I Chemicals'' by inserting at the end the following:
    ``At least 1,000 KG but less than 3,000 KG of Gamma-
butyrolactone;'';
    and in the subdivision captioned ``List II Chemicals'' by striking 
the period after ``Toluene'' and inserting a semi-colon; and by 
inserting at the end the following:
    ``At least 2.51 KG but less than 7.52 KG of Iodine.''.
    Section 2D1.11(d)(4) is amended in the subdivision captioned ``List 
I Chemicals'' by inserting at the end the following:
    ``At least 700 KG but less than 1,000 KG of Gamma-butyrolactone;'';
    and in the subdivision captioned ``List II Chemicals'' by striking 
the period after ``Toluene'' and inserting a semi-colon; and by 
inserting at the end the following:
    ``At least 1.76 KG but less than 2.51 KG of Iodine.''.
    Section 2D1.11(d)(5) is amended in the subdivision captioned ``List 
I Chemicals'' by inserting at the end the following:
    ``At least 400 KG but less than 700 KG of Gamma-butyrolactone;'';
    and in the subdivision captioned ``List II Chemicals'' by striking 
the period after ``Toluene'' and inserting a semi-colon; and by 
inserting at the end the following:
    ``At least 1 KG but less than 1.76 KG of Iodine.''.
    Section 2D1.11(d)(6) is amended in the subdivision captioned ``List 
I Chemicals'' by inserting at the end the following:
    ``At least 100 KG but less than 400 KG of Gamma-butyrolactone;'';
    and in the subdivision captioned ``List II Chemicals'' by striking 
the period after ``Toluene'' and inserting a semi-colon; and by 
inserting at the end the following:
    ``At least 250.8 G but less than 1 KG of Iodine.''.
    Section 2D1.11(d)(7) is amended in the subdivision captioned ``List 
I Chemicals'' by inserting at the end the following:
    ``At least 80 KG but less than 100 KG of Gamma-butyrolactone;'';
    and in the subdivision captioned ``List II Chemicals'' by striking 
the period after ``Toluene'' and inserting a semi-colon; and by 
inserting at the end the following:
    ``At least 200.64 G but less than 250.8 G of Iodine.''.
    Section 2D1.11(d)(8) is amended in the subdivision captioned ``List 
I Chemicals'' by inserting at the end the following:
    ``At least 60 KG but less than 80 KG of Gamma-butyrolactone;'';
    and in the subdivision captioned ``List II Chemicals'' by striking 
the period after ``Toluene'' and inserting a semi-colon; and by 
inserting at the end the following:
    ``At least 150.48 G but less than 200.64 KG of Iodine.''.
    Section 2D1.11(d)(9) is amended in the subdivision captioned ``List 
I Chemicals'' by inserting at the end the following:
    ``At least 40 KG but less than 60 KG of Gamma-butyrolactone;'';

[[Page 7985]]

    and in the subdivision captioned ``List II Chemicals'' by striking 
the period after ``Toluene'' and inserting a semi-colon; and by 
inserting at the end the following:
    ``At least 100.32 G but less than 150.48 G of Iodine.''.
    Section 2D1.11(d)(10) is amended in the subdivision captioned 
``List I Chemicals'' by inserting at the end the following:
    ``Less than 40 KG of Gamma-butyrolactone;'';
    and in the subdivision captioned ``List II Chemicals'' by striking 
the period after ``Toluene'' and inserting a semi-colon; and by 
inserting at the end the following:
    ``Less than 100.32 G of Iodine.''.

Proposed Amendment: Economic Crime Package

    12. Synopsis of Proposed Amendment: The Economic Crime Package 
consists of six parts. Part A is a proposal to consolidate the theft, 
property destruction and fraud guidelines. Part B contains three 
options for the loss table for the consolidated guideline and two 
options for a revised loss table in Sec. 2T4.1 (Tax Table). Part C 
contains two proposals to amend the definition of loss for the 
consolidated guideline. Part D proposes necessary changes to several 
guidelines which refer to the loss tables in either Sec. 2B1.1 
(Larceny, Embezzlement, and Other Forms of Theft) or Sec. 2F1.1 (Fraud 
and Deceit) if the Commission were to adopt one of the proposed new 
loss tables. Part E contains the technical and conforming amendments to 
the guidelines that would be necessary as a result of the theft and 
fraud consolidation. Part F contains a proposal to resolve a circuit 
split regarding the computation of tax loss in Sec. 2T1.1.

Part A. Consolidation of Theft, Property Destruction and Fraud

    Synopsis of Proposed Amendment: This amendment consolidates the 
three guidelines covering theft (Sec. 2B1.1), property destruction 
(Sec. 2B1.3), and fraud (Sec. 2F1.1). Consolidation of these guidelines 
is proposed in response to concerns raised by probation officers, 
judges, and practitioners over several years. The issues were among 
those discussed during Commission public hearings in 1997 and 1998 on 
difficulties posed by having different commentary in the theft and 
fraud guidelines applicable to the calculation and definition of loss 
and related issues. Commentators have also noted that although theft 
and fraud offenses are conceptually similar, differences in guideline 
structure can lead to disparate penalty levels among similar cases, 
depending on how the offense is charged, and the court's choice of the 
applicable guideline pursuant to Sec. 1B1.2.
    Bracketed place holders are indicated for the loss table (see Part 
B), definition of loss (see Part C), and the options regarding two 
circuit conflicts: Tax loss (see Part F) and new commentary regarding 
the application of subsection (b)(3) regarding a ``person in the 
business of receiving and selling receiving stolen property,'' and a 
scholarship fraud enhancement and accompanying application note. In the 
event that the Commission does not promulgate the consolidation 
proposal, these bracketed options can be promulgated separately.
    Base Offense Level: The proposal calls for a base offense level of 
level 6. The current base offense level for fraud offenses is level 6; 
the base offense level for theft and property destruction offenses 
currently is level 4. Starting with the base offense level 6, the 
proposed loss table for the consolidated guideline envisions two-level 
increments for increasing loss amounts beginning at $5,000. Currently 
the loss table for theft offenses provides one-level enhancements when 
loss exceeds $100, $1,000, $2,000, and $5,000, respectively, so that a 
theft offense involving more than $2,000 in loss results in an offense 
level of level 7, with the possibility of an additional increase for 
more-than-minimal planning. Under the proposed consolidated loss table, 
a theft offense involving more than $2,000 (but less than $5,000) would 
receive the base offense level of level 6, with no possible increase 
for more-than-minimal planning.
    In contrast, under the proposed table, a fraud offense involving 
the same amount of loss would start with the same base offense level of 
level 6 but would receive no additional increase based on the loss 
amount. Under the current fraud table, this offense would result in an 
offense level of level 7 for loss because the current fraud loss table 
provides a one-level increase for loss amounts in excess of $2,000 (but 
less than $5,000).
    More than Minimal Planning: Section 2F1.1(b)(2) currently provides 
a two-level increase if the offense involved (A) more than minimal 
planning, or (B) a scheme to defraud more than one victim. The proposal 
deletes this enhancement from the consolidated guideline. The more than 
minimal planning enhancement is deleted due to the potential overlap 
between this enhancement and the sophisticated means enhancement. The 
scheme to defraud more than one victim enhancement is deleted for two 
reasons: (1) If the adjustment were retained unmodified in a 
consolidated guideline, it would apply to cases currently sentenced 
under Sec. 2B1.1 where it is not currently applicable; and (2) in its 
current form it might be hard to justify providing a two-level increase 
in every case in which there is more-than-one victim, particularly in 
the face of the new Chapter Three adjustment in the vulnerable victim 
guideline (Sec. 3A1.1) that provides (only) a two-level increase if the 
offense involved ``a large number of vulnerable victims.''
    As an alternative to the scheme to defraud more than one victim 
enhancement, this amendment provides an enhancement based on the number 
of victims, to provide additional punishment for offenses involving 
multiple victims. The victim table proposes building in the current 
``mass-marketing'' enhancement as an alternative way of triggering the 
two-level increase provided if there were more than 4 and less than 50 
victims. The amendment proposes that if the proposed victim table is 
adopted, and a victim enhancement is applicable in a given case, then 
the enhancement under 3A1.1(b)(2) for ``a large number of vulnerable 
victims'' could not also apply in that case.
    Theft of Undelivered U.S. Mail: The current ``floor'' offense level 
of level 6 for the theft of undelivered United States mail is proposed 
to be deleted because the proposal raises the base offense level from 
level 4 to 6 for such offenses, making the floor unnecessary. However, 
if the Commission adopts the enhancement providing for a two-level 
reduction if loss is less than $2,000, it might be necessary to retain 
this floor of level 6.
    In the Business of Receiving and Selling Stolen Property: Section 
2B1.1(b)(4)(B) provides a 2-level enhancement if the offense involved 
receiving stolen property and the defendant was in the business of 
receiving and selling stolen property. The proposed amendment addresses 
an issue that has arisen in case law regarding what conduct qualifies a 
defendant for the 4-level enhancement.
    In determining the meaning of ``in the business of'', three 
circuits apply what has been coined the ``fence test'' in which the 
court must consider (1) if the stolen property was bought and sold, and 
(2) to what extent the stolen property transactions encouraged others 
to commit property crimes. Three other circuits have adopted the 
``totality of the

[[Page 7986]]

circumstances test'' that focuses on the ``regularity and 
sophistication'' of the defendant's operation. Though the factors 
considered by all of these circuits are similar, the approaches are 
different.
    The fence test involves making an ultimate determination of whether 
(1) the stolen property was bought and sold, and (2) the stolen 
property transactions encouraged others to commit property crimes. In 
making this determination, the court considers factors such as the 
regularity of the defendant's operation, the volume of the business, 
the quick turnover of the stolen items, the value of the stolen items, 
the sophistication of the defendant's operation, any use of a 
legitimate business to facilitate the turnover of the stolen items, the 
defendant's connections with thieves and purchasers of the stolen 
items, and the use of technology and communications.
    The totality of the circumstances test involves consideration of 
the circumstances in each case with particular emphasis on the 
regularity and sophistication of the defendant's operation, looking at 
such factors as the amount of income generated through fencing 
activities, the value of the property handled, the defendant's past 
activities, the defendant's demonstrated interest in continuing or 
expanding the operation, the use of technology and communication, and 
the defendant's connections with thieves and purchasers of stolen 
property.
    This amendment adopts the totality of the circumstances test, 
basing application of the enhancement on the circumstances surrounding 
the defendant and his business as opposed to the effect the fencing 
operation has in encouraging others to commit crimes.

College Scholarship Fraud

    Subsection (b)(9)(D) implements the the directive in section 3 of 
the College Scholarship Fraud Prevention Act of 1999, Pub. L. 106-420. 
The directive requires the Commission to amend the guidelines:

* * * in order to provide for enhanced penalties for any offense 
involving fraud or misrepresentation in connection with the 
obtaining or providing of, or the furnishing of information to a 
consumer on, any scholarship, grant, loan, tuition, discount, award, 
or other financial assistance for purposes of financing an education 
at an institution of higher education, such that those penalties are 
comparable to the base offense level for misrepresentation that the 
defendant was acting on behalf of a charitable, educational, 
religious, or political organization, or a government agency.

    The amendment adds an additional alternative enhancement that 
applies if the offense involves a misrepresentation to a consumer in 
connection with obtaining, providing, or furnishing financial 
assistance for an institution of higher education. This proposed 
enhancement is targeted at the provider of the financial assistance or 
scholarship services, not the individual applicant for such assistance 
or scholarship, consistent with the intent of the legislation.
    Risk of Bodily Injury Enhancement: The proposal provides for two 
substantive changes with respect to the enhancement involving conscious 
or reckless risk of serious bodily injury. First, it increases the 
``floor'' offense level from level 13 to level 14. Second, it inserts 
``death'' before the term ``or serious bodily injury'' because, as a 
practical matter, a risk of serious bodily injury is likely also to 
entail a risk of death. Including ``of death'' also will provide 
consistency throughout the Guidelines Manual. Currently, ``risk of 
death or serious bodily injury'' appears in a number of other 
guidelines as either an alternative base offense level, specific 
offense characteristic, or invited upward departure (see, e.g., 
Sec. 2A2.2 comment (n.3); Sec. 2K1.4(a)(1)(2); Sec. 2Q1.4(b)(1)). The 
fraud guideline is the only guideline in which risk of serious bodily 
injury appears as a sentencing factor without a reference to ``risk of 
death''.
    This enhancement stems from a 1988 congressional directive in which 
the Commission was instructed to amend the fraud guideline to provide 
an appropriate enhancement for a fraud offense that creates a conscious 
or reckless risk of serious bodily injury. The Commission was further 
instructed to consider the appropriateness of a minimum enhancement of 
two offense levels for this conduct. The legislation did not require a 
``floor'' offense level.
    The proposal increases the ``floor'' from level 13 to level 14 to 
promote proportionality between this and other guidelines covering 
similar conduct. Within the current theft and fraud guidelines, there 
are three specific offense characteristics that have a higher floor 
offense level than the current risk of bodily injury enhancement: (1) 
``Chop shops'': level 14; (2) jeopardizing the solvency of a financial 
institution: level 24; and (3) personally receiving more than $1 
million from a financial institution: level 24 (congressionally 
directed minimum).
    Other conceptually similar offense conduct under various guidelines 
is graded as follows:
    (1) Reckless voluntary manslaughter (Sec. 2A1.4): level 14
    (2) Operating a common carrier under influence of drugs or alcohol, 
no death or serious bodily injury resulting (Sec. 2D2.3): level 13
    (3) Arson creating a substantial risk of death or serious bodily 
injury (Sec. 2K1.4): level 20
    (4) Immigration smuggling offense creating a substantial risk of 
death or serious bodily injury (Sec. 2L1.1): 2-level enhancement, 
``floor'' of level 18
    (5) Environmental offenses resulting in risk of death or serious 
bodily injury (Secs. 2Q1.1, 2Q1.2, 2Q1.3, 2Q1.4): Offense level varies 
from level 17 to level 24.
    Gross Receipts Enhancement: The proposed amendment presents two 
options for modifying this enhancement, which currently provides a 4-
level increase and a floor offense level of level 24 for a defendant 
who personally derives more than $1 million in gross receipts from an 
offense that affected a financial institution.
    The gross receipts enhancement derives from a 1990 congressional 
directive requiring a minimum offense level of level 24 if the 
defendant derived more than $1 million in gross receipts from certain 
offenses that affected financial institutions. The Commission had 
received and implemented a related directive the previous year 
requiring that the guidelines provide a ``substantial period of 
incarceration'' for certain specific offenses that ``substantially 
jeopardize the safety and soundness of a federally insured financial 
institution.'' In each case, the Commission constructed an enhancement 
that was considerably broader and more severe than the directive 
required. In part, this was the Commission's way of responding to the 
increases in statutory maximum penalties for financial institution 
offenses that Congress enacted in 1989 and 1990. The Commission had 
modestly increased the penalties for all fraud offenses with 
substantial monetary losses in 1989. Rather than increase the loss 
table again, or adopt a generally applicable enhancement for fraud 
against financial institutions, the Commission elected to use the two 
congressionally directed enhancements as mechanisms for ensuring more 
stringent penalties for the more severe forms of those offenses.
    Option 1 deletes the 4-level increase for deriving more than $1 
million in gross receipts from the offense but retains the ``floor'' 
offense level of level 24 for such conduct (in order to retain 
compliance with the congressional directive). The 4-level increase is 
deleted under the assumption that a loss

[[Page 7987]]

table will be adopted that builds in increases for relatively high 
dollar losses; the deletion would prevent double-counting for the fact 
of a high dollar loss. Option 2 retains the current floor offense level 
but reduces the 4-level enhancement to 2 levels.
    Sentencing Data: Due to the structure of this enhancement and the 
Commission's data collection methods it is impossible to determine 
which offenders received increases for jeopardizing a financial 
institution and which offenders received increases for gross receipts 
in excess of $1,000,000. Nevertheless, 33 fraud offenders (0.5 %) 
received an increase under this enhancement.

Additional Cross References

    (A) This proposal adds a more generally applicable cross reference 
that would apply whenever a broadly applicable fraud statute is used to 
reach conduct that is more specifically addressed in another Chapter 
Two guideline [if the resulting offense level is greater].
    Currently, Application Note 14 in the fraud guideline instructs the 
user to move to another, more appropriate Chapter Two guideline under 
circumstances in which: (1) The defendant is convicted of a broadly 
applicable fraud statue (e.g., 18 U.S.C. Sec. 1001), and (2) the 
convicted conduct is more appropriately covered by another Chapter Two 
guideline specifically tailored to that conduct. In essence, this note 
is not a cross reference, but rather a reminder of the principles 
enunciated in Sec. 1B1.2 regarding application of the guideline most 
appropriate for the convicted conduct. Moreover, unlike the more 
typical cross reference, under this instruction the user locates and 
applies the more appropriate guideline, even if it yields an offense 
level lower than would have been obtained under the fraud guideline.
    Experience over the years demonstrates that this application note 
is not well known or understood, and hence, not applied consistently. 
One way of possibly addressing these problems would be to convert the 
application note into a cross reference. The more highly visible 
approach of incorporating the instruction directly into the guideline 
should ensure more consistent application, without changing the basic 
policy of using the cross reference to move to the guideline most 
appropriate for the conduct of which the defendant was convicted.

Proposed Amendment (Part A)

    Chapter Two, Part F, is amended in the heading by striking ``--
Offenses Involving Fraud or Deceit''; and by striking Secs. 2F1.1 and 
2F1.2 in their entirety.
    Chapter Two is amended by striking the heading to Part B; by 
striking the heading to Subpart 1; by striking the Introductory 
Commentary to such subpart; and by striking Secs. 2B1.1 and 2B1.3 in 
their entirety and inserting the following:

``Part B--Basic Economic Offenses

1. Theft, Embezzlement, Receipt of Stolen Property, Property 
Destruction, Fraud and Insider Trading
Introductory Commentary
    These sections address basic forms of property offenses: theft, 
embezzlement, fraud, forgery, counterfeiting (other than offenses 
involving altered or counterfeit bearer obligation of the United 
States), insider trading, transactions in stolen goods, and simple 
property damage or destruction. (Arson is dealt with separately in Part 
K, Offenses Involving Public Safety.) These guidelines apply to 
offenses prosecuted under a wide variety of federal statutes, as well 
as offenses that arise under the Assimilative Crimes Act.
Sec. 2B1.1. Larceny, Embezzlement, and Other Forms of Theft; Offenses 
Involving Stolen Property; Property Damage or Destruction; Fraud and 
Deceit; Offenses Involving Altered or Counterfeit Instruments Other 
than Counterfeit Bearer Obligations of the United States
(a) Base Offense Level: 6
(b) Specific Offense Characteristics
    (1) If the loss exceeded [$2000][$5,000], increase the offense 
level as follows:
    [Loss Table Options--See Part B of this amendment]
    (2) If the offense--
    (A) (i) involved more than 4, but less than 50, victims; or (ii) 
was committed through mass-marketing, increase by 2 levels; or
    (B) involved 50 or more victims, increase by 4 levels.
    (3) If the theft was from the person of another, increase by 2 
levels.
    (4) If the offense involved receiving stolen property, and the 
defendant was a person in the business of receiving and selling stolen 
property, increase by 2 levels.
    (5) If the offense involved misappropriation of a trade secret and 
the defendant knew or intended that the offense would benefit any 
foreign government, foreign instrumentality, or foreign agent, increase 
by 2 levels.
    (6) If the offense involved theft to, damage of, or destruction of 
property from a national cemetery, increase by 2 levels.
    [(7) If the loss was $2,000 or less, decrease by 2 levels.]
    (8) If the offense involved (A) a misrepresentation that the 
defendant was acting on behalf of a charitable, educational, religious 
or political organization, or a government agency; (B) a 
misrepresentation or other fraudulent action during the course of a 
bankruptcy proceeding; (C) a violation of any prior, specific judicial 
or administrative order, injunction, decree, or process not addressed 
elsewhere in the guidelines [; or (D) a misrepresentation to a consumer 
in connection with obtaining, providing, or furnishing financial 
assistance for an institution of higher education, increase by 2 
levels]. If the resulting offense level is less than level 10, increase 
to level 10.
    (9) If (A) the defendant relocated, or participated in relocating, 
a fraudulent scheme to another jurisdiction to evade law enforcement or 
regulatory officials; (B) a substantial part of a fraudulent scheme was 
committed from outside the United States; or (C) the offense otherwise 
involved sophisticated means, increase by 2 levels. If the resulting 
offense level is less than level 12, increase to level 12.
    (10) If the offense involved--
    (A) the possession or use of any device-making equipment;
    (B) the production or trafficking of any unauthorized access device 
or counterfeit access device; or
    (C) (i) the unauthorized transfer or use of any means of 
identification unlawfully to produce or obtain any other means of 
identification; or (ii) the possession of 5 or more means of 
identification that unlawfully were produced from another means of 
identification or obtained by the use of another means of 
identification,

increase by 2 levels. If the resulting offense level is less than level 
12, increase to level 12.
    (11) If the offense involved an organized scheme to steal vehicles 
or vehicle parts, and the offense level is less than level 14, increase 
to level 14.
    (12) If the offense involved (A) the conscious or reckless risk of 
death or serious bodily injury; or (B) possession of a dangerous weapon 
(including a firearm) in connection with the offense, increase by 2 
levels. If the resulting offense level is less than level 14, increase 
to level 14.
    (13) If the offense substantially jeopardized the safety and 
soundness of a financial institution, increase by 4 levels. If the 
resulting offense level is less than level 24, increase to level 24.

[[Page 7988]]

    [Option 1: (14) If (A) the defendant derived more than $1,000,000 
in gross receipts from one or more financial institutions as a result 
of the offense; and (B) the offense level is less than level 24, 
increase to level 24.]
    [Option 2: (14) If the defendant derived more than $1,000,000 in 
gross receipts from one or more financial institutions as a result of 
the offense, increase by 2 levels. If the resulting offense level is 
less than level 24, increase to level 24.]
(c) Cross References
    (1) If (A) a firearm, destructive device, explosive material, or 
controlled substance was taken, or the taking of such item was an 
object of the offense; or (B) the stolen property received, 
transported, transferred, transmitted, or possessed was a firearm, 
destructive device, explosive material, or controlled substance, apply 
Sec. 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or 
Trafficking; Attempt or Conspiracy), Sec. 2D2.1 (Unlawful Possession; 
Attempt or Conspiracy), Sec. 2K1.3 (Unlawful Receipt, Possession, or 
Transportation of Explosive Materials; Prohibited Transactions 
Involving Explosive Materials), or Sec. 2K2.1 (Unlawful Receipt, 
Possession, or Transportation of Firearms or Ammunition; Prohibited 
Transactions Involving Firearms or Ammunition), as appropriate, if the 
resulting offense level is greater than that determined above.
    (2) If the offense involved arson, or property damage by use of 
explosives, apply Sec. 2K1.4 (Arson; Property Damage by Use of 
Explosives), if the resulting offense level is greater than that 
determined above.
    (3) If (A) none of subdivisions (1) or (2) of this subsection 
apply; (B) the defendant was convicted under a statute proscribing 
false, fictitious, or fraudulent statements or representations 
generally (e.g., 18 U.S.C. Sec. 1001, Sec. 1341, Sec. 1342, or 
Sec. 1343); and (C) the count of conviction establishes an offense more 
aptly covered by another guideline in Chapter Two, apply that other 
guideline [if the resulting offense level is greater].
(d) Special Instruction
    (1) If the defendant is convicted under 18 U.S.C. Sec. 1030(a)(4) 
or (a)(5) the minimum guideline sentence, notwithstanding any other 
adjustment, shall be six months' imprisonment.
Commentary
    Statutory Provisions: 7 U.S.C. Secs. 6, 6b, 6c, 6h, 6o, 13, 23; 15 
U.S.C. Secs. 50, 77e, 77q, 77x, 78j, 78ff, 80b-6, 1644; 18 U.S.C. 
Secs. 225, 285-289, 471-473, 500, 510, 553(a)(1), 641, 656, 657, 659, 
662, 664, 1001-1008, 1010-1014, 1016-1022, 1025, 1026, 1028, 1029, 
1030(a)(4), 1030(a)(5), 1031, 1341-1344, 1361, 1363, 1702, 1703 (if 
vandalism or malicious mischief, including destruction of mail is 
involved), 1708, 1831, 1832, 2113(b), 2312-2317; 29 U.S.C. Sec. 501(c). 
For additional statutory provision(s), see Appendix A (Statutory 
Index).
    Application Notes:
    1. For purposes of this guideline.--
    `Financial institution'' as used in this guideline, is defined to 
include any institution described in 18 U.S.C. Secs. 20, 656, 657, 
1005-1007, and 1014; any state or foreign bank, trust company, credit 
union, insurance company, investment company, mutual fund, savings 
(building and loan) association, union or employee pension fund; any 
health, medical or hospital insurance association; brokers and dealers 
registered, or required to be registered, with the Securities and 
Exchange Commission; futures commodity merchants and commodity pool 
operators registered, or required to be registered, with the Commodity 
Futures Trading Commission; and any similar entity, whether or not 
insured by the federal government. ``Union or employee pension fund'' 
and ``any health, medical, or hospital insurance association,'' as used 
above, primarily include large pension funds that serve many 
individuals (e.g., pension funds of large national and international 
organizations, unions, and corporations doing substantial interstate 
business), and associations that undertake to provide pension, 
disability, or other benefits (e.g., medical or hospitalization 
insurance) to large numbers of persons.
    `Firearm' and ``destructive device'' are defined in the Commentary 
to Sec. 1B1.1 (Application Instructions).
    `Foreign instrumentality' and ``foreign agent'' are defined in 18 
U.S.C. Sec. 1839(1) and (2), respectively.
    `From the person of another' refers to property, taken without the 
use of force, that was being held by another person or was within arms' 
reach. Examples include pick-pocketing or non-forcible purse-snatching, 
such as the theft of a purse from a shopping cart.
    `Mass-marketing' means a plan, program, promotion, or campaign that 
is conducted through solicitation by telephone, mail, the Internet, or 
other means to induce a large number of persons to (A) purchase goods 
or services; (B) participate in a contest or sweepstakes; or (C) invest 
for financial profit. The enhancement would apply, for example, if the 
defendant conducted or participated in a telemarketing campaign that 
solicited a large number of individuals to purchase fraudulent life 
insurance policies.
    `National cemetery' means a cemetery (A) established under section 
2400 of title 38, United States Code; or (B) under the jurisdiction of 
the Secretary of the Army, the Secretary of the Navy, the Secretary of 
the Air Force, or the Secretary of the Interior.
    `Trade secret' is defined in 18 U.S.C. Sec. 1839(3).
    2. [Definition of Loss--See Part C of this amendment]
    3. Controlled substances should be valued at their estimated street 
value.
    [4. Enhancement for Business of Receiving and Selling Stolen 
Property.--
    (A) In General.--The court shall consider the totality of the 
circumstances to determine whether a defendant was in the business of 
receiving and selling stolen property for purposes of subsection 
(b)(4).
    (B) Factors to Consider.--The following is a non-inclusive list of 
factors that the court may consider in determining whether the 
defendant was in the business of receiving and selling stolen property 
for purposes of subsection (b)(4):
    (i) The regularity or sophistication of the defendant's activities;
    (ii) The value and size of the inventory of stolen property 
maintained by the defendant;
    (iii) The extent to which the defendant's activities encouraged or 
facilitated other crimes; or
    (iv) The defendant's past activities involving stolen property.]
    5. Application of Subsection (b)(8).--
    (A) In General.--The adjustments in subsection (b)(8) are 
alternative rather than cumulative. If, in a particular case, however, 
more than one of the enumerated factors applied, an upward departure 
may be warranted.
    (B) Misrepresentation Defendant Was Acting On Behalf of Charitable 
Institution.--Subsection (b)(8)(A) provides an adjustment for a 
misrepresentation that the defendant was acting on behalf of a 
charitable, educational, religious or political organization, or a 
government agency. Examples of conduct to which this factor applies 
would include a group of defendants who solicit contributions to a non-
existent famine relief organization by mail, a defendant who diverts 
donations for a religiously affiliated school by telephone 
solicitations to church members in which the defendant falsely claims 
to be a fund-raiser for the school, or a defendant who poses as a 
federal collection agent in order to collect a delinquent student loan.

[[Page 7989]]

    (C) Fraud in Contravention of Prior Judicial Order.--Subsection 
(b)(8)(C) provides an enhancement if the defendant commits a fraud in 
contravention of a prior, official judicial or administrative warning, 
in the form of an order, injunction, decree, or process, to take or not 
to take a specified action. A defendant who does not comply with such a 
prior, official judicial or administrative warning demonstrates 
aggravated criminal intent and deserves additional punishment. If it is 
established that an entity the defendant controlled was a party to the 
prior proceeding that resulted in the official judicial or 
administrative action, and the defendant had knowledge of that prior 
decree or order, this enhancement applies even if the defendant was not 
a specifically named party in that prior case. For example, a defendant 
whose business previously was enjoined from selling a dangerous 
product, but who nonetheless engaged in fraudulent conduct to sell the 
product, is subject to this enhancement. This enhancement does not 
apply if the same conduct resulted in an enhancement pursuant to a 
provision found elsewhere in the guidelines (e.g., a violation of a 
condition of release addressed in Sec. 2J1.7 (Commission of Offense 
While on Release) or a violation of probation addressed in Sec. 4A1.1 
(Criminal History Category)).
    (D) College Scholarship Fraud.--
    For the purposes of subsection (b)(8)(D)--
    `Financial assistance' means any scholarship, grant, loan, tuition, 
discount, award, or other financial assistance for the purposes of 
financing an education.
    `Institution of higher education' has the meaning given that term 
in section 101 of the Higher Education Act of 1954 (20 U.S.C. 
Sec. 1001).]
    (E) Non-Applicability of Enhancement.--If the conduct that forms 
the basis for an enhancement under (b)(8)(B) or (C) is the only conduct 
that forms the basis for an adjustment under Sec. 3C1.1 (Obstruction of 
Justice), do not apply an adjustment under Sec. 3C1.1.
    6. Application of Subsection (b)(9).--
    (A) Definition of United States.--`United States' means each of the 
50 states, the District of Columbia, the Commonwealth of Puerto Rico, 
the United States Virgin Islands, Guam, the Northern Mariana Islands, 
and American Samoa.
    (B) Sophisticated Means Enhancement.--For purposes of subsection 
(b)(9)(C), ``sophisticated means'' means especially complex or 
especially intricate offense conduct pertaining to the execution or 
concealment of an offense. For example, in a telemarketing scheme, 
locating the main office of the scheme in one jurisdiction but locating 
soliciting operations in another jurisdiction would ordinarily indicate 
sophisticated means. Conduct such as hiding assets or transactions, or 
both, through the use of fictitious entities, corporate shells, or 
offshore bank accounts also ordinarily would indicate sophisticated 
means.
    (C) Non-Applicability of Enhancement.--If the conduct that forms 
the basis for an enhancement under subsection (b)(9) is the only 
conduct that forms the basis for an adjustment under Sec. 3C1.1 
(Obstruction of Justice), do not apply an adjustment under Sec. 3C1.1.
    7. Application of Subsection (b)(10).--
    (A) Definitions.--
    `Counterfeit access device' (A) has the meaning given that term in 
18 U.S.C. Sec. 1029(e)(2); and (B) also includes a telecommunications 
instrument that has been modified or altered to obtain unauthorized use 
of telecommunications service. `Telecommunications service' has the 
meaning given that term in 18 U.S.C. Sec. 1029(e)(9).
    `Device-making equipment' (A) has the meaning given that term in 18 
U.S.C. Sec. 1029(e)(6); and (B) also includes (i) any hardware or 
software that has been configured as described in 18 U.S.C. 
Sec. 1029(a)(9); and (ii) a scanning receiver referred to in 18 U.S.C. 
Sec. 1029(a)(8). `Scanning receiver' has the meaning given that term in 
18 U.S.C. Sec. 1029(e)(8).
    `Means of identification' has the meaning given that term in 18 
U.S.C. Sec. 1028(d)(3), except that such means of identification shall 
be of an actual (i.e., not fictitious) individual other than the 
defendant or a person for whose conduct the defendant is accountable 
under Sec. 1B1.3 (Relevant Conduct).
    `Produce' includes manufacture, design, alter, authenticate, 
duplicate, or assemble. `Production' includes manufacture, design, 
alteration, authentication, duplication, or assembly.
    `Unauthorized access device' has the meaning given that term in 18 
U.S.C. Sec. 1029(e)(3).
    (B) Subsection (b)(10)(C)(i).--This subsection applies in a case in 
which a means of identification of an individual other than the 
defendant (or a person for whose conduct the defendant is accountable 
under Sec. 1B1.3 (Relevant Conduct)) is used without that individual's 
authorization unlawfully to produce or obtain another means of 
identification.
    (C) Examples of Conduct Under (b)(10)(C)(i).--Examples of conduct 
to which this subsection should apply are as follows:
    (i) A defendant obtains an individual's name and social security 
number from a source (e.g., from a piece of mail taken from the 
individual's mailbox) and obtains a bank loan in that individual's 
name. In this example, the account number of the bank loan is the other 
means of identification that has been obtained unlawfully.
    (ii) A defendant obtains an individual's name and address from a 
source (e.g., from a driver's license in a stolen wallet) and applies 
for, obtains, and subsequently uses a credit card in that individual's 
name. In this example, the credit card is the other means of 
identification that has been obtained unlawfully.
    (D) Nonapplicability of subsection (b)(10)(C)(i):--Examples of 
conduct to which this subsection should not apply are as follows:
    (i) A defendant uses a credit card from a stolen wallet only to 
make a purchase. In such a case, the defendant has not used the stolen 
credit card to obtain another means of identification.
    (ii) A defendant forges another individual's signature to cash a 
stolen check. Forging another individual's signature is not producing 
another means of identification.
    (E) Subsection (b)(10)(C)(ii).--This subsection applies in any case 
in which the offense involved the possession of 5 or more means of 
identification that unlawfully were produced or obtained, regardless of 
the number of individuals in whose name (or other identifying 
information) the means of identification were so produced or so 
obtained.
    (F) Upward Departure.--In a case involving unlawfully produced or 
unlawfully obtained means of identification, an upward departure may be 
warranted if the offense level does not adequately address the 
seriousness of the offense. Examples may include the following:
    (i) The offense caused substantial harm to the victim's reputation 
or credit record, or the victim suffered a substantial inconvenience 
related to repairing the victim's reputation or a damaged credit 
record.
    (ii) An individual whose means of identification the defendant used 
to obtain unlawful means of identification is erroneously arrested or 
denied a job because an arrest record has been made in the individual's 
name.
    (iii)The defendant produced or obtained numerous means of 
identification with respect to one

[[Page 7990]]

individual and essentially assumed that individual's identity.
    (G) Counterfeit Access Devices.--In a case involving any 
counterfeit access device or unauthorized access device, loss includes 
any unauthorized charges made with the counterfeit access device or 
unauthorized access device. In any such case, loss shall be not less 
than $500 per access device. However, if the unauthorized access device 
is a means of telecommunications access that identifies a specific 
telecommunications instrument or telecommunications account (including 
an electronic serial number/mobile identification number (ESN/MIN) 
pair), and that means was only possessed, and not used, during the 
commission of the offense, loss shall be not less than $100 per unused 
means.
    8. Chop Shop Enhancement.--For purposes of (b)(11), a minimum 
offense level is provided in the case of an ongoing, sophisticated 
operation (such as an auto theft ring or `chop shop') to steal vehicles 
or vehicle parts, or to receive stolen vehicles or vehicle parts. 
``Vehicles'' refers to all forms of vehicles, including aircraft and 
watercraft.
    9. Substantially Jeopardized the Safety and Soundness of a 
Financial Institution.--For the purposes of subsection (b)(13), an 
offense shall be considered to have substantially jeopardized the 
safety and soundness of a financial institution if, as a consequence of 
the offense, the institution became insolvent; substantially reduced 
benefits to pensioners or insureds; was unable on demand to refund 
fully any deposit, payment, or investment; was so depleted of its 
assets as to be forced to merge with another institution in order to 
continue active operations; or was placed in substantial jeopardy of 
any of the above.
    10. Application of Subsection of (b)(14).--
    In General.--For the purposes of (b)(14), the defendant shall be 
considered to have derived more than $1,000,000 in gross receipts if 
the gross receipts to the defendant individually, rather than to all 
participants, exceeded $1,000,000.
    Gross Receipts From the Offense.--`Gross receipts from the offense' 
includes all property, real or personal, tangible or intangible, which 
is obtained directly or indirectly as a result of such offense. See 18 
U.S.C. Sec. 982(a)(4).
    11. Cross References.--
    (A) General Fraud Statutes.--Subsection (c)(3) provides a cross 
reference to another Chapter Two guideline in cases in which the 
defendant is convicted of a general fraud statute, and the count of 
conviction (or a stipulation as described in Sec. 1B1.2(a)) establishes 
an offense more aptly covered by another guideline [and the resulting 
offense level is greater]. Sometimes, offenses involving fraudulent 
statements are prosecuted under 18 U.S.C. Sec. 1001, or a similarly 
general statute, although the offense is also covered by a more 
specific statute. Examples include false entries regarding currency 
transactions, for which Sec. 2S1.3 would be more apt, and false 
statements to a customs officer, for which Sec. 2T3.1 likely would be 
more apt. In certain other cases, the mail or wire fraud statutes, or 
other relatively broad statutes, are used primarily as jurisdictional 
bases for the prosecution of other offenses.
    (B) Identification Documents.--Offenses involving identification 
documents, false identification documents, and means of identification, 
in violation of 18 U.S.C. Sec. 1028, also are covered by this 
guideline. If the primary purpose of the offense was to violate, or 
assist another to violate, the law pertaining to naturalization, 
citizenship, or legal resident status, apply Sec. 2L2.1 (Trafficking in 
a Document Relating to Naturalization) or Sec. 2L2.2 (Fraudulently 
Acquiring Documents Relating to Naturalization), as appropriate, rather 
than Sec. 2F1.1.
    12. Continuing Financial Crimes Enterprise.--If the defendant is 
convicted under 18 U.S.C. Sec. 225 (relating to a continuing financial 
crimes enterprise), the offense level is that applicable to the 
underlying series of offenses comprising the `continuing financial 
crimes enterprise.'
    13. Upward Departure in Cases Involving Theft of Information from a 
Protected Computer.--In cases involving theft of information from a 
`protected computer', as defined in 18 U.S.C. Sec. 1030(e)(2)(A) or 
(B), an upward departure may be warranted where the defendant sought 
the stolen information to further a broader criminal purpose.
    14. Multiple Count Indictments.--Some fraudulent schemes may result 
in multiple-count indictments, depending on the technical elements of 
the offense. The cumulative loss produced by a common scheme or course 
of conduct should be used in determining the offense level, regardless 
of the number of counts of conviction. See Chapter Three, Part D 
(Multiple Counts).
    15. Upward Departure in Cases Involving Access Devices.--Offenses 
involving access devices, in violation of 18 U.S.C. Secs. 1028 and 
1029, are also covered by this guideline. In such a case, an upward 
departure may be warranted where the actual loss does not adequately 
reflect the seriousness of the conduct.
    16. Vulnerable Victims.--
    (A) In General.--Except as provided in subdivision (b)(2)(B), if 
the fraud exploited vulnerable victims, an enhancement shall apply. See 
Sec. 3A1.1 (Hate Crime Motivation or Vulnerable Victim).
    (B) Nonapplicability of Sec. 3A1.1(b)(2) in Certain Cases.--If 
subsection (b)(2)[(B)] applies, an enhancement under Sec. 3A1.1(b)(2) 
shall not apply.
    Background: This guideline covers offenses involving theft, stolen 
property, property damage or destruction, fraud, forgery, and 
counterfeiting (other than offenses involving altered or counterfeit 
bearer obligations of the United States). It also covers offenses 
involving altering or removing motor vehicle identification numbers, 
trafficking in automobiles or automobile parts with altered or 
obliterated identification numbers, odometer laws and regulations, 
obstructing correspondence, the falsification of documents or records 
relating to a benefit plan covered by the Employment Retirement Income 
Security Act, and the failure to maintain, or falsification of, 
documents required by the Labor Management Reporting and Disclosure 
Act.
    Because federal fraud statutes often are broadly written, a single 
pattern of offense conduct usually can be prosecuted under several code 
sections, as a result of which the offense of conviction may be 
somewhat arbitrary. Furthermore, most fraud statutes cover a broad 
range of conduct with extreme variation in severity. The specific 
offense characteristics [and cross references] contained in this 
guideline are designed with these considerations in mind.
    [Loss Background Commentary--See Part C]
    Theft from the person of another, such as pickpocketing or non-
forcible purse-snatching, receives an enhanced sentence because of the 
increased risk of physical injury. This guideline does not include an 
enhancement for thefts from the person by means of force or fear; such 
crimes are robberies and are covered under Sec. 2B3.1 (Robbery).
    A minimum offense level of level 14 is provided for offenses 
involving an organized scheme to steal vehicles or vehicle parts. 
Typically, the scope of such activity is substantial, but the value of 
the property may be particularly difficult to ascertain in individual 
cases because the stolen property is rapidly resold or otherwise 
disposed of in the course of the offense. Therefore, the specific 
offense characteristic of `organized scheme' is

[[Page 7991]]

used as an alternative to `loss' in setting a minimum offense level.
    Use of false pretenses involving charitable causes and government 
agencies enhances the sentences of defendants who take advantage of 
victims' trust in government or law enforcement agencies or the 
generosity and charitable motives of victims. Taking advantage of a 
victim's self-interest does not mitigate the seriousness of fraudulent 
conduct; rather, defendants who exploit victims' charitable impulses or 
trust in government create particular social harm. In a similar vein, a 
defendant who has been subject to civil or administrative proceedings 
for the same or similar fraudulent conduct demonstrates aggravated 
criminal intent and is deserving of additional punishment for not 
conforming with the requirements of judicial process or orders issued 
by federal, state, or local administrative agencies.
    Offenses that involve the use of transactions or accounts outside 
the United States in an effort to conceal illicit profits and criminal 
conduct involve a particularly high level of sophistication and 
complexity. These offenses are difficult to detect and require costly 
investigations and prosecutions. Diplomatic processes often must be 
used to secure testimony and evidence beyond the jurisdiction of United 
States courts. Consequently, a minimum level of 12 is provided for 
these offenses.
    Subsection (b)(6) implements the instruction to the Commission in 
section 2 of Public Law 105-101.
    Subsection (b)(9) implements, in a broader form, the instruction to 
the Commission in section 6(c)(2) of Public Law 105-184.
    Subsections (b)(10)(A) and(B) implement the instruction to the 
Commission in section 4 of the Wireless Telephone Protection Act, 
Public Law 105-172.
    Subsection (b)(10)(C) implements the directive to the Commission in 
section 4 of the Identity Theft and Assumption Deterrence Act of 1998, 
Public Law 105-318. This subsection focuses principally on an 
aggravated form of identity theft known as `affirmative identity theft' 
or `breeding,' in which a defendant uses another individual's name, 
social security number, or some other form of identification (the 
`means of identification') to `breed' (i.e., produce or obtain) new or 
additional forms of identification. Because 18 U.S.C. Sec. 1028(d) 
broadly defines `means of identification,' the new or additional forms 
of identification can include items such as a driver's license, a 
credit card, or a bank loan. This subsection provides a minimum offense 
level of level 12, in part, because of the seriousness of the offense. 
The minimum offense level accounts for the fact that the means of 
identification that were `bred' (i.e., produced or obtained) often are 
within the defendant's exclusive control, making it difficult for the 
individual victim to detect that the victim's identity has been 
`stolen.' Generally, the victim does not become aware of the offense 
until certain harms have already occurred (e.g., a damaged credit 
rating or inability to obtain a loan). The minimum offense level also 
accounts for the non-monetary harm associated with these types of 
offenses, much of which may be difficult or impossible to quantify 
(e.g., harm to the individual's reputation or credit rating, 
inconvenience, and other difficulties resulting from the offense). The 
legislative history of the Identity Theft and Assumption Deterrence Act 
of 1998 indicates that Congress was especially concerned with providing 
increased punishment for this type of harm.
    Subsection (b)(12)(B) implements, in a broader form, the 
instruction to the Commission in section 110512 of Public Law 103-322.
    Subsection (b)(13) implements, in a broader form, the instruction 
to the Commission in section 961(m) of Public Law 101-73.
    Subsection (b)(14) implements, in a broader form, the instruction 
to the Commission in section 2507 of Public Law 101-647.
    Subsection (d) implements the instruction to the Commission in 
section 805(c) of Public Law 104-132.''.
    The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is 
amended in Note 1 by striking subdivision (f) in its entirety.
    The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is 
amended in Note 4 in the second paragraph by striking ``For example, 
the adjustments from Sec. 2F1.1(b)(2) (more than minimal planning) and 
Sec. 3B1.1 (Aggravating Role) are applied cumulatively.''.
    The Commentary to Sec. 2A2.2 captioned ``Application Notes'' is 
amended in Note 2 by striking ``more than minimal planning,''.
    The Commentary to Sec. 2A2.2 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``4. `More than minimal planning' means more planning than is 
typical for commission of the offense in a simple form. `More than 
minimal planning' also exists if significant affirmative steps were 
taken to conceal the offense, other than conduct to which Sec. 3C1.1 
(Obstructing or Impeding the Administration of Justice) applies. For 
example, waiting to commit the offense when no witnesses were present 
would not alone constitute more than minimal planning. By contrast, 
luring the victim to a specific location, or wearing a ski mask to 
prevent identification, would constitute more than minimal planning.''.
    The Commentary to Sec. 2B2.1 captioned ``Application Notes'' is 
amended in Note 1 by striking ``'More than minimal planning'', 
``firearm,''' and inserting ` ``Firearm,' ''.
    The Commentary to Sec. 2B2.1 captioned ``Application Notes'' is 
amended in Note 2 by striking ``Sec. 2B1.1 (Larceny, Embezzlement, and 
Other Forms of Theft)'' and inserting ``Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud).''.
    The Commentary to Sec. 2B2.1 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``4. `More than minimal planning' means more planning than is 
typical for commission of the offense in a simple form. `More than 
minimal planning' also exists if significant affirmative steps were 
taken to conceal the offense, other than conduct to which Sec. 3C1.1 
(Obstructing or Impeding the Administration of Justice) applies. For 
example, checking the area to make sure no witnesses were present would 
not alone constitute more than minimal planning. By contrast, obtaining 
building plans to plot a particular course of entry, or disabling an 
alarm system, would constitute more than minimal planning.''.

Issues for Comment

    (1) The Commission invites comment on whether and how the rules on 
inchoate and partially completed offenses, as currently expressed in 
Sec. 2X1.1, Sec. 1B1.2 application note 7, Sec. 2B1.1 application note 
2 (last paragraph), and Sec. 2F1.1 application Note 10, should apply 
under the proposed revised and consolidated economic crime guideline 
(Sec. 2B1.1) and the proposed revised definition of ``loss.'' If the 
current rules are retained, how might they be revised to make their 
application clearer, simpler, and more consistent? Alternatively, 
should the current rules be replaced with permissive, encouraged 
downward departure commentary? If the current rules are modified in 
regard to offenses sentenced under the revised, consolidated guideline, 
what conforming changes should be made in Sec. 2X1.1 to ensure similar 
treatment for similar offense conduct not subject to the revised 
consolidated guideline?
    (2) The Commission also requests comment on whether, and if so, to 
what

[[Page 7992]]

extent it should provide an enhancement for the destruction of, or 
damage to, unique or irreplaceable items of cultural heritage, 
archaeological, or historical significance. As one means of providing 
an enhancement, should the Commission provide an alternative loss 
calculation based on the cultural heritage, archaeological, or 
historical significance of the item or based on the cost of the item's 
restoration and repair? See, e.g., United States v. Shumway, 47 F.3d 
1413, 1424 (10th Cir. 1997). Alternatively, should the Commission 
provide an upward departure provision for such cases, or some 
combination of an alternative measure of loss and an upward departure 
provision? Should the Commission also consider amending the current 
enhancement for damage to, or destruction of, property of a national 
cemetery in Secs. 2B1.1 and 2B1.3 to include, for example, offenses 
involving human remains and funerary objects located on federal or 
Indian land?

Part B. Loss Tables for Consolidated Guideline and Sec. 2T4.1 (Tax 
Table)

    Synopsis of Proposed Amendment: This amendment proposes three 
options for a loss table for the consolidated guideline, Sec. 2B1.1, 
and two options for a loss table for Sec. 2T4.1 (Tax Table). If a 
decision is made to use the same table, the effect would be to sentence 
the offenses under both guidelines in a similar manner. This would 
represent a change from the current relationship in which tax offenses 
generally face slightly higher offense levels for a given loss amount 
than fraud and theft offenses.
    Regarding the tables for both guidelines, each option attempts to 
compress the loss table by (generally) moving from one-level to two-
level increments, thus increasing the range of losses that correspond 
to an individual increment. This is designed to minimize fact-finding 
and the appearance of false precision.

Proposed Amendment (Part B)

    Sections 2B1.1(b)(1), as amended by Part A of this amendment, is 
further amended to read as follows:
Option One
    ``(1) If the loss exceeded $2,000, increase the offense level as 
follows:

------------------------------------------------------------------------
        Loss (apply the greatest)                Increase in level
------------------------------------------------------------------------
(A) $2,000 or less.......................  no increase.
(B) More than $2,000.....................  add 1.
(C) More than $5,000.....................  add 2.
(D) More than $10,000....................  add 4.
(E) More than $20,000....................  add 6.
(F) More than $40,000....................  add 8.
(G) More than $80,000....................  add 10.
(H) More than $200,000...................  add 12.
(I) More than $500,000...................  add 14.
(J) More than $1,200,000.................  add 16.
(K) More than $2,500,000.................  add 18.
(L) More than $7,500,000.................  add 20.
(M) More than $20,000,000................  add 22.
(N) More than $50,000,000................  add 24.
(O) More than $100,000,000...............  add 26.''.
------------------------------------------------------------------------

Option Two
    ``(1) If the loss exceeded $5,000, increase the offense level as 
follows:

------------------------------------------------------------------------
        Loss (apply the greatest)                Increase in level
------------------------------------------------------------------------
(A) $5,000 or less.......................  no increase.
(B) More than $5,000.....................  add 2.
(C) More than $10,000....................  add 4.
(D) More than $30,000....................  add 6.
(E) More than $70,000....................  add 8.
(F) More than $120,000...................  add 10.
(G) More than $200,000...................  add 12.
(H) More than $400,000...................  add 14.
(I) More than $1,000,000.................  add 16.
(J) More than $2,500,000.................  add 18.
(K) More than $7,000,000.................  add 20.
(L) More than $20,000,000................  add 22.
(M) More than $50,000,000................  add 24.
(N) More than $100,000,000...............  add 26.''.
------------------------------------------------------------------------

Option Three
    (1) If the loss exceeded $5,000, increase the offense level as 
follows:

------------------------------------------------------------------------
        Loss (apply the greatest)                Increase in level
------------------------------------------------------------------------
(A) $5,000 or less.......................  no increase.
(B) More than $5,000.....................  add 2.
(C) More than $10,000....................  add 4.
(D) More than $20,000....................  add 6.
(E) More than $40,000....................  add 8.
(F) More than $80,000....................  add 10.
(G) More than $160,000...................  add 12.
(H) More than $400,000...................  add 14.
(I) More than $1,000,000.................  add 16.
(J) More than $2,500,000.................  add 18.
(K) More than $7,5000,000................  add 20.
(L) More than $20,000,000................  add 22.
(M) More than $50,000,000................  add 24.
(N) More than $125,000,000...............  add 26.''.
------------------------------------------------------------------------

    Section 2T4.1 is amended by striking the table in its entirety and 
inserting the following:
Option One

------------------------------------------------------------------------
      Tax loss (apply the greatest)                Offense level
------------------------------------------------------------------------
(A) $2,000 or less.......................  6.
(B) More than $2,000.....................  8.
(C) More than $5,000.....................  10.
(D) More than $12,500....................  12.
(E) More than $30,000....................  14.
(F) More than $80,000....................  16.
(G) More than $200,000...................  18.
(H) More than $500,000...................  20.
(I) More than $1,200,000.................  22.
(J) More than $2,500,000.................  24.
(K) More than $7,500,000.................  26.
(L) More than $20,000,000................  28.
(M) More than $50,000,000................  30.
(N) More than $100,000,000...............  32.''.
------------------------------------------------------------------------

Option Two

------------------------------------------------------------------------
                                                               Offense
              ``Tax loss (apply the greatest)                   level
------------------------------------------------------------------------
(A) $5,000 or less........................................        6
(B) More than $5,000......................................        8
(C) More than $10,000.....................................       10
(D) More than $30,000.....................................       12
(E) More than $70,000.....................................       14
(F) More than $120,000....................................       16
(G) More than $200,000....................................       18
(H) More than $400,000....................................       20
(I) More than $1,000,000..................................       22
(J) More than $2,500,000..................................       24
(K) More than $7,000,000..................................       26
(L) More than $20,000,000.................................       28
(M) More than $50,000,000.................................       30
(N) More than $100,000,000................................       32.''.
------------------------------------------------------------------------

Part C. Revised Definition of Loss for Offenses Sentenced Pursuant 
to Sec. 2B1.1, the Consolidated Guideline

    Synopsis of Proposed Amendment: The proposed amendment provides two 
major options to create one definition of loss for offenses sentenced 
pursuant to Sec. 2B1.1 (Larceny, Embezzlement and Other Forms of Theft) 
and Sec. 2F1.1 (Fraud and Deceit). Each option is designed to resolve 
circuit conflicts, address case law and application issues, and to 
promote consistency in application. To the extent practicable, each of 
the proposed definitions retains existing language and concepts that 
have not proven problematic. The first option was prepared by the 
Commission and is intended to invite comment on the major issues 
related to the definition of loss, including those presented in the 
second option. The second option was prepared by the Criminal Law 
Committee (CLC) of the Judicial Conference and is included for 
publication in its entirety in recognition of the years of effort that 
the members of that committee have put into the preparation of a new 
definition of loss.
    The proposed amendment would accomplish the following purposes:
    (1) Combine the loss definitions in the commentary to the theft and 
fraud guidelines into one definition with a simplified format;
    (2) Provide definitions for key concepts of loss, including 
``actual loss'', ``pecuniary harm'', and ``intended loss'';
    (3) Provide two options for a causation standard: (A) ``but for'' 
causation standard (and an example) plus reasonable foreseeability; and 
(B)

[[Page 7993]]

combine current loss concepts from Secs. 2B1.1 and 2F1.1 and make clear 
``but for'' causation is required but without concept of reasonable 
foreseeability;
    (4) Clarify the concept of intended loss in terms of the 
applicability of any credits or offsets, and to resolve a circuit 
conflict to provide that intended loss includes unlikely or impossible 
losses that are intended;
    (5) Provide two options for when loss should be measured: (A) at 
the time of sentencing; and (B) when the offense was detected;
    (6) Provide three options for what should be considered the time of 
detection: (A) when the offense is discovered by a victim or 
governmental agency; (B) when the defendant should have known the 
offense was detected [or about to be detected]; and (C) at the earlier 
of those two occurrences;
    (7) Provide two options regarding inclusion of interest: (A) to 
explicitly exclude interest; and (B) to provide for the inclusion of 
only that interest that is accrued and unpaid that was bargained for as 
part of a lending transaction involved in the offense;
    (8) Exclude certain costs incurred by the government and victims in 
connection with prosecution and criminal investigation of the offense;
    (9) Provide for exclusion from loss of certain economic benefits 
transferred to victims, to be measured at the time of detection;
    (10) Provide an option for certain exceptions to what constitutes 
``economic benefits'': (A)(i) benefits of ``de minimis'' value; or (ii) 
benefits that are substantially different from what the victim intended 
to receive; and (B) services fraudulently rendered by defendants posing 
as licensed professionals and for goods falsely represented as approved 
by a regulatory agency or for which regulatory approval was obtained by 
fraud;
    (11) Provide two options for excluding certain benefits transferred 
to victims of investment fraud schemes, both of which would resolve a 
circuit conflict: (A) Exclude gain to an individual investor in the 
scheme from being used to offset the loss to other individual investors 
in the scheme; and (B) exclude benefits transferred to victims designed 
to lure additional investments in the scheme from being used to offset 
the loss;
    (12) Provide greater clarity regarding the flexibility that judges 
have in estimating loss;
    (13) Provide four options for the use of gain: (A) Allow the use of 
gain as one of the factors to be used in estimating loss; (B) allow use 
of pecuniary gain as an alternative measure of loss if the gain is 
greater than loss; (C) provide for use of gain when loss cannot 
reasonably be determined or when gain is greater than loss; and (D) 
allow use of gain as an alternative when loss cannot reasonably be 
determined but the gain can be determined;
    (14) Provide that the special loss rules establish a minimum loss 
rule in the specific context described;
    (15) Further revise the special rule on determining loss in cases 
involving diversion of government program benefits to resolve an 
apparent circuit conflict;
    (16) Reformat and clarify the provisions dealing with departures, 
including a bracketed option that would permit a downward departure 
where the loss exceeds the greater of the [defendant's] actual or 
intended [personal] gain; and
    (17) Reposition into the background commentary examples from the 
current rules on inclusion of consequential damages in offenses 
involving product substitution and government contract fraud, 
consistent with option one regarding a causation standard.

Proposed Amendment (Part C)

Option One (Commission Proposal)

    The Commentary to Sec. 2B1.1 captioned ``Application Notes'', as 
amended by Part A of this amendment, is further amended by inserting 
after Note 1 the following:
    ``2. For purposes of subsection (b)(1).--
    (A) General Rule.--Subject to the exclusions in subdivision (B), 
loss is the greater of actual loss or intended loss.
    [Option 1: `Actual loss' means the reasonably foreseeable pecuniary 
harm that resulted or will result from the conduct for which the 
defendant is accountable under Sec. 1B1.3 (Relevant Conduct).
    `Reasonably foreseeable pecuniary harm' means pecuniary harm that 
the defendant knew, or under the circumstances of the particular case, 
reasonably should have known, likely would result, in the ordinary 
course of events, from that conduct. For example, in an offense 
involving unlawfully accessing, or exceeding authorized access to, a 
`protected computer,' as defined in 18 U.S.C. Sec. 1030(e)(2)(A) or 
(B), `loss' is the reasonably foreseeable pecuniary harm to the victim, 
which typically includes costs such as conducting a damage assessment 
and restoring the system and data to their condition prior to the 
offense, and any lost revenue due to interruption of service.
    For example, defendant H pays defendant D $500 to inspect a home 
defendant H has contracted to purchase. Defendant D does not actually 
conduct an inspection, but rather mails defendant H a fraudulent 
inspection report stating that the property is free of all defects. Two 
days before closing, an underground oil tank--which must be removed 
before the sale may close--is discovered on the property. Due to the 
resulting unavoidable delay caused by the need to remove the tank, the 
closing must be postponed. Because defendant H's lease on his present 
residence expired on the original closing date, defendant H must locate 
temporary housing at additional cost. Further, defendant H loses the 
financing he had obtained and must procure new financing, at a higher 
interest rate, from another bank. On his way to the new bank to 
complete the paper work for the new loan, defendant H is in an 
automobile accident resulting in damage to the vehicle and injuries to 
defendant H. The $500 paid for the inspection report is includeable in 
loss as a direct loss. The increased rental payment for temporary 
housing and the cost resulting from the higher interest rates are also 
included in loss because they follow in the ordinary course and, 
therefore, are foreseeable. However, although the damage incurred in 
the automobile accident would not have occurred but for the fraud, it 
nevertheless did not follow in the ordinary course of events and was 
not foreseeable by a reasonable person in the defendant's position. 
Accordingly, it is not included in loss.]
    [Option 2: `Actual loss' means the pecuniary harm that resulted or 
will result from the conduct for which the defendant is accountable 
under Sec. 1B1.3 (Relevant Conduct). `Pecuniary harm' includes the 
value of the property taken, damaged, or destroyed, and the value of 
money and services unlawfully taken. Ordinarily, in a case in which 
property is taken or destroyed, the loss is the fair market value of 
the particular property at issue. If the market value is difficult to 
ascertain or inadequately measures harm to the victim, the court may 
measure loss in some other way, such as reasonable replacement cost to 
the victim.]
    `Intended loss' means the pecuniary harm that was intended to 
result from the conduct for which the defendant is accountable under 
Sec. 1B1.3. `Intended loss' includes intended harm that would have been 
impossible or unlikely to occur (e.g., as in a government sting 
operation, or an insurance fraud in which the claim exceeded the 
insured value)[so long as the intended loss reasonably would have 
resulted if the

[[Page 7994]]

facts were as the defendant believed them to be].
    [Option 1:
    (B) Time of measurement.--Loss ordinarily should be measured at the 
time of sentencing, except as provided herein.]
    [Option 2:
    (B) Time of measurement.--Loss ordinarily should be measured at the 
time the offense was detected. An offense is detected [Option 2A: When 
the offense is discovered by a victim or a governmental agency.] 
[Option 2B: When the defendant knew or reasonably should have known 
that the offense was detected [or about to be detected] by a victim or 
a public law enforcement agency.] [Option 2C: The earlier of when an 
offense is discovered by a victim or a governmental agency or the 
defendant knew or reasonably should have known that the offense was 
detected [or about to be detected] by a victim or a public law 
enforcement agency.]
    (C) Exclusions from Loss.--
    [Option 1: (i) Interest of any kind, finance charges, late fees, 
penalties, amounts based on an agreed-upon return or rate of return, or 
other opportunity costs.]
    [Option 2: (i) Interest of any kind, except if it is bargained for 
as part of a lending transaction that is involved in the offense. In 
such a case, the court shall include any such interest that is accrued 
and unpaid as of the time the defendant knew or should have known that 
the offense had been detected.]
    (ii) Costs to the government of, and costs incurred by victims 
primarily to aid the government in, the prosecution and criminal 
investigation of an offense, even if such costs are reasonably 
foreseeable.
    [(iii) The value of the economic benefit the defendant or other 
persons acting jointly with the defendant transferred to the victim 
before the offense was detected.]
    (I) For purposes of this subdivision.--
    ``Economic benefit'' [includes][means] money, property, or services 
performed.
    ``Transferred'' means pledged or otherwise provided as collateral, 
returned, repaid, or otherwise conveyed.
    (II) The value of any ``economic benefit'' transferred to the 
victim by the defendant ordinarily shall be measured at the time the 
offense was detected.
    (III) However, in a case involving collateral pledged by a 
defendant, the ``economic benefit'' of such collateral to the victim 
for purposes of this subdivision is the amount the victim has recovered 
at the time of sentencing from disposition of the collateral. If the 
collateral has not been disposed of by that time, the `economic 
benefit' of the collateral is its value at the time of sentencing.
    [(IV) However, loss shall not be reduced by the value of:
    (1) [benefits of de minimis value transferred by the defendant to 
the victim(s)][economic benefit transferred to the victim that has 
little or no value to the victim because it is substantially different 
from what the victim intended to receive]; or
    (2) services fraudulently rendered to victims by persons falsely 
posing as licensed professionals, or goods falsely represented as 
approved by a governmental regulatory agency, or goods for which 
regulatory approval by a government agency was obtained by fraud.]
    [Option 1:(V) In a case involving a fraudulent investment scheme, 
such as a Ponzi scheme, the loss shall not be reduced by the value of 
the economic benefit transferred to any individual investor in the 
scheme in excess of that investor's principal investment (i.e., the 
gain to an individual investor in the scheme shall not be used to 
offset the loss to another individual investor in the scheme).]
    [Option 2:(V) In a case involving a fraudulent investment scheme, 
such as a Ponzi scheme, loss shall not be reduced by the benefit 
transferred to victims designed to lure additional `investments' in the 
scheme.]
    (D) Estimation of Loss.--In order to determine the applicable 
offense level, the court need only make a reasonable estimate of the 
loss. The sentencing judge is in a unique position to assess the 
evidence and estimate the loss based upon that evidence. For this 
reason, the court's loss determination is entitled to appropriate 
deference. See 18 U.S.C. Sec. 3742(e) and (f).
    The estimate of the loss shall be based on available information, 
taking into account, as appropriate and practicable under the 
circumstances, factors such as the following:
    (i) The fair market value of the property, or other thing of value, 
taken or otherwise unlawfully acquired, misapplied, misappropriated, or 
destroyed; or if the fair market value is impracticable to determine or 
inadequately measures the harm, the cost to the victim of replacing 
that property or other thing of value.
    (ii) The cost of repairs to damaged property, not to exceed the 
replacement cost had the property been destroyed.
    (iii) The approximate number of victims multiplied by the average 
loss to each victim.
    (iv) More general factors, such as the scope and duration of the 
offense and revenues generated by similar operations.
    [Option 1:(v) The gain from the offense.]
    [Option 2:
    (E) Pecuniary Gain.--The court shall use the defendant's pecuniary 
gain as an alternative measure of loss if the pecuniary gain is greater 
than loss (which may be zero).
    ``Pecuniary gain'' has the meaning given that term in Application 
Note 3(h) of the Commentary to Sec. 8A1.2 (Application Instructions--
Organizations) (i.e., the before-tax profit resulting from the relevant 
conduct of the offense).]
    [Option 3:
    (E) Pecuniary Gain.--The court shall use the defendant's pecuniary 
gain as an alternative measure of loss if (i) loss cannot reasonably be 
determined; or (ii) gain is greater than loss.
    `Pecuniary gain' has the meaning given that term in Application 
Note 3(h) of the Commentary to Sec. 8A1.2 (Application Instructions--
Organizations) (i.e., the before-tax profit resulting from the relevant 
conduct of the offense).]
    [Option 4:
    (E) Gain.--The Court shall use the defendant's gain if loss cannot 
reasonably be determined. For purposes of this application note, 
``gain'' means the proceeds from the illegal activity.]
    [(F) Special Rules.--The following special rules shall be used to 
assist in determining loss in the cases indicated:
    (i) Stolen or Counterfeit Credit Cards and Access Devices; 
Purloined Numbers and Codes.--In a case involving any counterfeit 
access device or unauthorized access device, loss includes any 
unauthorized charges made with the counterfeit access device or 
unauthorized access device. In any such case, loss shall be not less 
than $500 per access device. However, if the unauthorized access device 
is a means of telecommunications access that identifies a specific 
telecommunications instrument or telecommunications account (including 
an electronic serial number/mobile identification number (ESN/MIN) 
pair), and that means was only possessed, and not used, during the 
commission of the offense, loss shall be not less than $100 per unused 
means. For purposes of this application note, ``counterfeit access 
device'' and ``unauthorized access device'' have the meaning given 
those terms in Application Note 15.
    (ii) Government Benefits.--In a case involving government benefits 
(e.g., grants, loans, entitlement program payments), loss shall be 
considered to be not less than the value of the benefits

[[Page 7995]]

obtained by unintended recipients or diverted to unintended uses, as 
the case may be. For example, if the defendant was the intended 
recipient of food stamps having a value of $100 but fraudulently 
received food stamps having a value of $150, the loss is $50.
    In a case involving a Davis-Bacon Act violation (i.e., a violation 
of 40 U.S.C. Sec. 276a, criminally prosecuted under 18 U.S.C. 
Sec. 1001), the value of the benefits shall be considered to be not 
less than the difference between the legally required and actual wages 
paid.
    In the case of a loan (e.g., a student educational loan), the value 
of the benefits shall be considered to be not less than the amount of 
savings in interest over the life of the loan compared to alternative 
loan terms for which the applicant would have qualified.]
    (G) Departure Considerations.--
    (i) Upward Departure Considerations.--There may be cases in which 
the offense level determined under this guideline substantially 
understates the seriousness of the offense. In such cases, an upward 
departure may be warranted. The following is a non-exhaustive list of 
factors that the court may consider in determining whether an upward 
departure is warranted:
    (I) A primary objective of the offense was an aggravating, non-
monetary objective. For example, a primary objective of the offense was 
to inflict emotional harm.
    (II) The offense caused or risked substantial non-monetary harm. 
For example, the offense caused physical harm, psychological harm, or 
severe emotional trauma, or resulted in a substantial invasion of a 
privacy interest.
    (III) The offense involved a substantial amount of interest of any 
kind, finance charges, late fees, penalties, anticipated profits, 
amounts based on an agreed-upon return or rate of return, or other 
opportunity costs, not included in the determination of loss for 
purposes of subsection (b)(1).
    (IV) The offense created a risk of substantial loss beyond the loss 
determined for purposes of subsection (b)(1).
    (V) The offense endangered the solvency or financial security of 
one or more victims.
    (ii) Downward Departure Considerations. There also may be cases in 
which the offense level determined under this guideline substantially 
overstates the seriousness of the offense. In such cases, a downward 
departure may be warranted. The following is a non-exhaustive list of 
factors that the court may consider in determining whether a downward 
departure is warranted.
    (I) The primary objective of the offense was a mitigating, non-
monetary objective, such as to fund medical treatment for a sick 
parent. However, if, in addition to that primary objective, a 
substantial objective of the offense was to benefit the defendant 
economically, a downward departure for this reason would not ordinarily 
be warranted.
    [(II)The loss significantly exceeds the greater of the 
[defendant's] actual or intended [personal] gain, and therefore 
significantly overstates the culpability of the defendant.]''.
    The Commentary to Sec. 2B1.1 captioned ``Background Commentary'', 
as amended by Part A of this proposed amendment, is further amended by 
inserting the following after the second paragraph:
    The Commission has determined that, ordinarily, the sentences of 
defendants convicted of federal offenses should reflect the nature and 
magnitude of the pecuniary harm caused by their crimes. Accordingly, 
along with other relevant factors under the guidelines, loss serves as 
a measure of the seriousness of the offense and the defendant's 
relative culpability and is a principal factor in determining the 
offense level under this guideline. Because of the structure of the 
Sentencing Table (Chapter 5, Part A), subsection (b)(1) results in an 
overlapping range of enhancements based on the loss.
    [Except as excluded above, both direct and indirect pecuniary harm 
that is a reasonably foreseeable result of the offense will be taken 
into account in determining the loss. Accordingly, in any particular 
case, the determination of loss may include consideration of factors 
not specifically set forth in this guideline. For example, in an 
offense involving unlawfully accessing, or exceeding authorized access 
to, a protected computer, as defined in 18 U.S.C. Sec. 1030(e)(2)(A) or 
(B), loss is the reasonably foreseeable pecuniary harm to the victim, 
which typically includes costs such as conducting a damage assessment 
and restoring the system and data to their condition prior to the 
offense [, and any lost revenue due to interruption of service]. 
Likewise, in a product substitution case, the loss includes the 
victim's reasonably foreseeable costs of making substitute transactions 
and handling or disposing of the product delivered, or modifying the 
product so that it can be used for its intended purpose, plus the 
victim's reasonably foreseeable cost of correcting the actual or 
potential disruption to the victim's business caused by the product 
substitution. Similarly, in a defense contract fraud case, loss 
includes the reasonably foreseeable administrative cost to the 
government and other participants of repeating or correcting the 
procurement action affected, plus any increased cost to procure the 
product or service involved that was reasonably foreseeable.]''.

Option Two (Criminal Law Committee Proposal)

    The Commentary to Sec. 2B1.1 captioned ``Application Notes'', as 
amended by Part A of this amendment, is further amended by inserting 
after Note 1 the following:
    ``2. For purposes of subsection (b)(1)--
    (A) General Rule.--Loss is the greater of the actual loss or the 
intended loss.
    `Actual loss' means the reasonably foreseeable pecuniary harm that 
resulted or will result from the conduct for which the defendant is 
accountable under Sec. 1B1.3 (Relevant Conduct).
    `Reasonably foreseeable pecuniary harm' means pecuniary harm that 
the defendant knew or, under the circumstances of the particular case, 
reasonably should have known likely would result in the ordinary course 
of events from the conduct for which the defendant is accountable under 
Sec. 1B1.3 (Relevant Conduct).
    `Intended loss' means the pecuniary harm that was intended to 
result from the conduct for which the defendant is accountable under 
Sec. 1B1.3, even if that harm would have been impossible or unlikely to 
occur (e.g., as in a government sting operation, or an intended 
insurance fraud in which the claim exceeded the insured value), so long 
as the intended loss would reasonably have resulted if the facts were 
as the defendant believed them to be.
    (B) Exclusions from Loss.--Loss does not include the following:
    (i) Interest of any kind, finance charges, late fees, penalties, 
anticipated profits, or amounts based on an agreed-upon return or rate 
of return.
    (ii) Costs to the government of, and costs incurred by victims 
primarily to aid the government in, the prosecution and criminal 
investigation of an offense, even if such costs are reasonably 
foreseeable.
    (C) Credits In Determining Loss.--
    (i) Loss shall be determined by excluding the value of the economic 
benefit the defendant or other persons acting jointly with the 
defendant transferred to the victim before the offense was detected. 
However, loss shall not be reduced by the value of:

[[Page 7996]]

    (a) benefits of de minimis value transferred by the defendant to 
the victim(s).
    (b) services fraudulently rendered to victims by persons falsely 
posing as licensed professionals, or goods falsely represented as 
approved by a governmental regulatory agency, or goods for which 
regulatory approval by a government agency was obtained by fraud.
    (ii) In a case involving a fraudulent investment scheme, such as a 
`Ponzi scheme,' the loss shall not be reduced by the value of the 
economic benefit transferred to any investor in the scheme in excess of 
that investor's principal investment (i.e., the gain to one investor in 
the scheme shall not be used to offset the loss to another investor in 
the scheme).
    (iii) For purposes of this subsection: (A) `economic benefit' means 
money, property, or services performed; and (B) `transferred' includes 
pledged or otherwise provided as collateral, returned, repaid, or 
otherwise conveyed.
    (D) Time of measurement: Loss should ordinarily be measured at the 
time the offense was detected.
    (i) For purposes of this guideline, an offense is detected when the 
defendant knew or reasonably should have known that the offense was 
detected by a victim or a public law enforcement agency.
    (ii) Except as provided in subsection (D)(iii), the value of any 
`economic benefit' transferred to the victim by the defendant for 
purposes of Subsection (C) shall be measured at the time the offense 
was detected.
    (iii) However, in a case involving collateral pledged by a 
defendant, the `economic benefit' of such collateral to the victim for 
purposes of Subsection (C) is the amount the victim has recovered at 
the time of sentencing from disposition of the collateral. If the 
collateral has not been disposed of by that time, the `economic 
benefit' of the collateral is its value at the time of sentencing.
    (E) Estimation of Loss. The court need not determine the precise 
amount of the loss. Rather, it need only make a reasonable estimate of 
loss. The sentencing judge is in a unique position to assess the 
evidence and estimate the loss based upon that evidence. For this 
reason, the court's loss determination is entitled to appropriate 
deference. See 18 U.S.C. 3742(e) and (f).
    The estimate of the loss shall be based on available information, 
taking into account and using as appropriate and practicable under the 
circumstances, factors such as the following:
    (i) The fair market value of the property, or other thing of value, 
taken or otherwise unlawfully acquired, misapplied, misappropriated, or 
destroyed; or if the fair market value is impracticable to determine or 
inadequately measures the harm, the cost to the victim of replacing 
that property or other thing of value.
    (ii) The cost of repairs to damaged property, not to exceed the 
replacement cost had the property been destroyed.
    (iii) The approximate number of victims multiplied by the average 
loss to each victim.
    (iv) More general factors, such as the scope and duration of the 
offense and revenues generated by similar operations.
    (F) Gain. The court shall use the defendant's gain as an 
alternative measure of loss when loss cannot otherwise reasonably be 
determined, but the defendant's gain can reasonably be determined.
    (G) Special Rules. The following special rules shall be used to 
assist in determining actual loss in the cases indicated:
    (i) Stolen or Counterfeit Credit Cards and Access Devices; 
Purloined Numbers and Codes. In a case involving stolen or counterfeit 
credit cards (see 15 U.S.C. 1602(k)), stolen or counterfeit access 
devices (see 18 U.S.C. 1029(e)(1)), or purloined numbers or codes, the 
actual loss includes any unauthorized charges made with the credit 
cards, access devices, or numbers or codes. The actual loss determined 
for each such credit card, access device, number or code shall be not 
less than $500.
    (ii) Diversion of Government Program Benefits. In a case involving 
diversion of government program benefits, actual loss is the value of 
the benefits diverted from intended recipients or uses. For example, if 
the defendant was the lawful recipient of food stamps having a value of 
$100 but fraudulently received food stamps having a value of $150, the 
loss is $50.
    (iii) Davis-Bacon Act Cases. In a case involving a Davis-Bacon Act 
violation (i.e., a violation of 40 U.S.C. 276a, criminally prosecuted 
under 18 U.S.C. 1001), the actual loss is the difference between the 
legally required and actual wages paid.
    (H) Departure Considerations.
    (1) Upward Departure Considerations. There may be cases in which 
the loss substantially understates the seriousness of the offense or 
the culpability of the defendant. In such cases, an upward departure 
may be warranted. The following is a non-exhaustive list of factors 
that the court may consider in determining whether an upward departure 
is warranted:
    (a) A primary objective of the offense was an aggravating, non-
monetary objective, such as to inflict emotional harm.
    (b) The offense resulted in or risked substantial non-monetary 
harm. For example, the offense caused physical harm, psychological 
harm, or severe emotional trauma, or resulted in a substantial invasion 
of a privacy interest.
    (c) The offense created a risk of substantial loss beyond the loss 
determined above.
    (d) The offense endangered the solvency or financial security of 
one or more victims.
    (e) The offense involved a substantial risk that a victim would 
lose a significant portion of his or her net worth or suffer other 
significant financial hardship.
    (2) Downward Departure Considerations. There may be cases in which 
the loss substantially overstates the seriousness of the offense or the 
culpability of the defendant. In such cases, a downward departure may 
be warranted. The following is a non-exhaustive list of factors that 
the court may consider in determining whether a downward departure is 
warranted:
    (a) The primary objective of the offense was a mitigating, non-
monetary objective, such as to fund medical treatment for a sick 
parent. However, if, in addition to that primary objective, a 
substantial objective of the offense was to benefit the defendant 
economically, a downward departure for this reason would not ordinarily 
be warranted.
    (b) The loss significantly exceeds the greater of the defendant's 
actual or intended personal gain, and therefore significantly 
overstates the culpability of the defendant.''.
    The Commentary to Sec. 2B1.1 captioned ``Background'', as amended 
by Part A of this amendment, is further amended by inserting after the 
second paragraph the following:
    The Commission has determined that, ordinarily, the sentences of 
defendants convicted of federal offenses should reflect the nature and 
magnitude of the pecuniary harm caused by their crimes. Accordingly, 
along with other relevant factors under the guidelines, loss serves as 
a measure of the seriousness of the offense and the defendant's 
relative culpability and is a principal factor in determining the 
offense level under this guideline.
    Both direct and indirect pecuniary harm that is a reasonably 
foreseeable result of the offense will be taken into account in 
determining the loss. For example, in an offense involving unlawfully 
accessing, or exceeding

[[Page 7997]]

authorized access to, a ``protected computer,' as defined in 18 U.S.C. 
Sec. 1030(e)(2)(A) or (B), `loss' is the reasonably foreseeable 
pecuniary harm to the victim, which typically includes costs such as 
conducting a damage assessment and restoring the system and data to 
their condition prior to the offense. Likewise, in a product 
substitution case, the loss includes the victim's reasonably 
foreseeable costs of making substitute transactions and handling or 
disposing of the product delivered or modifying the product so that it 
can be used for its intended purpose, plus the victim's reasonably 
foreseeable cost of correcting the actual or potential disruption to 
the victim's business caused by the product substitution. Similarly, in 
a defense contract fraud case, loss includes the reasonably foreseeable 
administrative cost to the government and other participants of 
repeating or correcting the procurement action affected, plus any 
increased cost to procure the product or service involved that was 
reasonably foreseeable.''.

Part D. Referring Guidelines for Theft and Fraud

    Synopsis of Proposed Amendment: The following proposed amendments 
are intended to be made in conjunction with a change to the loss tables 
in Sec. 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft) or 
Sec. 2F1.1 (Fraud and Deceit). The amendments provide a 1-level 
increase in several guidelines that refer to the loss tables for cases 
in which the loss is more than $2,000 but not more than $5,000. This 
increase would be provided to avoid a 1-level decrease that would 
otherwise occur for offenses involving losses of more than $2,000 but 
not more than $5,000 because the proposed table does not provide the 
first increase for loss amount until loss exceeds $5,000.

Proposed Amendments (Part D)

    Section 2B2.3(b) is amended by striking subdivision (3) in its 
entirety and inserting the following:
    ``(3) If (A) the offense involved invasion of a protected computer; 
and (B) the loss resulting from the invasion (i) exceeded $2,000 but 
did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, 
increase by the number of levels from the table in Sec. 2B1.1 (Theft, 
Property Destruction, and Fraud) corresponding to that amount.''.
    Section 2B3.3(b) is amended by striking subdivision (1) in its 
entirety and inserting the following:
    ``(1) If the greater of the amount obtained or demanded (A) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) 
exceeded $5,000, increase by the number of levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
that amount.''.
    Section 2B4.1(b) is amended by striking subdivision (1) in its 
entirety and inserting the following:
    ``(1) If the greater of the value of the bribe or the improper 
benefit to be conferred (A) exceeded $2,000 but did not exceed $5,000, 
increase by 1 level; or (B) exceeded $5,000, increase by the number of 
levels from the table in Sec. 2B1.1 (Theft, Property Destruction, and 
Fraud) corresponding to that amount.''.
    Section 2B5.1(b) is amended by striking subdivision (1) in its 
entirety and inserting the following:
    ``(1) If the face value of the counterfeit items (A) exceeded 
$2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded 
$5,000, increase by the number of levels from the table in Sec. 2B1.1 
(Theft, Property Destruction, and Fraud) corresponding to that 
amount.''.
    Section 2B5.3(b) is amended by striking subdivision (1) in its 
entirety and inserting the following:
    ``(1) If the infringement amount (A) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (B) exceeded $5,000, increase by 
the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    Section 2B6.1(b) is amended by striking subdivision (1) in its 
entirety and inserting the following:
    ``(1) If the retail value of the motor vehicles or parts (A) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) 
exceeded $5,000, increase by the number of levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
that amount.''.
    Section 2C1.1(b)(2) is amended by striking subdivision (A) in its 
entirety and inserting the following:
    ``(A) If the value of the payment, the benefit received or to be 
received in return for the payment, or the loss to the government from 
the offense, whichever is greatest (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    Section 2C1.2(b)(2) is amended by striking subdivision (A) in its 
entirety and inserting the following:
    ``(A) If the value of the gratuity (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    Section 2C1.6(b) is amended by striking subdivision (1) in its 
entirety and inserting the following:
    ``(1) If the value of the gratuity (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    Section 2C1.7(b)(1) is amended by striking subdivision (A) in its 
entirety and inserting the following:
    ``(A) If the loss to the government, or the value of anything 
obtained or to be obtained by a public official or others acting with a 
public official, whichever is greater, (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    Section 2E5.1(b) is amended by striking subdivision (2) in its 
entirety and inserting the following:
    ``(2) If the value of the prohibited payment or the value of the 
improper benefit to the payer, whichever is greater (A) exceeded $2,000 
but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, 
increase by the number of levels from the table in Sec. 2B1.1 (Theft, 
Property Destruction, and Fraud) corresponding to that amount.''.
    Section 2G2.2(b)(2)(A) is amended by striking ``Sec. 2F1.1 (Fraud 
and Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property Destruction, 
and Fraud)''.
    Section 2G3.1(b)(1)(A) is amended by striking ``Sec. 2F1.1 (Fraud 
and Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property Destruction, 
and Fraud)''.
    Section 2G3.2(b)(2) is amended by striking ``at Sec. 2F1.1 (b)(1)'' 
and inserting ``in Sec. 2B1.1 (Theft, Property Destruction, and 
Fraud).''.
    Section 2Q2.1(b)(3) is amended by striking subdivision (A) in its 
entirety and inserting the following:
    ``(A) If the market value of the fish, wildlife, or plants (i) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (ii) 
exceeded $5,000, increase by the number of levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
that

[[Page 7998]]

amount, [but in no event more than [18] levels]; or''.
    Section 2S1.3(a) is amended by striking ``Sec. 2F1.1 (Fraud and 
Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property Destruction, and 
Fraud)''.

Part E. Technical and Conforming Amendments

    The Commentary to Sec. 1B1.2 captioned ``Application Notes'' is 
amended in Note 1 in the fourth paragraph by striking ``Sec. 2B1.1 
(Larceny, Embezzlement, and Other Forms of Theft)'' and inserting 
``Sec. 2F1.1 (Theft, Property Destruction, and Fraud)''.
    The Commentary to Sec. 1B1.3 captioned ``Application Notes'' is 
amended in Note 5 by striking ``Sec. 2F1.1 (Fraud and Deceit)'' and 
inserting ``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    Chapter Two, Part B, Subpart 1, is amended by inserting after 
Sec. 2B1.3 the following:

``Sec. 2B1.4.  Insider Trading

    (a) Base Offense Level: 8.
    (b) Specific Offense Characteristic.
    (1) Increase by the number of levels from the table in Sec. 2B1.1 
(Theft, Property Destruction, and Fraud) corresponding to the gain 
resulting from the offense.
Commentary
    Statutory Provisions: 15 U.S.C. 78j and 17 CFR 240.10b-5. For 
additional statutory provision(s), see Appendix A (Statutory Index).
Application Note
    1. Section 3B1.3 (Abuse of Position of Trust or Use of Special 
Skill) should be applied only if the defendant occupied and abused a 
position of special trust. Examples might include a corporate president 
or an attorney who misused information regarding a planned but 
unannounced takeover attempt. It typically would not apply to an 
ordinary ``tippee.''
    Background: This guideline applies to certain violations of Rule 
10b-5 that are commonly referred to as `insider trading.' Insider 
trading is treated essentially as a sophisticated fraud. Because the 
victims and their losses are difficult if not impossible to identify, 
the gain, i.e., the total increase in value realized through trading in 
securities by the defendant and persons acting in concert with him or 
to whom he provided inside information, is employed instead of the 
victims' losses.
    Certain other offenses, e.g., 7 U.S.C. 13(e), that involve misuse 
of inside information for personal gain also may appropriately be 
covered by this guideline.''.
    The Commentary to Sec. 2B5.1 captioned ``Application Notes'' is 
amended in Note 3 by striking ``Sec. 2F1.1 (Fraud and Deceit)'' and 
inserting ``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    The Commentary to Sec. 2B5.3 captioned ``Background'' is amended in 
the second sentence of the first paragraph by striking ``guidelines'' 
and inserting ``guideline''.
    The Commentary to Sec. 2B2.3 captioned ``Application Notes'' is 
amended in Note 2 by striking ``Sec. 2B1.1 (Larceny, Embezzlement, and 
Other Forms of Theft)'' and inserting ``Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud)''.
    The Commentary to Sec. 2B3.1 captioned ``Application Notes'' is 
amended in Note 3 by striking ``Sec. 2B1.1 (Larceny, Embezzlement, and 
Other Forms of Theft)'' and inserting ``Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud)''.
    The Commentary to Sec. 2B6.1 captioned ``Application Notes'' is 
amended in Note 1 by striking ``Sec. 2B1.1 (Larceny, Embezzlement, and 
Other Forms of Theft)'' and inserting ``Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud)''.
    The Commentary to Sec. 2B6.1 captioned ``Application Notes'' is 
amended by striking Note 2 in its entirety and inserting the following:
    ``2. The `Increase by the number of levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
that amount,' as used in subsection (b)(1), refers to the number of 
levels corresponding to the retail value of the motor vehicles or parts 
involved.''.
    The Commentary to Sec. 2C1.1 captioned ``Application Notes'' is 
amended in Note 2 by striking ``Sec. 2B1.1 (Larceny, Embezzlement, and 
Other Forms of Theft) and includes both actual and intended loss'' and 
inserting ``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    The Commentary to Sec. 2C1.7 captioned ``Application Notes'' is 
amended in Note 3 by striking ``Sec. 2B1.1 (Larceny, Embezzlement, and 
Other Forms of Theft) and includes both actual and intended los'' and 
inserting ``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    Section 2H3.3(a) is amended in subdivision (2) by inserting ``or 
destruction'' after ``theft''; and by striking ``Sec. 2B1.1 (Larceny, 
Embezzlement, and Other Forms of Theft)'' and inserting ``Sec. 2B1.1 
(Theft, Property Destruction, and Fraud)''.
    Section 2H3.3(a) is amended by striking subdivision (3) in its 
entirety.
    The Commentary to Sec. 2H3.3 captioned ``Background'' is amended by 
striking ``Sec. 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft) 
or Sec. 2B1.3 (Property Damage or Destruction)'' and inserting 
``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    The Commentary to Sec. 2J1.1 captioned ``Application Notes'' is 
amended in Note 2 by striking ``Sec. 2B1.1 (Larceny, Embezzlement, and 
Other Forms of Theft)'' and inserting ``Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud)''.
    Section 2K1.4(a) is amended in subdivision (3) by striking 
``Sec. 2F1.1 (Fraud and Deceit) if the offense was committed in 
connection with a scheme to defraud; or'' and inserting ``Sec. 2B1.1 
(Theft, Property Destruction, and Fraud).''.
    Section 2K1.4(a) is amended by striking subdivision (4) in its 
entirety.
    Section 2K1.4(b)(2) is amended in subdivision (2) by striking 
``(4)'' and inserting ``(3)''.
    Section 2N2.1(b)(1) is amended by striking ``Sec. 2F1.1 (Fraud and 
Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property Destruction, and 
Fraud)''.
    The Commentary to Sec. 2N2.1 captioned ``Application Notes'' is 
amended in Note 2 by inserting ``theft, property destruction, and'' 
after ``involved'' and by striking ``(e.g., theft, bribery, revealing 
trade secrets, or destruction of property)'' and inserting ``(e.g., 
bribery).''.
    The Commentary to Sec. 2N2.1 captioned ``Application Notes'' is 
amended in Note 4 by striking ``2F1.1 (Fraud and Deceit)'' and 
inserting ``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    Section 2N3.1(b)(1) is amended by striking ``Sec. 2F1.1 (Fraud and 
Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property Destruction, and 
Fraud)''.
    The Commentary to Sec. 2N3.1 captioned ``Background'' is amended in 
the first paragraph by striking ``the guideline for fraud and 
deception, Sec. 2F1.1,'' and inserting ``Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud)''.
    Section 2Q1.6(a)(2) is amended by striking ``Sec. 2B1.3 (Property 
Damage or Destruction)'' and inserting ``Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud)''.
    Section 2T1.6(b)(1) is amended by striking ``Sec. 2B1.1 (Larceny, 
Embezzlement, and Other Forms of Theft)'' and inserting ``Sec. 2B1.1 
(Theft, Property Destruction, and Fraud)''.
    The Commentary to Sec. 3B1.3 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``4. The following additional illustrations of an abuse of a 
position of trust pertain to theft or embezzlement from employee 
pension or welfare benefit plans or labor unions:
    (A) If the offense involved theft or embezzlement from an employee 
pension or welfare benefit plan and the

[[Page 7999]]

defendant was a fiduciary of the benefit plan, an adjustment under this 
section for abuse of a position of trust will apply. ``Fiduciary of the 
benefit plan'' is defined in 29 U.S.C. 1002(21)(A) to mean a person who 
exercises any discretionary authority or control in respect to the 
management of such plan or exercises authority or control in respect to 
management or disposition of its assets, or who renders investment 
advice for a fee or other direct or indirect compensation with respect 
to any moneys or other property of such plan, or has any authority or 
responsibility to do so, or who has any discretionary authority or 
responsibility in the administration of such plan.
    (B) If the offense involved theft or embezzlement from a labor 
union and the defendant was a union officer or occupied a position of 
trust in the union (as set forth in 29 U.S.C. 501(a)), an adjustment 
under this section for an abuse of a position of trust will apply.''.
    Section 3D1.2(d) is amended by striking ``2B1.3'' and inserting 
``2B1.4''; and by striking ``Secs. 2F1.1, 2F1.2;''.
    The Commentary to Sec. 3D1.2 captioned ``Application Notes'' is 
amended in the third paragraph of Note 6 by striking ``, and would 
include, for example, larceny, embezzlement, forgery, and fraud''.
    Section 3D1.3(b) is amended by striking ``(e.g., theft and 
fraud)''.
    The Commentary to Sec. 3D1.3 captioned ``Application Notes'' is 
amended in Note 3 by striking ``(e.g., theft and fraud)''; and by 
striking ``In addition, the adjustment for `more than minimal planning' 
frequently will apply to multiple count convictions for property 
offenses.''.
    The Commentary to Sec. 3D1.5 captioned ``Illustrations of the 
Operation of the Multiple-Count Rules'' is amended by striking 
Illustration 2 in its entirety and by redesignating Illustrations 3 and 
4 as illustrations 2 and 3, respectively.
    The Commentary to Sec. 3D1.5 captioned ``Illustrations of the 
Operation of the Multiple-Count Rules'' is amended in Illustration, as 
redesignated by this amendment, 3 by striking ``Sec. 2F1.1 (Fraud and 
Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property Destruction, and 
Fraud)''; and in the last sentence by striking ``Sec. 2F1.1'' after 
``or'' and inserting ``2B1.1''.
    The Commentary to Sec. 8A1.2 captioned ``Application Notes'' is 
amended in Note 3(i) by striking ``Secs. 2B1.1 (Larceny, Embezzlement, 
and Other Forms of Theft), 2F1.1 (Fraud and Deceit)'' and inserting 
``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    Section 8C2.1(a) is amended by striking ``2B1.3'' and inserting 
``2B1.4'' and by striking ``Secs. 2F1.1; 2F1.2;''.
    The Commentary to Sec. 8C2.1 captioned ``Application Notes'' is 
amended in Note 2 by striking wherever it appears ``Sec. 2F1.1 (Fraud 
and Deceit)'' each place it appears and inserting ``Sec. 2B1.1 (Theft, 
Property Destruction, and Fraud)''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 6 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 6b(A) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 6b(C) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 6c by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 6h by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 6o by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 13(a)(2) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 13(a)(3) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 13(a)(4) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 13(d) by striking ``2F1.2'' and inserting ``2B1.4''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 13(f) by striking ``2F1.2'' and inserting ``2B1.4''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 23 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 270 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 2024(b) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 7 
U.S.C. 2024(c) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
12 U.S.C. 631 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 50 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 77e by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 77q by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 77x by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 78j by striking ``2F1.1'' and inserting ``2B1.1''; and by 
striking ``2F1.2'' and inserting ``2B1.4''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 78ff by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 80b-6 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 158 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 645(a) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 645(b) by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 645(c) by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 714m(a) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 714m(b) by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 1281 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 1644 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 1681q by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
15 U.S.C. 1693n(a) by striking ``2F1.1'' and inserting ``2B1.1''.

[[Page 8000]]

    Appendix A (Statutory Index) is amended in the line referenced to 
16 U.S.C. 114 by striking ``, 2B1.3''.
    Appendix A (Statutory Index) is amended in the line referenced to 
16 U.S.C. 117c by striking ``, 2B1.3''.
    Appendix A (Statutory Index) is amended in the line referenced to 
16 U.S.C. 123 by striking ``2B1.3,''.
    Appendix A (Statutory Index) is amended in the line referenced to 
16 U.S.C. 146 by striking ``2B1.3,''.
    Appendix A (Statutory Index) is amended in the line referenced to 
16 U.S.C. 413 by striking ``, 2B1.3''.
    Appendix A (Statutory Index) is amended in the line referenced to 
16 U.S.C. 433 by striking ``, 2B1.3''.
    Appendix A (Statutory Index) is amended in the line referenced to 
16 U.S.C. 831t(b) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
16 U.S.C. 831t(c) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 32(a), (b) by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 33 by striking ``2B1.3''and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 37 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 43 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 112(a) by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 152 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 153 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 155 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 225 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 285 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 286 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 287 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 288 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 289 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 332 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 335 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 470 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 471 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 472 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 473 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 474 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 474A by inserting ``2B1.1,'' before ``2B5.1''; and by 
striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 476 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 477 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 478 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 479 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 480 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 481 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 482 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 483 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 484 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 485 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 486 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 488 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 491 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 493 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 494 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 495 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 496 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 497 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 498 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 499 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 500 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 501 by inserting ``2B1.1,'' before ``2B5.1''; and by striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 502 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 503 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18

[[Page 8001]]

U.S.C. 505 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 506 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 507 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 508 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 509 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 510 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 513 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 514 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 642 by inserting ``2B1.1,'' before ``2B5.1'' and striking ``, 
2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 656 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 657 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 659 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 663 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 665(a) by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 666(a)(1)(A) by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 709 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 712 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 911 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 914 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 915 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 917 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 970(a) by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1001 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1002 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1003 by inserting ``2B1.1,'' before ``2B5.1'' and striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1004 by striking ``, 2F1.1''; and by inserting ``2B1.1,'' 
before ``2B5.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1005 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1006 by striking ``, 2F1.1''; and by inserting ``2B1.1,'' 
before ``2B5.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1007 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1010 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1011 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1012 by inserting ``2B1.1,'' before ``2C1.3'' and striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1013 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1014 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1015 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1016 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1017 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1018 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1019 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1020 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1021 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1022 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1023 by striking ``, 2F1.1'' .
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1025 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1026 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1028 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1029 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1030(a)(4) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1030(a)(5) by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1030(a)(6) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1031 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1032 by inserting ``2B1.1,'' before ``2B4.1''; and by 
striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1033 by striking ``2F1.1,''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1035 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1341 by inserting ``2B1.1,'' before ``2C1.7''; and by 
striking ``, 2F1.1''.

[[Page 8002]]

    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1342 by inserting ``2B1.1,'' before ``2C1.7''; and by 
striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1343 by inserting ``2B1.1,'' before ``2C1.7''; and by 
striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1344 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1347 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1361 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1362 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1363 by striking ``2B1.3'' and inserting ``2B1.1.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1366 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1422 by inserting ``2B1.1,'' before ``2C1.2''; and by 
striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1702 by striking ``2B1.3,''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1703 by striking ``2B1.3,''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1704 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1705 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1706 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1708 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1712 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1716C by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1720 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1728 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1852 by striking ``, 2B1.3''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1853 by striking ``, 2B1.3''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1854 by striking ``, 2B1.3''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1857 by striking `` 2B1.3,'' and inserting ``2B1.1,''
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1861 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1902 by striking ``2F1.2'' and inserting ``2B1.4''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1919 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1920 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1923 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1992 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2071 by striking ``, 2B1.3''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2072 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2073 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2197 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2272 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2275 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2276 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2280 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2281 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2314 by striking ``, 2F1.1'' .
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2315 by striking ``, 2F1.1'' .
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2332a by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
19 U.S.C. 1434 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
19 U.S.C. 1435 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
19 U.S.C. 1436 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
19 U.S.C. 1919 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
19 U.S.C. 2316 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
20 U.S.C. 1097(a) by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
20 U.S.C. 1097(b) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
20 U.S.C. 1097(d) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
21 U.S.C. 333(a)(2) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
22 U.S.C. 1980(g) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
22 U.S.C. 2197(n) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
22 U.S.C. 4221 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
25 U.S.C. 450d by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
26 U.S.C. 7208 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
26

[[Page 8003]]

U.S.C. 7214 by inserting ``2B1.1,'' before ``2C1.2'' and striking ``, 
2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
26 U.S.C. 7232 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
29 U.S.C. 1141 by inserting ``2B1.1,'' before ``2B3.2'' and striking 
``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
38 U.S.C. 787 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
38 U.S.C. 3502 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
41 U.S.C. 423(e) by inserting ``2B1.1,'' before ``2C1.1''; and by 
striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 408 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1307(a) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1307(b) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1307a-7b by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1383(d)(2) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1383a(a) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1383a(b) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1395nn(a) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1395nn(c) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1396h(a) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1713 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1760(g) by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1761(o)(1) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 1761(o)(2) by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 3220(a) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 3220(b) by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 3426 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 3791 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 3792 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 3795 by striking ``, 2F1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
42 U.S.C. 5157(a) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
45 U.S.C. 359(a) by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
46 U.S.C. 1276 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
49 U.S.C. 121 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
49 U.S.C. 11903 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
49 U.S.C. 11904 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
49 U.S.C. 14912 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
49 U.S.C. 16102 by striking ``2F1.1'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
49 U.S.C. 60123(d) by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
49 U.S.C. 80116 by striking ``2F1.1''and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
49 U.S.C. 80501 by striking ``2B1.3'' and inserting ``2B1.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
49 U.S.C. App. Sec. 1687(g) by striking ``2B1.3'' and inserting 
``2B1.1''.

Part F: Computing Tax Loss Under Sec. 2T1.1

    Synopsis of Proposed Amendment: This proposed amendment addresses a 
circuit conflict regarding how tax loss under Sec. 2T1.1 (Tax Evasion) 
is computed for cases that involve a defendant's under-reporting of 
income on both individual and corporate tax returns. Such a case often 
arises when (1) the defendant fails to report, and pay corporate income 
taxes on, income earned by the corporation, (2) diverts that unreported 
corporate income for the defendant's personal use, and (3) fails to 
report, and to pay personal income taxes on, that income. The proposed 
amendment clarifies that the amount of the tax loss is the aggregate 
amount of federal income tax that would have due by both the 
corporation and the individual defendant.
    More specifically, the circuits are split on which methodology 
should be used to calculate tax loss in these cases. Two circuits use a 
sequential calculation method the aggregate tax loss. Under this 
method, the court determines the corporate federal income tax that 
would have been due, subtracts that amount from the amount diverted to 
the defendant personally, then determines the personal federal income 
tax that would have been due on the reduced diverted amount. See United 
States v. Harvey, 996 F.2d 919 (7th Cir. 1993); United States v. 
Martinez-Rios, 143 F.3d 662 (2d Cir. 1998). In contrast, one circuit 
holds that the court should determine the aggregate tax loss by adding 
the corporate federal income tax that would have been due on the total 
amount of unreported income and the personal federal income tax that 
would have been due on that total amount. See United States v. Cseplo, 
42 F.3d 36 (6th Cir. 1994).
    The amendment adopts the Harvey approach, clarifying the existing 
rule in Application Note 7 of Sec. 2T1.1 that ``if the offense involves 
both individual and corporate tax returns, the tax loss is the 
aggregate tax loss from the offenses taken together''.
    The amendment also clarifies that the loss in Sec. 2T1.1 refers to 
federal, and not state and local, tax loss. The alternative 
interpretation of this provision would greatly complicate the guideline 
because of the multitude of state and local tax rates and provisions.

[[Page 8004]]

    The amendment also adds an application note to Sec. 2T1.1 
clarifying that a tax evasion count and a count charging the offense 
that provided the income on which tax was evaded are grouped together 
under Sec. 3D1.2(c). This application note is consistent with the 
longstanding view of the staff as to how such counts should be treated 
for grouping purposes.

Proposed Amendment (Part F)

    Section Sec. 2T1.1(c)(1) is amended in by adding at the end the 
following:
    ``(D) If the offense involved (i) conduct described in paragraphs 
(A), (B), or (C); and (ii) both individual and corporate tax returns, 
the tax loss is the aggregate tax loss from the offenses taken 
together.''.
    Section 2T1.1(c)(2) is amended by inserting ``(A)'' before ``If''; 
and by adding at the end the following:
    ``(B) If the offense involved (i) conduct described in paragraph 
(A), and; (ii) both individual and corporate tax returns, the tax loss 
is the aggregate tax loss from the offenses taken together.''.
    The Commentary to Sec. 2T1.1 captioned ``Application Notes'' is 
amended in Note 1 by adding at the end the following paragraph:
    ``Tax loss'' means federal tax loss; it does not include state or 
local tax loss.''.
    The Commentary to Sec. 2T1.1 is amended in Note 7 by adding at the 
end the following:
    ``Accordingly, in a case in which a defendant fails to report 
income derived from a corporation on either the defendant's individual 
tax return or the corporate tax return, the tax loss is the aggregate 
amount due to the treasury from the offenses taken together. For 
example, the defendant, the sole owner of a corporation, fraudulently 
understates the corporation's income in the amount of $100,000 on the 
corporation's tax return, diverts the funds to his own use, and does 
not report these funds on the defendant's individual tax return. For 
purposes of this example, assume that the applicable tax rate is 34% 
and the applicable individual tax rate is 28%. The tax loss 
attributable to the defendant's corporate tax returns is $34,000 
($100,000 multiplied by 34%). The tax loss attributable to the 
defendant's individual tax return is based on the unreported $100,000 
in income less the $34,000 in corporate tax on these same funds. This 
avoids double counting because the $34,000 in corporate tax reduces the 
defendant's effective income from $100,000 to $66,000. The tax loss 
attributable to the defendant's individual tax return is $18,480 
($66,000 multiplied by 28%). Consequently, the aggregate tax loss for 
the offenses, taken together, is $52,480 ($34,000 plus $18,480).''.
    The Commentary to Sec. 2T1.1 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``8. If the defendant is sentenced for a count charging an offense 
from which the defendant derived income and a count charging a tax 
offense involving that criminally derived income, the counts are to be 
grouped together as closely related counts under subsection (c) of 
Sec. 3D1.2 (Groups of Closely Related Counts). Such counts are to be 
grouped together whether or not the amount of criminally derived income 
is sufficient to warrant the enhancement under subsection (b)(1).''.

Issues for Comment

    (1) The proposed amendment uses a sequential method to determine 
tax loss in cases in which the defendant is both the individual and the 
corporate tax payer. Commission invites comment on whether Sec. 2T1.1 
instead should be amended to provide that, in such cases, the aggregate 
tax loss is the sum of (A) the total amount of unreported income 
multiplied by the corporate tax rate; and (B) the total amount of 
unreported income multiplied by the individual tax rate.
    (2) The Commission also invites comment on whether the definition 
of ``tax loss'' should include interest and penalties in evasion-of-
payment tax cases. Such cases are distinguishable from evasion-of-
assessment tax cases.
    (3) The Commission also invites comment on whether the 
``sophisticated concealment'' enhancement in Secs. 2T1.1(b)(2) and 
2T1.4(b)(2) should be revised to conform to the ``sophisticated means'' 
enhancement in Sec. 2F1.1(b)(6)(C), including imposition of a minimum 
of offense level of level 12.

Proposed Amendment: Aggravating and Mitigating Factors in Fraud and 
Theft Cases

    13. Synopsis of Proposed Amendment: This amendment proposes two 
options to provide for the consideration of a number of aggravating and 
mitigating factors that may be present in theft and fraud cases. Option 
One provides for a four-level increase if the offense involved 
significantly aggravating factors, a two-level increase if the offense 
involved aggravating factors, a two-level decrease if the offense 
involved mitigating factors, and a four-level decrease if the offense 
involved significantly mitigating factors. Option One provides a non-
exhaustive list of aggravating and mitigating factors for the court to 
consider in determining whether, on balance and after weighing the 
presence and intensity of the factors, the offense involves 
significantly aggravating, aggravating, mitigating, or significantly 
mitigating factors. In contrast, Option Two provides for a two-level 
increase if the offense involved certain aggravating factor(s) and no 
mitigating factors or if the aggravating factor(s) present in the case 
outweigh all mitigating factors present in the case, and a two-level 
decrease if the offense involved certain mitigating factors and no 
aggravating factors or if the mitigating factor(s) present in the case 
outweigh all aggravating factors present in the case. Option Two 
provides an exhaustive list of aggravating and mitigating factors that 
may trigger application of the enhancement.
    An issue for comment follows regarding whether any of the factors 
in the existing specific offense characteristics in the fraud 
(Sec. 2F1.1), theft (Sec. 2B1.1), and property destruction (Sec. 2B1.3) 
guidelines should be incorporated into the aggravating and mitigating 
factors found in either of Option One or Two and, accordingly, 
eliminated as a specific offense characteristic within the guideline.

Proposed Amendment

Option 1
    Section 2B1.1, as amended by Amendment 12, is further amended by 
redesignating subsections (b)(8) through (b)(14) as subsections (b)(9) 
through (b)(15), respectively; and by inserting after subsection (b)(7) 
the following:
    ``(8) If the offense involved--
    (A) Aggravating circumstances, increase by 2 levels;
    [(B) Significantly aggravating circumstances, increase by 4 
levels;]
    (C) Mitigating circumstances, decrease by 2 levels;
    [(D) Significantly mitigating circumstances, decrease by 4 levels.]
    [In cases falling between (A) and (B), increase by 3 levels; in 
cases falling between (C) and (D), decrease by 3 levels.]''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'', as 
amended by Amendment 12, is further amended by adding at the end the 
following:
    ``17. (A) Whether an offense involved aggravating circumstances or 
significantly aggravating circumstances is based on consideration of 
the presence and intensity of aggravating factors, such as the 
following:
    (i) The offense caused or risked reasonably foreseeable, 
substantial non-monetary harm;

[[Page 8005]]

    (ii) False statements were made for the purpose of facilitating 
some other crime;
    (iii) The offense caused reasonably foreseeable, physical or 
psychological harm or emotional trauma;
    (iv) The offense endangered national security or military 
readiness;
    (v) The offense caused a loss of confidence in an important 
institution;
    (vi) The offense involved the knowing endangerment of the solvency 
of one or more victims;
    (vii) The offense involved more than [10][25] victims;
    (viii) The offense involved the destruction or damage to 
irreplaceable items of cultural, historical or archeological 
significance;
    [(ix) The loss amount determined above was at or near the highest 
amount possible for the range of loss that corresponds to the 
applicable offense level determined by the loss table].
    (B) Whether an offense contains mitigating circumstances or 
significantly mitigating circumstances is based on consideration of the 
presence and intensity of mitigating factors such as the following:
    (i) The defendant, prior to detection of the offense, made 
significant efforts to limit the pecuniary harm caused by the crime;
    (ii) [The defendant's attempted offense was impossible or extremely 
unrealistic;]
    (iii) The defendant's actual or intended gain was substantially 
less than the loss determined above;
    (iv) The offense was not committed for commercial advantage or 
financial gain;
    (v) The offense was committed because of extreme financial hardship 
[caused by extraordinary unforseen circumstances not caused by the 
defendant and beyond the defendant's control] [caused by excessive 
costs for the life sustaining needs of the defendant or his immediate 
family];
    (vi) The offense involved minimal or no planning;
    [(vii) The loss amount determined above was at or near the lowest 
amount possible for the range of loss that corresponds to the 
applicable offense level determined by the loss table].
    (C) In a case involving both aggravating and mitigating factors, 
the court will determine, after consideration of all of the factors, 
whether the case involves, on balance, aggravating[, significantly 
aggravating,] or mitigating[, or significantly mitigating] 
circumstances.
    (D) When applying this section, the court must make specific 
findings regarding the offense characteristics, and clearly articulate 
the factors and weight given those factors, that the court is relying 
on to determine whether the offense involved aggravating circumstances, 
[significantly aggravating circumstances,] mitigating circumstances [or 
significantly mitigating circumstances]. Such a determination should be 
based on the presence and intensity, rather than on a simple counting, 
of the factors listed above.
    (E) Consistent with the overall structure of the guidelines, the 
government bears the burden of persuasion in establishing the factors 
associated with aggravating circumstances, while the defendant bears 
the burden of persuasion in establishing the factors associated with 
mitigating circumstances.
    (F) Application of this section does not preclude consideration of 
any of these factors, for the purposes of an upward or downward 
departure, even though the reason for the departure has been taken into 
consideration in determining the guideline range, if the court 
determines that the factor is present to an unusual or extraordinary 
degree.''.
Option 2
    Section 2B1.1, as amended by Amendment 12, is further amended by 
redesignating subsections (b)(8) through (b)(14) as subsections (b)(9) 
through (b)(15), respectively; and by inserting after subsection (b)(7) 
the following:
    ``(8) If the offense--
    (A) Involved (i) at least one qualifying aggravating factor and no 
qualifying mitigating factors; or (ii) one or more qualifying 
aggravating factors the seriousness of which outweigh the mitigating 
effect of all qualifying mitigating factors present in the offense, 
increase by 2 levels; or
    (B) Involved (i) at least one qualifying mitigating factor and no 
qualifying aggravating factors; or (ii) one or more qualifying 
mitigating factors the mitigating effect of which outweigh the 
seriousness of all qualifying aggravating factors present in the 
offense, decrease by 2 levels.''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'', as 
amended by Amendment 12, is further amended by adding at the end the 
following:
    ``17. For purposes of subsection (b)(8):
    `Qualifying aggravating factor' means any of the following:
    (A) the offense involved [a large number of] [more than 10] 
victims, and subsection (b)(3) is not applicable;
    (B) The offense [involved the knowing endangerment of the solvency 
of one or more victims] [caused one or more victims to suffer 
insolvency or substantial financial hardship]; and subsection (b)(7) 
does not apply;
    (C) The offense caused reasonably foreseeable, substantial non-
monetary harm (e.g., physical or psychological harm or emotional 
trauma);
    (D) The defendant's conduct was unusually heinous, cruel, brutal or 
degrading to a victim;
    (E) The offense was committed for the purpose of facilitating 
another crime;
    (F) The offense endangered public health or safety, national 
security, or military readiness;
    (G) The offense (i) substantially disrupted an important government 
function; or (ii) caused a loss of confidence in an important 
institution and the enhancement in subsection (b)(7)(A) does not apply; 
or
    (H) The offense involved destruction or substantial damage to 
unique property of environmental, cultural, historical, or 
archeological significance. `Qualifying mitigating factor' means any of 
the following:
    (A) Prior to detection of the offense, the defendant remedied, or 
made every reasonable effort to remedy, the harm resulting from the 
offense;
    (B) The defendant's attempted offense (i) did not involve a 
government `sting' operation; (ii) was highly improbable of success; 
and (iii) did not result in actual loss;
    (C) The defendant neither intended to profit, nor actually 
profited, from the offense, and the offense was not committed for the 
purpose of inflicting non-monetary harm; or
    (D) The defendant committed the offense in order to avoid a 
perceived greater harm, other than the avoidance or mitigation of 
personal financial hardship, (e.g., the defendant committed the offense 
in order to fund medical treatment for a gravely ill family member).
    Subsection (b)(8) applies in cases in which qualifying aggravating 
factors or qualifying mitigating factors are present to such a degree 
that an increase or a decrease in the sentence, respectively, is 
appropriate. An increase or a decrease in the sentence pursuant to 
subsection (b)(8) shall not apply in a case in which both qualifying 
aggravating factors and qualifying mitigating factors are present, but 
the seriousness of the qualifying aggravating factors is equal to the 
mitigating effect of the qualifying mitigating factors.
    Application of subsection (b)(8) does not preclude consideration of 
any of the factors listed in such subsection for purposes of an upward 
or downward departure if the court determines that

[[Page 8006]]

the factor is present to an unusual or extraordinary degree.''.
    Issue for Comment: The Commission invites comment whether any of 
the factors in the existing specific offense characteristics in the 
fraud (Sec. 2F1.1), theft (Sec. 2B1.1), and property destruction 
(Sec. 2B1.3) guidelines should be incorporated into the aggravating and 
mitigating factors found in either of Option One or Two and, 
accordingly, eliminated as a separate specific offense characteristic 
within the guideline.

Proposed Amendment: Sentencing Table Amendment and Alternative to 
Sentencing Table Amendment

    14. Synopsis of Proposed Amendment: In August 2000, the Commission 
indicated that one of its policy priorities would be to begin a review 
of the guidelines relating to Criminal History. See 65 FR 50034, 50035 
(Aug. 16, 2000). As part of that long range review and as part of a 
review of the Economic Crime Package set forth in Amendment #12, the 
Commission is publishing part I of this amendment (i.e., the proposed 
Sentencing Table amendment) as one item that may facilitate public 
discussion and inform Commission consideration about related issues. 
The Sentencing Table amendment proposes to change the Sentencing Table 
in Chapter Five by expanding each of Zones B and C by two levels in 
Criminal History Categories I and II.
    The second part of this amendment, intended as an alternative to 
the Sentencing Table amendment, proposes a new guideline, which would 
be added at the end of Chapter Three or in Chapter Five immediately 
following the Sentencing Table. It provides a two-level reduction in 
offense level for certain less serious economic offenses, in 
furtherance of the statutory command in 28 U.S.C. 994(j). The 
eligibility criteria generally parallel those determined by Congress 
under 18 U.S.C. 3553(f) to gain relief from applicable controlled 
substance mandatory minimums. Certain additional requirements are added 
in order to more fully define the categories of first offenders who 
have not been convicted of a ``crime of violence or an otherwise 
serious offense.'' Importantly, eligibility for the reduction also 
hinges on making, or committing to make, full restitution.

Proposed Amendment

Option 1 (Sentencing Table Amendment)

    The Sentencing Table in Chapter Five, Part A, is amended by 
increasing Zone B by two levels in Criminal History Category I (so that 
Zone B contains offense levels 9, 10, 11, and 12 in Criminal History 
Category I); by increasing Zone B by two levels in Criminal History 
Category II (so that Zone B contains offense levels 6, 7, 8, 9, 10, and 
11 in Criminal History Category II); by increasing Zone C by two levels 
in Criminal History Category I (so that Zone C contains offense levels 
13, 14, 15, and 16 in Criminal History Category I); and by increasing 
Zone C by two levels in Criminal History Category II (so that Zone C 
contains offense levels 12, 13, 14, and 15 in Criminal History Category 
II).

Option 2 (Alternative to Sentencing Table Amendment)

    Chapter Five, Part A, is amended by adding at the end the 
following:
    ``Sec. 5A1.2. Adjustment for Certain Less Serious Economic Crimes
    If each of subsections (a) through (f) applies, decrease the 
offense level by 2 levels--
    (a) The defendant's Chapter Two offense level is determined solely 
by applying one or more of the following offense guidelines in Chapter 
Two:
    (1) Secs. 2B1.1, 2B1.3, 2B2.1, 2F1.1, 2N2.1, 2N1.3, 2S1.1, 2S1.2, 
2S1.3, 2T1.1, 2T1.4, 2T1.6, 2T1.7, 2T1.8, 2T2.1, 2T2.2, 2T3.1;
    (2) Sec. 2X1.1 (if the Chapter Two offense level for the 
substantive offense or offenses is determined solely from a guideline 
in subsection (a)(1));
    (3) Sec. 2X2.1, Sec. 2X3.1, Sec. 2X4.1 (if the Chapter Two offense 
level for the underlying offense is determined solely from a guideline 
in subsection (a)(1));
    (4) Sec. 2X5.1 (if the Chapter Two offense level is determined 
solely from a guideline in subsection (a)(1) determined to be 
sufficiently analogous).
    (b) The defendant has no criminal history points;
    (c) The defendant did not use violence or a threat of violence or 
possess or use a firearm or other dangerous weapon;
    (d) The offense did not involve bodily injury or a conscious or 
reckless risk of serious bodily injury;
    (e) The defendant did not receive an increase in offense level 
under any of the following guideline sections:
    (1) Sec. 2B1.1(b)(4)(B)--(b)(7);
    (2) Sec. 2F1.1(b)(4)--(b)(8);
    (3) Sec. 2S1.1(b)(1);
    (4) Sec. 2S1.2(b)(1)(A);
    (5) Sec. 2S1.3(b)(1);
    (6) Sec. 2T1.1(b)(1) or (b)(2);
    (7) Sec. 2T1.4(b)(1) or (b)(2);
    (8) Chapter Three, Parts A, B, or C;
    (9) Sec. 4B1.3; and
    (f) The defendant, prior to sentencing, (1) voluntarily makes full 
restitution; or (2)(A) notifies the government and the court that the 
defendant agrees to make full restitution as determined by the court, 
(B) fully cooperates with the government and the court in determining 
the amount of such restitution; and (C) makes partial restitution to 
the extent able to do so.
Commentary
    Application Notes:
    1. For the purposes of this guideline--
    `Dangerous weapon' and `firearm,' as used in subdivision (2), 
`bodily injury,' `offense,' and `serious bodily injury,' are defined in 
the Commentary to Sec. 1B1.1 (Application Instructions).
    `Full restitution' means the amount of restitution required by law 
under 18 U.S.C. 3663.
    `No criminal history points,' means the defendant has zero criminal 
history points as determined under Sec. 4A1.1 (Criminal History 
Category).
    `Substantive offense' has the meaning given that term in 
Sec. 2X1.1, Application Note 3.
    2. If the Chapter Two offense guideline for a count is not listed 
in subsection (a) above, but the applicable guideline results in the 
determination of the Chapter Two offense level solely by use of one or 
more listed guidelines, the defendant qualifies for a reduction under 
this guideline. For example, where the conduct set forth in a count of 
conviction ordinarily referenced to Sec. 2E5.3 (an offense guideline 
not listed in subsection (a)) establishes Sec. 2F1.1 (Fraud and Deceit) 
as the applicable offense guideline (an offense guideline listed in 
subsection (a)), this guideline would apply because the actual offense 
level is determined under Sec. 2F1.1 (Fraud and Deceit).''.

Proposed Amendment: Firearms Table

    15. Synopsis of Proposed Amendment: This proposed amendment 
presents two options for implementing the recommendation of the Bureau 
of Alcohol, Tobacco and Firearms (ATF) to increase the penalties in 
Sec. 2K2.1 (Unlawful Receipt, Possession or Transportation of Firearms 
or Ammunition) for offenses involving more than 100 firearms.
    Option 1 amends the firearms table in Sec. 2K2.1 to provide an 
additional one-level increase for offenses that involve 100-199 
firearms, and an additional two-level increase for offenses that 
involve more than 200 firearms. The ATF reports that these increases 
are needed to provide adequate and proportionate punishment in cases 
that involve large numbers of firearms. Under the current table, a 
defendant who trafficked in 200 firearms receives

[[Page 8007]]

the same six-level enhancement as a defendant who trafficked in 50 
firearms. According to the ATF, from 1995 through 1997, nearly a 
quarter of all defendants sentenced under Sec. 2K2.1 for trafficking 
more than 50 firearms received sentences of less than one year, or no 
term of imprisonment whatsoever, despite the encouraged upward 
departure provided in Application Note 15 to Sec. 2K2.1.
    Option 1 also makes a conforming change to Application Note 16 
regarding upward departures.
    Option 2 amends the table to provide increases of two level 
increments and compresses the table by providing a wider range for the 
number of firearms for each increase. Compressing the table in this 
manner diminishes some of the fact-finding required to determine how 
many firearms were involved in the offense.

Proposed Amendment

Option 1
    Section 2K2.1(b)(1)(F) is amended by striking ``50 or more'' and 
inserting ``50-99''; and by striking the period at the end and 
inserting the following:

``(G)100-199  add 7
(H)200 or more  add 8.''.
    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended in Note 16 by striking ``significantly'' and inserting 
``substantially''; and by striking ``fifty'' and inserting ``200''.
Option 2
    Section 2K2.1(b)(1) is amended in the table by striking 
subdivisions (A) through (F) in their entirety and inserting the 
following:

``(A) 3-7  add 2
(B) 8-24  add 4
(C) 25-99  add 6
(D) 100-199  add 8
(E) 200 or more  add 10.''.

    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended in Note 16 by striking ``significantly'' and inserting 
``substantially''; and by striking ``fifty'' and inserting ``200''.

Proposed Amendment: Prohibited Person Definition

    16. Synopsis of Proposed Amendment: This proposed amendment 
modifies the definition of ``prohibited person'' in Secs. 2K1.3 
(Unlawful Receipt, Possession, or Transportation of Explosive 
Materials; Prohibited Transactions Involving Explosive Materials) and 
2K2.1 (Unlawful Receipt, Possession, or Transportation of Firearms or 
Ammunition; Prohibited Transactions Involving Firearms or Ammunition) 
to refer to the relevant prohibited persons statutes for explosive and 
firearm offenses, respectively. (There is no statutory definition of 
``prohibited person''.) The relevant statutory provision for Sec. 2K1.3 
is 18 U.S.C. 842(i), and for Sec. 2K2.1, the relevant statutory 
provisions are 18 U.S.C. 922(g) and (n).
    The proposed amendment also clarifies that the relevant time to 
determine whether a person qualifies as a ``prohibited person'' is as 
of the time the defendant committed the instant offense. This 
clarification is consistent with the proposed amendment on prior 
felonies, which provides that increased base offense levels are only 
applied if the defendant committed the instant offense subsequent to 
sustaining certain felony convictions.

Proposed Amendment

    Section 2K1.3(a)(1) and (a)(2) are amended by striking ``; or'' 
each place it appears and inserting a semi-colon.
    Section 2K1.3(a) is amended by striking the text of subdivision (3) 
in its entirety and inserting the following:
    ``16, if the defendant (A) was a prohibited person at the time the 
defendant committed the instant offense; or (B) knowingly distributed 
explosive materials to a prohibited person; or''.
    The Commentary to Sec. 2K1.3 captioned ``Application Notes'' is 
amended by striking the text of Note 3 in its entirety and inserting 
the following:
    ``For purposes of subsection (a)(3), `prohibited person' means any 
person designated in 18 U.S.C. Sec. 842(i).''.
    Sections 2K2.1(a)(1), (a)(2), and (a)(3) are amended by striking 
``; or'' each place it appears and inserting a semi-colon.
    Section 2K2.1(a)(4)(B) is amended by striking ``is'' after ``(i)'' 
and inserting ``was''; by inserting ``at the time the defendant 
committed the instant offense'' after ``prohibited person''; and by 
striking ``or'' after ``922(d);''.
    Section 2K2.1(a)(5) is amended by striking ``or'' after 
``Sec. 922(d);''.
    Section 2K2.1(a)(6) is amended by striking ``is'' after ``(A)'' and 
inserting ``was''; by inserting ``at the time the defendant committed 
the instant offense'' after ``prohibited person''; and by striking 
``or'' after ``Sec. 922(d));''.
    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended by striking the text of Note 6 in its entirety and inserting 
the following:
    ``For purposes of subsections (a)(4)(B) and (a)(6), a `prohibited 
person' is any person designated in 18 U.S.C. 922(g) or 922(n).''.

Proposed Amendment: Prior Felonies

    17. Synopsis of Proposed Amendment: This proposed amendment 
resolves a circuit conflict regarding whether a crime committed after 
the commission of the instant offense of felon in possession of a 
firearm, but sentenced before sentencing on the instant offense, is 
counted as a ``felony conviction'' for purposes of determining the 
defendant's base offense level. The proposed amendment adopts the 
minority view that an offense committed after the commission of any 
part of the offense cannot be counted as a ``felony conviction''. 
Accordingly, the proposed amendment clarifies, in Sec. 2K2.1(a)(1), 
(a)(2), (a)(3) and (a)(4)(A), that the instant offense must have been 
committed subsequent to sustaining the prior felony conviction(s). In 
so doing, the proposed amendment adopts a rule that is consistent with 
the requirements concerning the use of prior convictions under 
Secs. 4B1.1 (Career Offender) and 4B1.2 (Definitions of Terms Used in 
Section 4B1.1).
    The proposed amendment also makes conforming changes to Sec. 2K1.3 
(Unlawful Receipt, Possession, or Transportation of Explosive 
Materials; Prohibited Transactions Involving Explosive Materials).

Proposed Amendment

    Section 2K1.3(a)(1) is amended by striking ``had at least two prior 
felony convictions of either a crime of violence or a controlled 
substance offense; or'' and inserting ``committed any part of the 
instant offense subsequent to sustaining at least two felony 
convictions of either a crime of violence or a controlled substance 
offense;'';
    Section 2K1.3(a)(2) is amended by striking ``had one prior felony 
conviction of either a crime of violence or a controlled substance 
offense; or'' and inserting ``committed any part of the instant offense 
subsequent to sustaining one felony conviction of either a crime of 
violence or a controlled substance offense;''.
    The Commentary to Sec. 2K1.3 captioned ``Application Notes'' is 
amended by striking the text of Note 2 in its entirety and inserting 
the following:
    ``For purposes of this guideline--
    `Controlled substance offense' has the meaning given that term in 
Sec. 4B1.2(b) and Application Note 1 of the Commentary to Sec. 4B1.2 
(Definitions of Terms Used in Section 4B1.1).
    `Crime of violence' has the meaning given that term in 
Sec. 4B1.2(a) and Application Note 1 of the Commentary to Sec. 4B1.2 
(Definitions of Terms Used in Section 4B1.1).

[[Page 8008]]

    `Felony conviction' means a prior adult federal or state conviction 
for an offense punishable by death or imprisonment for a term exceeding 
one year, regardless of whether such offense is specifically designated 
as a felony and regardless of the actual sentence imposed. A conviction 
for an offense committed at age eighteen or older is an adult 
conviction. A conviction for an offense committed prior to age eighteen 
is an adult conviction if it is classified as an adult conviction under 
the laws of the jurisdiction in which the defendant was convicted 
(e.g., a federal conviction for an offense committed prior to the 
defendant's eighteenth birthday is an adult conviction if the defendant 
was expressly proceeded against as an adult).''.
    The Commentary to Sec. 2K1.3 captioned ``Application Notes'' is 
amended in Note 9 by inserting before the first paragraph the 
following:
    ``For purposes of applying subsection (a)(1) or (2), use only those 
felony convictions that receive criminal history points under 
Sec. 4A1.1(a), (b), or (c). In addition, for purposes of applying 
subsection (a)(1), use only those felony convictions that are counted 
separately under Sec. 4A1.1(a), (b), or (c). See Sec. 4A1.2(a)(2); 
Sec. 4A1.2, comment. (n.3).''.
    Section 2K2.1(a)(1) is amended by striking ``had at least two prior 
felony convictions of either a crime of violence or a controlled 
substance offense; or'' and inserting ``committed any part of the 
instant offense subsequent to sustaining at least two felony 
convictions of either a crime of violence or a controlled substance 
offense;''.
    Section 2K2.1(a)(2) is amended by striking ``had at least two prior 
felony convictions of either a crime of violence or a controlled 
substance offense; or'' and inserting ``committed any part of the 
instant offense subsequent to sustaining at least two felony 
convictions of either a crime of violence or a controlled substance 
offense;''.
    Section 2K2.1(a)(3) is amended by striking ``had one prior felony 
conviction of either a crime of violence or controlled substance 
offense; or'' and inserting ``committed any part of the instant offense 
subsequent to sustaining one felony conviction of either a crime of 
violence or a controlled substance offense;''.
    Section 2K2.1(a)(4)(A) is amended by striking ``had one prior 
felony conviction of either a crime of violence or controlled substance 
offense'' and inserting ``committed any part of the instant offense 
subsequent to sustaining one felony conviction of either a crime of 
violence or a controlled substance offense; or''.
    Section 2K2.1(a) is amended in subdivision (4)(B) by striking ``; 
or'' after ``922(d)'' and inserting a semi-colon; in subdivision (5), 
by striking the ``; or'' after ``921(a)(30)'' and inserting a semi-
colon; and in subdivision (6) by striking ``; or'' after 
``Sec. 922(d)'' and inserting a semi-colon.
    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended by striking Note 5 in its entirety and inserting the following:
    ``5. For purposes of this guideline--
    `Controlled substance offense' has the meaning given that term in 
Sec. 4B1.2(b) and Application Note 1 of the Commentary to Sec. 4B1.2 
(Definitions of Terms Used in Section 4B1.1).
    `Crime of violence' has the meaning given that term in 
Sec. 4B1.2(a) and Application Note 1 of the Commentary to Sec. 4B1.2 
(Definitions of Terms Used in Section 4B1.1).
    `Felony conviction' means a prior adult federal or state conviction 
for an offense punishable by death or imprisonment for a term exceeding 
one year, regardless of whether such offense is specifically designated 
as a felony and regardless of the actual sentence imposed. A conviction 
for an offense committed at age eighteen or older is an adult 
conviction. A conviction for an offense committed prior to age eighteen 
is an adult conviction if it is classified as an adult conviction under 
the laws of the jurisdiction in which the defendant was convicted 
(e.g., a federal conviction for an offense committed prior to the 
defendant's eighteenth birthday is an adult conviction if the defendant 
was expressly proceeded against as an adult).''.
    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended in Note 15 by inserting before the first paragraph the 
following:
    ``For purposes of applying subsection (a)(1), (2), (3), or (4)(A), 
use only those felony convictions that receive criminal history points 
under Sec. 4A1.1(a), (b), or (c). In addition, for purposes of applying 
subsection (a)(1) and (a)(2), use only those felony convictions that 
are counted separately under Sec. 4A1.1(a), (b), or (c). See 
Sec. 4A1.2(a)(2); Sec. 4A1.2, comment. (n.3).''.

Proposed Amendment: Immigration

    18. Synopsis of Proposed Amendment: This amendment modifies 
Sec. 2L1.2(b)(1) (Unlawful Entering or Remaining in the United States) 
to provide more graduated sentencing enhancements based on the 
seriousness of the prior aggravated felony conviction. Subsection 
(b)(1)(A) currently provides a 16-level enhancement if the defendant 
was previously deported after a criminal conviction, and the conviction 
was for an aggravated felony.
    The Commission has received comment that Sec. 2L1.2 often results 
in offense levels that are disproportionate to the seriousness of the 
prior aggravated felony conviction. This occurs for two primary 
reasons. First, 8 U.S.C. 1101(a)(43) and, by reference, Sec. 2L1.2, 
defines aggravated felony very broadly. Second, subsection (b)(1) 
neither distinguishes among the many types of aggravated felonies for 
purposes of triggering the 16-level enhancement, nor provides for 
smaller increases for less serious aggravated felonies.
    The proposed amendment is intended to achieve more proportionate 
punishment by providing tiered sentencing enhancements based on the 
period of imprisonment the defendant actually served for the prior 
aggravated felony. In addition, the amendment contains two options for 
providing increased punishment for the most serious aggravated 
felonies. Under Option One, the 16-level enhancement would be triggered 
not only by the period of imprisonment actually served but also by all 
aggravated felonies involving death, serious bodily injury, the 
discharge or other use of a firearm or dangerous weapon, or a serious 
drug trafficking offense, regardless of the period of imprisonment 
actually served by the defendant. Alternatively, Option Two would 
encourage an upward departure in such cases, which could result in an 
increase greater than the 16-level enhancement for these most serious 
aggravated felonies.
    The Commission invites comment as to whether the 16-level 
enhancement provided by subsection (b)(1) should be graduated on some 
basis other than period of imprisonment actually served, perhaps by 
extending the approach taken by Option 1 throughout the other tiers. In 
addition, the Commission invites comment as to whether aggravated 
felonies that were committed beyond a certain number of years prior to 
the instant offense should not count for purposes of triggering 
subsection (b)(1).

Proposed Amendment

    Chapter Two, Part L, Subpart 1, is amended by striking Sec. 2L1.2 
in its entirety and inserting the following:
``Sec. 2L1.2.  Unlawfully Entering or Remaining in the United States
    (a) Base Offense Level: 8.
    (b) Specific Offense Characteristic.
    (1) If the defendant previously was deported after a criminal 
conviction, or if the defendant unlawfully remained in

[[Page 8009]]

the United States following a removal order issued after a criminal 
conviction, increase as follows (if more than one applies, apply the 
greater):
    (A) If the conviction was for an aggravated felony; and--
    (i) (I) The defendant actually served a period of imprisonment of 
at least ten years for such conviction [Option 1: or
    (II) The aggravated felony involved death, serious bodily injury, 
the discharge or other use of a firearm or dangerous weapon, or a 
serious drug trafficking offense],

increase by 16 levels;
    (ii) The defendant actually served a period of imprisonment of at 
least five years but less than ten years, increase by [10][12] levels;
    (iii) The defendant actually served a period of imprisonment of at 
least two years but less than five years, increase by [8] levels; or
    (iv)(I) The defendant actually served a period of imprisonment of 
less than two years, or (II) the sentence imposed was only a term of 
probation or other sentence alternative to a term of imprisonment, or a 
combination of probation and other sentence alternative to a term of 
imprisonment, increase by [6] levels.
    (B) If the conviction was for (i) any felony other than an 
aggravated felony; or (ii) three or more misdemeanors that are crimes 
of violence or controlled substance offenses, increase by 4 levels.
Commentary
    Statutory Provisions: 8 U.S.C. Sec. 1325(a) (second or subsequent 
offense only), 8 U.S.C. 1326. For additional statutory provision(s), 
see Appendix A (Statutory Index).
    Application Notes:
    ``1. Definitions.--For purposes of this guideline:
    `Aggravated felony' has the meaning given that term in 8 U.S.C. 
1101(a)(43) without regard to the date of conviction of the aggravated 
felony.
    `Controlled substance offense'--
    (A) Means an offense under federal or state law that prohibits the 
manufacture, import, export, distribution, or dispensing of a 
controlled substance (or a counterfeit substance) or the possession of 
a controlled substance (or a counterfeit substance) with intent to 
manufacture, import, export, distribute, or dispense; and
    (B) Includes--
    (i) Unlawfully possessing a listed chemical with intent to 
manufacture a controlled substance (see 21 U.S.C. 841(d)(1));
    (ii) Unlawfully possessing a prohibited flask or equipment with 
intent to manufacture a controlled substance (see 21 U.S.C. 843(a)(6));
    (iii) Maintaining any place for the purpose of facilitating an 
offense described in subdivision (A) (see 21 U.S.C. 856);
    (iv) Using a communications facility in committing, causing, or 
facilitating an offense described in subdivision (A) (see 21 U.S.C. 
843(b)); and
    (v) The offenses of aiding and abetting, conspiring, and attempting 
to commit any offense described in subdivision (A) or (B)(i), (ii), 
(iii), or (iv).
    `Felony' means any federal, state, or local offense punishable by 
imprisonment for a term exceeding one year.
    `Misdemeanor' means any federal, state, or local offense punishable 
by imprisonment for a term of imprisonment of one year or less.
    `Serious bodily injury' has the meaning given that term in 
Application Note 1 of the Commentary to Sec. 1B1.1 (Application 
Instructions).
    `Serious drug trafficking offense' has the meaning given that term 
in Application Note 1 of the Commentary to Sec. 5K2.20 (Aberrant 
Behavior).
    2. Application of Subsection (b)(1).--For purposes of subsection 
(b)(1):
    (A) A defendant shall be considered to be deported if the defendant 
has been removed or has departed the United States while an order of 
exclusion, deportation, or removal was outstanding.
    (B) A defendant shall be considered to be deported after a 
conviction if the deportation was subsequent to the conviction, whether 
or not the deportation was in response to such conviction.
    (C) A defendant shall be considered to have remained in the United 
States following a removal order issued after a conviction if the 
removal order was subsequent to the conviction, whether or not the 
removal order was in response to such conviction.
    (D) The period of imprisonment that the defendant actually served 
for the aggravated felony includes, in the case of a defendant who 
escaped from imprisonment, time the defendant would have served if the 
defendant had not escaped.
    3. Computation of Criminal History Points.--Prior felony and 
misdemeanor convictions taken into account under subsection (b) also 
are counted for purposes of determining criminal history points 
pursuant to Chapter Four, Part A (Criminal History).
    4. Departure Provisions.--
    [Option Two:
    (A) Upward Departure Provisions.--There may be cases in which 
subsection (b)(1) applies but the applicable enhancement understates 
the seriousness of the aggravated felony taken into account under that 
subsection. In such cases, an upward departure may be warranted. For 
example an upward departure may be warranted if the aggravated felony 
involved any of the following:
    (i) Serious bodily injury, as defined in Application Note 1 of the 
Commentary to Sec. 1B1.1 (Application Instructions), or death.
    (ii) The discharge or other use of a firearm or a dangerous weapon.
    (iii) A serious drug trafficking offense, as defined in Application 
Note 1 of the Commentary to Sec. 5K2.20 (Aberrant Behavior).]
    (B) Downward Departure Provisions.--A downward departure may be 
warranted in a case in which the defendant was not advised, at the time 
the defendant previously was deported or removed, of the criminal 
consequences of reentry after deportation or removal.''.
    Issues for Comment: The Commission invites comment regarding 
whether the enhancement in Sec. 2L1.2(b)(1) for a previous conviction 
for an aggravated felony should be graduated based on a factor other 
than, or in addition to, the period of imprisonment the defendant 
actually served for the aggravated felony. Should the enhancement be 
graduated based on the type of aggravated felony involved? For example, 
should the approach of Option One for subsection (b)(1)(A)(i) be 
extended to subdivisions (ii) through (iv) of subsection (b)(1)?
    The Commission also invites comment on whether the enhancement in 
Sec. 2L1.2(b)(1) for a previous conviction for an aggravated felony 
should take into consideration only aggravated felonies that were 
committed within a specified time period, e.g., fifteen years, or the 
counting rules provided by Sec. 4A1.2 (Definitions and Instructions for 
Computing Criminal History).

Proposed Amendment: Nuclear, Biological, and Chemical Weapons

    19. Synopsis of Proposed Amendment: This is a two-part amendment.
    First, in response to the sense of Congress contained in section 
1423(a) of the National Defense Authorization Act for Fiscal Year 1997 
that guideline penalties are inadequate for certain offenses involving 
the importation, attempted importation, exportation, and attempted 
exportation of nuclear, chemical, and biological weapons, materials, or 
technologies, the proposed

[[Page 8010]]

amendment increases by four levels the base offense levels in 
Secs. 2M5.1 (the guideline covering the evasion of export controls) and 
2M5.2 (the guideline covering the exportation of arms, munitions, and 
military equipment without a license). A four-level increase is 
proposed for those offenses in subsection (a)(1) of both Secs. 2M5.1 
and 2M5.2 to make the penalty structure for those offenses proportional 
to other national security guidelines in Chapter Two, Part M. In 
addition, the Statutory Index is proposed to be amended to refer one of 
the offenses, 50 U.S.C. 1701 (which currently is not referenced in the 
Statutory Index), to both Secs. 2M5.1 and 2M5.2.
    Second, the proposed amendment substantially revises Sec. 2M6.1 
(the guideline covering the unlawful acquisition, alteration, use, 
transfer, or possession of nuclear material, weapons, or facilities) in 
order to incorporate into that guideline two relatively new offenses, 
18 U.S.C. 175, relating to biological weapons, and 18 U.S.C. 229, 
relating to chemical weapons. Specifically, the amendment proposes to 
modify Sec. 2M6.1 in the following ways:
    (1) It provides two alternative base offense levels. The first base 
offense level of level 42 applies if the offense was committed with the 
intent to injure the United States or to aid a foreign government or 
foreign terrorist organization. This incorporates into the base offense 
level the 12-level enhancement currently found in the guideline for 
such intent and does not change the overall offense level for these 
offenses. ``Foreign terrorist organizations'' are added because 
Congress has found that such groups are investing in the acquisition of 
unconventional weapons such as nuclear, biological, and chemical 
agents. It is anticipated that this base offense level will apply to 
cases as apparently originally contemplated by the guideline, i.e., the 
acquisition of nuclear material from defense, or even civilian, nuclear 
facilities in order to assist foreign governments, thereby creating a 
threat to the national security, as well as to cases that implicate the 
national security but involve biological and chemical weapons.
    The proposed amendment provides that, if the base offense level of 
level 42 applies, none of the adjustments in subsection (b) shall 
apply. This is intended to cap the very high offense level attendant to 
this base offense level and also to preclude the possibility of a 
downward adjustment if the offense involved only a threat. However, if 
death results, the cross reference allows for the possibility of a 
higher offense level through application of the first degree murder 
guideline.
    It is anticipated that the second base offense level, of level 
[28][30], will apply in most cases, specifically those cases that do 
not threaten the national security of the United States.
    (2) It provides a six-level decrease, in subsection (b)(1), if the 
offense involved only a threat to use a nuclear, biological, or 
chemical weapon or material, and there was no conduct evidencing an 
intent to carry out the threat. After review of the cases and meeting 
with representatives of the Department of Justice and the Federal 
Bureau of Investigations, it became apparent that the least culpable 
offenders, and the least serious of these offenses, are those that 
involve non-credible threats. The extent of the adjustment (i.e., six 
levels) mirrors in reverse the six-level increase in the threatening 
communications guideline, Sec. 2A6.1, if the conduct involved an actual 
intent to carry out the threat.
    (3) It provides, in brackets, a two-level enhancement, in 
subsection (b)(2), if the offense involved particularly dangerous types 
of nuclear, chemical, and biological weapons and materials. Those 
weapons and materials are defined in the guideline commentary by 
reference to the applicable statutory and regulatory provisions. This 
enhancement acknowledges the distinctions already made in international 
treaties, provisions of title 18, United States Code, the relevant 
regulatory schemes, and by representatives of the Department of Justice 
and the Federal Bureau of Investigations, that certain types of weapons 
and materials are inherently more lethal and pose a greater threat to 
the public safety.
    (4) It provides an enhancement, in subsection (b)(3), if any victim 
sustained serious bodily injury or death. This enhancement is modeled 
after the enhancement found in Sec. 2N1.1, the guideline covering 
tampering with consumer products. Like that guideline, the amendment 
provides commentary (in the background) stating that the base offense 
level reflects that the offense typically will involve a risk of 
serious bodily injury or death or will cause or intend to cause bodily 
injury.
    (5) It provides two options for cases involving a substantial 
disruption of public, governmental, or business functions or services, 
or the substantial expenditure of funds for clean up and 
decontamination efforts. Option One provides for a four-level 
enhancement in such cases. Option Two provides for an upward departure 
provision.
    (6) It provides two cross references, if the resulting offense 
level is greater, if death resulted (in which case the first or second 
degree murder guideline would apply) or if the offense was tantamount 
to attempted murder (in which case the attempted murder guideline would 
apply). These cross references are also modeled after cross references 
found in Sec. 2N1.1, the guideline for tampering with consumer 
products.
    (7) It provides a special instruction that if the defendant is 
convicted of one count involving the death of, serious bodily injury 
to, or attempted murder of, more than one victim, the grouping rules 
will be applied as if the defendant had been convicted of separate 
counts for each such victim.
    (8) It amends the Statutory Index to refer 18 U.S.C. 175 and 229 to 
Sec. 2M6.1 and to delete a number of guideline references for 18 U.S.C. 
2332a and instead provide a reference for that offense to Secs. 2K1.4 
(in the case of weapons of mass destruction that are explosive devices 
and 2M6.1 (in the case of other weapons of mass destruction).
    Three issues for comment follow the proposed amendment.

Proposed Amendment

    Section 2M5.1 is amended by striking subsection (a) in its entirety 
and inserting the following:
    ``(a) Base Offense Level (Apply the greater):
    (1) [26,] if national security controls or controls relating to the 
proliferation of nuclear, biological, or chemical weapons or materials 
were evaded; or
    (2) 14, otherwise.''.
    Section 2M5.2(a)(1) is amended by striking ``22'' and inserting 
``[26]''.
    The heading to Chapter Two, Part M, is amended by adding at the end 
``And Weapons of Mass Destruction''.
    The heading to Chapter Two, Part M, Subpart 6, is amended by 
striking ``Atomic Energy'' and inserting `` Nuclear, Biological, And 
Chemical Weapons And Materials, And Other Weapons of Mass 
Destruction''.
    Chapter Two, Part M, is amended by striking Sec. 2M6.1 in its 
entirety and inserting the following:
``Sec. 2M6.1.  Unlawful Production, Development, Acquisition, 
Stockpiling, Alteration, Use, Transfer, or Possession of Nuclear 
Material, Weapons, or Facilities, Biological Agents, Chemical Weapons, 
or Other Weapons of Mass Destruction
    (a) Base Offense Level:
    (1) [42], if the offense was committed with intent (A) to injure 
the United States; or (B) to aid a foreign nation or a foreign 
terrorist organization; or

[[Page 8011]]

    (2) [28][30], otherwise.
    (b) Specific Offense Characteristics:
    If subsection (a)(2) applies, and:
    (1) If the offense (A) involved a threat to use a nuclear weapon, 
nuclear material, nuclear byproduct material, biological agent, 
chemical weapon, or other weapon of mass destruction; and (B) did not 
involve any conduct evidencing an intent or ability to carry out the 
threat, decrease by [6] levels.
    [(2) If the offense involved (A) a select biological agent; (B) a 
listed precursor or a listed toxic chemical; (C) nuclear material or 
nuclear byproduct material; or (D) a weapon of mass destruction that 
contains any agent, precursor, toxic chemical, or material referred to 
in subdivision (A), (B), or (C), increase by [2] levels.]
    (3) If (A) any victim sustained permanent or life-threatening 
bodily injury, increase by 4 levels; (B) any victim sustained serious 
bodily injury, increase by 2 levels; or (C) the degree of injury is 
between that specified in subdivisions (A) and (B), increase by 3 
levels.
    [Option One: (4) If the offense resulted in (A) substantial 
disruption of public, governmental, or business functions or services; 
or (B) a substantial expenditure of funds to clean up, decontaminate, 
or otherwise respond to the offense, increase by [4] levels.]
    (c) Cross References:
    (1) If the offense resulted in death, apply Sec. 2A1.1 (First 
Degree Murder) if the death was caused intentionally or knowingly, or 
Sec. 2A1.2 (Second Degree Murder) in any other case, if the resulting 
offense level is greater than that determined above.
    (2) If the offense was tantamount to attempted murder, apply 
Sec. 2A2.1 (Assault with Intent to Commit Murder; Attempted Murder), if 
the resulting offense level is greater than that determined above.
    (d) Special Instruction:
    (1) If the defendant is convicted of a single count involving (A) 
the death or permanent, life-threatening, or serious bodily injury of 
more than one victim, or (B) conduct tantamount to the attempted murder 
of more than one victim, Chapter Three, Part D (Multiple Counts), shall 
be applied as if the defendant had been convicted of a separate count 
for each such victim.
Commentary
    Statutory Provisions: 18 U.S.C. Secs. 175, 229, 831, 2332a (only 
with respect to weapons of mass destruction as defined in 18 U.S.C. 
Sec. 2332a(c)(2)(B), (C), and (D)); 42 U.S.C. Secs. 2077(b), 2122, 
2131. For additional statutory provision(s), see Appendix A (Statutory 
Index).
    Application Notes:
    ``1. Definitions.--For purposes of this guideline:
    Biological agent has the meaning given that term in 18 U.S.C. 
178(1).
    Chemical weapon has the meaning given that term in 18 U.S.C. 
229F(1).
    Foreign terrorist organization (A) means an organization that 
engages in terrorist activity that threatens the security of a national 
of the United States or the national security of the United States; and 
(B) includes an organization designated by the Secretary of State as a 
foreign terrorist organization pursuant to section 219 of the 
Immigration and Nationality Act (8 U.S.C. 1219). National of the United 
States has the meaning given that term in section 101(a)(22) of the 
Immigration and Nationality Act (8 U.S.C. 1101(a)(22)).
    Listed precursor or listed toxic chemical means a precursor or 
toxic chemical, respectively, listed in Schedule I of the Annex on 
Chemicals to the Chemical Weapons Convention. See 18 U.S.C. 229F(6)(B), 
(8)(B). Precursor has the meaning given that term in 18 U.S.C. 
229F(6)(A). Toxic chemical has the meaning given that term in 18 U.S.C. 
229F(8)(A).
    Nuclear byproduct material has the meaning given that term in 18 
U.S.C. 831(f)(2).
    Nuclear material has the meaning given that term in 18 U.S.C. 
831(f)(1).
    Select biological agent means a biological agent or toxin 
identified by the Secretary of Health and Human Services on the select 
agent list established pursuant to section 511(d) of the Antiterrorism 
and Effective Death Penalty Act, Pub. L. 104-132. See 42 CFR part 62. 
Toxin has the meaning given that term in 18 U.S.C. 178(2).
    Weapon of mass destruction (A) has the meaning given that term in 
18 U.S.C. Sec. 2332a(c)(2)(B), (C), and (D); and (B) includes any 
radiological dispersal device, regardless of whether the radioactive 
material contained in that radiological dispersal device was nuclear 
material, nuclear byproduct material, or other radioactive material 
(such as low-grade medical, industrial, or research radioactive waste). 
Radiological dispersal device means any device, including any weapon or 
equipment, other than a nuclear explosion, specifically designed to 
disseminate radioactive material in order to cause property 
destruction, damage, or bodily injury by means of the radiation 
produced by the decay of the radioactive material.
    2. Inapplicability of Subsection (b) to Subsection (a)(1) Cases.--
If subsection (a)(1) applies, do not apply subsection (b).
    3. Applicability of Subsections (b)(2) and (b)(4) in Threat 
Cases.--The application of subsection (b)(1) in a case involving a 
threat shall not preclude the application of either subsection (b)(2) 
or subsection (b)(4) in such a case.
    4. Application of Special Instruction.--Subsection (d) applies in 
any case in which the defendant is convicted of a single count 
involving (A) the death or permanent, life-threatening, or serious 
bodily injury of more than one victim; or (B) conduct tantamount to the 
attempted murder of more than one victim, regardless of whether the 
offense level is determined under subsection (a), subsections (a) and 
(b), or subsection (c).
    5. Inapplicability of Sec. 3A1.4 in Certain Cases.--If subsection 
(a)(1) applies because the offense was committed with the intent to aid 
an international foreign terrorist organization, do not apply 
Sec. 3A1.4 (Terrorism).
    6. Departure Provisions.--
    (A) Upward Departure Provisions.--There may be cases in which the 
offense level determined above substantially understates the 
seriousness of the offense. In such cases, an upward departure may be 
warranted. The following is a non-exhaustive list of circumstances in 
which an upward departure may be warranted:
    (i) The offense posed a substantial risk of death or serious bodily 
injury to numerous victims (e.g., chlorine gas was released in a 
crowded movie theater).
    (ii) The offense caused extreme psychological injury. See 
Sec. 5K2.3 (Extreme Psychological Injury).
    (iii) The offense caused substantial property damage or monetary 
loss. See Sec. 5K2.5 (Property Damage or Loss).
    [Option Two: (iv) The offense resulted in substantial disruption of 
public, governmental, or business functions or services, or the 
response to the offense required a substantial expenditure (e.g., to 
provide environmental decontamination of the affected area). See, e.g., 
Sec. 5K2.7 (Disruption of Governmental Function).]
    (B) Downward Departure Provision.--There may be cases in which the 
offense level determined above substantially overstates the seriousness 
of the offense. In such cases, a downward departure may be warranted. 
For example, in the unusual case in which the offense did not cause a 
risk of death or serious bodily injury, and neither caused nor was 
intended to cause bodily injury, a downward departure may be warranted.
    Background: The base offense level reflects that this offense 
typically poses a risk of death or serious bodily injury

[[Page 8012]]

to one or more victims; or causes, or is intended to cause, bodily 
injury.''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to ``18 U.S.C. Sec. 155'' the following:
    ``18 U.S.C. Sec. 1752M6.1''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to ``18 U.S.C. 228'' the following:
    ``18 U.S.C. Sec. 2292M6.1''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 2332a by striking ``2A1.1, 2A1.2, 2A1.3, 2A1.4, 2A1.5, 2A2.1, 
2A2.2, 2B1.3,'' and by inserting ``, 2M6.1'' after ``2K1.4''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to ``50 U.S.C. App. 462'' the following:
    ``50 U.S.C. App. Sec. 1701  2M5.1, 2M5.2''.

Issues for Comment

    (1) The Commission invites comment on whether the above proposal 
appropriately addresses the offenses in 18 U.S.C. 175, relating to 
biological weapons, and in 18 U.S.C. 229, relating to chemical weapons. 
Specifically, are these offenses more appropriately addressed through a 
guideline that incorporates into the base offense level any or all of 
the aggravating factors that may be associated with these offenses 
(e.g., the inherent psychological harm, the risk of bodily harm, and 
the economic harm associated with cleanup and decontamination efforts), 
or is it preferable to address these harms as specific offense 
characteristics?
    (2) The Commission also invites comment on how threats to use 
nuclear, biological, or chemical weapons should be punished under the 
guidelines. Should there be a greater differentiation in punishment 
under proposed Sec. 2M6.1 between offenses that involve only the 
threatened use of such weapons (whether or not the defendant engaged in 
conduct evidencing an intent or ability to carry out the threat) and 
other conduct punished under that guideline? Alternatively, should the 
threatened use of such weapons be punished under Sec. 2A6.1 
(Threatening or Harassing Communications), and if so, how severely 
should such conduct be punished in relation to other types of threats 
punished under that guideline?
    (3) How should attempts, conspiracies, and solicitations to commit 
an offense under 18 U.S.C. 175 or 229 be covered under the guidelines? 
Should such attempts, conspiracies, and solicitations be expressly 
covered by the proposed new guideline, Sec. 2M6.1, or should Sec. 2X1.1 
(Attempt, Solicitation, or Conspiracy) apply?

Proposed Amendment: Money Laundering

    20. Synopsis of Proposed Amendment:

Overview

    The proposed amendment consolidates the two current money 
laundering guidelines, Secs. 2S1.1 and 2S1.2, and applies to 
convictions under either 18 U.S.C. 1956 or 1957. The primary feature of 
the consolidated amendment structure is that it ties offense levels for 
money laundering more closely to the underlying criminal conduct that 
was the source of the criminally derived funds. The amendment 
accomplishes this objective by separating money laundering offenders, 
regardless of the statute of conviction, into two categories for 
purposes of determining the base offense level. The base offense level 
is determined differently, depending on whether the defendant is a 
``direct'' or a ``third party'' money launderer (money launderers who 
commit the underlying offense which generated the criminal proceeds 
versus money launderers who did not commit the underlying offense). 
Specific offense characteristics are included in this proposed 
amendment to increase the total offense level in order to assure 
greater punishment for those money laundering defendants whose conduct 
is considered more serious and harmful to the societal interests which 
the money laundering laws are designed to protect.

Base Offense Level

    Subsection (a) provides two distinct methods for determining the 
base offense level, depending on whether the defendant is a ``direct'' 
money launderer or a ``third party'' money launderer. Subsection (a)(1) 
sets the base offense level for ``direct'' money launderers at the 
offense level for the underlying offense from which the laundered funds 
were derived (i.e., the base offense level and all applicable specific 
offense characteristics for the underlying offense), if the offense 
level for the underlying offense can be determined. A data analysis of 
a representative sample of 259 money laundering cases conducted by the 
Commission indicated that subsection (a)(1) would apply to 86 percent 
of defendants sentenced under the guideline (i.e., ``direct'' money 
launderers comprise 86 percent of the money laundering defendants).
    This proposed amendment excludes from application of subsection 
(a)(1) offenders who otherwise would be accountable for the underlying 
offense solely on the basis of Sec. 1B1.3(a)(1)(B) (i.e., jointly 
undertaken criminal activity). However, this limitation has minimal 
practical consequence. Commission data indicate that less than one 
percent of defendants who would not be categorized as ``direct'' money 
launderers because of this limitation would be subject to subsection 
(a)(1) if it were expanded to include defendants who would be otherwise 
accountable for the underlying offense under Sec. 1B1.3(a)(1)(B). The 
Commission invites comment as to whether application of subsection 
(a)(1) should be expanded to include offenders who otherwise would be 
accountable for the underlying offense solely on the basis of 
Sec. 1B1.3(a)(1)(B).
    For ``third party'' money launderers (i.e., defendants who did not 
commit or would not be accountable for the underlying offense under 
Sec. 1B1.3(a)(1)(A)), subsection (a)(2) sets the base offense level at 
level eight, plus an increase based on the value of the laundered funds 
from the table in subsection (b)(1) of Sec. 2F1.1 (Fraud and Deceit). 
Subsection (a)(2) also applies to ``direct'' money laundering 
defendants for whom subsection (a)(1) would apply but the offense level 
for the underlying offense is impossible or impracticable to determine.
    Under the structure of this proposed amendment, there may be some 
cases in which the ``third party'' money launderers will receive a 
higher base offense level than the offenders who committed the 
underlying offense. This conceivably could occur in cases in which the 
underlying offense that generated the criminally derived proceeds is a 
fraud or other economic crime covered by a guideline that uses the 
table in subsection (b)(1) of Sec. 2F1.1, and the loss calculation is 
less than the value of the laundered funds. For example, the underlying 
offense may have involved the fraudulent sale of stock for $200,000 
that was worth $180,000. The defendant did not commit the underlying 
offense, but laundered all of the $200,000. In such a case, the value 
of the laundered funds is $200,000, but the loss amount for purposes of 
Sec. 2F1.1(b)(1) is $20,000. In such a case, the ``third party'' money 
laundering defendant may receive a higher base offense level than the 
Chapter Two offense level for the offender who committed the fraud.
    Three options in Application Note 3 are presented for addressing 
this type of case. Option 1 provides that a downward departure may be 
warranted in such a case, but limits the extent of such a departure to 
the offense level for

[[Page 8013]]

the underlying offense conduct that would result if the base offense 
level were determined using subsection (a)(1). Option 2 creates a rule 
that the value of the funds is the lesser of either the actual value of 
the laundered funds or the value of the loss as calculated for purposes 
of Sec. 2F1.1(b)(1). Option 3 provides no specific provision to address 
this type of case.
    An analysis conducted by the Commission indicates that this type of 
case will rarely occur. In its sample of 259 cases, Commission 
identified no cases in which the loss amount was less than the value of 
laundered funds. In fact, this issue can arise only in ``third party'' 
money laundering cases, which comprise only 14 percent (36 of 259 
cases) of the money laundering cases in the representative sample. 
Furthermore, in the overwhelming majority--89 percent--of those 36 
``third party'' cases, the underlying offense was a drug offense, which 
does not give rise to this problem. In its sample, the Commission 
identified only three ``third party'' money laundering cases for which 
the underlying offense was a fraud or other economic crime.

Adjustments

    In addition to the base offense level, the proposed amendment 
contains a number of adjustments. Consistent with the approach of tying 
the base offense level to the underlying offense that generated the 
criminally derived funds, subsection (b)(1) provides a [2][4][6] level 
enhancement for ``third party'' money launderers who know or believe 
that any of the laundered funds were the proceeds of, or were intended 
to promote, certain types of more serious underlying criminal conduct; 
specifically, drug trafficking, crimes of violence, offenses involving 
firearms, explosives, national security, terrorism, and the sexual 
exploitation of a minor.
    Subsection (b)(2) provides four alternative enhancements, with the 
greatest applicable enhancement to be applied. Subsection (b)(2)(A) 
provides a [2][3][4] level increase if the defendant is a ``third 
party'' money launderer who is ``in the business'' of laundering funds. 
This adjustment reflects the view that, similar to a professional 
``fence'' (see Sec. 2B1.1(b)(4)(B)), defendants who routinely engage in 
laundering funds on behalf of third parties and who gain financially 
from engaging in such transactions warrant additional punishment 
because they encourage the commission of additional underlying criminal 
offenses. Application Note 6 directs the court to consider the totality 
of the circumstances in determining whether a defendant was in the 
business of laundering funds and provides a non-exhaustive list of 
factors to be considered in making this determination. The Commission 
invites comment as to whether eligibility for this enhancement should 
be expanded to include ``direct'' money launderers who launder the 
criminal derived proceeds of others, in addition to their own 
criminally derived proceeds.
    Subsection (b)(2)(B) provides a [2][3] level enhancement if any of 
the laundered funds were used [or intended to be used] to 
[significantly] [materially] promote further criminal conduct. 
Application Note 5 limits applicability of this enhancement to the use 
of laundered funds to further criminal conduct in addition to, or 
beyond, the criminal conduct from which the laundered funds were 
derived, as opposed to underlying offenses that were completed at the 
time of the laundering. This enhancement attempts to provide increased 
punishment for two types of offense conduct: (1) Cases in which the 
defendant uses criminally derived funds to cause criminal conduct in 
addition to or beyond the criminal conduct that initially generated the 
criminally derived funds that are the subject of the money laundering 
conviction; or (2) cases in which the defendant reinvests all or some 
of the laundered funds back into an ongoing criminal scheme to finance 
the continued operation or expansion of the criminal scheme.
    Subsection (b)(2)(C) provides a [2][3] level enhancement if the 
offense involved ``sophisticated concealment.'' Application Note 6 
defines ``sophisticated concealment'' as especially complex or 
especially intricate offense conduct where the defendant takes 
deliberate steps to conceal the nature, location, source, ownership, or 
control of the criminally derived funds to make the transaction more 
difficult to detect. Application Note 6 also provides examples of 
conduct that typically constitutes sophisticated concealment. The 
Commission invites comment as to whether the applicability of this 
enhancement should be expanded to include all forms of concealment, 
even if the concealment is not sophisticated.
    Subsection (b)(2)(D) provides a [1][2] level enhancement if the 
defendant launders funds with the intent to engage in conduct 
constituting a violation of section 7201 or 7206 of the Internal 
Revenue Code (title 26, United States Code). A conviction under the 
relevant subsection of 18 U.S.C. 1956 is required for the enhancement 
to apply. The Commission invites comment as to whether the proposed 
guideline should include such an enhancement, absent additional 
aggravating money laundering conduct.
    Subsection (b)(3) provides a [1] level increase if the defendant is 
a ``direct'' money launderer, none of the enhancements under subsection 
(b)(2) apply, and the value of the laundered funds is greater than 
$10,000. This enhancement is intended to ensure that defendants who 
also commit the underlying offense receive some incremental punishment 
for the money laundering offense, even if ineligible for any of the 
other enhancements that reflect more aggravated money laundering 
offense conduct. The Commission specifically invites comment as to 
whether the proposed guideline should contain such an enhancement.
    Subsection (b)(4) provides a [2] level decrease for cases in which 
three conditions are met: (1) The defendant did not commit the 
underlying offense that generated the criminally derived funds; (2) the 
defendant was convicted under 18 U.S.C. 1957 only; and, (3) none of the 
other enhancements apply. This downward adjustment recognizes that 
section 1957 offenses, with no aggravating factors, may be considered 
less serious than section 1956 offenses because the statutory maximum 
of the former is half (10 years) that of the latter (20 years), and 
because the government is not required to prove that the section 1957 
defendant knew that the offense from which the laundered funds were 
derived was a specified unlawful activity (see 18 U.S.C. 1957(c)).
    Application Note 7 provides that in a case in which the defendant 
is to be sentenced on a count of conviction for money laundering and a 
count of conviction for the underlying offense that generated the 
laundered funds, such counts shall be grouped pursuant to subsection 
(c) of Sec. 3D1.2 (Groups of Closely-Related Counts), thereby resolving 
a circuit conflict on this issue. Providing for grouping under 
Sec. 3D1.2(c) may make appropriate a conforming amendment to 
Application Note 5 of Sec. 3D1.2 to provide that grouping under 
Sec. 3D1.2(c) also applies in cases in which the base offense level 
from the guideline applicable to one count specifically incorporates 
the offense level applicable to the other related count. In such cases, 
the conduct that forms the basis for the base offense level in one 
count is the same aggravating conduct that forms the basis for the 
offense level of the other count.
    The proposed amendment provides that convictions under 18 U.S.C. 
1960 (Illegal Money Transmitting Businesses; failure to obtain 
appropriate licenses or

[[Page 8014]]

comply with registration requirements for money transmitting 
businesses) be referenced to Sec. 2T2.2 (Regulatory Offenses). The 
Commission invites comment as to whether such violations are more 
appropriately referenced to Sec. 2S1.3 (Structuring Transactions to 
Evade Reporting Requirements). Finally, the proposed amendment provides 
that convictions under 31 U.S.C. Sec. 5326 relevant to structuring 
violations be referenced to Sec. 2S1.3 (Structuring Transactions).

Proposed Amendment

    Chapter Two, Part S, Subpart 1 is amended by striking Secs. 2S1.1 
and 2S1.2 and their accompanying commentary in their entirety and 
inserting the following:
``Sec. 2S1.1.  Laundering of Monetary Instruments; Engaging in Monetary 
Transactions in Property Derived from Unlawful Activity
    (a) Base Offense Level:
    (1) The offense level for the underlying offense from which the 
laundered funds were derived, if (A) the defendant committed the 
underlying offense (or otherwise would be accountable for the 
underlying offense under Sec. 1B1.3(a)(1)(A) (Relevant Conduct)); and 
(B) the offense level for that offense can be determined; or
    (2) 8 plus the number of offense levels from the table in 
subsection (b)(1) of Sec. 2F1.1 (Fraud and Deceit) corresponding to the 
value of the laundered funds, otherwise.
    (b) Specific Offense Characteristics:
    (1) If (A) subsection (a)(2) applies because the defendant did not 
commit the underlying offense; and (B) the defendant knew or believed 
that any of the laundered funds were the proceeds of, or were intended 
to promote (i) an offense involving the manufacture, importation, or 
distribution of a controlled substance or a listed chemical; (ii) a 
crime of violence [as defined under Sec. 4B1.2(a)(1) (Definitions of 
Terms Used in Sec. 4B1.1)]; or (iii) an offense involving firearms, 
explosives, national security, terrorism, or the sexual exploitation of 
a minor, increase by [2][4][6] levels.
    (2) (Apply the greatest):
    (A) If [(i) subsection (a)(2) applies because the defendant did not 
commit the underlying offense; and (ii)] the defendant was in the 
business of laundering funds, increase by [2][3][4] levels.
    (B) If any of the laundered funds were used [or were intended to be 
used] to [significantly] [materially] promote further criminal conduct, 
increase by [2][3] levels.
    (C) If the offense involved sophisticated concealment, increase by 
[2][3] levels.
    [(D) If the defendant is convicted (A) under 18 U.S.C. 
Sec. 1956(a)(1)(A)(ii); (B) under 18 U.S.C. Sec. 1956(a)(1)(B)(ii); (C) 
under 18 U.S.C. Sec. 1956(a)(2)(B)(ii); (D) under 18 U.S.C. 
Sec. 1956(a)(3)(C); or (E) of attempting, aiding or abetting, or 
conspiracy to commit any of the offenses referred to in subdivisions 
(A) through (D), increase by [1][2] levels.]
    [(3) If (A) subsection (a)(1) applies; (B) subsection (b)(2) does 
not apply; and (C) the value of the laundered funds is greater than 
$10,000, increase by [1] level.]
    [(4) If (A) subsection (a)(2) applies because the defendant did not 
commit the underlying offense; (B) the defendant is convicted under 18 
U.S.C. 1957; and (C) none of the enhancements in subsections (b)(1) and 
(b)(2) apply, decrease by [2] levels.]
Commentary
    Statutory Provisions: 18 U.S.C. 1956, 1957.
    Application Notes:
    1. Definitions.--For purposes of this guideline:
    `Crime of violence' has the meaning given that term in subsection 
(a)(1) of Sec. 4B1.2 (Definitions of Terms Used in Sec. 4B1.1).
    `Criminally derived funds' means any funds derived [or represented 
to be derived] from conduct constituting a criminal offense.
    `Laundered funds' means the property, funds, or monetary instrument 
involved in the transaction, financial transaction, monetary 
transaction, transportation, transfer, or transmission in violation of 
18 U.S.C. 1956 or 1957.
    `Laundering funds' means the making of a transaction, financial 
transaction, monetary transaction, or transmission, or the transporting 
of, property, funds, or a monetary instrument in violation of 18 U.S.C. 
1956 or 1957.
    `Sexual exploitation of a minor' means an offense involving (A) 
promoting prostitution by a minor; (B) sexually exploiting a minor by 
production of sexually explicit visual or printed material; (C) 
distribution of material involving the sexual exploitation of a minor, 
or possession of material involving the sexual exploitation of a minor 
with intent to distribute; or (D) aggravated sexual abuse sexual abuse, 
or abusive sexual contact, involving a minor. `Minor' means an 
individual under the age of 18 years.
    2. Application of Subsection (a)(1).--
    (A) Multiple Underlying Offenses.--In cases in which subsection 
(a)(1) applies and there is more than one underlying offense, the 
offense level for the underlying offense is to be determined under the 
procedures set forth in Application Note 3 of the Commentary to 
Sec. 1B1.5 (Interpretation of References to Other Guidelines).
    (B) Defendants Otherwise Accountable.--In order for subsection 
(a)(1) to apply, the defendant must have committed the underlying 
offense or be otherwise accountable for the underlying offense under 
Sec. 1B1.3(a)(1)(A) (Relevant Conduct). The fact that the defendant was 
involved in laundering criminally derived funds after the commission of 
the underlying offense, without additional involvement in the 
underlying offense, does not establish that the defendant committed, 
aided, abetted, counseled, commanded, induced, procured, or willfully 
caused the underlying offense.
    (C) Non-Applicability of Enhancements--If subsection (a)(1) 
applies, and the conduct that forms the basis for an enhancement under 
the guideline applicable to the underlying offense is the only conduct 
that forms the basis for application of any of the enhancements in 
subsection (b) of this guideline, do not apply the subsection (b) 
enhancement under this guideline.
    3. Application of Subsection (a)(2).--
    (A) In General.--Subsection (a)(2) applies to cases in which (A) 
the defendant did not commit the underlying offense; or (B) the 
defendant committed the underlying offense (or otherwise would be 
accountable for the underlying offense under subsection (a)(1)(A) of 
Sec. 1B1.3 (Relevant Conduct), but the offense level for the underlying 
offense is impossible or impracticable to determine.
    (B) Commingled Funds.--In a case in which a transaction, financial 
transaction, monetary transaction, transportation, transfer, or 
transmission results in the commingling of legitimately derived funds 
with criminally derived funds, the value of the laundered funds, for 
purposes of subsection (a)(2), is the amount of the criminally derived 
funds, not the total amount of the commingled funds, if the defendant 
provides sufficient information to determine the amount of criminally 
derived funds without unduly complicating or prolonging the sentencing 
process. If the amount of the criminally derived funds is difficult or 
impracticable to determine, the value of the laundered funds, for 
purposes of subsection (a)(2), is the total amount of the commingled 
funds.
    [Value of Funds--Option 1:
    (C) Value of Laundered Funds for Certain Defendants.--There may be

[[Page 8015]]

cases in which (A) subsection (a)(2) applies; (B) the defendant did not 
commit the underlying offense; (C) the underlying offense is a fraud or 
another economic crime covered by a guideline that uses the table in 
subsection (b)(1) of Sec. 2F1.1 (Fraud and Deceit); and (D) the value 
of the laundered funds under subsection (a)(2) is substantially greater 
than the value of the loss or other monetary amount attributable to the 
underlying offense for purposes of Sec. 2F1.1(b)(1). In such cases, a 
downward departure may be warranted to ensure that the seriousness of 
the punishment for the money laundering offense is reasonably related 
to the seriousness of the punishment that would be warranted for the 
underlying offense. However, any such downward departure shall not 
result in an offense level lower than that which would result if the 
sentence were determined using the base offense level under subsection 
(a)(1). For example, the underlying offense may have involved the 
fraudulent sale of stock for $200,000 that was worth $180,000. The 
defendant did not commit the underlying offense but laundered all of 
the $200,000. The value of the laundered funds is $200,000, but the 
loss amount for purposes of Sec. 2F1.1(b)(1) is $20,000. In such a 
case, the downward departure shall not result in an offense level lower 
than the sum of the base offense level under Sec. 2F1.1(a) and the 
enhancement under Sec. 2F1.1(b)(1) for the value of the loss. 
Accordingly, a downward departure, if warranted, shall not result in an 
offense level lower than level 9 (Sec. 2F1.1(a) base offense level of 
level 6 plus Sec. 2F1.1(b)(1) increase of 3 offense levels to account 
for loss amount of $20,000).]
    [Value of Funds--Option 2:
    (C) Value of Laundered Funds for Certain Defendants.--In a case in 
which (A) subsection (a)(2) applies; (B) the defendant did not commit 
the underlying offense; and (C) the underlying offense is a fraud or 
another economic crime covered by a guideline that uses the table in 
subsection (b)(1) of Sec. 2F1.1 (Fraud and Deceit), the value of the 
laundered funds is the lesser of the actual value of the laundered 
funds or the value of the loss or other monetary amount attributable to 
the underlying offense for purposes of Sec. 2F1.1(b)(1). For example, 
the underlying offense may have involved the fraudulent sale of stock 
for $200,000 that was worth $180,000. The defendant did not commit the 
underlying offense but laundered all of the $200,000. The actual value 
of the laundered funds is $200,000, but the loss amount for purposes of 
Sec. 2F1.1(b)(1) is $20,000. In such a case, the value of the laundered 
funds, for purposes of subsection (a)(2), is $20,000. Accordingly, the 
base offense level under subsection (a)(2) is the sum of the base 
offense level under Sec. 2F1.1(a) and the enhancement under 
Sec. 2F1.1(b)(1) for the value of the loss. Therefore, in this example, 
the base offense level under subsection (a)(2) is level 9 
(Sec. 2F1.1(a) base offense level of level 6 plus Sec. 2F1.1(b)(1) 
increase of 3 offense levels to account for loss amount of $20,000.]

[Value of Funds--Option 3: No specific provision]

    4. Enhancement for Business of Laundering Funds.--
    (A) In General.--The court shall consider the totality of the 
circumstances to determine whether a defendant who did not commit the 
underlying offense was in the business of laundering funds, for 
purposes of subsection (b)(2)(A).
    (B) Factors to Consider.--The court shall consider the following 
factors in determining whether, under the totality of circumstances, 
the defendant was in the business of laundering funds for purposes of 
subsection (b)(2)(A):
    (i) The defendant [regularly] [routinely] engaged in acts of 
laundering funds during an extended period of time.
    (ii) The defendant laundered criminally derived funds from multiple 
sources during an extended period of time.
    (iii) The defendant generated a substantial amount of revenue in 
return for laundering the funds.
    (iv) At the time the defendant committed the instant offense, the 
defendant had one or more prior convictions of an offense under 18 
U.S.C. 1956 or 1957, [31 U.S.C. 5313, 5314, 5316, 5324, or 5326] or any 
similar offense under state law, or an attempt or conspiracy to commit 
any such federal or state offense. Prior convictions taken into account 
under subsection (b)(2)(A) also are counted for purposes of determining 
criminal history points pursuant to Chapter Four, Part A (Criminal 
History).
    5. [Significant][Material] Promotion of Further Criminal Conduct.--
In order for subsection (b)(2)(B) to apply, all or part of the 
laundered funds must have been used to further criminal conduct in 
addition to or beyond the criminal conduct from which the laundered 
funds were derived. [Subsection (b)(2)(B) does not apply if the 
defendant laundered criminally derived proceeds that were generated 
from an underlying offense that was completed at the time of the 
laundering.] For example, subsection (b)(2)(B) would apply in a case in 
which the defendant reinvested (i.e., plowed-back) all or part of the 
laundered funds from an ongoing, fraudulent telemarketing scheme to 
finance the continued operation of that scheme but would not apply in a 
case in which the defendant used all or part of the laundered funds 
only to finance a lavish lifestyle. Similarly, subsection (b)(2)(B) 
would apply in a case in which the defendant used laundered funds from 
an underlying drug offense to purchase additional drugs for 
distribution but would not apply in a case in which the defendant used 
those laundered funds to pay for drugs the defendant had already 
distributed as part of the underlying drug offense.
    Subsection(b)(2)(B) does not apply to transactions that only give 
the defendant access to, or the use of for otherwise legal purposes, 
the criminally derived funds. For example, subsection (b)(2)(B) does 
not apply in a case in which the defendant deposits checks that 
represent the criminally derived proceeds from a fraudulent scheme into 
an account, and subsequently spends the funds for items that are not 
inherently illegal or items that do not further additional criminal 
conduct.

[Subsection (b)(2)(B) does not apply if the value of laundered funds 
used or intended to be used to promote criminal conduct was de minimis 
relative to the value of the laundered funds.]

    6. Sophisticated Concealment.--For purposes of subsection 
(b)(2)(C), sophisticated concealment means especially complex or 
especially intricate offense conduct in which deliberate steps were 
taken to conceal the nature, location, source, ownership, or control of 
the criminally derived funds, in order to make the transaction, 
financial transaction, monetary transaction, transportation, transfer, 
or transmission in violation of 18 U.S.C. 1956 or 1957, or the extent 
of that violation, difficult to detect.
    Sophisticated concealment typically involves hiding assets or 
hiding transactions, or both, through:
    (A) The use of fictitious entities;
    (B) The use of shell corporations;
    (C) The creation of two or more levels (i.e., layering) of 
transactions, transportation, transfers, or transmissions, of 
criminally derived funds that were intended to appear legitimate; or
    (D) the transportation, transmission, or transfer of criminally 
derived funds from or through a place inside the United States to or 
through a place outside the United States (e.g., an offshore bank 
account) or from or

[[Page 8016]]

through a place outside the United States to or through a place inside 
the United States. For purposes of this subdivision, United States has 
the meaning given that term in Application Note 1 of the Commentary to 
Sec. 2B5.1 (Offenses Involving Counterfeit Bearer Obligations of the 
United States).
    7. Grouping of Multiple Counts.--In a case in which the defendant 
is to be sentenced on a count (or a Group of counts) for the underlying 
offense from which the laundered funds were derived, the count for the 
offense under this guideline shall be grouped pursuant to subsection 
(c) of Sec. 3D1.2 (Groups of Closely-Related Counts) with the count for 
the underlying offense or, in the case of a Group of counts for the 
underlying offense, with the most serious of the counts comprising the 
Group, i.e., the count resulting in the greatest offense level.''.
    The Commentary to Sec. 2S1.3 captioned ``Statutory Provisions'' is 
amended by inserting ``, 5326'' after ``5324''.
    The Commentary to Sec. 2T2.2 captioned ``Statutory Provisions'' is 
amended by inserting ``18 U.S.C. 1960;'' before ``26 U.S.C.''; by 
striking ``provided'' and inserting ``if''; and by inserting ``; 31 
U.S.C. 5326'' after ``taxes''.
    Appendix A (Statutory Index) is amended in the line referenced to 
``18 U.S.C. 1957'' by striking ``2S1.2'' and inserting ``2S1.1''; By 
inserting after the line referenced to ``18 U.S.C. 1959'' the following 
new line:
    ``18 U.S.C. 1960  2T2.2'';
    B-Date: 01-24-01 10:11 striking ``31 U.S.C. 5322  2S1.3''; and by 
inserting after the line referenced to ``31 U.S.C. 5324'' the following 
new line:
    ``31 U.S.C. 5326  2S1.3, 2T2.2''.
    The Commentary to Sec. 1B1.3 captioned ``Application Notes'' is 
amended in the first and second paragraphs of Note 6, by striking the 
second sentence in its entirety, in each instance.
    Section 3D1.2(d) is amended in the second paragraph by striking 
``2S1.2,''.
    Section 8C2.1(a) is amended by striking ``2S1.2,''.
    The Commentary to Sec. 8C2.4 captioned ``Application Notes'' is 
amended in Note 5 by striking ``; 2S1.1 (Laundering of Monetary 
Instruments); and 2S1.2 (Engaging in Monetary Transactions in Property 
Derived from Specified Unlawful Activity)''.
    The Commentary to Sec. 8C2.4 captioned ``Background'' is amended in 
the seventh sentence by striking ``and money laundering''.
    Issues for Comment: The Commission invites comment on the 
following:
    (1) Whether application of subsection (a)(1) of proposed Sec. 2S1.1 
should be expanded to include defendants who are otherwise accountable 
for the underlying offense under Sec. 1B1.3(a)(1)(B)(Relevant Conduct), 
in addition to defendants who commit or are otherwise accountable for 
the underlying offense under Sec. 1B1.3(a)(1)(A).
    (2) Whether proposed Sec. 2S1.1 should include enhancements for 
conduct that constitutes elements of the money laundering offense, even 
if the conduct did not constitute an aggravated form of money 
laundering offense conduct. Specifically, the Commission invites 
comment on whether and, if so, to what extent, proposed Sec. 2S1.1 
should include an enhancement if:
    (A) The offense involved concealment (coextensive with the meaning 
of the term under 18 U.S.C. 1956), even if the conduct did not 
constitute sophisticated concealment.
    (B) If the defendant is convicted (A) under 18 U.S.C. 
1956(a)(1)(A)(ii); (B) under 18 U.S.C. 1956(a)(1)(B)(ii); (C) under 18 
U.S.C. 1956(a)(2)(B)(ii); (D) under 18 U.S.C. 1956(a)(3)(C); or (E) of 
attempting, aiding or abetting, or conspiracy to commit any of the 
offenses referred to in subdivisions (A) through (D).
    (C) If subsection (a)(1) applies and (1) the defendant did not 
engage in an aggravated form of money laundering as accounted for by 
subsection (b)(2), and (2) the value of funds laundered exceeded 
$10,000.
    (3) Whether application of subsection (b)(2)(A) (``in the business 
of laundering funds'') should be expanded to include defendants (1) 
whose base offense level is determined under subsection (a)(1) and (2) 
who launder criminally derived funds generated by offenses which they 
did not commit and are not otherwise accountable under 
Sec. 1B1.3(a)(1)(A).
    (4) Whether violations of 18 U.S.C. 1960 (Illegal Money 
Transmitting Businesses) should be referenced to Sec. 2S1.3 
(Structuring Transactions to Evade Reporting Requirements).

Proposed Amendment: Miscellaneous New Legislation and Technical 
Amendments

    21. Synopsis of Proposed Amendment: This is a two-part proposed 
amendment.
    First, the proposed amendment addresses miscellaneous legislation 
enacted during the 106th Congress by (1) adding to Appendix A 
(Statutory Index) and the statutory provisions of several guidelines 
references to new statutes; and (2) providing commentary to Sec. 2M3.9 
that implements the new consecutive sentencing requirement of 50 U.S.C. 
421 (pertaining to the disclosure of information identifying a covert 
agent). Note that there were no directives to the Commission contained 
in any of the legislation that created these new offenses.
    In each instance, the new Appendix A references are based on a 
determination that the new offense is sufficiently similar to other 
offenses covered by the referenced guideline.
    The new offenses and proposed guideline references are as follows:
    7 U.S.C. 7734--prohibits knowingly importing, exporting, or moving 
in interstate commerce any plant pest or noxious weed, or knowingly 
forging any permit authorizing movement of plant pests or noxious 
weeds. Referenced to Sec. 2N2.1 (Violations of Statutes and Regulations 
Dealing with Any Food, Drug, Biological Product, Device, Cosmetic, or 
Agricultural Product).
    5 U.S.C. 6821--prohibits (A) obtaining or attempting to obtain 
customer information from a financial institution by false statements, 
representations, or documents; or (B) requesting another person to 
obtain customer information knowing the information will be obtained 
under false pretenses. Referenced to Sec. 2F1.1 (Fraud and Deceit).
    18 U.S.C. 38--prohibits falsifying any material fact, or making any 
fraudulent representation concerning aircraft or space vehicle parts. 
Referenced to Sec. 2F1.1 (Fraud and Deceit).
    18 U.S.C. 842(p)(2)--prohibits any person to teach or demonstrate 
the making or use of an explosive, a destructive device, or a weapon of 
mass destruction, or distribute by any means information pertaining to 
the manufacture of an explosive, destructive device, or weapon of mass 
destruction with the intent that the teaching, demonstration, or 
information will be used for, or in furtherance of any federal crime of 
violence. Referenced to Sec. 2K1.3 (Unlawful Receipts, Possession, or 
Transportation of Explosive Materials; Prohibited Transactions 
Involving Explosive Materials) or Sec. 2M6.1 (Unlawful Acquisition, 
Alteration, Use, Transfer, or Possession of Nuclear Material, Weapons, 
or Facilities) (if the information pertained to a weapon of mass 
destruction).
    42 U.S.C. 1011--knowingly and willfully making of any false 
statement or representation of a material fact in an application for 
benefits established by the Social Security Act. Referenced to 
Sec. 2F1.1 (Fraud and Deceit).
    49 U.S.C. 30170--prohibits violating 18 U.S.C. 1001 with respect to 
the reporting requirements of 49 U.S.C. 30166, with the specific 
intention of misleading the Secretary of Transportation regarding motor 
vehicle

[[Page 8017]]

or motor vehicle equipment safety related defects that have caused 
death or serious bodily injury to an individual. Referenced to 
Sec. 2F1.1 (Fraud and Deceit).
    49 U.S.C. 46317(a)--prohibits (1) knowingly and willfully serving 
or attempting to serve as an airman operating an aircraft without an 
airman's certificate; or (2) knowingly and willfully employing as an 
airman to operate an aircraft any individual who does not have an 
airman's certificate. Referenced to Sec. 2F1.1 (Fraud and Deceit).
    49 U.S.C. 46317(b) prohibits offenses described in 49 U.S.C. 
46317(a) that relate to transporting a controlled substance by aircraft 
or aiding or facilitating a controlled substance violation and that 
transporting, aiding, or facilitating--
    Is punishable by imprisonment of more than one year under Federal 
or State law; or
    Is related to a Federal or state controlled substance law (except 
simple possession) punishable by imprisonment of more than one year.
    Referenced to Sec. 2D1.1 (Unlawful Manufacturing, Importing, 
Exporting, or Trafficking).
    Second, the proposed amendment makes technical and conforming 
changes as follows: (1) Modifies Application Note 3 of the Commentary 
to Sec. 2J1.6 to improve the transition between the first and second 
paragraphs; (2) adds a reference to 18 U.S.C. 842(l)-(o) to the 
Commentary of Sec. 2K1.3; and (3) adds a reference to 7 U.S.C. 6810 to 
the Commentary of Sec. 2N2.1. (With respect to the latter two technical 
amendments, the statutory provision was listed in Appendix A (Statutory 
Index) but not in the Commentary of the respective guidelines.)

Proposed Amendment

    The Commentary to Sec. 2D1.1 captioned ``Statutory Provisions'' is 
amended by inserting ``; 49 U.S.C. Sec. 46317(b)'' after ``960(a), 
(b)''.
    The Commentary to Sec. 2F1.1 captioned ``Statutory Provisions'' is 
amended by inserting ``, 6821'' after ``1644;''; by inserting ``38,'' 
after ``18 U.S.C. Secs. ''; and by inserting ``; 42 U.S.C. 1011; 49 
U.S.C. 30170, 46317(a)'' after ``2315''.
    The Commentary to Sec. 2K1.3 captioned ``Statutory Provisions'' is 
amended by inserting ``(l)-(o), (p)(2), after ``(i),''.
    The Commentary to Sec. 2M3.9 captioned ``Application Notes'' is 
amended by inserting after Note 2 the following:
    ``3. A term of imprisonment imposed for a conviction under 50 
U.S.C. Sec. 421 shall be imposed consecutively to any other term of 
imprisonment.''.
    The Commentary to Sec. 2M6.1 captioned ``Statutory Provisions'' is 
amended by inserting ``Sec. '' before ``Sec. 831''; by striking 
``where'' and inserting ``if''; and by inserting ``, 842(p)(2)'' after 
`` aforementioned statutory provisions)''.
    The Commentary to Sec. 2N2.1 captioned ``Statutory Provisions'' is 
amended by inserting ``, 6810, 7734'' after ``150gg''.
    Appendix A (Statutory Index) is amended by inserting the following 
at the appropriate place by title and section:

``7 U.S.C. 7734  2N2.1
15 U.S.C. 6821  2F1.1
18 U.S.C. 38  2F1.1
18 U.S.C. 842(p)(2)  2K1.3, 2M6.1
42 U.S.C. 1011  2F1.1
49 U.S.C. 30170  2F1.1
49 U.S.C. 46317(a)  2F1.1
49 U.S.C. 46317(b)  2D1.1''.

    The Commentary to Sec. 2J1.6 captioned ``Application Notes'' is 
amended in the first sentence of the second paragraph of Note 3 by 
striking ``In'' and inserting ``However, in''; and by inserting ``other 
than a case of failure to appear for service of sentence,'' after ``and 
the failure to appear,''.

[FR Doc. 01-1505 Filed 1-25-01; 8:45 am]
BILLING CODE 2211-01-U