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< Back to current issue of Immigration Daily < Back to current issue of Immigrant's Weekly

[Federal Register: June 6, 2001 (Volume 66, Number 109)]
[Notices]               
[Page 30511-30563]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jn01-160]                         

[[Page 30511]]
-----------------------------------------------------------------------
Part II

United States Sentencing Commission
-----------------------------------------------------------------------
Sentencing Guidelines for United States Courts; Notice

[[Page 30512]]
-----------------------------------------------------------------------
UNITED STATES SENTENCING COMMISSION

Sentencing Guidelines for United States Courts

AGENCY: United States Sentencing Commission.

ACTION: Notice of: (A) promulgation of temporary, emergency amendments, 
effective May 1, 2001, for (1) offenses involving the manufacture, 
importation, exportation, or trafficking of ``Ecstasy''; (2) offenses 
involving the manufacture, importation, or trafficking of amphetamine; 
(3) offenses involving the trafficking of certain List I chemicals that 
are used in the manufacture of methamphetamine; and (4) offenses 
involving peonage and human trafficking; and (B) submission to Congress 
of additional non-emergency amendments to the sentencing guidelines, 
effective November 1, 2001.
-----------------------------------------------------------------------
SUMMARY: The United States Sentencing Commission hereby gives notice of 
the following actions:
    (A) Emergency Amendments.--
    (1) ``Ecstasy'' Offenses.--Pursuant to section 3664 of the Ecstasy 
Anti-Proliferation Act of 2000, Pub. L. 106--310, the Commission has 
promulgated a temporary, emergency amendment to Sec. 2D1.1.
    (2) Amphetamine Offenses.--Pursuant to section 3611 of the 
Methamphetamine Anti-Proliferation Act of 2000, Pub. L. 106--310, the 
Commission has promulgated a temporary, emergency amendment to 
Sec. 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or 
Trafficking (Including Possession with Intent to Commit These Offenses) 
Attempt and Conspiracy).
    (3) List I Chemical Offenses.--Pursuant to section 3651 of the 
Methamphetamine Anti-Proliferation Act of 2000, the Commission has 
promulgated a temporary, emergency amendment to Secs. 2D1.1 and 2D1.11 
(Unlawfully Distributing, Importing, Exporting or Possessing a Listed 
Chemical; Attempt or Conspiracy).
    (4) Human Trafficking Offenses.--Pursuant to section 112(b) of the 
Victims of Trafficking and Violence Protection Act of 2000, Pub. L. 
106--386, the Commission has promulgated a temporary, emergency 
amendment to Secs. 2G1.1 (Promoting Prostitution or Prohibited Sexual 
Conduct), 2G2.1 (Sexually Exploiting a Minor by Production of Sexually 
Explicit Visual or Printed Material; Custodian Permitting Minor to 
Engage in Sexually Explicit Conduct; Advertisement for Minors to Engage 
in Production), and 2H4.1 (Peonage, Involuntary Servitude, and Slave 
Trade), and has promulgated a new guideline at Sec. 2H4.2 (Willful 
Violations of the Migrant and Seasonal Agricultural Worker Protection 
Act).
    (B) Non-Emergency Amendments--Pursuant to its authority under 28 
U.S.C. 994(a) and (p) and several congressional directives more fully 
described herein, the Commission has promulgated additional, non-
emergency amendments to the sentencing guidelines, policy statements, 
commentary, and statutory index.
    This notice sets forth the amendments and the season for each 
amendment.

DATES: The Commission has specified an effective date of May 1, 2001, 
for the emergency amendments set forth in Part (A) of this notice and 
an effective date of November 1, 2001, for the non-emergency amendments 
set forth in Part (B) of this notice.

FOR FURTHER INFORMATION CONTACT: Michael Courlander, Public Affairs 
Officer, 202-502-4590. The amendments set forth in this notice also may 
be accessed through the Commission's website at www.ussc.gov.

SUPPLEMENTARY INFORMATION: The United States Sentencing Commission is 
an independent agency in the judicial branch of the United States 
Government. The Commission promulgates sentencing guidelines and policy 
statements for federal sentencing courts pursuant to 28 U.S.C. 994(a). 
The Commission also periodically reviews and revises previously 
promulgated guidelines pursuant to 28 U.S.C. 994(o) and submits 
guidelines amendments to the Congress not later than the first day of 
May each year pursuant to 28 U.S.C. 994(p).
    (A) Emergency Amendments.--In January 2001, the Commission 
published options for promulgating the emergency amendments set forth 
herein (see 66 FR 7962, January 26, 2001). The Commission held a public 
hearing on the proposed amendments in Washington, DC, on March 19, 
2001. After a review of hearing testimony and additional public 
comment, the Commission promulgated the emergency amendments set forth 
herein. The Commission specified an effective date of May 1, 2001, for 
these amendments.
    (1) ``Ecstasy''.--The Ecstasy Anti-Proliferation Act of 2000 
instructed the Commission to provide increased penalties for the 
manufacture, importation, exportation, or trafficking of ``Ecstasy''. 
The directive specifically required the Commission to increase the base 
offense level for 3,4-Methylenedioxymethamphetamine (MDMA), 3,4-
Methylenedioxyamphetamine (MDA), 3,4-Methylenedioxy-N-ethylamphetamine 
(MDEA), and Paramethoxymethamphetamine (PMA). The amendment amends the 
Drug Equivalency Tables in 1A2D1.1 to increase substantially the 
marihuana equivalencies for the specified controlled substances, which 
has the effect of substantially increasing the penalties for offenses 
involving ``Ecstasy''.
    (2) Amphetamine.--Section 3611 of the Methamphetamine Anti-
Proliferation Act of 2000 directed the Commission to provide increased 
guideline penalties for amphetamine offenses such that those penalities 
are comparable to the base offense level for methamphetamine offenses. 
This amendment revises Sec. 2D1.1 to include amphetamine in the Drug 
Quantity Table in subsection (c) of that guideline. This amendment also 
treats amphetamine and methamphetamine identically, at a 1:1 ratio, 
because of the similarities of the two substances.
    (3) List I Chemicals.--Section 3651 of the Methamphetamine Anti-
Proliferation Act of 2000 directed the Commission to ``provide 
increased penalties for offenses involving ephedrine, 
phenylpropanolamine (PPA), or pseudoephedrine (including their salts, 
optical isomers, and salts of optical isomers) to correspond to the 
quality of controlled substance that reasonably could have been 
manufactured using the quality of ephedrine, PPA, and pseudoephedrine 
possessed or distributed.'' This amendment provides a new chemical 
quantity table in Sec. 2D1.11 specifically for ephedrine, 
pseudoephedrine, and phenylpropanolamine (PPA). The table, which has a 
maximum based offense level of level 38, ties the base offense levels 
for these chemicals to the base offense levels for methamphetamine 
(actual) set forth in Sec. 2D1.1. The amendment also makes conforming 
changes to the commentary in Secs. 2D1.11 and 2D1.1.
    (4) Human Trafficking.--This amendment implements the congressional 
directive in section 112(b) of the Victims of Trafficking and Violence 
Protection Act of 2000, Pub. L. 106-386. The directive requires the 
Commission to amend, if appropriate, the guidelines applicable to human 
trafficking (i.e., peonage, involuntary servitude, and forced labor) 
offenses. It also requires the Commission to ensure that the guidelines 
``are sufficiently stringent to deter and adequately reflect the 
heinous nature of these offenses.'' This amendment (i) creates a new

[[Page 30513]]

guideline, Sec. 2H4.2 (Willful Violations of the Migrant and Seasonal 
Agricultural Worker Protection Act); (ii) refers violations of four new 
statutes, 18 U.S.C. 1589 (Forced Labor), 1590 (Trafficking with Respect 
to Peonage, Involuntary Servitude or Forced Labor), 1591 (Sex 
Trafficking of Children by Force, Fraud or Coercion) and 1952 (Unlawful 
Conduct with Respect to Documents in Furtherance of Peonage, 
Involuntary Servitude, or Forced Labor) to the appropriate guidelines; 
and (iii) makes changes, consistent with the directive, which both 
enhance sentences and reflect changes to three existing statutes: 18 
U.S.C. 1581(a) (Peonage), 1583 (Enticement into Slavery) and 1584 (Sale 
into Involuntary Servitude).
    (B) Non-Emergency Amendments.--Section 994 of title 28, United 
States Code, authorizes the Commission to promulgate sentencing 
guidelines and policy statements for federal courts. See 28 U.S.C. 
994(a). Additionally, 28 U.S.C. 994 directs the Commission periodically 
to review and revise guidelines previously promulgated (see 28 U.S.C. 
994(o)) and authorizes its to submit guidelines amendments to the 
Congress at or after the beginning of a regular session of Congress but 
not later than May 1 (see 18 U.S.C. 994(p)). Absent action of Congress 
to the contrary, submitted amendments become effective by operation of 
law on the date specified by the Commission (generally November 1 of 
the year in which the amendments are submitted to Congress).
    Notice of proposed amendments was published in the Federal Register 
on November 7, 2000 (see 65 FR 66792), and January 26, 2001 (see 66 FR 
7962). The Commission held a public hearing on the proposed amendments 
in Washington, DC on March 19, 2001. After a review of hearing 
testimony and additional public comment, the Commission promulgated the 
amendments set forth herein (including amendments to make permanent the 
temporary, emergency amendments set forth in Part (A) of this notice). 
On May 1, 2001, the Commission submitted these amendments to Congress 
and specified an effective date of November 1, 2001.

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

Diana E. Murphy,
Chair.

    (A) Emergency Amendments to the Sentencing Guidelines, Policy 
Statements, and Official Commentary, Effective May 1, 2001.
    1. Amendment: The Commentary to 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 ``500 gm''; 
in the line referenced to ``MDMA'' by striking ``35 gm'' and inserting 
``500 gm''; in the line referenced ``MDEA'' by striking ``30 gm'' and 
inserting ``500 gm''; and by inserting ``1 gm of 
Paramethoxymethamphetamine/PMA = 500 gm of marihuana'' after the line 
referenced to ``MDEA''.
    Reason for Amendment: This amendment addresses the directive in the 
Ecstasy Anti-Proliferation Act of 2000 (the ``Act''), section 3664 of 
Pub. L. 106-310, which instructs the Commission to provide, under 
emergency amendment authority, increased penalties for the manufacture, 
importation, exportation, or trafficking of Ecstasy. The directive 
specifically requires the Commission to increase the base offense level 
for 3,4-Methylenedioxymethetamine (MDMA), 3,4-Methylenedioxyamphetamine 
(MDA), 3,4-Methylenedioxy-N-ethylamphetamine (MDEA), 
Paramethoxymethamphetamine (PMA), and any other controlled substance 
that is marketed as Ecstasy and that has either a chemical structure 
similar to MDMA or an effect on the central nervous system 
substantially similar to or greater than MDMA.
    The amendment addresses the directive by amending the Drug 
Equivalency Table in Sec. 2D1.1, Application Note 10, to increase 
substantially the marihuana equivalencies for the specified controlled 
substances, which has the effect of substantially increasing the 
penalties for offenses involving Ecstasy. The new penalties for Ecstasy 
trafficking provide penalties which, gram for gram, are more severe 
than those for powder cocaine. Currently under the Drug Equivalency 
Table, one gram of powder cocaine has a marihuana equivalency of 200 
grams. This amendment sets the marihuana equivalency for one gram of 
Ecstasy at 500 grams.
    There are a combination of reasons why the Commission has 
substantially increased the penalties in response to the congressional 
directive. Much evidence received by the Commission indicated that 
Ecstasy: (1) has powerful pharmacological effects; (2) has the capacity 
to cause lasting physical harms, including brain damage; and (3) is 
being abused by rapidly increasing numbers of teenagers and young 
adults. Indeed, the market for Ecstasy is overwhelmingly comprised of 
people under the age of 25 years.
    Before voting to promulgate this amendment, the Commission 
considered whether the penalty levels for Ecstasy should be set at the 
same levels as for heroin (i.e., one gram of heroin has a marihuana 
equivalency of 1000 grams) and decided that somewhat lesser penalties 
were appropriate for Ecstasy for a number of reasons: (1) The potential 
for addiction is greater with heroin; (2) heroin distribution often 
involves violence while, at this time, violence is not reported in 
Ecstasy markets; (3) because it is a narcotic and is often injected, 
the risk of death from overdose is much greater from heroin; and (4) 
because heroin is often injected, there are more secondary health 
consequences, such as infections and the transmission of the human 
immunodeficiency virus (HIV) and hepatitis.
    Finally, based on information regarding Ecstasy trafficking 
patterns, the penalty levels chosen are appropriate and sufficient to 
target serious and high-level traffickers and to provide appropriate 
punishment, deterrence, and incentives for cooperation. The penalty 
levels chosen for Ecstasy offenses provide five year sentences for 
serious traffickers (those whose relevant conduct involved at least 800 
pills) and ten year sentences for high-level traffickers (those whose 
relevant conduct involved at least 8,000 pills).
    2. Amendment: Section 2D1.1(c)(1) is amended by inserting after the 
fifth entry the following:
    ``15 KG or more of Amphetamine, or 1.5 KG or more of Amphetamine 
(actual);''.
    Section 2D1.1(c)(2) is amended by inserting after the fifth entry 
the following:
    ``At least 5 KG but less than 15 KG of Amphetamine, or at least 500 
G but less than 1.5 KG of Amphetamine (actual);''.
    Section 2D1.1(c)(3) is amended by inserting after the fifth entry 
the following:
    ``At least 1.5 KG but less than 5 KG of Amphetamine, or at least 
150 G but less than 500 G of Amphetamine (actual);''.
    Section 2D1.1(c)(4) is amended by inserting after the fifth entry 
the following:
    ``At least 500 G but less than 1.5 KG of Amphetamine, or at least 
50 G but less than 150 G of Amphetamine (actual);''.
    Section 2D1.1(c)(5) is amended by inserting after the fifth entry 
the following:
    ``At least 350 G but less than 500 G of Amphetamine, or at least 35 
G but

[[Page 30514]]

less than 50 G of Amphetamine (actual);''.
    Section 2D1.1(c)(6) is amended by inserting after the fifth entry 
the following:
    ``At least 200 G but less than 350 G of Amphetamine, or at least 20 
G but less than 35 G of Amphetamine (actual);''.
    Section 2D1.1(c)(7) is amended by inserting after the fifth entry 
the following:
    ``At least 50 G but less than 200 G of Amphetamine, or at least 5 G 
but less than 20 G of Amphetamine (actual);''.
    Section 2D1.1(c)(8) is amended by inserting after the fifth entry 
the following:
    ``At least 40 G but less than 50 G of Amphetamine, or at least 4 G 
but less than 5 G of Amphetamine (actual);''.
    Section 2D1.1(c)(9) is amended by inserting after the fifth entry 
the following:
    ``At least 30 G but less than 40 G of Amphetamine, or at least 3 G 
but less than 4 G of Amphetamine (actual);''.
    Section 2D1.1(c)(10) is amended by inserting after the fifth entry 
the following:
    ``At least 20 G but less than 30 G of Amphetamine, or at least 2 G 
but less than 3 G of Amphetamine (actual);''.
    Section 2D1.1(c)(11) is amended by inserting after the fifth entry 
the following:
    ``At least 10 G but less than 20 G of Amphetamine, or at least 1 G 
but less than 2 G of Amphetamine (actual);''.
    Section 2D1.1(c)(12) is amended by inserting after the fifth entry 
the following:
    ``At least 5 G but less than 10 G of Amphetamine, or at least 500 
MG but less than 1 G of Amphetamine (actual);''.
    Section 2D1.1(c)(13) is amended by inserting after the fifth entry 
the following:
    ``At least 2.5 G but less than 5 G of Amphetamine, or at least 250 
MG but less than 500 MG of Amphetamine (actual);''.
    Section 2D1.1(c)(14) is amended by inserting after the fifth entry 
the following:
    ``Less than 2.5 G of Amphetamine, or less than 250 MG of 
Amphetamine (actual);''.
    Section 2D1.1(c) is amended in Note (B) of the ``Notes to Drug 
Quantity Table'' by inserting ``, `Amphetamine (actual)','' after 
``terms `PCP (actual)' ''; by inserting ``, amphetamine,'' after 
``substance containing PCP''; and by inserting ``, amphetamine 
(actual),'' after ``weight of the PCP (actual)''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 9 by inserting ``, amphetamine,'' 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''; and by inserting ``1 gm of 
Amphetamine (Actual) = 20 kg of marihuana'' after the line referenced 
to ``Amphetamine''.
    Reason for Amendment: This emergency amendment implements the 
directive in the Methamphetamine 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.
    This amendment revised Sec. 2D1.1 to include amphetamine in the 
Drug Quantity Table. This amendment also treats amphetamine and 
methamphetamine identically, at a 1:1 ratio (i.e., the same quantities 
of amphetamine and methamphetamine would result in the same base 
offense level) because of the similarities of the two substances. 
Specifically, amphetamine and methamphetamine (1) chemically are 
similar; (2) are produced by a similar method and are trafficked in a 
similar manner; (3) share similar methods of use; (4) affect the same 
parts of the brain; and (5) have similar intoxicating effects. The 
amendment also distinguishes between pure amphetamine (i.e., 
amphetamine (actual)) and amphetamine mixture in the same manner, and 
at the same quantities, as pure methamphetamine (i.e., methamphetamine 
(actual)) and methamphetamine mixture, respectively. The amendment 
reflects the view that the 1:1 ratio is appropriate given the 
seriousness of these two controlled substances.
    3. Amendment: Section 2D1.11 is amended by striking subsection (d), 
captioned ``Chemical Quantity Table*''; and by striking the Notes that 
follow subsection (d), captioned ``*Notes'', and inserting the 
following:

  ``(d)(1) Ephedrine, Pseudoephedrine, and Phenylpropanolamine Quantity
                                 Table *
          [Methamphetamine and Amphetamine Precursor Chemicals]
------------------------------------------------------------------------
                                                           Base  offense
                        Quantity                               level
------------------------------------------------------------------------
(1) 3 KG or more of Ephedrine;..........................        Level 38
3 KG or more of Phenylpropanolamine;
3 KG or More of Pseudoephedrine.
(2) At least 1 KG but less than 3 KG of Ephedrine;......        Level 36
At least 1 KG but less than 3 KG of Phenylpropanolamine;
At least 1 KG but less than 3 KG of Pseudoephedrine.
(3) At least 300 G but less than 1 KG of Ephedrine;.....        Level 34
At least 300 G but less than 1 KG of
 Phenylpropanolamine;
At least 300 G but less than 1 KG of Pseudoephedrine.
(4) At least 100 G but less than 300 G of Ephedrine;....        Level 32
At least 100 G but less than 300 G of
 Phenylpropanolamine;
At least 100 G but less than 300 G of Pseudoephedrine.
(5) At least 70 G but less than 100 G of Ephedrine;.....        Level 30
At least 70 G but less than 100 G of
 Phenylpropanolamine;
At least 70 G but less than 100 G of Pseudoephedrine.
(6) At least 40 G but less than 70 G of Ephedrine;......        Level 28
At least 40 G but less than 70 G of Phenylpropanolamine;
At least 40 G but less than 70 G of Pseudoephedrine.
(7) At least 10 G but less than 40 G of Ephedrine;......        Level 26
At least 10 G but less than 40 G of Phenylpropanolamine;
At least 10 G but less than 40 G of Pseudoephedrine.

[[Page 30515]]


(8) At least 8 G but less than 10 G of Ephedrine;.......        Level 24
At least 8 G but less than 10 G of Phenylpropanolamine;
At least 8 G but less than 10 G of Pseudoephedrine.
(9) At least 6 G but less than 8 G of Ephedrine;........        Level 22
At least 6 G but less than 8 G of Phenylpropanolamine;
At least 6 G but less than 8 G of Pseudoephedrine.
(10) At least 4 G but less than 6 G of Ephedrine;.......        Level 20
At least 4 G but less than 6 G of Phenylpropanolamine;
At least 4 G but less than 6 G of Pseudoephedrine.
(11) At least 2 G but less than 4 G of Ephedrine;.......        Level 18
At least 2 G but less than 4 G of Phenylpropanolamine;
At least 2 G but less than 4 G of Pseudoephedrine.
(12) At least 1 G but less than 2 G of Ephedrine;.......        Level 16
At least 1 G but less than 2 G of Phenylpropanolamine;
At least 1 G but less than 2 G of Pseudoephedrine.
(13) At least 500 MG but less than 1 G of Ephedrine;....        Level 14
At least 500 MG but less than 1 G of
 Phenylpropanolamine;
At least 500 MG but less than 1 G of Pseudoephedrine.
(14) Less than 500 MG of Ephedrine;.....................        Level 12
Less than 500 MG of Phenylpropanolamine;
Less than 500 MG of Pseudoephedrine.
------------------------------------------------------------------------
* Notes:
(A) Except as provided in Note (B), to calculate the base offense level
  in an offense that involves two or more chemicals, use the quantity of
  the single chemical that results in the greatest offense level,
  regardless of whether the chemicals are set forth in different tables
  or in different categories (i.e., list I or list II) under subsection
  (d) of this guideline.
(B) To calculate the base offense level in an offense that involves two
  or more chemicals each of which is set forth in the Ephedrine,
  Pseudoephedrine, and Phenylpropanolamine Quantity Table, (i) aggregate
  the quantities of all such chemicals, and (ii) determine the base
  offense level corresponding to the aggregate quantity.
(C) In a case involving ephedrine, pseudoephedrine, or
  phenylpropanolamine tablets, use the weight of the ephedrine,
  pseudoephedrine, or phenylpropanolamine contained in the tablets, not
  the weight of the entire tablets, in calculating the base offense
  level.''.


                     (d)(2) Chemical Quantity Table*
                     [All other precursor chemicals]
------------------------------------------------------------------------
                                                           Base  offense
              Listed chemicals and quantity                    level
------------------------------------------------------------------------
(1) List I Chemicals....................................        Level 30

    890 G or more of Benzaldehyde;
    20 KG or more of Benzyl Cyanide;
    200 G or more of Ergonovine;
    400 G or more of Ergotamine;
    20 KG or more of Ethylamine;
    2.2 KG or more of Hydriodic Acid;
    320 KG or more of Isosafrole;
    200 G or more of Methylamine;
    500 KG or more of N-Methylephedrine;
    500 KG or more of N-Methylpseudoephedrine;
    625 G or more of Nitroethane;
    10 KG or more of Norpseudoephedrine;
    20 KG or more of Phenylacetic Acid;
    10 KG or more of Piperidine;
    320 KG or more of Piperonal;
    1.6 KG or more of Propionic Anhydride;
    320 KG or more of Safrole;
    400 KG or more of 3, 4-Methylenedioxyphenyl-2-
     propanone.

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

    At least 267 G but less than 890 G of Benzaldehyde;
    At least 6 KG but less than 20 KG of Benzyl Cyanide;
    At least 60 G but less than 200 G of Ergonovine;
    At least 120 G but less than 400 G of Ergotamine;
    At least 6 KG but less than 20 KG of Ethylamine;
    At least 660 G but less than 2.2 KG of Hydriodic
     Acid;
    At least 96 KG but less than 320 KG of Isosafrole;
    At least 60 G but less than 200 G of Methylamine;

[[Page 30516]]


    At least 150 KG but less than 500 KG of N-
     Methylephedrine;
    At least 150 KG but less than 500 KG of N-
     Methylpseudoephedrine;
    At least 187.5 G but less than 625 G of Nitroethane;
    At least 3 KG but less than 10 KG of
     Norpseudoephedrine;
    At least 6 KG but less than 20 KG of Phenylacetic
     Acid;
    At least 3 KG but less than 10 KG of Piperidine;
    At least 96 KG but less than 320 KG of Piperonal;
    At least 480 G but less than 1.6 KG of Propionic
     Anhydride;
    At least 96 KG but less than 320 KG of Safrole;
    At least 120 KG but less than 400 KG of 3,4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    11 KG or more of Acetic Anhydride;
    1175 KG or more of Acetone;
    20 KG or more of Benzyl Chloride;
    1075 KG or more of Ethyl Ether;
    1200 KG or more of Methyl Ethyl Ketone;
    10 KG or more of Potassium Permanganate;
    1300 KG or more of Toluene.                                 Level 26

(3) List I Chemicals

    At least 89 G but less than 267 G of Benzaldehyde;
    At least 2 KG but less than 6 KG of Benzyl Cyanide;
    At least 20 G but less than 60 G of Ergonovine;
    At least 40 G but less than 120 G of Ergotamine;
    At least 2 KG but less than 6 KG of Ethylamine;
    At least 220 G but less than 660 G of Hydriodic
     Acid;
    At least 32 KG but less than 96 KG of Isosafrole;
    At least 20 G but less than 60 G of Methylamine;
    At least 50 KG but less than 150 KG of N-
     Methylephedrine;
    At least 50 KG but less than 150 KG of N-
     Methylpseudoephedrine;
    At least 62.5 G but less than 187.5 G of
     Nitroethane;
    At least 1 KG but less than 3 KG of
     Norpseudoephedrine;
    At least 2 KG but less than 6 KG of Phenylacetic
     Acid;
    At least 1 KG but less than 3 KG of Piperidine;
    At least 32 KG but less than 96 KG of Piperonal;
    At least 160 G but less than 480 G of Propionic
     Anhydride;
    At least 32 KG but less than 96 KG of Safrole;
    At least 40 KG but less than 120 KG of 3,4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 3.3 KG but less than 11 KG of Acetic
     Anhydride;
    At least 352.5 KG but less than 1175 KG of Acetone;
    At least 6 KG but less than 20 KG of Benzyl
     Chloride;
    At least 332.5 KG but less than 1075 KG of Ethyl
     Ether;
    At least 360 KG but less than 1200 KG of Methyl
     Ethyl Ketone;
    At least 3 KG but less than 10 KG of Potassium
     Permanganate;
    At least 390 KG but less than 1300 KG of Toluene.

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

    At least 62.3 G but less than 89 G of Benzaldehyde;
    At least 1.4 KG but less than 2 KG of Benzyl
     Cyanide;
    At least 14 G but less than 20 G of Ergonovine;
    At least 28 G but less than 40 G of Ergotamine;
    At least 1.4 KG but less than 2 KG of Ethylamine;
    At least 154 G but less than 220 G of Hydriodic
     Acid;
    At least 22.4 KG but less than 32 KG of Isosafrole;
    At least 14 G but less than 20 G of Methylamine;
    At least 35 KG but less than 50 KG of N-
     Methylephedrine;

    At least 35 KG but less than 50 KG of N-
     Methylpseudoephedrine;
    At least 43.8 G but less than 62.5 of Nitroethane;
    At least 700 G but less than 1 KG of
     Norpseudoephedrine;
    At least 1.4 KG but less than 2 KG of Phenylacetic
     Acid;
    At least 700 G but less than 1 KG of Piperidine;
    At least 22.4 KG but less than 32 KG of Piperonal;
    At least 112 G but less than 160 G of Propionic
     Anhydride;

[[Page 30517]]


    At least 22.4 KG but less than 32 KG of Safrole;
    At least 28 KG but less than 40 KG of 3, 4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 1.1 KG but less than 3.3 KG of Acetic
     Anhydride;
    At least 117.5 KG but less than 352.5 KG of Acetone;
    At least 2 KG but less than 6 KG of Benzyl Chloride;
    At least 107.5 but less than 322.5 KG of Ethyl
     Ether;
    At least 120 KG but less than 360 KG of Methyl Ethyl
     Ketone;
    At least 1 KG but less than 3 KG of Potassium
     Permanganate;
    At least 130 KG but less than 390 KG of Toluene.

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

    At least 35.6 G but less than 62.3 of Benzaldehyde;
    At least 800 G but less than 1.4 KG of Benzyl
     Cyanide;
    At least 8 G but less than 14 G of Ergonovine;
    At least 16 G but less than 28 G of Ergotamine;
    At least 800 G but less than 1.4 KG of Ethylamine;
    At least 88 G but less than 154 G of Hydriodic Acid;
    At least 12.8 KG but less than 22.4 KG of
     Isosafrole;
    At least 8 G but less than 14 G of Methylamine;
    At least 20 KG but less than 35 KG of N-
     Methylephedrine;
    At least 20 KG but less than 35 KG of N-
     Methylpseudoephedrine;
    At least 25 G but less than 43.8 G of Nitroethane;
    At least 400 G but less than 700 G of
     Norpseudoephedrine;
    At least 800 G but less than 1.4 KG of Phenylacetic
     Acid;
    At least 400 G but less than 700 G of Piperidine;
    At least 12.8 KG but less than 22.4 KG of Piperonal;
    At least 64 G but less than 112 G of Propionic
     Anhydride;
    At least 12.8 KG but less than 22.4 KG of Safrole;
    At least 16 KG but less than 28KG of 3,4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 726 G but less than 1.1 KG of Acetic
     Anhydride;
    At least 82.25 KG but less than 117.5 KG of Acetone;
    At least 1.4 KG but less than 2 KG of Benzyl
     Chloride;
    At least 75.25 KG but less than 107.5 KG of Ethyl
     Ether;
    At least 84 KG but less than 120 KG of Methyl Ethyl
     Ketone;
    At least 700 G but less than 1 KG of Potassium
     Permanganate;
    At least 91 KG but less than 130 KG of Toluene.

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

    At least 8.9 G but less than 35.6 G of Benzaldehyde;
    At least 200 G but less than 800 G of Benzyl
     Cyanide;
    At least 2 G but less than 8 G of Ergonovine;
    At least 4 G but less than 16 G of Ergotamine;
    At least 200 G but less than 800 G of Ethylamine;
    At least 22 G but less than 88 G of Hydriodic Acid;
    At least 3.2 KG but less than 12.8 KG of Isosafrole;
    At least 2 G but less than 8 G of Methylamine;
    At least 5 KG but less than 20 KG of N-
     Methylephedrine;
    At least 5 KG but less than 20 KG of N-
     Methylpseudoephedrine;
    At least 6.3 G but less than 25 G of Nitroethane;
    At least 100 G but less than 400 of
     Norpseudoephedrine;
    At least 200 G but less than 800 G of Phenylacetic
     Acid;
    At least 100 G but less than 400 G of Piperidine;
    At least 3.2 KG but less than 12.8 KG of Piperonal;
    At least 16 G but less than 64 G of Propionic
     Anhydride;
    At least 3.2 KG but less than 12.8 KG of Safrole;
    At least 4 KG but less than 16 KG of 3,4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 440 G but less than 726 G of Acetic
     Anhydride;
    At least 47 KG but less than 82.25 KG of Acetone;

[[Page 30518]]


    At least 800 G but less than 1.4 KG of Benzyl
     Chloride;
    At least 43 KG but less than 75.25 KG of Ethyl
     Ether;
    At least 48 KG but less than 84 KG of Methyl Ethyl
     Ketone;
    At least 400 G but less than 700 g of Potassium
     Permanganate;

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

    At least 7.1 G but less than 8.9 G of Benzaldehyde;
    At least 160 G but less than 200 G of Benzyl
     Cyanide;
    At least 1.6 G but less than 2 G of Ergonovine;
    At least 3.2 G but less than 4 G of Ergotamine;
    At least 160 G but less than 200 G of Ethylamine;
    At least 17.6 G but less than 22 G of Hydriodic
     Acid;
    At least 2.56 KG but less than 3.2 KG of Isosafrole;
    At least 1.6 G but less than 2 G of Methylamine;
    At least 4 KG but less than 5 KG of N-
     Methylephedrine;
    At least 4 KG but less than 5 KG of N-
     Methylpseudoephedrine;
    At least 5 G but less than 6.3 G of Nitroethane;
    At least 80 G but less than 100 G of
     Norpseudoephedrine;
    At least 160 G but less than 200 G of Phenylacetic
     Acid;
    At least 80 G but less than 100 G of Piperidine;
    At least 2.56 KG but less than 3.2 KG of Piperonal;
    At least 12.8 G but less than 16G of Propionic
     Anhydride;
    At least 2.56 KG but less than 3.2 KG of Safrole;
    At least 3.2 KG but less than 4 KG of 3,4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 110 G but less than 440 G of Acetic
     Anhydride;
    At least 11.75 KG but less than 47 KG of Acetone;
    At least 200 G but less than 800 G of Benzyl
     Chloride;
    At least 10.75 KG but less than 43 KG of Ethyl
     Ether;
    At least 12 KG but less than 48 KG of Methyl Ethyl
     Ketone;
    At least 100 G but less than 400 G of Potassium
     Permanganate;
    At least 13 KG but less than 52 KG of Toluene.

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

    3.6 KG or more of Anthranilic Acid;
    At least 5.3 G but less than 7.1 G of Benzaldehyde;
    At least 120 G but less than 160 G of Benzyl
     Cyanide;
    At least 1.2 G but less than 1.6 G of Ergonovine;
    At least 2.4 G but less than 3.2 G of Ergotamine;
    At least 120 G but less than 160 G of Ethylamine;
    At least 13.2 G but less than 17.6 G of Hydriodic
     Acid;
    At least 1.92 KG but less than 2.56 KG of
     Isosafrole;
    At least 1.2 G but less than 1.6 G of Methylamine;
    4.8 KG or more of N-Acetylanthranilic Acid;
    At least 3 KG but less than 4 KG of N-
     Methylephedrine;
    At least 3 KG but less than 4 KG of N-
     Methylpseudoephedrine;
    At least 3.8 G but less than 5 G of Nitroethane;
    At least 60 G but less than 80 G of
     Norpseudoephedrine;
    At least 120 G but less than 160 G of Phenylacetic
     Acid;
    At least 60 G but less than 80 G of Piperidine;
    At least 1.92 KG but less than 2.56 KG of Piperonal;
    At least 9.6 G but less than 12.8 G of Propionic
     Anhydride;
    At least 1.92 KG but less than 2.56 KG of Safrole;
    At least 2.4 KG but less than 3.2 KG of 3, 4-
     MethylenedioxyphenyL-2-propanone;

    List II Chemicals

    At least 88 G but less than 110 G of Acetic
     Anhydride;
    At least 9.4 KG but less than 11.75 KG of Acetone;
    At least 160 G but less than 200 G of Benzyl
     Chloride;
    At least 8.6 KG but less than 10.75 KG of Ethyl
     Ether;
    At least 9.6 KG but less than 12 KG of Methyl Ethyl
     Ketone;
    At least 80 G but less than 100 G of Potassium
     Permanganate;
    At least 10.4 KG but less than 13 KG of Toluene.


[[Page 30519]]


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

    At least 2.7 KG but less than 3.6 KG of Anthranilic
     Acid;
    At least 3.6 G but less than 5.3 G of Benzaldehyde;
    At least 80 G but less than 120 G of Benzyl Cyanide;
    At least 800 MG but less than 1.2 G of Ergonovine;
    At least 1.6 G but less than 2.4 G of Ergotamine;
    At least 80 G but less than 120 G of Ethylamine;
    At least 8.8 G but less than 13.2 G of Hydriodic
     Acid;
    At least 1.44 KG but less than 1.92 KG of
     Isosafrole;
    At least 800 MG but less than 1.2 G of Methylamine;
    At least 3.6 KG but less than 4.8 KG of N-
     Acetylanthraniclic Acid;
    At least 2.25 KG but less than 3 KG of N-
     Methylephedrine;
    At least 2.25 KG but less than 3 KG of N-
     Methylpseudoephedrine;
    At least 2.5 G but less than 3.8 G of Nitroethane;
    At least 40 G but less than 60 G of
     Norpseudoephedrine;
    At least 80 G but less than 120 G of Phenylacetic
     Acid;
    At least 40 G but less than 60 G of Piperidine;
    At least 1.44 KG but less than 1.92 KG of Piperonal;
    At least 7.2 G but less than 9.6 G of Propionic
     Anhydride;
    At least 1.44 KG but less than 1.92 KG of Safrole;
    At least 1.8 KG but less than 2.4 KG of 3, 4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 66 G but less than 88 G of Acetic
     Anhydride;
    At least 7.05 KG but less than 9.4 KG of Acetone;
    At least 120 G but less than 160 G of Benzyl
     Chloride;
    At least 6.45 KG but less than 8.6 KG of Ethyl
     Ether;
    At least 7.2 KG but less than 9.6 KG of Methyl Ethyl
     Ketone;
    At least 60 G but less than 80 G of Potassium
     Permanganate;
    At least 7.8 KG but less than 10.4 KG of Toluene.

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

    Less than 2.7 KG of Anthranilic Acid;
    Less than 3.6 G of Benzaldehyde;
    Less than 80 G of Benzyl Cyanide;
    Less than 800 MG of Ergonovine;
    Less than 1.6 G of Ergotamine;
    Less than 80 G of Ethylamine;
    Less than 8.8 G of Hydriodic Acid;
    Less than 1.44 KG of Isosafrole;
    Less than 800 MG of Methylamine;
    Less than 3.6 KG of N-Acetylanthranilic Acid;
    Less than 2.25 KG of N-Methylephedrine;
    Less than 2.25 KG of N-Methylpseudoephedrine;
    Less than 2.5 G of Nitroethane;
    Less than 40 G of Norpseudoephedrine;
    Less than 80 G of Phenylacetic Acid;
    Less than 40 G of Piperidine;
    Less than 1.44 KG of Piperonal;
    Less than 7.2 G of Propionic Anhydride;
    Less than 1.44 KG of Safrole;
    Less than 1.8 KG of 3,4-Methylenedioxyphenyl-2-
     propanone;

    List II Chemicals

    Less than 66 G of Acetic Anhydride;
    Less than 7.05 KG of Acetone;
    Less than 120 G of Benzyl Chloride;
    Less than 6.45 KG of Ethyl Ether;
    Less than 7.2 KG of Methyl Ethyl Ketone;
    Less than 60 G of Potassium Permanganate;
    Less than 7.8 KG of Toluene.
------------------------------------------------------------------------
* Notes:
(A) Except as provided in Note (B), to calculate the base offense level
  in an offense that involves two or more chemicals, use the quantity of
  the single chemical that results in the greatest offense level,
  regardless of whether the chemicals are set forth in different tables
  or in different categories (i.e., list I or list II) under subsection
  (d) of this guideline.

[[Page 30520]]


(B) To calculate the base offense level in an offense that involves two
  or more chemicals each of which is set forth in the Ephedrine,
  Pseudoephedrine, and Phenylpropanolamine Quantity Table, (i) aggregate
  the quantities of all such chemicals, and (ii) determine the base
  offense level corresponding to the aggregate quantity.
(C) In a case involving ephedrine, pseudoephedrine, or
  phenylpropanolamine tablets, use the weight of the ephedrine,
  pseudoephedrine, or phenylpropanolamine contained in the tablets, not
  the weight of the entire tablets, in calculating the base offense
  level.''.

    The commentary to Sec. 2D1.11 captioned ``Application Notes'' is 
amended by striking Note 4 in its entirety and inserting the following:
    ``4. Cases Involving Multiple Chemicals.--
    (A) Determining the Base Offense Level for Two or More Chemicals.--
Except as provided in subdivision (B), if the offense involves two or 
more chemicals, use the quantity of the single chemical that results in 
the greatest offense level, regardless of whether the chemicals are set 
forth in different tables or in different categories. (i.e., list I or 
list II) under subsection (d) of this guideline.

    Example: The defendant was in possession of five kilograms of 
ephedrine and 300 grams of hydriodic acid. Ephedrine and hydriodic 
acid typically are used together in the same manufacturing process 
to manufacture methamphetamine. The base offense level for each 
chemical is calculated separately and the chemical with the higher 
base offense level is used. Five kilograms of ephedrine result in a 
base offense level of level 38; 300 grams of hydriodic acid result 
in a base offense level of level 26. In this case, the base offense 
level would be level 38.

    (B) Determining the Base Offense Level for Offenses involving 
Ephedrine, Pseudoephedrine, or Phenylpropanolamine.--If the offense 
involves two or more chemicals each of which is set forth in the 
Ephedrine, Pseudoephedrine, and Phenylpropanolamine Quantity Table, (i) 
aggregate the quantities of all such chemicals, and (ii) determine the 
base offense level corresponding to the aggregate quantity.

    Example: The defendant was in possession of 80 grams of 
ephedrine and 50 grams of phenylpropanolamine, an aggregate quantity 
of 130 grams of such chemicals. The base offense level corresponding 
to that aggregate quantity is level 32.

    (C) Upward Departure.--In a case involving two or more chemicals 
used to manufacture different controlled substances, or to manufacture 
one controlled substance by different manufacturing processes, an 
upward departure may be warranted if the offense level does not 
adequately address the seriousness of the offense.''.
    The Commentary to 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 ``(including ephedrine, 
pseudoephedrine, and phenylpropanolamine)'' after ``list I chemicals''.
    The Commentary to 2D1.1 captioned ``Application Notes'' is amended 
in Note 10 in the ``Drug Equivalency Tables'' by inserting after the 
subdivision captioned ``Schedule V Substances * * *'' the following new 
subdivision:
    ``List I Chemicals (relating to the manufacture of amphetamine or 
methamphetamine)* * *

1 gm of Ephedrine = 10 kg of marihuana
1 gm of Phenylpropanolamine = 10 kg of marihuana
1 gm of Pseudoephedrine = 10 kg of marihuana

    * * * Provided, that in a case involving ephedrine, 
pseudoephedrine, or phenylpropanolamine tablets, use the weight of the 
ephedrine, pseudoephedrine, or phenylpropanolamine contained in the 
tablets, not the weight of the entire tablets, in calculating the base 
offense level.''.
    Reason for Amendment: This amendment is in response to the three-
part directive in section 3651 of the Methamphetamine Anti-
Proliferation Act of 2000, Pub. L. 106-310 (the ``Act''), regarding 
enhanced punishment for trafficking in List I chemicals. That section 
requires the Commission to promulgate an amendment implementing the 
directive under emergency amendment authority.
    First, this amendment provides a new chemical quantity table 
specifically for ephedrine, pseudoephedrine, and phenylpropanolamine 
(PPA). The table ties the base offense levels for these chemicals to 
the base offense levels for methamphetamine (actual) set forth in 
Sec. 2D1.1, assuming a 50 percent actual yield of the controlled 
substance from the chemicals. (Methamphetamine (actual) is used rather 
than methamphetamine mixture because ephedrine, pseudoephedrine, and 
PPA produce methamphetamine (actual)). This yield is based on 
information provided by the Drug Enforcement Administration (DEA) that 
the typical yield of these substances for clandestine laboratories is 
50 to 75 percent.
    This new chemical quantity table has a maximum base offense level 
of level 38 (as opposed to a maximum base offense level of level 30 for 
all other precursor chemicals). Providing a maximum base offense level 
of the level 38 complies with the directive to establish penalties for 
these precursors that ``correspond to the quantity of controlled 
substance that could have reasonably been manufactured using the 
quantity of ephedrine, phenylpropanolamine, or pseudoephedrine 
possessed or distributed.'' Additionally, this adjustment will have an 
impact on the relationship between Secs. 2D1.1 and 2D1.11 by 
eliminating the six-level distinction that currently exists between 
offenses that involve intent to manufacture methamphetamine and 
offenses that involve an attempt to manufacture methamphetamine, at 
least for offenses involving ephedrine, pseudoephedrine, and PPA.
    This amendment eliminates the Ephedrine Equivalency Table in 
Sec. 2D1.11 and, in its place, provides an instruction for the court to 
determine the base offense level in cases involving multiple precursors 
(other than ephedrine, pseudoephedrine, or PPA) by using the quantity 
of the single chemical resulting in the greatest offense level. An 
upward departure is provided for cases in which the offense level does 
not adequately address the seriousness of the offense.
    However, this amendment provides an exception to the rule for 
offenses that involve a combination of ephedrine, pseudoephedrine, or 
PPA because these chemicals often are used in the same manufacturing 
process. In a case that involves two or more of these chemicals, the 
base offense level will be determined using the total quantity of these 
chemicals involved. The purpose of this exception is twofold: (1) Any 
of the three primary precursors in the same table can be combined 
without difficulty; and (2) studies conducted by the DEA indicate that 
because the manufacturing process for amphetamine and methamphetamine 
is identical, there are cases in which the different precursors are 
included in the same batch of drugs. If the chemical is PPA, 
amphetamine results; and if the chemical is ephedrine, methamphetamine 
results.
    Second, the amendment adds to the Drug Equivalency Tables in 
Sec. 2D1.1 a conversion table for these precursor chemicals, providing 
for a 50 percent

[[Page 30521]]

conversion ratio. This is based on data from the DEA that the actual 
yield from ephedrine, pseudoephedrine, or PPA typically is in the range 
of 50 to 75 percent. The purpose of this part of the amendment is to 
achieve the same punishment level (as is achieved by the first part of 
this amendment) for an offense involving any of these precursor 
chemicals when such offense involved the manufacturer of 
methamphetamine and, as a result, is sentenced under Sec. 2D1.1 
pursuant to the cross reference in Sec. a2D1.11.
    Third, this amendment increases the base offense level for 
Benzaldehyde, Hydriodic Acid, Methylamine, Nitroethane, and 
Norpseudoesphedrine by re-calibrating these levels to the appropriate 
quantity of methamphetamine (actual) that could be produced assuming a 
50 percent yield of chemical to drug and retaining a cap at level 30. 
Previously, these chemicals had been linked to methamphetamine 
(mixture) penalty levels. Based on a study conducted by the DEA, 
ephedrine and pseudoephedrine are the primary precursors used to make 
methamphetamine in the United States. Phenylproponolamine is the 
primary precursor used to make amphetamine. Unlike the five additional 
List I chemicals, the chemical structures of ephedrine, 
pseudoephedrine, and PPA are so similar to the resulting drug (i.e., 
methamphetamine or amphetamine) that the manufacture of methamphetamine 
or amphetamine from ephedrine, pseudoephedrine, or PPA is a very simple 
one-step synthesis which anyone can perform using a variety of chemical 
reagents. The manufacture of methamphetamine or amphetamine from the 
five additional List I chemicals is a more complex process which 
requires a heightened level of expertise.
    4. Amendment: The Commentary to 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 forth 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 Provisions.--An upward departure may be 
warranted in either of the following circumstances:
    (A) The defendant was convicted under 18 U.S.C. 1591 and the 
offense involved a victim who had not attained the age of 14 years.
    (B) The offense involved more than 10 victims.''.
    The Commentary to 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 (1) 
force, fraud, or coercion will be used to cause the person to engage in 
a commercial sex act; or (2) the person (A) had not attained the age of 
18 years; and (B) will be caused to engage in a commercial sex act.''.
    The Commentary to 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 Provisions.--An upward departure may be 
warranted in either of the following circumstances:
    (A) The defendant was convicted under 18 U.S.C. 1591 and the 
offense involved a victim who had not attained the age of 14 years.
    (B) The offense involved more than 10 victims.''.
    Section 2H4.1 is amended by striking subsection (a) in its entirety 
and inserting the following:
    ``(a) Base Offense Level (Apply the greater):
    (1) 22; or
    (2) 18, if the defendant was convicted of an offense under 18 
U.S.C. 1592.''.
    Section 2H4.1(b) is amended by striking subdivision (2) in its 
entirety and inserting the following:
    ``(2) If (A) a dangerous weapon was used, increase by 4 levels; or 
(B) a dangerous weapon was brandished, or the use of a dangerous weapon 
was threatened, increase by 2 levels.''.
    The Commentary to 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 in Note 1 in the second paragraph by inserting ``other'' after 
``that a firearm or''; and by adding after ``otherwise used.'' the 
following:
    `` `The use of a dangerous weapon was threatened' means that the 
use of a dangerous weapon was threatened regardless of whether a 
dangerous weapon was present.''.
    Chapter Two, Part H, is amended in Subpart 4 by adding at the end 
the following:
``Sec. 2H4.2. Willful Violations of the Migrant and Seasonal 
Agricultural Worker Protection Act
    (a) Base Offense Level: 6
    (b) Specific Offense Characteristics
    (1) If the offense involved (i) serious bodily injury, increase by 
4 levels; or (ii) bodily injury, increase by 2 levels.
    (2) If the defendant committed any part of the instant offense 
subsequent to sustaining a civil or administrative adjudication for 
similar misconduct, increase by 2 levels.

Commentary

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

Application Notes

    1. Definitions.--For purposes of subsection (b)(1), `bodily injury' 
and `serious bodily injury' have the meaning given those terms in 
Application Note 1 of the Commentary to 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. Sec. 1801 et. 
seq.).''.
    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 ``Sec. 1593,'' after ``18 
U.S.C.Secs. ''.
    Appendix A (Statutory Index) is amended in the line referenced to 
``18 U.S.C. Sec. 241'' by inserting ``, 2H4.1'' after ``2H2.1''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to ``18 U.S.C. 1588'' the following new lines:

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

    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to ``29 U.S.C. 1141'' the following:

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

    Reason for Amendment: In promulgating this amendment, the 
Commission is cognizant of the extraordinarily serious nature of 
offenses that involve trafficking in human lives. This amendment is in 
response to the directive found at section 112(b) of the Victims of 
trafficking and Violence Protection Act of 2000 (the ``Act''). Pub. L. 
106-386. The Commission expects to consider further revisions and 
additions to the specific offense characteristics and punishment levels 
for these offenses, such as the possibility of providing an alternative 
base offense level in Sec. 2G1.1

[[Page 30522]]

(Promoting Prostitution or Prohibited Sexual Conduct) for convictions 
under 18 U.S.C. 1591 involving victims under the age of 14 years.
    The directive confers emergency authority on the Commission to 
amend the federal sentencing guidelines to reflect changes to 18 U.S.C. 
1581(a) (Peonage), 1583 (Enticement into Slavery), and 1584 (Sale into 
Involuntary Servitude). The Commission also is directed to consider how 
to address four new statutes: 18 U.S.C. 1589 (Forced Labor); 1590 
(Trafficking with Respect to Peonage, Involuntary Servitude or Forced 
Labor); 1591 (Sex Trafficking of Children by Force, Fraud or Coercion); 
and 1592 (Unlawful Conduct with Respect to Documents in Furtherance of 
Peonage, Involuntary Servitude or Forced Labor).
    Specifically, the Commission is directed to ``review and, if 
appropriate, amend the sentencing guidelines applicable to * * * the 
trafficking of persons including * * * peonage, involuntary servitude, 
slave trade offenses, and possession, transfer or sale of false 
immigration documents in furtherance of trafficking, and the Fair Labor 
Standards Act and the Migrant and Seasonal Agricultural Worker 
Protection Act.''
    The Commission further is directed to ``take all appropriate 
measures to ensure that these sentencing guidelines . . . are 
sufficiently stringent to deter and adequately reflect the heinous 
nature of these offenses.'' The Commission also is directed to 
``consider providing sentencing enhancements'' in cases which involve: 
(1) A large number of victims; (2) a pattern of continued and flagrant 
violations; (3) the use or threatened use of a dangerous weapon; or (4) 
the death or bodily injury of any person.
    To address this multi-faceted directive, this amendment makes 
changes to several existing guidelines and creates a new guideline for 
criminal violations of the Migrant and Seasonal Agricultural Worker 
Protection Act. Although the directive instructs the Commission to 
amend the guidelines applicable to the Fair Labor Standards Act (29 
U.S.C. 201 et. seq.), a criminal violation of the Fair Labor Standards 
Act is only a Class B misdemeanor. See 29 U.S.C. 216. Thus, the 
guidelines are not applicable to those offenses.
    The amendment references the new offense at 18 U.S.C. 1591 to 
Sec. 2G1.1. Section 1591 punishes a defendant who participates in the 
transporting or harboring of a person, or who benefits from 
participating in such a venture, with the knowledge that force, fraud, 
or coercion will be used to cause that person to engage in a commercial 
sex act or with knowledge that the person is not 18 years old and will 
be forced to engage in a commercial sex act. Despite the statute's 
inclusion in a chapter of title 18 devoted mainly to peonage offenses, 
section 1591 offenses are more analogous to the offenses referenced to 
the prostitution guideline.
    Section 1591 cases alternatively have been referred in Appendix A 
to Sec. 2G2.1 (Sexually Exploiting a Minor by Production of Sexually 
Explicit Visual or Printed Material; Custodian Permitting Minor to 
Engage in Sexually Explicit Conduct; Advertisement for Minors to Engage 
in Production). This has been done in anticipation that some portion of 
section 1591 cases will involve children being forced or coerced to 
engage in commercial sex acts for the purpose of producing pornography. 
Such offenses, as recognized by the higher base offense level at 
Sec. 2G2.1, are more serious because they both involve specific harm to 
an individual victim and further an additional criminal purpose, 
namely, commercial pornography.
    The amendment maintains the view that 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 also is designed to cover offenses under three 
new statutes, 18 U.S.C. 1589, 1590, and 1592. Section 1589 punishes 
defendants who provide or obtain the labor or services of another by 
the use of threats of serious harm or physical restraint against a 
person, or by a scheme or plan intended to make the person believe that 
if he or she did not perform the labor or services, he or she would 
suffer physical restraint or serious harm. This statute also applies to 
defendants who provide or obtain labor or services of another by 
abusing or threatening abuse of the law or the legal process. See 18 
U.S.C. 1589.
    Section 1590 punishes defendants who harbor, transport, or are 
otherwise involved in obtaining, a person for labor or services. 
Section 1592 punishes a defendant who knowingly possesses, destroys, or 
removes an actual passport, other immigration document, or government 
identification document of another person in the course of a violation 
of Sec. 1581 (peonage), Sec. 1583 (enticement into slavery), Sec. 1584 
(sale into involuntary servitude), Sec. 1589 (forced labor), Sec. 1590 
(trafficking with respect to these offenses), Sec. 1591 (sex 
trafficking of children by force, fraud or coercion), Sec. 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 that have been traditionally sentenced under 
Sec. 2H4.1.
    The amendment provides an alternative, less punitive base offense 
level of level 18 for those who violate 18 U.S.C. 1592, an offense 
which limits participation in peonage cases to the destruction or 
wrongful confiscation of a passport or other immigration document. This 
alternative, lower base level reflects the lower statutory maximum 
sentence for Sec. 1592 offenses, (i.e., 5 years).
    Section 2H4.1(b)(2) has been expanded to provide a 4-level increase 
if a dangerous weapon was used and a 2-level increase if a dangerous 
weapon was brandished or its use was threatened. Currently, only actual 
use of a dangerous weapon is covered. This change reflects the 
directive to consider an enhancement for the ``use or threatened use of 
a dangerous weapon.'' The commentary to Sec. 2H4.1 is amended to 
clarify that the threatened use of a dangerous weapon applies 
regardless of whether a dangerous weapon was actually present.
    The amendment also creates a new guideline, Sec. 2H4.2 (Willful 
Violations of the Migrant and Seasonal Agricultural Worker Protection 
Act), in response to the directive to amend the guidelines applicable 
to such offenses. These offenses, which have a statutory maximum 
sentence of one year imprisonment for first offenses and three years' 
imprisonment for subsequent offenses, currently are not referred to any 
specific guidelines. The amendment provides a base offense level of 
level 6 in recognition of the low statutory maximum sentences set for 
these cases by Congress. Further, these offenses typically involve 
violations of regulatory provisions. Setting the base offense level at 
level 6 provides consistency with guidelines for other regulatory 
offenses. See, e.g., Secs. 2N2.1 (Violations of Statutes and 
Regulations Dealing With Any Food, Drug, Biological Product, Device, 
Cosmetic, or Agricultural Product) and 2N3.1 (Odometer Laws and 
Regulations). Subsections (b)(1), an enhancement for bodily injury, and 
(b)(2), an enhancement applicable to defendants who commit the instant 
offense after previously sustaining a civil penalty for similar 
misconduct, have been established to respond to the directive that the 
Commission consider sentencing enhancement for these

[[Page 30523]]

offense characteristics. This section addresses the Department of 
Justice's and the Department of Labor's concern regarding prior 
administrative and civil adjudications.
    This amendment also addresses that portion of section 112 of the 
Act that amends chapter 77 of title 18, United States Code, to provide 
mandatory restitution for peonage and involuntary servitude offenses. 
The amendment amends Sec. 5E1.1 (Restitution) to include a reference to 
18 U.S.C. 1593 in the guideline provision regarding mandatory 
restitution.
    By enactment of various sentencing enhancements and encouraged 
upward departures for areas of concern identified by Congress, the 
Commission has provided for more severe sentences for perpetrators of 
human trafficking offenses in keeping with the conclusion that the 
offenses covered by this amendment are both heinous in nature and being 
committed with rapidly increasing frequency.
    (B) Amendments to the Sentencing Guidelines, Policy Statements, and 
Official Commentary, Effective November 1, 2001.
    1. Amendment: The Commentary to Sec. 1B1.2 captioned ``Application 
Notes'' is amended in Note 1 in the third sentence of the first 
paragraph by inserting ``(written or made orally on the record)'' after 
``agreement''.
    The Commentary to Sec. 1B1.2 captioned ``Application Notes'' is 
amended in Note 1 by striking the first two sentences of the third 
paragraph and inserting:
    ``As set forth in the first paragraph of this note, an exception to 
this general rule is that if a plea agreement (written or made orally 
on the record) contains a stipulation that establishes a more serious 
offense than the offense of conviction, the guideline section 
applicable to the stipulated offense is to be used. A factual statement 
or a stipulation contained in a plea agreement (written or made orally 
on the record) is a stipulation for purposes of subsection (a) only if 
both the defendant and the government explicitly agree that the factual 
statement or stipulation is a stipulation for such purposes. However, a 
factual statement or stipulation made after the plea agreement has been 
entered, or after any modification to the plea agreement has been made, 
is not a stipulation for purposes of subsection (a).''.
    The Commentary to Sec. 1B1.2 captioned ``Application Notes'' is 
amended in Note 1 in the third paragraph by striking ``may be imposed'' 
and inserting ``shall be imposed''.
    The Commentary to Sec. 1B1.2 captioned ``Application Notes'' is 
amended in Note 1 in the second sentence of the fourth paragraph by 
striking ``cases where'' and inserting ``a case in which''.
    Reason for Amendment: This amendment addresses the circuit conflict 
regarding whether admissions made by a defendant during a guilty plea 
hearing, without more, can be considered stipulations for purposes of 
subsection (a) of Sec. 1B1.2 (Application Instructions). Compare, e.g., 
United States v. Nathan, 188 F.3d 190, 201 (3d Cir. 1999) (statement 
made by defendants during the factual-basis hearing for a plea 
agreement do not constitute stipulations for the purpose of this 
enhancement; a statement is a stipulation only if it is part of a 
defendant's written plea agreement or if both the government and the 
defendant explicitly agree at a factual-basis hearing that the facts 
being placed on the record are stipulations that might subject the 
defendant to Sec. 1B1.2(a)); United States v. Saaverda, 148 F.3d 1311 
(11th Cir. 1998) (same); United States v. McCall, 915 F.2d 811 (2d Cir. 
1990) (same); United States v. Gardner, 940 F.2d (10th Cir. 1991) 
(requiring a ``knowing agreement by the defendant, as part of a plea 
bargain, that facts supporting a more serious offense occurred and 
could be presented to the court''), and United States v. Rutter, 897 
F.2d 1558, 1561 (10th Cir. 1990) (once the government agrees to a plea 
bargain without extracting an admission, facts admitted by the 
defendant can be considered only as relevant conduct in determining 
appropriate guideline range, not as stipulations under Sec. 1B1.2(a)), 
with United States v. Loos, 165 F.3d 504, 508 (7th Cir. 1998) (the 
objective behind Sec. 1B1.2(a) is best answered by interpreting 
``stipulations'' to mean any acknowledgment by the defendant that the 
defendant committed the acts that justify use of the more serious 
guideline, not in the formal agreement); and United States v. Domino, 
62 F.3d 716 (5th Cir. 1995) (same).
    This amendment represents a narrow approach to the majority view 
that a factual statement made by the defendant during the plea colloquy 
must be made as part of the plea agreement in order to be considered a 
stipulation for purposes of Sec. 1B1.2(a). This approach lessens the 
possibility that the plea agreement will be modified during the course 
of the plea proceeding without providing the parties, especially the 
defendant, with notice of the defendant's potential sentencing range.
    2. Amendment: The Commentary to Sec. 2A2.2 captioned ``Application 
Notes'' is amended by striking Notes 1 through 3 and inserting the 
following:
    ``1. Definitions.--For purposes of guideline:
    `Aggravated assault' means a felonious assault that involved (A) a 
dangerous weapon with intent to cause bodily injury (i.e., not merely 
to frighten) with that weapon; (B) serious bodily injury; or (C) an 
intent to commit another felony.
    `Brandished,' `bodily injury,' `firearm;' `otherwise used,' 
`permanent or life threatening bodily injury,' and `serious bodily 
injury,' have the meaning given those terms in Sec. 1B1.1 (Application 
Instructions), Application Note 1.
    `Dangerous weapon' has the meaning given that term in Sec. 1B.1, 
Application Note 1, and includes any instrument that is not ordinarily 
used as a weapon (e.g., a car, a chair, or an ice pick) if such an 
instrument is involved in the offense with the intent to commit bodily 
injury.
    Application of Subsection (b)(2).--In a case involving a dangerous 
weapon with intent to cause bodily injury, the court shall apply both 
the base offense level and subsection (b)(2).
    3. More than Minimal Planning.--For purposes of subsection (b)(1), 
`more than minimal planning' means more planning than is typical for 
commission of the offense in a simple form. `More than minimal 
planning' also exists if significant affirmative steps were taken to 
conceal the offense, other than conduct to which 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. 2A2.2 captioned ``Background'' is amended by 
striking the text of the background and inserting the following:

    ``This guideline covers felonious assaults that are more serious 
than minor assaults because of the presence of an aggravating 
factor, i.e., serious bodily injury, the involvement of a dangerous 
weapon with intent to cause bodily injury, or the intent to commit 
another felony. Such offenses occasionally may involve planning or 
be committed for hire. Consequently, the structure follows 
Sec. 2A2.1 (Assault with Intent to Commit Murder, Attempted Murder). 
This guideline also covers attempted manslaughter and assault with 
intent to commit manslaughter. Assault with intent to commit murder 
is covered by Sec. 2A2.1. Assault with intent to commit rape is 
covered by Sec. 2A3.1 (Criminal Sexual Abuse; Attempt to Commit 
Criminal Sexual Abuse.)

[[Page 30524]]

    An assault that involves the presence of a dangerous weapon is 
aggravated in form when the presence of the dangerous weapon is 
coupled with the intent to cause bodily injury. In such a case, the 
base offense level and the weapon enhancement in subsection (b)(2) 
take into account different aspects of the offense, even if 
application of the base offense level and the weapon enhancement is 
based on the same conduct.''.

    Reason for Amendment: This amendment responds to a circuit conflict 
regarding whether the four-level enhancement in subsection (b)(2)(B) of 
Sec. 2A2.2 (Aggravated Assault) for use of a dangerous weapon during an 
aggravated assault is impermissible double counting. Compare United 
States v. Williams, 954 F.2d 204, 205-08 (4th circ. 1992) (applying the 
dangerous weapon enhancement under Sec. 2A2.2(b)(2)(B) for defendant's 
use of his chair as a dangerous weapon did not constitute impermissible 
double counting even though that conduct increased the defendant's 
offense level twice: first, by triggering the application of the 
aggravated assault guideline, and second, as the basis for the four-
level enhancement for use for a dangerous weapon), with United States 
v. Hudson, 972 F.2d 504, 506-07 (2d Cir. 1992) (in a case in which the 
use of an automobile caused the crime to be classified as an aggravated 
assault, the court may not enhance the base offense level under 
Sec. 2A2.2(b) for use of the same, non-inherently dangerous weapon).
    This amendment addresses the circuit conflict by providing in the 
aggravated assault guideline that (1) Both the base offense level of 
level 15 and the weapon use enhancement in subsection (b)(2) shall 
apply to aggravated assaults that involve a dangerous weapon with 
intent to cause bodily harm; and (2) an instrument, such as a car or 
chair, that ordinarily is not used as a weapon may qualify as a 
dangerous weapon for purposes of the use of the aggravated assault 
guideline and the application of subsection (b)(2) when the defendant 
involves it in the offense with the intent to cause bodily harm.
    3. Amendment: The Commentary to Sec. 2A3.1 captioned ``Application 
Notes'' is amended by striking Note 5 and Note 7; and by redesignating 
Note 6 as Note 5.
    Section 2A3.2(a) is amended by striking subdivisions (1) and (2) 
and inserting the following:
    ``(1) 24, if the offense involved (A) a violation of chapter 117 of 
title 18, United States Code; and (B)(i) the commission of a sexual 
act; or (ii) sexual contact;
    (2) 21, if the offense (A) involved a violation of chapter 117 of 
title 18, United States Code; but (B) did not involve (i) the 
commission of a sexual act; or (ii) sexual contact; or
    (3) 18, otherwise.''.
    Section 2A3.2(b) is amended by striking subdivision (4) and 
inserting the following:
    ``(4) If (A) subsection (a)(1) applies; and (B) none of subsections 
(b)(1) through (b)(3) applies, decrease by 6 levels.''.
    The Commentary to 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:''; and by inserting before `` `Victim' means'' the following 
new paragraphs:
    `` `Sexual act' has the meaning given that term in 18 U.S.C. 
2246(2).
    `Sexual contact' has the meaning given that term in 18 U.S.C. 
2246(3).''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended by striking Note 2 and Note 8; by redesignating Notes 3 through 
7 as Notes 2 through 6, respectively; and by inserting after Note 6, as 
redesignated by this amendment, the following:
    ``7. Upward Departure Consideration.--There may be cases in which 
the offense level determined under this guideline substantially 
understates the seriousness of the offense. In such cases, an upward 
departure may be warranted. For example, an upward departure may be 
warranted if the defendant committed the criminal sexual act in 
furtherance of a commercial scheme such as pandering, transporting 
persons for the purpose of prostitution, or the production of 
pornography.''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in Note 2, as redesignated by this amendment, by inserting 
``Custody, Care, and Supervisory Control Enhancement.--'' before 
``Subsection''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in Note 3, as redesignated by this amendment, by inserting 
``Abuse of Position of Trust.--'' before ``If the''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in Note 4, as redesignated by this amendment, by inserting 
``Misrepresentation of Identity.--'' before ``The enhancement''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in Note 5, as redesignated by this amendment, by inserting 
``Use of Computer or Internet-Access Device.--'' before ``Subsection 
(b)(3) provides''.
    The Commentary to Sec. 2A3.2 captioned ``Applications Notes'' is 
amended in Note 6, as redesignated by this amendment, by inserting 
``Cross Reference.--'' before ``Subsection (c)(1)''.
    The Commentary to Sec. 2A3.3 captioned ``Application Notes'' is 
amended by striking Note 4.
    Section 2A3.4(b) is amended by adding at the end the following:
    ``(6) If the offense involved a violation of chapter 117 of title 
18, United States Code, increase by 3 levels.''.
    The Commentary to Sec. 2A3.4 captioned ``Application Notes'' is 
amended by striking Note 8.
    Section 3D1.2(d) is amended in the second paragraph by inserting 
after ``Secs. 2E4.1, 2E5.1;'' the following new line: ``Secs. 2G2.2, 
2G2.4;''.
    Chapter Four, Part B is amended by adding at the end the following:
``Sec. 4B1.5. Repeat and Dangerous Sex Offender Against Minors
    (a) In any case in which the defendant's instant offense of 
conviction is a covered sex crime, Sec. 4B1.1 (Career Offender) does 
not apply, and the defendant committed the instant offense of 
conviction subsequent to sustaining at least one sex offense 
conviction:
    (1) The offense level shall be the greater of:
    (A) the offense level determined under Chapters Two and Three; or
    (B) the offense level from the table below decreased by the number 
of levels corresponding to any applicable adjustment from Sec. 3E1.1 
(Acceptance of Responsibility):

------------------------------------------------------------------------
                                                                 Offense
                   Offense statutory maximum                      level
------------------------------------------------------------------------
(i) Life......................................................        37
(ii) 25 years or more.........................................        34
(iii) 20 years or more, but less than 25 years................        32
(iv) 15 years or more, but less than 20 years.................        29
(v) 10 years or more, but less than 15 years..................        24
(vi) 5 years or more, but less than 10 years..................        17
(vii) More than 1 year, but less than 5 years.................        12
------------------------------------------------------------------------

    (2) The criminal history category shall be the greater of: (A) the 
criminal history category determined under Chapter Four, Part A 
(Criminal History); or (B) criminal history Category V.
    (b) In any case in which the defendant's instant offense of 
conviction is a covered sex crime, neither Sec. 4B1.1 nor subsection 
(a) of this guideline applies, and the defendant engaged in a patter of 
activity involving prohibited sexual conduct:
    (1) The offense level shall be 5 plus the offense level determined 
under

[[Page 30525]]

Chapters Two and Three. However, if the resulting offense level is less 
than level 22, the offense level shall be level 22, decreased by the 
number of levels corresponding to any applicable adjustment from 
Sec. 3E1.1.
    (2) The criminal history category shall be the criminal history 
category determined under Chapter Four, Part A.

Commentary

Application Notes

    1. Definitions.--For purposes of this guideline:
    `Minor' means an individual who had not attained the age of 18 
years.
    `Minor victim' includes (A) an undercover law enforcement officer 
who represented to the defendant that the officer was a minor; or (B) 
any minor the officer represented to the defendant would be involved in 
the prohibited sexual conduct.
    2. Covered Sex Crime as Instant Offense of Conviction.--For 
purposes of this guideline, the instant offense of conviction must be a 
covered sex crime, i.e.: (A) an offense, perpetrated against a minor, 
under (i) chapter 109A of title 18, United States Code; (ii) chapter 
110 of such title, not including trafficking in, receipt of, or 
possession of, child pornography, or a recordkeeping offense; (iii) 
chapter 117 of such title, not including transmitting information about 
a minor or filing a factual statement about an alien individual; or (B) 
an attempt or a conspiracy to commit any offense described in 
subdivisions (A)(i) through (iii) of this note.
    3. Application of Subsection (a).--
    (A) Definitions.--For purposes of subsection (a):
    (i) `Offense statutory maximum' means the maximum term of 
imprisonment authorized for the instant offense of conviction that is a 
covered sex crime, including any increase in that maximum term under a 
sentencing enhancement provision (such as a sentencing enhancement 
provision contained in 18 U.S.C. 2247(a) or 2426(a)) that applies to 
that covered sex crime because of the defendant's prior criminal 
record.
    (ii) `Sex offense conviction' (I) means any offense described in 18 
U.S.C. 2426(b)(1)(A) or (B), if the offense was perpetrated against a 
minor; and (II) does not include trafficking in, receipt of, or 
possession of, child pornography. `Child pornography' has the meaning 
given that term in 18 U.S.C. 2256(8).
    (B) Determination of Offense Statutory Maximum in the Case of 
Multiple Counts of Conviction.--In a case in which more than one count 
of the instant offense of conviction is a felony that is a covered sex 
crime, the court shall use the maximum authorized term of imprisonment 
for the count that has the greatest offense statutory maximum, for 
purposes of determining the offense statutory maximum under subsection 
(a).
    4. Application of Subsection (b).--
    (A) Definition.--For purposes of subsection (b), `prohibited sexual 
conduct' (i) means any offense described in 18 U.S.C. 2426(b)(1)(A) or 
(B); (ii) includes the production of child pornography; (iii) includes 
trafficking in child pornography only if, prior to the commission of 
the instant offense of conviction, the defendant sustained a felony 
conviction for that trafficking in child pornography; and (iv) does not 
include receipt or possession of child pornography. `Child pornography' 
has the meaning given that term in 18 U.S.C. 2256(8).
    (B) Determination of Pattern of Activity.--
    (i) In General.--For purposes of subsection (b), the defendant 
engaged in a pattern of activity involving prohibited sexual conduct 
if--
    (I) on at least two separate occasions, the defendant engaged in 
prohibited sexual conduct with a minor; and
    (II) there were at least two minor victims of the prohibited sexual 
conduct.
    For example, the defendant engaged in a pattern of activity 
involving prohibited sexual conduct if there were two separate 
occasions of prohibited sexual conduct and each such occasion involved 
a different minor, or if there were two separate occasions of 
prohibited sexual conduct involving the same two minors.
    (ii) Occasion of Prohibited Sexual Conduct.--An occasion of 
prohibited sexual conduct may be considered for purposes of subsection 
(b) without regard to whether the occasion (I) occurred during the 
course of the instant offense; or (II) resulted in a conviction for the 
conduct that occurred on that occasion.
    5. Treatment and Monitoring.--
    (A) Recommended Maximum Term of Supervised Release.--The statutory 
maximum term of supervised release is recommended for offenders 
sentenced under this guideline.
    (B) Recommended Conditions of Probation and Supervised Release.--
Treatment and monitoring are important tools for supervising offenders 
and should be considered as special conditions of any term of probation 
or supervised release that is imposed.
    Background: The guideline is intended to provide lengthy 
incarceration for offenders who commit sex offenses against minors and 
who present a continuing danger to the public. It applies to offenders 
whose instant offense of conviction is a sex offense committed against 
a minor victim. The relevant criminal provisions provide for increased 
statutory maximum penalties for repeat sex offenders and make those 
increased statutory maximum penalties available if the defendant 
previously was convicted of any of several federal and state sex 
offenses (see 18 U.S.C. 2247, 2426). In addition, section 632 of Pub. 
L. 102-141 and section 505 of Pub. L. 105-314 directed the Commission 
to ensure lengthy incarceration for offenders who engage in a pattern 
of activity involving the sexual abuse or exploitation of minors.''.
    Section 5B1.3(d) is amended by adding at the end the following:
    ``(7) Sex Offenses
    If the instant offense of conviction is a sex offense, as defined 
in Sec. 5D1.2 (Term of Supervised Release)--a condition requiring the 
defendant to participate in a program approved by the United States 
Probation Office for the treatment and monitoring of sex offenders.''.
    Section 5D1.2 is amended by adding after subsection (b) the 
following:
    ``(c) If the instant offense of conviction is a sex offense, the 
statutory maximum term of supervised release is recommended.''.
    The Commentary to Sec. 5D1.2 captioned ``Application Notes'' is 
amended by redesignating Notes 1 and 2 as Notes 2 and 3, respectively; 
by inserting before Note 2, as redesignated by this amendment, the 
following:
    ``1. Definition.--For purposes of this guideline, `sex offense' 
means (A) an offense, perpetrated against a minor, under (i) chapter 
109A of title 18, United States Code; (ii) chapter 110 of such title, 
not including a recordkeeping offense; or (iii) chapter 117 of such 
title, not including transmitting information about a minor or filing a 
factual statement about an alien individual; or (B) an attempt or a 
conspiracy to commit any offense described in subdivisions (A)(i) 
through (iii) of this note.''; and in Note 2, as redesignated by this 
amendment, by inserting ``Safety Valve Cases.--'' before ``A 
defendant''; and in Note 3, as redesignated by this amendment, by 
inserting ``Substantial Assistance Cases.--'' before ``Upon motion''.
    Section 5D1.3(d) is amended by inserting at the end the following:
    ``(7) Sex Offenses
    If the instant offense of conviction is a sex offense, as defined 
in Sec. 5D1.2

[[Page 30526]]

(Term of Supervised Release)--a condition requiring the defendant to 
participate in a program approved by the United States Probation Office 
for the treatment and monitoring of sex offenders.''.
    Reason for Amendment: This is a three-part amendment promulgated 
primarily in response to the Protection of Children from Sexual 
Predators Act of 1998, Pub. L. 105-314 (the ``Act''), which contains 
several directives to the Commission. In furtherance of the directives, 
the Commission initiated a comprehensive examination of the guidelines 
under which most sex crimes are sentenced. Amendment 592, effective 
November 1, 2000, addressed a number of these directives. (See USSC 
Guidelines Manual 2000 Supplement to Appendix C, Amendment 592.)
    The first part of the amendment addresses the Act's directive to 
increase penalties in any case in which the defendant engaged in a 
pattern of activity of sexual abuse or sexual exploitation of a minor. 
In response to this directive, the amendment provides a new Chapter 
Four (Criminal History and Criminal Livelihood) guideline, Sec. 4B1.5 
(Repeat and Dangerous Sex Offender Against Minors), that focuses on 
repeat child sex offenders. This new guideline works in a coordinated 
manner with Sec. 4B1.1 (Career Offender) and creates a tiered approach 
to punishing repeat child sex offenders.
    The first tier, in Sec. 4B1.5(a), aims to incapacitate repeat child 
sex offenders who have an instant offense of conviction of sexual abuse 
of a minor and a prior felony conviction for sexual abuse of a minor 
(but to whom Sec. 4B1.1 does not apply). This provision subjects a 
defendant to the greater of the offense level determined under Chapters 
Two and Three or the offense level obtained from a table that, like the 
table in Sec. 4B1.1, bases the applicable offense level on the 
statutory maximum for the offense. In addition, the defendant is 
subject to an enhanced criminal history category of not less than 
Category V, similar to Sec. 4B1.1 (which provides for Category VI). By 
statute, defendants convicted of a federal sex offense are subject to 
twice the statutory maximum penalty for a subsequent sex offense 
conviction. This guideline provision effectuates the Commission's and 
Congress's intent to punish repeat child sex offenders severely.
    The second tier, in Sec. 4B1.5(b), provides a five-level increase 
in the offense level and a minimum offense level of level 22 for 
defendants who are not subject to either Sec. 4B1.1 or to Sec. 4B1.5(a) 
and who have engaged in a pattern of activity involving prohibited 
sexual conduct with minors. This part of the guideline does not rely on 
prior convictions to increase the penalty for those who have a pattern 
of activity of sexual abuse or exploitation of a minor. The pattern of 
activity enhancement requires that the defendant engaged in prohibited 
sexual conduct on at least two separate occasions and that at least two 
minors were victims of the sexual conduct. This provision is similar to 
the existing five-level pattern of activity enhancement in subsection 
(b)(4) of Sec. 2G2.2 (Trafficking in Material Involving the Sexual 
Exploitation of a Minor; Receiving, Transporting, Shipping, or 
Advertising Material Involving the Sexual Exploitation of a Minor; 
Possessing Material Involving the Sexual Exploitation of a Minor with 
Intent to Traffic) and effectuates the Commission's and Congress's 
intent to punish severely offenders who engage in a pattern of activity 
involving the sexual abuse or exploitation of minors.
    Conforming amendments are made to the criminal sexual abuse 
guidelines in Chapter Two, Part A, Subpart 3 to delete the upward 
departure provisions for prior sentences for similar conduct; that 
factor is now taken into account in the new guideline.
    In addition to creating a new guideline, this part of the amendment 
also modifies Sec. 5D1.2 (Term of Supervised Release) to provide that 
the recommended term of supervised release for a defendant convicted of 
a sex crime is the maximum term authorized by statute. Amendments to 
Sec. Sec. 5B1.3 (Conditions of Probation) and 5D1.3 (Conditions of 
Supervised Release) effectuate the Commission's intent that offenders 
who commit sex crimes receive appropriate treatment and monitoring.
    The second part of the amendment addresses a circuit conflict 
regarding whether multiple counts of possession, receipt, or 
transportation of images containing child pornography should be grouped 
together pursuant to subsection (a) or (b) of Sec. 3D1.2 (Groups of 
Closely Related Counts). Resolution of the conflict depends, in part, 
on determining who is the victim of the offense: the child depicted in 
the pornography images or society as a whole. Six circuits have held 
that the child depicted is the victim, and, therefore, that the counts 
are not grouped. See United States v. Norris, 159 F.3d 926 (5th Cir. 
1998); United States v. Hibbler, 159 F.3d 233 (6th Cir. 1998); United 
States v. Ketcham, 80 F.3d 789 (3d Cir. 1996); United States v. Rugh, 
968 F.2d 750 (8th Cir. 1992); United States v. Boos, 127 F.3d 1207 (9th 
Cir. 1997), cert. denied, 522 U.S. 1066 (1998); and United States v. 
Tillmon, 195 F.3d 640 (11th Cir. 1999). In contrast, one circuit has 
held that society as a whole is the victim of these types of offenses, 
and, therefore, that one count of interstate transportation of child 
pornography does not group with a count of interstate transportation of 
a minor with intent to engage in illegal sexual activity in a case in 
which the child portrayed in the pornography was the same child 
transported. See United States v. Toler, 901 F.2d 399 (4th Cir. 1990).
    In addressing the circuit conflict, the Commission adopted a 
position that provides for grouping of multiple counts of child 
pornography distribution, receipt, and possession pursuant to 
Sec. 3D1.2(d). Grouping multiple counts of these offenses pursuant to 
Sec. 3D1.2(d) is appropriate because these offenses typically are 
continuous and ongoing enterprises. This grouping provision does not 
require the determination of whether counts involve the same victim in 
order to calculate a combined adjusted offense level for multiple 
counts of conviction which, particularly in these kinds of cases, could 
be complex and time consuming. Consistent with the provisions of 
subsection (a)(2) of Sec. 1B1.3 (Relevant Conduct), this approach 
provides that additional images of child pornography (often involved in 
the case, but outside of the offense of conviction) shall be considered 
by the court in determining the appropriate sentence for the defendant 
if the conduct related to those images is part of the same course of 
conduct or common scheme or plan.
    The third part of the amendment makes several modifications to 
Sec. 2A3.2 (Criminal Sexual Abuse of a Minor Under the Age of Sixteen 
Years (Statutory Rape) or Attempt to Commit Such Acts). The amendment 
responds to the directive in the Act to provide an enhancement for 
offenses under chapter 117 of title 18, United States Code, involving 
the transportation of minors for prostitution or prohibited sexual 
conduct. The amendment increases the offense levels in Sec. 2A3.2 and 
in Sec. 2A3.4 (Abusive Sexual Contact or Attempt to Commit Abusive 
Sexual Contact). The Act focuses on those individuals who travel to 
meet or transport minors for illegal sexual activity by providing 
increased statutory maximum penalties for those individuals. In 
response, the increase in penalties in these guidelines were geared 
toward those individuals. Specifically, the amendment distinguishes 
between chapter 117 offenses that involve the commission of a sexual 
act or sexual contact and those offenses (e.g., sting cases) that do 
not, by

[[Page 30527]]

providing an alternative base offense level in Sec. 2A3.2 for chapter 
117 offenses that also involve the commission of a sexual act or sexual 
contact that is three levels greater (i.e., level 24) than the base 
offense level applicable to chapter 117 offenses that do not involve a 
sexual act or sexual contact.
    The amendment provides a three-level increase in the base offense 
level for offenses sentenced under Sec. 2A3.2, such that the base 
offense level (1) for statutory rape unaccompanied by aggravating 
conduct is increased from level 15 to level 18; (2) for a chapter 117 
offense (unaccompanied by a sexual act or sexual contact) is increased 
from level 18 to level 21; and (3) for a chapter 117 offense 
(accompanied by a sexual act or sexual contact) results in a base 
offense level of level 24. The amendment reflects the seriousness 
accorded criminal sexual abuse offenses by Congress, which provided for 
statutory maximum penalties of 15 years' imprisonment (or 30 years' 
imprisonment with a prior conviction for a sex crime). A defendant who 
transmits child pornography to a minor as a means of enticing the minor 
to engage in illegal sexual activity will receive a sentence increase 
when that defendant subsequently travels across state lines to engage 
in illegal sexual activity with that minor. Therefore, this increase 
also maintains the proportionality between Secs. 2A3.2 and 2G2.2.
    The third part of the amendment also makes conforming changes to 
Sec. 2A3.2 to ensure that some chapter 117 offenses that do not include 
aggravating conduct receive the offense level applicable to statutory 
rape in its basic form. Technical changes made by the amendment (such 
as the addition of headings and the reordering of applications notes) 
are not intended to have substantive effect.
    4. Amendment: Section 2A6.2(a) is amended by striking ``14'' and 
inserting ``18''.
    Section 2A6.2(c) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the offense involved the commission of another criminal 
offense, apply the offense guideline from Chapter Two, Part A (Offenses 
Against the Person) most applicable to that other criminal offense, if 
the resulting offense level is greater than that determined above.''.
    The Commentary to Sec. 2A6.2 captioned ``Application Notes'' is 
amended in Note 1 by striking the 1-em dash and inserting a colon; and 
by striking the last paragraph and inserting the following:
    `` `Stalking means (A) traveling with the intent to kill, injure, 
harass, or intimidate another person and, in the course of, or as a 
result of, such travel, placing the person in reasonable fear of death 
or serious bodily injury to that person or an immediate family member 
of that person; or (B) using the mail or any facility of interstate or 
foreign commerce to engage in a course of conduct that places that 
person in reasonable fear of the death of, or serious bodily injury to, 
that person or an immediate family member of that person. See 18 U.S.C. 
Sec. 2261A. `Immediate family member' (A) has the meaning given that 
term in 18 U.S.C. Sec. 115(c)(2); and (B) includes a spouse or intimate 
partner. `Course of conduct' and `spouse or intimate partner' have the 
meaning given those terms in 18 U.S.C. 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 and conduct that occurred under circumstances that would 
constitute a federal offense had the conduct taken place within the 
territorial or maritime jurisdiction of the United States.''.
    Reason for Amendment: This amendment addresses section 1107 of the 
Victims of Trafficking and Violence Protection Act of 2000, Pub. L. 
106-386 (the ``Act''). That section amends 18 U.S.C. 2261, 2261A, and 
2262 to broaden the reach of those statutes to include international 
travel to stalk, commit domestic violence, or violate a protective 
order. Section 2261A also is amended to broaden the category of persons 
protected by this statute to include intimate partners of the person 
stalked. The Act also creates a new offense at section 2261A(2) that 
prohibits the use of the mail or any facility of interstate or foreign 
commerce to commit a stalking offense. Several technical changes were 
also made to these statutes.
    The Act includes a directive to the Commission to amend the federal 
sentencing guidelines to reflect the changes made to 18 U.S.C. 2261, 
with specific consideration to be given to the following factors: (1) 
whether the guidelines relating to stalking offenses should be modified 
in light of the amendment made by this subsection; and (2) whether any 
changes the Commission may make to the guidelines pursuant to clause 
(1) should also be made with respect to offenses under chapter 110A of 
title 18, United States Code (staling and domestic violence offenses).
    For several reasons, the amendment refers the new stalking by mail 
offense, like other stalking offenses, to 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 refer this new offense 
to Sec. 2A6.1 (Threatening or Harassing Communications), stalking by 
mail offenses differ significantly from threatening communications in 
that the former require the defendant's intent to kill, or injure a 
person, or place a person in reasonable fear of death or serious bodily 
injury. Third, referencing stalking by mail offenses to Sec. 2A6.1 
could result in these offenses receiving higher penalties than other 
stalking offenses. For example, a defendant who writes a threatening 
letter, violates a protective order, and engages in some conduct 
evidencing an intent to carry out such threat, would receive an offense 
level of level 20 under Sec. 2A6.1. A defendant who engages in stalking 
by mail, violates a protective order, and actually commits bodily 
injury on the person who is the subject of the protection order would 
have received, prior to this amendment, an offense level of level 18 
under Sec. 2A6.2. This amendment reflects the policy judgment that the 
second defendant should receive punishment equal to, or perhaps greater 
than, that received by the first defendant. Accordingly, because of 
concern for proportionality in sentencing stalking and domestic 
violence offenses relative to other crimes, such as threatening or 
harassing communications, this amendment increases the base offense 
level in Sec. 2A6.2 from level 14 to level 18. Setting the base offense 
level at level 18 for stalking and domestic violence crimes ensures 
that these offenses are sentenced at or above the offense levels for 
offenses involving threatening and harassing communications.
    The amendment also conforms the definition of ``stalking'' in 
Application Note 1 of Sec. 2A6.2 to the statutory changes made by the 
Act. Additionally, the amendment modifies the language of subsection 
(c) in Sec. 2A6.2 to clarify application of the cross reference. This 
change is consistent with the amendment to Application Note 3 of 
Sec. 1B1.5 (Interpretation of References to Other Offense Guidelines), 
which also clarifies the operation of cross references generally.
    These revisions are designed to clarify that, unless otherwise 
specified, cross references in Chapter Two (Offense

[[Page 30528]]

Conduct) are to be determined consistently 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 and conduct that occurred under 
circumstances that would constitute a federal offense had the conduct 
taken place within the territorial or maritime jurisdiction of the 
United States.
    5. Amendment: Chapter Two is amended by striking the heading to 
Part B, the heading to Subpart 1 of Part B, and the Introductory 
Commentary to such subpart and inserting the following:

``PART B--BASIC ECONOMIC OFFENSES

    1. Theft, Embezzlement, Receipt of Stolen Property, Property 
Destruction, and Offenses Involving Fraud or Deceit

Introductory Commentary

    These sections address basic forms of property offenses: theft, 
embezzlement, fraud, forgery, counterfeiting (other than offenses 
involving altered or counterfeit bearer obligations of the United 
States), insider trading, transactions in stolen goods, and simple 
property damage or destruction. (Arson is dealt with separately in 
Chapter Two, Part K (Offenses Involving Public Safety)). These 
guidelines apply to offenses prosecuted under a wide variety of federal 
statutes, as well as offenses that arise under the Assimilative Crimes 
Act.''.
    Chapter Two, Part B is amended by striking Sec. 2B1.1, and its 
accompanying commentary, and inserting the following:
``Sec. 2B1.1. Larceny, Embezzlement, and Other Forms of Theft; Offenses 
Involving Stolen Property; Property Damage or Destruction; Fraud and 
Deceit; Forgery; Offenses Involving Altered or Counterfeit Instruments 
Other than Counterfeit Bearer Obligations of the United States
    (a) Base Offense Level: 6
    (b) Specific Offense Characteristics
    (1) If the loss exceeded $5,000, increase the offense level as 
follows:

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

    (2) (Apply the greater) If the offense--
    (A) (i) involved more than 10, but less than 50, victims; or (ii) 
was committed through mass-marketing, increase by 2 levels; or
    (B) involved 50 or more victims, increase by 4 levels.
    (3) If the offense involved a theft from the person of another, 
increase by 2 levels.
    (4) If the offense involved receiving stolen property, and the 
defendant was a person in the business of receiving and selling stolen 
property, increase by 2 levels.
    (5) If the offense involved misappropriation of a trade secret and 
the defendant knew or intended that the offense would benefit a foreign 
government, foreign instrumentality, or foreign agent, increase by 2 
levels.
    (6) If the offense involved theft of, damage to, or destruction of, 
property from a national cemetery, increase by 2 levels.
    (7) If the offense involved (A) a misrepresentation that the 
defendant was acting on behalf of a charitable, educational, religious, 
or political organization, or a government agency; (B) a 
misrepresentation or other fraudulent action during the course of a 
bankruptcy proceeding; (C) a violation of any prior, specific judicial 
or administrative order, injunction, decree, or process not addressed 
elsewhere in the guidelines; or (D) a misrepresentation to a consumer 
in connection with obtaining, providing, or furnishing financial 
assistance for an institution of higher education, increase by 2 
levels. If the resulting offense level is less than level 10, increase 
to level 10.
    (8) If (A) the defendant relocated, or participated in relocating, 
a fraudulent scheme to another jurisdiction to evade law enforcement or 
regulatory officials; (B) a substantial part of a fraudulent scheme was 
committed from outside the United States; or (C) the offense otherwise 
involved sophisticated means, increase by 2 levels. If the resulting 
offense level is less than level 12, increase to level 12.
    (9) If the offense involved (A) the possession or use of any 
device-making equipment; (B) the production or trafficking of any 
unauthorized access device or counterfeit access device; or (C)(i) the 
unauthorized transfer or use of any means of identification unlawfully 
to produce or obtain any other means of identification; or (ii) the 
possession of 5 or more means of identification that unlawfully were 
produced from, or obtained by the use of, another means of 
identification, increase by 2 levels. If the resulting offense level is 
less than level 12, increase to level 12.
    (10) If the offense involved an organized scheme to steal vehicles 
or vehicle parts, and the offense level is less than level 14, increase 
to level 14.
    (11) If the offense involved (A) the conscious or reckless risk of 
death or serious bodily injury; or (B) possession of a dangerous weapon 
(including a firearm) in connection with the offense, increase by 2 
levels. If the resulting offense level is less than level 14, increase 
to level 14.
    (12) (Apply the greater) If--
    (A) the defendant derived more than $1,000,000 in gross receipts 
from one or more financial institutions as a result of the offense, 
increase by 2 levels; or
    (B) the offense substantially jeopardized the safety and soundness 
of a financial institution, increase by 4 levels.
    If the resulting offense level determined under subdivision (A) or 
(B) is less than level 24, increase to level 24.
    (c) Cross References
    (1) If (A) a firearm, destructive device, explosive material, or 
controlled substance was taken, or the taking of any such item was an 
object of the offense; or (B) the stolen property received, 
transported, transferred, transmitted, or possessed was a firearm, 
destructive device, explosive material, or controlled substance, apply 
Sec. 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or 
Trafficking (Including Possession with Intent to Commit These 
Offenses); 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.
    (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) neither subdivision (1) nor (2) of this subsection 
applies; (B) the defendant was convicted under a statute proscribing 
false, fictitious, or

[[Page 30529]]

fraudulent statements or representations generally (e.g., 18 U.S.C. 
1001, 1341, 1342, or 1343); and (C) the conduct set forth in the count 
of conviction establishes an offense specifically covered by another 
guideline in Chapter Two (Offense Conduct), apply that other guideline.
    (d) Special Instruction
    (1) If the defendant is convicted under 18 U.S.C. 1030(a)(4) or 
(5), the minimum guideline sentence, notwithstanding any other 
adjustment, shall be six months' imprisonment.

Commentary

Statutory Provisions: 7 U.S.C. 6, 6b, 6c, 6h, 6o, 13, 23; 15 U.S.C. 
50, 77e, 77q, 77x, 78j, 78ff, 80b-6, 1644, 6821; 18 U.S.C. 38, 225, 
285-289, 471-473, 500, 510, 553(a)(1), 641, 656, 657, 659, 662, 
1001-1008, 1010-1014, 1016-1022, 1025, 1026, 1028, 1029, 1030(a)(4)-
(5), 1031, 1341-1344, 1361, 1363, 1702, 1703 (if vandalism or 
malicious mischief, including destruction of mail, is involved), 
1708, 1831, 1832, 2113(b), 2312-2317; 29 U.S.C. 501(c); 42 U.S.C. 
1011; 49 U.S.C. 30170, 46317(a). For additional statutory 
provision(s) see Appendix A (Statutory Index).

Application Notes

    1. Definitions.--For purposes of this guideline:
    ``Financial institution'' includes any institution described in 18 
U.S.C. 20, 656, 657, 1005, 1006, 1007, or 1014; any state or foreign 
bank, trust company, credit union, insurance company, investment 
company, mutual fund, savings (building and loan) association, union or 
employee pension fund; any health, medical, or hospital insurance 
association; brokers and dealers registered, or required to be 
registered, with the Securities and Exchange Commission; futures 
commodity merchants and commodity pool operators registered, or 
required to be registered, with the Commodity Futures Trading 
Commission; and any similar entity, whether or not insured by the 
federal government. ``Union or employee pension fund'' and ``any 
health, medical, or hospital insurance association,'' primarily include 
large pension funds that serve many persons (e.g., pension funds or 
large national and international organizations, unions, and 
corporations doing substantial interstate business), and associations 
that undertake to provide pension, disability, or other benefits (e.g., 
medical or hospitalization insurance) to large numbers of persons.
    ``Firearm'' and ``destructive device'' have the meaning given those 
terms in the Commentary to Sec. 1B1.1 (Application Instructions).
    ``Foreign instrumentality'' and ``foreign agent'' have the meaning 
given those terms in 18 U.S.C. 1839(1) and (2), respectively.
    ``National cemetery'' means a cemetery (A) established under 
section 2400 of title 38, United States Code; or (B) under the 
jurisdiction of the Secretary of the Army, the Secretary of the Navy, 
the Secretary of the Air Force, or the Secretary of the Interior.
    ``Theft from the person of another'' means theft, without the use 
of force, of property that was being held by another person or was 
within arms' reach. Examples include pick-pocketing and non-forcible 
purse-snatching, such as the theft of a purse from a shopping cart.
    ``Trade secret'' has the meaning given that term in 18 U.S.C. 
1839(3).
    2. Loss Under Subsection (b)(1).--This application note applies to 
the determination of loss under subsection (b)(1).
    (A) General Rule.--Subject to the exclusions in subdivision (D), 
loss is the greater of actual loss or intended loss.
    (i) Actual Loss.--``Actual loss'' means the reasonably foreseeable 
pecuniary harm that resulted from the offense.
    (ii) Intended Loss.--``Intended loss'' (I) means the pecuniary harm 
that was intended to result from the offense; and (II) includes 
intended pecuniary harm that would have been impossible or unlikely to 
occur (e.g., as in a government sting operation, or an insurance fraud 
in which the claim exceeded the insured value).
    (iii) Pecuniary Harm.--``Pecuniary harm'' means harm that is 
monetary or that otherwise is readily measurable in money. Accordingly, 
pecuniary harm does not include emotional distress, harm to reputation, 
or other non-economic harm.
    (iv) Reasonably Foreseeable Pecuniary Harm.--For purposes of this 
guideline, ``reasonably foreseeable pecuniary harm'' means pecuniary 
harm that the defendant knew or, under the circumstances, reasonably 
should have known, was a potential result of the offense.
    (v) Rules of Construction in Certain Cases.--In the cases described 
in subdivisions (I) through (III), reasonably foreseeable pecuniary 
harm shall be considered to include the pecuniary harm specified for 
those cases as follows:
    (I) Product Substitution Cases.--In the case of a product 
substitution offense, the reasonably foreseeable pecuniary harm 
includes the reasonably foreseeable costs of making substitute 
transactions and handling or disposing of the product delivered, or of 
retrofitting the product so that it can be used for its intended 
purpose, and the reasonably foreseeable costs of rectifying the actual 
or potential disruption to the victim's business operations caused by 
the product substitution.
    (II) Procurement Fraud Cases.--In the case of a procurement fraud, 
such as a fraud affecting a defense contract award, reasonably 
foreseeable pecuniary harm includes the reasonably foreseeable 
administrative costs to the government and other participants of 
repeating or correct the procurement action affected, plus any 
increased costs to procure the product or service involved that was 
reasonably foreseeable.
    (III) Protected Computer Cases.--In the case of an offense 
involving unlawfully accessing, or exceeding authorized access to, a 
``protected computer'' as defined in 18 U.S.C. 1030(e)(2), actual loss 
includes the following pecuniary harm, regardless of whether such 
pecuniary harm was reasonably foreseeable: reasonable costs to the 
victim of conducting a damage assessment, and restoring the system and 
data to their condition prior to the offense, and any lost revenue due 
to interruption of service.
    (B) Gain.--The court shall use the gain that resulted from the 
offense as an alternative measure of loss only if there is a loss but 
it reasonably cannot be determined.
    (C) Estimation of Loss.--The court need only make a reasonable 
estimate of the loss. The sentencing judge is in a unique position to 
assess the evidence and estimate the loss based upon that evidence. For 
this reason, the court's loss determination is entitled to appropriate 
deference. See 18 U.S.C. 3742(e) and (f).
    The estimate of the loss shall be based on available information, 
taking into account, as appropriate and practicable under the 
circumstances, factors such as the following:
    (i) The fair market value of the property unlawfully taken or 
destroyed; or, if the fair market value is impracticable to determine 
or inadequately measures the harm, the cost to the victim of replacing 
that property.
    (ii) The cost of repairs to damaged property.
    (iii) The approximate number of victims multiplied by the average 
loss to each victim.
    (iv) More general factors, such as the scope and duration of the 
offense and revenues generated by similar operations.
    (D) Exclusions from Loss.--Loss shall not include the following:

[[Page 30530]]

    (i) Interest of any kind, finance charges, late fees, penalties, 
amounts based on an agreed-upon return or rate of return, or other 
similar costs.
    (ii) Costs to the government of, and costs incurred by victims 
primarily to aid the government in, the prosecution and criminal 
investigation of an offense.
    (E) Credits Against Loss.--Loss shall be reduced by the following:
    (i) The money returned, and the fair market value of the property 
returned and the services rendered, by the defendant or other persons 
acting jointly with the defendant, to the victim before the offense was 
detected. The time of detection of the offense is the earlier of (I) 
the time the offense was discovered by a victim or government agency; 
or (II) the time the defendant knew or reasonably should have known 
that the offense was detected or about to be detected by a victim or 
government agency.
    (ii) In a case involving collateral pledged or otherwise provided 
by the defendant, the amount the victim has recovered at the time of 
sentencing from disposition of the collateral, or if the collateral has 
not been disposed of by that time, the fair market value of the 
collateral at the time of sentencing.
    (F) Special Rules.--Notwithstanding subdivision (A), the following 
special rules shall be used to assist in determining loss in the cases 
indicated:
    (i) Stolen or Counterfeit Credit Cards and Access Devices; 
Purloined Numbers and Codes.--In a case involving any counterfeit 
access device or unauthorized access device, loss includes any 
unauthorized charges made with the counterfeit access device or 
unauthorized access device and shall be not less than $500 per access 
device. However, if the unauthorized access device is a means of 
telecommunications access that identifies a specific telecommunications 
instrument or telecommunications account (including an electronic 
serial number/mobile identification number (ESN/MIN) pair), and that 
means was only possessed, and not used, during the commission of the 
offense, loss shall be not less than $100 per unused means. For 
purposes of this subdivision, `counterfeit access device' and 
`unauthorized access device' have the meaning given those terms in 
Application Note 7(A).
    (ii) Government Benefits.--In a case involving government benefits 
(e.g., grants, loans, entitlement program payments), loss shall be 
considered to be not less than the value of the benefits obtained by 
unintended recipients or diverted to unintended uses, as the case may 
be. For example, if the defendant was the intended recipient of food 
stamps having a value of $100 but fraudulently received food stamps 
having a value of $150, loss is $50.
    (iii) Davis-Bacon Act Violations.--In a case involving a Davis-
Bacon Act violation (i.e., a violation of 40 U.S.C. 276a, criminally 
prosecuted under 18 U.S.C. 1001), the value of benefits shall be 
considered to be not less than the difference between the legally 
required wages and actual wages paid.
    (iv) Ponzi and Other Fraudulent Investment Schemes.--In a case 
involving a fraudulent investment scheme, such as a Ponzi scheme, loss 
shall not be reduced by the money or the value of the property 
transferred to any individual investor in the scheme in access of that 
investor's principal investment (i.e., the gain to an individual 
investor in the scheme shall not be used to offset the loss to another 
individual investor in the scheme).
    (v) Certain Other Unlawful Misrepresentation Schemes.--In a case 
involving a scheme in which (I) services were fraudulently rendered to 
the victim by persons falsely posing as licensed professionals; (II) 
goods were falsely represented as approved by a governmental regulatory 
agency; or (III) goods for which regulatory approval by a government 
agency was required but not obtained, or was obtained by fraud, loss 
shall include the amount paid for the property, services or goods 
transferred, rendered, or misrepresented, with no credit provided for 
the value of those items or services.
    (vi) Value of Controlled Substances.--In a case involving 
controlled substances, loss is the estimated street value of the 
controlled substances.
    (3) Victim and Mass-Marketing Enhancement under Subsection 
(b)(2).--
    (A) Definitions.--For purposes of subsection (b)(2):
    (i) ``Mass-marketing'' means a plan, program, promotion, or 
campaign that is conducted through solicitation by telephone, mail, the 
Internet, or other means to induce a large number of persons to (I) 
purchase goods or services; (II) participate in a contest or 
sweepstakes; or (III) invest for financial profit. ``Mass-marketing'' 
includes, for example, a telemarketing campaign that solicits a large 
number of individuals to purchase fraudulent life insurance policies.
    (ii) ``Victim'' means (I) any person who sustained any part of the 
actual loss determined under subsection (b)(1); or (II) any individual 
who sustained bodily injury as a result of the offense. ``Person'' 
includes individuals, corporations, companies, associations, firms, 
partnerships, societies, and joint stock companies.
    (B) Undelivered United States Mail.--
    (i) In General.--In a case in which undelivered United States mail 
was taken, or the taking of such item was an object of the offense, or 
in a case in which the stolen property received, transported, 
transferred, transmitted, or possessed was undelivered United States 
mail, ``victim'' means any person (I) described in subdivision (A)(ii) 
of this note; or (II) who was the intended recipient, or addressee, of 
the undelivered United States mail.
    (ii) Special Rule.--A case described in subdivision (B)(i) of this 
note that involved a Postal Service (I) relay box; (II) collection box; 
(III) delivery vehicle; or (IV) satchel or cart, shall be considered to 
have involved 50 or more victims.
    (iii) Definition.--``Undelivered United States mail'' means mail 
that has not actually been received by the addressee or his agent 
(e.g., mail taken from the addressee's mail box).
    (C) Vulnerable Victims.--If subsection (b)(2)(B) applies, an 
enhancement under Sec. 3A1.1(b)(2) shall not apply.
    4. Enhancement for Business of Receiving and Selling Stolen 
Property under Subsection (b)(4).--For purposes of subsection (b)(4), 
the court shall consider the following non-exhaustive list of factors 
in determining whether the defendant was in the business of receiving 
and selling stolen property:
    (A) The regularity and sophistication of the defendant's 
activities.
    (B) The value and size of the inventory of stolen property 
maintained by the defendant.
    (C) The extent to which the defendant's activities encouraged or 
facilitated other crimes.
    (D) The defendant's past activities involving stolen property.
    5. Application of Subsection (b)(7).--
    (A) In General.--The adjustments in subsection (b)(7) are 
alternative rather than cumulative. If, in a particular case, however, 
more than one of the enumerated factors applied, an upward departure 
may be warranted.
    (B) Misrepresentations Regarding Charitable and Other 
Institutions.-- Subsection (b)(7)(A) applies in any case in which the 
defendant represented that the defendant was acting to obtain a benefit 
on behalf of a charitable educational, religious, or political 
organization, or a government agency (regardless of whether the 
defendant actually was associated with the organization or government 
agency) when, in fact, the defendant intended to divert all or part of 
that benefit (e.g., for the defendant's personal gain).

[[Page 30531]]

Subsection (b)(7)(A) applies, for example, to the following:
    (i) A defendant who solicited contributions for a non-existent 
famine relief organization.
    (ii) A defendant who solicited donations from church members by 
falsely claiming to be a fundraiser for a religiously affiliated 
school.
    (iii) A defendant, chief of a local fire department, who conducted 
a public fundraiser representing that the purpose of the fundraiser was 
to procure sufficient funds for a new fire engine when, in fact, the 
defendant intended to divert some of the funds for the defendant's 
personal benefit.
    (C) Fraud in Contravention of Prior Judicial Order.--Subsection 
(b)(7)(C) provides an enhancement if the defendant commits a fraud in 
contravention of a prior, official judicial or administrative warning, 
in the form of an order, injunction, decree, or process, to take or not 
to take a specified action. A defendant who does not comply with such a 
prior, official judicial or administrative warning demonstrates 
aggravated criminal intent and deserves additional punishment. If it is 
established that an entity the defendant controlled was a party to the 
prior proceeding that resulted in the official judicial or 
administrative action, and the defendant had knowledge of that prior 
decree or order, this enhancement applies even if the defendant was not 
a specifically named party in that prior case. For example, a defendant 
whose business previously was enjoined from selling a dangerous 
product, but who nonetheless engaged in fraudulent conduct to sell the 
product, is subject to this enhancement. This enhancement does not 
apply if the same conduct resulted in an enhancement pursuant to a 
provision found elsewhere in the guidelines (e.g., a violation of a 
condition of release addressed in 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 purposes of subsection 
(b)(7)(D):
    `Financial assistance' means any scholarship, grant, loan, tuition, 
discount, award, or other financial assistance for the purpose of 
financing an education.
    `Institution of higher education' has the meaning given that term 
in section 101 of the Higher Education Act of 1954 (20 U.S.C. 1001).
    (E) Non-Applicability of Enhancements.--
    (i) Subsection (b)(7)(A).--If the conduct that forms the basis for 
an enhancement under subsection (b)(7)(A) is the only conduct that 
forms the basis for an adjustment under Sec. 3B1.3 (Abuse of Position 
of Trust or Use of Special Skill), do not apply that adjustment under 
Sec. 3B1.3.
    (ii) Subsection (b)(7)(B) and (C).--If the conduct that forms the 
basis for an enhancement under subsection (b)(7)(B) or (C) is the only 
conduct that forms the basis for an adjustment under Sec. 3C1.1 
(Obstructing or Impeding the Administration of Justice), do not apply 
that adjustment under Sec. 3C1.1.
    6. Sophisticated Means Enhancement under Subsection (b)(8).--
    (A) Definition of United States.--For purposes of subsection 
(b)(8)(B), `United States' means each of the 50 states, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, the Northern Mariana Islands, and American Samoa.
    (B) Sophisticated Means Enhancement.--For purposes of subsection 
(b)(8)(C), `sophisticated means' means especially complex or especially 
intricate offense conduct pertaining to the execution or concealment of 
an offense. For example, in a telemarketing scheme, locating the main 
office of the scheme in one jurisdiction but locating soliciting 
operations in another jurisdiction ordinarily indicates sophisticated 
means. Conduct such as hiding assets or transactions, or both, through 
the use of fictitious entities, corporate shells, or offshore financial 
accounts also ordinarily indicates sophisticated means.
    (C) Non-Applicability of Enhancement.--If the conduct that forms 
the basis for an enhancement under subsection (b)(8) is the only 
conduct that forms the basis for an adjustment under Sec. 3C1.1, do not 
apply that adjustment under Sec. 3C1.1.
    7. Application of Subsection (b)(9).--
    (A) Definitions.--For purposes of subsection (b)(9):
    `Counterfeit access device' (i) has the meaning given that term in 
18 U.S.C. 1029(e)(2); and (ii) includes a telecommunications instrument 
that has been modified or altered to obtain unauthorized use of 
telecommunications service. `Telecommunications service' has the 
meaning given that term in 19 U.S.C. 1029(e)(9).
    `Device-making equipment' has the meaning given that term in 18 
U.S.C. 1029(e)(6); and (ii) includes (I) any hardware or software that 
has been configured as described in 18 U.S.C. 1029(a)(9); and (II) a 
scanning receiver referred to in 18 U.S.C. 1029(a)(8). `Scanning 
receiver' has the meaning given that term in 18 U.S.C. 1029(e)(8).
    ``Means of identification'' has the meaning given that term in 18 
U.S.C. 1028(d)(3), except that such means of identification shall be of 
an actual (i.e., not fictitious) individual, other than the defendant 
or a person for whose conduct the defendant is accountable under 
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. 1029(e)(3).
    Identification Documents.--Offenses involving identification 
documents, false identification documents, and means of identification, 
in violation of 18 U.S.C. 1028, also are covered by this guideline. If 
the primary purpose of the offense, under 18 U.S.C. 1028, was to 
violate, or assist another to violate, the law pertaining to 
naturalization, citizenship, or legal resident status, apply Sec. 2L2.1 
(Trafficking in a Document Relating to Naturalization) or Sec. 2L2.2 
(Fraudulently Acquiring Documents Relating to Naturalization), as 
appropriate, rather than this guideline.
    (C) Application of Subsection (b)(9)(C)(i).--
    (i) In General.--Subsection (b)(9)(C)(i) applies in a case in which 
a means of identification of an individual other than the defendant (or 
a person for whose conduct the defendant is accountable under 
Sec. 1B1.3 (Relevant Conduct)) is used without that individual's 
authorization unlawfully to produce or obtain another means of 
identification.
    (ii) Examples.--Examples of conduct to which subsection 
(b)(9)(C)(i) applies are as follows:
    (I) A defendant obtains an individual's name and social security 
number from a source (e.g., from a piece of mail taken from the 
individual's mailbox) and obtains a bank loan in that individual's 
name. In this example, the account number of the bank loan is the other 
means of identification that has been obtained unlawfully.
    (II) A defendant obtains an individual's name and address from a 
source (e.g., from a diver's license in a stolen wallet) and applies 
for, obtains, and subsequently uses a credit card in that individual's 
name. In this example, the credit card is the other means of 
identification that has been obtained unlawfully.

[[Page 30532]]

    (iii) Nonapplicability of Subsection (b)(9)(C)(i).--Examples of 
conduct to which subsection (b)(9)(C)(i) does not apply are as follows:
    (I) A defendant uses a credit card from a stolen wallet only to 
make a purchase. In such a case, the defendant has not used the stolen 
credit card to obtain another means of identification.
    (II) A defendant forges another individual's signature to cash a 
stolen check. Forging another individual's signature is not producing 
another means of identification.
    (D) Application of Subsection (b)(9)(C)(ii).--Subsection 
(b)(9)(C)(ii) applies in any case in which the offense involved the 
possession of 5 or more means of identification that unlawfully were 
produced or obtained, regardless of the number of individuals in whose 
name (or other identifying information) the means of identification 
were so produced or so obtained.
    8. Chop Shop Enhancement under Subsection (b)(10).--Subsection 
(b)(10) provides a minimum offense level in the case of an ongoing, 
sophisticated operation (such as an auto theft ring or `chop shop') to 
steal vehicles or vehicle parts, or to receive stolen vehicles or 
vehicle parts. `Vehicles' refers to all forms of vehicles, including 
aircraft and watercraft.
    9. Gross Receipts Enhancement under Subsection (b)(12)(A).--
    (A) In General.--For purposes of subsection (b)(12)(A), the 
defendant shall be considered to have derived more than $1,000,000 in 
gross receipts if the gross receipts to the defendant individually, 
rather than to all participants, exceeded $1,000,000.
    (B) Definition.--`Gross receipts from the offense' includes all 
property, real or personal, tangible or intangible, which is obtained 
directly or indirectly as a result of such offense. See 18 U.S.C. 
982(a)(4).
    10. Enhancement for Substantially Jeopardizing the Safety and 
Soundness of a Financial Institution under Subsection (b)(12)(B).--For 
purposes of subsection (b)(12)(B), an offense shall be considered to 
have substantially jeopardized the safety and soundness of a financial 
institution if, as a consequence of the offense, the institution (A) 
became insolvent; (B) substantially reduced benefits to pensioners or 
insureds; (C) was unable on demand to refund fully any deposit, 
payment, or investment; (D) was so depleted of its assets as to be 
forced to merge without another institution in order to continue active 
operations; or (E) was placed in substantial jeopardy of any of 
subdivisions (A) through (D) of this note.
    11. Cross Reference in Subsection (c)(3).--Subsection (c)(3) 
provides a cross reference to another guideline in Chapter Two (Offense 
Conduct) in cases in which the defendant is convicted of a general 
fraud statute, and the count of conviction establishes an offense more 
aptly covered by another guideline. Sometimes, offenses involving 
fraudulent statements are prosecuted under 18 U.S.C. 1001, or similarly 
general statute, although the offense is also covered by a more 
specific statute. Examples include false entries regarding currency 
transactions, for which Sec. 2S1.3 (Structuring Transactions to Evade 
Reporting Requirements) likely would be more apt, and false statements 
to a customs officer, for which Sec. 2T3.1 (Evading Import Duties or 
Restrictions (Smuggling); Receiving or Trafficking in Smuggled 
Property) likely would be more apt. In certain other cases, the mail or 
wire fraud statutes, or other relatively broad statutes, are used 
primarily as jurisdictional bases for the prosecution of other 
offenses.
    12. Continuing Financial Crimes Enterprise.--If the defendant is 
convicted under 18 U.S.C. 225 (relating to a continuing financial 
crimes enterprise), the offense level is that applicable to the 
underlying series of offenses comprising the `continuing financial 
crimes enterprise'.
    13. Partially Completed Offenses.--In the case of a partially 
completed offense (e.g., an offense involving a completed theft or 
fraud that is part of a larger, attempted theft or fraud), the offense 
level is to be determined in accordance with the provisions of 
Sec. 2X1.1 (Attempt, Solicitation, or Conspiracy) whether the 
conviction is for the substantive offense, the inchoate offense 
(attempt, solicitation, or conspiracy), or both. See Application Note 4 
of the Commentary to Sec. 2X1.1.
    14. Multiple Count Indictments.--Some fraudulent schemes may result 
in multiple-count indictments, depending on the technical elements of 
the offense. The cumulative loss produced by a common scheme or course 
of conduct should be used in determining the offense level, regardless 
of the number of counts of conviction. See Chapter Three, Part D 
(Multiple Counts).
    15. Departure Considerations.--
    (A) Upward Departure Considerations.--There may be cases in which 
the offense level determined under this guideline substantially 
understates the seriousness of the offense. In such cases, an upward 
departure may be warranted. The following is a non-exhaustive list of 
factors that the court may consider in determining whether an upward 
departure is warranted:
    (i) A primary objective of the offense was an aggravating, non-
monetary objective. For example, a primary objective of the offense was 
to inflict emotional harm.
    (ii) The offense caused or risked substantial non-monetary harm. 
For example, the offense caused physical harm, psychological harm, or 
severe emotional trauma, or resulted in a substantial invasion of a 
privacy interest (through, for example, the theft of personal 
information such as medical, educational, or financial records).
    (iii) The offense involved a substantial amount of interest of any 
kind, finance charges, late fees, penalties, amounts based on an 
agreed-upon return or rate of return, or other similar costs, not 
included in the determination of loss for purposes of subsection 
(b)(1).
    (iv) The offense created a risk of substantial loss beyond the loss 
determined for purposes of subsection (b)(1).
    (v) The offense endangered the solvency or financial security of 
one or more victims.
    (vi) In a case involving stolen information from a `protected 
computer', as defined in 18 U.S.C. 1030(e)(2), the defendant sought the 
stolen information to further a broader criminal purpose.
    (vii) In a case involving access devices or unlawfully produced or 
unlawfully obtained means of identification:
    (I) The offense caused substantial harm to the victim's reputation 
or credit record, or the victim suffered a substantial inconvenience 
related to repairing the victim's reputation or a damaged credit 
record.
    (II) An individual whose means of identification the defendant used 
to obtain unlawful means of identification is erroneously arrested or 
denied a job because an arrest record has been made in that 
individual's name.
    (III) The defendant produced or obtained numerous means of 
identification with respect to one individual and essentially assumed 
that individual's identity.
    (B) Downward Departure Consideration.--There may be cases in which 
the offense level determined under this guideline substantially 
overstates the seriousness of the offense. In such cases, a downward 
departure may be warranted.
    Background: This guideline covers offenses involving theft, stolen 
property, property damage or destruction, fraud, forgery, and 
counterfeiting (other than offenses involving altered or counterfeit 
bearer obligations of the United Sates).

[[Page 30533]]

It also covers offenses involving altering or removing motor vehicle 
identification numbers, trafficking in automobiles or automobile parts 
with altered or obliterated identification numbers, odometer laws and 
regulations, obstructing correspondence, the falsification of documents 
or records relating to a benefit plan covered by the Employment 
Retirement Income Security Act, and the failure to maintain, or 
falsification of, documents required by the Labor Management Reporting 
and Disclosure Act.
    Because federal fraud statutes often are broadly written, a single 
pattern of offense conduct usually can be prosecuted under several code 
sections, as a result of which the offense of conviction may be 
somewhat arbitrary. Furthermore, most fraud statutes cover a broad 
range of conduct with extreme variation in severity. The specific 
offense characteristics and cross references contained in this 
guideline are designed with these considerations in mind.
    The Commission has determined that, ordinarily, the sentences of 
defendants convicted of federal offenses should reflect the nature and 
magnitude of the loss caused or intended by their crimes. Accordingly, 
along with other relevant factors under the guidelines, loss serves as 
a measure of the seriousness of the offense and the defendant's 
relative culpability and is a principal factor in determining the 
offense level under this guideline.
    Theft from the person of another, such as pickpocketing or non-
forcible purse-snatching, receives an enhanced sentence because of the 
increase risk of physical injury. This guideline does not include an 
enhancement for thefts from the person by means of force or fear; such 
crimes are robberies and are covered under 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 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 financial transactions or 
financial accounts outside the United States in an effort to conceal 
illicit profits and criminal conduct involve a particularly high level 
of sophistication and complexity. These offenses are difficult to 
detect and require costly investigations and prosecutions. Diplomatic 
processes often must be used to secure testimony and evidence beyond 
the jurisdiction of United States courts. Consequently, a minimum 
offense level of level 12 is provided for these offenses.
    Subsection (b)(6) implements the instruction to the Commission in 
section 2 of Public Law 105-101.
    Subsection (b)(7)(D) implements, in a broader form, the directive 
in section 3 of the College Scholarship Fraud Prevention Act of 2000, 
Public law 106-420.
    Subsection (b)(8) implements, in a broader form, the instruction to 
the Commission in section 6(c)(2) of Public Law 105-184.
    Subsections (b)(9)(A) and (B) implement the instruction to the 
Commission in section 4 of the Wireless Telephone Protection Act, 
Public Law 105-172.
    Subsection (b)(9)(C) implements the directive to the commission in 
section 4 of the Identity Theft and Assumption Deterrence Act of 1998, 
Public Law 105-318. This subsection focuses principally on an 
aggravated form of identity theft known as ``affirmative identity 
theft'' or ``breeding'', in which a defendant uses another individual's 
name, social security number, or some other form of identification (the 
``means of identification'') to ``breed'' (i.e., produce or obtain) new 
or additional forms of identification. Because 18 U.S.C. 1028(d) 
broadly defines ``means of identification'', the new or additional 
forms of identification can include items such as a driver's license, a 
credit card, or a bank loan. This subsection provides a minimum offense 
level of level 12, in part because of the seriousness of the offense. 
The minimum offense level accounts for the fact that the means of 
identification that were ``bred'' (i.e., produced or obtained) often 
are within the defendant's exclusive control, making it difficult for 
the individual victim to detect that the victim's identity has been 
``stolen.'' Generally, the victim does not become aware of the offense 
until certain harms have already occurred (e.g., a damaged credit 
rating or an inability to obtain a loan). The minimum offense level 
also accounts for the non-monetary harm associated with these types of 
offenses, much of which may be difficult or impossible to quantify 
(e.g., harm to the individual's reputation or credit rating, 
inconvenience, and other difficulties resulting from the offense). The 
legislative history of the Identity Theft and Assumption Deterrence Act 
of 1998 indicates that Congress was especially concerned with providing 
increased punishment for this type of harm.
    Subsection (b)(11)(B) implements, in a broader form, the 
instruction to the Commission in section 110512 of Public Law 103-322.
    Subsection (b)(12)(A) implements, in a broader form, the 
instruction to the Commission in section 2507 of Public Law 101-647.
    Subsection (b)(12)(B) implements, in a broader form, the 
instruction to the Commission in section 961(m) of Public Law 101-73.
    Subsection (d) implements the instruction to the Commission in 
section 805(c) of Public Law 104-132.''.
    Chapter Two, Part B is amended by striking Sec. 2B1.3 and its 
accompanying commentary.
    Chapter Two is amended by striking the heading of Part F, 
Sec. 2F1.1 and its accompanying commentary, and Sec. 2F1.2 and its 
accompanying commentary, and by adding at the end of Part B the 
following:
``Sec. 2B1.4. Insider Trading
    (a) Base Offense Level: 8
    (b) Specific Offense Characteristic
    (1) If the gain resulting from the offense exceeded $5,000, 
increase by the number of levels from the table in Sec. 2B1.1 (Theft, 
Property Destruction, and Fraud) corresponding to that amount.

Commentary

Statutory Provisions: 15 U.S.C. 78j and 17 CFR 240.10b-5. For 
additional statutory provisions(s), see Appendix A (Statutory 
Index).

Application Note

    1. Application of Subsection of Sec. 3B1.3.--(Section 3B1.3 (Abuse 
of

[[Page 30534]]

Position of Trust or Use of Special Skill) should be applied only if 
the defendant occupied and abused a position of special trust. Examples 
might include a corporate president or an attorney who misused 
information regarding a planned but unannounced takeover attempt. It 
typically would not apply to an ordinary ``tippee''.
    Background: This guideline applies to certain violations of Rule 
10b-5 that are commonly referred to as `inside trading'. Insider 
trading is treated essentially as a sophisticated fraud. Because the 
victims and their losses are difficult if not impossible to identify, 
the gain, i.e., the total increase in value realized through trading in 
securities by the defendant and persons acting in concert with the 
defendant or to whom the defendant provide inside information, is 
employed instead of the victims' losses.
    Certain other offenses, e.g., 7 U.S.C. 13(e), that involve misuse 
of inside information for personal gain also appropriately may be 
covered by this guideline.''.
    The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is 
amended in Note 1 by striking subdivision (f); and by redesignating 
subdivisions (g) through (l) as subdivisions (f) through (k), 
respectively.
    The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is 
amended in Note 4 in the second paragraph by striking the last 
sentence.
    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. 2B1.1 (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)''.
    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. 2B1.1 captioned ``Application Notes'' is 
amended by striking the text of Note 2 and inserting:
    `` `Loss' '' means the value of the property taken, damaged, or 
destroyed.''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``4. More than Minimal Planning.--`More than minimal planning' 
means more planning than is typical for commission of the offense in a 
simple form. `More than minimal planning' also exists if significant 
affirmative steps were taken to conceal the offense, other than conduct 
to which Sec. 3C1.1 (Obstructing or Impeding the Administration of 
Justice) applies. `More than minimal planning' shall be considered to 
be present in any case involving repeated acts over a period of time, 
unless it is clear that each instance was purely opportune. For 
example, checking the area to make sure no witnesses were present would 
not alone constitute more than minimal planning. By contrast, obtaining 
building plans to plot a particular course of entry, or disabling an 
alarm system, would constitute more than minimal planning.''.
    Section 2B2.3(b) is amended by striking subdivision (3) and 
inserting the following:
    ``(3) If (A) the offense involved invasion of a protected computer; 
and (B) the loss resulting from the invasion (i) exceeded $2,000 but 
did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, 
increase by the number of levels from the table in Sec. 2B1.1 (Theft, 
Property Destruction, and Fraud) corresponding to that amount.''.
    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 by striking the text of Note 3 and inserting:
    `` `Loss' means the value of the property taken, damaged, or 
destroyed''.
    Section 2B3.(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the greater of the amount obtained or demanded (A) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) 
exceeded $5,000, increase by the number of levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
that amount.''.
    Section 2B4.1(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the greater of the value of the bribe or the improper 
benefit to be conferred (A) exceeded $2,000 but did not exceed $5,000, 
increase by 1 level; or (B) exceeded $5,000, increase by the number of 
levels from the table in Sec. 2B1.1 (Theft, Property Destruction, and 
Fraud) corresponding to that amount.''.
    Section 2B5.1(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the face value of the counterfeit items (A) exceeded 
$2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded 
$5,000, increase by the number of levels from the table in Sec. 2B1.1 
(Theft, Property Destruction, and Fraud) corresponding to that 
amount.''.
    The Commentary to Sec. 2B5.1 captioned ``Application Notes'' is 
amended in Note 3 by inserting ``Inapplicability to Genuine but 
Fraudulently Altered Instruments.--'' before `` `Counterfeit,' ''; and 
by striking ``Sec. 2F1.1 (Fraud and Deceit)'' and inserting 
``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    Section 2B5.3(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the infringement amount (A) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (B) exceeded $5,000, increase by 
the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    The Commentary to Sec. 2B5.3 captioned ``Background'' is amended in 
the first paragraph by striking ``guidelines'' and inserting 
``guideline''.
    Section 2B6.1(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the retail value of the motor vehicles or parts (A) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) 
exceeded $5,000, increase by the number of levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
that amount.''.
    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 in Note 2 by striking ``corresponding'' before ``number'' and 
inserting ``term `increase by the''; and by striking ``Sec. 2F1.1 
(Fraud and Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount''.
    Section 2C1.1(b) is amended by striking subdivision (2)(A) and 
inserting the following:
    ``(A) If the value of the payment, the benefit received or to be 
received in return for the payment, or the loss to the government from 
the offense, whichever is greatest (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.

[[Page 30535]]

    The Commentary to Sec. 2C1.1 captioned ``Application Notes'' is 
amended in Note 2 by striking `` `Loss' is discussed in the Commentary 
to Sec. 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft) and 
includes both actual and intended loss'' and inserting `` `Loss', for 
purposes of subsection (b)(2)(A), shall be determined in accordance 
with Application Note 2 of the Commentary to Sec. 2B1.1 (Theft, 
Property Destruction, and Fraud)''.
    Section 2C1.2(b) is amended by striking subdivision (2)(A) and 
inserting the following:
    ``(A) If the value of the gratuity (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    Section 2C1.6(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the value of the gratuity (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    Section 2C1.7(b) is amended by striking subdivision (1)(A) and 
inserting the following:
    ``(A) If the loss to the government, or the value of anything 
obtained or to be obtained by a public official or others acting with a 
public official, whichever is greater (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    The Commentary to Sec. 2C1.7 captioned ``Application Notes'' is 
amended by striking the text of Note 3 and inserting:
    `` `Loss', for purposes of subsection (b)(1)(A), shall be 
determined in accordance with Application Note 2 of the Commentary to 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud).''.
    Section 2E5.1(b) is amended by striking subdivision (2) and 
inserting the following:
    ``(2) If the value of the prohibited payment or the value of the 
improper benefit to the payer, whichever is greater (A) exceeded $2,000 
but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, 
increase by the number of levels from the table in 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 2H3.3(a) is amended by striking the text of subdivision (2) 
and inserting: ``if the conduct was theft or destruction of mail, apply 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud).''; and by striking 
subdivision (3).
    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 ``(Larceny, Embezzlement, and Other Forms 
of Theft)'' and inserting ``(Theft, Property Destruction, and Fraud)''.
    Section 2K1.4(a) is amended by striking the text of subdivision (3) 
and inserting: ``2 plus the offense level from Sec. 2B1.1 (Theft, 
Property Destruction, and Fraud).''; and by striking subdivision (4).
    Section 2K1.4(b)(2) is amended by striking ``(4)'' and inserting 
``(3)''.
    Section 2N2.1(b)(1) is amended by striking ``Sec. 2F1.1 (Fraud and 
Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property Destruction, and 
Fraud)''.
    The Commentary to Sec. 2N2.1 captioned ``Statutory Provisions'' is 
amended by inserting ``, 6810, 7734'' after ``150gg''.
    The Commentary to Sec. 2N2.1 captioned ``Application Notes'' is 
amended in Note 2 by inserting ``theft, property destruction, or'' 
after ``involved''; and by striking ``theft, bribery, revealing trade 
secrets, or destruction of property'' and inserting ``bribery''.
    The Commentary to Sec. 2N2.1 captioned ``Application Notes'' is 
amended in Note 4 by striking ``Sec. 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 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 2Q2.1(b) is amended by striking subdivision (3)(A) and 
inserting the following:
    ``(A) If the market value of the fish, wildlife, or plants (i) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (ii) 
exceeded $5,000, increase by the number of levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
that amount; 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)''.
    Section 2T1.1(b)(2) is amended by striking ``concealment'' and 
inserting ``means''; and by inserting after ``levels.'' the following: 
``If the resulting offense level is less than level 12, increase to 
level 12.''.
    Section 2T1.1(c)(1) is amended by adding at the end the following:
    ``(D) If the offense involved (i) conduct described in subdivisions 
(A), (B), or (C) of these Notes; and (ii) both individual and corporate 
tax returns, the tax loss is the aggregate tax loss from the offenses 
added together.''.
    Section 2T1.1(c)(2) is amended in the second paragraph by striking 
``Note'' and inserting ``Notes''; by inserting ``(A)'' before ``If''; 
and by adding at the end the following:
    ``(B) If the offense involved (i) conduct described in subdivision 
(A) of these Notes; and (ii) both individual and corporate tax returns, 
the tax loss is the aggregate tax loss from the offenses added 
together.''.
    The Commentary to Sec. 2T1.1 captioned ``Application Notes'' is 
amended in Note 1 in the first paragraph by inserting ``, except in 
willful evasion of payment cases under 26 U.S.C. 7201 and willful 
failure to pay cases under 26 U.S.C. 7203'' after ``penalties''.
    The Commentary to Sec. 2T1.1 captioned ``Application Notes'' is 
amended by striking the text of Note 4 and inserting the following:
    ``Sophisticated Means Enhancement.--For purposes of subsection 
(b)(2), `sophisticated means' means especially complex or especially 
intricate offense conduct pertaining to the execution or concealment of 
an offense. Conduct such as hiding assets or transactions, or both, 
through the use of fictitious entities, corporate shells, or offshore 
financial accounts ordinarily indicates sophisticated means.''.
    The Commentary to Sec. 2T1.1 captioned ``Application Notes'' is 
amended by

[[Page 30536]]

striking the text of Note 7 and inserting the following:
    ``If the offense involved both individual and corporate tax 
returns, the tax loss is the aggregate tax loss from the individual tax 
offense and the corporate tax offense added together. Accordingly, in a 
case in which a defendant fails to report income derived from a 
corporation on both the defendant's individual tax return and the 
defendant's corporate tax return, the tax loss is the sum of (A) the 
unreported or diverted amount multiplied by (i) 28%; or (ii) the tax 
rate for the individual tax offense, if sufficient information is 
available to make a more accurate assessment of that tax rate; and (B) 
the unreported or diverted amount multiplied by (i) 34%; or (ii) the 
tax rate for the corporate tax offense, if sufficient information is 
available to make a more accurate assessment of that tax rate. For 
example, the defendant, the sole owner of a Subchapter C corporation, 
fraudulently understates the corporation's income in the amount of 
$100,000 on the corporation's tax return, diverts the funds to the 
defendant's own use, and does not report these funds on the defendant's 
individual tax return. For purposes of this example, assume the use of 
34% with respect to the corporate tax loss and the use of 28% with 
respect to the individual tax loss. The tax loss attributable to the 
defendant's corporate tax return is $34,000 ($100,000 multiplied by 
34%). The tax loss attributable to the defendant's individual tax 
return is $28,000 ($100,000 multiplied by 28%). The tax loss for the 
offenses are added together to equal $62,000 ($34,000 + $28,000).''.
    Section 2T1.4(b)(2) is amended by striking ``concealment'' and 
inserting ``means''; and by inserting after ``levels.'' the following: 
``If the resulting offense level is less than level 12, increase to 
level 12.''.
    The Commentary to Sec. 2T1.4 captioned ``Application Notes'' is 
amended by striking the text of Note 3 and inserting the following:
    ``Sophisticated Means.--For purposes of subsection (b)(2), 
`sophisticated means' means especially complex or especially intricate 
offense conduct pertaining to the execution or concealment of an 
offense. Conduct such as hiding assets or transactions, or both, 
through the use of fictitious entities, corporate shells, or offshore 
financial accounts ordinarily indicates sophisticated means.''.
    Section 2T1.6(b)(1) is amended by striking ``(Larceny, 
Embezzlement, and Other Forms of Theft)'' and inserting ``(Theft, 
Property Destruction, and Fraud)''.
    Section 2T3.1(b)(1) is amended by striking ``concealment'' and 
inserting ``means''; and by inserting after ``levels.'' the following: 
``If the resulting offense level is less than level 12, increase to 
level 12.''.
    The Commentary to Sec. 2T3.1 captioned ``Application Notes'' is 
amended by striking the text of Note 3 and inserting the following:
    ``Sophisticated Means.--For purposes of subsection (b)(1), 
`sophisticated means' means especially complex or especially intricate 
offense conduct pertaining to the execution or concealment of an 
offense. Conduct such as hiding assets or transactions, or both, 
through the use of fictitious entities, corporate shells, or offshore 
financial accounts ordinarily indicates sophisticated means.''.
    Section 2T4.1 is amended by striking the text and inserting the 
following:

------------------------------------------------------------------------
                                                                Offense
               ``Tax loss (apply the greatest)                   level
------------------------------------------------------------------------
(A) $2,000 or less...........................................       6
(B) More than $2,000.........................................       8
(C) More than $5,000.........................................      10
(D) More than $12,500........................................      12
(E) More than $30,000........................................      14
(F) More than $80,000........................................      16
(G) More than $200,000.......................................      18
(H) More than $400,000.......................................      20
(I) More than $1,000,000.....................................      22
(J) More than $2,500,000.....................................      24
(K) More than $7,000,000.....................................      26
(L) More than $20,000,000....................................      28
(M) More than $50,000,000....................................      30
(N) More than $100,000,000...................................      32.''.
------------------------------------------------------------------------

    The Commentary to Sec. 3B1.3 captioned ``Application Notes'' is 
amended by adding after Note 3 the following:
    ``4. The following additional illustrations of an abuse of a 
position of trust pertain to theft or embezzlement from employee 
pension or welfare benefit plans or labor unions:
    (A) If the offense involved theft or embezzlement from an employee 
pension or welfare benefit plan and the defendant was a fiduciary of 
the benefit plan, an adjustment under this section for abuse of a 
position of trust will apply. ``Fiduciary of the benefit plan'' is 
defined in 29 U.S.C. 1002(21)(A) to mean a person who exercises any 
discretionary authority or control in respect to the management of such 
plan or exercises authority or control in respect to management or 
disposition of its assets, or who renders investment advice for a fee 
or other direct or indirect compensation with respect to any moneys or 
other property of such plan, or has any authority or responsibility to 
do so, or who has any discretionary authority or responsibility in the 
administration of such plan.
    (B) If the offense involved theft or embezzlement from a labor 
union and the defendant was a union officer or occupied a position of 
trust in the union (as set forth in 29 U.S.C. 501(a)), an adjustment 
under this section for an abuse of a position of trust will apply.''.
    Section 3D1.2(d) is amended in the second paragraph by striking 
``2B1.3'' and inserting ``2B1.4''; and by striking ``Secs. 2F1.1, 
2F1.2;''.
    The Commentary to Sec. 3D1.2 captioned ``Application Notes'' is 
amended in Note 6 in the third paragraph by striking ``, and would 
include, for example, larceny, embezzlement, forgery, and fraud''.
    Section 3D1.3(b) is amended by striking ``(e.g., theft and 
fraud)''.
    The Commentary to Sec. 3D1.3 captioned ``Application Notes'' is 
amended in Note 3 by striking ``(e.g., theft and fraud)''; and by 
striking the last sentence.
    The Commentary following Sec. 3D1.5 captioned ``Illustrations of 
the Operation of the Multiple-Count Rules'' is amended by striking 
Illustration 2; and by redesignating Illustrations 3 and 4 as 
Illustrations 2 and 3, respectively.
    The Commentary following Sec. 3D1.5 captioned ``Illustrations of 
the Operation of the Multiple-Count Rules'' is amended in Illustration 
3, as redesignated by this amendment, by striking ``Sec. 2F1.1 (Fraud 
and Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property Destruction, 
and Fraud)''; and by striking ``Sec. 2B4.1 or Sec. 2F1.1'' and 
inserting ``Sec. 2B1.1 or Sec. 2B4.1''.
    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 ``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. Sec. 6 by striking ``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 6b(A) by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 6b(B) by striking ``2F1.1'' 
and inserting ``2B1.1'';

[[Page 30537]]

    In the line referenced to 7 U.S.C. Sec. 6b(C) by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 6c by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 6h by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 6o by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 13(a)(2) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 13(a)(3) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 13(a)(4) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 13(d) by striking ``2F1.2'' 
and inserting ``2B1.4'';
    In the line referenced to 7 U.S.C. Sec. 13(f) by striking ``2F1.2'' 
and inserting ``2B1.4'';
    In the line referenced to 7 U.S.C. Sec. 23 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 270 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 2024(b) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 2024(c) by striking 
``2F1.1'' and inserting ``2B1.1'';
    By inserting after the line referenced to 7 U.S.C. Sec. 6810 the 
following new line:
    ``7 U.S.C. Sec. 7734  2N2.1'';
    In the line referenced to 12 U.S.C. Sec. 631 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 50 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 77e by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 77q by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 77x by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 78j by striking ``2F1.1'' 
and inserting ``2B1.1''; and by striking ``2F1.2'' and inserting 
``2B1.4'';
    In the line referenced to 15 U.S.C. Sec. 78ff by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 80b-6 by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 158 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 645(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 645(b) by striking ``, 
2F1.1'';
    In the line referenced to 15 U.S.C. Sec. 645(c) by striking ``, 
2F1.1'';
    In the line referenced to 15 U.S.C. Sec. 714m(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 714m(b) by striking ``, 
2F1.1'';
    In the line referenced to 15 U.S.C. Sec. 1281 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 1644 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 1681q by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 1693n(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    By inserting after the line referenced to 15 U.S.C. Sec. 2615 the 
following new line:
    ``15 U.S.C. Sec. 6821  2B1.1'';
    In the line referenced to 16 U.S.C. Sec. 114 by striking ``, 
2B1.3'';
    In the line referenced to 16 U.S.C. Sec. 117c by striking ``, 
2B1.3'';
    In the line referenced to 16 U.S.C. Sec. 123 by striking 
``2B1.3,'';
    In the line referenced to 16 U.S.C. Sec. 146 by striking 
``2B1.3,'';
    In the line referenced to 16 U.S.C. Sec. 413 by striking ``, 
2B1.3'';
    In the line referenced to 16 U.S.C. Sec. 433 by striking ``, 
2B1.3'';
    In the line referenced to 16 U.S.C. Sec. 831t(b) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 16 U.S.C. Sec. 831t(c) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 32(a),(b) by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 33 by striking 
``2B1.3''and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 37 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    By inserting after the line referenced to 18 U.S.C. Sec. 37 the 
following new line:
    ``18 U.S.C. Sec. 38  2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 43 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 112(a) by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 152 by striking ``2B4.1, 
2F1.1'' and inserting ``2B1.1, 2B4.1'';
    In the line referenced to 18 U.S.C. Sec. 153 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 155 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 225 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 285 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 286 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 287 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 288 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 289 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 332 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 335 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 470 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 471 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 472 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 473 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 474 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 474A by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 476 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 477 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 478 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 479 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 480 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 481 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 482 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 483 by striking ``2F1.1'' 
and inserting ``2B1.1'';

[[Page 30538]]

    In the line referenced to 18 U.S.C. Sec. 484 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 485 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 486 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 488 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 491 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 493 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 494 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 495 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 496 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 497 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 498 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 499 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 500 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 501 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 502 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 503 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 505 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 506 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 507 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 508 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 509 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 510 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 513 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 514 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 642 by inserting 
``2B1.1,'' before ``2B5.1'' and striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 656 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 657 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 659 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 663 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 665(a) by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 666(a)(1)(A) by striking 
``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 709 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 712 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 911 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 914 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 915 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 917 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 970(a) by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1001 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1002 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1003 by inserting 
``2B1.1,'' before ``2B5.1'' and striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1004 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1005 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1006 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1007 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1010 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1011 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1012 by inserting 
``2B1.1,'' before ``2C1.3''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1013 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1014 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1015 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1016 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1017 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1018 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1019 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1020 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1021 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1022 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1023 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1025 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1026 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1028 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1029 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1030(a)(4) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1030(a)(5) by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1030(a)(6) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1031 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1032 by inserting 
``2B1.1,'' before ``2B4.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1033 by striking 
``2F1.1,'';
    In the line referenced to 18 U.S.C. Sec. 1035 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1341 by inserting 
``2B1.1,'' before ``2C1.7''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1342 by inserting 
``2B1.1,'' before ``2C1.7''; and by striking ``, 2F1.1'';

[[Page 30539]]

    In the line referenced to 18 U.S.C. Sec. 1343 by inserting 
``2B1.1,'' before ``2C1.7''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1344 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1347 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1361 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1362 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1363 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1366 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1422 by inserting 
``2B1.1,'' before ``2C1.2''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1702 by striking 
``2B1.3,'';
    In the line referenced to 18 U.S.C. Sec. 1703 by striking 
``2B1.3,'';
    In the line referenced to 18 U.S.C. Sec. 1704 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1705 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1706 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1708 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1712 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1716C by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1720 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1728 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1852 by striking ``, 
2B1.3'';
    In the line referenced to 18 U.S.C. Sec. 1853 by striking ``, 
2B1.3'';
    In the line referenced to 18 U.S.C. Sec. 1854 by striking ``, 
2B1.3'';
    In the line referenced to 18 U.S.C. Sec. 1857 by striking 
``2B1.3,'' and inserting ``2B1.1,'';
    In the line referenced to 18 U.S.C. Sec. 1861 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1902 by striking ``2F1.2'' 
and inserting ``2B1.4'';
    In the line referenced to 18 U.S.C. Sec. 1919 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1920 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1923 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1992 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2071 by striking ``, 
2B1.3'';
    In the line referenced to 18 U.S.C. Sec. 2072 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2073 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2197 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2272 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2275 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2276 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2280 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2281 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2314 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 2315 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 2332a by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 19 U.S.C. Sec. 1434 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 19 U.S.C. Sec. 1435 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 19 U.S.C. Sec. 1436 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 19 U.S.C. Sec. 1919 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 19 U.S.C. Sec. 2316 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 20 U.S.C. Sec. 1097(a) by striking ``, 
2F1.1'';
    In the line referenced to 20 U.S.C. Sec. 1097(b) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 20 U.S.C. Sec. 1097(d) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 21 U.S.C. Sec. 333(a)(2) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 22 U.S.C. Sec. 1980(g) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 22 U.S.C. Sec. 2197(n) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 22 U.S.C. Sec. 4221 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 25 U.S.C. Sec. 450d by striking ``, 
2F1.1'';
    In the line referenced to 26 U.S.C. Sec. 7208 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 26 U.S.C. Sec. 7214 by inserting 
``2B1.1,'' before ``2C1.1''; and by striking ``, 2F1.1'';
    In the line referenced to 26 U.S.C. Sec. 7232 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 29 U.S.C. Sec. 1141 by inserting 
``2B1.1,'' before ``2B3.2''; and by striking ``, 2F1.1'';
    In the line referenced to 38 U.S.C. Sec. 787 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 38 U.S.C. Sec. 3502 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 41 U.S.C. Sec. 423(e) by inserting 
``2B1.1,'' before ``2C1.1''; and by striking ``, 2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 408 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    By inserting after the line referenced to 42 U.S.C. Sec. 408 the 
following new line:
    ``42 U.S.C. Sec. 1011  2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1307(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1307(b) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1307a-7b by striking ``, 
2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 1383(d)(2) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1383a(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1383a(b) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1395nn(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1395nn(c) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1396h(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1713 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1760(g) by striking ``, 
2F1.1'';

[[Page 30540]]

    In the line referenced to 42 U.S.C. Sec. 1761(o)(1) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1761(o)(2) by striking ``, 
2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 3220(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 3220(b) by striking ``, 
2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 3426 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 3791 by striking ``, 
2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 3792 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 3795 by striking ``, 
2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 5157(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 45 U.S.C. Sec. 359(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 46 U.S.C. Sec. 1276 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 121 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 11903 by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 11904 by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 14912 by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 16102 by striking 
``2F1.1'' and inserting ``2B1.1'';
    By inserting after the line referenced to 49 U.S.C. Sec. 16104 the 
following new line:
    ``49 U.S.C. Sec. 30170  2B1.1'';
    By inserting after the line referenced to 49 U.S.C. Sec. 46312 the 
following new line:
    ``49 U.S.C. Sec. 46317(a)  2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 60123(d) by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 80116 by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 80501 by striking 
``2B1.3'' and inserting ``2B1.1''; and
    In the line referenced to 49 U.S.C. App. Sec. 1687(g) by striking 
``2B1.3'' and inserting ``2B1.1''.
    Reason for Amendment: This ``Economic Crime Package'' is a six-part 
amendment that is the result of Commission study of economic crime 
issues over a number of years. The major parts of the amendment are: 
(1) Consolidation of the theft, property destruction, and fraud 
guidelines; (2) a revised, common loss table for the consolidated 
guideline, and a similar table for tax offenses; (3) a revised, common 
definition of loss for the consolidated guideline; (4) revisions to 
guidelines that refer to the loss table in the consolidated guideline; 
(5) technical and conforming amendments; and (6) amendments regarding 
tax loss.

Consolidation of Theft, Property Destruction, and Fraud; 
Miscellaneous Revisions

    The first part of this amendment consolidates the guidelines for 
theft, Sec. 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft; 
Receiving, Transporting, Transferring, Transmitting, or Possessing 
Stolen Property), property destruction, Sec. 2B1.3 (Property Damage or 
Destruction), and fraud, Sec. 2F1.1 (Fraud and Deceit; Forgery; 
Offenses Involving Altered or Counterfeit Instruments Other than 
Counterfeit Bearer Obligations of the United States) into one 
guideline, Sec. 2B1.1 (Theft, Property Destruction, and Fraud). 
Consolidation will provide similar treatment for similar offenses for 
which pecuniary harm is a major factor in determining the offense level 
and, therefore, decrease unwarranted sentencing disparity that may be 
caused by undue complexity in the guidelines. Consolidation addresses 
concerns raised over several years by probation officers, judges, and 
practitioners about the difficulties of determining for particular 
cases, whether to apply Sec. 2B1.1 or Sec. 2F1.1 and the disparate 
sentencing outcomes that can result depending on that decision. 
Commentators have noted that inasmuch as theft and fraud offenses are 
conceptually similar, there is no strong reason to sentence them 
differently.
    The base offense level for the consolidated guideline is level 6. 
This maintains the base offense level for fraud offenses, but 
represents a two-level increase for theft and property destruction 
offenses, which prior to this amendment was level 4. The increase of 
two levels in the base offense levels for theft and property 
destruction offenses will have minimal impact for low-level theft 
offenses involving offenders in criminal history Category I or Category 
II. Commission analysis indicates that only a few defendants will move 
from Zone A (where probation without conditions of confinement is 
possible) to Zone B or Zone C, and those that are moved into a zone at 
higher offense levels in the Sentencing Table generally will have 
criminal history categories above Category I. As a result, the 
Commission decided against promulgating a two-level reduction for 
offenses involving loss amounts less than $2,000.
    The amendment deletes the two-level enhancement for more than 
minimal planning previously at Secs. 2B1.1(b)(4)(A) and 2F1.1(b)(2)(A). 
The two-fold reason for this change was to obviate the need for 
judicial fact-finding about this frequently occurring enhancement and 
to avoid the potential overlap between the more than minimal planning 
enhancement and the sophisticated means enhancement previously at 
Sec. 2F1.1(b)(6) and now, by this amendment, at Sec. 2B1.1(b)(8).
    The amendment also eliminates the alternative prong of the more 
than minimal planning enhancement, at Sec. 2F1.1(b)(2)(B) prior to this 
amendment, which provided a two-level increase if the offense involved 
more than one victim. The amendment replaces this enhancement with a 
specific offense characteristic for offenses that involved large 
numbers of victims. This change addresses three concerns. First, as a 
result of the consolidation, the more-than-one-victim enhancement, if 
retained, would apply in cases that, prior to this amendment, were not 
subject to such an enhancement. Second, a two-level increase in every 
case involving more than one victim is arguably inconsistent with the 
approach in subsection (b)(2) of Sec. 3A1.1 (Hate Crime Motivation or 
Vulnerable Victim), which provides a two-level increase if the offense 
involved a large number of vulnerable victims. Third, in practice, the 
more than minimal planning enhancement was so closely linked with this 
enhancement that the decision to eliminate the former argues strongly 
for also eliminating the latter.
    The amendment provides a two-level enhancement for offenses 
involving ten or more, but fewer than 50, victims, and a four-level 
increase for offenses involving 50 or more victims. This provision is 
designed to provide a measured increment that results in increased 
punishment for offenses involving larger numbers of victims. Its 
applicability to those cases in which victims, both individuals and 
organizations, sustain an actual loss under subsection (b)(1) or 
sustain bodily injury.
    A special rule is provided for application of the victim 
enhancement for offenses involving United States mail because of (i) 
the unique proof problems often attendant to such offenses, (ii) the 
frequently significant, but difficult to quantify, non-monetary

[[Page 30541]]

losses in such offenses, and (iii) the importance of maintaining the 
integrity of the United States mail.
    In addition, the amendment moves the mass-marketing enhancement 
into the new victim-related specific offense characteristic, as an 
alternative to the two-level adjustment for more than ten, but fewer 
than 50, victims. The provision is retained to remain responsive to the 
congressional directive that led to its original promulgation and 
reflects the Commission's expectation that most telemarketing cases, or 
similar mass-marketing cases, will have at least ten victims and, 
receive this enhancement. The mass-marketing alternative enhancement 
also will continue to apply in cases in which mass-marketing has been 
used to target a large number of persons, regardless of the number of 
persons who have sustained an actual loss or injury.
    In addition, the amendment provides that if a victim enhancement 
applies, the enhancement under Sec. 3A1.1(b)(2) for ``a large number of 
vulnerable victims'' does not also apply because the more serious 
conduct already would have resulted in a higher penalty level.
    In response to issues raised in a circuit conflict, the amendment 
revises the commentary related to subsection (b)(4)(B) of Sec. 2B1.1 to 
clarify the meaning of ``person in the business of receiving and 
selling stolen property.'' The amendment addresses an issue that has 
arisen in case law regarding what conduct receives a defendant for the 
4-level enhancement.
    In determining the meaning of ``in the business of'', some circuits 
apply what has been termed the ``fence test'', under which the court 
must consider (1) if the stolen property was bought and sold, and (2) 
to what extent the stolen property transactions encouraged others to 
commit property crimes. Other circuits have adopted the ``totality of 
the circumstances test'' that focuses on the regularity and 
sophistication of the defendant's operation. Compare United States v. 
Esquivel, 919 F.2d 957 (5th Cir. 1990), with United States v. St. Cyr, 
997 F.2d 698 (1st Cir. 1992). Under either test, courts consider the 
sophistication and regularity of the business as well as the control, 
volume, turnover, relationship with thieves, and connections with 
buyers. Although the factors considered by all of these circuits are 
similar, the approaches are different.
    After consideration, the Commission adopted the totality of 
circumstances approach because it is more objective and more properly 
targets the conduct of the individual who is actually in the business 
of fencing. See United States v. St. Cyr, supra.
    In addition, this amendment resolves a circuit conflict regarding 
the scope of the enhancement in the consolidated guideline for a 
misrepresentation that the defendant was acting on behalf of a 
charitable, educational, religious, or political organization, or a 
government agency. (Prior to this amendment, the enhancement was at 
subsection (b)(4)(A) of Sec. 2F1.1). The conflict concerns whether the 
misrepresentation enhancement applies only in cases in which the 
defendant does not have any authority to act on behalf of the covered 
organization or government agency or if it applies more broadly to 
cases in which the defendant has a legitimate connection to the covered 
organization or government agency, but misrepresents that the defendant 
is acting solely on behalf of that organization or agency. Compare, 
e.g., United States v. Marcum, 16 F.3d 599 (4th Cir. 1994) (enhancement 
appropriate even though defendant did not misrepresent his authority to 
act on behalf of the organization but rather only misrepresented that 
he was conducting an activity wholly on behalf of the organization), 
with United States v. Frazier, 53 F.3d 1105 (10th Cir. 1995) 
(application of the enhancement is limited to cases in which the 
defendant exploits the victim by claiming to have authority which in 
fact does not exist).
    The amendment follows the broader view of the Fourth Circuit. It 
provides for application of the enhancement, now, by this amendment, at 
Sec. 2B1.1(b)(7)(A), if the defendant falsely represented that the 
defendant was acting to obtain a benefit for a covered organization or 
agency when, in fact, the defendant intended to divert all or part of 
that benefit (for example, for the defendant's personal gain), 
regardless of whether the defendant actually was associated with the 
organization or government agency. The Commission determined that the 
enhancement was appropriate in such cases because the representation 
that the defendant was acting to obtain a benefit for the organization 
enables the defendant to commit the offense. In the case of an employee 
who also holds a position of trust, the amendment provides an 
application note instructing the court not to apply Sec. 3B1.3 (Abuse 
of Position of Trust or Use of Special Skill) if the same conduct forms 
the basis both for the enhancement and the adjustment in Sec. 3B1.3.
    The amendment implements the directive in section 3 of the College 
Scholarship Fraud Prevention Act of 2000, Public Law 106-420, by 
providing an additional alternative enhancement that applies if the 
offense involves a misrepresentation to a consumer in connection with 
obtaining, providing, or furnishing financial assistance for an 
institution of higher education. The enhancement targets the provider 
of the financial assistance or scholarship services, not the individual 
applicant for such assistance or scholarship, consistent with the 
intent of the legislation.
    This amendment makes two minor substantive changes to the 
enhancement for conscious or reckless risk of serious bodily injury, 
now, by this amendment, at subsection (b)(11)(A). First, it increases 
the minimum offense level from level 13 to level 14 to promote 
proportionality within this guideline. For example, within the theft 
and fraud guidelines prior to this amendment, there were other specific 
offense characteristics that had a higher floor offense level than the 
risk of bodily injury enhancement: (1) ``chop shops'' (level 14); (2) 
jeopardizing the solvency of a financial institution (level 24); and 
(3) personally receiving more than $1,000,000 from a financial 
institution (level 24). Second, it inserts ``death'' before the term 
``or serious bodily injury'' to clarify that the risk of the greater 
harm also is covered. Including risk of death also provides consistency 
with similar provisions in other parts of the Guidelines Manual, where 
risk of death is always included with risk of serious bodily injury.
    The amendment modifies the four-level increase and minimum offense 
level of level 24 for a defendant who personally derives more than 
$1,000,000 in gross receipts from an offense that affected a financial 
institution, now, by this amendment, at subsection (b)(12)(A). The 
amendment retains the minimum offense level but reduces the four-level 
enhancement to two levels because of the increased offense levels that 
will result from the loss table for the consolidated guideline. The 
two-level increase was retained because elimination of the enhancement 
entirely would not provide an appropriate punishment for those 
offenders involved with losses that are in the $1,000,000 to $2,500,000 
range of loss.
    The enhancement also was modified to address issues about what it 
means to ``affect'' a financial institution and how to apply the 
enhancement to a case in which there are more than one financial 
institution involved. Accordingly, the revised provision focuses on 
whether the defendant derived more than $1,000,000 in gross receipts 
from one or more financial institutions as a result of the offense.

[[Page 30542]]

    The amendment includes a new cross reference (subsection (c)(3)) 
that is more generally applicable and intended to apply whenever a 
broadly applicable fraud statute is used to reach conduct that is 
addressed more specifically in another Chapter Two guideline. Prior to 
this amendment, the fraud guideline contained an application note that 
instructed the user to move to another, more appropriate Chapter Two 
guideline, under specified circumstances. Although this note was not a 
cross reference, but rather a reminder of the principles enunciated in 
Sec. 1B1.2, it operated like a cross reference in the sense that it 
required use of a different guideline.
    This amendment also makes a minor revision (adding ``in a broader 
form'') to the background commentary regarding the implementation of 
the directive in section 2507 of Public Law 101-647, nullifying the 
effect of United States v. Tomasino, 206 F. 3d 739 (7th Cir. 2000).

Loss Tables

    The amendment provides revised loss tables for this consolidated 
guideline and for the tax offense guidelines. A principle feature of 
the new tables is that they expand the previously existing one-level 
increments into two-level increments, thus increasing the range of 
losses that correspond to an individual increment, compressing the 
table, and reducing fact-finding. The new loss tables also provide 
substantial increases in penalties for moderate and higher loss 
amounts, even, for fraud and theft offenses, notwithstanding the 
elimination of the two-level enhancement for more than minimal 
planning. These higher penalty levels respond to comments received from 
the Department of Justice, the Criminal Law Committee of the Judicial 
Conference, and others, that the offenses sentenced under the 
guidelines consolidated by this amendment under-punish individuals 
involved with moderate and high loss amounts, relative to penalty 
levels for offenses of similar seriousness sentenced under other 
guidelines.
    Some offenders accountable for relatively low dollar losses will 
receive slightly lower offense levels under the new loss table for the 
consolidated guideline because of (1) the elimination of the 
enhancement for more than minimal planning; (2) the change from one-
level to two-level increments for increasing loss amounts; (3) the 
selection of the breakpoints for the loss increments (including $5,000 
as the first loss amount that results in an increase); and (4) the 
slope chosen for the relationship between increases in loss amount and 
increases in offense level at the lower loss amounts. This amendment 
reflects a decision by the Commission that this effect on penalty 
levels at lower loss amounts is appropriate for several reasons: (1) 
The lower offense levels provide appropriate deterrence and punishment, 
generally, (2) at lower offense levels more defendants will be subject 
to the court's ability to fashion sentencing alternatives as 
appropriate (see, e.g., Sec. 5C1.1 (Imposition of a Term of 
Imprisonment)); and (3) these penalty levels may facilitate the payment 
of restitution.
    The loss table for the consolidated guideline provides the first of 
incremental increases for cases in which loss exceeds $5,000, rather 
than $2,000 provided previously in Sec. 2F1.1, or $100 provided 
previously in Sec. 2B1.1. The Commission believes this will reduce the 
fact-finding burden on courts for less serious offenses that are 
generally subject to greater sentencing flexibility because of the 
availability of alternatives to incarceration.
    The amendment also provides a revised loss table in Sec. 2T4.1 (Tax 
Table) for tax offenses that ensures significantly higher penalty 
levels for offenses involving moderate and high tax loss in a similar 
manner and degree as the loss table for the consolidated guideline. The 
new table is designed to reflect more appropriately the seriousness of 
tax offenses and to maintain proportionality with the offenses 
sentenced under the consolidated guideline.
    The tax loss table is similar to the loss table for the 
consolidated guideline, except it does not reduce generally any 
sentences for offenders involved with lower loss amounts. The tax table 
provides its first increment for loss at $2,000, rather than the $5,000 
threshold under the consolidated guideline (and the $1,700 threshold 
under the tax loss table prior to this amendment). These differences 
are intended to avoid unintended decreases that would occur otherwise. 
The increases in the new tax loss table for offenders involved with 
lower loss amounts are intended to maintain the long-standing treatment 
of tax offenses relative to theft and fraud offenses.

Definition of Loss

    This amendment provides a new definition of loss applicable to 
offenses previously sentenced under Secs. 2B1.1, 2B1.3, and 2F1.1. The 
revised definition makes clarifying and substantive revisions to the 
definitions of loss previously in the commentary to Secs. 2B1.1 and 
2F1.1, resolves a number of circuit conflicts, addresses a variety of 
application issues, and promotes consistency in application.
    Significantly, the new definition of loss retains the core rule 
that loss is the greater of actual and intended loss. The Commission 
concluded that, for cases in which intended loss is greater than actual 
loss, the intended loss is a more appropriate initial measure of the 
culpability of the offender. Conversely, in cases in which the actual 
loss is greater, that amount is a more appropriate measure of the 
seriousness of the offense.
    A definition is provided for intended loss that is consistent with 
the rule regarding the interaction of actual and intended loss.
    The amendment includes a resolution of the circuit conflict 
relating to the meaning and application of intended loss.
    The amendment resolves the conflict to provide that intended loss 
includes unlikely or impossible losses that are intended, because their 
inclusion better reflects the culpability of the offender. Compare 
United States v. Geevers, 226 F.3d 186 (3d Cir. 2000) (agreeing with 
the majority of circuits holding that impossibility is not in and of 
itself a limit on the intended loss for purposes of calculating 
sentences under the guidelines * * * impossibility does not require a 
sentencing court to lower its calculations of intended loss); and 
United States v. Coffman, 94 F.3d 330 (7th Cir. 1996) (rejecting the 
argument that a loss that cannot possibly occur cannot be intended); 
United States v. Koenig, 952 F.2d 267 (9th Cir. 1991) (holding that 
Sec. 2F1.1 only requires a calculation of intended loss and does not 
require a finding that the intentions were realistic); United States v. 
Klisser, 190 F. 3d 34, 36 (2d Cir. 1999) (same); United States v. 
Blitz, 151 F. 3d 1002, 1010 (9th Cir. 1998) (same); United States v. 
Studevent, 116 F. 3d 1559, 1563 (D.C. Cir. 1997) (same); United States 
v. Wai-Keung, 115 F. 3d 874, 877 (11th Cir. 1997) (same), with United 
States v. Galbraith, 20 F. 3d 1054, 1059 (10th Cir. 1993) (because 
intended loss only includes losses that are possible, in an undercover 
sting operation the intended loss is zero); and United States v. 
Watkins, 994 F.2d 1192, 1196 (6th Cir. 1993) (holding that a limitation 
on the broad reach of the intended loss rule is that the intended loss 
must have been possible to be considered relevant).
    Accordingly, concepts such as ``economic reality'' or ``amounts put 
at risk'' will no longer be considerations in the determination of 
intended loss. See United States v. Bonanno, 146 F.3d 502 (7th Cir. 
1998) (holding that the relevant inquiry is how much the scheme put at

[[Page 30543]]

risk); and United States v. Wells, 127 F. 3d 739 (8th Cir. 1997) 
(citing United States v. Morris, 18 F.3d 562 (8th Cir. 1994)) (holding 
that intended loss properly was measured by the possible loss the 
defendant intended, and did not hinge on actual or net loss).
    This amendment also resolves differing circuit interpretations of 
the standard of causation applicable for actual loss, an issue that was 
not addressed expressly in the prior definition of actual loss. Various 
circuits recognized three arguably inconsistent standards for loss 
causation. First, Sec. 1B1.3 (Relevant Conduct) provides that a 
defendant is responsible for all losses--foreseen or unforeseen--that 
result from the defendant's actions or that result from the foreseeable 
actions of co-participants. See United States v. Sarno, 73 F.3d 1470 
(9th Cir. 1995) (holding that ``[a] sentence calculated pursuant to the 
loss tables * * * is properly based on actual loss notwithstanding the 
fact that this loss may be greater than the intended, expected or 
foreseeable loss''), cert. denied, 518 U.S. 1020 (1996); and United 
States v. Lopreato, 83 F.3d 571 (2d Cir. 1996) (holding that in a 
bribery case, the defendant is responsible for all losses, foreseeable 
or not). A second view is premised on the fact that prior to this 
amendment commentary in Sec. 2F1.1 limited the loss amount to the value 
of the money, property, or services unlawfully taken. See United States 
v. Marlatt, 24 F.3d 1005 (7th Cir. 1994) (refusing to count foreseeable 
losses in loss figure because they did not represent the actual thing 
taken). A third view is that the commentary's explicit inclusion of 
consequential damages in the loss determination for contract 
procurement and product substitution cases implies that only non-
consequential or direct damages are included in other cases. See United 
States v. Thomas, 62 F.3d 1332 (11th Cir. 1995), cert. denied, 516 U.S. 
1166 (1996) (only non-consequential or direct damages are included in 
loss). See also United States v. Daddona, 34 F.3d 163 (3d Cir.), cert. 
denied, 513 U.S. 1002 (1994) (holding that merely incidental or 
consequential damages may not be counted in computing loss); and United 
States v. Newman, 6 F.3d 623 (9th Cir. 1993) (holding that loss caused 
by the defendant arsonist was only the value of the property destroyed 
by the fire, not costs of putting out the fire).
    The amendment defines ``actual loss'' as the ``reasonably 
foreseeable pecuniary harm'' that resulted from the offense. The 
amendment incorporates this causation standard that, at a minimum, 
requires factual causation (often called ``but for'' causation) and 
provides a rule for legal causation (i.e., guidance to courts regarding 
how to draw the line as to what losses should be included and excluded 
from the loss determination). Significantly, the application of this 
causation standard in the great variety of factual contexts in which it 
is expected to occur appropriately is entrusted to sentencing judges.
    ``Pecuniary harm'' is defined in a manner that excludes emotional 
distress, harm to reputation, and other non-economic harm, in order to 
foreclose the laborious effort sometimes necessary to quantify non-
economic harms (as in some tort proceedings, for example).
    ``Reasonably foreseeable pecuniary harm'' is defined to include 
pecuniary harms that the defendant knew or, under the circumstances, 
reasonably should have known, was a potential result of the offense. 
The Commission determined that this standard better ensures the 
inclusion in loss of those harms that reflect the seriousness of the 
offense and the culpability of the offender.
    The definition deletes the previous rule that, by negative 
implication, excludes consequential damages (except in specified 
cases), thus resolving a circuit conflict. Compare United States v. 
Izydore, 167 F.3d 213 (5th Cir. 1999) (the fact that the Commission 
prescribed consequential losses in only specific fraud cases, and not 
others, is strong evidence that consequential damages were omitted from 
the general loss definition by design rather than mistake), with United 
States v. Gottfried, 58 F.3d 648 (D.C. Cir. 1995) (holding that merely 
incidental or consequential damages may not be counted in computing 
loss). The Commission decided, however, not to use the term 
``consequential damages,'' or any similar civil law distinction between 
direct and indirect harms. Rather, the Commission determined that the 
reasonable foreseeability standard provides sufficient guidance to 
courts as to what type of harms are included in loss.
    In addition, this amendment preserves the special provisions 
addressing loss in protected computer offenses and the inclusion of 
consequential damages in product substitution and contract procurement 
offenses; however, these special cases are re-characterized as rules of 
construction to avoid any negative implications regarding other types 
of offenses.
    The amendment reflects a decision by the Commission that interest 
and similar costs shall be excluded from loss. However, the amendment 
provides that a departure may be warranted in the rare case in which 
exclusion of interest will under-punish the offender. Thus, the rule 
resolves the circuit split regarding whether ``bargained for'' interest 
may be included in loss. Compare United States v. Henderson, 19 F.3d 
917 (5th Cir.), cert. denied, 513 U.S. 877 (1994) (holding that 
interest should be included if the victim had a reasonable expectation 
of receiving interest from the transaction); United States v. Gilberg, 
75 F.3d 15 (1st Cir. 1996) (including in loss interest on fraudulently 
procured mortgage loan); and United States v. Sharma, 190 F.3d 220 (3d 
Cir. 1999) (holding that Application Note 8 of Sec. 2F1.1 requires the 
exclusion of ``opportunity cost'' interest, but did not intend to 
exclude bargained-for interest), with United States v. Hoyle, 33 F.3d 
415 (4th Cir. 1994), cert. denied, 513 U.S. 1133 (1995) (excluding 
interest from the determination of loss for sentencing purposes); and 
United States v. Guthrie, 144 F.3d 1006 (6th Cir. 1998) (holding that 
when the defendant concealed assets in a bankruptcy proceeding, the 
lower court's determination that loss to creditors included interest 
was erroneous). This rule is consistent with the general purpose of the 
loss determination to serve as a rough measurement of the seriousness 
of the offense and culpability of the offender and avoids unnecessary 
litigation regarding the amount of interest to be included.
    The loss definition also excludes from loss certain costs incurred 
by the government and victims in connection with criminal investigation 
and prosecution of the offense. Such losses are likely to occur in a 
broad range of cases, would present a fact-finding burden in those 
cases, and would not contribute to the ability of loss to perform its 
essential function.
    The loss definition also provides for the exclusion from loss of 
certain economic benefits transferred to victims, to be measured at the 
time of detection. This provision codifies the ``net loss'' approach 
that has developed in the case law, with some modifications made for 
policy reasons. This crediting approach is adopted because the 
seriousness of the offense and the culpability of a defendant is better 
determined by using a net approach. This approach recognizes that the 
offender who transfers something of value to the victim(s) generally is 
committing a less serious offense than an offender who does not.

[[Page 30544]]

    The amendment adopts ``time of detection'' as the most appropriate 
and least burdensome time for measuring the value of the transferred 
benefits. The Commission determined that valuing such benefits at the 
time of transfer would be especially problematic in cases in which the 
offender misrepresented the value of an item that is difficult to 
value. Although the time of detection standard will allow some 
fluctuation in value which may inure to the defendant's benefit or 
detriment, the Commission determined that, because the time of 
detection is closer in time to the sentencing and occurs at a point 
when the authorities are aware of the criminality, its use generally 
would make it easier to determine a more accurate value of the benefit.
    The definition of ``time of detection'' was adopted because there 
may be situations in which it is difficult to prove that the defendant 
knew the offense was detected even if it was already discovered. In 
addition, the words ``about to be detected'' are included to cover 
those situations in which the offense is not yet detected, but the 
defendant knows it is about to be detected. In such a case, it would be 
inappropriate to credit the defendant with benefits transferred to the 
victim after that defendant's awareness.
    The definition of ``loss'' also provides special rules for certain 
schemes. One rule includes in loss (and excludes from crediting) the 
benefits received by victims of persons fraudulently providing 
professional services. This rule reverses case law that has allowed 
crediting (or exclusion from loss) in cases in which services were 
provided by persons posing as attorneys and medical personnel. See 
United States v. Maurello, 76 F.3d 1304 (3d Cir. 1996) (calculating 
loss by subtracting the value of satisfactory legal services from 
amount of fees paid to a person posing as a lawyer); and United States 
v. Reddeck, 22 F.3d 1504 (10th Cir. 1994) (reducing loss by the value 
of education received from a sham university). The Commission 
determined that the seriousness of these offenses and the culpability 
of these offenders is best reflected by a loss determination that does 
not credit the value of the unlicensed benefits provided. In addition, 
this provision eliminates the additional burden that would be imposed 
on courts if required to determine the value of these benefits.
    Similarly, the definition of loss provides a special rule that 
includes in loss (and excludes from crediting) the value of items that 
were falsely represented as approved by a regulatory agency, for which 
regulatory approval was obtained by fraud, or for which regulatory 
approval was required but not obtained. The Commission determined that 
the seriousness of these offenses and the culpability of these 
offenders is best reflected by a loss determination that does not 
credit the value of these items. This decision reflects the importance 
of the regulatory approval process to public health, safety, and 
confidence.
    Regarding investment schemes, the amendment resolves a circuit 
conflict regarding whether and how to credit payments made to victims. 
Compare United States v. Mucciante, 21 F.3d 1228 (2nd Cir. 1994) (under 
the Guidelines, loss includes the value of all property taken, even 
though all or part of it was returned.); United States v. Deavours, 219 
F.3d 400 (5th Cir. 2000) (intended loss is not reduced by any sums 
returned to investors); and United States v. Loayza, 107 F.3d 257 (4th 
Cir.1997) (declining to follow the approach of net loss and holding 
defendants responsible for the value of all property taken, even though 
all or a part is returned), with United States v. Holiusa, 13 F.3d 1043 
(7th Cir.1994) (holding that only the net loss should be included in 
loss, thus allowing a credit for returned interest), and United States 
v. Orton, 73 F.3d 331 (11th Cir. 1996) (only payments made to losing 
investors should be credited, not payments to investors who made a 
profit).
    This amendment adopts the approach of the Eleventh Circuit that 
excludes the gain to any individual investor in the scheme from being 
used to offset the loss to other individual investors because any gain 
realized by an individual investor is designed to lure others into the 
fraudulent scheme. See United States v. Orton, supra.
    The definition retains the rule providing for the use of gain when 
loss cannot reasonably be determined. It clarifies that there must be a 
loss for gain to be considered. In doing so, the Commission resolved 
another circuit conflict. Compare United States v. Robie, 166 F.3d 444 
(2d Cir. 1999) (holding that use of defendant's gain for purposes of 
subsection (b)(1) is improper if there is no economic loss to the 
victim), with United States v. Haas, 171 F.3d 259 (5th Cir. 1999) 
(stating that ``if the loss is either incalculable or zero, the 
district court must determine the Sec. 2F1.1 sentence enhancement by 
estimating the gain to the defendant as a result of his fraud''). The 
Commission decided not to expand the use of gain to situations in which 
loss can be determined but the gain is greater than the loss because 
such instances should occur infrequently, the efficiency of the 
criminal operation as reflected in the amount of gain ordinarily should 
not determine the penalty level, and the traditional use of loss is 
generally adequate.
    The amendment revises the special rule on determining loss in cases 
involving diversion of government program benefits to resolve another 
circuit conflict. The revision is intended to clarify that loss in such 
cases only includes amounts that were diverted from intended recipients 
or uses, not benefits received or used by authorized persons. In other 
words, even if such benefits flowed through an unauthorized 
intermediary, as long as they went to intended recipients for intended 
uses, the amount of those benefits should not be included in loss. 
Compare United States v. Henry, 164 F.3d 1304 (10th Cir. 1999) (holding 
that loss includes the value of gross benefits paid, rather than the 
value of benefits improperly received or diverted in determining the 
loss), with United States v. Peters, 59 F.3d 732 (8th Cir. 1995) 
(determining that loss is the value of benefits diverted from intended 
recipients); and United States v. Barnes, 117 F.3d 328 (7th Cir. 1997) 
(holding that the sentence is calculated only on the value of the 
government benefits diverted from intended recipients or users). This 
net loss approach is more consistent with general rules for determining 
loss.

Referring Guidelines for Theft and Fraud

    The amendment includes revisions to the guidelines that, prior to 
this amendment, referred to the loss tables in Sec. 2B1.1 or 
Sec. 2F1.1. Pursuant to this amendment, these guidelines will refer to 
the loss tables in the consolidated guideline. Prior to this amendment, 
the referring guidelines used the tables in Secs. 2B1.1 and 2F1.1, 
which provided the first loss increment for losses in excess of $2,000. 
Because the consolidated loss table provides the first loss increment 
for losses in excess of $5,000, the referring guidelines are amended to 
provide a one-level increase in a case in which the loss is more than 
$2,000, but did not exceed $5,000. This increase is provided to avoid a 
one-level decrease that would otherwise occur for an offense involving 
losses of more than $2,000 but not more than $5,000.
    Two referring guidelines (Secs. 2B2.1 (Burglary of a Residence or a 
Structure Other than a Residence) and 2B3.1 (Robbery)) that use the 
definition of loss previously in Sec. 2B1.1 will retain that definition 
of loss rather than the new loss definition in the consolidated 
guideline. The existing definition has

[[Page 30545]]

not proven problematic for cases sentenced under these guidelines.

Technical and Conforming Amendments

    The amendment includes a number of technical and conforming 
amendments, most of which are necessitated by the consolidation and the 
deletion of the more than minimal planning enhancement.

Computing Tax Loss

    This amendment addresses several issues related to tax loss. It 
addresses a circuit conflict regarding how tax loss under 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) the 
defendant diverts that unreported corporate income for the defendant's 
personal use; and (3) the defendant fails to report, and to pay 
personal income taxes on, that diverted income. The amendment provides 
that the amount of the federal tax loss is the sum of the federal 
income tax due from the corporation and the amount of federal income 
tax due from the individual.
    The amendment thereby resolves a circuit conflict as to the 
methodology used to calculate tax loss in cases involving a corporate 
diversion. Two circuits use a sequential method to aggregate the tax 
loss. Under this method, the court determines the corporate federal 
income tax that would have been due, subtracts that amount from the 
amount diverted to the defendant personally, then determines the 
personal federal income tax that would have been due on the reduced 
diverted amount. See United States v. Harvey, 996 F.2d 919 (7th Cir. 
1993); and United States v. Martinez-Rios, 143 F.3d 662 (2d Cir. 1998). 
The Commission adopted the alternative method used in United States v. 
Cseplo, 42 F.3d 360 (6th Cir. 1994), in which the court determines the 
corporate federal income tax due on the diverted amount, and adds that 
amount to the personal federal income tax due on the total amount 
diverted. This clarifies the prior rule in Application Note 7 of 
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'' and reflects the Commission's conclusion that, in 
cases of corporate diversions, the method for computing total tax loss 
adopted by the Sixth Circuit in Cseplo more accurately reflects the 
seriousness of the total harm caused by these offenses than would be 
reflected by the alternative method.
    In evasion-of-payment tax cases, the Commission amended the 
definition of ``tax loss'' to include interest and penalties because, 
in contrast to evasion-of-assessment tax cases, such amounts 
appropriately are included in tax loss for such cases. This amendment 
limits the inclusion of interest or penalties to willful evasion of 
payment cases under 26 U.S.C. 7201 and willful failure to pay cases 
under 26 U.S.C. 7203. The nature of these cases is such that the 
interest and penalties often greatly exceed the assessed tax amount 
constituting the bulk of the harm associated with these offenses.
    This amendment also revises the sophisticated concealment 
enhancement in subsection (b)(2) of Secs. 2T1.1 (Tax Evasion) and 2T1.4 
(Aiding, Assisting, Procuring, Counseling, or Advising Tax Fraud) to 
conform to the sophisticated means enhancement in the consolidated 
guideline, including imposition of a minimum offense level of level 12. 
This revision is appropriate inasmuch as certain tax offenses can be 
committed using sophisticated means in addition to being concealed in a 
sophisticated manner. Indeed, tax offenses committed in a sophisticated 
manner are more serious offenses, and reflect a greater culpability on 
the part of the offender (just as a tax offense concealed in a 
sophisticated manner reflects greater culpability). Consequently, this 
revision will allow the enhancement to apply to a somewhat greater 
range of tax offenses than the previously existing sophisticated 
concealment enhancement.
    In addition, the amendment revises ``offshore bank accounts'' by 
substituting ``financial'' for ``bank'', to ensure that the enhancement 
applies to conduct involving similar kinds of accounts, consistent with 
language in Sec. 2S1.1 (Laundering of Monetary Instruments; Engaging in 
Monetary Transactions in Property Derived from Unlawful Activity). A 
similar revision is made in Sec. 2B1.1.
    6. Amendment: Section 2B5.1(b)(2) is amended by inserting ``(A)'' 
after ``defendant''; and by striking ``, and the offense level as 
determined above is less than 15, increase to level 15.'' and inserting 
``; or (B) controlled or possessed (i) counterfeiting paper similar to 
a distinctive paper; or (ii) a feature or device essentially identical 
to a distinctive counterfeit deterrent, increase by 2 levels.''.
    Section 2B5.1(b) is amended by redesignating subdivisions (3) and 
(4) as subdivisions (4) and (5), respectively; and by inserting after 
subdivision (2) the following:
    ``(3) If subsection (b)(2)(A) applies, and the offense level 
determined under that subsection is less than level 15, increase to 
level 15.''.
    The Commentary to Sec. 2B5.1 captioned ``Statutory Provisions'' is 
amended by inserting ``A'' after ``474''.
    The Commentary to Sec. 2B5.1 captioned ``Application Notes'' is 
amended by striking Note 1 and inserting the following:
    ``1. Definitions.--For purposes of this guideline:
    `Distinctive counterfeit deterrent' and `distinctive paper' have 
the meaning given those terms in 18 U.S.C. 474A(c)(2) and (1), 
respectively.
    `United States' means each of the fifty states, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, the Northern Mariana Islands, and American Samoa.''.
    The Commentary to Sec. 2B5.1 captioned ``Application Notes'' is 
amended in Note 2 by inserting ``Applicability to Counterfeit Bearer 
Obligations of the United States.--'' before ``This guideline''.
    The Commentary to Sec. 2B5.1 captioned ``Application Notes'' is 
amended by striking Note 4 and inserting the following:
    ``4. Inapplicability to Certain Obviously Counterfeit Items.--
Subsection (b)(2)(A) does not apply to persons who produce items that 
are so obviously counterfeit that they are unlikely to be accepted even 
if subjected to only minimal scrutiny.''.
    The Commentary to Sec. 2B5.1 captioned ``Background'' is amended by 
striking ``(b)(3)'' and inserting ``(b)(4)''.
    Reason for Amendment: The frequency of counterfeiting offenses has 
increased significantly since 1995 due to the increasing affordability 
and availability of personal computers and digital printers. This 
amendment addresses concerns raised by the Department of the Treasury 
and the United States Secret Service regarding both the operation of, 
and the penalties provided by, Sec. 2B5.1 (Offenses Involving 
Counterfeit Bearer Obligations of the United States). The amendment 
increases penalties for counterfeiting activity in two ways.
    First, the amendment adds a two-level enhancement for 
manufacturing, in addition to the minimum offense level of level 15 for 
manufacturing. This change will ensure some degree of additional 
punishment for all offenders who engage in manufacturing activity.
    Second, the amendment adds a two-level enhancement (which would 
apply

[[Page 30546]]

alternatively to the manufacturing enhancement) if the offense involved 
possessing or controlling (1) paper that is similar to a distinctive 
paper used by the United States for its currency, obligations, or 
securities; or (2) a feature or device that is essentially identical to 
a distinctive counterfeit deterrent used by the United States for its 
currency, obligations, or securities. This enhancement is justified 
because of the higher statutory maximum penalties under 18 U.S.C. 474A 
(i.e., a term of imprisonment of up to 25 years compared to 10, 15, and 
20 years for other counterfeiting offenses). In addition, use of paper 
similar to ``distinctive paper'' and use of features and devices 
essentially identical to ``distinctive counterfeit deterrents'' (both 
of which are defined in Sec. 2B5.1 consistently with the statute) make 
the counterfeit item more passable and the offense more sophisticated.
    In addition, the amendment deletes the language in the commentary 
of Sec. 2B5.1 that suggests that the manufacturing adjustment does not 
apply if the defendant ``merely photocopies''. That commentary was 
intended to make the manufacturing minimum offense level of level 15 
inapplicable to notes that are so obviously counterfeit that they are 
unlikely to be accepted. Particularly with the advent of digital 
technology, it cannot be said that photocopying necessarily produces a 
note so obviously counterfeit as to be impassible.
    7. Amendment: Section 2C1.3 is amended in the title by adding ``; 
Payment or Receipt of Unauthorized Compensation'' after ``Interest''.
    Section 2C1.3 is amended by adding after subsection (b) the 
following:
    `` (c) Cross Reference.
    (1) If the offense involved a bribe or gratuity, apply Sec. 2C1.1 
(Offering, Giving, Soliciting, or Receiving a Bribe; Extortion Under 
Color of Official Right) or Sec. 2C1.2 (Offering, Giving, Soliciting, 
or Receiving a Gratuity), as appropriate, if the resulting offense 
level is greater than the offense level determined above.''.
    The Commentary to Sec. 2C1.3 captioned ``Statutory Provisions'' is 
amended by inserting ``, 209, 1909'' after ``208''.
    The Commentary to Sec. 2C1.3 captioned ``Application Note'' is 
amended in Note 1 by inserting ``Abuse of Position of Trust.--'' before 
``Do not''.
    The Commentary to Sec. 2C1.3 is amended by striking the background.
    Chapter Two, Part C is amended by striking Sec. 2C1.4 and its 
accompanying commentary. Section 8C2.1(a) is amended by striking 
``2C1.4,''.
    Reason for Amendment: The amendment (1) consolidates Secs. 2C1.3 
(Conflict of Interest) and 2C1.4 (Payment or Receipt of Unauthorized 
Compensation) covering payments to obtain public office, to promote 
ease of application; and (2) adds a cross reference in Sec. 2B1.1 
(Theft, Property Destruction, and Fraud) to Sec. 2C1.1 (Offering, 
Giving, Soliciting, or Receiving a Bribe; Extortion Under Color of 
Official Right) and Sec. 2C1.2 (Offering, Giving, Soliciting, or 
Receiving a Gratuity) to account for aggravating conduct often 
occurring in offenses involving the unlawful supplementation of the 
salary of various federal officials and employees committed in 
violation of 18 U.S.C. 209.
    The amendment simplifies guideline operation by consolidating 
Secs. 2C1.3 and 2C1.4. Consolidation is appropriate because the 
gravamen of the offenses covered by Secs. 2C1.3 and 2C1.4 is similar: 
unauthorized receipt of a payment in respect to an official act. The 
cross reference to Sec. 2C1.1 or Sec. 2C1.2 was added by this amendment 
because the cases to which these guidelines apply usually involve a 
conflict of interest offense that is associated with a bribe or 
gratuity.
    8. Amendment: Section 2D1.1(b)(5) through (7), Notes 20 and 21 of 
the Commentary to Sec. 2D1.1 captioned ``Application Notes'', the ninth 
and tenth paragraphs of the Commentary to Sec. 2D1.1 captioned 
``Background'', and Sec. 2D1.10, effective December 16, 2001 (see USSC 
Guidelines Manual Supplement to the 2000 Supplement to Appendix C, 
Amendment 608), are repromulgated with the following changes:
    Section 2D1.1(b) is amended by striking subdivision (5); by 
redesignating subdivisions (6) and (7) as subdivisions (5) and (6), 
respectively; by redesignating subdivisions (5)(A) and (5)(B), as 
redesignated by this amendment, as subdivisions (5)(B) and (5)(C), 
respectively; and by inserting before subdivision (5)(B), as 
redesignated by this amendment, the following:
    ``(A) If the offense involved (i) an unlawful discharge, emission, 
or release into the environment of a hazardous or toxic substance; or 
(ii) the unlawful transportation, treatment, storage, or disposal of a 
hazardous waste, increase by 2 levels.''.
    Section 2D1.1(b)(5)(B), as redesignated by this amendment, is 
amended by striking ``subsection (b)(6)(B)'' and inserting 
``subdivision (C)''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended by striking Note 20 and inserting the following:
    ``20. Hazardous or Toxic Substances.''--Subsection (b)(5)(A) 
applies if the conduct for which the defendant is accountable under 
Sec. 1B1.3 (Relevant Conduct) involved any discharge, emission, 
release, transportation, treatment, storage, or disposal violation 
covered by the Resource Conservation and Recovery Act, 42 U.S.C. 
Sec. 6928(d); the Federal Water Pollution Control Act, 33 U.S.C. 
1319(c); the Comprehensive Environmental Response, Compensation, and 
Liability Act, 42 U.S.C. Sec. 9603(b); or 49 U.S.C. Sec. 5124 (relating 
to violations of laws and regulations enforced by the Department of 
Transportation with respect to the transportation of hazardous 
material). In some cases, the enhancement under subsection (b)(5)(A) 
may not account adequately for the seriousness of the environmental 
harm or other threat to public health or safety (including the health 
or safety of law enforcement and cleanup personnel). In such cases, an 
upward departure may be warranted. Additionally, in determining the 
amount of restitution under Sec. 5E1.1 (Restitution) and in fashioning 
appropriate conditions of probation and supervision under Secs. 5B1.3 
(Conditions of Probation) and 5D1.3 (Conditions of Supervised Release), 
respectively, any costs of environmental cleanup and harm to 
individuals or property shall be considered by the court in cases 
involving the manufacture of amphetamine or methamphetamine and should 
be considered by the court in cases involving the manufacture of a 
controlled substance other than amphetamine or methamphetamine. See 21 
U.S.C. 853(q) (mandatory restitution for cleanup costs relating to the 
manufacture of amphetamine and methamphetamine).''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 21(A) by striking ``(b)(6)'' and inserting ``(b)(5)(B) 
or (C)''; by striking ``may consider factors such as the following'' 
and inserting ``shall include consideration of the following factors''; 
by striking ``or'' after ``at the laboratory,'' and inserting ``and''; 
by striking ``or'' after ``disposed,'' and inserting ``and''; by 
striking ``or'' after ``the offense'' and inserting ``and''; by 
striking ``amphetamine or methamphetamine''; and by inserting ``whether 
the laboratory is located'' after ``e.g.,''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 21(B) by striking ``(b)(6)(B)'' and inserting 
``(b)(5)(C)''.

[[Page 30547]]

    The Commentary to Sec. 2D1.1 captioned ``Background'' is amended in 
the ninth paragraph by inserting ``(A)'' after ``(b)(5)''; and in the 
tenth paragraph by striking ``Subsection (b)(6) implements'' and 
inserting ``Subsections (b)(5)(B) and (C) implement, in a broader 
form,''; and by striking ``878'' and inserting ``310''.
    The Commentary to Sec. 2D1.10 captioned ``Application Note'' is 
amended in Note 1 by striking ``may consider factors such as the 
following'' and inserting ``shall include consideration of the 
following factors''; by striking ``or'' after ``at the laboratory,'' 
and inserting ``and''; by striking ``or'' after ``disposed,'' and 
inserting ``and''; by striking ``or'' after ``the offense'' and 
inserting ``and''; by striking ``amphetamine or methamphetamine''; and 
by inserting ``whether the laboratory is located'' after ``e.g.,''.
    The Commentary to Sec. 2D1.10 captioned ``Background'' is amended 
by striking ``878'' and inserting ``310''.
    Reason for Amendment: The Commission promulgated an emergency 
amendment addressing the directive in section 102 (the ``substantial 
risk directive'') of the Methamphetamine Anti-Proliferation Act of 
2000, Pub. L. 106-310 (the ``Act''), with an effective date of December 
16, 2000. (See USSC Guidelines Manual Supplement to the 2000 Supplement 
to Appendix C, Amendment 608.) This amendment repromulgates the 
emergency amendment, with modifications, as a permanent amendment.
    The substantial risk directive instructs the Commission to amend 
the federal sentencing guidelines with respect to any offense relating 
to the manufacture, attempt to manufacture, or conspiracy to 
manufacture amphetamine or methamphetamine in (1) the Controlled 
Substances Act, 21 U.S.C. 801-90; (2) the Controlled Substances Import 
and Export Act, 21 U.S.C. 951-71; or (3) the Maritime Drug Law 
Enforcement Act, 46 U.S.C. App. 1901-04.
    The Act requires the Commission, in carrying out the substantial 
risk directive, to provide the following enhancements--
    (A) if the offense created a substantial risk of harm to human life 
(other than a life described in subparagraph (B)) or the environment, 
increase the base offense level for the offense--
    (i) by not less than 3 offense levels above the applicable level in 
effect on the date of the enactment of this Act; or
    (ii) if the resulting base offense level after an increase under 
clause (i) would be less than level 27, to not less than level 27; or
    (B) if the offense created a substantial risk of harm to the life 
of a minor or incompetent, increase the base offense level for the 
offense--
    (i) by not less than 6 offense levels above the applicable level in 
effect on the date of the enactment of this Act; or
    (ii) if the resulting base offense level after an increase under 
clause (i) would be less than level 30, to not less than level 30.
    The emergency amendment provided enhancements in Secs. 2D1.1 
(Unlawful Manufacturing, Importing, Exporting, or Trafficking 
(Including Possession with Intent to Commit These Offenses); Attempt or 
Conspiracy) and 2D1.10 (Endangering Human Life While Illegally 
Manufacturing a Controlled Substance) that also apply in the case of an 
attempt or a conspiracy to manufacture amphetamine or methamphetamine. 
The amendment did not amend Sec. 2D1.11 (Unlawfully Distributing, 
Importing, Exporting or Possessing a Listed Chemical; Attempt or 
Conspiracy) or Sec. 2D1.12 (Unlawful Possession, Manufacture, 
Distribution, or Importation of Prohibited Flask or Equipment). 
Although offenses that involve the manufacture of amphetamine or 
methamphetamine also are referenced in Appendix A (Statutory Index) to 
Secs. 2D1.11 and 2D1.12, the cross references in these guidelines, 
which apply if the offense involved the manufacture of a controlled 
substance, will result in application of Sec. 2D1.1 and accordingly, 
the enhancements.
    The basic structure of the emergency amendment to Secs. 2D1.1 and 
2D1.10 tracked the structure of the substantial risk directive. 
Accordingly, in Sec. 2D1.1, the amendment provided a three-level 
increase and a minimum offense level of level 27 if the offense (1) 
involved the manufacture of amphetamine or methamphetamine; and (2) 
created a substantial risk of harm either to human life or the 
environment. For offenses that created a substantial risk of harm to 
the life of a minor or an incompetent, the amendment provided a six-
level increase and a minimum offense level of level 30.
    However, the structure of the emergency amendment to Sec. 2D1.10 
differed from the structure of the emergency amendment to 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 emergency amendment provided a three-level increase 
and a minimum offense level of level 27 if the offense involved the 
manufacture of amphetamine or methamphetamine without making 
application of the enhancement dependent upon whether the offense also 
involved a substantial risk of either harm to human life or the 
environment. Consideration of whether the offense involves a 
substantial risk of harm to human life also is unnecessary because 
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 
an offense under 21 U.S.C. 858. Therefore, the base offense level 
already takes into account the substantial risk of harm to human life. 
Consideration of whether the offense involved a substantial risk of 
harm to the environment was unnecessary because the directive 
predicated application of the enhancement on substantial risk of harm 
either to human life or to the environment, and the creation of a 
substantial risk of harm to human life necessarily is taken into 
account as an element of the offense.
    Neither the substantial risk directive nor any statutory provision 
defines ``substantial risk of harm.'' Based on an analysis of relevant 
case law that interpreted ``substantial risk of harm,'' the emergency 
amendment provided commentary setting forth factors that may be 
relevant in determining whether a particular offense created a 
substantial risk of harm. The definition of ``incompetent'' was modeled 
after several state statutes.
    This permanent amendment re-promulgates, with modifications, the 
emergency amendment regarding the substantial risk directive. This 
amendment differs from the emergency amendment in several respects:
    First, in Sec. 2D1.1, this amendment treats the existing specific 
offense characteristic in Sec. 2D1.1(b)(5), relating to a two-level 
enhancement for environmental violations occurring in the course of a 
drug trafficking offense, as an alternative to the three-level 
enhancement for substantial risk of harm to human life or the 
environment. This portion of the amendment is in response to an issue 
related to the substantial risk directive regarding how to implement it 
in a manner consistent with the earlier environmental hazard directive 
in section 303 of the Comprehensive Methamphetamine Control Act, Pub. 
L. 104-237. The emergency amendment made the enhancements cumulative. 
However, this permanent amendment makes the new guideline provision 
alternative with the pre-existing enhancement for environmental hazards 
in Sec. 2D1.1.
    Second, in Sec. 2D1.1, this amendment lists four factors that the 
court ``shall'', as opposed to ``may'', consider to determine whether 
subsection (b)(6)(A)

[[Page 30548]]

or (B) applies. Similarly, in Sec. 2D1.10, this amendment lists four 
factors the court ``shall'' consider to determine whether subsection 
(b)(1)(B) applies. The list of four factors was identified by the 
Commission to assist the courts in defining the meaning of 
``substantial risk of harm'' for offenses related to the production and 
trafficking of precursor chemicals and the manufacture of amphetamine 
and methamphetamine.
    Third, in Sec. 2D1.1, this amendment provides that the court (1) 
shall consider any costs of environmental cleanup and harm to 
individuals and property in cases involving the manufacture of 
amphetamine or methamphetamine in determining the amount of restitution 
under Sec. 5E1.1 (Restitution) and in fashioning appropriate conditions 
of probation and supervision under Secs. 5B1.3 (Conditions of 
Probation) and 5D1.3 (Conditions of Supervised Release), and (2) should 
consider such costs and harms in cases involving the manufacture of a 
controlled substance other than amphetamine or methamphetamine.
    The amendment also makes a minor technical change in the background 
commentary.
    9. Amendment: The subdivision captioned ``LSD, PCP, and Other 
Schedule I and II Hallucinogens (and their immediate precursors)*'' of 
the Drug Equivalency Tables of Note 10 of the Commentary to Sec. 2D1.1 
captioned ``Application Notes'', effective May 1, 2001 (see USSC 
Guidelines Manual Supplement to the 2000 Supplement to Appendix C 
Amendment 609), is repromulgated without change.
    Reason for Amendment: This amendment repromulgates (as a permanent 
amendment) without change the emergency amendment previously 
promulgated that addressed the directive in section 3664 of the Ecstasy 
Anti-Proliferation Act of 2000, Pub. L. 106-310 (the ``Act''). (See 
USSC Guidelines Manual Supplement to the 2000 Supplement to Appendix C, 
Amendment 609). That directive instructs the Commission to provide 
increased penalties for the manufacture, importation, exportation, or 
trafficking of ``Ecstasy''. The directive specifically requires the 
Commission to increase the base offense level for 3,4-
Methylenedioxymethamphetamine (MDMA), 3,4-Methylenedioxyamphetamine 
(MDA), 3,4-Methylenedioxy-N-ethylamphetamine (MDEA), 
Paramethoxymethamphetamine (PMA), and any other controlled substance 
that is marketed as ``Ecstasy'' and that has either a chemical 
structure similar to MDMA or an effect on the central nervous system 
substantially similar to or greater than MDMA.
    The amendment addresses the directive by amending the Drug 
Equivalency Tables in Sec. 2D1.1, Application Note 10, to increase 
substantially the marihuana equivalencies for the specified controlled 
substances, which has the effect of substantially increasing the 
penalties for offenses involving ``Ecstasy''. The new penalties for 
``Ecstasy'' trafficking provide penalties which, gram for gram, are 
more severe than those for powder cocaine. Under the Drug Equivalency 
Tables, one gram of powder cocaine has a marihuana equivalency of 200 
grams. This amendment sets the marihuana equivalency for one gram of 
``Ecstasy'' at 500 grams.
    There is a combination of reasons why the Commission has 
substantially increased the penalties in response to the congressional 
directive. Much evidence received by the Commission indicated that 
``Ecstasy'' (1) has powerful pharmacological effects; (2) has the 
capacity to cause lasting physical harms, including brain damage; and 
(3) is being abused by rapidly increasing numbers of teenagers and 
young adults. Indeed, the market for ``Ecstasy'' is overwhelmingly 
comprised of persons under the age of 25 years.
    The Commission considered whether the penalty levels for 
``Ecstasy'' should be set at the same levels as for heroin (one gram of 
heroin has a marihuana equivalency of 1000 grams) and decided that 
somewhat lesser penalties were appropriate for ``Ecstasy'' for a number 
of reasons: (1) The potential for addiction is greater with heroin; (2) 
heroin distribution often involves violence while, at this time, 
violence is not reported in ``Ecstasy'' markets; (3) because heroin is 
a narcotic and is often injected, the risk of death from overdose is 
much greater than for ``Ecstasy''; and (4) because heroin is often 
injected, there are more secondary health consequences, such as 
infections and the transmission of the human immunodeficiency virus 
(HIV) and hepatitis than for ``Ecstasy''.
    Finally, based on information regarding ``Ecstasy'' trafficking 
patterns, the penalty levels chosen are appropriate and sufficient to 
target serious and high-level traffickers and to provide appropriate 
punishment, deterrence, and incentives for cooperation. The penalty 
levels chosen for ``Ecstasy'' offenses provide five year sentences for 
serious traffickers (those whose relevant conduct involved 
approximately 800 pills) and ten year sentences for high-level 
traffickers (those whose relevant conduct involved approximately 8,000 
pills).
    10. Amendment: Section 2D1.1(b)(4) is amended by inserting 
``amphetamine or'' before ``methamphetamine'' each place it appears.
    The Commentary to Sec. 2D1.1 captioned ``Statutory Provisions'' is 
amended by inserting ``; 49 U.S.C. 46317(b)'' after ``960(a), (b)''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 19 by inserting ``amphetamine or'' before 
``methamphetamine''.
    Appendix A (Statutory Index), as amended by amendment 5, is further 
amended by inserting after the line referenced to 49 U.S.C. 46317(a) 
the following new line:
    ``49 U.S.C. 46317(b)  2D1.1''.
    The sixth entry, relating to Amphetamine and Amphetamine (actual), 
in each of subdivisions (1) through (14) of section 2D1.1(c), Note (B) 
of the ``*Notes to Drug Quantity Table'' in Sec. 2D1.1(c), Note 9 of 
the Commentary to Sec. 2D1.1 captioned ``Application Notes'', and the 
subdivision captioned ``Cocaine and Other Schedule I and II Stimulants 
(and their immediate precursors)*'' of the Drug Equivalency Tables in 
Note 10 of the Commentary to Sec. 2D1.1 captioned ``Application 
Notes'', effective May 1, 2001 (see USSC Guidelines Manual Supplement 
to the 2000 Supplement to Appendix C Supplement, Amendment 610), are 
repromulgated with the following change:
    The Commentary to 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 ``1 gm of Dextroamphetamine = 200 
gm of marihuana''.
    Reason for Amendment: This amendment repromulgates as a permanent 
amendment the emergency amendment previously promulgated to implement 
the directive in section 3611 of the Methamphetamine Anti-Proliferation 
Act of 2000, Pub. L. 106-310 (the ``Act''), which directs the 
Commission to provide increased guideline penalties for amphetamine 
offenses such that those penalties are comparable to the base offense 
level for methamphetamine offenses. The directive provided the 
Commission emergency amendment authority. (See USSC Guidelines Manual 
Supplement to the 2000 Supplement to Appendix C, Amendment 610.)
    This amendment revises Sec. 2D1.1 to include amphetamine in the 
Drug Quantity Table in Sec. 2D1.1 (Unlawful Manufacturing, Importing, 
Exporting, or

[[Page 30549]]

Trafficking (Including Possession with Intent to Commit These 
Offenses); Attempt or Conspiracy). This amendment also treats 
amphetamine and methamphetamine identically, at a 1:1 ratio (i.e., the 
same quantities of amphetamine and methamphetamine will result in the 
same base offense level) because of the similarities of the two 
substances. Specifically, amphetamine and methamphetamine (1) are 
chemically similar; (2) are produced by a similar method and are 
trafficked in a similar manner; (3) share similar methods of use; (4) 
affect the same parts of the brain; and (5) have similar intoxicating 
effects. The amendment also distinguishes between pure amphetamine 
(i.e., amphetamine (actual)) and amphetamine mixture in the same 
manner, and at the same quantities, as pure methamphetamine (i.e., 
methamphetamine (actual)) and methamphetamine mixture, respectively. 
The Commission determined that the 1:1 ratio is appropriate given the 
similarity of these two controlled substances.
    This amendment differs from the emergency amendment in that it also 
(1) amends Sec. 2D1.1(b)(4) to make the enhancement for the importation 
of methamphetamine applicable to amphetamine offenses as well, and 
makes a conforming change in the commentary to Sec. 2D1.1 in 
Application Note 19; (2) deletes as unnecessary the marihuana 
equivalency for dextroamphetamine in the Drug Equivalency Tables in 
Sec. 2D1.1; and (3) amends Appendix A (Statutory Index) to refer a new 
offense at 49 U.S.C. 46317(b), (prohibiting transportation of 
controlled substances by aircraft) to Sec. 2D1.1.
    11. Amendment: Section 2D1.1(c)(1) is amended by striking the 
period after ``Hashish Oil'' and inserting a semi-colon; and by adding 
at the end the following: ``30,000,000 units or more of Schedule I or 
II Depressants; 1,875,000 units or more of Flunitrazepam.''.
    Section 2D1.1(c)(2) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 10,000,000 but less than 30,000,000 units of 
Schedule I or II Depressants; At least 625,000 but less than 1,875,000 
units of Flunitrazepam.''.
    Section 2D1.1(c)(3) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 3,000,000 but less than 10,000,000 units of 
Schedule I or II Depressants; At least 187,500 but less than 625,000 
units of Flunitrazepam.''.
    Section 2D1.1(c)(4) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 1,000,000 but less than 3,000,000 units of 
Schedule I or II Depressants; At least 62,500 but less than 187,500 
units of Flunitrazepam.''.
    Section 2D1.1(c)(5) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 700,000 but less than 1,000,000 units of 
Schedule I or II Depressants; At least 43,750 but less than 62,500 
units of Flunitrazepam.''.
    Section 2D1.1(c)(6) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 400,000 but less than 700,000 units of 
Schedule I or II Depressants; At least 25,000 but less than 43,750 
units of Flunitrazepam.''.
    Section 2D1.1(c)(7) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 100,000 but less than 400,000 units of 
Schedule I or II Depressants; At least 6,250 but less than 25,000 units 
of Flunitrazepam.''.
    Section 2D1.1(c)(8) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 80,000 but less than 100,000 units of 
Schedule I or II Depressants; At least 5,000 but less than 6,250 units 
of Flunitrazepam.''.
    Section 2D1.1(c)(9) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 60,000 but less than 80,000 units of Schedule 
I or II Depressants; At least 3,750 but less than 5,000 units of 
Flunitrazepam.''.
    Section 2D1.1(c)(10) is amended in the line referenced to Schedule 
I or II Depressants by striking ``40,000 or more'' and inserting ``At 
least 40,000 but less than 60,000''; and in the line referenced to 
Flunitrazepam, by striking ``2,500 or more'' and inserting ``At least 
2,500 but less than 3,750''.
    The Commentary to 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.''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 10 in the Drug Equivalency Tables in the subdivision 
captioned ``Schedule III Substances****'' by striking ``Schedule I or 
II depressants,'' after ``Schedule III Substances,''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 17 by striking ``(e.g., the maximum offense level in 
the Drug Quantity Table for flunitrazepam is level 20)''.
    Reason for Amendment: This amendment implements the Hillory J. 
Farias and Samantha Reid Date-Rape Drug Prohibition Act of 2000, Pub. 
L. 106-172 (the ``Act''), which provides the emergency scheduling of 
gamma hydroxybutyric acid (``GHB'') as a Schedule I controlled 
substance under the Controlled Substances Act when the drug is used 
illicitly. The Act also amended section 401(b)(1)(C) of the Controlled 
Substances Act, 21 U.S.C. 841(b)(1)(C), and section 1010(b)(3) of the 
Controlled Substances Import and Export Act, 21 U.S.C. 960(b)(3), to 
provide penalties of not more than 20 years' imprisonment for an 
offense that involves GHB.
    This amendment eliminates the maximum base offense level of level 
20 in the Drug Quantity Table of Sec. 2D1.1 (Unlawful Manufacturing, 
Importing, Exporting, or Trafficking (Including Possession with Intent 
to Commit These Offenses); Attempt or Conspiracy) for Schedule I and II 
depressants (including GHB). The same change is made with respect to 
flunitrazepam, which, for sentencing purposes, is tied to Schedule I 
and II depressants. The Commission determined that increased penalties 
for the more serious offenses involving Schedule I and II depressants 
are appropriate.
    Corresponding changes to the Drug Equivalency Tables in Sec. 2D1.1 
were made for both Flunitrazepam and Schedule I or II depressants by 
eliminating the maximum marihuana equivalency when offenses involving 
these controlled substances also involve

[[Page 30550]]

offenses for controlled substances in Schedules III, IV, or V.
    12. Amendment: Section 2D1.1(b)(6), as redesignated by amendment 8, 
is amended by inserting ``subsection (a) of'' after ``(1)-(5) of''; and 
by striking ``and the offense level determined above is level 26 or 
greater''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'', as 
amended by amendments 8, 10, and 11, is further amended by striking 
Note 14; and by redesignating Notes 15 through 21 as Notes 14 through 
20, respectively.
    Section 5C1.2 is amended in the first paragraph by striking ``In'' 
and inserting ``(a) Except as provided in subsection (b), in''.
    Section 5C1.2 is amended by inserting after subsection (a), as so 
designated by this amendment, the following:
    ``(b) In the case of a defendant (1) who meets the criteria set 
forth in subsection (a); and (2) for whom the statutorily required 
minimum sentence is at least five years, the offense level applicable 
from Chapters Two (Offense Conduct) and Three (Adjustments) shall be 
not less than level 17.''.
    The Commentary to Sec. 5C1.2 captioned ``Application Notes'' is 
amended in Note 2 by striking ``subdivision'' and inserting 
``subsection (a)''.
    The Commentary to Sec. 5C1.2 captioned ``Application Notes'' is 
amended in Note 3 by striking ``subdivisions'' and inserting 
``subsection (a)''; and striking ``subdivision'' and inserting 
``subsection (a)''.
    The Commentary to Sec. 5C1.2 captioned ``Application Notes'' is 
amended in Notes 4 through 7 by striking ``subdivision'' each place it 
appears and inserting ``subsection (a)''.
    Reason for Amendment: This amendment expands the eligibility for 
the two-level reduction in subsection (b)(6) of Sec. 2D1.1 (Unlawful 
Manufacturing, Importing, Exporting, or Trafficking (Including 
Possession with Intent to Commit These Offenses); Attempt or 
Conspiracy) for persons who meet the criteria set forth in Sec. 5C1.2 
(Limitation on Applicability of Statutory Minimum Sentences in Certain 
Cases) to include defendants with an offense level less than level 26. 
The Commission determined that limiting the applicability of this 
reduction to defendants with an offense level of level 26 or greater is 
inconsistent with the general principles underlying this two-level 
reduction (and the related safety valve provision, see 18 U.S.C. 
3553(f)) to provide lesser punishment for first time, nonviolent 
offenders.
    This amendment also establishes in Sec. 5C1.2 a minimum offense 
level of level 17 for a defendant who meets the requirements set forth 
in Sec. 5C1.2, and for whom the statutorily required minimum sentence 
is at least five years, in order to comply more strictly with the 
directive to the Commission at section 80001(b) of the Violent Crime 
Control and Law Enforcement Act of 1994, Pub. L. 103-322.
    13. Amendment: The subdivision captioned ``List I Chemicals 
(relating to the manufacture of amphetamine or 
methamphetamine)*******'' in the Drug Equivalency Tables in Note 10 of 
the Commentary to Sec. 2D1.1 captioned ``Application Notes'' and 
Sec. 2D1.11, effective May 1, 2001 (see USSC Guidelines Manual 
Supplement to the 2000 Supplement to Appendix C, Amendment 611), are 
repromulgated with the following changes:
    Section 2D1.11 is amended in the heading to subsection (d)(1) by 
striking ``(d)(1)'' before ``Ephedrine,'' and inserting ``(d)''.
    Section 2D1.11 is amended in the heading to subsection (d)(2) by 
striking ``(d)(2)'' before ``Chemical'' and inserting ``(e)''.
    Section 2D1.11(e)(1), as redesignated by this amendment, is amended 
by striking the period after ``3, 4-Methylenedioxyphenyl-2-propanone'' 
and inserting a semicolon; and by adding at the end the following: 
``10,000 KG or more of Gamma-butyrolactone.''.
    Section 2D1.11(e)(2), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 3,000 KG but less than 10,000 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``376.2 G or more 
of Iodine.''.
    Section 2D1.11(e)(3), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 1,000 KG but less than 3,000 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 125.4 G 
but less than 376.2 G of Iodine.''.
    Section 2D1.11(e)(4), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 700 KG but less than 1,000 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 87.8 G 
but less than 125.4 G of Iodine.''.
    Section 2D1.11(e)(5), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 400 KG but less than 700 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 50.2 G 
but less than 87.8 G of Iodine.''.
    Section 2D1.11(e)(6), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 100 KG but less than 400 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 12.5 G 
but less than 50.2 G of Iodine.''.
    Section 2D1.11(e)(7), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 80 KG but less than 100 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 10 G but 
less than 12.5 G of Iodine. ``.
    Section 2D1.11(e)(8), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 60 KG but less than 80 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 7.5 G 
but less than 10 G of Iodine.''.
    Section 2D1.11(e)(9), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following:
    ``At least 40 KG but less than 60 KG of Gamma-butyrolactone;''; and 
in the subdivision captioned ``List II Chemicals'' by striking the 
period after ``Toluene'' and inserting a semi-colon; and by adding at 
the end the following: ``At least 5 G but less than 7.5 G of Iodine.''.
    Section 2D1.11(e)(10), as redesignated by this amendment, is 
amended in the subdivision captioned ``List I Chemicals'' by adding at 
the end the following: ``Less than 40 KG of Gamma-butyrolactone;''; and 
in the subdivision

[[Page 30551]]

captioned ``List II Chemicals'' by striking the period after 
``Toluene'' and inserting a semi-colon; and by adding at the end the 
following: ``Less than 5 G of Iodine.''.
    Reason for Amendment: This amendment repromulgates, with additional 
changes, the emergency amendment previously promulgated in response to 
the three-part directive in section 3651 of the Methamphetamine Anti-
Proliferation Act of 2000, Pub. L. 106-310 (the ``Act''), regarding 
enhanced punishment for trafficking in List I chemicals. (See 
Guidelines Manual Supplement to the 2000 Supplement to Appendix C, 
Amendment 611). That section provided the Commission emergency 
amendment authority to implement the directive.
    This amendment provides a new chemical quantity table in 
Sec. 2D1.11 (Unlawfully Distributing, Importing, Exporting or 
Possessing a Listed Chemical; Attempt or Conspiracy) specifically for 
ephedrine, pseudoephedrine, and phenylpropanolamine (PPA). The table 
ties the base offense levels for these chemicals to the base offense 
levels for methamphetamine (actual) set forth in Sec. 2D1.1 (Unlawful 
Manufacturing, Importing, Exporting, or Trafficking (Including 
Possession with Intent to Commit These Offenses); Attempt or 
Conspiracy), assuming a 50 percent actual yield of the controlled 
substance from the chemicals. (Methamphetamine (actual) is used rather 
than methamphetamine mixture because ephedrine and pseudoephedrine 
produce methamphetamine (actual), and PPA produces amphetamine 
(actual)). This yield is based on information provided by the Drug 
Enforcement Administration (DEA) that the typical yield of these 
substances for clandestine laboratories is 50 to 75 percent.
    This new chemical quantity table has a maximum base offense level 
of level 38 (as opposed to a maximum base offense level of level 30 for 
all other precursor chemicals). Providing a maximum base offense level 
of level 38 complies with the directive to establish penalties for 
these precursors that ``correspond to the quantity of controlled 
substance that reasonably could have been manufactured using the 
quantity of ephedrine, phenylpropanolamine, or pseudoephedrine 
possessed or distributed.'' Additionally, this eliminates the six-level 
distinction that currently exists between precursor chemical offenses 
that involve intent to manufacture amphetamine or methamphetamine and 
such offenses that also involve an actual attempt to manufacture 
amphetamine or methamphetamine.
    This amendment eliminates the Ephedrine Equivalency Table in 
Sec. 2D1.11 and, in its place, provides a general rule for the court to 
determine the base offense level in cases involving multiple precursors 
(other than ephedrine, pseudoephedrine, or PPA) by using the quantity 
of the single chemical resulting in the greatest offense level. An 
upward departure is provided for cases in which the offense level does 
not adequately address the seriousness of the offense.
    However, this amendment provides an exception to that general rule 
for offenses that involve a combination of ephedrine, pseudoephedrine, 
or PPA because these chemicals often are used in the same manufacturing 
process. In a case that involves two or more of these chemicals, the 
base offense level will be determined using the total quantity of these 
chemicals involved. The purpose of this exception is twofold: (1) Any 
of the three primary precursors in the same table can be combined 
without difficulty; and (2) studies conducted by the DEA indicate that 
because the manufacturing process for amphetamine is essentially 
identical to the manufacturing process for methamphetamine, there are 
cases in which the different precursors are included in the same batch 
of drugs. If the chemical is PPA, amphetamine results; if the chemical 
is ephedrine or pseudoephedrine, methamphetamine results.
    The amendment also adds to the Drug Equivalency Tables in 
Sec. 2D1.1 a conversion table for these precursor chemicals, providing 
for a 50 percent conversion ratio. This is based on data from the DEA 
that the actual yield from ephedrine, pseudoephedrine, or PPA typically 
is in the range of 50 to 75 percent. The purpose of this part of the 
amendment is to achieve the same punishment level (as is achieved by 
the first part of this amendment) for an offense involving any of these 
precursor chemicals when such offense involved the manufacture of 
amphetamine or methamphetamine and, as a result, is sentenced under 
Sec. 2D1.1 pursuant to the cross reference in Sec. 2D1.11.
    This amendment also increases the base offense level for 
Benzaldehyde, Hydriodic Acid, Methylamine, Nitroethane, and 
Norpseudoephedrine by re-calibrating these levels to the appropriate 
quantity of methamphetamine (actual) that could be produced assuming a 
50 percent yield of chemical to drug and retaining a cap at level 30. 
Previously, these chemicals had been linked to methamphetamine 
(mixture) penalty levels. Based on a study conducted by the DEA, 
ephedrine and pseudoepehdrine are the primary precursors used to make 
methamphetamine in the United States. Phenylproponolamine is the 
primary precursor used to make amphetamine. Unlike the five additional 
List I chemicals, the chemical structures of ephedrine, 
pseudoephedrine, and PPA are so similar to the resulting drug (i.e., 
methamphetamine or amphetamine) that the manufacture of methamphetamine 
or amphetamine from ephedrine, pseudoephedrine, or PPA is a very simple 
one-step synthesis which anyone can perform using a variety of chemical 
reagents. The manufacture of methamphetamine or amphetamine from the 
five additional List I chemicals is a more complex process which 
requires a heightened level of expertise.
    This amendment adds to the emergency amendment in two ways. First, 
it amends the Chemical Quantity Table in Sec. 2D1.11 to include gamma-
butyrolactone (GBL), a precursor for gamma hydroxybutyric acid (GHB), 
as a List I chemical. This change is in response to the Hillory J. 
Farias and Samantha Reid Date Rape Prohibition Act of 2000, Pub. L. 
106-172, which added GBL to the list of List 1 chemicals in section 401 
(b)(1)(C) of the Controlled Substances Act, 21 U.S.C. 841(b)(1)(C). 
Offense levels for GBL were established in the same manner as other 
List I chemicals. The offense level for a specific quantity of GHB that 
can be produced from a given quantity of GBL, assuming a 50 percent 
yield, was determined using the Drug Quantity Table in Sec. 2D1.1. From 
this offense level, six levels were subtracted to reflect the fact that 
an attempt to manufacture is not a required element of these offenses 
and, therefore, they are less serious offenses than offenses covered by 
Sec. 2D1.1.
    Second, the amendment adds iodine to the Chemical Quantity Table in 
Sec. 2D1.1 in response to a recent classification of iodine as a List 
II chemical. Iodine is used to produce hydrogen iodide which, in the 
presence of water, becomes hydriodic acid, a List I chemical that is a 
reagent used in the production of amphetamine and methamphetamine. The 
penalties for iodine were established based upon its conversion to 
hydriodic acid.
    14. Amendment: Section 2D1.12 is amended in the title by inserting 
``Transportation, Exportation,'' after ``Distribution,''; and by 
striking ``or Equipment'' and inserting ``, Equipment, Chemical, 
Product, or Material''.

[[Page 30552]]

    Section 2D1.12(a)(1), (a)(2), and (b)(1) are amended by inserting 
``flask,'' after ``prohibited'' each place it appears; and by inserting 
``, chemical, product, or material'' after ``equipment'' each place it 
appears.
    The Commentary to 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 and inserting the following:
    ``If the offense involved the large-scale manufacture, 
distribution, transportation, exportation, or importation of prohibited 
flasks, equipment, chemicals, products, or material, an upward 
departure may be warranted.''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to 21 U.S.C. Sec. 863 the following:
    ``21 U.S.C. 864-2D1.12''.
    Reason for Amendment: This amendment addresses the new offense, in 
section 423 of the Controlled Substances Act, 21 U.S.C. 864, of 
stealing or transporting across state lines anhydrous ammonia knowing, 
intending, or having reasonable cause to believe that such anhydrous 
ammonia will be used to manufacture a controlled substance. This new 
offense, created by section 3653 of the Methamphetamine Anti-
Proliferation Act of 2000, Pub. L. 106-310, carries the statutory 
penalties contained in section 403(d) of the Controlled Substances Act, 
21 U.S.C. 843, i.e., not more than four years' imprisonment (or not 
more than eight years' imprisonment in the case of certain prior 
convictions), or not more than ten years' imprisonment (or not more 
than 20 years' imprisonment in the case of certain prior convictions) 
if the offense involved the manufacture of methamphetamine.
    The amendment references the new offense to 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 
that already are referenced to the guideline and have the same penalty 
structure, such as 21 U.S.C. 843(a)(6), which among other things, makes 
it unlawful to possess any chemical, product, or material that may be 
used to manufacture a controlled substance. In addition, this amendment 
expands the coverage of Application Note 1 to also apply to cases 
involving the transportation and exportation of prohibited chemicals, 
products, or material. Finally, the amendment makes minor, non-
substantive changes to the guideline in order to fully incorporate the 
new and existing offenses.
    15. Amendment: Sections 2G1.1, 2G2.1, 2H4.1, 2H4.2, and 5E1.1, and 
each line in Appendix A (Statutory Index) referenced to 18 U.S.C. 241, 
1589, 1590, 1591, or 1592, or to 29 U.S.C. 1851, effective May 1, 2001 
(see USSC Guidelines Manual Supplement to the 2000 Supplement to 
Appendix C, Amendment 612), are repromulgated with the following 
changes:
    Section 5E1.1(a)(1) is amended by inserting ``, or 21 U.S.C. 
853(q)'' after ``3663A''.
    The Commentary to Sec. 5E1.1 captioned ``Background'' is amended in 
the first paragraph by inserting ``, and 21 U.S.C. 853(q)'' after 
``3663A''.
    Reason for Amendment: This amendment repromulgates as a permanent 
amendment the previously promulgated emergency amendment on human 
trafficking. (See USSC Guidelines Manual Supplement to the 2000 
Supplement to Appendix C, Amendment 612.) The amendment implements the 
congressional directive in section 112(b) of the Victims of Trafficking 
and Violence Protection Act of 2000, Pub. L. 106-386 (the ``Act'').
    The directive requires the Commission to amend, if appropriate, the 
guidelines applicable to human trafficking (i.e., peonage, involuntary 
servitude, and forced labor) offenses. It also requires the Commission 
to ensure that the guidelines ``are sufficiently stringent to deter and 
adequately reflect the heinous nature of these offenses.'' In 
compliance with the directive, the amendment (1) creates a new 
guideline, Sec. 2H4.2 (Willful Violations of the Migrant and Seasonal 
Agricultural Worker Protection Act); (2) refers violations of four new 
statutes, 18 U.S.C. 1589 (Forced Labor), 1590 (Trafficking with Respect 
to Peonage, Involuntary Servitude or Forced Labor), 1591 (Sex 
Trafficking of Children by Force, Fraud or Coercion), and 1592 
(Unlawful Conduct with Respect to Documents in Furtherance of Peonage, 
Involuntary Servitude, or Forced Labor) to the appropriate guidelines; 
and (3) makes changes, consistent with the directive, which both 
enhance sentences and reflect changes to three existing statutes: 18 
U.S.C. 1581(a) (Peonage), 1583 (Enticement into Slavery) and 1584 (Sale 
into Involuntary Servitude).
    To address this multi-faceted directive, the amendment makes 
changes to several existing guidelines and creates a new guideline for 
criminal violations of the Migrant and Seasonal Agricultural Worker 
Protection Act. Although the directive instructs the Commission to 
amend the guidelines applicable to the Fair Labor Standards Act (29 
U.S.C. 201 et. seq.), a criminal violation of the Fair Labor Standards 
Act is only a Class B misdemeanor. See 29 U.S.C. 216. Thus, the 
guidelines are not applicable to those offenses.
    The amendment references the new offense at 18 U.S.C. 1591 to 
Sec. 2G1.1 (Promoting Prostitution or Prohibited Sexual Conduct). 
Section 1591 provides criminal penalties for a defendant who 
participates in the transporting or harboring of a person, or who 
benefits from participating in such a venture, with the knowledge that 
force, fraud, or coercion will be used to cause that person to engage 
in a commercial sex act or with knowledge that the person is not 18 
years old and will be forced to engage in a commercial sex act. Despite 
the statute's inclusion in a chapter of title 18 devoted mainly to 
peonage offenses, section 1591 offenses are more analogous to the 
offenses referenced to the prostitution guideline.
    Section 1591 cases alternatively have been referred in Appendix A 
(Statutory Index) to Sec. 2G2.1 (Sexually Exploiting a Minor by 
Production of Sexually Explicit Visual or Printed Material; Custodian 
Permitting Minor to Engage in Sexually Explicit Conduct; Advertisement 
for Minors to Engage in Production). This has been done in anticipation 
that some portion of section 1591 cases will involve forcing or 
coercing children to engage in commercial sex acts for the purpose of 
producing pornography. Such offenses, as recognized by the higher base 
offense level at Sec. 2G2.1, are more serious because they both involve 
specific harm to an individual victim and further an additional 
criminal purpose, namely, commercial pornography.
    The amendment maintains the view that 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 also is designed to cover offenses under three 
new statutes: 18 U.S.C. 1589, 1590, and 1592. Section 1589 provides 
criminal penalties for a defendant who provides or obtains the labor or 
services of another by the use of threats of serious harm or physical 
restraint against a person, or by a scheme or plan intended to make the 
person believe that physical restraint or serious harm would result 
from not performing the labor or services. This statute also applies to 
defendants who provide or obtain labor or services of another by 
abusing or threatening abuse

[[Page 30553]]

of the law or the legal process. See 18 U.S.C. 1589.
    Section 1590 provides criminal penalties for a defendant who 
harbors, transports, or is otherwise involved in obtaining, a person 
for labor or services. Section 1592 provides criminal penalties for a 
defendant who knowingly possesses, destroys, or removes an actual 
passport, other immigration document, or government identification 
document of another person in the course of a violation of Sec. 1581 
(peonage), Sec. 1583 (enticement into slavery), Sec. 1584 (sale into 
involuntary servitude), Sec. 1589 (forced labor), Sec. 1590 
(trafficking with respect to these offenses), Sec. 1591 (sex 
trafficking of children by force, fraud, or coercion), or Sec. 1594(a) 
(attempts to violate these offenses). Section 1592 also provides 
criminal penalties for 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 that 
traditionally have been sentenced under Sec. 2H4.1.
    The amendment provides an alternative, less punitive base offense 
level of level 18 for those who violate 18 U.S.C. 1592, an offense 
which limits participation in peonage cases to the destruction or 
wrongful confiscation of a passport or other immigration document. This 
alternative, lower base level reflects the lower statutory maximum 
sentence for section 1592 offenses (i.e., 5 years' imprisonment).
    Section 2H4.1(b)(2) has been expanded to provide a four-level 
increase if a dangerous weapon was used and a two-level increase if a 
dangerous weapon was brandished or its use was threatened. Prior to 
this amendment, only actual use of a dangerous weapon was covered. This 
change reflects the directive to consider an enhancement for the use or 
threatened use of a dangerous weapon. The commentary to Sec. 2H4.1 is 
amended to clarify that the threatened use of a dangerous weapon 
applies regardless of whether a dangerous weapon was actually present.
    The amendment also creates a new guideline, Sec. 2H4.2 (Willful 
Violations of the Migrant and Seasonal Agricultural Worker Protection 
Act), in response to the directive to amend the guidelines applicable 
to such offenses. These offenses, which have a statutory maximum 
sentence of one year imprisonment for first offenses and three years' 
imprisonment for subsequent offenses, were not, prior to this 
amendment, referred to any specific guideline. The amendment provides a 
base offense level of level 6 in recognition of the low statutory 
maximum sentences set for these cases by Congress. Further, these 
offenses typically involve violations of regulatory provisions. Setting 
the base offense level at level 6 provides consistency with guidelines 
for other regulatory offenses. See, e.g., Secs. 2N2.1 (Violations of 
Statutes and Regulations Dealing With Any Food, Drug, Biological 
Product, Device, Cosmetic, or Agricultural Product) and 2N3.1 (Odometer 
Laws and Regulations). Subsections (b)(1), an enhancement for bodily 
injury, and (b)(2), an enhancement applicable to defendants who commit 
the instant offense after previously sustaining a civil penalty for 
similar misconduct, have been established to respond to the directive 
that the Commission consider sentencing enhancement for this aggravated 
conduct. This provision addresses the Department of Justice's and the 
Department of Labor's concern regarding the need for enhanced penalties 
in cases involving prior administrative and civil adjudications.
    This amendment also addresses that portion of section 112 of the 
Act that amends chapter 77 of title 18, United States Code, to provide 
mandatory restitution for peonage and involuntary servitude offenses. 
The amendment amends Sec. 5E1.1 (Restitution) to include a reference to 
18 U.S.C. 1593 in the guideline provision regarding mandatory 
restitution.
    By enactment of various sentencing enhancements and encouraged 
upward departures for areas of concern identified by Congress, the 
Commission has provided for more severe sentences for perpetrators of 
human trafficking offenses in keeping with the conclusion that the 
offenses covered by this amendment are both heinous in nature and being 
committed with increasing frequency.
    In addition, to repromulgating the emergency amendment, this 
amendment responds to section 3613 of the Methamphetamine Anti-
Proliferation Act of 2000, Pub. L. 106-310, that amends 21 U.S.C. 
853(q) to provide mandatory restitution for offenses involving the 
manufacture of methamphetamine. Accordingly, the amendment amends 
Sec. 5E1.1 (Restitution) to include a reference to 21 U.S.C. 853(q) in 
the guideline provision regarding mandatory restitution.
    16. Amendment: Section 2H3.1 is amended in the title by striking 
``or'' and inserting a semicolon; and by inserting ``; Disclosure of 
Tax Return Information'' after ``Eavesdropping''.
    Section 2H3.1 is amended by striking subsection (a) and inserting 
the following:
    ``(a) Base Offense Level (Apply the greater):
    (1) 9; or
    (2) 6, if the defendant was convicted of 26 U.S.C. 7213A or 26 
U.S.C. 7216.''.
    Section 2H3.1(b)(1) is amended by striking ``conduct'' and 
inserting ``offense''.
    Section 2H3.1(c)(1) is amended by striking ``conduct'' and 
inserting ``offense''; and by striking ``that offense'' and inserting 
``that other offense''.
    The Commentary to Sec. 2H3.1 captioned ``Statutory Provisions'' is 
amended by inserting ``26 U.S.C. 7213(a)(1)-(3), (a)(5), (d), 7213A, 
7216;'' after ``2511;''.
    The Commentary to Sec. 2H3.1 captioned ``Application Note'' is 
amended by striking ``Note'' and inserting ``Notes''; by redesignating 
Note 1 as Note 2; and by inserting before Note 2, as redesignated by 
this amendment, the following:
    ``1. Definitions.--For purposes of this guideline, `tax return' and 
`tax return information' have the meaning given the terms `return' and 
`return information' in 26 U.S.C. 6103(b)(1) and (2), respectively.''.
    The Commentary to Sec. 2H3.1 captioned ``Application Notes'' as re-
captioned by this amendment, is amended in Note 2, as redesignated by 
this amendment, by inserting ``Satellite Cable Transmissions.--'' 
before ``If the''.
    The Commentary to Sec. 2H3.1 captioned ``Background'' is amended by 
adding at the end the following additional paragraph:
    ``This section also refers to conduct relating to the disclosure 
and inspection of tax returns and tax return information, which is 
proscribed by 26 U.S.C. 7213(a)(1)-(3), (5), (d), 7213A, and 7216. 
These statutes provide for a maximum term of imprisonment of five years 
for most types of disclosure of tax return information, but provide a 
maximum term of imprisonment of one year for violations of 26 U.S.C. 
7213A and 7216.''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to 26 U.S.C. 7212(b) the following new lines:

``26 U.S.C. Sec. 7213(a)(1) 2H3.1
26 U.S.C. Sec. 7213(a)(2) 2H3.1
26 U.S.C. Sec. 7213(a)(3) 2H3.1
26 U.S.C. Sec. 7213(a)(5) 2H3.1
26 U.S.C. Sec. 7213(d) 2H3.1
26 U.S.C. Sec. 7213A 2H3.1'';

    And by inserting after the line referenced to 26 U.S.C. Sec. 7215 
the following new line:

[[Page 30554]]

    ``26 U.S.C. Sec. 7216 2H3.1''.
    Reason for Amendment: This amendment responds to the Internal 
Revenue Service Restructuring and Reform Act of 1998, Public Law 105-
206 (``the Act''). The Act created new tax offenses pertaining to the 
unlawful disclosure of tax-related information contained on computer 
software and to unlawful requests for tax audits. In addition, the 
Taxpayer Browsing Protection Act of 1997, Public Law 105-35, created 
another tax offense pertaining to the unlawful inspection of tax 
information.
    Specifically, Public Law 105-35 expanded 26 U.S.C. 7213 to prohibit 
federal and state employees and certain other persons from disclosing 
tax-related computer software. Public Law 105-35 also created an 
offense at 26 U.S.C. 7213A making it unlawful for federal and state 
employees and certain other persons to inspect tax return information 
in any way other than that authorized under the Internal Revenue Code.
    This is a two-part amendment. First, this amendment updates 
Appendix A (Statutory Index) by referring most of these offenses to 
Sec. 2H3.1 (Interception of Communications and Eavesdropping). Prior to 
this amendment, no guideline provision or statutory reference was 
expressly promulgated to address tax offenses that implicated privacy 
interests. Under subsection (a) of Sec. 1B1.2 (Applicable Guidelines) 
and under Sec. 2X5.1 (Other Offenses), courts are required to use the 
most analogous offense guideline from Chapter Two (Offense Conduct) in 
each pending case brought under a statute having no reference in the 
guidelines' statutory index.
    In general, the guideline most analogous for these offenses is 
Sec. 2H3.1. Section 2H3.1 concerns offenses against privacy and, in 
large measure, these tax-related offenses are devoted to protecting 
taxpayer privacy interests. Section 2H3.1 also contains a cross 
reference to ``another offense'' if a greater offense level will 
result.
    Second, this amendment adds a three-level decrease in the base 
offense level under Sec. 2H3.1 for the least serious types of offense 
behavior, in which there was no intent to harm or obtain pecuniary 
gain. The base offense level for Sec. 2H3.1 is level 9 with a range of 
4 to 10 months (in criminal history Category I). The Commission 
determined that a base offense level of level 9 is too severe for the 
misdemeanor offenses contained in 26 U.S.C. Secs. 7213A (Unauthorized 
Inspection) and 7216 (Unauthorized Disclosure), and the three-level 
decrease addresses this concern.
    17. Amendment: Section 2K1.3(a) is amended by striking the text of 
subdivision (3) and inserting the following:
    ``16, if the defendant (A) was a prohibited person at the time the 
defendant committed the instant offense; or (B) knowingly distributed 
explosive materials to a prohibited person; or''.
    The Commentary to Sec. 2K1.3 captioned ``Statutory Provisions'' is 
amended by inserting ``(l)-(o), (p)(2),'' after ``(i),''.
    The Commentary to Sec. 2K1.3 captioned ``Application Notes'' is 
amended by striking the text of Note 3 and inserting the following:
    ``For purposes of subsection (a)(3), `prohibited person' means any 
person described in 18 U.S.C. 842(i).''.
    Section 2K2.1(a)(4)(B) is amended by striking ``is'' after ``(i)'' 
and inserting ``was''; and by inserting ``at the time the defendant 
committed the instant offense'' after ``prohibited person''.
    Section 2K2.1(a)(6) is amended by striking ``is'' after ``(A)'' and 
inserting ``was''; and by inserting ``at the time the defendant 
committed the instant offense'' after ``prohibited person''.
    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended by striking the text of Note 6 and inserting the following:
    ``For purposes of subsections (a)(4)(B) and (a)(6), `prohibited 
person' means any person described in 18 U.S.C. 922(g) or 922(n).''.
    Reason for Amendment: This amendment makes two revisions regarding 
the definition of ``prohibited person'' in subsection (a)(3) of 
Sec. 2K1.3 (Unlawful Receipt, Possession, or Transportation of 
Explosive Materials; Prohibited Transactions Involving Explosive 
Materials) and subsections (a)(4)(B) and (a)(6) of Sec. 2K2.1 (Unlawful 
Receipt, Possession, or Transportation of Firearms or Ammunition; 
Prohibited Transactions Involving Firearms or Ammunition). First, the 
amendment adopts the definitions of prohibited person found in specific 
statutes for explosive and firearm offenses. (There is no uniform 
statutory definition of prohibited person.) The relevant statutory 
provision for Sec. 2K1.3 is 18 U.S.C. Sec. 842(i), and the relevant 
statutory provisions for Sec. 2K2.1 are 18 U.S.C. 922(g) and (n).
    Second, the amendment clarifies that the pertinent alternative base 
offense level applies only when the offender attains the requisite 
status prior to committing the instant offense. This clarification is 
consistent with the amendment on prior felonies, which provides for 
increased punishment only when the offender sustains certain felony 
convictions prior to committing the instant offense.
    18. Amendment: Section 2K1.3(a)(1) is amended by striking ``had at 
least two prior felony convictions of either a crime of violence or a 
controlled substance offense; or'' and inserting ``committed any part 
of the instant offense subsequent to sustaining at least two felony 
convictions of either a crime of violence or a controlled substance 
offense;'';
    Section 2K1.3(a)(2) is amended by striking ``had one prior felony 
conviction of either a crime of violence or a controlled substance 
offense; or' and inserting `committed any part of the instant offense 
subsequent to sustaining one felony conviction of either a crime of 
violence or a controlled substance offense;''.
    The Commentary to Sec. 2K1.3 captioned ``Application Notes'' is 
amended by striking the text of Note 2 and inserting the following:
    ``For purposes of this guideline:
    ``Controlled substance offense'' has the meaning given that term in 
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.
    `Felony conviction' means a prior adult federal or state conviction 
for an offense punishable by death or imprisonment for a term exceeding 
one year, regardless of whether such offense is specifically designated 
as a felony and regardless of the actual sentence imposed. A conviction 
for an offense committed at age eighteen years or older is an adult 
conviction. A conviction for an offense committed prior to age eighteen 
years is an adult conviction if it is classified as an adult conviction 
under the laws of the jurisdiction in which the defendant was convicted 
(e.g., a federal conviction for an offense committed prior to the 
defendant's eighteenth birthday is an adult conviction if the defendant 
was expressly proceeded against as an adult).''.
    The Commentary to 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).''.

[[Page 30555]]

    Section 2K2.1(a)(1) is amended by striking ``had at least two prior 
felony convictions of either a crime of violence or a controlled 
substance offense; or'' and inserting ``committed any part of the 
instant offense subsequent to sustaining at least two felony 
convictions of either a crime of violence or a controlled substance 
offense;''.
    Section 2K2.1(a)(2) is amended by striking ``had at least two prior 
felony convictions of either a crime of violence or a controlled 
substance offense; or'' and inserting ``committed any part of the 
instant offense subsequent to sustaining at least two felony 
convictions of either a crime of violence or a controlled substance 
offense;''.
    Section 2K2.1(a)(3) is amended by striking ``had one prior felony 
conviction of either a crime of violence or controlled substance 
offense; or'' and inserting ``committed any part of the instant offense 
subsequent to sustaining one felony conviction of either a crime of 
violence or a controlled substance offense;''.
    Section 2K2.1(a)(4)(A) is amended by striking ``had one prior 
felony conviction of either a crime of violence or controlled substance 
offense; or'' and inserting ``committed any part of the instant offense 
subsequent to sustaining one felony conviction of either a crime of 
violence or a controlled substance offense; or''.
    Section 2K2.1(a) is amended in subdivision (4)(B) by striking ``; 
or'' after ``922(d)'' and inserting a semi-colon; in subdivision (5), 
by striking ``; or'' after ``921(a)(30)'' and inserting a semi-colon; 
and in subdivision (6) by striking ``; or'' after ``Sec. 922(d)'' and 
inserting a semi-colon.
    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended by striking Note 5 and inserting the following:
    ``5. For purposes of this guideline:
    ``Controlled substance offense'' has the meaning given that term in 
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.
    ``Felony conviction'' means a prior adult federal or state 
conviction for an offense punishable by death or imprisonment for a 
term exceeding one year, regardless of whether such offense is 
specifically designated as a felony and regardless of the actual 
sentence imposed. A conviction for an offense committed at age eighteen 
years or older is an adult conviction. A conviction for an offense 
committed prior to age eighteen years is an adult conviction if it is 
classified as an adult conviction under the laws of the jurisdiction in 
which the defendant was convicted (e.g., a federal conviction for an 
offense committed prior to the defendant's eighteenth birthday is an 
adult conviction if the defendant was expressly proceeded against as an 
adult).''.
    The Commentary to 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).''.
    Reason for Amendment: This amendment modifies subsections (a)(1) 
and (a)(2) of Sec. 2K1.3 (Unlawful Receipt, Possession, or 
Transportation of Explosive Materials; Prohibited Transactions 
Involving Explosive Materials) and subsections (a)(1), (a)(2), (a)(3) 
and (a)(4)(A) of Sec. 2K2.1 (Unlawful Receipt, Possession or 
Transportation of Firearms or Ammunition) to resolve a circuit conflict 
regarding whether a crime committed after the commission of the instant 
offense and before sentencing for the instant offense is counted as a 
prior felony conviction for purposes of determining the defendant's 
base offense level. Compare United States v. Pugh, 158 F.3d 1308, 1311 
(D.C. Cir. 1998) (finding the guideline language ambiguous but the 
commentary language clear, thereby counting prior felony conviction 
that was sentenced prior to sentencing for the instant federal offense, 
even if the defendant committed the prior felony offense after the 
instant federal offense); United States v. McCary, 14 F.3d 1502, 1506 
(10th Cir. 1994) (the defendant's base offense level is to be 
determined on the basis of the defendant's status as of the date the 
district court imposed sentence, not the date of the offense for which 
he had previously been convicted); and United States v. Laihben, 167 
F.3d 1364 (11th Cir. 1999) (district court properly considered 
defendant's conviction, which occurred after commission of, but before 
sentencing, on the federal firearms offense, in determining offense 
level), with United States v. Barton, 100 F.3d 43, 46 (6th Cir. 1996) 
(defendant's state drug crime, which was committed after federal 
offense of being a felon in possession of firearm, could not have been 
counted as prior felony conviction under Sec. 2K2.1(a), even though 
defendant was convicted and sentenced on state offense prior to 
sentencing on federal charge; only those convictions that occur prior 
to the commission of the firearm offense may be counted against the 
defendant in determining the base offense level)) and United States v. 
Oetken, 241 F.3d 1057 (8th Cir. 2001) (only convictions that occur 
prior to the commission of the offense qualify as ``prior 
convictions'').
    The amendment adopts the minority view that an offense committed 
after the commission of any part of the offense cannot be counted as a 
prior felony conviction. The amendment clarifies, in Sec. 2K1.3(a)(1) 
and (a)(2) and 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. In so doing, this 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).
    This amendment also clarifies that in cases in which more than one 
prior felony conviction is required for application of the base offense 
level in Sec. 2K1.3 or Sec. 2K2.1, the prior felony convictions must be 
counted separately under Chapter Four (Criminal History and Criminal 
Livelihood).
    The amendment makes nonsubstantive clarifying changes in the 
definitions of ``controlled substance offense'', ``crime of violence'', 
and ``felony conviction'' for purposes of Secs. 2K1.3 and 2K2.1.
    19. Amendment: Section 2K2.1(b)(1) is amended in the table by 
striking subdivisions (A) through (F) and inserting the following:

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


    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended in Note 16 by striking ``significantly'' and inserting 
``substantially''; and by striking ``fifty'' and inserting ``200''.
    Reason for Amendment: This amendment responds to a recommendation 
from the Bureau of Alcohol, Tobacco and Firearms (ATF) to increase the 
penalties in Sec. 2K2.1 (Unlawful Receipt, Possession or Transportation 
of Firearms or Ammunition) for offenses involving more than 100 
firearms.
    The amendment modifies the firearms table at Sec. 2K2.1(b)(1), to 
provide enhancements in two-level increments.

[[Page 30556]]

Prior to this amendment, the table provided enhancements in one-level 
increments. This change has the effect of compressing the table by 
providing a wider range in each subdivision of the table for the number 
of firearms involved in the offense. Compressing the table in this 
manner diminishes some of the fact-finding required to determine how 
many firearms were involved in the offense and provides some increase 
in penalties. The amendment provides additional two-level increases for 
offenses that involve either 100-199 firearms, or 200 or more firearms. 
These increases are provided to ensure adequate and proportionate 
punishment in cases that involve large numbers of firearms.
    The proposed amendment also makes a conforming change to 
Application Note 16 of Sec. 2K2.1 regarding upward departures.
    20. Amendment: Chapter Two, Part L, Subpart 1 is amended by 
striking Sec. 2L1.2, and its accompanying commentary, 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) Apply the Greatest:
    If the defendant previously was deported, or unlawfully remained in 
the United States, after--
    (A) a conviction for a felony that is (i) a drug trafficking 
offense for which the sentence imposed exceeded 13 months; (ii) a crime 
of violence; (iii) a firearms offense; (iv) a child pornography 
offense; (v) a national security or terrorism offense; (vi) a human 
trafficking offense; or (vii) an alien smuggling offense committed for 
profit, increase by 16 levels;
    (B) a conviction for a felony drug trafficking offense for which 
the sentence imposed was 13 months or less, increase by 12 levels;
    (C) a conviction for an aggravated felony, increase by 8 levels;
    (D) a conviction for any other felony, increase by 4 levels; or
    (E) three or more convictions for misdemeanors that are crimes of 
violence or drug trafficking offenses, increase by 4 levels.

Commentary

Statutory Provisions: 8 U.S.C. 1325(a) (second or subsequent offense 
only), 8 U.S.C. 1326. For additional statutory provision(s), see 
Appendix A (Statutory Index).

Application Notes

    1. Application of Subsection (b)(1).--
    (A) In General.''For purposes of subsection (b)(1):
    (i) A defendant shall be considered to be deported after a 
conviction if the defendant has been removed or has departed the United 
States while an order of exclusion, deportation, or removal was 
outstanding.
    (ii) A defendant shall be considered to be deported after a 
conviction if the deportation was subsequent to the conviction, 
regardless of whether the deportation was in response to the 
conviction.
    (iii) A defendant shall be considered to have unlawfully remained 
in the United States if the defendant remained in the United States 
following a removal order issued after a conviction, regardless of 
whether the removal order was in response to the conviction.
    (iv) If all or any part of a sentence of imprisonment was probated, 
suspended, deferred, or stayed, `sentence imposed' refers only to the 
portion that was not probated, suspended, deferred, or stayed.
    (B) Definitions.--For purposes of subsection (b)(1):
    (i) `Committed for profit' means committed for payment or 
expectation of payment.
    (ii) `Crime of violence'--
    (I) means an offense under federal, state, or local law that has as 
an element the use, attempted use, or threatened use of physical force 
against the person of another; and
    (II) includes murder, manslaughter, kidnapping, aggravated assault, 
forcible sex offenses (including sexual abuse of a minor), robbery, 
arson, extortion, extortionate extension of credit, and burglary of a 
dwelling.
    (iii) `Drug trafficking offense' means an offense under federal, 
state, or local law that prohibits the manufacture, import, export, 
distribution, or dispensing of a controlled substance (or a counterfeit 
substance) or the possession of a controlled substance (or a 
counterfeit substance) with intent to manufacture, import, export, 
distribute, or dispense.
    (iv) `Felony' means any federal, state, or local offense punishable 
by imprisonment for a term exceeding one year.
    (v) `Firearms offense' means any of the following:
    (I) An offense under federal, state, or local law that prohibits 
the importation, distribution, transportation, or trafficking of a 
firearm described in 18 U.S.C. 921, or of an explosive material as 
defined in 18 U.S.C. 841(c).
    (II) An offense under federal, state, or local law that prohibits 
the possession of a firearm described in 26 5845(a), or of an explosive 
material as defined in 18 841(c).
    (III) A violation of 18 U.S.C. 844(h).
    (IV) A violation of 18 U.S.C. 924(c).
    (V) A violation of 18 U.S.C. 929(a).
    2. Application of Subsection (b)(1)(C).--For purposes of subsection 
(b)(1)(C), `aggravated felony' has the meaning given that term in 8 
U.S.C. 1101(a)(43), without regard to the date of conviction of the 
aggravated felony.
    3. Application of Subsection (b)(1)(E).--For purposes of subsection 
(b)(1)(E):
    (A) `Misdemeanor' means any federal, state, or local offense 
punishable by a term of imprisonment of one year or less.
    (B) `Three or more convictions' means at least three convictions 
for offenses that (i) were separated by an intervening arrest; (ii) did 
not occur on the same occasion; (iii) were not part of a single common 
scheme or plan; or (iv) were not consolidated for trial or sentencing.
    4. Aiding and Abetting, Conspiracies, and Attempts.--Prior 
convictions of offenses counted under subsection (b)(1) include the 
offenses of aiding and abetting, conspiring, and attempting, to commit 
such offenses.
    5. Computation of Criminal History Points.--A conviction taken into 
account under subsection (b)(1) is not excluded from consideration of 
whether that conviction receives criminal history points pursuant to 
Chapter Four, Part A (Criminal History).''.
    Reason for Amendment: This amendment responds to concerns raised by 
a number of judges, probation officers, and defense attorneys, 
particularly in districts along the southwest border between the United 
States and Mexico, that Sec. 2L1.2 (Unlawfully Entering or Remaining in 
the United States) sometimes results in disproportionate penalties 
because of the 16-level enhancement provided in the guideline for a 
prior conviction for an aggravated felony. The disproportionate 
penalties result because the breadth of the definition of ``aggravated 
felony'' provided in 8 U.S.C. 1101(a)(43), which is incorporated into 
the guideline by reference, means that a defendant who previously was 
convicted of murder, for example, receives the same 16-level 
enhancement as a defendant previously convicted of simple assault. The 
Commission also observed that the criminal justice system has been 
addressing this inequity on an ad hoc basis in such cases by increased 
use of departures.
    This amendment responds to these concerns by providing a more 
graduated sentencing enhancement of between 8 levels and 16 levels, 
depending on the seriousness of the prior aggravated

[[Page 30557]]

felony and the dangerousness of the defendant. In doing so, the 
Commission determined that the 16-level enhancement is warranted if the 
defendant previously was deported, or unlawfully remained in the United 
States, after a conviction for certain serious offenses, specifically, 
a drug trafficking offense for which the sentence imposed exceeded 13 
months, a felony that is a crime of violence, a felony that is a 
firearms offense, a felony that is a national security or terrorism 
offense, a felony that is a human trafficking offense, and a felony 
that is an alien smuggling offense committed for profit. Other felony 
drug trafficking offenses will receive a 12-level enhancement. All 
other aggravated felony offenses will receive an 8-level enhancement.
    This amendment also deletes an application note providing that a 
downward departure may be warranted based on the seriousness of the 
offense if the 16-level enhancement applied and (1) the defendant has 
previously been convicted of only one felony offense; (2) such offense 
was not a crime of violence or firearms offense; and (3) the term of 
imprisonment for such offenses did not exceed one year. The Commission 
determined that the graduation of the 16-level enhancement based on the 
seriousness of the prior conviction negated the need for this departure 
provision. As a result, this amendment may have the indirect result of 
reducing the departure rate for cases sentenced under Sec. 2L1.2. In 
addition, this amendment renders moot a circuit conflict regarding 
whether the three criteria set forth in the application note are the 
exclusive basis for a downward departure from the 16-level enhancement. 
Compare United States v. Sanchez-Rodriguez, 161 F.3d 556 (9th Cir. 
1998) (holding that Application Note 5 to Sec. 2L1.2 does not limit the 
circumstances under which a downward departure from the 16-level 
enhancement is warranted); and United States v. Alfaro-Zayas, 196 F.3d 
1338 (11th Cir. 1999) (same), with United States v. Tappin, 205 F.3d 
536 (2d Cir. 2000) (holding that a defendant must satisfy all three 
criteria set forth in Application Note 5 in Sec. 2L1.2 to receive a 
downward departure from the 16-level enhancement).
    This amendment also makes a number of other minor changes to 
Sec. 2L1.2, to provide guidance regarding the application of the 
enhancement for the commission of three or more prior misdemeanors and 
to provide definitions for terms used in the guideline.
    21. Amendment: The heading to Chapter Two, Part M is amended by 
adding at the end ``And Weapons of Mass Destruction''.
    Section 2M5.1 is amended by striking subsection (a) and inserting 
the following:
    ``(a) Base Offense Level (Apply the greater):
    (1) 26, if national security controls or controls relating to the 
proliferation of nuclear, biological, or chemical weapons or materials 
were evaded; or
    (2) 14, otherwise.''.
    Section 2M5.2(a)(1) is amended by striking ``22'' and inserting 
``26''.
    The heading to Chapter Two, Part M, Subpart 6 is amended by 
striking ``Atomic Energy'' and inserting ``Nuclear, Biological, And 
Chemical Weapons And Materials, And Other Weapons of Mass 
Destruction''.
    Chapter Two, Part M is amended by striking Sec. 2M6.1 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, Toxins, or 
Delivery Systems, Chemical Weapons, or Other Weapons of Mass 
Destruction; Attempt or Conspiracy
    (a) Base Offense Level (Apply the Greatest):
    (1) 42, if the offense was committed with intent (A) to injure the 
United States; or (B) to aid a foreign nation or a foreign terrorist 
organization;
    (2) 28, if subsections (a)(1) and (a)(3) do not apply; or
    (3) 20, if the offense (A) involved a threat to use a nuclear 
weapon, nuclear material, or nuclear by-product material, a chemical 
weapon, a biological agent, toxin, or delivery system, or a weapon of 
mass destruction; but (B) did not involve any conduct evidencing an 
intent or ability to carry out the threat.
    (b) Specific Offense Characteristics
    (1) If (A) subsection (a)(2) or (a)(3) applies; and (B) the offense 
involved a threat to use, or otherwise involved (i) a select biological 
agent; (ii) a listed precursor or a listed toxic chemical; (iii) 
nuclear material or nuclear byproduct material; or (iv) a weapon of 
mass destruction that contains any agent, precursor, toxic chemical, or 
material referred to in subdivision (i), (ii), or (iii), increase by 2 
levels.
    (2) If (A) subsection (a)(2) applies; and (B)(i) any victim died or 
sustained permanent or life-threatening bodily injury, increase by 4 
levels; (ii) any victim sustained serious bodily injury, increase by 2 
levels; or (iii) the degree of injury is between that specified in 
subdivisions (i) and (ii), increase by 3 levels.
    (3) If (A) subsection (a)(2) or (a)(3) applies; and (B) the offense 
resulted in (i) substantial disruption of public, governmental, or 
business functions or services; or (ii) a substantial expenditure of 
funds to clean up, decontaminate, or otherwise respond to the offense, 
increase by 4 levels.
    (c) Cross References
    (1) If the offense resulted in death, apply Sec. 2A1.1 (First 
Degree Murder) if the death was caused intentionally or knowingly, or 
Sec. 2A1.2 (Second Degree Murder) otherwise, if the resulting offense 
level is greater than that determined above.
    (2) If the offense was tantamount to attempted murder, apply 
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) 
conduct that resulted in 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 such conduct in 
respect to each victim had been contained in a separate count of 
conviction.

Commentary

Statutory Provisions: 18 U.S.C. 175, 229, 831, 842(p)(2), 2332a 
(only with respect to weapons of mass destruction as defined in 18 
U.S.C. 2332a(c)(2)(B), (C), and (D), but including any biological 
agent, toxin, or vector); 42 U.S.C. 2077(b), 2122, 2131. For 
additional statutory provision(s), see Appendix A (Statutory Index).

Application Notes

    1. Definitions.''For purposes of this guideline:
    `Biological agent' has the meaning given that term in 18 U.S.C. 
178(1).
    `Chemical weapon' has the meaning given that term in 18 U.S.C. 
229F(1).
    `Foreign terrorist organization' (A) means an organization that 
engages in terrorist activity that threatens the security of a national 
of the United States or the national security of the United States; and 
(B) includes an organization designated by the Secretary of State as a 
foreign terrorist organization pursuant to section 219 of the 
Immigration and Nationality Act (8 U.S.C. 1219). ``National of the 
United States'' has the meaning given that term in section 101(a)(22) 
of the Immigration and Nationality Act (8 U.S.C. 1101(a)(22)).

[[Page 30558]]

    `Listed precursor or a listed toxic chemical' means a precursor or 
a toxic chemical, respectively, listed in Schedule I of the Annex on 
Chemicals to the Chemical Weapons Convention. See 18 U.S.C. 229F(6)(B), 
(8)(B). `Precursor' has the meaning given that term in 18 U.S.C. 
229F(6)(A). `Toxic chemical' has the meaning given that term in 18 
U.S.C. 229F(8)(A).
    `Nuclear byproduct material' has the meaning given that term in 18 
U.S.C. Sec. 831(f)(2).
    `Nuclear material' has the meaning given that term in 18 U.S.C. 
831(f)(1).
    `Select biological agent' means a biological agent or toxin 
identified by the Secretary of Health and Human Services on the select 
agent list established pursuant to section 511(d) of the Antiterrorism 
and Effective Death Penalty Act, Pub. L. 104-132. See 42 CFR part 72.
    `Toxin' has the meaning given that term in 18 U.S.C. 178(2).
    `Vector' has the meaning given that term in 18 U.S.C. 178(4).
    `Weapon of mass destruction' has the meaning given that term in 18 
U.S.C. 2332a(c)(2)(B), (C), and (D).
    2. Threat Cases.--Subsection (a)(3) applies in cases that involved 
a threat to use a weapon, agent, or material covered by this guideline 
but that did not involve any conduct evidencing an intent or ability to 
carry out the threat. For example, subsection (a)(3) would apply in a 
case in which the defendant threatened to contaminate an area with 
anthrax and also dispersed into the area a substance that appeared to 
be anthrax but that the defendant knew to be harmless talcum powder. In 
such a case, the dispersal of talcum powder does not evidence an intent 
on the defendant's part to carry out the threat. In contrast, 
subsection (a)(3) would not apply in a case in which the defendant 
threatened to contaminate an area with anthrax and also dispersed into 
the area a substance that the defendant believed to be anthrax but that 
in fact was harmless talcum powder. In such a case, the dispersal of 
talcum powder was conduct evidencing an intent to carry out the threat 
because of the defendant's belief that the talcum powder was anthrax.
    Subsection (a)(3) shall not apply in any case involving both a 
threat to use any weapon, agent, or material covered by this guideline 
and the possession of that weapon, agent, or material. In such a case, 
possession of the weapon, agent, or material is conduct evidencing an 
intent to use that weapon, agent, or material.
    3. Application of Special Instruction.--Subsection (d) applies in 
any case in which the defendant is convicted of a single count 
involving (A) the death or permanent, 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 this guideline or under another 
guideline in Chapter Two (Offense Conduct) by use of a cross reference 
under subsection (c).''.
    The Commentary to Sec. 2X1.1 captioned ``Application Notes'' is 
amended in Note 1 by inserting after the line referenced to 
``Sec. 2E5.1;'' the following: ``Sec. 2M6.1;''.
    The Commentary to Sec. 2X1.1 captioned ``Application Notes'' is 
amended in Note 1 by inserting after the line referenced to 
``Sec. 2H1.1'' the following: ``Sec. 2M6.1;''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to 18 U.S.C. Sec. 842(l)-(o) the following new line:
    ``18 U.S.C. Sec. 842(p)(2)  2K1.3, 2M6.1'';
    By inserting after the line referenced to 18 U.S.C. Sec. 155 the 
following new line:
    ``18 U.S.C. Sec. 175  2M6.1'';
    By inserting after the line referenced to 18 U.S.C. Sec. 228 the 
following new line:
    ``18 U.S.C. Sec. 229  2M6.1'';
    In the line referenced to 18 U.S.C. Sec. 2332a by striking ``2A1.1, 
2A1.2, 2A1.3, 2A1.4, 2A1.5, 2A2.1, 2A2.2, 2B1.3,'' and by inserting ``, 
2M6.1'' after ``2K1.4''; and
    By inserting after the line referenced to 50 U.S.C. App. Sec. 462 
the following new line:
    ``50 U.S.C. App. Sec. 1701  2M5.1, 2M5.2''.
    Reason for Amendment: This amendment responds to a statutory 
provision expressing a sense of Congress and addresses two offenses 
relating to biological and chemical weapons. Specifically, the 
amendment responds to section 1423(a) of the National Defense 
Authorization Act for Fiscal Year 1997, Public Law 104-201, that 
expressed a sense of Congress that guideline penalties are inadequate 
for certain offenses involving the importation and exportation of 
nuclear, chemical, and biological weapons, materials, or technologies 
by providing a four-level increase for those offenses in subsection 
(a)(1) of both Secs. 2M5.1 (Evasion of Export Controls) and 2M5.2 
(Exportation of Arms, Munitions, or Military Equipment or Services 
Without a Required Validated Export License). This increase serves to 
make the penalty structure for those offenses proportional to other 
national security guidelines in Chapter Two, Part M. In addition, 
Appendix A (Statutory Index) is amended to refer one of the offenses, 
50 U.S.C. 1701 (which prior to this amendment was not referenced in the 
Statutory Index), to both Secs. 2M5.1 and 2M5.2.
    The amendment also substantially revises Sec. 2M6.1 to incorporate 
offenses at 18 U.S.C. Sec. 175, relating to biological weapons, and 18 
U.S.C. 229, relating to chemical weapons. Specifically, the amendment 
modifies Sec. 2M6.1 as follows:
    First, the amendment provides three alternative base offense 
levels. The first alternative base offense level of level 42 applies if 
the offense was committed with the intent to injure the United States 
or to aid a foreign government or foreign terrorist organization and 
incorporates the 12-level enhancement previously at subsection (b)(1). 
Therefore, this change does not affect the overall offense level for 
these offenses. ``Foreign terrorist organizations'' are added because 
such groups are investing in the acquisition of unconventional weapons 
such as nuclear, biological, and chemical agents. This first 
alternative base offense level is expected to apply to cases previously 
covered by the guideline (i.e., the acquisition of nuclear material 
from nuclear facilities in order to assist foreign governments, thereby 
creating a threat to the national security), as well as to cases that 
implicate the national security and involve biological and chemical 
weapons and other weapons of mass destruction.
    The amendment provides that, if the base offense level of level 42 
applies, none of the adjustments in subsection (b) shall apply. 
However, if death results, the cross reference allows for the 
possibility of a greater offense level through application of the first 
degree murder guideline.
    The second alternative base offense level of level 28 applies to 
those cases that do not threaten the national security of the United 
States, and is expected to apply in most cases.
    The third alternative base offense level of level 20 applies to 
cases which involve a threat to use a nuclear, biological, or chemical 
weapon or material, or other weapon of mass destruction, but do not 
involve any conduct evidencing an intent or ability to carry out the 
threat and, accordingly, are less serious offenses.
    Second, the amendment provides a two-level enhancement in 
subsection (b)(1) if the offense or threat involved particularly 
dangerous types of nuclear, chemical, and biological weapons and 
materials that are defined in the

[[Page 30559]]

guideline commentary by reference to the applicable statutory and 
regulatory provisions. This enhancement reflects the distinctions 
already made in international treaties, provisions of title 18, United 
States Code, relevant regulatory schemes, and the fact that certain 
types of weapons and materials are inherently more lethal and pose a 
greater threat to the public safety.
    Third, the amendment provides a four-level enhancement in 
subsection (b)(2) if any victim died or sustained permanent or life-
threatening bodily injury, and a two-level enhancement if any victim 
sustained serious bodily injury. If the degree of injury is between 
permanent or life-threatening bodily injury and serious bodily injury, 
a three-level enhancement is provided. This enhancement is modeled 
after the enhancement found in Sec. 2N1.1 (Tampering or Attempting to 
Tamper Involving Risk of Death or Bodily Injury).
    Fourth, the amendment provides a four-level enhancement for cases 
involving a substantial disruption of public, governmental, or business 
functions or services, or the substantial expenditure of funds to clean 
up, decontaminate, or otherwise respond to the offense.
    Fifth, the amendment provides two cross references, applicable if 
the resulting offense level is greater and either death resulted (in 
which case the first or second degree murder guideline would apply), or 
if the offense was tantamount to attempted murder (in which case the 
attempted murder guideline would apply). These cross references are 
also modeled after the cross reference found in Sec. 2N1.1.
    Sixth, the amendment provides a special instruction that if the 
defendant is convicted of one count involving the death of, serious 
bodily injury to, or attempted murder of, more than one victim, the 
grouping rules will be applied as if the defendant had been convicted 
of separate counts for each such victim.
    Seventh, the amendment amends Appendix A to refer violations of 18 
U.S.C. Sec. 175 and 229 to Sec. 2M6.1 and to delete a number of 
guideline references for violations of 18 U.S.C. 2332a and instead 
provide a reference for that offense to Secs. 2K1.4 (Arson; Property 
Damage by Use of Explosives) and 2M6.1 (in the case of other weapons of 
mass destruction).
    Finally, the amendment amends the title of Sec. 2M6.1 to include 
attempts and conspiracies, and adds Sec. 2M6.1 under the sections 
addressing attempts and conspiracies in Application Note 1 of 
Sec. 2X1.1 (Attempt, Solicitation, or Conspiracy) to indicate that 
attempts and conspiracies are covered expressly by the Sec. 2M6.1 
offense guideline.
    22. Amendment: Chapter Two, Part S is amended by striking 
Sec. 2S1.1, and its accompanying commentary, 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 would be accountable for the underlying offense 
under subsection (a)(1)(A) of Sec. 1B1.3 (Relevant Conduct)); and (B) 
the offense level for that offense can be determined; or
    (2) 8 plus the number of offense levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
the value of the laundered funds, otherwise.
    (b) Specific Offense Characteristics
    (1) If (A) subsection (a)(2) applies; and (B) the defendant knew or 
believed that any of the laundered funds were the proceeds of, or were 
intended to promote (i) an offense involving the manufacture, 
importation, or distribution of a controlled substance or a listed 
chemical; (ii) a crime of violence; or (iii) an offense involving 
firearms, explosives, national security, terrorism, or the sexual 
exploitation of a minor, increase by 6 levels.
    (2) (Apply the Greatest):
    (A) If the defendant was convicted under 18 U.S.C. Sec. 1957, 
increase by 1 level.
    (B) If the defendant was convicted under 18 U.S.C. Sec. 1956, 
increase by 2 levels.
    (C) If (i) subsection (a)(2) applies; and (ii) the defendant was in 
the business of laundering funds, increase by 4 levels.
    (3) If (A) subsection (b)(2)(B) applies; and (B) the offense 
involved sophisticated laundering, increase by 2 levels.

Commentary

Statutory Provisions: 18 U.S.C. 1956, 1957. For additional statutory 
provision(s), see Appendix A (Statutory Index).

Application Notes

    1. Definitions.--For purposes of this guideline:
    `Crime of violence' has the meaning given that term in subsection 
(a)(1) of Sec. 4B1.2 (Definitions of Terms Used in Section 4B1.1).
    `Criminally derived funds' means any funds derived, or represented 
by a law enforcement officer, or by another person at the direction or 
approval of an authorized Federal official, to be derived from conduct 
constituting a criminal offense.
    `Laundered funds' means the property, funds, or monetary instrument 
involved in the transaction, financial transaction, monetary 
transaction, transportation, transfer, or transmission in violation of 
18 U.S.C. 1956 or 1957.
    `Laundering funds' means making a transaction, financial 
transaction, monetary transaction, or transmission, or transporting or 
transferring property, funds, or a monetary instrument in violation of 
18 U.S.C. 1956 or 1957.
    `Sexual exploitation of a minor' means an offense involving (A) 
promoting prostitution by a minor; (B) sexually exploiting a minor by 
production of sexually explicit visual or printed material; (C) 
distribution of material involving the sexual exploitation of a minor, 
or possession of material involving the sexual exploitation of a minor 
with intent to distribute; or (D) aggravated sexual abuse, sexual 
abuse, or abusive sexual contact involving a minor. ``Minor'' means an 
individual under the age of 18 years.
    2. Application of Subsection (a)(1).--
    (A) Multiple Underlying Offenses.--In cases in which subsection 
(a)(1) applies and there is more than one underlying offense, the 
offense level for the underlying offense is to be determined under the 
procedures set forth in Application Note 3 of the Commentary to 
Sec. 1B1.5 (Interpretation of References to Other Offense Guidelines).
    (B) Defendants Accountable for Underlying Offense.--In order for 
subsection (a)(1) to apply, the defendant must have committed the 
underlying offense or be accountable for the underlying offense under 
Sec. 1B1.3(a)(1)(A). The fact that the defendant was involved in 
laundering criminally derived funds after the commission of the 
underlying offense, without additional involvement in the underlying 
offense, does not establish that the defendant committed, aided, 
abetted, counseled, commanded, induced, procured, or willfully caused 
the underlying offense.
    3. Application of Subsection (a)(2).--
    (A) In General.--Subsection (a)(2) applies to any case in which (i) 
the defendant did not commit the underlying offense; or (ii) the 
defendant committed the underlying offense (or would be accountable for 
the underlying offense under Sec. 1B1.3(a)(1)(A)), but the offense 
level for the underlying offense

[[Page 30560]]

is impossible or impracticable to determine.
    (B) Commingled Funds.--In a case in which a transaction, financial 
transaction, monetary transaction, transportation, transfer, or 
transmission results in the commingling of legitimately derived funds 
with criminally derived funds, the value of the laundered funds, for 
purposes of subsection (a)(2), is the amount of the criminally derived 
funds, not the total amount of the commingled funds, if the defendant 
provides sufficient information to determine the amount of criminally 
derived funds without unduly complicating or prolonging the sentencing 
process. If the amount of the criminally derived funds is difficult or 
impracticable to determine, the value of the laundered funds, for 
purposes of subsection (a)(2), is the total amount of the commingled 
funds.
    4. Enhancement for Business of Laundering Funds.--
    (A) In General.--The court shall consider the totality of the 
circumstances to determine whether a defendant who did not commit the 
underlying offense was in the business of laundering funds, for 
purposes of subsection (b)(2)(C).
    (B) Factors to Consider.--The following is a non-exhaustive list of 
factors that may indicate the defendant was in the business of 
laundering funds for purposes of subsection (b)(2)(C):
    (i) The defendant regularly engaged in laundering funds.
    (ii) The defendant engaged in laundering funds during an extended 
period of time.
    (iii) The defendant engaged in laundering funds from multiple 
sources.
    (iv) The defendant generated a substantial amount of revenue in 
return for laundering funds.
    (v) At the time the defendant committed the instant offense, the 
defendant had one or more prior convictions for an offense under 18 
U.S.C. 1956 or 1957, or under 31 U.S.C. 5313, 5314, 5316, 5324 or 5326, 
or any similar offense under state law, or an attempt or conspiracy to 
commit any such federal or state offense. A conviction taken into 
account under subsection (b)(2)(C) is not excluded from consideration 
of whether that conviction receives criminal history points pursuant to 
Chapter Four, Part A (Criminal History).
    (vi) During the course of an undercover government investigation, 
the defendant made statements that the defendant engaged in any of the 
conduct described in subdivisions (i) through (iv).
    5. (A) Sophisticated Laundering under Subsection (b)(3).--For 
purposes of subsection (b)(3), `sophisticated laundering' means complex 
or intricate offense conduct pertaining to the execution or concealment 
of the 18 U.S.C. 1956 offense.
    Sophisticated laundering typically involves the use of--
    (i) fictitious entities;
    (ii) shell corporations;
    (iii) two or more levels (i.e., layering) of transactions, 
transportation, transfers, or transmissions, involving criminally 
derived funds that were intended to appear legitimate; or
    (iv) offshore financial accounts.
    (B) Non-Applicability of Enhancement.--If subsection (b)(3) 
applies, and the conduct that forms the basis for an enhancement under 
the guideline applicable to the underlying offense is the only conduct 
that forms the basis for application of subsection (b)(3) of this 
guideline, do not apply subsection (b)(3) of this guideline.
    6. Grouping of Multiple Counts.--In a case in which the defendant 
is convicted of a count of laundering funds and a count for the 
underlying offense from which the laundered funds were derived, the 
counts shall be grouped pursuant to subsection (c) of Sec. 3D1.2 
(Groups of Closely-Related Counts).''.
    Chapter Two, Part S is amended by striking section 2S1.2, and its 
accompanying commentary.
    The Commentary to Sec. 2S1.3 captioned ``Statutory Provisions'' is 
amended by inserting ``18 U.S.C. Sec. 1960;'' before ``26 U.S.C. 
Sec. 7203''; and by inserting ``, 5326'' after ``5324''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1957 and the line referenced to 21 U.S.C. 854 by striking 
``2S1.2'' and inserting ``2S1.1''; by inserting after the line 
referenced to 18 U.S.C. 1959 the following new line:
    ``18 U.S.C. 1960--2S1.3'';
    And by inserting after the line referenced to 31 U.S.C. 5324 the 
following new line:
    ``31 U.S.C. 5326  2S1.3, 2T2.2''.
    The Commentary to Sec. 1B1.3 captioned ``Application Notes'' is 
amended in Note 6 in the first paragraph by striking the second 
sentence and inserting the following:
    ``For example, in Sec. 2S1.1 (Laundering of Monetary Instruments; 
Engaging in Monetary Transactions in Property Derived from Unlawful 
Activity), subsection (b)(2)(B) applies if the defendant ``is convicted 
under 18 U.S.C. 1956'.''.
    The Commentary to Sec. 1B1.3 captioned ``Application Notes'' is 
amended in Note 6 in the second paragraph by striking the last sentence 
and inserting the following:
    ``For example, Sec. 2S1.1(b)(2)(B) (which is applicable only if the 
defendant is convicted under 18 U.S.C. 1956) would be applied in 
determining the offense level under Sec. 2X3.1 (Accessory After the 
Fact) in a case in which the defendant was convicted of accessory after 
the fact to a violation of 18 U.S.C. 1956.''.
    Section 3D1.2(d) is amended in the second paragraph by striking 
``2S1.2,''.
    Section 8C2.1(a) is amended by striking ``2S1.2,''.
    The Commentary to 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''.
    Reason for Amendment: This amendment consolidates the money 
laundering guidelines, Secs. 2S1.1 (Laundering of Monetary Instruments) 
and 2S1.2 (Engaging in Monetary Transactions in Property Derived from 
Specified Unlawful Activity), into one guideline that applies to 
convictions under 18 U.S.C. 1956 or 1957, or 21 U.S.C. 854. The 
amendment responds in several ways to concerns that the penalty 
structure existing prior to this amendment for such offenses did not 
reflect adequately the culpability of the defendant or the seriousness 
of the money laundering conduct because the offense level for money 
laundering was determined without sufficient consideration of the 
defendant's involvement in, or the relative seriousness of, the 
underlying offense. This amendment is designed to promote 
proportionality by providing increased penalties for defendants who 
launder funds derived from more serious underlying criminal conduct, 
such as drug trafficking, crimes of violence, and fraud offenses that 
generate relatively high loss amounts, and decreased penalties for 
defendants who launder funds derived from less serious underlying 
criminal conduct, such as basic fraud offenses that generate relatively 
low loss amounts.
    First, this amendment ties offense levels for money laundering more 
closely to the underlying conduct that was the source of the criminally 
derived funds by separating money laundering offenders into two 
categories for purposes of determining the base offense level. For 
direct money launderers (offenders who commit or would be accountable 
under

[[Page 30561]]

Sec. 1B1.3(a)(1)(A) (Relevant Conduct) for the underlying offense which 
generated the criminal proceeds), subsection (a)(1) sets the base 
offense level at the offense level in Chapter Two (Offense Conduct) for 
the underlying offense (i.e., the base offense level, specific offense 
characteristics, cross references, and special instructions for the 
underlying offense). For third party money launderers (offenders who 
launder the proceeds generated from underlying offenses that the 
defendant did not commit or would not be accountable for under 
Sec. 1B1.3(a)(1)(A)), subsection (a)(2) sets the base offense level at 
level 8, plus an increase based on the value of the laundered funds 
from the table in subsection (b)(1) of Sec. 2B1.1 (Theft, Fraud, 
Property Destruction).
    Second, in addition to the base offense level calculation, this 
amendment provides an enhancement designed to reflect the differing 
seriousness of the underlying conduct that was the source of the 
criminally derived funds. Subsection (b)(1) provides a six-level 
enhancement for third party money launderers who knew or believed that 
any of the laundered funds were the proceeds of, or were intended to 
promote, certain types of more serious underlying criminal conduct; 
specifically, drug trafficking, crimes of violence, offenses involving 
firearms, explosives, national security, terrorism, and the sexual 
exploitation of a minor. The Commission determined that defendants who 
knowingly launder the proceeds of these more serious underlying 
offenses are substantially more culpable than third party launderers of 
criminally derived proceeds of less serious underlying offenses.
    Third, this amendment provides three alternative enhancements, with 
the greatest applicable enhancement to be applied. These enhancements 
are designed to (1) ensure that all direct money launderers receive 
additional punishment for committing both the money laundering offense 
and the underlying offense, and (2) reflect the differing seriousness 
of money laundering conduct depending on the nature and sophistication 
of the offense. Specifically, subsection (b)(2)(A) provides a one-level 
increase if the defendant was convicted under 18 U.S.C. 1957, and 
subsection (b)(2)(B) provides a two-level increase if the defendant was 
convicted under 18 U.S.C. 1956. The one-level difference between these 
two enhancements reflects the fact that 18 U.S.C. 1956 has a statutory 
maximum penalty (20 years' imprisonment) that is twice as long as the 
statutory maximum penalty for violations of 18 U.S.C. 1957 (10 years' 
imprisonment). In addition, subsection (b)(3) provides an additional 
two-level increase if subsection (b)(2)(B) applies and the offense 
involved sophisticated laundering such as the use of fictitious 
entities, shell corporations, two or more levels of transactions, or 
offshore financial accounts. The Commission determined that, similar to 
fraud and tax offenses that involve sophisticated means, see subsection 
(b)(8) of Sec. 2B1.1 (Theft, Property Destruction, and Fraud), 
subsection (b)(2) of Sec. 2T1.1 (Tax Evasion; Willful Failure to File 
Return, Supply Information, or Pay Tax; Fraudulent or False Returns, 
Statements, or Other Documents), violations of 18 U.S.C. 1956 that 
involve sophisticated laundering warrant additional punishment because 
such offenses are more difficult and time consuming for law enforcement 
to detect than less sophisticated laundering. As a result of the 
enhancements provided by subsections (b)(2)(A), (b)(2)(B), and (b)(3), 
all direct money launderers will receive an offense level that is one 
to four levels greater than the Chapter Two offense level for the 
underlying offense, depending on the statute of conviction and 
sophistication of the money laundering offense conduct.
    With respect to third party money launderers, subsection (b)(2)(C) 
provides a four-level enhancement if the defendant is ``in the 
business'' of laundering funds. The Commission determined that, similar 
to a professional ``fence'', see Sec. 2B1.1(b)(4)(B), defendants who 
routinely engage in laundering funds on behalf of others, and who gain 
financially from engaging in such transactions, warrant substantial 
additional punishment because they encourage the commission of 
additional criminal conduct.
    Fourth, this amendment contains an application note expressly 
providing instructions regarding the grouping of money laundering 
counts with a count of conviction for the underlying offense. In a case 
in which the defendant is to be sentenced on a count of conviction for 
money laundering and a count of conviction for the underlying offense 
that generated the laundered funds, this application note instructs 
that such counts shall be grouped pursuant to subsection (c) of 
Sec. 3D1.2 (Groups of Closely-Related Counts), thereby resolving a 
circuit conflict on this issue. Compare United States v. Cusumano, 943 
F.2d 305 (3d Cir. 1991), cert. denied, 502 U.S. 1036 (1992) (affirming 
decision to group under Sec. 3D1.2(b) money laundering count with other 
offenses that ``were all part of one scheme to obtain money'' from an 
employee benefit fund); United States v. Leonard, 61 F.3d 1181 (5th 
Cir. 1995) (affirming decision to group fraud and money laundering 
offenses under Sec. 3D1.2(d) because defendant's money laundering 
activity and fraudulent telemarketing scheme constituted the same 
common plan and had the same victims); and United States v. Wilson, 98 
F.3d 281 (7th Cir. 1996) (district court erred in not grouping money 
laundering and mail fraud convictions under Sec. 3D1.2(d)), with United 
States v. Kneeland, 148 F.3d 6 (1st Cir. 1998) (affirming district 
court decision not to group fraud and money laundering counts under 
Sec. 3D1.2(d) because the offense level for fraud, unlike money 
laundering, is determined ``largely on the basis of total amount of 
harm or loss''); United States v. Napoli, 179 F.3d 1 (2d Cir. 1999), 
cert. denied, 528 U.S. 1162 (2000) (affirming decision not to group 
wire fraud and money laundering counts under Sec. 3D1.2(b) or (d) 
because the offenses have different victims and the offense level for 
money laundering, unlike fraud, is not based primarily on the amount of 
money involved); United States v. Hildebrand, 152 F.3d 756 (8th Cir.), 
cert. denied, 525 U.S. 1033 (1998) (finding that money laundering and 
fraud counts should not be grouped because the fraud and money 
laundering guidelines do not measure the same types of harm); United 
States v. Hanley, 190 F.3d 1017 (9th Cir. 1999) (affirming decision not 
to group money laundering and wire fraud counts under Sec. 3D1.2(d) 
because the guidelines for such offenses measure harm differently); and 
United States v. Johnson, 971 F.2d 562 (10th Cir. 1992) (district court 
erred in grouping money laundering and fraud counts under Sec. 3D1.2(d) 
because the measurement of harm for fraud is not the same as that for 
money laundering).
    Finally, this amendment provides that convictions under 18 U.S.C. 
1960 are referenced to Sec. 2S1.3 (Structuring Transactions to Evade 
Reporting Requirements). Operation of money transmitting businesses 
without an appropriate license is proscribed by 18 U.S.C. 1960, as are 
failures to comply with certain reporting requirements issued under 31 
U.S.C. 5330. The Commission determined that offenses involving these 
regulatory requirements serve many of the same purposes as Currency 
Transaction Reports, Currency and Monetary Instrument Reports, Reports 
of Foreign Bank and Financial Accounts, and Reports of Cash Payments 
over $10,000 Received in a

[[Page 30562]]

Trade or Business, violations regarding which currently are referenced 
to Sec. 2S1.3, and that, therefore, violations of 18 U.S.C. Sec. 1960 
also should be referenced to Sec. 2S1.3.
    23. Amendment: The Commentary to Sec. 3B1.2 is amended by striking 
Notes 1 through 4 and the background and inserting the following:
    ``1. Definition.--For purposes of this guideline, `participant' has 
the meaning given that term in Application Note 1 of Sec. 3B1.1 
(Aggravating Role).
    2. Requirement of Multiple Participants.--This guideline is not 
applicable unless more than one participant was involved in the 
offense. See the Introductory Commentary to this Part (Role in the 
Offense). Accordingly, an adjustment under this guideline may not apply 
to a defendant who is the only defendant convicted of an offense unless 
that offense involved other participants in addition to the defendant 
and the defendant otherwise qualifies for such an adjustment.
    3. Applicability of Adjustment.--
    (A) Substantially Less Culpable than Average Participant.--This 
section provides a range of adjustments for a defendant who plays a 
part in committing the offense that makes him substantially less 
culpable than the average participant.
    A defendant who is accountable under Sec. 1B1.3 (Relevant Conduct) 
only for the conduct in which the defendant personally was involved and 
who performs a limited function in concerted criminal activity is not 
precluded from consideration for an adjustment under this guideline. 
For example, a defendant who is convicted of a drug trafficking 
offense, whose role in that offense was limited to transporting or 
storing drugs and who is accountable under Sec. 1B1.3 only for the 
quantity of drugs the defendant personally transported or stored is not 
precluded from consideration for an adjustment under this guideline.
    (B) Conviction of Significantly Less Serious Offense.--If a 
defendant has received a lower offense level by virtue of being 
convicted of an offense significantly less serious than warranted by 
his actual criminal conduct, a reduction for a mitigating role under 
this section ordinarily is not warranted because such defendant is not 
substantially less culpable than a defendant whose only conduct 
involved the less serious offense. For example, if a defendant whose 
actual conduct involved a minimal role in the distribution of 25 grams 
of cocaine (an offense having a Chapter Two offense level of level 14 
under Sec. 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or 
Trafficking (Including Possession with Intent to Commit These 
Offenses); Attempt or Conspiracy)) is convicted of simple possession of 
cocaine (an offense having a Chapter Two offense level of level 6 under 
Sec. 2D2.1 (Unlawful Possession; Attempt or Conspiracy)), no reduction 
for a mitigating role is warranted because the defendant is not 
substantially less culpable than a defendant whose only conduct 
involved the simple possession of cocaine.
    (C) Fact-Based Determination.--The determination whether to apply 
subsection (a) or subsection (b), or an intermediate adjustment, 
involves a determination that is heavily dependent upon the facts of 
the particular case. As with any other factual issue, the court, in 
weighing the totality of the circumstances, is not required to find, 
based solely on the defendant's bare assertion, that such a role 
adjustment is warranted.
    4. Minimal Participant.--Subsection (a) applies to a defendant 
described in Application Note 3(A) who plays a minimal role in 
concerted activity. It is intended to cover defendants who are plainly 
among the least culpable of those involved in the conduct of a group. 
Under this provision, the defendant's lack of knowledge or 
understanding of the scope and structure of the enterprise and of the 
activities of others is indicative of a role as minimal participant. It 
is intended that the downward adjustment for a minimal participant will 
be used infrequently.
    5. Minor Participant.--Subsection (b) applies to a defendant 
described in Application Note 3(A) who is less culpable than most other 
participants, but whose role could not be described as minimal.''.
    Reason for Amendment: This amendment resolves a circuit conflict 
regarding whether a defendant who is accountable under Sec. 1B1.3 
(Relevant Conduct) only for conduct in which the defendant personally 
was involved, and who performs a limited function in concerted criminal 
activity, is precluded from consideration for an adjustment under 
Sec. 3B1.2 (Mitigating Role). Compare United States v. Burnett, 66 F.3d 
137 (7th Cir. 1995) (``where a defendant is sentenced only for the 
amount of drugs he handled, he is not entitled to a Sec. 3B1.2 
reduction''), with United States v. Rodriguez De Varon, 175 F.3d 930 
(11th Cir. 1999) (a defendant is not automatically precluded from 
consideration for a mitigating role adjustment in a case in which the 
defendant is held accountable solely for the amount of drugs he 
personally handled). Although this circuit conflict arose in the 
context of a drug offense, the amendment resolves it in a manner that 
makes the rule applicable to all types of offenses.
    The amendment adopts the approach articulated by the Eleventh 
Circuit in United States v. Rodriguez De Varon, supra, that Sec. 3B1.2 
does not automatically preclude a defendant from being considered for a 
mitigating role adjustment in a case in which the defendant is held 
accountable under Sec. 1B1.3 solely for the amount of drugs the 
defendant personally handled. In considering a Sec. 3B1.2 adjustment, a 
court must measure the defendant's role against the relevant conduct 
for which the defendant is held accountable at sentencing, whether or 
not other defendants are charged.
    In contrast to the holding in United States v. Burnett, supra, this 
amendment allows the court to apply traditional analysis on the 
applicability of a reduction pursuant to Sec. 3B1.2, even in a case in 
which a defendant is held liable under Sec. 1B1.3 only for conduct 
(such as drug quantities) in which the defendant was involved 
personally.
    The substantive impact of this amendment in resolving the circuit 
conflict is to provide, in the context of a drug courier, for example, 
that the court is not precluded from considering a Sec. 3B1.2 
adjustment simply because the defendant's role in the offense was 
limited to transporting or storing drugs, and the defendant was 
accountable under Sec. 1B1.3 only for the quantity of drugs the 
defendant personally transported or stored. The amendment does not 
require that such a defendant receive a reduction under Sec. 3B1.2, or 
suggest that such a defendant can receive a reduction based only on 
those facts; rather, the amendment provides only that such a defendant 
is not precluded from consideration for such a reduction if the 
defendant otherwise qualifies for the reduction pursuant to the terms 
of Sec. 3B1.2.
    In addition to resolving the circuit conflict, the amendment makes 
the following non-substantive revisions to Sec. 3B1.2 to clarify 
guideline application: (1) Incorporating commentary from the 
Introduction to Chapter Three, Part B (Role in the Offense) that there 
must be more than one participant before application of a mitigating 
role adjustment may be considered; (2) incorporating into this 
guideline the definition of ``participant'' from Sec. 3B1.1 
(Aggravating Role); (3) moving into an application note significant 
background commentary that has been cited frequently in appellate 
decisions; (4) adding a section on fact-based

[[Page 30563]]

determinations to Application Note 3 that emphasizes the significant 
judicial role in decision-making on the applicability of Sec. 3B1.2; 
(5) maintaining commentary language that the minimal role adjustment is 
intended to be used infrequently; and (6) making technical amendments 
to the Commentary to clarify applicable rules (such as the addition of 
headings for, and the reordering of, application notes in the 
commentary) that are intended to have no substantive impact.
    The language regarding ``average participant'' is moved from the 
Background into Application Note 3(A) to provide guidance as to the 
applicability of Sec. 3B1.2. For a reduction to apply, the court, at a 
minimum, must make a factual determination that the defendant's role 
was significantly less culpable than the average participant.
    24. Amendment: The Commentary to Sec. 2J1.6 captioned ``Application 
Notes'' is amended in Note 3 in the first sentence of the second 
paragraph by striking ``In'' and inserting ``However, in''; and by 
inserting ``other than a case of failure to appear for service of 
sentence,'' after ``offense and the failure to appear,''.
    The Commentary to 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.''.
    Reason for Amendment: This amendment makes two minor technical 
changes. First, the amendment makes an editorial change in the 
commentary to Sec. 2J1.6 (Failure to Appear by Defendant) to improve 
the transition between the first and second paragraphs of Application 
Note 3. Second, the amendment adds an application note to Sec. 2M3.9 
(Disclosure of Information Identifying a Covert Agent) that implements 
the consecutive sentencing requirement of 50 U.S.C. 421, relating to 
the disclosure of information identifying a covert agent.
[FR Doc. 01-13966 Filed 6-5-01; 8:45 am]
BILLING CODE 2210-40-P; 2211-01-P


[Federal Register: June 6, 2001 (Volume 66, Number 109)]
[Notices]               
[Page 30511-30563]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jn01-160]                         


[[Page 30511]]

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Part II





United States Sentencing Commission





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Sentencing Guidelines for United States Courts; Notice


[[Page 30512]]


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UNITED STATES SENTENCING COMMISSION

 
Sentencing Guidelines for United States Courts

AGENCY: United States Sentencing Commission.

ACTION: Notice of: (A) promulgation of temporary, emergency amendments, 
effective May 1, 2001, for (1) offenses involving the manufacture, 
importation, exportation, or trafficking of ``Ecstasy''; (2) offenses 
involving the manufacture, importation, or trafficking of amphetamine; 
(3) offenses involving the trafficking of certain List I chemicals that 
are used in the manufacture of methamphetamine; and (4) offenses 
involving peonage and human trafficking; and (B) submission to Congress 
of additional non-emergency amendments to the sentencing guidelines, 
effective November 1, 2001.

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SUMMARY: The United States Sentencing Commission hereby gives notice of 
the following actions:
    (A) Emergency Amendments.--
    (1) ``Ecstasy'' Offenses.--Pursuant to section 3664 of the Ecstasy 
Anti-Proliferation Act of 2000, Pub. L. 106--310, the Commission has 
promulgated a temporary, emergency amendment to Sec. 2D1.1.
    (2) Amphetamine Offenses.--Pursuant to section 3611 of the 
Methamphetamine Anti-Proliferation Act of 2000, Pub. L. 106--310, the 
Commission has promulgated a temporary, emergency amendment to 
Sec. 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or 
Trafficking (Including Possession with Intent to Commit These Offenses) 
Attempt and Conspiracy).
    (3) List I Chemical Offenses.--Pursuant to section 3651 of the 
Methamphetamine Anti-Proliferation Act of 2000, the Commission has 
promulgated a temporary, emergency amendment to Secs. 2D1.1 and 2D1.11 
(Unlawfully Distributing, Importing, Exporting or Possessing a Listed 
Chemical; Attempt or Conspiracy).
    (4) Human Trafficking Offenses.--Pursuant to section 112(b) of the 
Victims of Trafficking and Violence Protection Act of 2000, Pub. L. 
106--386, the Commission has promulgated a temporary, emergency 
amendment to Secs. 2G1.1 (Promoting Prostitution or Prohibited Sexual 
Conduct), 2G2.1 (Sexually Exploiting a Minor by Production of Sexually 
Explicit Visual or Printed Material; Custodian Permitting Minor to 
Engage in Sexually Explicit Conduct; Advertisement for Minors to Engage 
in Production), and 2H4.1 (Peonage, Involuntary Servitude, and Slave 
Trade), and has promulgated a new guideline at Sec. 2H4.2 (Willful 
Violations of the Migrant and Seasonal Agricultural Worker Protection 
Act).
    (B) Non-Emergency Amendments--Pursuant to its authority under 28 
U.S.C. 994(a) and (p) and several congressional directives more fully 
described herein, the Commission has promulgated additional, non-
emergency amendments to the sentencing guidelines, policy statements, 
commentary, and statutory index.
    This notice sets forth the amendments and the season for each 
amendment.

DATES: The Commission has specified an effective date of May 1, 2001, 
for the emergency amendments set forth in Part (A) of this notice and 
an effective date of November 1, 2001, for the non-emergency amendments 
set forth in Part (B) of this notice.

FOR FURTHER INFORMATION CONTACT: Michael Courlander, Public Affairs 
Officer, 202-502-4590. The amendments set forth in this notice also may 
be accessed through the Commission's website at www.ussc.gov.

SUPPLEMENTARY INFORMATION: The United States Sentencing Commission is 
an independent agency in the judicial branch of the United States 
Government. The Commission promulgates sentencing guidelines and policy 
statements for federal sentencing courts pursuant to 28 U.S.C. 994(a). 
The Commission also periodically reviews and revises previously 
promulgated guidelines pursuant to 28 U.S.C. 994(o) and submits 
guidelines amendments to the Congress not later than the first day of 
May each year pursuant to 28 U.S.C. 994(p).
    (A) Emergency Amendments.--In January 2001, the Commission 
published options for promulgating the emergency amendments set forth 
herein (see 66 FR 7962, January 26, 2001). The Commission held a public 
hearing on the proposed amendments in Washington, DC, on March 19, 
2001. After a review of hearing testimony and additional public 
comment, the Commission promulgated the emergency amendments set forth 
herein. The Commission specified an effective date of May 1, 2001, for 
these amendments.
    (1) ``Ecstasy''.--The Ecstasy Anti-Proliferation Act of 2000 
instructed the Commission to provide increased penalties for the 
manufacture, importation, exportation, or trafficking of ``Ecstasy''. 
The directive specifically required the Commission to increase the base 
offense level for 3,4-Methylenedioxymethamphetamine (MDMA), 3,4-
Methylenedioxyamphetamine (MDA), 3,4-Methylenedioxy-N-ethylamphetamine 
(MDEA), and Paramethoxymethamphetamine (PMA). The amendment amends the 
Drug Equivalency Tables in 1A2D1.1 to increase substantially the 
marihuana equivalencies for the specified controlled substances, which 
has the effect of substantially increasing the penalties for offenses 
involving ``Ecstasy''.
    (2) Amphetamine.--Section 3611 of the Methamphetamine Anti-
Proliferation Act of 2000 directed the Commission to provide increased 
guideline penalties for amphetamine offenses such that those penalities 
are comparable to the base offense level for methamphetamine offenses. 
This amendment revises Sec. 2D1.1 to include amphetamine in the Drug 
Quantity Table in subsection (c) of that guideline. This amendment also 
treats amphetamine and methamphetamine identically, at a 1:1 ratio, 
because of the similarities of the two substances.
    (3) List I Chemicals.--Section 3651 of the Methamphetamine Anti-
Proliferation Act of 2000 directed the Commission to ``provide 
increased penalties for offenses involving ephedrine, 
phenylpropanolamine (PPA), or pseudoephedrine (including their salts, 
optical isomers, and salts of optical isomers) to correspond to the 
quality of controlled substance that reasonably could have been 
manufactured using the quality of ephedrine, PPA, and pseudoephedrine 
possessed or distributed.'' This amendment provides a new chemical 
quantity table in Sec. 2D1.11 specifically for ephedrine, 
pseudoephedrine, and phenylpropanolamine (PPA). The table, which has a 
maximum based offense level of level 38, ties the base offense levels 
for these chemicals to the base offense levels for methamphetamine 
(actual) set forth in Sec. 2D1.1. The amendment also makes conforming 
changes to the commentary in Secs. 2D1.11 and 2D1.1.
    (4) Human Trafficking.--This amendment implements the congressional 
directive in section 112(b) of the Victims of Trafficking and Violence 
Protection Act of 2000, Pub. L. 106-386. The directive requires the 
Commission to amend, if appropriate, the guidelines applicable to human 
trafficking (i.e., peonage, involuntary servitude, and forced labor) 
offenses. It also requires the Commission to ensure that the guidelines 
``are sufficiently stringent to deter and adequately reflect the 
heinous nature of these offenses.'' This amendment (i) creates a new

[[Page 30513]]

guideline, Sec. 2H4.2 (Willful Violations of the Migrant and Seasonal 
Agricultural Worker Protection Act); (ii) refers violations of four new 
statutes, 18 U.S.C. 1589 (Forced Labor), 1590 (Trafficking with Respect 
to Peonage, Involuntary Servitude or Forced Labor), 1591 (Sex 
Trafficking of Children by Force, Fraud or Coercion) and 1952 (Unlawful 
Conduct with Respect to Documents in Furtherance of Peonage, 
Involuntary Servitude, or Forced Labor) to the appropriate guidelines; 
and (iii) makes changes, consistent with the directive, which both 
enhance sentences and reflect changes to three existing statutes: 18 
U.S.C. 1581(a) (Peonage), 1583 (Enticement into Slavery) and 1584 (Sale 
into Involuntary Servitude).
    (B) Non-Emergency Amendments.--Section 994 of title 28, United 
States Code, authorizes the Commission to promulgate sentencing 
guidelines and policy statements for federal courts. See 28 U.S.C. 
994(a). Additionally, 28 U.S.C. 994 directs the Commission periodically 
to review and revise guidelines previously promulgated (see 28 U.S.C. 
994(o)) and authorizes its to submit guidelines amendments to the 
Congress at or after the beginning of a regular session of Congress but 
not later than May 1 (see 18 U.S.C. 994(p)). Absent action of Congress 
to the contrary, submitted amendments become effective by operation of 
law on the date specified by the Commission (generally November 1 of 
the year in which the amendments are submitted to Congress).
    Notice of proposed amendments was published in the Federal Register 
on November 7, 2000 (see 65 FR 66792), and January 26, 2001 (see 66 FR 
7962). The Commission held a public hearing on the proposed amendments 
in Washington, DC on March 19, 2001. After a review of hearing 
testimony and additional public comment, the Commission promulgated the 
amendments set forth herein (including amendments to make permanent the 
temporary, emergency amendments set forth in Part (A) of this notice). 
On May 1, 2001, the Commission submitted these amendments to Congress 
and specified an effective date of November 1, 2001.

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

Diana E. Murphy,
Chair.

    (A) Emergency Amendments to the Sentencing Guidelines, Policy 
Statements, and Official Commentary, Effective May 1, 2001.
    1. Amendment: The Commentary to 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 ``500 gm''; 
in the line referenced to ``MDMA'' by striking ``35 gm'' and inserting 
``500 gm''; in the line referenced ``MDEA'' by striking ``30 gm'' and 
inserting ``500 gm''; and by inserting ``1 gm of 
Paramethoxymethamphetamine/PMA = 500 gm of marihuana'' after the line 
referenced to ``MDEA''.
    Reason for Amendment: This amendment addresses the directive in the 
Ecstasy Anti-Proliferation Act of 2000 (the ``Act''), section 3664 of 
Pub. L. 106-310, which instructs the Commission to provide, under 
emergency amendment authority, increased penalties for the manufacture, 
importation, exportation, or trafficking of Ecstasy. The directive 
specifically requires the Commission to increase the base offense level 
for 3,4-Methylenedioxymethetamine (MDMA), 3,4-Methylenedioxyamphetamine 
(MDA), 3,4-Methylenedioxy-N-ethylamphetamine (MDEA), 
Paramethoxymethamphetamine (PMA), and any other controlled substance 
that is marketed as Ecstasy and that has either a chemical structure 
similar to MDMA or an effect on the central nervous system 
substantially similar to or greater than MDMA.
    The amendment addresses the directive by amending the Drug 
Equivalency Table in Sec. 2D1.1, Application Note 10, to increase 
substantially the marihuana equivalencies for the specified controlled 
substances, which has the effect of substantially increasing the 
penalties for offenses involving Ecstasy. The new penalties for Ecstasy 
trafficking provide penalties which, gram for gram, are more severe 
than those for powder cocaine. Currently under the Drug Equivalency 
Table, one gram of powder cocaine has a marihuana equivalency of 200 
grams. This amendment sets the marihuana equivalency for one gram of 
Ecstasy at 500 grams.
    There are a combination of reasons why the Commission has 
substantially increased the penalties in response to the congressional 
directive. Much evidence received by the Commission indicated that 
Ecstasy: (1) has powerful pharmacological effects; (2) has the capacity 
to cause lasting physical harms, including brain damage; and (3) is 
being abused by rapidly increasing numbers of teenagers and young 
adults. Indeed, the market for Ecstasy is overwhelmingly comprised of 
people under the age of 25 years.
    Before voting to promulgate this amendment, the Commission 
considered whether the penalty levels for Ecstasy should be set at the 
same levels as for heroin (i.e., one gram of heroin has a marihuana 
equivalency of 1000 grams) and decided that somewhat lesser penalties 
were appropriate for Ecstasy for a number of reasons: (1) The potential 
for addiction is greater with heroin; (2) heroin distribution often 
involves violence while, at this time, violence is not reported in 
Ecstasy markets; (3) because it is a narcotic and is often injected, 
the risk of death from overdose is much greater from heroin; and (4) 
because heroin is often injected, there are more secondary health 
consequences, such as infections and the transmission of the human 
immunodeficiency virus (HIV) and hepatitis.
    Finally, based on information regarding Ecstasy trafficking 
patterns, the penalty levels chosen are appropriate and sufficient to 
target serious and high-level traffickers and to provide appropriate 
punishment, deterrence, and incentives for cooperation. The penalty 
levels chosen for Ecstasy offenses provide five year sentences for 
serious traffickers (those whose relevant conduct involved at least 800 
pills) and ten year sentences for high-level traffickers (those whose 
relevant conduct involved at least 8,000 pills).
    2. Amendment: Section 2D1.1(c)(1) is amended by inserting after the 
fifth entry the following:
    ``15 KG or more of Amphetamine, or 1.5 KG or more of Amphetamine 
(actual);''.
    Section 2D1.1(c)(2) is amended by inserting after the fifth entry 
the following:
    ``At least 5 KG but less than 15 KG of Amphetamine, or at least 500 
G but less than 1.5 KG of Amphetamine (actual);''.
    Section 2D1.1(c)(3) is amended by inserting after the fifth entry 
the following:
    ``At least 1.5 KG but less than 5 KG of Amphetamine, or at least 
150 G but less than 500 G of Amphetamine (actual);''.
    Section 2D1.1(c)(4) is amended by inserting after the fifth entry 
the following:
    ``At least 500 G but less than 1.5 KG of Amphetamine, or at least 
50 G but less than 150 G of Amphetamine (actual);''.
    Section 2D1.1(c)(5) is amended by inserting after the fifth entry 
the following:
    ``At least 350 G but less than 500 G of Amphetamine, or at least 35 
G but

[[Page 30514]]

less than 50 G of Amphetamine (actual);''.
    Section 2D1.1(c)(6) is amended by inserting after the fifth entry 
the following:
    ``At least 200 G but less than 350 G of Amphetamine, or at least 20 
G but less than 35 G of Amphetamine (actual);''.
    Section 2D1.1(c)(7) is amended by inserting after the fifth entry 
the following:
    ``At least 50 G but less than 200 G of Amphetamine, or at least 5 G 
but less than 20 G of Amphetamine (actual);''.
    Section 2D1.1(c)(8) is amended by inserting after the fifth entry 
the following:
    ``At least 40 G but less than 50 G of Amphetamine, or at least 4 G 
but less than 5 G of Amphetamine (actual);''.
    Section 2D1.1(c)(9) is amended by inserting after the fifth entry 
the following:
    ``At least 30 G but less than 40 G of Amphetamine, or at least 3 G 
but less than 4 G of Amphetamine (actual);''.
    Section 2D1.1(c)(10) is amended by inserting after the fifth entry 
the following:
    ``At least 20 G but less than 30 G of Amphetamine, or at least 2 G 
but less than 3 G of Amphetamine (actual);''.
    Section 2D1.1(c)(11) is amended by inserting after the fifth entry 
the following:
    ``At least 10 G but less than 20 G of Amphetamine, or at least 1 G 
but less than 2 G of Amphetamine (actual);''.
    Section 2D1.1(c)(12) is amended by inserting after the fifth entry 
the following:
    ``At least 5 G but less than 10 G of Amphetamine, or at least 500 
MG but less than 1 G of Amphetamine (actual);''.
    Section 2D1.1(c)(13) is amended by inserting after the fifth entry 
the following:
    ``At least 2.5 G but less than 5 G of Amphetamine, or at least 250 
MG but less than 500 MG of Amphetamine (actual);''.
    Section 2D1.1(c)(14) is amended by inserting after the fifth entry 
the following:
    ``Less than 2.5 G of Amphetamine, or less than 250 MG of 
Amphetamine (actual);''.
    Section 2D1.1(c) is amended in Note (B) of the ``Notes to Drug 
Quantity Table'' by inserting ``, `Amphetamine (actual)','' after 
``terms `PCP (actual)' ''; by inserting ``, amphetamine,'' after 
``substance containing PCP''; and by inserting ``, amphetamine 
(actual),'' after ``weight of the PCP (actual)''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 9 by inserting ``, amphetamine,'' 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''; and by inserting ``1 gm of 
Amphetamine (Actual) = 20 kg of marihuana'' after the line referenced 
to ``Amphetamine''.
    Reason for Amendment: This emergency amendment implements the 
directive in the Methamphetamine 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.
    This amendment revised Sec. 2D1.1 to include amphetamine in the 
Drug Quantity Table. This amendment also treats amphetamine and 
methamphetamine identically, at a 1:1 ratio (i.e., the same quantities 
of amphetamine and methamphetamine would result in the same base 
offense level) because of the similarities of the two substances. 
Specifically, amphetamine and methamphetamine (1) chemically are 
similar; (2) are produced by a similar method and are trafficked in a 
similar manner; (3) share similar methods of use; (4) affect the same 
parts of the brain; and (5) have similar intoxicating effects. The 
amendment also distinguishes between pure amphetamine (i.e., 
amphetamine (actual)) and amphetamine mixture in the same manner, and 
at the same quantities, as pure methamphetamine (i.e., methamphetamine 
(actual)) and methamphetamine mixture, respectively. The amendment 
reflects the view that the 1:1 ratio is appropriate given the 
seriousness of these two controlled substances.
    3. Amendment: Section 2D1.11 is amended by striking subsection (d), 
captioned ``Chemical Quantity Table*''; and by striking the Notes that 
follow subsection (d), captioned ``*Notes'', and inserting the 
following:

  ``(d)(1) Ephedrine, Pseudoephedrine, and Phenylpropanolamine Quantity
                                 Table *
          [Methamphetamine and Amphetamine Precursor Chemicals]
------------------------------------------------------------------------
                                                           Base  offense
                        Quantity                               level
------------------------------------------------------------------------
(1) 3 KG or more of Ephedrine;..........................        Level 38
3 KG or more of Phenylpropanolamine;
3 KG or More of Pseudoephedrine.
(2) At least 1 KG but less than 3 KG of Ephedrine;......        Level 36
At least 1 KG but less than 3 KG of Phenylpropanolamine;
At least 1 KG but less than 3 KG of Pseudoephedrine.
(3) At least 300 G but less than 1 KG of Ephedrine;.....        Level 34
At least 300 G but less than 1 KG of
 Phenylpropanolamine;
At least 300 G but less than 1 KG of Pseudoephedrine.
(4) At least 100 G but less than 300 G of Ephedrine;....        Level 32
At least 100 G but less than 300 G of
 Phenylpropanolamine;
At least 100 G but less than 300 G of Pseudoephedrine.
(5) At least 70 G but less than 100 G of Ephedrine;.....        Level 30
At least 70 G but less than 100 G of
 Phenylpropanolamine;
At least 70 G but less than 100 G of Pseudoephedrine.
(6) At least 40 G but less than 70 G of Ephedrine;......        Level 28
At least 40 G but less than 70 G of Phenylpropanolamine;
At least 40 G but less than 70 G of Pseudoephedrine.
(7) At least 10 G but less than 40 G of Ephedrine;......        Level 26
At least 10 G but less than 40 G of Phenylpropanolamine;
At least 10 G but less than 40 G of Pseudoephedrine.

[[Page 30515]]


(8) At least 8 G but less than 10 G of Ephedrine;.......        Level 24
At least 8 G but less than 10 G of Phenylpropanolamine;
At least 8 G but less than 10 G of Pseudoephedrine.
(9) At least 6 G but less than 8 G of Ephedrine;........        Level 22
At least 6 G but less than 8 G of Phenylpropanolamine;
At least 6 G but less than 8 G of Pseudoephedrine.
(10) At least 4 G but less than 6 G of Ephedrine;.......        Level 20
At least 4 G but less than 6 G of Phenylpropanolamine;
At least 4 G but less than 6 G of Pseudoephedrine.
(11) At least 2 G but less than 4 G of Ephedrine;.......        Level 18
At least 2 G but less than 4 G of Phenylpropanolamine;
At least 2 G but less than 4 G of Pseudoephedrine.
(12) At least 1 G but less than 2 G of Ephedrine;.......        Level 16
At least 1 G but less than 2 G of Phenylpropanolamine;
At least 1 G but less than 2 G of Pseudoephedrine.
(13) At least 500 MG but less than 1 G of Ephedrine;....        Level 14
At least 500 MG but less than 1 G of
 Phenylpropanolamine;
At least 500 MG but less than 1 G of Pseudoephedrine.
(14) Less than 500 MG of Ephedrine;.....................        Level 12
Less than 500 MG of Phenylpropanolamine;
Less than 500 MG of Pseudoephedrine.
------------------------------------------------------------------------
* Notes:
(A) Except as provided in Note (B), to calculate the base offense level
  in an offense that involves two or more chemicals, use the quantity of
  the single chemical that results in the greatest offense level,
  regardless of whether the chemicals are set forth in different tables
  or in different categories (i.e., list I or list II) under subsection
  (d) of this guideline.
(B) To calculate the base offense level in an offense that involves two
  or more chemicals each of which is set forth in the Ephedrine,
  Pseudoephedrine, and Phenylpropanolamine Quantity Table, (i) aggregate
  the quantities of all such chemicals, and (ii) determine the base
  offense level corresponding to the aggregate quantity.
(C) In a case involving ephedrine, pseudoephedrine, or
  phenylpropanolamine tablets, use the weight of the ephedrine,
  pseudoephedrine, or phenylpropanolamine contained in the tablets, not
  the weight of the entire tablets, in calculating the base offense
  level.''.


                     (d)(2) Chemical Quantity Table*
                     [All other precursor chemicals]
------------------------------------------------------------------------
                                                           Base  offense
              Listed chemicals and quantity                    level
------------------------------------------------------------------------
(1) List I Chemicals....................................        Level 30

    890 G or more of Benzaldehyde;
    20 KG or more of Benzyl Cyanide;
    200 G or more of Ergonovine;
    400 G or more of Ergotamine;
    20 KG or more of Ethylamine;
    2.2 KG or more of Hydriodic Acid;
    320 KG or more of Isosafrole;
    200 G or more of Methylamine;
    500 KG or more of N-Methylephedrine;
    500 KG or more of N-Methylpseudoephedrine;
    625 G or more of Nitroethane;
    10 KG or more of Norpseudoephedrine;
    20 KG or more of Phenylacetic Acid;
    10 KG or more of Piperidine;
    320 KG or more of Piperonal;
    1.6 KG or more of Propionic Anhydride;
    320 KG or more of Safrole;
    400 KG or more of 3, 4-Methylenedioxyphenyl-2-
     propanone.

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

    At least 267 G but less than 890 G of Benzaldehyde;
    At least 6 KG but less than 20 KG of Benzyl Cyanide;
    At least 60 G but less than 200 G of Ergonovine;
    At least 120 G but less than 400 G of Ergotamine;
    At least 6 KG but less than 20 KG of Ethylamine;
    At least 660 G but less than 2.2 KG of Hydriodic
     Acid;
    At least 96 KG but less than 320 KG of Isosafrole;
    At least 60 G but less than 200 G of Methylamine;

[[Page 30516]]


    At least 150 KG but less than 500 KG of N-
     Methylephedrine;
    At least 150 KG but less than 500 KG of N-
     Methylpseudoephedrine;
    At least 187.5 G but less than 625 G of Nitroethane;
    At least 3 KG but less than 10 KG of
     Norpseudoephedrine;
    At least 6 KG but less than 20 KG of Phenylacetic
     Acid;
    At least 3 KG but less than 10 KG of Piperidine;
    At least 96 KG but less than 320 KG of Piperonal;
    At least 480 G but less than 1.6 KG of Propionic
     Anhydride;
    At least 96 KG but less than 320 KG of Safrole;
    At least 120 KG but less than 400 KG of 3,4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    11 KG or more of Acetic Anhydride;
    1175 KG or more of Acetone;
    20 KG or more of Benzyl Chloride;
    1075 KG or more of Ethyl Ether;
    1200 KG or more of Methyl Ethyl Ketone;
    10 KG or more of Potassium Permanganate;
    1300 KG or more of Toluene.                                 Level 26

(3) List I Chemicals

    At least 89 G but less than 267 G of Benzaldehyde;
    At least 2 KG but less than 6 KG of Benzyl Cyanide;
    At least 20 G but less than 60 G of Ergonovine;
    At least 40 G but less than 120 G of Ergotamine;
    At least 2 KG but less than 6 KG of Ethylamine;
    At least 220 G but less than 660 G of Hydriodic
     Acid;
    At least 32 KG but less than 96 KG of Isosafrole;
    At least 20 G but less than 60 G of Methylamine;
    At least 50 KG but less than 150 KG of N-
     Methylephedrine;
    At least 50 KG but less than 150 KG of N-
     Methylpseudoephedrine;
    At least 62.5 G but less than 187.5 G of
     Nitroethane;
    At least 1 KG but less than 3 KG of
     Norpseudoephedrine;
    At least 2 KG but less than 6 KG of Phenylacetic
     Acid;
    At least 1 KG but less than 3 KG of Piperidine;
    At least 32 KG but less than 96 KG of Piperonal;
    At least 160 G but less than 480 G of Propionic
     Anhydride;
    At least 32 KG but less than 96 KG of Safrole;
    At least 40 KG but less than 120 KG of 3,4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 3.3 KG but less than 11 KG of Acetic
     Anhydride;
    At least 352.5 KG but less than 1175 KG of Acetone;
    At least 6 KG but less than 20 KG of Benzyl
     Chloride;
    At least 332.5 KG but less than 1075 KG of Ethyl
     Ether;
    At least 360 KG but less than 1200 KG of Methyl
     Ethyl Ketone;
    At least 3 KG but less than 10 KG of Potassium
     Permanganate;
    At least 390 KG but less than 1300 KG of Toluene.

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

    At least 62.3 G but less than 89 G of Benzaldehyde;
    At least 1.4 KG but less than 2 KG of Benzyl
     Cyanide;
    At least 14 G but less than 20 G of Ergonovine;
    At least 28 G but less than 40 G of Ergotamine;
    At least 1.4 KG but less than 2 KG of Ethylamine;
    At least 154 G but less than 220 G of Hydriodic
     Acid;
    At least 22.4 KG but less than 32 KG of Isosafrole;
    At least 14 G but less than 20 G of Methylamine;
    At least 35 KG but less than 50 KG of N-
     Methylephedrine;

    At least 35 KG but less than 50 KG of N-
     Methylpseudoephedrine;
    At least 43.8 G but less than 62.5 of Nitroethane;
    At least 700 G but less than 1 KG of
     Norpseudoephedrine;
    At least 1.4 KG but less than 2 KG of Phenylacetic
     Acid;
    At least 700 G but less than 1 KG of Piperidine;
    At least 22.4 KG but less than 32 KG of Piperonal;
    At least 112 G but less than 160 G of Propionic
     Anhydride;

[[Page 30517]]


    At least 22.4 KG but less than 32 KG of Safrole;
    At least 28 KG but less than 40 KG of 3, 4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 1.1 KG but less than 3.3 KG of Acetic
     Anhydride;
    At least 117.5 KG but less than 352.5 KG of Acetone;
    At least 2 KG but less than 6 KG of Benzyl Chloride;
    At least 107.5 but less than 322.5 KG of Ethyl
     Ether;
    At least 120 KG but less than 360 KG of Methyl Ethyl
     Ketone;
    At least 1 KG but less than 3 KG of Potassium
     Permanganate;
    At least 130 KG but less than 390 KG of Toluene.

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

    At least 35.6 G but less than 62.3 of Benzaldehyde;
    At least 800 G but less than 1.4 KG of Benzyl
     Cyanide;
    At least 8 G but less than 14 G of Ergonovine;
    At least 16 G but less than 28 G of Ergotamine;
    At least 800 G but less than 1.4 KG of Ethylamine;
    At least 88 G but less than 154 G of Hydriodic Acid;
    At least 12.8 KG but less than 22.4 KG of
     Isosafrole;
    At least 8 G but less than 14 G of Methylamine;
    At least 20 KG but less than 35 KG of N-
     Methylephedrine;
    At least 20 KG but less than 35 KG of N-
     Methylpseudoephedrine;
    At least 25 G but less than 43.8 G of Nitroethane;
    At least 400 G but less than 700 G of
     Norpseudoephedrine;
    At least 800 G but less than 1.4 KG of Phenylacetic
     Acid;
    At least 400 G but less than 700 G of Piperidine;
    At least 12.8 KG but less than 22.4 KG of Piperonal;
    At least 64 G but less than 112 G of Propionic
     Anhydride;
    At least 12.8 KG but less than 22.4 KG of Safrole;
    At least 16 KG but less than 28KG of 3,4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 726 G but less than 1.1 KG of Acetic
     Anhydride;
    At least 82.25 KG but less than 117.5 KG of Acetone;
    At least 1.4 KG but less than 2 KG of Benzyl
     Chloride;
    At least 75.25 KG but less than 107.5 KG of Ethyl
     Ether;
    At least 84 KG but less than 120 KG of Methyl Ethyl
     Ketone;
    At least 700 G but less than 1 KG of Potassium
     Permanganate;
    At least 91 KG but less than 130 KG of Toluene.

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

    At least 8.9 G but less than 35.6 G of Benzaldehyde;
    At least 200 G but less than 800 G of Benzyl
     Cyanide;
    At least 2 G but less than 8 G of Ergonovine;
    At least 4 G but less than 16 G of Ergotamine;
    At least 200 G but less than 800 G of Ethylamine;
    At least 22 G but less than 88 G of Hydriodic Acid;
    At least 3.2 KG but less than 12.8 KG of Isosafrole;
    At least 2 G but less than 8 G of Methylamine;
    At least 5 KG but less than 20 KG of N-
     Methylephedrine;
    At least 5 KG but less than 20 KG of N-
     Methylpseudoephedrine;
    At least 6.3 G but less than 25 G of Nitroethane;
    At least 100 G but less than 400 of
     Norpseudoephedrine;
    At least 200 G but less than 800 G of Phenylacetic
     Acid;
    At least 100 G but less than 400 G of Piperidine;
    At least 3.2 KG but less than 12.8 KG of Piperonal;
    At least 16 G but less than 64 G of Propionic
     Anhydride;
    At least 3.2 KG but less than 12.8 KG of Safrole;
    At least 4 KG but less than 16 KG of 3,4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 440 G but less than 726 G of Acetic
     Anhydride;
    At least 47 KG but less than 82.25 KG of Acetone;

[[Page 30518]]


    At least 800 G but less than 1.4 KG of Benzyl
     Chloride;
    At least 43 KG but less than 75.25 KG of Ethyl
     Ether;
    At least 48 KG but less than 84 KG of Methyl Ethyl
     Ketone;
    At least 400 G but less than 700 g of Potassium
     Permanganate;

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

    At least 7.1 G but less than 8.9 G of Benzaldehyde;
    At least 160 G but less than 200 G of Benzyl
     Cyanide;
    At least 1.6 G but less than 2 G of Ergonovine;
    At least 3.2 G but less than 4 G of Ergotamine;
    At least 160 G but less than 200 G of Ethylamine;
    At least 17.6 G but less than 22 G of Hydriodic
     Acid;
    At least 2.56 KG but less than 3.2 KG of Isosafrole;
    At least 1.6 G but less than 2 G of Methylamine;
    At least 4 KG but less than 5 KG of N-
     Methylephedrine;
    At least 4 KG but less than 5 KG of N-
     Methylpseudoephedrine;
    At least 5 G but less than 6.3 G of Nitroethane;
    At least 80 G but less than 100 G of
     Norpseudoephedrine;
    At least 160 G but less than 200 G of Phenylacetic
     Acid;
    At least 80 G but less than 100 G of Piperidine;
    At least 2.56 KG but less than 3.2 KG of Piperonal;
    At least 12.8 G but less than 16G of Propionic
     Anhydride;
    At least 2.56 KG but less than 3.2 KG of Safrole;
    At least 3.2 KG but less than 4 KG of 3,4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 110 G but less than 440 G of Acetic
     Anhydride;
    At least 11.75 KG but less than 47 KG of Acetone;
    At least 200 G but less than 800 G of Benzyl
     Chloride;
    At least 10.75 KG but less than 43 KG of Ethyl
     Ether;
    At least 12 KG but less than 48 KG of Methyl Ethyl
     Ketone;
    At least 100 G but less than 400 G of Potassium
     Permanganate;
    At least 13 KG but less than 52 KG of Toluene.

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

    3.6 KG or more of Anthranilic Acid;
    At least 5.3 G but less than 7.1 G of Benzaldehyde;
    At least 120 G but less than 160 G of Benzyl
     Cyanide;
    At least 1.2 G but less than 1.6 G of Ergonovine;
    At least 2.4 G but less than 3.2 G of Ergotamine;
    At least 120 G but less than 160 G of Ethylamine;
    At least 13.2 G but less than 17.6 G of Hydriodic
     Acid;
    At least 1.92 KG but less than 2.56 KG of
     Isosafrole;
    At least 1.2 G but less than 1.6 G of Methylamine;
    4.8 KG or more of N-Acetylanthranilic Acid;
    At least 3 KG but less than 4 KG of N-
     Methylephedrine;
    At least 3 KG but less than 4 KG of N-
     Methylpseudoephedrine;
    At least 3.8 G but less than 5 G of Nitroethane;
    At least 60 G but less than 80 G of
     Norpseudoephedrine;
    At least 120 G but less than 160 G of Phenylacetic
     Acid;
    At least 60 G but less than 80 G of Piperidine;
    At least 1.92 KG but less than 2.56 KG of Piperonal;
    At least 9.6 G but less than 12.8 G of Propionic
     Anhydride;
    At least 1.92 KG but less than 2.56 KG of Safrole;
    At least 2.4 KG but less than 3.2 KG of 3, 4-
     MethylenedioxyphenyL-2-propanone;

    List II Chemicals

    At least 88 G but less than 110 G of Acetic
     Anhydride;
    At least 9.4 KG but less than 11.75 KG of Acetone;
    At least 160 G but less than 200 G of Benzyl
     Chloride;
    At least 8.6 KG but less than 10.75 KG of Ethyl
     Ether;
    At least 9.6 KG but less than 12 KG of Methyl Ethyl
     Ketone;
    At least 80 G but less than 100 G of Potassium
     Permanganate;
    At least 10.4 KG but less than 13 KG of Toluene.


[[Page 30519]]


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

    At least 2.7 KG but less than 3.6 KG of Anthranilic
     Acid;
    At least 3.6 G but less than 5.3 G of Benzaldehyde;
    At least 80 G but less than 120 G of Benzyl Cyanide;
    At least 800 MG but less than 1.2 G of Ergonovine;
    At least 1.6 G but less than 2.4 G of Ergotamine;
    At least 80 G but less than 120 G of Ethylamine;
    At least 8.8 G but less than 13.2 G of Hydriodic
     Acid;
    At least 1.44 KG but less than 1.92 KG of
     Isosafrole;
    At least 800 MG but less than 1.2 G of Methylamine;
    At least 3.6 KG but less than 4.8 KG of N-
     Acetylanthraniclic Acid;
    At least 2.25 KG but less than 3 KG of N-
     Methylephedrine;
    At least 2.25 KG but less than 3 KG of N-
     Methylpseudoephedrine;
    At least 2.5 G but less than 3.8 G of Nitroethane;
    At least 40 G but less than 60 G of
     Norpseudoephedrine;
    At least 80 G but less than 120 G of Phenylacetic
     Acid;
    At least 40 G but less than 60 G of Piperidine;
    At least 1.44 KG but less than 1.92 KG of Piperonal;
    At least 7.2 G but less than 9.6 G of Propionic
     Anhydride;
    At least 1.44 KG but less than 1.92 KG of Safrole;
    At least 1.8 KG but less than 2.4 KG of 3, 4-
     Methylenedioxyphenyl-2-propanone;

    List II Chemicals

    At least 66 G but less than 88 G of Acetic
     Anhydride;
    At least 7.05 KG but less than 9.4 KG of Acetone;
    At least 120 G but less than 160 G of Benzyl
     Chloride;
    At least 6.45 KG but less than 8.6 KG of Ethyl
     Ether;
    At least 7.2 KG but less than 9.6 KG of Methyl Ethyl
     Ketone;
    At least 60 G but less than 80 G of Potassium
     Permanganate;
    At least 7.8 KG but less than 10.4 KG of Toluene.

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

    Less than 2.7 KG of Anthranilic Acid;
    Less than 3.6 G of Benzaldehyde;
    Less than 80 G of Benzyl Cyanide;
    Less than 800 MG of Ergonovine;
    Less than 1.6 G of Ergotamine;
    Less than 80 G of Ethylamine;
    Less than 8.8 G of Hydriodic Acid;
    Less than 1.44 KG of Isosafrole;
    Less than 800 MG of Methylamine;
    Less than 3.6 KG of N-Acetylanthranilic Acid;
    Less than 2.25 KG of N-Methylephedrine;
    Less than 2.25 KG of N-Methylpseudoephedrine;
    Less than 2.5 G of Nitroethane;
    Less than 40 G of Norpseudoephedrine;
    Less than 80 G of Phenylacetic Acid;
    Less than 40 G of Piperidine;
    Less than 1.44 KG of Piperonal;
    Less than 7.2 G of Propionic Anhydride;
    Less than 1.44 KG of Safrole;
    Less than 1.8 KG of 3,4-Methylenedioxyphenyl-2-
     propanone;

    List II Chemicals

    Less than 66 G of Acetic Anhydride;
    Less than 7.05 KG of Acetone;
    Less than 120 G of Benzyl Chloride;
    Less than 6.45 KG of Ethyl Ether;
    Less than 7.2 KG of Methyl Ethyl Ketone;
    Less than 60 G of Potassium Permanganate;
    Less than 7.8 KG of Toluene.
------------------------------------------------------------------------
* Notes:
(A) Except as provided in Note (B), to calculate the base offense level
  in an offense that involves two or more chemicals, use the quantity of
  the single chemical that results in the greatest offense level,
  regardless of whether the chemicals are set forth in different tables
  or in different categories (i.e., list I or list II) under subsection
  (d) of this guideline.

[[Page 30520]]


(B) To calculate the base offense level in an offense that involves two
  or more chemicals each of which is set forth in the Ephedrine,
  Pseudoephedrine, and Phenylpropanolamine Quantity Table, (i) aggregate
  the quantities of all such chemicals, and (ii) determine the base
  offense level corresponding to the aggregate quantity.
(C) In a case involving ephedrine, pseudoephedrine, or
  phenylpropanolamine tablets, use the weight of the ephedrine,
  pseudoephedrine, or phenylpropanolamine contained in the tablets, not
  the weight of the entire tablets, in calculating the base offense
  level.''.

    The commentary to Sec. 2D1.11 captioned ``Application Notes'' is 
amended by striking Note 4 in its entirety and inserting the following:
    ``4. Cases Involving Multiple Chemicals.--
    (A) Determining the Base Offense Level for Two or More Chemicals.--
Except as provided in subdivision (B), if the offense involves two or 
more chemicals, use the quantity of the single chemical that results in 
the greatest offense level, regardless of whether the chemicals are set 
forth in different tables or in different categories. (i.e., list I or 
list II) under subsection (d) of this guideline.

    Example: The defendant was in possession of five kilograms of 
ephedrine and 300 grams of hydriodic acid. Ephedrine and hydriodic 
acid typically are used together in the same manufacturing process 
to manufacture methamphetamine. The base offense level for each 
chemical is calculated separately and the chemical with the higher 
base offense level is used. Five kilograms of ephedrine result in a 
base offense level of level 38; 300 grams of hydriodic acid result 
in a base offense level of level 26. In this case, the base offense 
level would be level 38.

    (B) Determining the Base Offense Level for Offenses involving 
Ephedrine, Pseudoephedrine, or Phenylpropanolamine.--If the offense 
involves two or more chemicals each of which is set forth in the 
Ephedrine, Pseudoephedrine, and Phenylpropanolamine Quantity Table, (i) 
aggregate the quantities of all such chemicals, and (ii) determine the 
base offense level corresponding to the aggregate quantity.

    Example: The defendant was in possession of 80 grams of 
ephedrine and 50 grams of phenylpropanolamine, an aggregate quantity 
of 130 grams of such chemicals. The base offense level corresponding 
to that aggregate quantity is level 32.

    (C) Upward Departure.--In a case involving two or more chemicals 
used to manufacture different controlled substances, or to manufacture 
one controlled substance by different manufacturing processes, an 
upward departure may be warranted if the offense level does not 
adequately address the seriousness of the offense.''.
    The Commentary to 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 ``(including ephedrine, 
pseudoephedrine, and phenylpropanolamine)'' after ``list I chemicals''.
    The Commentary to 2D1.1 captioned ``Application Notes'' is amended 
in Note 10 in the ``Drug Equivalency Tables'' by inserting after the 
subdivision captioned ``Schedule V Substances * * *'' the following new 
subdivision:
    ``List I Chemicals (relating to the manufacture of amphetamine or 
methamphetamine)* * *

1 gm of Ephedrine = 10 kg of marihuana
1 gm of Phenylpropanolamine = 10 kg of marihuana
1 gm of Pseudoephedrine = 10 kg of marihuana

    * * * Provided, that in a case involving ephedrine, 
pseudoephedrine, or phenylpropanolamine tablets, use the weight of the 
ephedrine, pseudoephedrine, or phenylpropanolamine contained in the 
tablets, not the weight of the entire tablets, in calculating the base 
offense level.''.
    Reason for Amendment: This amendment is in response to the three-
part directive in section 3651 of the Methamphetamine Anti-
Proliferation Act of 2000, Pub. L. 106-310 (the ``Act''), regarding 
enhanced punishment for trafficking in List I chemicals. That section 
requires the Commission to promulgate an amendment implementing the 
directive under emergency amendment authority.
    First, this amendment provides a new chemical quantity table 
specifically for ephedrine, pseudoephedrine, and phenylpropanolamine 
(PPA). The table ties the base offense levels for these chemicals to 
the base offense levels for methamphetamine (actual) set forth in 
Sec. 2D1.1, assuming a 50 percent actual yield of the controlled 
substance from the chemicals. (Methamphetamine (actual) is used rather 
than methamphetamine mixture because ephedrine, pseudoephedrine, and 
PPA produce methamphetamine (actual)). This yield is based on 
information provided by the Drug Enforcement Administration (DEA) that 
the typical yield of these substances for clandestine laboratories is 
50 to 75 percent.
    This new chemical quantity table has a maximum base offense level 
of level 38 (as opposed to a maximum base offense level of level 30 for 
all other precursor chemicals). Providing a maximum base offense level 
of the level 38 complies with the directive to establish penalties for 
these precursors that ``correspond to the quantity of controlled 
substance that could have reasonably been manufactured using the 
quantity of ephedrine, phenylpropanolamine, or pseudoephedrine 
possessed or distributed.'' Additionally, this adjustment will have an 
impact on the relationship between Secs. 2D1.1 and 2D1.11 by 
eliminating the six-level distinction that currently exists between 
offenses that involve intent to manufacture methamphetamine and 
offenses that involve an attempt to manufacture methamphetamine, at 
least for offenses involving ephedrine, pseudoephedrine, and PPA.
    This amendment eliminates the Ephedrine Equivalency Table in 
Sec. 2D1.11 and, in its place, provides an instruction for the court to 
determine the base offense level in cases involving multiple precursors 
(other than ephedrine, pseudoephedrine, or PPA) by using the quantity 
of the single chemical resulting in the greatest offense level. An 
upward departure is provided for cases in which the offense level does 
not adequately address the seriousness of the offense.
    However, this amendment provides an exception to the rule for 
offenses that involve a combination of ephedrine, pseudoephedrine, or 
PPA because these chemicals often are used in the same manufacturing 
process. In a case that involves two or more of these chemicals, the 
base offense level will be determined using the total quantity of these 
chemicals involved. The purpose of this exception is twofold: (1) Any 
of the three primary precursors in the same table can be combined 
without difficulty; and (2) studies conducted by the DEA indicate that 
because the manufacturing process for amphetamine and methamphetamine 
is identical, there are cases in which the different precursors are 
included in the same batch of drugs. If the chemical is PPA, 
amphetamine results; and if the chemical is ephedrine, methamphetamine 
results.
    Second, the amendment adds to the Drug Equivalency Tables in 
Sec. 2D1.1 a conversion table for these precursor chemicals, providing 
for a 50 percent

[[Page 30521]]

conversion ratio. This is based on data from the DEA that the actual 
yield from ephedrine, pseudoephedrine, or PPA typically is in the range 
of 50 to 75 percent. The purpose of this part of the amendment is to 
achieve the same punishment level (as is achieved by the first part of 
this amendment) for an offense involving any of these precursor 
chemicals when such offense involved the manufacturer of 
methamphetamine and, as a result, is sentenced under Sec. 2D1.1 
pursuant to the cross reference in Sec. a2D1.11.
    Third, this amendment increases the base offense level for 
Benzaldehyde, Hydriodic Acid, Methylamine, Nitroethane, and 
Norpseudoesphedrine by re-calibrating these levels to the appropriate 
quantity of methamphetamine (actual) that could be produced assuming a 
50 percent yield of chemical to drug and retaining a cap at level 30. 
Previously, these chemicals had been linked to methamphetamine 
(mixture) penalty levels. Based on a study conducted by the DEA, 
ephedrine and pseudoephedrine are the primary precursors used to make 
methamphetamine in the United States. Phenylproponolamine is the 
primary precursor used to make amphetamine. Unlike the five additional 
List I chemicals, the chemical structures of ephedrine, 
pseudoephedrine, and PPA are so similar to the resulting drug (i.e., 
methamphetamine or amphetamine) that the manufacture of methamphetamine 
or amphetamine from ephedrine, pseudoephedrine, or PPA is a very simple 
one-step synthesis which anyone can perform using a variety of chemical 
reagents. The manufacture of methamphetamine or amphetamine from the 
five additional List I chemicals is a more complex process which 
requires a heightened level of expertise.
    4. Amendment: The Commentary to 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 forth 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 Provisions.--An upward departure may be 
warranted in either of the following circumstances:
    (A) The defendant was convicted under 18 U.S.C. 1591 and the 
offense involved a victim who had not attained the age of 14 years.
    (B) The offense involved more than 10 victims.''.
    The Commentary to 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 (1) 
force, fraud, or coercion will be used to cause the person to engage in 
a commercial sex act; or (2) the person (A) had not attained the age of 
18 years; and (B) will be caused to engage in a commercial sex act.''.
    The Commentary to 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 Provisions.--An upward departure may be 
warranted in either of the following circumstances:
    (A) The defendant was convicted under 18 U.S.C. 1591 and the 
offense involved a victim who had not attained the age of 14 years.
    (B) The offense involved more than 10 victims.''.
    Section 2H4.1 is amended by striking subsection (a) in its entirety 
and inserting the following:
    ``(a) Base Offense Level (Apply the greater):
    (1) 22; or
    (2) 18, if the defendant was convicted of an offense under 18 
U.S.C. 1592.''.
    Section 2H4.1(b) is amended by striking subdivision (2) in its 
entirety and inserting the following:
    ``(2) If (A) a dangerous weapon was used, increase by 4 levels; or 
(B) a dangerous weapon was brandished, or the use of a dangerous weapon 
was threatened, increase by 2 levels.''.
    The Commentary to 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 in Note 1 in the second paragraph by inserting ``other'' after 
``that a firearm or''; and by adding after ``otherwise used.'' the 
following:
    `` `The use of a dangerous weapon was threatened' means that the 
use of a dangerous weapon was threatened regardless of whether a 
dangerous weapon was present.''.
    Chapter Two, Part H, is amended in Subpart 4 by adding at the end 
the following:
``Sec. 2H4.2. Willful Violations of the Migrant and Seasonal 
Agricultural Worker Protection Act
    (a) Base Offense Level: 6
    (b) Specific Offense Characteristics
    (1) If the offense involved (i) serious bodily injury, increase by 
4 levels; or (ii) bodily injury, increase by 2 levels.
    (2) If the defendant committed any part of the instant offense 
subsequent to sustaining a civil or administrative adjudication for 
similar misconduct, increase by 2 levels.

Commentary

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

Application Notes

    1. Definitions.--For purposes of subsection (b)(1), `bodily injury' 
and `serious bodily injury' have the meaning given those terms in 
Application Note 1 of the Commentary to 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. Sec. 1801 et. 
seq.).''.
    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 ``Sec. 1593,'' after ``18 
U.S.C.Secs. ''.
    Appendix A (Statutory Index) is amended in the line referenced to 
``18 U.S.C. Sec. 241'' by inserting ``, 2H4.1'' after ``2H2.1''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to ``18 U.S.C. 1588'' the following new lines:

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

    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to ``29 U.S.C. 1141'' the following:

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

    Reason for Amendment: In promulgating this amendment, the 
Commission is cognizant of the extraordinarily serious nature of 
offenses that involve trafficking in human lives. This amendment is in 
response to the directive found at section 112(b) of the Victims of 
trafficking and Violence Protection Act of 2000 (the ``Act''). Pub. L. 
106-386. The Commission expects to consider further revisions and 
additions to the specific offense characteristics and punishment levels 
for these offenses, such as the possibility of providing an alternative 
base offense level in Sec. 2G1.1

[[Page 30522]]

(Promoting Prostitution or Prohibited Sexual Conduct) for convictions 
under 18 U.S.C. 1591 involving victims under the age of 14 years.
    The directive confers emergency authority on the Commission to 
amend the federal sentencing guidelines to reflect changes to 18 U.S.C. 
1581(a) (Peonage), 1583 (Enticement into Slavery), and 1584 (Sale into 
Involuntary Servitude). The Commission also is directed to consider how 
to address four new statutes: 18 U.S.C. 1589 (Forced Labor); 1590 
(Trafficking with Respect to Peonage, Involuntary Servitude or Forced 
Labor); 1591 (Sex Trafficking of Children by Force, Fraud or Coercion); 
and 1592 (Unlawful Conduct with Respect to Documents in Furtherance of 
Peonage, Involuntary Servitude or Forced Labor).
    Specifically, the Commission is directed to ``review and, if 
appropriate, amend the sentencing guidelines applicable to * * * the 
trafficking of persons including * * * peonage, involuntary servitude, 
slave trade offenses, and possession, transfer or sale of false 
immigration documents in furtherance of trafficking, and the Fair Labor 
Standards Act and the Migrant and Seasonal Agricultural Worker 
Protection Act.''
    The Commission further is directed to ``take all appropriate 
measures to ensure that these sentencing guidelines . . . are 
sufficiently stringent to deter and adequately reflect the heinous 
nature of these offenses.'' The Commission also is directed to 
``consider providing sentencing enhancements'' in cases which involve: 
(1) A large number of victims; (2) a pattern of continued and flagrant 
violations; (3) the use or threatened use of a dangerous weapon; or (4) 
the death or bodily injury of any person.
    To address this multi-faceted directive, this amendment makes 
changes to several existing guidelines and creates a new guideline for 
criminal violations of the Migrant and Seasonal Agricultural Worker 
Protection Act. Although the directive instructs the Commission to 
amend the guidelines applicable to the Fair Labor Standards Act (29 
U.S.C. 201 et. seq.), a criminal violation of the Fair Labor Standards 
Act is only a Class B misdemeanor. See 29 U.S.C. 216. Thus, the 
guidelines are not applicable to those offenses.
    The amendment references the new offense at 18 U.S.C. 1591 to 
Sec. 2G1.1. Section 1591 punishes a defendant who participates in the 
transporting or harboring of a person, or who benefits from 
participating in such a venture, with the knowledge that force, fraud, 
or coercion will be used to cause that person to engage in a commercial 
sex act or with knowledge that the person is not 18 years old and will 
be forced to engage in a commercial sex act. Despite the statute's 
inclusion in a chapter of title 18 devoted mainly to peonage offenses, 
section 1591 offenses are more analogous to the offenses referenced to 
the prostitution guideline.
    Section 1591 cases alternatively have been referred in Appendix A 
to Sec. 2G2.1 (Sexually Exploiting a Minor by Production of Sexually 
Explicit Visual or Printed Material; Custodian Permitting Minor to 
Engage in Sexually Explicit Conduct; Advertisement for Minors to Engage 
in Production). This has been done in anticipation that some portion of 
section 1591 cases will involve children being forced or coerced to 
engage in commercial sex acts for the purpose of producing pornography. 
Such offenses, as recognized by the higher base offense level at 
Sec. 2G2.1, are more serious because they both involve specific harm to 
an individual victim and further an additional criminal purpose, 
namely, commercial pornography.
    The amendment maintains the view that 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 also is designed to cover offenses under three 
new statutes, 18 U.S.C. 1589, 1590, and 1592. Section 1589 punishes 
defendants who provide or obtain the labor or services of another by 
the use of threats of serious harm or physical restraint against a 
person, or by a scheme or plan intended to make the person believe that 
if he or she did not perform the labor or services, he or she would 
suffer physical restraint or serious harm. This statute also applies to 
defendants who provide or obtain labor or services of another by 
abusing or threatening abuse of the law or the legal process. See 18 
U.S.C. 1589.
    Section 1590 punishes defendants who harbor, transport, or are 
otherwise involved in obtaining, a person for labor or services. 
Section 1592 punishes a defendant who knowingly possesses, destroys, or 
removes an actual passport, other immigration document, or government 
identification document of another person in the course of a violation 
of Sec. 1581 (peonage), Sec. 1583 (enticement into slavery), Sec. 1584 
(sale into involuntary servitude), Sec. 1589 (forced labor), Sec. 1590 
(trafficking with respect to these offenses), Sec. 1591 (sex 
trafficking of children by force, fraud or coercion), Sec. 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 that have been traditionally sentenced under 
Sec. 2H4.1.
    The amendment provides an alternative, less punitive base offense 
level of level 18 for those who violate 18 U.S.C. 1592, an offense 
which limits participation in peonage cases to the destruction or 
wrongful confiscation of a passport or other immigration document. This 
alternative, lower base level reflects the lower statutory maximum 
sentence for Sec. 1592 offenses, (i.e., 5 years).
    Section 2H4.1(b)(2) has been expanded to provide a 4-level increase 
if a dangerous weapon was used and a 2-level increase if a dangerous 
weapon was brandished or its use was threatened. Currently, only actual 
use of a dangerous weapon is covered. This change reflects the 
directive to consider an enhancement for the ``use or threatened use of 
a dangerous weapon.'' The commentary to Sec. 2H4.1 is amended to 
clarify that the threatened use of a dangerous weapon applies 
regardless of whether a dangerous weapon was actually present.
    The amendment also creates a new guideline, Sec. 2H4.2 (Willful 
Violations of the Migrant and Seasonal Agricultural Worker Protection 
Act), in response to the directive to amend the guidelines applicable 
to such offenses. These offenses, which have a statutory maximum 
sentence of one year imprisonment for first offenses and three years' 
imprisonment for subsequent offenses, currently are not referred to any 
specific guidelines. The amendment provides a base offense level of 
level 6 in recognition of the low statutory maximum sentences set for 
these cases by Congress. Further, these offenses typically involve 
violations of regulatory provisions. Setting the base offense level at 
level 6 provides consistency with guidelines for other regulatory 
offenses. See, e.g., Secs. 2N2.1 (Violations of Statutes and 
Regulations Dealing With Any Food, Drug, Biological Product, Device, 
Cosmetic, or Agricultural Product) and 2N3.1 (Odometer Laws and 
Regulations). Subsections (b)(1), an enhancement for bodily injury, and 
(b)(2), an enhancement applicable to defendants who commit the instant 
offense after previously sustaining a civil penalty for similar 
misconduct, have been established to respond to the directive that the 
Commission consider sentencing enhancement for these

[[Page 30523]]

offense characteristics. This section addresses the Department of 
Justice's and the Department of Labor's concern regarding prior 
administrative and civil adjudications.
    This amendment also addresses that portion of section 112 of the 
Act that amends chapter 77 of title 18, United States Code, to provide 
mandatory restitution for peonage and involuntary servitude offenses. 
The amendment amends Sec. 5E1.1 (Restitution) to include a reference to 
18 U.S.C. 1593 in the guideline provision regarding mandatory 
restitution.
    By enactment of various sentencing enhancements and encouraged 
upward departures for areas of concern identified by Congress, the 
Commission has provided for more severe sentences for perpetrators of 
human trafficking offenses in keeping with the conclusion that the 
offenses covered by this amendment are both heinous in nature and being 
committed with rapidly increasing frequency.
    (B) Amendments to the Sentencing Guidelines, Policy Statements, and 
Official Commentary, Effective November 1, 2001.
    1. Amendment: The Commentary to Sec. 1B1.2 captioned ``Application 
Notes'' is amended in Note 1 in the third sentence of the first 
paragraph by inserting ``(written or made orally on the record)'' after 
``agreement''.
    The Commentary to Sec. 1B1.2 captioned ``Application Notes'' is 
amended in Note 1 by striking the first two sentences of the third 
paragraph and inserting:
    ``As set forth in the first paragraph of this note, an exception to 
this general rule is that if a plea agreement (written or made orally 
on the record) contains a stipulation that establishes a more serious 
offense than the offense of conviction, the guideline section 
applicable to the stipulated offense is to be used. A factual statement 
or a stipulation contained in a plea agreement (written or made orally 
on the record) is a stipulation for purposes of subsection (a) only if 
both the defendant and the government explicitly agree that the factual 
statement or stipulation is a stipulation for such purposes. However, a 
factual statement or stipulation made after the plea agreement has been 
entered, or after any modification to the plea agreement has been made, 
is not a stipulation for purposes of subsection (a).''.
    The Commentary to Sec. 1B1.2 captioned ``Application Notes'' is 
amended in Note 1 in the third paragraph by striking ``may be imposed'' 
and inserting ``shall be imposed''.
    The Commentary to Sec. 1B1.2 captioned ``Application Notes'' is 
amended in Note 1 in the second sentence of the fourth paragraph by 
striking ``cases where'' and inserting ``a case in which''.
    Reason for Amendment: This amendment addresses the circuit conflict 
regarding whether admissions made by a defendant during a guilty plea 
hearing, without more, can be considered stipulations for purposes of 
subsection (a) of Sec. 1B1.2 (Application Instructions). Compare, e.g., 
United States v. Nathan, 188 F.3d 190, 201 (3d Cir. 1999) (statement 
made by defendants during the factual-basis hearing for a plea 
agreement do not constitute stipulations for the purpose of this 
enhancement; a statement is a stipulation only if it is part of a 
defendant's written plea agreement or if both the government and the 
defendant explicitly agree at a factual-basis hearing that the facts 
being placed on the record are stipulations that might subject the 
defendant to Sec. 1B1.2(a)); United States v. Saaverda, 148 F.3d 1311 
(11th Cir. 1998) (same); United States v. McCall, 915 F.2d 811 (2d Cir. 
1990) (same); United States v. Gardner, 940 F.2d (10th Cir. 1991) 
(requiring a ``knowing agreement by the defendant, as part of a plea 
bargain, that facts supporting a more serious offense occurred and 
could be presented to the court''), and United States v. Rutter, 897 
F.2d 1558, 1561 (10th Cir. 1990) (once the government agrees to a plea 
bargain without extracting an admission, facts admitted by the 
defendant can be considered only as relevant conduct in determining 
appropriate guideline range, not as stipulations under Sec. 1B1.2(a)), 
with United States v. Loos, 165 F.3d 504, 508 (7th Cir. 1998) (the 
objective behind Sec. 1B1.2(a) is best answered by interpreting 
``stipulations'' to mean any acknowledgment by the defendant that the 
defendant committed the acts that justify use of the more serious 
guideline, not in the formal agreement); and United States v. Domino, 
62 F.3d 716 (5th Cir. 1995) (same).
    This amendment represents a narrow approach to the majority view 
that a factual statement made by the defendant during the plea colloquy 
must be made as part of the plea agreement in order to be considered a 
stipulation for purposes of Sec. 1B1.2(a). This approach lessens the 
possibility that the plea agreement will be modified during the course 
of the plea proceeding without providing the parties, especially the 
defendant, with notice of the defendant's potential sentencing range.
    2. Amendment: The Commentary to Sec. 2A2.2 captioned ``Application 
Notes'' is amended by striking Notes 1 through 3 and inserting the 
following:
    ``1. Definitions.--For purposes of guideline:
    `Aggravated assault' means a felonious assault that involved (A) a 
dangerous weapon with intent to cause bodily injury (i.e., not merely 
to frighten) with that weapon; (B) serious bodily injury; or (C) an 
intent to commit another felony.
    `Brandished,' `bodily injury,' `firearm;' `otherwise used,' 
`permanent or life threatening bodily injury,' and `serious bodily 
injury,' have the meaning given those terms in Sec. 1B1.1 (Application 
Instructions), Application Note 1.
    `Dangerous weapon' has the meaning given that term in Sec. 1B.1, 
Application Note 1, and includes any instrument that is not ordinarily 
used as a weapon (e.g., a car, a chair, or an ice pick) if such an 
instrument is involved in the offense with the intent to commit bodily 
injury.
    Application of Subsection (b)(2).--In a case involving a dangerous 
weapon with intent to cause bodily injury, the court shall apply both 
the base offense level and subsection (b)(2).
    3. More than Minimal Planning.--For purposes of subsection (b)(1), 
`more than minimal planning' means more planning than is typical for 
commission of the offense in a simple form. `More than minimal 
planning' also exists if significant affirmative steps were taken to 
conceal the offense, other than conduct to which 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. 2A2.2 captioned ``Background'' is amended by 
striking the text of the background and inserting the following:

    ``This guideline covers felonious assaults that are more serious 
than minor assaults because of the presence of an aggravating 
factor, i.e., serious bodily injury, the involvement of a dangerous 
weapon with intent to cause bodily injury, or the intent to commit 
another felony. Such offenses occasionally may involve planning or 
be committed for hire. Consequently, the structure follows 
Sec. 2A2.1 (Assault with Intent to Commit Murder, Attempted Murder). 
This guideline also covers attempted manslaughter and assault with 
intent to commit manslaughter. Assault with intent to commit murder 
is covered by Sec. 2A2.1. Assault with intent to commit rape is 
covered by Sec. 2A3.1 (Criminal Sexual Abuse; Attempt to Commit 
Criminal Sexual Abuse.)

[[Page 30524]]

    An assault that involves the presence of a dangerous weapon is 
aggravated in form when the presence of the dangerous weapon is 
coupled with the intent to cause bodily injury. In such a case, the 
base offense level and the weapon enhancement in subsection (b)(2) 
take into account different aspects of the offense, even if 
application of the base offense level and the weapon enhancement is 
based on the same conduct.''.

    Reason for Amendment: This amendment responds to a circuit conflict 
regarding whether the four-level enhancement in subsection (b)(2)(B) of 
Sec. 2A2.2 (Aggravated Assault) for use of a dangerous weapon during an 
aggravated assault is impermissible double counting. Compare United 
States v. Williams, 954 F.2d 204, 205-08 (4th circ. 1992) (applying the 
dangerous weapon enhancement under Sec. 2A2.2(b)(2)(B) for defendant's 
use of his chair as a dangerous weapon did not constitute impermissible 
double counting even though that conduct increased the defendant's 
offense level twice: first, by triggering the application of the 
aggravated assault guideline, and second, as the basis for the four-
level enhancement for use for a dangerous weapon), with United States 
v. Hudson, 972 F.2d 504, 506-07 (2d Cir. 1992) (in a case in which the 
use of an automobile caused the crime to be classified as an aggravated 
assault, the court may not enhance the base offense level under 
Sec. 2A2.2(b) for use of the same, non-inherently dangerous weapon).
    This amendment addresses the circuit conflict by providing in the 
aggravated assault guideline that (1) Both the base offense level of 
level 15 and the weapon use enhancement in subsection (b)(2) shall 
apply to aggravated assaults that involve a dangerous weapon with 
intent to cause bodily harm; and (2) an instrument, such as a car or 
chair, that ordinarily is not used as a weapon may qualify as a 
dangerous weapon for purposes of the use of the aggravated assault 
guideline and the application of subsection (b)(2) when the defendant 
involves it in the offense with the intent to cause bodily harm.
    3. Amendment: The Commentary to Sec. 2A3.1 captioned ``Application 
Notes'' is amended by striking Note 5 and Note 7; and by redesignating 
Note 6 as Note 5.
    Section 2A3.2(a) is amended by striking subdivisions (1) and (2) 
and inserting the following:
    ``(1) 24, if the offense involved (A) a violation of chapter 117 of 
title 18, United States Code; and (B)(i) the commission of a sexual 
act; or (ii) sexual contact;
    (2) 21, if the offense (A) involved a violation of chapter 117 of 
title 18, United States Code; but (B) did not involve (i) the 
commission of a sexual act; or (ii) sexual contact; or
    (3) 18, otherwise.''.
    Section 2A3.2(b) is amended by striking subdivision (4) and 
inserting the following:
    ``(4) If (A) subsection (a)(1) applies; and (B) none of subsections 
(b)(1) through (b)(3) applies, decrease by 6 levels.''.
    The Commentary to 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:''; and by inserting before `` `Victim' means'' the following 
new paragraphs:
    `` `Sexual act' has the meaning given that term in 18 U.S.C. 
2246(2).
    `Sexual contact' has the meaning given that term in 18 U.S.C. 
2246(3).''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended by striking Note 2 and Note 8; by redesignating Notes 3 through 
7 as Notes 2 through 6, respectively; and by inserting after Note 6, as 
redesignated by this amendment, the following:
    ``7. Upward Departure Consideration.--There may be cases in which 
the offense level determined under this guideline substantially 
understates the seriousness of the offense. In such cases, an upward 
departure may be warranted. For example, an upward departure may be 
warranted if the defendant committed the criminal sexual act in 
furtherance of a commercial scheme such as pandering, transporting 
persons for the purpose of prostitution, or the production of 
pornography.''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in Note 2, as redesignated by this amendment, by inserting 
``Custody, Care, and Supervisory Control Enhancement.--'' before 
``Subsection''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in Note 3, as redesignated by this amendment, by inserting 
``Abuse of Position of Trust.--'' before ``If the''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in Note 4, as redesignated by this amendment, by inserting 
``Misrepresentation of Identity.--'' before ``The enhancement''.
    The Commentary to Sec. 2A3.2 captioned ``Application Notes'' is 
amended in Note 5, as redesignated by this amendment, by inserting 
``Use of Computer or Internet-Access Device.--'' before ``Subsection 
(b)(3) provides''.
    The Commentary to Sec. 2A3.2 captioned ``Applications Notes'' is 
amended in Note 6, as redesignated by this amendment, by inserting 
``Cross Reference.--'' before ``Subsection (c)(1)''.
    The Commentary to Sec. 2A3.3 captioned ``Application Notes'' is 
amended by striking Note 4.
    Section 2A3.4(b) is amended by adding at the end the following:
    ``(6) If the offense involved a violation of chapter 117 of title 
18, United States Code, increase by 3 levels.''.
    The Commentary to Sec. 2A3.4 captioned ``Application Notes'' is 
amended by striking Note 8.
    Section 3D1.2(d) is amended in the second paragraph by inserting 
after ``Secs. 2E4.1, 2E5.1;'' the following new line: ``Secs. 2G2.2, 
2G2.4;''.
    Chapter Four, Part B is amended by adding at the end the following:
``Sec. 4B1.5. Repeat and Dangerous Sex Offender Against Minors
    (a) In any case in which the defendant's instant offense of 
conviction is a covered sex crime, Sec. 4B1.1 (Career Offender) does 
not apply, and the defendant committed the instant offense of 
conviction subsequent to sustaining at least one sex offense 
conviction:
    (1) The offense level shall be the greater of:
    (A) the offense level determined under Chapters Two and Three; or
    (B) the offense level from the table below decreased by the number 
of levels corresponding to any applicable adjustment from Sec. 3E1.1 
(Acceptance of Responsibility):

------------------------------------------------------------------------
                                                                 Offense
                   Offense statutory maximum                      level
------------------------------------------------------------------------
(i) Life......................................................        37
(ii) 25 years or more.........................................        34
(iii) 20 years or more, but less than 25 years................        32
(iv) 15 years or more, but less than 20 years.................        29
(v) 10 years or more, but less than 15 years..................        24
(vi) 5 years or more, but less than 10 years..................        17
(vii) More than 1 year, but less than 5 years.................        12
------------------------------------------------------------------------

    (2) The criminal history category shall be the greater of: (A) the 
criminal history category determined under Chapter Four, Part A 
(Criminal History); or (B) criminal history Category V.
    (b) In any case in which the defendant's instant offense of 
conviction is a covered sex crime, neither Sec. 4B1.1 nor subsection 
(a) of this guideline applies, and the defendant engaged in a patter of 
activity involving prohibited sexual conduct:
    (1) The offense level shall be 5 plus the offense level determined 
under

[[Page 30525]]

Chapters Two and Three. However, if the resulting offense level is less 
than level 22, the offense level shall be level 22, decreased by the 
number of levels corresponding to any applicable adjustment from 
Sec. 3E1.1.
    (2) The criminal history category shall be the criminal history 
category determined under Chapter Four, Part A.

Commentary

Application Notes

    1. Definitions.--For purposes of this guideline:
    `Minor' means an individual who had not attained the age of 18 
years.
    `Minor victim' includes (A) an undercover law enforcement officer 
who represented to the defendant that the officer was a minor; or (B) 
any minor the officer represented to the defendant would be involved in 
the prohibited sexual conduct.
    2. Covered Sex Crime as Instant Offense of Conviction.--For 
purposes of this guideline, the instant offense of conviction must be a 
covered sex crime, i.e.: (A) an offense, perpetrated against a minor, 
under (i) chapter 109A of title 18, United States Code; (ii) chapter 
110 of such title, not including trafficking in, receipt of, or 
possession of, child pornography, or a recordkeeping offense; (iii) 
chapter 117 of such title, not including transmitting information about 
a minor or filing a factual statement about an alien individual; or (B) 
an attempt or a conspiracy to commit any offense described in 
subdivisions (A)(i) through (iii) of this note.
    3. Application of Subsection (a).--
    (A) Definitions.--For purposes of subsection (a):
    (i) `Offense statutory maximum' means the maximum term of 
imprisonment authorized for the instant offense of conviction that is a 
covered sex crime, including any increase in that maximum term under a 
sentencing enhancement provision (such as a sentencing enhancement 
provision contained in 18 U.S.C. 2247(a) or 2426(a)) that applies to 
that covered sex crime because of the defendant's prior criminal 
record.
    (ii) `Sex offense conviction' (I) means any offense described in 18 
U.S.C. 2426(b)(1)(A) or (B), if the offense was perpetrated against a 
minor; and (II) does not include trafficking in, receipt of, or 
possession of, child pornography. `Child pornography' has the meaning 
given that term in 18 U.S.C. 2256(8).
    (B) Determination of Offense Statutory Maximum in the Case of 
Multiple Counts of Conviction.--In a case in which more than one count 
of the instant offense of conviction is a felony that is a covered sex 
crime, the court shall use the maximum authorized term of imprisonment 
for the count that has the greatest offense statutory maximum, for 
purposes of determining the offense statutory maximum under subsection 
(a).
    4. Application of Subsection (b).--
    (A) Definition.--For purposes of subsection (b), `prohibited sexual 
conduct' (i) means any offense described in 18 U.S.C. 2426(b)(1)(A) or 
(B); (ii) includes the production of child pornography; (iii) includes 
trafficking in child pornography only if, prior to the commission of 
the instant offense of conviction, the defendant sustained a felony 
conviction for that trafficking in child pornography; and (iv) does not 
include receipt or possession of child pornography. `Child pornography' 
has the meaning given that term in 18 U.S.C. 2256(8).
    (B) Determination of Pattern of Activity.--
    (i) In General.--For purposes of subsection (b), the defendant 
engaged in a pattern of activity involving prohibited sexual conduct 
if--
    (I) on at least two separate occasions, the defendant engaged in 
prohibited sexual conduct with a minor; and
    (II) there were at least two minor victims of the prohibited sexual 
conduct.
    For example, the defendant engaged in a pattern of activity 
involving prohibited sexual conduct if there were two separate 
occasions of prohibited sexual conduct and each such occasion involved 
a different minor, or if there were two separate occasions of 
prohibited sexual conduct involving the same two minors.
    (ii) Occasion of Prohibited Sexual Conduct.--An occasion of 
prohibited sexual conduct may be considered for purposes of subsection 
(b) without regard to whether the occasion (I) occurred during the 
course of the instant offense; or (II) resulted in a conviction for the 
conduct that occurred on that occasion.
    5. Treatment and Monitoring.--
    (A) Recommended Maximum Term of Supervised Release.--The statutory 
maximum term of supervised release is recommended for offenders 
sentenced under this guideline.
    (B) Recommended Conditions of Probation and Supervised Release.--
Treatment and monitoring are important tools for supervising offenders 
and should be considered as special conditions of any term of probation 
or supervised release that is imposed.
    Background: The guideline is intended to provide lengthy 
incarceration for offenders who commit sex offenses against minors and 
who present a continuing danger to the public. It applies to offenders 
whose instant offense of conviction is a sex offense committed against 
a minor victim. The relevant criminal provisions provide for increased 
statutory maximum penalties for repeat sex offenders and make those 
increased statutory maximum penalties available if the defendant 
previously was convicted of any of several federal and state sex 
offenses (see 18 U.S.C. 2247, 2426). In addition, section 632 of Pub. 
L. 102-141 and section 505 of Pub. L. 105-314 directed the Commission 
to ensure lengthy incarceration for offenders who engage in a pattern 
of activity involving the sexual abuse or exploitation of minors.''.
    Section 5B1.3(d) is amended by adding at the end the following:
    ``(7) Sex Offenses
    If the instant offense of conviction is a sex offense, as defined 
in Sec. 5D1.2 (Term of Supervised Release)--a condition requiring the 
defendant to participate in a program approved by the United States 
Probation Office for the treatment and monitoring of sex offenders.''.
    Section 5D1.2 is amended by adding after subsection (b) the 
following:
    ``(c) If the instant offense of conviction is a sex offense, the 
statutory maximum term of supervised release is recommended.''.
    The Commentary to Sec. 5D1.2 captioned ``Application Notes'' is 
amended by redesignating Notes 1 and 2 as Notes 2 and 3, respectively; 
by inserting before Note 2, as redesignated by this amendment, the 
following:
    ``1. Definition.--For purposes of this guideline, `sex offense' 
means (A) an offense, perpetrated against a minor, under (i) chapter 
109A of title 18, United States Code; (ii) chapter 110 of such title, 
not including a recordkeeping offense; or (iii) chapter 117 of such 
title, not including transmitting information about a minor or filing a 
factual statement about an alien individual; or (B) an attempt or a 
conspiracy to commit any offense described in subdivisions (A)(i) 
through (iii) of this note.''; and in Note 2, as redesignated by this 
amendment, by inserting ``Safety Valve Cases.--'' before ``A 
defendant''; and in Note 3, as redesignated by this amendment, by 
inserting ``Substantial Assistance Cases.--'' before ``Upon motion''.
    Section 5D1.3(d) is amended by inserting at the end the following:
    ``(7) Sex Offenses
    If the instant offense of conviction is a sex offense, as defined 
in Sec. 5D1.2

[[Page 30526]]

(Term of Supervised Release)--a condition requiring the defendant to 
participate in a program approved by the United States Probation Office 
for the treatment and monitoring of sex offenders.''.
    Reason for Amendment: This is a three-part amendment promulgated 
primarily in response to the Protection of Children from Sexual 
Predators Act of 1998, Pub. L. 105-314 (the ``Act''), which contains 
several directives to the Commission. In furtherance of the directives, 
the Commission initiated a comprehensive examination of the guidelines 
under which most sex crimes are sentenced. Amendment 592, effective 
November 1, 2000, addressed a number of these directives. (See USSC 
Guidelines Manual 2000 Supplement to Appendix C, Amendment 592.)
    The first part of the amendment addresses the Act's directive to 
increase penalties in any case in which the defendant engaged in a 
pattern of activity of sexual abuse or sexual exploitation of a minor. 
In response to this directive, the amendment provides a new Chapter 
Four (Criminal History and Criminal Livelihood) guideline, Sec. 4B1.5 
(Repeat and Dangerous Sex Offender Against Minors), that focuses on 
repeat child sex offenders. This new guideline works in a coordinated 
manner with Sec. 4B1.1 (Career Offender) and creates a tiered approach 
to punishing repeat child sex offenders.
    The first tier, in Sec. 4B1.5(a), aims to incapacitate repeat child 
sex offenders who have an instant offense of conviction of sexual abuse 
of a minor and a prior felony conviction for sexual abuse of a minor 
(but to whom Sec. 4B1.1 does not apply). This provision subjects a 
defendant to the greater of the offense level determined under Chapters 
Two and Three or the offense level obtained from a table that, like the 
table in Sec. 4B1.1, bases the applicable offense level on the 
statutory maximum for the offense. In addition, the defendant is 
subject to an enhanced criminal history category of not less than 
Category V, similar to Sec. 4B1.1 (which provides for Category VI). By 
statute, defendants convicted of a federal sex offense are subject to 
twice the statutory maximum penalty for a subsequent sex offense 
conviction. This guideline provision effectuates the Commission's and 
Congress's intent to punish repeat child sex offenders severely.
    The second tier, in Sec. 4B1.5(b), provides a five-level increase 
in the offense level and a minimum offense level of level 22 for 
defendants who are not subject to either Sec. 4B1.1 or to Sec. 4B1.5(a) 
and who have engaged in a pattern of activity involving prohibited 
sexual conduct with minors. This part of the guideline does not rely on 
prior convictions to increase the penalty for those who have a pattern 
of activity of sexual abuse or exploitation of a minor. The pattern of 
activity enhancement requires that the defendant engaged in prohibited 
sexual conduct on at least two separate occasions and that at least two 
minors were victims of the sexual conduct. This provision is similar to 
the existing five-level pattern of activity enhancement in subsection 
(b)(4) of Sec. 2G2.2 (Trafficking in Material Involving the Sexual 
Exploitation of a Minor; Receiving, Transporting, Shipping, or 
Advertising Material Involving the Sexual Exploitation of a Minor; 
Possessing Material Involving the Sexual Exploitation of a Minor with 
Intent to Traffic) and effectuates the Commission's and Congress's 
intent to punish severely offenders who engage in a pattern of activity 
involving the sexual abuse or exploitation of minors.
    Conforming amendments are made to the criminal sexual abuse 
guidelines in Chapter Two, Part A, Subpart 3 to delete the upward 
departure provisions for prior sentences for similar conduct; that 
factor is now taken into account in the new guideline.
    In addition to creating a new guideline, this part of the amendment 
also modifies Sec. 5D1.2 (Term of Supervised Release) to provide that 
the recommended term of supervised release for a defendant convicted of 
a sex crime is the maximum term authorized by statute. Amendments to 
Sec. Sec. 5B1.3 (Conditions of Probation) and 5D1.3 (Conditions of 
Supervised Release) effectuate the Commission's intent that offenders 
who commit sex crimes receive appropriate treatment and monitoring.
    The second part of the amendment addresses a circuit conflict 
regarding whether multiple counts of possession, receipt, or 
transportation of images containing child pornography should be grouped 
together pursuant to subsection (a) or (b) of Sec. 3D1.2 (Groups of 
Closely Related Counts). Resolution of the conflict depends, in part, 
on determining who is the victim of the offense: the child depicted in 
the pornography images or society as a whole. Six circuits have held 
that the child depicted is the victim, and, therefore, that the counts 
are not grouped. See United States v. Norris, 159 F.3d 926 (5th Cir. 
1998); United States v. Hibbler, 159 F.3d 233 (6th Cir. 1998); United 
States v. Ketcham, 80 F.3d 789 (3d Cir. 1996); United States v. Rugh, 
968 F.2d 750 (8th Cir. 1992); United States v. Boos, 127 F.3d 1207 (9th 
Cir. 1997), cert. denied, 522 U.S. 1066 (1998); and United States v. 
Tillmon, 195 F.3d 640 (11th Cir. 1999). In contrast, one circuit has 
held that society as a whole is the victim of these types of offenses, 
and, therefore, that one count of interstate transportation of child 
pornography does not group with a count of interstate transportation of 
a minor with intent to engage in illegal sexual activity in a case in 
which the child portrayed in the pornography was the same child 
transported. See United States v. Toler, 901 F.2d 399 (4th Cir. 1990).
    In addressing the circuit conflict, the Commission adopted a 
position that provides for grouping of multiple counts of child 
pornography distribution, receipt, and possession pursuant to 
Sec. 3D1.2(d). Grouping multiple counts of these offenses pursuant to 
Sec. 3D1.2(d) is appropriate because these offenses typically are 
continuous and ongoing enterprises. This grouping provision does not 
require the determination of whether counts involve the same victim in 
order to calculate a combined adjusted offense level for multiple 
counts of conviction which, particularly in these kinds of cases, could 
be complex and time consuming. Consistent with the provisions of 
subsection (a)(2) of Sec. 1B1.3 (Relevant Conduct), this approach 
provides that additional images of child pornography (often involved in 
the case, but outside of the offense of conviction) shall be considered 
by the court in determining the appropriate sentence for the defendant 
if the conduct related to those images is part of the same course of 
conduct or common scheme or plan.
    The third part of the amendment makes several modifications to 
Sec. 2A3.2 (Criminal Sexual Abuse of a Minor Under the Age of Sixteen 
Years (Statutory Rape) or Attempt to Commit Such Acts). The amendment 
responds to the directive in the Act to provide an enhancement for 
offenses under chapter 117 of title 18, United States Code, involving 
the transportation of minors for prostitution or prohibited sexual 
conduct. The amendment increases the offense levels in Sec. 2A3.2 and 
in Sec. 2A3.4 (Abusive Sexual Contact or Attempt to Commit Abusive 
Sexual Contact). The Act focuses on those individuals who travel to 
meet or transport minors for illegal sexual activity by providing 
increased statutory maximum penalties for those individuals. In 
response, the increase in penalties in these guidelines were geared 
toward those individuals. Specifically, the amendment distinguishes 
between chapter 117 offenses that involve the commission of a sexual 
act or sexual contact and those offenses (e.g., sting cases) that do 
not, by

[[Page 30527]]

providing an alternative base offense level in Sec. 2A3.2 for chapter 
117 offenses that also involve the commission of a sexual act or sexual 
contact that is three levels greater (i.e., level 24) than the base 
offense level applicable to chapter 117 offenses that do not involve a 
sexual act or sexual contact.
    The amendment provides a three-level increase in the base offense 
level for offenses sentenced under Sec. 2A3.2, such that the base 
offense level (1) for statutory rape unaccompanied by aggravating 
conduct is increased from level 15 to level 18; (2) for a chapter 117 
offense (unaccompanied by a sexual act or sexual contact) is increased 
from level 18 to level 21; and (3) for a chapter 117 offense 
(accompanied by a sexual act or sexual contact) results in a base 
offense level of level 24. The amendment reflects the seriousness 
accorded criminal sexual abuse offenses by Congress, which provided for 
statutory maximum penalties of 15 years' imprisonment (or 30 years' 
imprisonment with a prior conviction for a sex crime). A defendant who 
transmits child pornography to a minor as a means of enticing the minor 
to engage in illegal sexual activity will receive a sentence increase 
when that defendant subsequently travels across state lines to engage 
in illegal sexual activity with that minor. Therefore, this increase 
also maintains the proportionality between Secs. 2A3.2 and 2G2.2.
    The third part of the amendment also makes conforming changes to 
Sec. 2A3.2 to ensure that some chapter 117 offenses that do not include 
aggravating conduct receive the offense level applicable to statutory 
rape in its basic form. Technical changes made by the amendment (such 
as the addition of headings and the reordering of applications notes) 
are not intended to have substantive effect.
    4. Amendment: Section 2A6.2(a) is amended by striking ``14'' and 
inserting ``18''.
    Section 2A6.2(c) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the offense involved the commission of another criminal 
offense, apply the offense guideline from Chapter Two, Part A (Offenses 
Against the Person) most applicable to that other criminal offense, if 
the resulting offense level is greater than that determined above.''.
    The Commentary to Sec. 2A6.2 captioned ``Application Notes'' is 
amended in Note 1 by striking the 1-em dash and inserting a colon; and 
by striking the last paragraph and inserting the following:
    `` `Stalking means (A) traveling with the intent to kill, injure, 
harass, or intimidate another person and, in the course of, or as a 
result of, such travel, placing the person in reasonable fear of death 
or serious bodily injury to that person or an immediate family member 
of that person; or (B) using the mail or any facility of interstate or 
foreign commerce to engage in a course of conduct that places that 
person in reasonable fear of the death of, or serious bodily injury to, 
that person or an immediate family member of that person. See 18 U.S.C. 
Sec. 2261A. `Immediate family member' (A) has the meaning given that 
term in 18 U.S.C. Sec. 115(c)(2); and (B) includes a spouse or intimate 
partner. `Course of conduct' and `spouse or intimate partner' have the 
meaning given those terms in 18 U.S.C. 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 and conduct that occurred under circumstances that would 
constitute a federal offense had the conduct taken place within the 
territorial or maritime jurisdiction of the United States.''.
    Reason for Amendment: This amendment addresses section 1107 of the 
Victims of Trafficking and Violence Protection Act of 2000, Pub. L. 
106-386 (the ``Act''). That section amends 18 U.S.C. 2261, 2261A, and 
2262 to broaden the reach of those statutes to include international 
travel to stalk, commit domestic violence, or violate a protective 
order. Section 2261A also is amended to broaden the category of persons 
protected by this statute to include intimate partners of the person 
stalked. The Act also creates a new offense at section 2261A(2) that 
prohibits the use of the mail or any facility of interstate or foreign 
commerce to commit a stalking offense. Several technical changes were 
also made to these statutes.
    The Act includes a directive to the Commission to amend the federal 
sentencing guidelines to reflect the changes made to 18 U.S.C. 2261, 
with specific consideration to be given to the following factors: (1) 
whether the guidelines relating to stalking offenses should be modified 
in light of the amendment made by this subsection; and (2) whether any 
changes the Commission may make to the guidelines pursuant to clause 
(1) should also be made with respect to offenses under chapter 110A of 
title 18, United States Code (staling and domestic violence offenses).
    For several reasons, the amendment refers the new stalking by mail 
offense, like other stalking offenses, to 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 refer this new offense 
to Sec. 2A6.1 (Threatening or Harassing Communications), stalking by 
mail offenses differ significantly from threatening communications in 
that the former require the defendant's intent to kill, or injure a 
person, or place a person in reasonable fear of death or serious bodily 
injury. Third, referencing stalking by mail offenses to Sec. 2A6.1 
could result in these offenses receiving higher penalties than other 
stalking offenses. For example, a defendant who writes a threatening 
letter, violates a protective order, and engages in some conduct 
evidencing an intent to carry out such threat, would receive an offense 
level of level 20 under Sec. 2A6.1. A defendant who engages in stalking 
by mail, violates a protective order, and actually commits bodily 
injury on the person who is the subject of the protection order would 
have received, prior to this amendment, an offense level of level 18 
under Sec. 2A6.2. This amendment reflects the policy judgment that the 
second defendant should receive punishment equal to, or perhaps greater 
than, that received by the first defendant. Accordingly, because of 
concern for proportionality in sentencing stalking and domestic 
violence offenses relative to other crimes, such as threatening or 
harassing communications, this amendment increases the base offense 
level in Sec. 2A6.2 from level 14 to level 18. Setting the base offense 
level at level 18 for stalking and domestic violence crimes ensures 
that these offenses are sentenced at or above the offense levels for 
offenses involving threatening and harassing communications.
    The amendment also conforms the definition of ``stalking'' in 
Application Note 1 of Sec. 2A6.2 to the statutory changes made by the 
Act. Additionally, the amendment modifies the language of subsection 
(c) in Sec. 2A6.2 to clarify application of the cross reference. This 
change is consistent with the amendment to Application Note 3 of 
Sec. 1B1.5 (Interpretation of References to Other Offense Guidelines), 
which also clarifies the operation of cross references generally.
    These revisions are designed to clarify that, unless otherwise 
specified, cross references in Chapter Two (Offense

[[Page 30528]]

Conduct) are to be determined consistently 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 and conduct that occurred under 
circumstances that would constitute a federal offense had the conduct 
taken place within the territorial or maritime jurisdiction of the 
United States.
    5. Amendment: Chapter Two is amended by striking the heading to 
Part B, the heading to Subpart 1 of Part B, and the Introductory 
Commentary to such subpart and inserting the following:

``PART B--BASIC ECONOMIC OFFENSES

    1. Theft, Embezzlement, Receipt of Stolen Property, Property 
Destruction, and Offenses Involving Fraud or Deceit

Introductory Commentary

    These sections address basic forms of property offenses: theft, 
embezzlement, fraud, forgery, counterfeiting (other than offenses 
involving altered or counterfeit bearer obligations of the United 
States), insider trading, transactions in stolen goods, and simple 
property damage or destruction. (Arson is dealt with separately in 
Chapter Two, Part K (Offenses Involving Public Safety)). These 
guidelines apply to offenses prosecuted under a wide variety of federal 
statutes, as well as offenses that arise under the Assimilative Crimes 
Act.''.
    Chapter Two, Part B is amended by striking Sec. 2B1.1, and its 
accompanying commentary, and inserting the following:
``Sec. 2B1.1. Larceny, Embezzlement, and Other Forms of Theft; Offenses 
Involving Stolen Property; Property Damage or Destruction; Fraud and 
Deceit; Forgery; Offenses Involving Altered or Counterfeit Instruments 
Other than Counterfeit Bearer Obligations of the United States
    (a) Base Offense Level: 6
    (b) Specific Offense Characteristics
    (1) If the loss exceeded $5,000, increase the offense level as 
follows:

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

    (2) (Apply the greater) If the offense--
    (A) (i) involved more than 10, but less than 50, victims; or (ii) 
was committed through mass-marketing, increase by 2 levels; or
    (B) involved 50 or more victims, increase by 4 levels.
    (3) If the offense involved a theft from the person of another, 
increase by 2 levels.
    (4) If the offense involved receiving stolen property, and the 
defendant was a person in the business of receiving and selling stolen 
property, increase by 2 levels.
    (5) If the offense involved misappropriation of a trade secret and 
the defendant knew or intended that the offense would benefit a foreign 
government, foreign instrumentality, or foreign agent, increase by 2 
levels.
    (6) If the offense involved theft of, damage to, or destruction of, 
property from a national cemetery, increase by 2 levels.
    (7) If the offense involved (A) a misrepresentation that the 
defendant was acting on behalf of a charitable, educational, religious, 
or political organization, or a government agency; (B) a 
misrepresentation or other fraudulent action during the course of a 
bankruptcy proceeding; (C) a violation of any prior, specific judicial 
or administrative order, injunction, decree, or process not addressed 
elsewhere in the guidelines; or (D) a misrepresentation to a consumer 
in connection with obtaining, providing, or furnishing financial 
assistance for an institution of higher education, increase by 2 
levels. If the resulting offense level is less than level 10, increase 
to level 10.
    (8) If (A) the defendant relocated, or participated in relocating, 
a fraudulent scheme to another jurisdiction to evade law enforcement or 
regulatory officials; (B) a substantial part of a fraudulent scheme was 
committed from outside the United States; or (C) the offense otherwise 
involved sophisticated means, increase by 2 levels. If the resulting 
offense level is less than level 12, increase to level 12.
    (9) If the offense involved (A) the possession or use of any 
device-making equipment; (B) the production or trafficking of any 
unauthorized access device or counterfeit access device; or (C)(i) the 
unauthorized transfer or use of any means of identification unlawfully 
to produce or obtain any other means of identification; or (ii) the 
possession of 5 or more means of identification that unlawfully were 
produced from, or obtained by the use of, another means of 
identification, increase by 2 levels. If the resulting offense level is 
less than level 12, increase to level 12.
    (10) If the offense involved an organized scheme to steal vehicles 
or vehicle parts, and the offense level is less than level 14, increase 
to level 14.
    (11) If the offense involved (A) the conscious or reckless risk of 
death or serious bodily injury; or (B) possession of a dangerous weapon 
(including a firearm) in connection with the offense, increase by 2 
levels. If the resulting offense level is less than level 14, increase 
to level 14.
    (12) (Apply the greater) If--
    (A) the defendant derived more than $1,000,000 in gross receipts 
from one or more financial institutions as a result of the offense, 
increase by 2 levels; or
    (B) the offense substantially jeopardized the safety and soundness 
of a financial institution, increase by 4 levels.
    If the resulting offense level determined under subdivision (A) or 
(B) is less than level 24, increase to level 24.
    (c) Cross References
    (1) If (A) a firearm, destructive device, explosive material, or 
controlled substance was taken, or the taking of any such item was an 
object of the offense; or (B) the stolen property received, 
transported, transferred, transmitted, or possessed was a firearm, 
destructive device, explosive material, or controlled substance, apply 
Sec. 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or 
Trafficking (Including Possession with Intent to Commit These 
Offenses); 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.
    (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) neither subdivision (1) nor (2) of this subsection 
applies; (B) the defendant was convicted under a statute proscribing 
false, fictitious, or

[[Page 30529]]

fraudulent statements or representations generally (e.g., 18 U.S.C. 
1001, 1341, 1342, or 1343); and (C) the conduct set forth in the count 
of conviction establishes an offense specifically covered by another 
guideline in Chapter Two (Offense Conduct), apply that other guideline.
    (d) Special Instruction
    (1) If the defendant is convicted under 18 U.S.C. 1030(a)(4) or 
(5), the minimum guideline sentence, notwithstanding any other 
adjustment, shall be six months' imprisonment.

Commentary

Statutory Provisions: 7 U.S.C. 6, 6b, 6c, 6h, 6o, 13, 23; 15 U.S.C. 
50, 77e, 77q, 77x, 78j, 78ff, 80b-6, 1644, 6821; 18 U.S.C. 38, 225, 
285-289, 471-473, 500, 510, 553(a)(1), 641, 656, 657, 659, 662, 
1001-1008, 1010-1014, 1016-1022, 1025, 1026, 1028, 1029, 1030(a)(4)-
(5), 1031, 1341-1344, 1361, 1363, 1702, 1703 (if vandalism or 
malicious mischief, including destruction of mail, is involved), 
1708, 1831, 1832, 2113(b), 2312-2317; 29 U.S.C. 501(c); 42 U.S.C. 
1011; 49 U.S.C. 30170, 46317(a). For additional statutory 
provision(s) see Appendix A (Statutory Index).

Application Notes

    1. Definitions.--For purposes of this guideline:
    ``Financial institution'' includes any institution described in 18 
U.S.C. 20, 656, 657, 1005, 1006, 1007, or 1014; any state or foreign 
bank, trust company, credit union, insurance company, investment 
company, mutual fund, savings (building and loan) association, union or 
employee pension fund; any health, medical, or hospital insurance 
association; brokers and dealers registered, or required to be 
registered, with the Securities and Exchange Commission; futures 
commodity merchants and commodity pool operators registered, or 
required to be registered, with the Commodity Futures Trading 
Commission; and any similar entity, whether or not insured by the 
federal government. ``Union or employee pension fund'' and ``any 
health, medical, or hospital insurance association,'' primarily include 
large pension funds that serve many persons (e.g., pension funds or 
large national and international organizations, unions, and 
corporations doing substantial interstate business), and associations 
that undertake to provide pension, disability, or other benefits (e.g., 
medical or hospitalization insurance) to large numbers of persons.
    ``Firearm'' and ``destructive device'' have the meaning given those 
terms in the Commentary to Sec. 1B1.1 (Application Instructions).
    ``Foreign instrumentality'' and ``foreign agent'' have the meaning 
given those terms in 18 U.S.C. 1839(1) and (2), respectively.
    ``National cemetery'' means a cemetery (A) established under 
section 2400 of title 38, United States Code; or (B) under the 
jurisdiction of the Secretary of the Army, the Secretary of the Navy, 
the Secretary of the Air Force, or the Secretary of the Interior.
    ``Theft from the person of another'' means theft, without the use 
of force, of property that was being held by another person or was 
within arms' reach. Examples include pick-pocketing and non-forcible 
purse-snatching, such as the theft of a purse from a shopping cart.
    ``Trade secret'' has the meaning given that term in 18 U.S.C. 
1839(3).
    2. Loss Under Subsection (b)(1).--This application note applies to 
the determination of loss under subsection (b)(1).
    (A) General Rule.--Subject to the exclusions in subdivision (D), 
loss is the greater of actual loss or intended loss.
    (i) Actual Loss.--``Actual loss'' means the reasonably foreseeable 
pecuniary harm that resulted from the offense.
    (ii) Intended Loss.--``Intended loss'' (I) means the pecuniary harm 
that was intended to result from the offense; and (II) includes 
intended pecuniary harm that would have been impossible or unlikely to 
occur (e.g., as in a government sting operation, or an insurance fraud 
in which the claim exceeded the insured value).
    (iii) Pecuniary Harm.--``Pecuniary harm'' means harm that is 
monetary or that otherwise is readily measurable in money. Accordingly, 
pecuniary harm does not include emotional distress, harm to reputation, 
or other non-economic harm.
    (iv) Reasonably Foreseeable Pecuniary Harm.--For purposes of this 
guideline, ``reasonably foreseeable pecuniary harm'' means pecuniary 
harm that the defendant knew or, under the circumstances, reasonably 
should have known, was a potential result of the offense.
    (v) Rules of Construction in Certain Cases.--In the cases described 
in subdivisions (I) through (III), reasonably foreseeable pecuniary 
harm shall be considered to include the pecuniary harm specified for 
those cases as follows:
    (I) Product Substitution Cases.--In the case of a product 
substitution offense, the reasonably foreseeable pecuniary harm 
includes the reasonably foreseeable costs of making substitute 
transactions and handling or disposing of the product delivered, or of 
retrofitting the product so that it can be used for its intended 
purpose, and the reasonably foreseeable costs of rectifying the actual 
or potential disruption to the victim's business operations caused by 
the product substitution.
    (II) Procurement Fraud Cases.--In the case of a procurement fraud, 
such as a fraud affecting a defense contract award, reasonably 
foreseeable pecuniary harm includes the reasonably foreseeable 
administrative costs to the government and other participants of 
repeating or correct the procurement action affected, plus any 
increased costs to procure the product or service involved that was 
reasonably foreseeable.
    (III) Protected Computer Cases.--In the case of an offense 
involving unlawfully accessing, or exceeding authorized access to, a 
``protected computer'' as defined in 18 U.S.C. 1030(e)(2), actual loss 
includes the following pecuniary harm, regardless of whether such 
pecuniary harm was reasonably foreseeable: reasonable costs to the 
victim of conducting a damage assessment, and restoring the system and 
data to their condition prior to the offense, and any lost revenue due 
to interruption of service.
    (B) Gain.--The court shall use the gain that resulted from the 
offense as an alternative measure of loss only if there is a loss but 
it reasonably cannot be determined.
    (C) Estimation of Loss.--The court need only make a reasonable 
estimate of the loss. The sentencing judge is in a unique position to 
assess the evidence and estimate the loss based upon that evidence. For 
this reason, the court's loss determination is entitled to appropriate 
deference. See 18 U.S.C. 3742(e) and (f).
    The estimate of the loss shall be based on available information, 
taking into account, as appropriate and practicable under the 
circumstances, factors such as the following:
    (i) The fair market value of the property unlawfully taken or 
destroyed; or, if the fair market value is impracticable to determine 
or inadequately measures the harm, the cost to the victim of replacing 
that property.
    (ii) The cost of repairs to damaged property.
    (iii) The approximate number of victims multiplied by the average 
loss to each victim.
    (iv) More general factors, such as the scope and duration of the 
offense and revenues generated by similar operations.
    (D) Exclusions from Loss.--Loss shall not include the following:

[[Page 30530]]

    (i) Interest of any kind, finance charges, late fees, penalties, 
amounts based on an agreed-upon return or rate of return, or other 
similar costs.
    (ii) Costs to the government of, and costs incurred by victims 
primarily to aid the government in, the prosecution and criminal 
investigation of an offense.
    (E) Credits Against Loss.--Loss shall be reduced by the following:
    (i) The money returned, and the fair market value of the property 
returned and the services rendered, by the defendant or other persons 
acting jointly with the defendant, to the victim before the offense was 
detected. The time of detection of the offense is the earlier of (I) 
the time the offense was discovered by a victim or government agency; 
or (II) the time the defendant knew or reasonably should have known 
that the offense was detected or about to be detected by a victim or 
government agency.
    (ii) In a case involving collateral pledged or otherwise provided 
by the defendant, the amount the victim has recovered at the time of 
sentencing from disposition of the collateral, or if the collateral has 
not been disposed of by that time, the fair market value of the 
collateral at the time of sentencing.
    (F) Special Rules.--Notwithstanding subdivision (A), the following 
special rules shall be used to assist in determining loss in the cases 
indicated:
    (i) Stolen or Counterfeit Credit Cards and Access Devices; 
Purloined Numbers and Codes.--In a case involving any counterfeit 
access device or unauthorized access device, loss includes any 
unauthorized charges made with the counterfeit access device or 
unauthorized access device and shall be not less than $500 per access 
device. However, if the unauthorized access device is a means of 
telecommunications access that identifies a specific telecommunications 
instrument or telecommunications account (including an electronic 
serial number/mobile identification number (ESN/MIN) pair), and that 
means was only possessed, and not used, during the commission of the 
offense, loss shall be not less than $100 per unused means. For 
purposes of this subdivision, `counterfeit access device' and 
`unauthorized access device' have the meaning given those terms in 
Application Note 7(A).
    (ii) Government Benefits.--In a case involving government benefits 
(e.g., grants, loans, entitlement program payments), loss shall be 
considered to be not less than the value of the benefits obtained by 
unintended recipients or diverted to unintended uses, as the case may 
be. For example, if the defendant was the intended recipient of food 
stamps having a value of $100 but fraudulently received food stamps 
having a value of $150, loss is $50.
    (iii) Davis-Bacon Act Violations.--In a case involving a Davis-
Bacon Act violation (i.e., a violation of 40 U.S.C. 276a, criminally 
prosecuted under 18 U.S.C. 1001), the value of benefits shall be 
considered to be not less than the difference between the legally 
required wages and actual wages paid.
    (iv) Ponzi and Other Fraudulent Investment Schemes.--In a case 
involving a fraudulent investment scheme, such as a Ponzi scheme, loss 
shall not be reduced by the money or the value of the property 
transferred to any individual investor in the scheme in access of that 
investor's principal investment (i.e., the gain to an individual 
investor in the scheme shall not be used to offset the loss to another 
individual investor in the scheme).
    (v) Certain Other Unlawful Misrepresentation Schemes.--In a case 
involving a scheme in which (I) services were fraudulently rendered to 
the victim by persons falsely posing as licensed professionals; (II) 
goods were falsely represented as approved by a governmental regulatory 
agency; or (III) goods for which regulatory approval by a government 
agency was required but not obtained, or was obtained by fraud, loss 
shall include the amount paid for the property, services or goods 
transferred, rendered, or misrepresented, with no credit provided for 
the value of those items or services.
    (vi) Value of Controlled Substances.--In a case involving 
controlled substances, loss is the estimated street value of the 
controlled substances.
    (3) Victim and Mass-Marketing Enhancement under Subsection 
(b)(2).--
    (A) Definitions.--For purposes of subsection (b)(2):
    (i) ``Mass-marketing'' means a plan, program, promotion, or 
campaign that is conducted through solicitation by telephone, mail, the 
Internet, or other means to induce a large number of persons to (I) 
purchase goods or services; (II) participate in a contest or 
sweepstakes; or (III) invest for financial profit. ``Mass-marketing'' 
includes, for example, a telemarketing campaign that solicits a large 
number of individuals to purchase fraudulent life insurance policies.
    (ii) ``Victim'' means (I) any person who sustained any part of the 
actual loss determined under subsection (b)(1); or (II) any individual 
who sustained bodily injury as a result of the offense. ``Person'' 
includes individuals, corporations, companies, associations, firms, 
partnerships, societies, and joint stock companies.
    (B) Undelivered United States Mail.--
    (i) In General.--In a case in which undelivered United States mail 
was taken, or the taking of such item was an object of the offense, or 
in a case in which the stolen property received, transported, 
transferred, transmitted, or possessed was undelivered United States 
mail, ``victim'' means any person (I) described in subdivision (A)(ii) 
of this note; or (II) who was the intended recipient, or addressee, of 
the undelivered United States mail.
    (ii) Special Rule.--A case described in subdivision (B)(i) of this 
note that involved a Postal Service (I) relay box; (II) collection box; 
(III) delivery vehicle; or (IV) satchel or cart, shall be considered to 
have involved 50 or more victims.
    (iii) Definition.--``Undelivered United States mail'' means mail 
that has not actually been received by the addressee or his agent 
(e.g., mail taken from the addressee's mail box).
    (C) Vulnerable Victims.--If subsection (b)(2)(B) applies, an 
enhancement under Sec. 3A1.1(b)(2) shall not apply.
    4. Enhancement for Business of Receiving and Selling Stolen 
Property under Subsection (b)(4).--For purposes of subsection (b)(4), 
the court shall consider the following non-exhaustive list of factors 
in determining whether the defendant was in the business of receiving 
and selling stolen property:
    (A) The regularity and sophistication of the defendant's 
activities.
    (B) The value and size of the inventory of stolen property 
maintained by the defendant.
    (C) The extent to which the defendant's activities encouraged or 
facilitated other crimes.
    (D) The defendant's past activities involving stolen property.
    5. Application of Subsection (b)(7).--
    (A) In General.--The adjustments in subsection (b)(7) are 
alternative rather than cumulative. If, in a particular case, however, 
more than one of the enumerated factors applied, an upward departure 
may be warranted.
    (B) Misrepresentations Regarding Charitable and Other 
Institutions.-- Subsection (b)(7)(A) applies in any case in which the 
defendant represented that the defendant was acting to obtain a benefit 
on behalf of a charitable educational, religious, or political 
organization, or a government agency (regardless of whether the 
defendant actually was associated with the organization or government 
agency) when, in fact, the defendant intended to divert all or part of 
that benefit (e.g., for the defendant's personal gain).

[[Page 30531]]

Subsection (b)(7)(A) applies, for example, to the following:
    (i) A defendant who solicited contributions for a non-existent 
famine relief organization.
    (ii) A defendant who solicited donations from church members by 
falsely claiming to be a fundraiser for a religiously affiliated 
school.
    (iii) A defendant, chief of a local fire department, who conducted 
a public fundraiser representing that the purpose of the fundraiser was 
to procure sufficient funds for a new fire engine when, in fact, the 
defendant intended to divert some of the funds for the defendant's 
personal benefit.
    (C) Fraud in Contravention of Prior Judicial Order.--Subsection 
(b)(7)(C) provides an enhancement if the defendant commits a fraud in 
contravention of a prior, official judicial or administrative warning, 
in the form of an order, injunction, decree, or process, to take or not 
to take a specified action. A defendant who does not comply with such a 
prior, official judicial or administrative warning demonstrates 
aggravated criminal intent and deserves additional punishment. If it is 
established that an entity the defendant controlled was a party to the 
prior proceeding that resulted in the official judicial or 
administrative action, and the defendant had knowledge of that prior 
decree or order, this enhancement applies even if the defendant was not 
a specifically named party in that prior case. For example, a defendant 
whose business previously was enjoined from selling a dangerous 
product, but who nonetheless engaged in fraudulent conduct to sell the 
product, is subject to this enhancement. This enhancement does not 
apply if the same conduct resulted in an enhancement pursuant to a 
provision found elsewhere in the guidelines (e.g., a violation of a 
condition of release addressed in 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 purposes of subsection 
(b)(7)(D):
    `Financial assistance' means any scholarship, grant, loan, tuition, 
discount, award, or other financial assistance for the purpose of 
financing an education.
    `Institution of higher education' has the meaning given that term 
in section 101 of the Higher Education Act of 1954 (20 U.S.C. 1001).
    (E) Non-Applicability of Enhancements.--
    (i) Subsection (b)(7)(A).--If the conduct that forms the basis for 
an enhancement under subsection (b)(7)(A) is the only conduct that 
forms the basis for an adjustment under Sec. 3B1.3 (Abuse of Position 
of Trust or Use of Special Skill), do not apply that adjustment under 
Sec. 3B1.3.
    (ii) Subsection (b)(7)(B) and (C).--If the conduct that forms the 
basis for an enhancement under subsection (b)(7)(B) or (C) is the only 
conduct that forms the basis for an adjustment under Sec. 3C1.1 
(Obstructing or Impeding the Administration of Justice), do not apply 
that adjustment under Sec. 3C1.1.
    6. Sophisticated Means Enhancement under Subsection (b)(8).--
    (A) Definition of United States.--For purposes of subsection 
(b)(8)(B), `United States' means each of the 50 states, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, the Northern Mariana Islands, and American Samoa.
    (B) Sophisticated Means Enhancement.--For purposes of subsection 
(b)(8)(C), `sophisticated means' means especially complex or especially 
intricate offense conduct pertaining to the execution or concealment of 
an offense. For example, in a telemarketing scheme, locating the main 
office of the scheme in one jurisdiction but locating soliciting 
operations in another jurisdiction ordinarily indicates sophisticated 
means. Conduct such as hiding assets or transactions, or both, through 
the use of fictitious entities, corporate shells, or offshore financial 
accounts also ordinarily indicates sophisticated means.
    (C) Non-Applicability of Enhancement.--If the conduct that forms 
the basis for an enhancement under subsection (b)(8) is the only 
conduct that forms the basis for an adjustment under Sec. 3C1.1, do not 
apply that adjustment under Sec. 3C1.1.
    7. Application of Subsection (b)(9).--
    (A) Definitions.--For purposes of subsection (b)(9):
    `Counterfeit access device' (i) has the meaning given that term in 
18 U.S.C. 1029(e)(2); and (ii) includes a telecommunications instrument 
that has been modified or altered to obtain unauthorized use of 
telecommunications service. `Telecommunications service' has the 
meaning given that term in 19 U.S.C. 1029(e)(9).
    `Device-making equipment' has the meaning given that term in 18 
U.S.C. 1029(e)(6); and (ii) includes (I) any hardware or software that 
has been configured as described in 18 U.S.C. 1029(a)(9); and (II) a 
scanning receiver referred to in 18 U.S.C. 1029(a)(8). `Scanning 
receiver' has the meaning given that term in 18 U.S.C. 1029(e)(8).
    ``Means of identification'' has the meaning given that term in 18 
U.S.C. 1028(d)(3), except that such means of identification shall be of 
an actual (i.e., not fictitious) individual, other than the defendant 
or a person for whose conduct the defendant is accountable under 
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. 1029(e)(3).
    Identification Documents.--Offenses involving identification 
documents, false identification documents, and means of identification, 
in violation of 18 U.S.C. 1028, also are covered by this guideline. If 
the primary purpose of the offense, under 18 U.S.C. 1028, was to 
violate, or assist another to violate, the law pertaining to 
naturalization, citizenship, or legal resident status, apply Sec. 2L2.1 
(Trafficking in a Document Relating to Naturalization) or Sec. 2L2.2 
(Fraudulently Acquiring Documents Relating to Naturalization), as 
appropriate, rather than this guideline.
    (C) Application of Subsection (b)(9)(C)(i).--
    (i) In General.--Subsection (b)(9)(C)(i) applies in a case in which 
a means of identification of an individual other than the defendant (or 
a person for whose conduct the defendant is accountable under 
Sec. 1B1.3 (Relevant Conduct)) is used without that individual's 
authorization unlawfully to produce or obtain another means of 
identification.
    (ii) Examples.--Examples of conduct to which subsection 
(b)(9)(C)(i) applies are as follows:
    (I) A defendant obtains an individual's name and social security 
number from a source (e.g., from a piece of mail taken from the 
individual's mailbox) and obtains a bank loan in that individual's 
name. In this example, the account number of the bank loan is the other 
means of identification that has been obtained unlawfully.
    (II) A defendant obtains an individual's name and address from a 
source (e.g., from a diver's license in a stolen wallet) and applies 
for, obtains, and subsequently uses a credit card in that individual's 
name. In this example, the credit card is the other means of 
identification that has been obtained unlawfully.

[[Page 30532]]

    (iii) Nonapplicability of Subsection (b)(9)(C)(i).--Examples of 
conduct to which subsection (b)(9)(C)(i) does not apply are as follows:
    (I) A defendant uses a credit card from a stolen wallet only to 
make a purchase. In such a case, the defendant has not used the stolen 
credit card to obtain another means of identification.
    (II) A defendant forges another individual's signature to cash a 
stolen check. Forging another individual's signature is not producing 
another means of identification.
    (D) Application of Subsection (b)(9)(C)(ii).--Subsection 
(b)(9)(C)(ii) applies in any case in which the offense involved the 
possession of 5 or more means of identification that unlawfully were 
produced or obtained, regardless of the number of individuals in whose 
name (or other identifying information) the means of identification 
were so produced or so obtained.
    8. Chop Shop Enhancement under Subsection (b)(10).--Subsection 
(b)(10) provides a minimum offense level in the case of an ongoing, 
sophisticated operation (such as an auto theft ring or `chop shop') to 
steal vehicles or vehicle parts, or to receive stolen vehicles or 
vehicle parts. `Vehicles' refers to all forms of vehicles, including 
aircraft and watercraft.
    9. Gross Receipts Enhancement under Subsection (b)(12)(A).--
    (A) In General.--For purposes of subsection (b)(12)(A), the 
defendant shall be considered to have derived more than $1,000,000 in 
gross receipts if the gross receipts to the defendant individually, 
rather than to all participants, exceeded $1,000,000.
    (B) Definition.--`Gross receipts from the offense' includes all 
property, real or personal, tangible or intangible, which is obtained 
directly or indirectly as a result of such offense. See 18 U.S.C. 
982(a)(4).
    10. Enhancement for Substantially Jeopardizing the Safety and 
Soundness of a Financial Institution under Subsection (b)(12)(B).--For 
purposes of subsection (b)(12)(B), an offense shall be considered to 
have substantially jeopardized the safety and soundness of a financial 
institution if, as a consequence of the offense, the institution (A) 
became insolvent; (B) substantially reduced benefits to pensioners or 
insureds; (C) was unable on demand to refund fully any deposit, 
payment, or investment; (D) was so depleted of its assets as to be 
forced to merge without another institution in order to continue active 
operations; or (E) was placed in substantial jeopardy of any of 
subdivisions (A) through (D) of this note.
    11. Cross Reference in Subsection (c)(3).--Subsection (c)(3) 
provides a cross reference to another guideline in Chapter Two (Offense 
Conduct) in cases in which the defendant is convicted of a general 
fraud statute, and the count of conviction establishes an offense more 
aptly covered by another guideline. Sometimes, offenses involving 
fraudulent statements are prosecuted under 18 U.S.C. 1001, or similarly 
general statute, although the offense is also covered by a more 
specific statute. Examples include false entries regarding currency 
transactions, for which Sec. 2S1.3 (Structuring Transactions to Evade 
Reporting Requirements) likely would be more apt, and false statements 
to a customs officer, for which Sec. 2T3.1 (Evading Import Duties or 
Restrictions (Smuggling); Receiving or Trafficking in Smuggled 
Property) likely would be more apt. In certain other cases, the mail or 
wire fraud statutes, or other relatively broad statutes, are used 
primarily as jurisdictional bases for the prosecution of other 
offenses.
    12. Continuing Financial Crimes Enterprise.--If the defendant is 
convicted under 18 U.S.C. 225 (relating to a continuing financial 
crimes enterprise), the offense level is that applicable to the 
underlying series of offenses comprising the `continuing financial 
crimes enterprise'.
    13. Partially Completed Offenses.--In the case of a partially 
completed offense (e.g., an offense involving a completed theft or 
fraud that is part of a larger, attempted theft or fraud), the offense 
level is to be determined in accordance with the provisions of 
Sec. 2X1.1 (Attempt, Solicitation, or Conspiracy) whether the 
conviction is for the substantive offense, the inchoate offense 
(attempt, solicitation, or conspiracy), or both. See Application Note 4 
of the Commentary to Sec. 2X1.1.
    14. Multiple Count Indictments.--Some fraudulent schemes may result 
in multiple-count indictments, depending on the technical elements of 
the offense. The cumulative loss produced by a common scheme or course 
of conduct should be used in determining the offense level, regardless 
of the number of counts of conviction. See Chapter Three, Part D 
(Multiple Counts).
    15. Departure Considerations.--
    (A) Upward Departure Considerations.--There may be cases in which 
the offense level determined under this guideline substantially 
understates the seriousness of the offense. In such cases, an upward 
departure may be warranted. The following is a non-exhaustive list of 
factors that the court may consider in determining whether an upward 
departure is warranted:
    (i) A primary objective of the offense was an aggravating, non-
monetary objective. For example, a primary objective of the offense was 
to inflict emotional harm.
    (ii) The offense caused or risked substantial non-monetary harm. 
For example, the offense caused physical harm, psychological harm, or 
severe emotional trauma, or resulted in a substantial invasion of a 
privacy interest (through, for example, the theft of personal 
information such as medical, educational, or financial records).
    (iii) The offense involved a substantial amount of interest of any 
kind, finance charges, late fees, penalties, amounts based on an 
agreed-upon return or rate of return, or other similar costs, not 
included in the determination of loss for purposes of subsection 
(b)(1).
    (iv) The offense created a risk of substantial loss beyond the loss 
determined for purposes of subsection (b)(1).
    (v) The offense endangered the solvency or financial security of 
one or more victims.
    (vi) In a case involving stolen information from a `protected 
computer', as defined in 18 U.S.C. 1030(e)(2), the defendant sought the 
stolen information to further a broader criminal purpose.
    (vii) In a case involving access devices or unlawfully produced or 
unlawfully obtained means of identification:
    (I) The offense caused substantial harm to the victim's reputation 
or credit record, or the victim suffered a substantial inconvenience 
related to repairing the victim's reputation or a damaged credit 
record.
    (II) An individual whose means of identification the defendant used 
to obtain unlawful means of identification is erroneously arrested or 
denied a job because an arrest record has been made in that 
individual's name.
    (III) The defendant produced or obtained numerous means of 
identification with respect to one individual and essentially assumed 
that individual's identity.
    (B) Downward Departure Consideration.--There may be cases in which 
the offense level determined under this guideline substantially 
overstates the seriousness of the offense. In such cases, a downward 
departure may be warranted.
    Background: This guideline covers offenses involving theft, stolen 
property, property damage or destruction, fraud, forgery, and 
counterfeiting (other than offenses involving altered or counterfeit 
bearer obligations of the United Sates).

[[Page 30533]]

It also covers offenses involving altering or removing motor vehicle 
identification numbers, trafficking in automobiles or automobile parts 
with altered or obliterated identification numbers, odometer laws and 
regulations, obstructing correspondence, the falsification of documents 
or records relating to a benefit plan covered by the Employment 
Retirement Income Security Act, and the failure to maintain, or 
falsification of, documents required by the Labor Management Reporting 
and Disclosure Act.
    Because federal fraud statutes often are broadly written, a single 
pattern of offense conduct usually can be prosecuted under several code 
sections, as a result of which the offense of conviction may be 
somewhat arbitrary. Furthermore, most fraud statutes cover a broad 
range of conduct with extreme variation in severity. The specific 
offense characteristics and cross references contained in this 
guideline are designed with these considerations in mind.
    The Commission has determined that, ordinarily, the sentences of 
defendants convicted of federal offenses should reflect the nature and 
magnitude of the loss caused or intended by their crimes. Accordingly, 
along with other relevant factors under the guidelines, loss serves as 
a measure of the seriousness of the offense and the defendant's 
relative culpability and is a principal factor in determining the 
offense level under this guideline.
    Theft from the person of another, such as pickpocketing or non-
forcible purse-snatching, receives an enhanced sentence because of the 
increase risk of physical injury. This guideline does not include an 
enhancement for thefts from the person by means of force or fear; such 
crimes are robberies and are covered under 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 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 financial transactions or 
financial accounts outside the United States in an effort to conceal 
illicit profits and criminal conduct involve a particularly high level 
of sophistication and complexity. These offenses are difficult to 
detect and require costly investigations and prosecutions. Diplomatic 
processes often must be used to secure testimony and evidence beyond 
the jurisdiction of United States courts. Consequently, a minimum 
offense level of level 12 is provided for these offenses.
    Subsection (b)(6) implements the instruction to the Commission in 
section 2 of Public Law 105-101.
    Subsection (b)(7)(D) implements, in a broader form, the directive 
in section 3 of the College Scholarship Fraud Prevention Act of 2000, 
Public law 106-420.
    Subsection (b)(8) implements, in a broader form, the instruction to 
the Commission in section 6(c)(2) of Public Law 105-184.
    Subsections (b)(9)(A) and (B) implement the instruction to the 
Commission in section 4 of the Wireless Telephone Protection Act, 
Public Law 105-172.
    Subsection (b)(9)(C) implements the directive to the commission in 
section 4 of the Identity Theft and Assumption Deterrence Act of 1998, 
Public Law 105-318. This subsection focuses principally on an 
aggravated form of identity theft known as ``affirmative identity 
theft'' or ``breeding'', in which a defendant uses another individual's 
name, social security number, or some other form of identification (the 
``means of identification'') to ``breed'' (i.e., produce or obtain) new 
or additional forms of identification. Because 18 U.S.C. 1028(d) 
broadly defines ``means of identification'', the new or additional 
forms of identification can include items such as a driver's license, a 
credit card, or a bank loan. This subsection provides a minimum offense 
level of level 12, in part because of the seriousness of the offense. 
The minimum offense level accounts for the fact that the means of 
identification that were ``bred'' (i.e., produced or obtained) often 
are within the defendant's exclusive control, making it difficult for 
the individual victim to detect that the victim's identity has been 
``stolen.'' Generally, the victim does not become aware of the offense 
until certain harms have already occurred (e.g., a damaged credit 
rating or an inability to obtain a loan). The minimum offense level 
also accounts for the non-monetary harm associated with these types of 
offenses, much of which may be difficult or impossible to quantify 
(e.g., harm to the individual's reputation or credit rating, 
inconvenience, and other difficulties resulting from the offense). The 
legislative history of the Identity Theft and Assumption Deterrence Act 
of 1998 indicates that Congress was especially concerned with providing 
increased punishment for this type of harm.
    Subsection (b)(11)(B) implements, in a broader form, the 
instruction to the Commission in section 110512 of Public Law 103-322.
    Subsection (b)(12)(A) implements, in a broader form, the 
instruction to the Commission in section 2507 of Public Law 101-647.
    Subsection (b)(12)(B) implements, in a broader form, the 
instruction to the Commission in section 961(m) of Public Law 101-73.
    Subsection (d) implements the instruction to the Commission in 
section 805(c) of Public Law 104-132.''.
    Chapter Two, Part B is amended by striking Sec. 2B1.3 and its 
accompanying commentary.
    Chapter Two is amended by striking the heading of Part F, 
Sec. 2F1.1 and its accompanying commentary, and Sec. 2F1.2 and its 
accompanying commentary, and by adding at the end of Part B the 
following:
``Sec. 2B1.4. Insider Trading
    (a) Base Offense Level: 8
    (b) Specific Offense Characteristic
    (1) If the gain resulting from the offense exceeded $5,000, 
increase by the number of levels from the table in Sec. 2B1.1 (Theft, 
Property Destruction, and Fraud) corresponding to that amount.

Commentary

Statutory Provisions: 15 U.S.C. 78j and 17 CFR 240.10b-5. For 
additional statutory provisions(s), see Appendix A (Statutory 
Index).

Application Note

    1. Application of Subsection of Sec. 3B1.3.--(Section 3B1.3 (Abuse 
of

[[Page 30534]]

Position of Trust or Use of Special Skill) should be applied only if 
the defendant occupied and abused a position of special trust. Examples 
might include a corporate president or an attorney who misused 
information regarding a planned but unannounced takeover attempt. It 
typically would not apply to an ordinary ``tippee''.
    Background: This guideline applies to certain violations of Rule 
10b-5 that are commonly referred to as `inside trading'. Insider 
trading is treated essentially as a sophisticated fraud. Because the 
victims and their losses are difficult if not impossible to identify, 
the gain, i.e., the total increase in value realized through trading in 
securities by the defendant and persons acting in concert with the 
defendant or to whom the defendant provide inside information, is 
employed instead of the victims' losses.
    Certain other offenses, e.g., 7 U.S.C. 13(e), that involve misuse 
of inside information for personal gain also appropriately may be 
covered by this guideline.''.
    The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is 
amended in Note 1 by striking subdivision (f); and by redesignating 
subdivisions (g) through (l) as subdivisions (f) through (k), 
respectively.
    The Commentary to Sec. 1B1.1 captioned ``Application Notes'' is 
amended in Note 4 in the second paragraph by striking the last 
sentence.
    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. 2B1.1 (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)''.
    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. 2B1.1 captioned ``Application Notes'' is 
amended by striking the text of Note 2 and inserting:
    `` `Loss' '' means the value of the property taken, damaged, or 
destroyed.''.
    The Commentary to Sec. 2B1.1 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``4. More than Minimal Planning.--`More than minimal planning' 
means more planning than is typical for commission of the offense in a 
simple form. `More than minimal planning' also exists if significant 
affirmative steps were taken to conceal the offense, other than conduct 
to which Sec. 3C1.1 (Obstructing or Impeding the Administration of 
Justice) applies. `More than minimal planning' shall be considered to 
be present in any case involving repeated acts over a period of time, 
unless it is clear that each instance was purely opportune. For 
example, checking the area to make sure no witnesses were present would 
not alone constitute more than minimal planning. By contrast, obtaining 
building plans to plot a particular course of entry, or disabling an 
alarm system, would constitute more than minimal planning.''.
    Section 2B2.3(b) is amended by striking subdivision (3) and 
inserting the following:
    ``(3) If (A) the offense involved invasion of a protected computer; 
and (B) the loss resulting from the invasion (i) exceeded $2,000 but 
did not exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, 
increase by the number of levels from the table in Sec. 2B1.1 (Theft, 
Property Destruction, and Fraud) corresponding to that amount.''.
    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 by striking the text of Note 3 and inserting:
    `` `Loss' means the value of the property taken, damaged, or 
destroyed''.
    Section 2B3.(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the greater of the amount obtained or demanded (A) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) 
exceeded $5,000, increase by the number of levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
that amount.''.
    Section 2B4.1(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the greater of the value of the bribe or the improper 
benefit to be conferred (A) exceeded $2,000 but did not exceed $5,000, 
increase by 1 level; or (B) exceeded $5,000, increase by the number of 
levels from the table in Sec. 2B1.1 (Theft, Property Destruction, and 
Fraud) corresponding to that amount.''.
    Section 2B5.1(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the face value of the counterfeit items (A) exceeded 
$2,000 but did not exceed $5,000, increase by 1 level; or (B) exceeded 
$5,000, increase by the number of levels from the table in Sec. 2B1.1 
(Theft, Property Destruction, and Fraud) corresponding to that 
amount.''.
    The Commentary to Sec. 2B5.1 captioned ``Application Notes'' is 
amended in Note 3 by inserting ``Inapplicability to Genuine but 
Fraudulently Altered Instruments.--'' before `` `Counterfeit,' ''; and 
by striking ``Sec. 2F1.1 (Fraud and Deceit)'' and inserting 
``Sec. 2B1.1 (Theft, Property Destruction, and Fraud)''.
    Section 2B5.3(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the infringement amount (A) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (B) exceeded $5,000, increase by 
the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    The Commentary to Sec. 2B5.3 captioned ``Background'' is amended in 
the first paragraph by striking ``guidelines'' and inserting 
``guideline''.
    Section 2B6.1(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the retail value of the motor vehicles or parts (A) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (B) 
exceeded $5,000, increase by the number of levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
that amount.''.
    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 in Note 2 by striking ``corresponding'' before ``number'' and 
inserting ``term `increase by the''; and by striking ``Sec. 2F1.1 
(Fraud and Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount''.
    Section 2C1.1(b) is amended by striking subdivision (2)(A) and 
inserting the following:
    ``(A) If the value of the payment, the benefit received or to be 
received in return for the payment, or the loss to the government from 
the offense, whichever is greatest (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.

[[Page 30535]]

    The Commentary to Sec. 2C1.1 captioned ``Application Notes'' is 
amended in Note 2 by striking `` `Loss' is discussed in the Commentary 
to Sec. 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft) and 
includes both actual and intended loss'' and inserting `` `Loss', for 
purposes of subsection (b)(2)(A), shall be determined in accordance 
with Application Note 2 of the Commentary to Sec. 2B1.1 (Theft, 
Property Destruction, and Fraud)''.
    Section 2C1.2(b) is amended by striking subdivision (2)(A) and 
inserting the following:
    ``(A) If the value of the gratuity (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    Section 2C1.6(b) is amended by striking subdivision (1) and 
inserting the following:
    ``(1) If the value of the gratuity (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    Section 2C1.7(b) is amended by striking subdivision (1)(A) and 
inserting the following:
    ``(A) If the loss to the government, or the value of anything 
obtained or to be obtained by a public official or others acting with a 
public official, whichever is greater (i) exceeded $2,000 but did not 
exceed $5,000, increase by 1 level; or (ii) exceeded $5,000, increase 
by the number of levels from the table in Sec. 2B1.1 (Theft, Property 
Destruction, and Fraud) corresponding to that amount.''.
    The Commentary to Sec. 2C1.7 captioned ``Application Notes'' is 
amended by striking the text of Note 3 and inserting:
    `` `Loss', for purposes of subsection (b)(1)(A), shall be 
determined in accordance with Application Note 2 of the Commentary to 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud).''.
    Section 2E5.1(b) is amended by striking subdivision (2) and 
inserting the following:
    ``(2) If the value of the prohibited payment or the value of the 
improper benefit to the payer, whichever is greater (A) exceeded $2,000 
but did not exceed $5,000, increase by 1 level; or (B) exceeded $5,000, 
increase by the number of levels from the table in 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 2H3.3(a) is amended by striking the text of subdivision (2) 
and inserting: ``if the conduct was theft or destruction of mail, apply 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud).''; and by striking 
subdivision (3).
    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 ``(Larceny, Embezzlement, and Other Forms 
of Theft)'' and inserting ``(Theft, Property Destruction, and Fraud)''.
    Section 2K1.4(a) is amended by striking the text of subdivision (3) 
and inserting: ``2 plus the offense level from Sec. 2B1.1 (Theft, 
Property Destruction, and Fraud).''; and by striking subdivision (4).
    Section 2K1.4(b)(2) is amended by striking ``(4)'' and inserting 
``(3)''.
    Section 2N2.1(b)(1) is amended by striking ``Sec. 2F1.1 (Fraud and 
Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property Destruction, and 
Fraud)''.
    The Commentary to Sec. 2N2.1 captioned ``Statutory Provisions'' is 
amended by inserting ``, 6810, 7734'' after ``150gg''.
    The Commentary to Sec. 2N2.1 captioned ``Application Notes'' is 
amended in Note 2 by inserting ``theft, property destruction, or'' 
after ``involved''; and by striking ``theft, bribery, revealing trade 
secrets, or destruction of property'' and inserting ``bribery''.
    The Commentary to Sec. 2N2.1 captioned ``Application Notes'' is 
amended in Note 4 by striking ``Sec. 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 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 2Q2.1(b) is amended by striking subdivision (3)(A) and 
inserting the following:
    ``(A) If the market value of the fish, wildlife, or plants (i) 
exceeded $2,000 but did not exceed $5,000, increase by 1 level; or (ii) 
exceeded $5,000, increase by the number of levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
that amount; 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)''.
    Section 2T1.1(b)(2) is amended by striking ``concealment'' and 
inserting ``means''; and by inserting after ``levels.'' the following: 
``If the resulting offense level is less than level 12, increase to 
level 12.''.
    Section 2T1.1(c)(1) is amended by adding at the end the following:
    ``(D) If the offense involved (i) conduct described in subdivisions 
(A), (B), or (C) of these Notes; and (ii) both individual and corporate 
tax returns, the tax loss is the aggregate tax loss from the offenses 
added together.''.
    Section 2T1.1(c)(2) is amended in the second paragraph by striking 
``Note'' and inserting ``Notes''; by inserting ``(A)'' before ``If''; 
and by adding at the end the following:
    ``(B) If the offense involved (i) conduct described in subdivision 
(A) of these Notes; and (ii) both individual and corporate tax returns, 
the tax loss is the aggregate tax loss from the offenses added 
together.''.
    The Commentary to Sec. 2T1.1 captioned ``Application Notes'' is 
amended in Note 1 in the first paragraph by inserting ``, except in 
willful evasion of payment cases under 26 U.S.C. 7201 and willful 
failure to pay cases under 26 U.S.C. 7203'' after ``penalties''.
    The Commentary to Sec. 2T1.1 captioned ``Application Notes'' is 
amended by striking the text of Note 4 and inserting the following:
    ``Sophisticated Means Enhancement.--For purposes of subsection 
(b)(2), `sophisticated means' means especially complex or especially 
intricate offense conduct pertaining to the execution or concealment of 
an offense. Conduct such as hiding assets or transactions, or both, 
through the use of fictitious entities, corporate shells, or offshore 
financial accounts ordinarily indicates sophisticated means.''.
    The Commentary to Sec. 2T1.1 captioned ``Application Notes'' is 
amended by

[[Page 30536]]

striking the text of Note 7 and inserting the following:
    ``If the offense involved both individual and corporate tax 
returns, the tax loss is the aggregate tax loss from the individual tax 
offense and the corporate tax offense added together. Accordingly, in a 
case in which a defendant fails to report income derived from a 
corporation on both the defendant's individual tax return and the 
defendant's corporate tax return, the tax loss is the sum of (A) the 
unreported or diverted amount multiplied by (i) 28%; or (ii) the tax 
rate for the individual tax offense, if sufficient information is 
available to make a more accurate assessment of that tax rate; and (B) 
the unreported or diverted amount multiplied by (i) 34%; or (ii) the 
tax rate for the corporate tax offense, if sufficient information is 
available to make a more accurate assessment of that tax rate. For 
example, the defendant, the sole owner of a Subchapter C corporation, 
fraudulently understates the corporation's income in the amount of 
$100,000 on the corporation's tax return, diverts the funds to the 
defendant's own use, and does not report these funds on the defendant's 
individual tax return. For purposes of this example, assume the use of 
34% with respect to the corporate tax loss and the use of 28% with 
respect to the individual tax loss. The tax loss attributable to the 
defendant's corporate tax return is $34,000 ($100,000 multiplied by 
34%). The tax loss attributable to the defendant's individual tax 
return is $28,000 ($100,000 multiplied by 28%). The tax loss for the 
offenses are added together to equal $62,000 ($34,000 + $28,000).''.
    Section 2T1.4(b)(2) is amended by striking ``concealment'' and 
inserting ``means''; and by inserting after ``levels.'' the following: 
``If the resulting offense level is less than level 12, increase to 
level 12.''.
    The Commentary to Sec. 2T1.4 captioned ``Application Notes'' is 
amended by striking the text of Note 3 and inserting the following:
    ``Sophisticated Means.--For purposes of subsection (b)(2), 
`sophisticated means' means especially complex or especially intricate 
offense conduct pertaining to the execution or concealment of an 
offense. Conduct such as hiding assets or transactions, or both, 
through the use of fictitious entities, corporate shells, or offshore 
financial accounts ordinarily indicates sophisticated means.''.
    Section 2T1.6(b)(1) is amended by striking ``(Larceny, 
Embezzlement, and Other Forms of Theft)'' and inserting ``(Theft, 
Property Destruction, and Fraud)''.
    Section 2T3.1(b)(1) is amended by striking ``concealment'' and 
inserting ``means''; and by inserting after ``levels.'' the following: 
``If the resulting offense level is less than level 12, increase to 
level 12.''.
    The Commentary to Sec. 2T3.1 captioned ``Application Notes'' is 
amended by striking the text of Note 3 and inserting the following:
    ``Sophisticated Means.--For purposes of subsection (b)(1), 
`sophisticated means' means especially complex or especially intricate 
offense conduct pertaining to the execution or concealment of an 
offense. Conduct such as hiding assets or transactions, or both, 
through the use of fictitious entities, corporate shells, or offshore 
financial accounts ordinarily indicates sophisticated means.''.
    Section 2T4.1 is amended by striking the text and inserting the 
following:

------------------------------------------------------------------------
                                                                Offense
               ``Tax loss (apply the greatest)                   level
------------------------------------------------------------------------
(A) $2,000 or less...........................................       6
(B) More than $2,000.........................................       8
(C) More than $5,000.........................................      10
(D) More than $12,500........................................      12
(E) More than $30,000........................................      14
(F) More than $80,000........................................      16
(G) More than $200,000.......................................      18
(H) More than $400,000.......................................      20
(I) More than $1,000,000.....................................      22
(J) More than $2,500,000.....................................      24
(K) More than $7,000,000.....................................      26
(L) More than $20,000,000....................................      28
(M) More than $50,000,000....................................      30
(N) More than $100,000,000...................................      32.''.
------------------------------------------------------------------------

    The Commentary to Sec. 3B1.3 captioned ``Application Notes'' is 
amended by adding after Note 3 the following:
    ``4. The following additional illustrations of an abuse of a 
position of trust pertain to theft or embezzlement from employee 
pension or welfare benefit plans or labor unions:
    (A) If the offense involved theft or embezzlement from an employee 
pension or welfare benefit plan and the defendant was a fiduciary of 
the benefit plan, an adjustment under this section for abuse of a 
position of trust will apply. ``Fiduciary of the benefit plan'' is 
defined in 29 U.S.C. 1002(21)(A) to mean a person who exercises any 
discretionary authority or control in respect to the management of such 
plan or exercises authority or control in respect to management or 
disposition of its assets, or who renders investment advice for a fee 
or other direct or indirect compensation with respect to any moneys or 
other property of such plan, or has any authority or responsibility to 
do so, or who has any discretionary authority or responsibility in the 
administration of such plan.
    (B) If the offense involved theft or embezzlement from a labor 
union and the defendant was a union officer or occupied a position of 
trust in the union (as set forth in 29 U.S.C. 501(a)), an adjustment 
under this section for an abuse of a position of trust will apply.''.
    Section 3D1.2(d) is amended in the second paragraph by striking 
``2B1.3'' and inserting ``2B1.4''; and by striking ``Secs. 2F1.1, 
2F1.2;''.
    The Commentary to Sec. 3D1.2 captioned ``Application Notes'' is 
amended in Note 6 in the third paragraph by striking ``, and would 
include, for example, larceny, embezzlement, forgery, and fraud''.
    Section 3D1.3(b) is amended by striking ``(e.g., theft and 
fraud)''.
    The Commentary to Sec. 3D1.3 captioned ``Application Notes'' is 
amended in Note 3 by striking ``(e.g., theft and fraud)''; and by 
striking the last sentence.
    The Commentary following Sec. 3D1.5 captioned ``Illustrations of 
the Operation of the Multiple-Count Rules'' is amended by striking 
Illustration 2; and by redesignating Illustrations 3 and 4 as 
Illustrations 2 and 3, respectively.
    The Commentary following Sec. 3D1.5 captioned ``Illustrations of 
the Operation of the Multiple-Count Rules'' is amended in Illustration 
3, as redesignated by this amendment, by striking ``Sec. 2F1.1 (Fraud 
and Deceit)'' and inserting ``Sec. 2B1.1 (Theft, Property Destruction, 
and Fraud)''; and by striking ``Sec. 2B4.1 or Sec. 2F1.1'' and 
inserting ``Sec. 2B1.1 or Sec. 2B4.1''.
    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 ``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. Sec. 6 by striking ``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 6b(A) by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 6b(B) by striking ``2F1.1'' 
and inserting ``2B1.1'';

[[Page 30537]]

    In the line referenced to 7 U.S.C. Sec. 6b(C) by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 6c by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 6h by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 6o by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 13(a)(2) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 13(a)(3) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 13(a)(4) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 13(d) by striking ``2F1.2'' 
and inserting ``2B1.4'';
    In the line referenced to 7 U.S.C. Sec. 13(f) by striking ``2F1.2'' 
and inserting ``2B1.4'';
    In the line referenced to 7 U.S.C. Sec. 23 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 270 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 2024(b) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 7 U.S.C. Sec. 2024(c) by striking 
``2F1.1'' and inserting ``2B1.1'';
    By inserting after the line referenced to 7 U.S.C. Sec. 6810 the 
following new line:
    ``7 U.S.C. Sec. 7734  2N2.1'';
    In the line referenced to 12 U.S.C. Sec. 631 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 50 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 77e by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 77q by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 77x by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 78j by striking ``2F1.1'' 
and inserting ``2B1.1''; and by striking ``2F1.2'' and inserting 
``2B1.4'';
    In the line referenced to 15 U.S.C. Sec. 78ff by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 80b-6 by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 158 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 645(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 645(b) by striking ``, 
2F1.1'';
    In the line referenced to 15 U.S.C. Sec. 645(c) by striking ``, 
2F1.1'';
    In the line referenced to 15 U.S.C. Sec. 714m(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 714m(b) by striking ``, 
2F1.1'';
    In the line referenced to 15 U.S.C. Sec. 1281 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 1644 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 1681q by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 15 U.S.C. Sec. 1693n(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    By inserting after the line referenced to 15 U.S.C. Sec. 2615 the 
following new line:
    ``15 U.S.C. Sec. 6821  2B1.1'';
    In the line referenced to 16 U.S.C. Sec. 114 by striking ``, 
2B1.3'';
    In the line referenced to 16 U.S.C. Sec. 117c by striking ``, 
2B1.3'';
    In the line referenced to 16 U.S.C. Sec. 123 by striking 
``2B1.3,'';
    In the line referenced to 16 U.S.C. Sec. 146 by striking 
``2B1.3,'';
    In the line referenced to 16 U.S.C. Sec. 413 by striking ``, 
2B1.3'';
    In the line referenced to 16 U.S.C. Sec. 433 by striking ``, 
2B1.3'';
    In the line referenced to 16 U.S.C. Sec. 831t(b) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 16 U.S.C. Sec. 831t(c) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 32(a),(b) by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 33 by striking 
``2B1.3''and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 37 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    By inserting after the line referenced to 18 U.S.C. Sec. 37 the 
following new line:
    ``18 U.S.C. Sec. 38  2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 43 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 112(a) by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 152 by striking ``2B4.1, 
2F1.1'' and inserting ``2B1.1, 2B4.1'';
    In the line referenced to 18 U.S.C. Sec. 153 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 155 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 225 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 285 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 286 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 287 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 288 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 289 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 332 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 335 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 470 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 471 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 472 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 473 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 474 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 474A by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 476 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 477 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 478 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 479 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 480 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 481 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 482 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 483 by striking ``2F1.1'' 
and inserting ``2B1.1'';

[[Page 30538]]

    In the line referenced to 18 U.S.C. Sec. 484 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 485 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 486 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 488 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 491 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 493 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 494 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 495 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 496 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 497 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 498 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 499 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 500 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 501 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 502 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 503 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 505 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 506 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 507 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 508 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 509 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 510 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 513 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 514 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 642 by inserting 
``2B1.1,'' before ``2B5.1'' and striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 656 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 657 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 659 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 663 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 665(a) by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 666(a)(1)(A) by striking 
``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 709 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 712 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 911 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 914 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 915 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 917 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 970(a) by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1001 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1002 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1003 by inserting 
``2B1.1,'' before ``2B5.1'' and striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1004 by inserting 
``2B1.1,'' before ``2B5.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1005 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1006 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1007 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1010 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1011 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1012 by inserting 
``2B1.1,'' before ``2C1.3''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1013 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1014 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1015 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1016 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1017 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1018 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1019 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1020 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1021 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1022 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1023 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1025 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1026 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1028 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1029 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1030(a)(4) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1030(a)(5) by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1030(a)(6) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1031 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1032 by inserting 
``2B1.1,'' before ``2B4.1''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1033 by striking 
``2F1.1,'';
    In the line referenced to 18 U.S.C. Sec. 1035 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1341 by inserting 
``2B1.1,'' before ``2C1.7''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1342 by inserting 
``2B1.1,'' before ``2C1.7''; and by striking ``, 2F1.1'';

[[Page 30539]]

    In the line referenced to 18 U.S.C. Sec. 1343 by inserting 
``2B1.1,'' before ``2C1.7''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1344 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1347 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1361 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1362 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1363 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1366 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1422 by inserting 
``2B1.1,'' before ``2C1.2''; and by striking ``, 2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1702 by striking 
``2B1.3,'';
    In the line referenced to 18 U.S.C. Sec. 1703 by striking 
``2B1.3,'';
    In the line referenced to 18 U.S.C. Sec. 1704 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1705 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1706 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1708 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 1712 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1716C by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1720 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1728 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1852 by striking ``, 
2B1.3'';
    In the line referenced to 18 U.S.C. Sec. 1853 by striking ``, 
2B1.3'';
    In the line referenced to 18 U.S.C. Sec. 1854 by striking ``, 
2B1.3'';
    In the line referenced to 18 U.S.C. Sec. 1857 by striking 
``2B1.3,'' and inserting ``2B1.1,'';
    In the line referenced to 18 U.S.C. Sec. 1861 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1902 by striking ``2F1.2'' 
and inserting ``2B1.4'';
    In the line referenced to 18 U.S.C. Sec. 1919 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1920 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1923 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 1992 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2071 by striking ``, 
2B1.3'';
    In the line referenced to 18 U.S.C. Sec. 2072 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2073 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2197 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2272 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2275 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2276 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2280 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2281 by striking ``2B1.3'' 
and inserting ``2B1.1'';
    In the line referenced to 18 U.S.C. Sec. 2314 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 2315 by striking ``, 
2F1.1'';
    In the line referenced to 18 U.S.C. Sec. 2332a by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 19 U.S.C. Sec. 1434 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 19 U.S.C. Sec. 1435 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 19 U.S.C. Sec. 1436 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 19 U.S.C. Sec. 1919 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 19 U.S.C. Sec. 2316 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 20 U.S.C. Sec. 1097(a) by striking ``, 
2F1.1'';
    In the line referenced to 20 U.S.C. Sec. 1097(b) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 20 U.S.C. Sec. 1097(d) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 21 U.S.C. Sec. 333(a)(2) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 22 U.S.C. Sec. 1980(g) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 22 U.S.C. Sec. 2197(n) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 22 U.S.C. Sec. 4221 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 25 U.S.C. Sec. 450d by striking ``, 
2F1.1'';
    In the line referenced to 26 U.S.C. Sec. 7208 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 26 U.S.C. Sec. 7214 by inserting 
``2B1.1,'' before ``2C1.1''; and by striking ``, 2F1.1'';
    In the line referenced to 26 U.S.C. Sec. 7232 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 29 U.S.C. Sec. 1141 by inserting 
``2B1.1,'' before ``2B3.2''; and by striking ``, 2F1.1'';
    In the line referenced to 38 U.S.C. Sec. 787 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 38 U.S.C. Sec. 3502 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 41 U.S.C. Sec. 423(e) by inserting 
``2B1.1,'' before ``2C1.1''; and by striking ``, 2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 408 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    By inserting after the line referenced to 42 U.S.C. Sec. 408 the 
following new line:
    ``42 U.S.C. Sec. 1011  2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1307(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1307(b) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1307a-7b by striking ``, 
2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 1383(d)(2) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1383a(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1383a(b) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1395nn(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1395nn(c) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1396h(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1713 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1760(g) by striking ``, 
2F1.1'';

[[Page 30540]]

    In the line referenced to 42 U.S.C. Sec. 1761(o)(1) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 1761(o)(2) by striking ``, 
2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 3220(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 3220(b) by striking ``, 
2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 3426 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 3791 by striking ``, 
2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 3792 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 42 U.S.C. Sec. 3795 by striking ``, 
2F1.1'';
    In the line referenced to 42 U.S.C. Sec. 5157(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 45 U.S.C. Sec. 359(a) by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 46 U.S.C. Sec. 1276 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 121 by striking ``2F1.1'' 
and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 11903 by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 11904 by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 14912 by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 16102 by striking 
``2F1.1'' and inserting ``2B1.1'';
    By inserting after the line referenced to 49 U.S.C. Sec. 16104 the 
following new line:
    ``49 U.S.C. Sec. 30170  2B1.1'';
    By inserting after the line referenced to 49 U.S.C. Sec. 46312 the 
following new line:
    ``49 U.S.C. Sec. 46317(a)  2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 60123(d) by striking 
``2B1.3'' and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 80116 by striking 
``2F1.1'' and inserting ``2B1.1'';
    In the line referenced to 49 U.S.C. Sec. 80501 by striking 
``2B1.3'' and inserting ``2B1.1''; and
    In the line referenced to 49 U.S.C. App. Sec. 1687(g) by striking 
``2B1.3'' and inserting ``2B1.1''.
    Reason for Amendment: This ``Economic Crime Package'' is a six-part 
amendment that is the result of Commission study of economic crime 
issues over a number of years. The major parts of the amendment are: 
(1) Consolidation of the theft, property destruction, and fraud 
guidelines; (2) a revised, common loss table for the consolidated 
guideline, and a similar table for tax offenses; (3) a revised, common 
definition of loss for the consolidated guideline; (4) revisions to 
guidelines that refer to the loss table in the consolidated guideline; 
(5) technical and conforming amendments; and (6) amendments regarding 
tax loss.

Consolidation of Theft, Property Destruction, and Fraud; 
Miscellaneous Revisions

    The first part of this amendment consolidates the guidelines for 
theft, Sec. 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft; 
Receiving, Transporting, Transferring, Transmitting, or Possessing 
Stolen Property), property destruction, Sec. 2B1.3 (Property Damage or 
Destruction), and fraud, Sec. 2F1.1 (Fraud and Deceit; Forgery; 
Offenses Involving Altered or Counterfeit Instruments Other than 
Counterfeit Bearer Obligations of the United States) into one 
guideline, Sec. 2B1.1 (Theft, Property Destruction, and Fraud). 
Consolidation will provide similar treatment for similar offenses for 
which pecuniary harm is a major factor in determining the offense level 
and, therefore, decrease unwarranted sentencing disparity that may be 
caused by undue complexity in the guidelines. Consolidation addresses 
concerns raised over several years by probation officers, judges, and 
practitioners about the difficulties of determining for particular 
cases, whether to apply Sec. 2B1.1 or Sec. 2F1.1 and the disparate 
sentencing outcomes that can result depending on that decision. 
Commentators have noted that inasmuch as theft and fraud offenses are 
conceptually similar, there is no strong reason to sentence them 
differently.
    The base offense level for the consolidated guideline is level 6. 
This maintains the base offense level for fraud offenses, but 
represents a two-level increase for theft and property destruction 
offenses, which prior to this amendment was level 4. The increase of 
two levels in the base offense levels for theft and property 
destruction offenses will have minimal impact for low-level theft 
offenses involving offenders in criminal history Category I or Category 
II. Commission analysis indicates that only a few defendants will move 
from Zone A (where probation without conditions of confinement is 
possible) to Zone B or Zone C, and those that are moved into a zone at 
higher offense levels in the Sentencing Table generally will have 
criminal history categories above Category I. As a result, the 
Commission decided against promulgating a two-level reduction for 
offenses involving loss amounts less than $2,000.
    The amendment deletes the two-level enhancement for more than 
minimal planning previously at Secs. 2B1.1(b)(4)(A) and 2F1.1(b)(2)(A). 
The two-fold reason for this change was to obviate the need for 
judicial fact-finding about this frequently occurring enhancement and 
to avoid the potential overlap between the more than minimal planning 
enhancement and the sophisticated means enhancement previously at 
Sec. 2F1.1(b)(6) and now, by this amendment, at Sec. 2B1.1(b)(8).
    The amendment also eliminates the alternative prong of the more 
than minimal planning enhancement, at Sec. 2F1.1(b)(2)(B) prior to this 
amendment, which provided a two-level increase if the offense involved 
more than one victim. The amendment replaces this enhancement with a 
specific offense characteristic for offenses that involved large 
numbers of victims. This change addresses three concerns. First, as a 
result of the consolidation, the more-than-one-victim enhancement, if 
retained, would apply in cases that, prior to this amendment, were not 
subject to such an enhancement. Second, a two-level increase in every 
case involving more than one victim is arguably inconsistent with the 
approach in subsection (b)(2) of Sec. 3A1.1 (Hate Crime Motivation or 
Vulnerable Victim), which provides a two-level increase if the offense 
involved a large number of vulnerable victims. Third, in practice, the 
more than minimal planning enhancement was so closely linked with this 
enhancement that the decision to eliminate the former argues strongly 
for also eliminating the latter.
    The amendment provides a two-level enhancement for offenses 
involving ten or more, but fewer than 50, victims, and a four-level 
increase for offenses involving 50 or more victims. This provision is 
designed to provide a measured increment that results in increased 
punishment for offenses involving larger numbers of victims. Its 
applicability to those cases in which victims, both individuals and 
organizations, sustain an actual loss under subsection (b)(1) or 
sustain bodily injury.
    A special rule is provided for application of the victim 
enhancement for offenses involving United States mail because of (i) 
the unique proof problems often attendant to such offenses, (ii) the 
frequently significant, but difficult to quantify, non-monetary

[[Page 30541]]

losses in such offenses, and (iii) the importance of maintaining the 
integrity of the United States mail.
    In addition, the amendment moves the mass-marketing enhancement 
into the new victim-related specific offense characteristic, as an 
alternative to the two-level adjustment for more than ten, but fewer 
than 50, victims. The provision is retained to remain responsive to the 
congressional directive that led to its original promulgation and 
reflects the Commission's expectation that most telemarketing cases, or 
similar mass-marketing cases, will have at least ten victims and, 
receive this enhancement. The mass-marketing alternative enhancement 
also will continue to apply in cases in which mass-marketing has been 
used to target a large number of persons, regardless of the number of 
persons who have sustained an actual loss or injury.
    In addition, the amendment provides that if a victim enhancement 
applies, the enhancement under Sec. 3A1.1(b)(2) for ``a large number of 
vulnerable victims'' does not also apply because the more serious 
conduct already would have resulted in a higher penalty level.
    In response to issues raised in a circuit conflict, the amendment 
revises the commentary related to subsection (b)(4)(B) of Sec. 2B1.1 to 
clarify the meaning of ``person in the business of receiving and 
selling stolen property.'' The amendment addresses an issue that has 
arisen in case law regarding what conduct receives a defendant for the 
4-level enhancement.
    In determining the meaning of ``in the business of'', some circuits 
apply what has been termed the ``fence test'', under which the court 
must consider (1) if the stolen property was bought and sold, and (2) 
to what extent the stolen property transactions encouraged others to 
commit property crimes. Other circuits have adopted the ``totality of 
the circumstances test'' that focuses on the regularity and 
sophistication of the defendant's operation. Compare United States v. 
Esquivel, 919 F.2d 957 (5th Cir. 1990), with United States v. St. Cyr, 
997 F.2d 698 (1st Cir. 1992). Under either test, courts consider the 
sophistication and regularity of the business as well as the control, 
volume, turnover, relationship with thieves, and connections with 
buyers. Although the factors considered by all of these circuits are 
similar, the approaches are different.
    After consideration, the Commission adopted the totality of 
circumstances approach because it is more objective and more properly 
targets the conduct of the individual who is actually in the business 
of fencing. See United States v. St. Cyr, supra.
    In addition, this amendment resolves a circuit conflict regarding 
the scope of the enhancement in the consolidated guideline for a 
misrepresentation that the defendant was acting on behalf of a 
charitable, educational, religious, or political organization, or a 
government agency. (Prior to this amendment, the enhancement was at 
subsection (b)(4)(A) of Sec. 2F1.1). The conflict concerns whether the 
misrepresentation enhancement applies only in cases in which the 
defendant does not have any authority to act on behalf of the covered 
organization or government agency or if it applies more broadly to 
cases in which the defendant has a legitimate connection to the covered 
organization or government agency, but misrepresents that the defendant 
is acting solely on behalf of that organization or agency. Compare, 
e.g., United States v. Marcum, 16 F.3d 599 (4th Cir. 1994) (enhancement 
appropriate even though defendant did not misrepresent his authority to 
act on behalf of the organization but rather only misrepresented that 
he was conducting an activity wholly on behalf of the organization), 
with United States v. Frazier, 53 F.3d 1105 (10th Cir. 1995) 
(application of the enhancement is limited to cases in which the 
defendant exploits the victim by claiming to have authority which in 
fact does not exist).
    The amendment follows the broader view of the Fourth Circuit. It 
provides for application of the enhancement, now, by this amendment, at 
Sec. 2B1.1(b)(7)(A), if the defendant falsely represented that the 
defendant was acting to obtain a benefit for a covered organization or 
agency when, in fact, the defendant intended to divert all or part of 
that benefit (for example, for the defendant's personal gain), 
regardless of whether the defendant actually was associated with the 
organization or government agency. The Commission determined that the 
enhancement was appropriate in such cases because the representation 
that the defendant was acting to obtain a benefit for the organization 
enables the defendant to commit the offense. In the case of an employee 
who also holds a position of trust, the amendment provides an 
application note instructing the court not to apply Sec. 3B1.3 (Abuse 
of Position of Trust or Use of Special Skill) if the same conduct forms 
the basis both for the enhancement and the adjustment in Sec. 3B1.3.
    The amendment implements the directive in section 3 of the College 
Scholarship Fraud Prevention Act of 2000, Public Law 106-420, by 
providing an additional alternative enhancement that applies if the 
offense involves a misrepresentation to a consumer in connection with 
obtaining, providing, or furnishing financial assistance for an 
institution of higher education. The enhancement targets the provider 
of the financial assistance or scholarship services, not the individual 
applicant for such assistance or scholarship, consistent with the 
intent of the legislation.
    This amendment makes two minor substantive changes to the 
enhancement for conscious or reckless risk of serious bodily injury, 
now, by this amendment, at subsection (b)(11)(A). First, it increases 
the minimum offense level from level 13 to level 14 to promote 
proportionality within this guideline. For example, within the theft 
and fraud guidelines prior to this amendment, there were other specific 
offense characteristics that had a higher floor offense level than the 
risk of bodily injury enhancement: (1) ``chop shops'' (level 14); (2) 
jeopardizing the solvency of a financial institution (level 24); and 
(3) personally receiving more than $1,000,000 from a financial 
institution (level 24). Second, it inserts ``death'' before the term 
``or serious bodily injury'' to clarify that the risk of the greater 
harm also is covered. Including risk of death also provides consistency 
with similar provisions in other parts of the Guidelines Manual, where 
risk of death is always included with risk of serious bodily injury.
    The amendment modifies the four-level increase and minimum offense 
level of level 24 for a defendant who personally derives more than 
$1,000,000 in gross receipts from an offense that affected a financial 
institution, now, by this amendment, at subsection (b)(12)(A). The 
amendment retains the minimum offense level but reduces the four-level 
enhancement to two levels because of the increased offense levels that 
will result from the loss table for the consolidated guideline. The 
two-level increase was retained because elimination of the enhancement 
entirely would not provide an appropriate punishment for those 
offenders involved with losses that are in the $1,000,000 to $2,500,000 
range of loss.
    The enhancement also was modified to address issues about what it 
means to ``affect'' a financial institution and how to apply the 
enhancement to a case in which there are more than one financial 
institution involved. Accordingly, the revised provision focuses on 
whether the defendant derived more than $1,000,000 in gross receipts 
from one or more financial institutions as a result of the offense.

[[Page 30542]]

    The amendment includes a new cross reference (subsection (c)(3)) 
that is more generally applicable and intended to apply whenever a 
broadly applicable fraud statute is used to reach conduct that is 
addressed more specifically in another Chapter Two guideline. Prior to 
this amendment, the fraud guideline contained an application note that 
instructed the user to move to another, more appropriate Chapter Two 
guideline, under specified circumstances. Although this note was not a 
cross reference, but rather a reminder of the principles enunciated in 
Sec. 1B1.2, it operated like a cross reference in the sense that it 
required use of a different guideline.
    This amendment also makes a minor revision (adding ``in a broader 
form'') to the background commentary regarding the implementation of 
the directive in section 2507 of Public Law 101-647, nullifying the 
effect of United States v. Tomasino, 206 F. 3d 739 (7th Cir. 2000).

Loss Tables

    The amendment provides revised loss tables for this consolidated 
guideline and for the tax offense guidelines. A principle feature of 
the new tables is that they expand the previously existing one-level 
increments into two-level increments, thus increasing the range of 
losses that correspond to an individual increment, compressing the 
table, and reducing fact-finding. The new loss tables also provide 
substantial increases in penalties for moderate and higher loss 
amounts, even, for fraud and theft offenses, notwithstanding the 
elimination of the two-level enhancement for more than minimal 
planning. These higher penalty levels respond to comments received from 
the Department of Justice, the Criminal Law Committee of the Judicial 
Conference, and others, that the offenses sentenced under the 
guidelines consolidated by this amendment under-punish individuals 
involved with moderate and high loss amounts, relative to penalty 
levels for offenses of similar seriousness sentenced under other 
guidelines.
    Some offenders accountable for relatively low dollar losses will 
receive slightly lower offense levels under the new loss table for the 
consolidated guideline because of (1) the elimination of the 
enhancement for more than minimal planning; (2) the change from one-
level to two-level increments for increasing loss amounts; (3) the 
selection of the breakpoints for the loss increments (including $5,000 
as the first loss amount that results in an increase); and (4) the 
slope chosen for the relationship between increases in loss amount and 
increases in offense level at the lower loss amounts. This amendment 
reflects a decision by the Commission that this effect on penalty 
levels at lower loss amounts is appropriate for several reasons: (1) 
The lower offense levels provide appropriate deterrence and punishment, 
generally, (2) at lower offense levels more defendants will be subject 
to the court's ability to fashion sentencing alternatives as 
appropriate (see, e.g., Sec. 5C1.1 (Imposition of a Term of 
Imprisonment)); and (3) these penalty levels may facilitate the payment 
of restitution.
    The loss table for the consolidated guideline provides the first of 
incremental increases for cases in which loss exceeds $5,000, rather 
than $2,000 provided previously in Sec. 2F1.1, or $100 provided 
previously in Sec. 2B1.1. The Commission believes this will reduce the 
fact-finding burden on courts for less serious offenses that are 
generally subject to greater sentencing flexibility because of the 
availability of alternatives to incarceration.
    The amendment also provides a revised loss table in Sec. 2T4.1 (Tax 
Table) for tax offenses that ensures significantly higher penalty 
levels for offenses involving moderate and high tax loss in a similar 
manner and degree as the loss table for the consolidated guideline. The 
new table is designed to reflect more appropriately the seriousness of 
tax offenses and to maintain proportionality with the offenses 
sentenced under the consolidated guideline.
    The tax loss table is similar to the loss table for the 
consolidated guideline, except it does not reduce generally any 
sentences for offenders involved with lower loss amounts. The tax table 
provides its first increment for loss at $2,000, rather than the $5,000 
threshold under the consolidated guideline (and the $1,700 threshold 
under the tax loss table prior to this amendment). These differences 
are intended to avoid unintended decreases that would occur otherwise. 
The increases in the new tax loss table for offenders involved with 
lower loss amounts are intended to maintain the long-standing treatment 
of tax offenses relative to theft and fraud offenses.

Definition of Loss

    This amendment provides a new definition of loss applicable to 
offenses previously sentenced under Secs. 2B1.1, 2B1.3, and 2F1.1. The 
revised definition makes clarifying and substantive revisions to the 
definitions of loss previously in the commentary to Secs. 2B1.1 and 
2F1.1, resolves a number of circuit conflicts, addresses a variety of 
application issues, and promotes consistency in application.
    Significantly, the new definition of loss retains the core rule 
that loss is the greater of actual and intended loss. The Commission 
concluded that, for cases in which intended loss is greater than actual 
loss, the intended loss is a more appropriate initial measure of the 
culpability of the offender. Conversely, in cases in which the actual 
loss is greater, that amount is a more appropriate measure of the 
seriousness of the offense.
    A definition is provided for intended loss that is consistent with 
the rule regarding the interaction of actual and intended loss.
    The amendment includes a resolution of the circuit conflict 
relating to the meaning and application of intended loss.
    The amendment resolves the conflict to provide that intended loss 
includes unlikely or impossible losses that are intended, because their 
inclusion better reflects the culpability of the offender. Compare 
United States v. Geevers, 226 F.3d 186 (3d Cir. 2000) (agreeing with 
the majority of circuits holding that impossibility is not in and of 
itself a limit on the intended loss for purposes of calculating 
sentences under the guidelines * * * impossibility does not require a 
sentencing court to lower its calculations of intended loss); and 
United States v. Coffman, 94 F.3d 330 (7th Cir. 1996) (rejecting the 
argument that a loss that cannot possibly occur cannot be intended); 
United States v. Koenig, 952 F.2d 267 (9th Cir. 1991) (holding that 
Sec. 2F1.1 only requires a calculation of intended loss and does not 
require a finding that the intentions were realistic); United States v. 
Klisser, 190 F. 3d 34, 36 (2d Cir. 1999) (same); United States v. 
Blitz, 151 F. 3d 1002, 1010 (9th Cir. 1998) (same); United States v. 
Studevent, 116 F. 3d 1559, 1563 (D.C. Cir. 1997) (same); United States 
v. Wai-Keung, 115 F. 3d 874, 877 (11th Cir. 1997) (same), with United 
States v. Galbraith, 20 F. 3d 1054, 1059 (10th Cir. 1993) (because 
intended loss only includes losses that are possible, in an undercover 
sting operation the intended loss is zero); and United States v. 
Watkins, 994 F.2d 1192, 1196 (6th Cir. 1993) (holding that a limitation 
on the broad reach of the intended loss rule is that the intended loss 
must have been possible to be considered relevant).
    Accordingly, concepts such as ``economic reality'' or ``amounts put 
at risk'' will no longer be considerations in the determination of 
intended loss. See United States v. Bonanno, 146 F.3d 502 (7th Cir. 
1998) (holding that the relevant inquiry is how much the scheme put at

[[Page 30543]]

risk); and United States v. Wells, 127 F. 3d 739 (8th Cir. 1997) 
(citing United States v. Morris, 18 F.3d 562 (8th Cir. 1994)) (holding 
that intended loss properly was measured by the possible loss the 
defendant intended, and did not hinge on actual or net loss).
    This amendment also resolves differing circuit interpretations of 
the standard of causation applicable for actual loss, an issue that was 
not addressed expressly in the prior definition of actual loss. Various 
circuits recognized three arguably inconsistent standards for loss 
causation. First, Sec. 1B1.3 (Relevant Conduct) provides that a 
defendant is responsible for all losses--foreseen or unforeseen--that 
result from the defendant's actions or that result from the foreseeable 
actions of co-participants. See United States v. Sarno, 73 F.3d 1470 
(9th Cir. 1995) (holding that ``[a] sentence calculated pursuant to the 
loss tables * * * is properly based on actual loss notwithstanding the 
fact that this loss may be greater than the intended, expected or 
foreseeable loss''), cert. denied, 518 U.S. 1020 (1996); and United 
States v. Lopreato, 83 F.3d 571 (2d Cir. 1996) (holding that in a 
bribery case, the defendant is responsible for all losses, foreseeable 
or not). A second view is premised on the fact that prior to this 
amendment commentary in Sec. 2F1.1 limited the loss amount to the value 
of the money, property, or services unlawfully taken. See United States 
v. Marlatt, 24 F.3d 1005 (7th Cir. 1994) (refusing to count foreseeable 
losses in loss figure because they did not represent the actual thing 
taken). A third view is that the commentary's explicit inclusion of 
consequential damages in the loss determination for contract 
procurement and product substitution cases implies that only non-
consequential or direct damages are included in other cases. See United 
States v. Thomas, 62 F.3d 1332 (11th Cir. 1995), cert. denied, 516 U.S. 
1166 (1996) (only non-consequential or direct damages are included in 
loss). See also United States v. Daddona, 34 F.3d 163 (3d Cir.), cert. 
denied, 513 U.S. 1002 (1994) (holding that merely incidental or 
consequential damages may not be counted in computing loss); and United 
States v. Newman, 6 F.3d 623 (9th Cir. 1993) (holding that loss caused 
by the defendant arsonist was only the value of the property destroyed 
by the fire, not costs of putting out the fire).
    The amendment defines ``actual loss'' as the ``reasonably 
foreseeable pecuniary harm'' that resulted from the offense. The 
amendment incorporates this causation standard that, at a minimum, 
requires factual causation (often called ``but for'' causation) and 
provides a rule for legal causation (i.e., guidance to courts regarding 
how to draw the line as to what losses should be included and excluded 
from the loss determination). Significantly, the application of this 
causation standard in the great variety of factual contexts in which it 
is expected to occur appropriately is entrusted to sentencing judges.
    ``Pecuniary harm'' is defined in a manner that excludes emotional 
distress, harm to reputation, and other non-economic harm, in order to 
foreclose the laborious effort sometimes necessary to quantify non-
economic harms (as in some tort proceedings, for example).
    ``Reasonably foreseeable pecuniary harm'' is defined to include 
pecuniary harms that the defendant knew or, under the circumstances, 
reasonably should have known, was a potential result of the offense. 
The Commission determined that this standard better ensures the 
inclusion in loss of those harms that reflect the seriousness of the 
offense and the culpability of the offender.
    The definition deletes the previous rule that, by negative 
implication, excludes consequential damages (except in specified 
cases), thus resolving a circuit conflict. Compare United States v. 
Izydore, 167 F.3d 213 (5th Cir. 1999) (the fact that the Commission 
prescribed consequential losses in only specific fraud cases, and not 
others, is strong evidence that consequential damages were omitted from 
the general loss definition by design rather than mistake), with United 
States v. Gottfried, 58 F.3d 648 (D.C. Cir. 1995) (holding that merely 
incidental or consequential damages may not be counted in computing 
loss). The Commission decided, however, not to use the term 
``consequential damages,'' or any similar civil law distinction between 
direct and indirect harms. Rather, the Commission determined that the 
reasonable foreseeability standard provides sufficient guidance to 
courts as to what type of harms are included in loss.
    In addition, this amendment preserves the special provisions 
addressing loss in protected computer offenses and the inclusion of 
consequential damages in product substitution and contract procurement 
offenses; however, these special cases are re-characterized as rules of 
construction to avoid any negative implications regarding other types 
of offenses.
    The amendment reflects a decision by the Commission that interest 
and similar costs shall be excluded from loss. However, the amendment 
provides that a departure may be warranted in the rare case in which 
exclusion of interest will under-punish the offender. Thus, the rule 
resolves the circuit split regarding whether ``bargained for'' interest 
may be included in loss. Compare United States v. Henderson, 19 F.3d 
917 (5th Cir.), cert. denied, 513 U.S. 877 (1994) (holding that 
interest should be included if the victim had a reasonable expectation 
of receiving interest from the transaction); United States v. Gilberg, 
75 F.3d 15 (1st Cir. 1996) (including in loss interest on fraudulently 
procured mortgage loan); and United States v. Sharma, 190 F.3d 220 (3d 
Cir. 1999) (holding that Application Note 8 of Sec. 2F1.1 requires the 
exclusion of ``opportunity cost'' interest, but did not intend to 
exclude bargained-for interest), with United States v. Hoyle, 33 F.3d 
415 (4th Cir. 1994), cert. denied, 513 U.S. 1133 (1995) (excluding 
interest from the determination of loss for sentencing purposes); and 
United States v. Guthrie, 144 F.3d 1006 (6th Cir. 1998) (holding that 
when the defendant concealed assets in a bankruptcy proceeding, the 
lower court's determination that loss to creditors included interest 
was erroneous). This rule is consistent with the general purpose of the 
loss determination to serve as a rough measurement of the seriousness 
of the offense and culpability of the offender and avoids unnecessary 
litigation regarding the amount of interest to be included.
    The loss definition also excludes from loss certain costs incurred 
by the government and victims in connection with criminal investigation 
and prosecution of the offense. Such losses are likely to occur in a 
broad range of cases, would present a fact-finding burden in those 
cases, and would not contribute to the ability of loss to perform its 
essential function.
    The loss definition also provides for the exclusion from loss of 
certain economic benefits transferred to victims, to be measured at the 
time of detection. This provision codifies the ``net loss'' approach 
that has developed in the case law, with some modifications made for 
policy reasons. This crediting approach is adopted because the 
seriousness of the offense and the culpability of a defendant is better 
determined by using a net approach. This approach recognizes that the 
offender who transfers something of value to the victim(s) generally is 
committing a less serious offense than an offender who does not.

[[Page 30544]]

    The amendment adopts ``time of detection'' as the most appropriate 
and least burdensome time for measuring the value of the transferred 
benefits. The Commission determined that valuing such benefits at the 
time of transfer would be especially problematic in cases in which the 
offender misrepresented the value of an item that is difficult to 
value. Although the time of detection standard will allow some 
fluctuation in value which may inure to the defendant's benefit or 
detriment, the Commission determined that, because the time of 
detection is closer in time to the sentencing and occurs at a point 
when the authorities are aware of the criminality, its use generally 
would make it easier to determine a more accurate value of the benefit.
    The definition of ``time of detection'' was adopted because there 
may be situations in which it is difficult to prove that the defendant 
knew the offense was detected even if it was already discovered. In 
addition, the words ``about to be detected'' are included to cover 
those situations in which the offense is not yet detected, but the 
defendant knows it is about to be detected. In such a case, it would be 
inappropriate to credit the defendant with benefits transferred to the 
victim after that defendant's awareness.
    The definition of ``loss'' also provides special rules for certain 
schemes. One rule includes in loss (and excludes from crediting) the 
benefits received by victims of persons fraudulently providing 
professional services. This rule reverses case law that has allowed 
crediting (or exclusion from loss) in cases in which services were 
provided by persons posing as attorneys and medical personnel. See 
United States v. Maurello, 76 F.3d 1304 (3d Cir. 1996) (calculating 
loss by subtracting the value of satisfactory legal services from 
amount of fees paid to a person posing as a lawyer); and United States 
v. Reddeck, 22 F.3d 1504 (10th Cir. 1994) (reducing loss by the value 
of education received from a sham university). The Commission 
determined that the seriousness of these offenses and the culpability 
of these offenders is best reflected by a loss determination that does 
not credit the value of the unlicensed benefits provided. In addition, 
this provision eliminates the additional burden that would be imposed 
on courts if required to determine the value of these benefits.
    Similarly, the definition of loss provides a special rule that 
includes in loss (and excludes from crediting) the value of items that 
were falsely represented as approved by a regulatory agency, for which 
regulatory approval was obtained by fraud, or for which regulatory 
approval was required but not obtained. The Commission determined that 
the seriousness of these offenses and the culpability of these 
offenders is best reflected by a loss determination that does not 
credit the value of these items. This decision reflects the importance 
of the regulatory approval process to public health, safety, and 
confidence.
    Regarding investment schemes, the amendment resolves a circuit 
conflict regarding whether and how to credit payments made to victims. 
Compare United States v. Mucciante, 21 F.3d 1228 (2nd Cir. 1994) (under 
the Guidelines, loss includes the value of all property taken, even 
though all or part of it was returned.); United States v. Deavours, 219 
F.3d 400 (5th Cir. 2000) (intended loss is not reduced by any sums 
returned to investors); and United States v. Loayza, 107 F.3d 257 (4th 
Cir.1997) (declining to follow the approach of net loss and holding 
defendants responsible for the value of all property taken, even though 
all or a part is returned), with United States v. Holiusa, 13 F.3d 1043 
(7th Cir.1994) (holding that only the net loss should be included in 
loss, thus allowing a credit for returned interest), and United States 
v. Orton, 73 F.3d 331 (11th Cir. 1996) (only payments made to losing 
investors should be credited, not payments to investors who made a 
profit).
    This amendment adopts the approach of the Eleventh Circuit that 
excludes the gain to any individual investor in the scheme from being 
used to offset the loss to other individual investors because any gain 
realized by an individual investor is designed to lure others into the 
fraudulent scheme. See United States v. Orton, supra.
    The definition retains the rule providing for the use of gain when 
loss cannot reasonably be determined. It clarifies that there must be a 
loss for gain to be considered. In doing so, the Commission resolved 
another circuit conflict. Compare United States v. Robie, 166 F.3d 444 
(2d Cir. 1999) (holding that use of defendant's gain for purposes of 
subsection (b)(1) is improper if there is no economic loss to the 
victim), with United States v. Haas, 171 F.3d 259 (5th Cir. 1999) 
(stating that ``if the loss is either incalculable or zero, the 
district court must determine the Sec. 2F1.1 sentence enhancement by 
estimating the gain to the defendant as a result of his fraud''). The 
Commission decided not to expand the use of gain to situations in which 
loss can be determined but the gain is greater than the loss because 
such instances should occur infrequently, the efficiency of the 
criminal operation as reflected in the amount of gain ordinarily should 
not determine the penalty level, and the traditional use of loss is 
generally adequate.
    The amendment revises the special rule on determining loss in cases 
involving diversion of government program benefits to resolve another 
circuit conflict. The revision is intended to clarify that loss in such 
cases only includes amounts that were diverted from intended recipients 
or uses, not benefits received or used by authorized persons. In other 
words, even if such benefits flowed through an unauthorized 
intermediary, as long as they went to intended recipients for intended 
uses, the amount of those benefits should not be included in loss. 
Compare United States v. Henry, 164 F.3d 1304 (10th Cir. 1999) (holding 
that loss includes the value of gross benefits paid, rather than the 
value of benefits improperly received or diverted in determining the 
loss), with United States v. Peters, 59 F.3d 732 (8th Cir. 1995) 
(determining that loss is the value of benefits diverted from intended 
recipients); and United States v. Barnes, 117 F.3d 328 (7th Cir. 1997) 
(holding that the sentence is calculated only on the value of the 
government benefits diverted from intended recipients or users). This 
net loss approach is more consistent with general rules for determining 
loss.

Referring Guidelines for Theft and Fraud

    The amendment includes revisions to the guidelines that, prior to 
this amendment, referred to the loss tables in Sec. 2B1.1 or 
Sec. 2F1.1. Pursuant to this amendment, these guidelines will refer to 
the loss tables in the consolidated guideline. Prior to this amendment, 
the referring guidelines used the tables in Secs. 2B1.1 and 2F1.1, 
which provided the first loss increment for losses in excess of $2,000. 
Because the consolidated loss table provides the first loss increment 
for losses in excess of $5,000, the referring guidelines are amended to 
provide a one-level increase in a case in which the loss is more than 
$2,000, but did not exceed $5,000. This increase is provided to avoid a 
one-level decrease that would otherwise occur for an offense involving 
losses of more than $2,000 but not more than $5,000.
    Two referring guidelines (Secs. 2B2.1 (Burglary of a Residence or a 
Structure Other than a Residence) and 2B3.1 (Robbery)) that use the 
definition of loss previously in Sec. 2B1.1 will retain that definition 
of loss rather than the new loss definition in the consolidated 
guideline. The existing definition has

[[Page 30545]]

not proven problematic for cases sentenced under these guidelines.

Technical and Conforming Amendments

    The amendment includes a number of technical and conforming 
amendments, most of which are necessitated by the consolidation and the 
deletion of the more than minimal planning enhancement.

Computing Tax Loss

    This amendment addresses several issues related to tax loss. It 
addresses a circuit conflict regarding how tax loss under 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) the 
defendant diverts that unreported corporate income for the defendant's 
personal use; and (3) the defendant fails to report, and to pay 
personal income taxes on, that diverted income. The amendment provides 
that the amount of the federal tax loss is the sum of the federal 
income tax due from the corporation and the amount of federal income 
tax due from the individual.
    The amendment thereby resolves a circuit conflict as to the 
methodology used to calculate tax loss in cases involving a corporate 
diversion. Two circuits use a sequential method to aggregate the tax 
loss. Under this method, the court determines the corporate federal 
income tax that would have been due, subtracts that amount from the 
amount diverted to the defendant personally, then determines the 
personal federal income tax that would have been due on the reduced 
diverted amount. See United States v. Harvey, 996 F.2d 919 (7th Cir. 
1993); and United States v. Martinez-Rios, 143 F.3d 662 (2d Cir. 1998). 
The Commission adopted the alternative method used in United States v. 
Cseplo, 42 F.3d 360 (6th Cir. 1994), in which the court determines the 
corporate federal income tax due on the diverted amount, and adds that 
amount to the personal federal income tax due on the total amount 
diverted. This clarifies the prior rule in Application Note 7 of 
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'' and reflects the Commission's conclusion that, in 
cases of corporate diversions, the method for computing total tax loss 
adopted by the Sixth Circuit in Cseplo more accurately reflects the 
seriousness of the total harm caused by these offenses than would be 
reflected by the alternative method.
    In evasion-of-payment tax cases, the Commission amended the 
definition of ``tax loss'' to include interest and penalties because, 
in contrast to evasion-of-assessment tax cases, such amounts 
appropriately are included in tax loss for such cases. This amendment 
limits the inclusion of interest or penalties to willful evasion of 
payment cases under 26 U.S.C. 7201 and willful failure to pay cases 
under 26 U.S.C. 7203. The nature of these cases is such that the 
interest and penalties often greatly exceed the assessed tax amount 
constituting the bulk of the harm associated with these offenses.
    This amendment also revises the sophisticated concealment 
enhancement in subsection (b)(2) of Secs. 2T1.1 (Tax Evasion) and 2T1.4 
(Aiding, Assisting, Procuring, Counseling, or Advising Tax Fraud) to 
conform to the sophisticated means enhancement in the consolidated 
guideline, including imposition of a minimum offense level of level 12. 
This revision is appropriate inasmuch as certain tax offenses can be 
committed using sophisticated means in addition to being concealed in a 
sophisticated manner. Indeed, tax offenses committed in a sophisticated 
manner are more serious offenses, and reflect a greater culpability on 
the part of the offender (just as a tax offense concealed in a 
sophisticated manner reflects greater culpability). Consequently, this 
revision will allow the enhancement to apply to a somewhat greater 
range of tax offenses than the previously existing sophisticated 
concealment enhancement.
    In addition, the amendment revises ``offshore bank accounts'' by 
substituting ``financial'' for ``bank'', to ensure that the enhancement 
applies to conduct involving similar kinds of accounts, consistent with 
language in Sec. 2S1.1 (Laundering of Monetary Instruments; Engaging in 
Monetary Transactions in Property Derived from Unlawful Activity). A 
similar revision is made in Sec. 2B1.1.
    6. Amendment: Section 2B5.1(b)(2) is amended by inserting ``(A)'' 
after ``defendant''; and by striking ``, and the offense level as 
determined above is less than 15, increase to level 15.'' and inserting 
``; or (B) controlled or possessed (i) counterfeiting paper similar to 
a distinctive paper; or (ii) a feature or device essentially identical 
to a distinctive counterfeit deterrent, increase by 2 levels.''.
    Section 2B5.1(b) is amended by redesignating subdivisions (3) and 
(4) as subdivisions (4) and (5), respectively; and by inserting after 
subdivision (2) the following:
    ``(3) If subsection (b)(2)(A) applies, and the offense level 
determined under that subsection is less than level 15, increase to 
level 15.''.
    The Commentary to Sec. 2B5.1 captioned ``Statutory Provisions'' is 
amended by inserting ``A'' after ``474''.
    The Commentary to Sec. 2B5.1 captioned ``Application Notes'' is 
amended by striking Note 1 and inserting the following:
    ``1. Definitions.--For purposes of this guideline:
    `Distinctive counterfeit deterrent' and `distinctive paper' have 
the meaning given those terms in 18 U.S.C. 474A(c)(2) and (1), 
respectively.
    `United States' means each of the fifty states, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, the Northern Mariana Islands, and American Samoa.''.
    The Commentary to Sec. 2B5.1 captioned ``Application Notes'' is 
amended in Note 2 by inserting ``Applicability to Counterfeit Bearer 
Obligations of the United States.--'' before ``This guideline''.
    The Commentary to Sec. 2B5.1 captioned ``Application Notes'' is 
amended by striking Note 4 and inserting the following:
    ``4. Inapplicability to Certain Obviously Counterfeit Items.--
Subsection (b)(2)(A) does not apply to persons who produce items that 
are so obviously counterfeit that they are unlikely to be accepted even 
if subjected to only minimal scrutiny.''.
    The Commentary to Sec. 2B5.1 captioned ``Background'' is amended by 
striking ``(b)(3)'' and inserting ``(b)(4)''.
    Reason for Amendment: The frequency of counterfeiting offenses has 
increased significantly since 1995 due to the increasing affordability 
and availability of personal computers and digital printers. This 
amendment addresses concerns raised by the Department of the Treasury 
and the United States Secret Service regarding both the operation of, 
and the penalties provided by, Sec. 2B5.1 (Offenses Involving 
Counterfeit Bearer Obligations of the United States). The amendment 
increases penalties for counterfeiting activity in two ways.
    First, the amendment adds a two-level enhancement for 
manufacturing, in addition to the minimum offense level of level 15 for 
manufacturing. This change will ensure some degree of additional 
punishment for all offenders who engage in manufacturing activity.
    Second, the amendment adds a two-level enhancement (which would 
apply

[[Page 30546]]

alternatively to the manufacturing enhancement) if the offense involved 
possessing or controlling (1) paper that is similar to a distinctive 
paper used by the United States for its currency, obligations, or 
securities; or (2) a feature or device that is essentially identical to 
a distinctive counterfeit deterrent used by the United States for its 
currency, obligations, or securities. This enhancement is justified 
because of the higher statutory maximum penalties under 18 U.S.C. 474A 
(i.e., a term of imprisonment of up to 25 years compared to 10, 15, and 
20 years for other counterfeiting offenses). In addition, use of paper 
similar to ``distinctive paper'' and use of features and devices 
essentially identical to ``distinctive counterfeit deterrents'' (both 
of which are defined in Sec. 2B5.1 consistently with the statute) make 
the counterfeit item more passable and the offense more sophisticated.
    In addition, the amendment deletes the language in the commentary 
of Sec. 2B5.1 that suggests that the manufacturing adjustment does not 
apply if the defendant ``merely photocopies''. That commentary was 
intended to make the manufacturing minimum offense level of level 15 
inapplicable to notes that are so obviously counterfeit that they are 
unlikely to be accepted. Particularly with the advent of digital 
technology, it cannot be said that photocopying necessarily produces a 
note so obviously counterfeit as to be impassible.
    7. Amendment: Section 2C1.3 is amended in the title by adding ``; 
Payment or Receipt of Unauthorized Compensation'' after ``Interest''.
    Section 2C1.3 is amended by adding after subsection (b) the 
following:
    `` (c) Cross Reference.
    (1) If the offense involved a bribe or gratuity, apply Sec. 2C1.1 
(Offering, Giving, Soliciting, or Receiving a Bribe; Extortion Under 
Color of Official Right) or Sec. 2C1.2 (Offering, Giving, Soliciting, 
or Receiving a Gratuity), as appropriate, if the resulting offense 
level is greater than the offense level determined above.''.
    The Commentary to Sec. 2C1.3 captioned ``Statutory Provisions'' is 
amended by inserting ``, 209, 1909'' after ``208''.
    The Commentary to Sec. 2C1.3 captioned ``Application Note'' is 
amended in Note 1 by inserting ``Abuse of Position of Trust.--'' before 
``Do not''.
    The Commentary to Sec. 2C1.3 is amended by striking the background.
    Chapter Two, Part C is amended by striking Sec. 2C1.4 and its 
accompanying commentary. Section 8C2.1(a) is amended by striking 
``2C1.4,''.
    Reason for Amendment: The amendment (1) consolidates Secs. 2C1.3 
(Conflict of Interest) and 2C1.4 (Payment or Receipt of Unauthorized 
Compensation) covering payments to obtain public office, to promote 
ease of application; and (2) adds a cross reference in Sec. 2B1.1 
(Theft, Property Destruction, and Fraud) to Sec. 2C1.1 (Offering, 
Giving, Soliciting, or Receiving a Bribe; Extortion Under Color of 
Official Right) and Sec. 2C1.2 (Offering, Giving, Soliciting, or 
Receiving a Gratuity) to account for aggravating conduct often 
occurring in offenses involving the unlawful supplementation of the 
salary of various federal officials and employees committed in 
violation of 18 U.S.C. 209.
    The amendment simplifies guideline operation by consolidating 
Secs. 2C1.3 and 2C1.4. Consolidation is appropriate because the 
gravamen of the offenses covered by Secs. 2C1.3 and 2C1.4 is similar: 
unauthorized receipt of a payment in respect to an official act. The 
cross reference to Sec. 2C1.1 or Sec. 2C1.2 was added by this amendment 
because the cases to which these guidelines apply usually involve a 
conflict of interest offense that is associated with a bribe or 
gratuity.
    8. Amendment: Section 2D1.1(b)(5) through (7), Notes 20 and 21 of 
the Commentary to Sec. 2D1.1 captioned ``Application Notes'', the ninth 
and tenth paragraphs of the Commentary to Sec. 2D1.1 captioned 
``Background'', and Sec. 2D1.10, effective December 16, 2001 (see USSC 
Guidelines Manual Supplement to the 2000 Supplement to Appendix C, 
Amendment 608), are repromulgated with the following changes:
    Section 2D1.1(b) is amended by striking subdivision (5); by 
redesignating subdivisions (6) and (7) as subdivisions (5) and (6), 
respectively; by redesignating subdivisions (5)(A) and (5)(B), as 
redesignated by this amendment, as subdivisions (5)(B) and (5)(C), 
respectively; and by inserting before subdivision (5)(B), as 
redesignated by this amendment, the following:
    ``(A) If the offense involved (i) an unlawful discharge, emission, 
or release into the environment of a hazardous or toxic substance; or 
(ii) the unlawful transportation, treatment, storage, or disposal of a 
hazardous waste, increase by 2 levels.''.
    Section 2D1.1(b)(5)(B), as redesignated by this amendment, is 
amended by striking ``subsection (b)(6)(B)'' and inserting 
``subdivision (C)''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended by striking Note 20 and inserting the following:
    ``20. Hazardous or Toxic Substances.''--Subsection (b)(5)(A) 
applies if the conduct for which the defendant is accountable under 
Sec. 1B1.3 (Relevant Conduct) involved any discharge, emission, 
release, transportation, treatment, storage, or disposal violation 
covered by the Resource Conservation and Recovery Act, 42 U.S.C. 
Sec. 6928(d); the Federal Water Pollution Control Act, 33 U.S.C. 
1319(c); the Comprehensive Environmental Response, Compensation, and 
Liability Act, 42 U.S.C. Sec. 9603(b); or 49 U.S.C. Sec. 5124 (relating 
to violations of laws and regulations enforced by the Department of 
Transportation with respect to the transportation of hazardous 
material). In some cases, the enhancement under subsection (b)(5)(A) 
may not account adequately for the seriousness of the environmental 
harm or other threat to public health or safety (including the health 
or safety of law enforcement and cleanup personnel). In such cases, an 
upward departure may be warranted. Additionally, in determining the 
amount of restitution under Sec. 5E1.1 (Restitution) and in fashioning 
appropriate conditions of probation and supervision under Secs. 5B1.3 
(Conditions of Probation) and 5D1.3 (Conditions of Supervised Release), 
respectively, any costs of environmental cleanup and harm to 
individuals or property shall be considered by the court in cases 
involving the manufacture of amphetamine or methamphetamine and should 
be considered by the court in cases involving the manufacture of a 
controlled substance other than amphetamine or methamphetamine. See 21 
U.S.C. 853(q) (mandatory restitution for cleanup costs relating to the 
manufacture of amphetamine and methamphetamine).''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 21(A) by striking ``(b)(6)'' and inserting ``(b)(5)(B) 
or (C)''; by striking ``may consider factors such as the following'' 
and inserting ``shall include consideration of the following factors''; 
by striking ``or'' after ``at the laboratory,'' and inserting ``and''; 
by striking ``or'' after ``disposed,'' and inserting ``and''; by 
striking ``or'' after ``the offense'' and inserting ``and''; by 
striking ``amphetamine or methamphetamine''; and by inserting ``whether 
the laboratory is located'' after ``e.g.,''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 21(B) by striking ``(b)(6)(B)'' and inserting 
``(b)(5)(C)''.

[[Page 30547]]

    The Commentary to Sec. 2D1.1 captioned ``Background'' is amended in 
the ninth paragraph by inserting ``(A)'' after ``(b)(5)''; and in the 
tenth paragraph by striking ``Subsection (b)(6) implements'' and 
inserting ``Subsections (b)(5)(B) and (C) implement, in a broader 
form,''; and by striking ``878'' and inserting ``310''.
    The Commentary to Sec. 2D1.10 captioned ``Application Note'' is 
amended in Note 1 by striking ``may consider factors such as the 
following'' and inserting ``shall include consideration of the 
following factors''; by striking ``or'' after ``at the laboratory,'' 
and inserting ``and''; by striking ``or'' after ``disposed,'' and 
inserting ``and''; by striking ``or'' after ``the offense'' and 
inserting ``and''; by striking ``amphetamine or methamphetamine''; and 
by inserting ``whether the laboratory is located'' after ``e.g.,''.
    The Commentary to Sec. 2D1.10 captioned ``Background'' is amended 
by striking ``878'' and inserting ``310''.
    Reason for Amendment: The Commission promulgated an emergency 
amendment addressing the directive in section 102 (the ``substantial 
risk directive'') of the Methamphetamine Anti-Proliferation Act of 
2000, Pub. L. 106-310 (the ``Act''), with an effective date of December 
16, 2000. (See USSC Guidelines Manual Supplement to the 2000 Supplement 
to Appendix C, Amendment 608.) This amendment repromulgates the 
emergency amendment, with modifications, as a permanent amendment.
    The substantial risk directive instructs the Commission to amend 
the federal sentencing guidelines with respect to any offense relating 
to the manufacture, attempt to manufacture, or conspiracy to 
manufacture amphetamine or methamphetamine in (1) the Controlled 
Substances Act, 21 U.S.C. 801-90; (2) the Controlled Substances Import 
and Export Act, 21 U.S.C. 951-71; or (3) the Maritime Drug Law 
Enforcement Act, 46 U.S.C. App. 1901-04.
    The Act requires the Commission, in carrying out the substantial 
risk directive, to provide the following enhancements--
    (A) if the offense created a substantial risk of harm to human life 
(other than a life described in subparagraph (B)) or the environment, 
increase the base offense level for the offense--
    (i) by not less than 3 offense levels above the applicable level in 
effect on the date of the enactment of this Act; or
    (ii) if the resulting base offense level after an increase under 
clause (i) would be less than level 27, to not less than level 27; or
    (B) if the offense created a substantial risk of harm to the life 
of a minor or incompetent, increase the base offense level for the 
offense--
    (i) by not less than 6 offense levels above the applicable level in 
effect on the date of the enactment of this Act; or
    (ii) if the resulting base offense level after an increase under 
clause (i) would be less than level 30, to not less than level 30.
    The emergency amendment provided enhancements in Secs. 2D1.1 
(Unlawful Manufacturing, Importing, Exporting, or Trafficking 
(Including Possession with Intent to Commit These Offenses); Attempt or 
Conspiracy) and 2D1.10 (Endangering Human Life While Illegally 
Manufacturing a Controlled Substance) that also apply in the case of an 
attempt or a conspiracy to manufacture amphetamine or methamphetamine. 
The amendment did not amend Sec. 2D1.11 (Unlawfully Distributing, 
Importing, Exporting or Possessing a Listed Chemical; Attempt or 
Conspiracy) or Sec. 2D1.12 (Unlawful Possession, Manufacture, 
Distribution, or Importation of Prohibited Flask or Equipment). 
Although offenses that involve the manufacture of amphetamine or 
methamphetamine also are referenced in Appendix A (Statutory Index) to 
Secs. 2D1.11 and 2D1.12, the cross references in these guidelines, 
which apply if the offense involved the manufacture of a controlled 
substance, will result in application of Sec. 2D1.1 and accordingly, 
the enhancements.
    The basic structure of the emergency amendment to Secs. 2D1.1 and 
2D1.10 tracked the structure of the substantial risk directive. 
Accordingly, in Sec. 2D1.1, the amendment provided a three-level 
increase and a minimum offense level of level 27 if the offense (1) 
involved the manufacture of amphetamine or methamphetamine; and (2) 
created a substantial risk of harm either to human life or the 
environment. For offenses that created a substantial risk of harm to 
the life of a minor or an incompetent, the amendment provided a six-
level increase and a minimum offense level of level 30.
    However, the structure of the emergency amendment to Sec. 2D1.10 
differed from the structure of the emergency amendment to 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 emergency amendment provided a three-level increase 
and a minimum offense level of level 27 if the offense involved the 
manufacture of amphetamine or methamphetamine without making 
application of the enhancement dependent upon whether the offense also 
involved a substantial risk of either harm to human life or the 
environment. Consideration of whether the offense involves a 
substantial risk of harm to human life also is unnecessary because 
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 
an offense under 21 U.S.C. 858. Therefore, the base offense level 
already takes into account the substantial risk of harm to human life. 
Consideration of whether the offense involved a substantial risk of 
harm to the environment was unnecessary because the directive 
predicated application of the enhancement on substantial risk of harm 
either to human life or to the environment, and the creation of a 
substantial risk of harm to human life necessarily is taken into 
account as an element of the offense.
    Neither the substantial risk directive nor any statutory provision 
defines ``substantial risk of harm.'' Based on an analysis of relevant 
case law that interpreted ``substantial risk of harm,'' the emergency 
amendment provided commentary setting forth factors that may be 
relevant in determining whether a particular offense created a 
substantial risk of harm. The definition of ``incompetent'' was modeled 
after several state statutes.
    This permanent amendment re-promulgates, with modifications, the 
emergency amendment regarding the substantial risk directive. This 
amendment differs from the emergency amendment in several respects:
    First, in Sec. 2D1.1, this amendment treats the existing specific 
offense characteristic in Sec. 2D1.1(b)(5), relating to a two-level 
enhancement for environmental violations occurring in the course of a 
drug trafficking offense, as an alternative to the three-level 
enhancement for substantial risk of harm to human life or the 
environment. This portion of the amendment is in response to an issue 
related to the substantial risk directive regarding how to implement it 
in a manner consistent with the earlier environmental hazard directive 
in section 303 of the Comprehensive Methamphetamine Control Act, Pub. 
L. 104-237. The emergency amendment made the enhancements cumulative. 
However, this permanent amendment makes the new guideline provision 
alternative with the pre-existing enhancement for environmental hazards 
in Sec. 2D1.1.
    Second, in Sec. 2D1.1, this amendment lists four factors that the 
court ``shall'', as opposed to ``may'', consider to determine whether 
subsection (b)(6)(A)

[[Page 30548]]

or (B) applies. Similarly, in Sec. 2D1.10, this amendment lists four 
factors the court ``shall'' consider to determine whether subsection 
(b)(1)(B) applies. The list of four factors was identified by the 
Commission to assist the courts in defining the meaning of 
``substantial risk of harm'' for offenses related to the production and 
trafficking of precursor chemicals and the manufacture of amphetamine 
and methamphetamine.
    Third, in Sec. 2D1.1, this amendment provides that the court (1) 
shall consider any costs of environmental cleanup and harm to 
individuals and property in cases involving the manufacture of 
amphetamine or methamphetamine in determining the amount of restitution 
under Sec. 5E1.1 (Restitution) and in fashioning appropriate conditions 
of probation and supervision under Secs. 5B1.3 (Conditions of 
Probation) and 5D1.3 (Conditions of Supervised Release), and (2) should 
consider such costs and harms in cases involving the manufacture of a 
controlled substance other than amphetamine or methamphetamine.
    The amendment also makes a minor technical change in the background 
commentary.
    9. Amendment: The subdivision captioned ``LSD, PCP, and Other 
Schedule I and II Hallucinogens (and their immediate precursors)*'' of 
the Drug Equivalency Tables of Note 10 of the Commentary to Sec. 2D1.1 
captioned ``Application Notes'', effective May 1, 2001 (see USSC 
Guidelines Manual Supplement to the 2000 Supplement to Appendix C 
Amendment 609), is repromulgated without change.
    Reason for Amendment: This amendment repromulgates (as a permanent 
amendment) without change the emergency amendment previously 
promulgated that addressed the directive in section 3664 of the Ecstasy 
Anti-Proliferation Act of 2000, Pub. L. 106-310 (the ``Act''). (See 
USSC Guidelines Manual Supplement to the 2000 Supplement to Appendix C, 
Amendment 609). That directive instructs the Commission to provide 
increased penalties for the manufacture, importation, exportation, or 
trafficking of ``Ecstasy''. The directive specifically requires the 
Commission to increase the base offense level for 3,4-
Methylenedioxymethamphetamine (MDMA), 3,4-Methylenedioxyamphetamine 
(MDA), 3,4-Methylenedioxy-N-ethylamphetamine (MDEA), 
Paramethoxymethamphetamine (PMA), and any other controlled substance 
that is marketed as ``Ecstasy'' and that has either a chemical 
structure similar to MDMA or an effect on the central nervous system 
substantially similar to or greater than MDMA.
    The amendment addresses the directive by amending the Drug 
Equivalency Tables in Sec. 2D1.1, Application Note 10, to increase 
substantially the marihuana equivalencies for the specified controlled 
substances, which has the effect of substantially increasing the 
penalties for offenses involving ``Ecstasy''. The new penalties for 
``Ecstasy'' trafficking provide penalties which, gram for gram, are 
more severe than those for powder cocaine. Under the Drug Equivalency 
Tables, one gram of powder cocaine has a marihuana equivalency of 200 
grams. This amendment sets the marihuana equivalency for one gram of 
``Ecstasy'' at 500 grams.
    There is a combination of reasons why the Commission has 
substantially increased the penalties in response to the congressional 
directive. Much evidence received by the Commission indicated that 
``Ecstasy'' (1) has powerful pharmacological effects; (2) has the 
capacity to cause lasting physical harms, including brain damage; and 
(3) is being abused by rapidly increasing numbers of teenagers and 
young adults. Indeed, the market for ``Ecstasy'' is overwhelmingly 
comprised of persons under the age of 25 years.
    The Commission considered whether the penalty levels for 
``Ecstasy'' should be set at the same levels as for heroin (one gram of 
heroin has a marihuana equivalency of 1000 grams) and decided that 
somewhat lesser penalties were appropriate for ``Ecstasy'' for a number 
of reasons: (1) The potential for addiction is greater with heroin; (2) 
heroin distribution often involves violence while, at this time, 
violence is not reported in ``Ecstasy'' markets; (3) because heroin is 
a narcotic and is often injected, the risk of death from overdose is 
much greater than for ``Ecstasy''; and (4) because heroin is often 
injected, there are more secondary health consequences, such as 
infections and the transmission of the human immunodeficiency virus 
(HIV) and hepatitis than for ``Ecstasy''.
    Finally, based on information regarding ``Ecstasy'' trafficking 
patterns, the penalty levels chosen are appropriate and sufficient to 
target serious and high-level traffickers and to provide appropriate 
punishment, deterrence, and incentives for cooperation. The penalty 
levels chosen for ``Ecstasy'' offenses provide five year sentences for 
serious traffickers (those whose relevant conduct involved 
approximately 800 pills) and ten year sentences for high-level 
traffickers (those whose relevant conduct involved approximately 8,000 
pills).
    10. Amendment: Section 2D1.1(b)(4) is amended by inserting 
``amphetamine or'' before ``methamphetamine'' each place it appears.
    The Commentary to Sec. 2D1.1 captioned ``Statutory Provisions'' is 
amended by inserting ``; 49 U.S.C. 46317(b)'' after ``960(a), (b)''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 19 by inserting ``amphetamine or'' before 
``methamphetamine''.
    Appendix A (Statutory Index), as amended by amendment 5, is further 
amended by inserting after the line referenced to 49 U.S.C. 46317(a) 
the following new line:
    ``49 U.S.C. 46317(b)  2D1.1''.
    The sixth entry, relating to Amphetamine and Amphetamine (actual), 
in each of subdivisions (1) through (14) of section 2D1.1(c), Note (B) 
of the ``*Notes to Drug Quantity Table'' in Sec. 2D1.1(c), Note 9 of 
the Commentary to Sec. 2D1.1 captioned ``Application Notes'', and the 
subdivision captioned ``Cocaine and Other Schedule I and II Stimulants 
(and their immediate precursors)*'' of the Drug Equivalency Tables in 
Note 10 of the Commentary to Sec. 2D1.1 captioned ``Application 
Notes'', effective May 1, 2001 (see USSC Guidelines Manual Supplement 
to the 2000 Supplement to Appendix C Supplement, Amendment 610), are 
repromulgated with the following change:
    The Commentary to 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 ``1 gm of Dextroamphetamine = 200 
gm of marihuana''.
    Reason for Amendment: This amendment repromulgates as a permanent 
amendment the emergency amendment previously promulgated to implement 
the directive in section 3611 of the Methamphetamine Anti-Proliferation 
Act of 2000, Pub. L. 106-310 (the ``Act''), which directs the 
Commission to provide increased guideline penalties for amphetamine 
offenses such that those penalties are comparable to the base offense 
level for methamphetamine offenses. The directive provided the 
Commission emergency amendment authority. (See USSC Guidelines Manual 
Supplement to the 2000 Supplement to Appendix C, Amendment 610.)
    This amendment revises Sec. 2D1.1 to include amphetamine in the 
Drug Quantity Table in Sec. 2D1.1 (Unlawful Manufacturing, Importing, 
Exporting, or

[[Page 30549]]

Trafficking (Including Possession with Intent to Commit These 
Offenses); Attempt or Conspiracy). This amendment also treats 
amphetamine and methamphetamine identically, at a 1:1 ratio (i.e., the 
same quantities of amphetamine and methamphetamine will result in the 
same base offense level) because of the similarities of the two 
substances. Specifically, amphetamine and methamphetamine (1) are 
chemically similar; (2) are produced by a similar method and are 
trafficked in a similar manner; (3) share similar methods of use; (4) 
affect the same parts of the brain; and (5) have similar intoxicating 
effects. The amendment also distinguishes between pure amphetamine 
(i.e., amphetamine (actual)) and amphetamine mixture in the same 
manner, and at the same quantities, as pure methamphetamine (i.e., 
methamphetamine (actual)) and methamphetamine mixture, respectively. 
The Commission determined that the 1:1 ratio is appropriate given the 
similarity of these two controlled substances.
    This amendment differs from the emergency amendment in that it also 
(1) amends Sec. 2D1.1(b)(4) to make the enhancement for the importation 
of methamphetamine applicable to amphetamine offenses as well, and 
makes a conforming change in the commentary to Sec. 2D1.1 in 
Application Note 19; (2) deletes as unnecessary the marihuana 
equivalency for dextroamphetamine in the Drug Equivalency Tables in 
Sec. 2D1.1; and (3) amends Appendix A (Statutory Index) to refer a new 
offense at 49 U.S.C. 46317(b), (prohibiting transportation of 
controlled substances by aircraft) to Sec. 2D1.1.
    11. Amendment: Section 2D1.1(c)(1) is amended by striking the 
period after ``Hashish Oil'' and inserting a semi-colon; and by adding 
at the end the following: ``30,000,000 units or more of Schedule I or 
II Depressants; 1,875,000 units or more of Flunitrazepam.''.
    Section 2D1.1(c)(2) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 10,000,000 but less than 30,000,000 units of 
Schedule I or II Depressants; At least 625,000 but less than 1,875,000 
units of Flunitrazepam.''.
    Section 2D1.1(c)(3) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 3,000,000 but less than 10,000,000 units of 
Schedule I or II Depressants; At least 187,500 but less than 625,000 
units of Flunitrazepam.''.
    Section 2D1.1(c)(4) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 1,000,000 but less than 3,000,000 units of 
Schedule I or II Depressants; At least 62,500 but less than 187,500 
units of Flunitrazepam.''.
    Section 2D1.1(c)(5) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 700,000 but less than 1,000,000 units of 
Schedule I or II Depressants; At least 43,750 but less than 62,500 
units of Flunitrazepam.''.
    Section 2D1.1(c)(6) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 400,000 but less than 700,000 units of 
Schedule I or II Depressants; At least 25,000 but less than 43,750 
units of Flunitrazepam.''.
    Section 2D1.1(c)(7) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 100,000 but less than 400,000 units of 
Schedule I or II Depressants; At least 6,250 but less than 25,000 units 
of Flunitrazepam.''.
    Section 2D1.1(c)(8) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 80,000 but less than 100,000 units of 
Schedule I or II Depressants; At least 5,000 but less than 6,250 units 
of Flunitrazepam.''.
    Section 2D1.1(c)(9) is amended by striking the period after 
``Hashish Oil'' and inserting a semi-colon; and by adding at the end 
the following: ``At least 60,000 but less than 80,000 units of Schedule 
I or II Depressants; At least 3,750 but less than 5,000 units of 
Flunitrazepam.''.
    Section 2D1.1(c)(10) is amended in the line referenced to Schedule 
I or II Depressants by striking ``40,000 or more'' and inserting ``At 
least 40,000 but less than 60,000''; and in the line referenced to 
Flunitrazepam, by striking ``2,500 or more'' and inserting ``At least 
2,500 but less than 3,750''.
    The Commentary to 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.''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 10 in the Drug Equivalency Tables in the subdivision 
captioned ``Schedule III Substances****'' by striking ``Schedule I or 
II depressants,'' after ``Schedule III Substances,''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'' is 
amended in Note 17 by striking ``(e.g., the maximum offense level in 
the Drug Quantity Table for flunitrazepam is level 20)''.
    Reason for Amendment: This amendment implements the Hillory J. 
Farias and Samantha Reid Date-Rape Drug Prohibition Act of 2000, Pub. 
L. 106-172 (the ``Act''), which provides the emergency scheduling of 
gamma hydroxybutyric acid (``GHB'') as a Schedule I controlled 
substance under the Controlled Substances Act when the drug is used 
illicitly. The Act also amended section 401(b)(1)(C) of the Controlled 
Substances Act, 21 U.S.C. 841(b)(1)(C), and section 1010(b)(3) of the 
Controlled Substances Import and Export Act, 21 U.S.C. 960(b)(3), to 
provide penalties of not more than 20 years' imprisonment for an 
offense that involves GHB.
    This amendment eliminates the maximum base offense level of level 
20 in the Drug Quantity Table of Sec. 2D1.1 (Unlawful Manufacturing, 
Importing, Exporting, or Trafficking (Including Possession with Intent 
to Commit These Offenses); Attempt or Conspiracy) for Schedule I and II 
depressants (including GHB). The same change is made with respect to 
flunitrazepam, which, for sentencing purposes, is tied to Schedule I 
and II depressants. The Commission determined that increased penalties 
for the more serious offenses involving Schedule I and II depressants 
are appropriate.
    Corresponding changes to the Drug Equivalency Tables in Sec. 2D1.1 
were made for both Flunitrazepam and Schedule I or II depressants by 
eliminating the maximum marihuana equivalency when offenses involving 
these controlled substances also involve

[[Page 30550]]

offenses for controlled substances in Schedules III, IV, or V.
    12. Amendment: Section 2D1.1(b)(6), as redesignated by amendment 8, 
is amended by inserting ``subsection (a) of'' after ``(1)-(5) of''; and 
by striking ``and the offense level determined above is level 26 or 
greater''.
    The Commentary to Sec. 2D1.1 captioned ``Application Notes'', as 
amended by amendments 8, 10, and 11, is further amended by striking 
Note 14; and by redesignating Notes 15 through 21 as Notes 14 through 
20, respectively.
    Section 5C1.2 is amended in the first paragraph by striking ``In'' 
and inserting ``(a) Except as provided in subsection (b), in''.
    Section 5C1.2 is amended by inserting after subsection (a), as so 
designated by this amendment, the following:
    ``(b) In the case of a defendant (1) who meets the criteria set 
forth in subsection (a); and (2) for whom the statutorily required 
minimum sentence is at least five years, the offense level applicable 
from Chapters Two (Offense Conduct) and Three (Adjustments) shall be 
not less than level 17.''.
    The Commentary to Sec. 5C1.2 captioned ``Application Notes'' is 
amended in Note 2 by striking ``subdivision'' and inserting 
``subsection (a)''.
    The Commentary to Sec. 5C1.2 captioned ``Application Notes'' is 
amended in Note 3 by striking ``subdivisions'' and inserting 
``subsection (a)''; and striking ``subdivision'' and inserting 
``subsection (a)''.
    The Commentary to Sec. 5C1.2 captioned ``Application Notes'' is 
amended in Notes 4 through 7 by striking ``subdivision'' each place it 
appears and inserting ``subsection (a)''.
    Reason for Amendment: This amendment expands the eligibility for 
the two-level reduction in subsection (b)(6) of Sec. 2D1.1 (Unlawful 
Manufacturing, Importing, Exporting, or Trafficking (Including 
Possession with Intent to Commit These Offenses); Attempt or 
Conspiracy) for persons who meet the criteria set forth in Sec. 5C1.2 
(Limitation on Applicability of Statutory Minimum Sentences in Certain 
Cases) to include defendants with an offense level less than level 26. 
The Commission determined that limiting the applicability of this 
reduction to defendants with an offense level of level 26 or greater is 
inconsistent with the general principles underlying this two-level 
reduction (and the related safety valve provision, see 18 U.S.C. 
3553(f)) to provide lesser punishment for first time, nonviolent 
offenders.
    This amendment also establishes in Sec. 5C1.2 a minimum offense 
level of level 17 for a defendant who meets the requirements set forth 
in Sec. 5C1.2, and for whom the statutorily required minimum sentence 
is at least five years, in order to comply more strictly with the 
directive to the Commission at section 80001(b) of the Violent Crime 
Control and Law Enforcement Act of 1994, Pub. L. 103-322.
    13. Amendment: The subdivision captioned ``List I Chemicals 
(relating to the manufacture of amphetamine or 
methamphetamine)*******'' in the Drug Equivalency Tables in Note 10 of 
the Commentary to Sec. 2D1.1 captioned ``Application Notes'' and 
Sec. 2D1.11, effective May 1, 2001 (see USSC Guidelines Manual 
Supplement to the 2000 Supplement to Appendix C, Amendment 611), are 
repromulgated with the following changes:
    Section 2D1.11 is amended in the heading to subsection (d)(1) by 
striking ``(d)(1)'' before ``Ephedrine,'' and inserting ``(d)''.
    Section 2D1.11 is amended in the heading to subsection (d)(2) by 
striking ``(d)(2)'' before ``Chemical'' and inserting ``(e)''.
    Section 2D1.11(e)(1), as redesignated by this amendment, is amended 
by striking the period after ``3, 4-Methylenedioxyphenyl-2-propanone'' 
and inserting a semicolon; and by adding at the end the following: 
``10,000 KG or more of Gamma-butyrolactone.''.
    Section 2D1.11(e)(2), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 3,000 KG but less than 10,000 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``376.2 G or more 
of Iodine.''.
    Section 2D1.11(e)(3), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 1,000 KG but less than 3,000 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 125.4 G 
but less than 376.2 G of Iodine.''.
    Section 2D1.11(e)(4), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 700 KG but less than 1,000 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 87.8 G 
but less than 125.4 G of Iodine.''.
    Section 2D1.11(e)(5), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 400 KG but less than 700 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 50.2 G 
but less than 87.8 G of Iodine.''.
    Section 2D1.11(e)(6), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 100 KG but less than 400 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 12.5 G 
but less than 50.2 G of Iodine.''.
    Section 2D1.11(e)(7), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 80 KG but less than 100 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 10 G but 
less than 12.5 G of Iodine. ``.
    Section 2D1.11(e)(8), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following: ``At least 60 KG but less than 80 KG of Gamma-
butyrolactone;''; and in the subdivision captioned ``List II 
Chemicals'' by striking the period after ``Toluene'' and inserting a 
semi-colon; and by adding at the end the following: ``At least 7.5 G 
but less than 10 G of Iodine.''.
    Section 2D1.11(e)(9), as redesignated by this amendment, is amended 
in the subdivision captioned ``List I Chemicals'' by adding at the end 
the following:
    ``At least 40 KG but less than 60 KG of Gamma-butyrolactone;''; and 
in the subdivision captioned ``List II Chemicals'' by striking the 
period after ``Toluene'' and inserting a semi-colon; and by adding at 
the end the following: ``At least 5 G but less than 7.5 G of Iodine.''.
    Section 2D1.11(e)(10), as redesignated by this amendment, is 
amended in the subdivision captioned ``List I Chemicals'' by adding at 
the end the following: ``Less than 40 KG of Gamma-butyrolactone;''; and 
in the subdivision

[[Page 30551]]

captioned ``List II Chemicals'' by striking the period after 
``Toluene'' and inserting a semi-colon; and by adding at the end the 
following: ``Less than 5 G of Iodine.''.
    Reason for Amendment: This amendment repromulgates, with additional 
changes, the emergency amendment previously promulgated in response to 
the three-part directive in section 3651 of the Methamphetamine Anti-
Proliferation Act of 2000, Pub. L. 106-310 (the ``Act''), regarding 
enhanced punishment for trafficking in List I chemicals. (See 
Guidelines Manual Supplement to the 2000 Supplement to Appendix C, 
Amendment 611). That section provided the Commission emergency 
amendment authority to implement the directive.
    This amendment provides a new chemical quantity table in 
Sec. 2D1.11 (Unlawfully Distributing, Importing, Exporting or 
Possessing a Listed Chemical; Attempt or Conspiracy) specifically for 
ephedrine, pseudoephedrine, and phenylpropanolamine (PPA). The table 
ties the base offense levels for these chemicals to the base offense 
levels for methamphetamine (actual) set forth in Sec. 2D1.1 (Unlawful 
Manufacturing, Importing, Exporting, or Trafficking (Including 
Possession with Intent to Commit These Offenses); Attempt or 
Conspiracy), assuming a 50 percent actual yield of the controlled 
substance from the chemicals. (Methamphetamine (actual) is used rather 
than methamphetamine mixture because ephedrine and pseudoephedrine 
produce methamphetamine (actual), and PPA produces amphetamine 
(actual)). This yield is based on information provided by the Drug 
Enforcement Administration (DEA) that the typical yield of these 
substances for clandestine laboratories is 50 to 75 percent.
    This new chemical quantity table has a maximum base offense level 
of level 38 (as opposed to a maximum base offense level of level 30 for 
all other precursor chemicals). Providing a maximum base offense level 
of level 38 complies with the directive to establish penalties for 
these precursors that ``correspond to the quantity of controlled 
substance that reasonably could have been manufactured using the 
quantity of ephedrine, phenylpropanolamine, or pseudoephedrine 
possessed or distributed.'' Additionally, this eliminates the six-level 
distinction that currently exists between precursor chemical offenses 
that involve intent to manufacture amphetamine or methamphetamine and 
such offenses that also involve an actual attempt to manufacture 
amphetamine or methamphetamine.
    This amendment eliminates the Ephedrine Equivalency Table in 
Sec. 2D1.11 and, in its place, provides a general rule for the court to 
determine the base offense level in cases involving multiple precursors 
(other than ephedrine, pseudoephedrine, or PPA) by using the quantity 
of the single chemical resulting in the greatest offense level. An 
upward departure is provided for cases in which the offense level does 
not adequately address the seriousness of the offense.
    However, this amendment provides an exception to that general rule 
for offenses that involve a combination of ephedrine, pseudoephedrine, 
or PPA because these chemicals often are used in the same manufacturing 
process. In a case that involves two or more of these chemicals, the 
base offense level will be determined using the total quantity of these 
chemicals involved. The purpose of this exception is twofold: (1) Any 
of the three primary precursors in the same table can be combined 
without difficulty; and (2) studies conducted by the DEA indicate that 
because the manufacturing process for amphetamine is essentially 
identical to the manufacturing process for methamphetamine, there are 
cases in which the different precursors are included in the same batch 
of drugs. If the chemical is PPA, amphetamine results; if the chemical 
is ephedrine or pseudoephedrine, methamphetamine results.
    The amendment also adds to the Drug Equivalency Tables in 
Sec. 2D1.1 a conversion table for these precursor chemicals, providing 
for a 50 percent conversion ratio. This is based on data from the DEA 
that the actual yield from ephedrine, pseudoephedrine, or PPA typically 
is in the range of 50 to 75 percent. The purpose of this part of the 
amendment is to achieve the same punishment level (as is achieved by 
the first part of this amendment) for an offense involving any of these 
precursor chemicals when such offense involved the manufacture of 
amphetamine or methamphetamine and, as a result, is sentenced under 
Sec. 2D1.1 pursuant to the cross reference in Sec. 2D1.11.
    This amendment also increases the base offense level for 
Benzaldehyde, Hydriodic Acid, Methylamine, Nitroethane, and 
Norpseudoephedrine by re-calibrating these levels to the appropriate 
quantity of methamphetamine (actual) that could be produced assuming a 
50 percent yield of chemical to drug and retaining a cap at level 30. 
Previously, these chemicals had been linked to methamphetamine 
(mixture) penalty levels. Based on a study conducted by the DEA, 
ephedrine and pseudoepehdrine are the primary precursors used to make 
methamphetamine in the United States. Phenylproponolamine is the 
primary precursor used to make amphetamine. Unlike the five additional 
List I chemicals, the chemical structures of ephedrine, 
pseudoephedrine, and PPA are so similar to the resulting drug (i.e., 
methamphetamine or amphetamine) that the manufacture of methamphetamine 
or amphetamine from ephedrine, pseudoephedrine, or PPA is a very simple 
one-step synthesis which anyone can perform using a variety of chemical 
reagents. The manufacture of methamphetamine or amphetamine from the 
five additional List I chemicals is a more complex process which 
requires a heightened level of expertise.
    This amendment adds to the emergency amendment in two ways. First, 
it amends the Chemical Quantity Table in Sec. 2D1.11 to include gamma-
butyrolactone (GBL), a precursor for gamma hydroxybutyric acid (GHB), 
as a List I chemical. This change is in response to the Hillory J. 
Farias and Samantha Reid Date Rape Prohibition Act of 2000, Pub. L. 
106-172, which added GBL to the list of List 1 chemicals in section 401 
(b)(1)(C) of the Controlled Substances Act, 21 U.S.C. 841(b)(1)(C). 
Offense levels for GBL were established in the same manner as other 
List I chemicals. The offense level for a specific quantity of GHB that 
can be produced from a given quantity of GBL, assuming a 50 percent 
yield, was determined using the Drug Quantity Table in Sec. 2D1.1. From 
this offense level, six levels were subtracted to reflect the fact that 
an attempt to manufacture is not a required element of these offenses 
and, therefore, they are less serious offenses than offenses covered by 
Sec. 2D1.1.
    Second, the amendment adds iodine to the Chemical Quantity Table in 
Sec. 2D1.1 in response to a recent classification of iodine as a List 
II chemical. Iodine is used to produce hydrogen iodide which, in the 
presence of water, becomes hydriodic acid, a List I chemical that is a 
reagent used in the production of amphetamine and methamphetamine. The 
penalties for iodine were established based upon its conversion to 
hydriodic acid.
    14. Amendment: Section 2D1.12 is amended in the title by inserting 
``Transportation, Exportation,'' after ``Distribution,''; and by 
striking ``or Equipment'' and inserting ``, Equipment, Chemical, 
Product, or Material''.

[[Page 30552]]

    Section 2D1.12(a)(1), (a)(2), and (b)(1) are amended by inserting 
``flask,'' after ``prohibited'' each place it appears; and by inserting 
``, chemical, product, or material'' after ``equipment'' each place it 
appears.
    The Commentary to 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 and inserting the following:
    ``If the offense involved the large-scale manufacture, 
distribution, transportation, exportation, or importation of prohibited 
flasks, equipment, chemicals, products, or material, an upward 
departure may be warranted.''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to 21 U.S.C. Sec. 863 the following:
    ``21 U.S.C. 864-2D1.12''.
    Reason for Amendment: This amendment addresses the new offense, in 
section 423 of the Controlled Substances Act, 21 U.S.C. 864, of 
stealing or transporting across state lines anhydrous ammonia knowing, 
intending, or having reasonable cause to believe that such anhydrous 
ammonia will be used to manufacture a controlled substance. This new 
offense, created by section 3653 of the Methamphetamine Anti-
Proliferation Act of 2000, Pub. L. 106-310, carries the statutory 
penalties contained in section 403(d) of the Controlled Substances Act, 
21 U.S.C. 843, i.e., not more than four years' imprisonment (or not 
more than eight years' imprisonment in the case of certain prior 
convictions), or not more than ten years' imprisonment (or not more 
than 20 years' imprisonment in the case of certain prior convictions) 
if the offense involved the manufacture of methamphetamine.
    The amendment references the new offense to 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 
that already are referenced to the guideline and have the same penalty 
structure, such as 21 U.S.C. 843(a)(6), which among other things, makes 
it unlawful to possess any chemical, product, or material that may be 
used to manufacture a controlled substance. In addition, this amendment 
expands the coverage of Application Note 1 to also apply to cases 
involving the transportation and exportation of prohibited chemicals, 
products, or material. Finally, the amendment makes minor, non-
substantive changes to the guideline in order to fully incorporate the 
new and existing offenses.
    15. Amendment: Sections 2G1.1, 2G2.1, 2H4.1, 2H4.2, and 5E1.1, and 
each line in Appendix A (Statutory Index) referenced to 18 U.S.C. 241, 
1589, 1590, 1591, or 1592, or to 29 U.S.C. 1851, effective May 1, 2001 
(see USSC Guidelines Manual Supplement to the 2000 Supplement to 
Appendix C, Amendment 612), are repromulgated with the following 
changes:
    Section 5E1.1(a)(1) is amended by inserting ``, or 21 U.S.C. 
853(q)'' after ``3663A''.
    The Commentary to Sec. 5E1.1 captioned ``Background'' is amended in 
the first paragraph by inserting ``, and 21 U.S.C. 853(q)'' after 
``3663A''.
    Reason for Amendment: This amendment repromulgates as a permanent 
amendment the previously promulgated emergency amendment on human 
trafficking. (See USSC Guidelines Manual Supplement to the 2000 
Supplement to Appendix C, Amendment 612.) The amendment implements the 
congressional directive in section 112(b) of the Victims of Trafficking 
and Violence Protection Act of 2000, Pub. L. 106-386 (the ``Act'').
    The directive requires the Commission to amend, if appropriate, the 
guidelines applicable to human trafficking (i.e., peonage, involuntary 
servitude, and forced labor) offenses. It also requires the Commission 
to ensure that the guidelines ``are sufficiently stringent to deter and 
adequately reflect the heinous nature of these offenses.'' In 
compliance with the directive, the amendment (1) creates a new 
guideline, Sec. 2H4.2 (Willful Violations of the Migrant and Seasonal 
Agricultural Worker Protection Act); (2) refers violations of four new 
statutes, 18 U.S.C. 1589 (Forced Labor), 1590 (Trafficking with Respect 
to Peonage, Involuntary Servitude or Forced Labor), 1591 (Sex 
Trafficking of Children by Force, Fraud or Coercion), and 1592 
(Unlawful Conduct with Respect to Documents in Furtherance of Peonage, 
Involuntary Servitude, or Forced Labor) to the appropriate guidelines; 
and (3) makes changes, consistent with the directive, which both 
enhance sentences and reflect changes to three existing statutes: 18 
U.S.C. 1581(a) (Peonage), 1583 (Enticement into Slavery) and 1584 (Sale 
into Involuntary Servitude).
    To address this multi-faceted directive, the amendment makes 
changes to several existing guidelines and creates a new guideline for 
criminal violations of the Migrant and Seasonal Agricultural Worker 
Protection Act. Although the directive instructs the Commission to 
amend the guidelines applicable to the Fair Labor Standards Act (29 
U.S.C. 201 et. seq.), a criminal violation of the Fair Labor Standards 
Act is only a Class B misdemeanor. See 29 U.S.C. 216. Thus, the 
guidelines are not applicable to those offenses.
    The amendment references the new offense at 18 U.S.C. 1591 to 
Sec. 2G1.1 (Promoting Prostitution or Prohibited Sexual Conduct). 
Section 1591 provides criminal penalties for a defendant who 
participates in the transporting or harboring of a person, or who 
benefits from participating in such a venture, with the knowledge that 
force, fraud, or coercion will be used to cause that person to engage 
in a commercial sex act or with knowledge that the person is not 18 
years old and will be forced to engage in a commercial sex act. Despite 
the statute's inclusion in a chapter of title 18 devoted mainly to 
peonage offenses, section 1591 offenses are more analogous to the 
offenses referenced to the prostitution guideline.
    Section 1591 cases alternatively have been referred in Appendix A 
(Statutory Index) to Sec. 2G2.1 (Sexually Exploiting a Minor by 
Production of Sexually Explicit Visual or Printed Material; Custodian 
Permitting Minor to Engage in Sexually Explicit Conduct; Advertisement 
for Minors to Engage in Production). This has been done in anticipation 
that some portion of section 1591 cases will involve forcing or 
coercing children to engage in commercial sex acts for the purpose of 
producing pornography. Such offenses, as recognized by the higher base 
offense level at Sec. 2G2.1, are more serious because they both involve 
specific harm to an individual victim and further an additional 
criminal purpose, namely, commercial pornography.
    The amendment maintains the view that 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 also is designed to cover offenses under three 
new statutes: 18 U.S.C. 1589, 1590, and 1592. Section 1589 provides 
criminal penalties for a defendant who provides or obtains the labor or 
services of another by the use of threats of serious harm or physical 
restraint against a person, or by a scheme or plan intended to make the 
person believe that physical restraint or serious harm would result 
from not performing the labor or services. This statute also applies to 
defendants who provide or obtain labor or services of another by 
abusing or threatening abuse

[[Page 30553]]

of the law or the legal process. See 18 U.S.C. 1589.
    Section 1590 provides criminal penalties for a defendant who 
harbors, transports, or is otherwise involved in obtaining, a person 
for labor or services. Section 1592 provides criminal penalties for a 
defendant who knowingly possesses, destroys, or removes an actual 
passport, other immigration document, or government identification 
document of another person in the course of a violation of Sec. 1581 
(peonage), Sec. 1583 (enticement into slavery), Sec. 1584 (sale into 
involuntary servitude), Sec. 1589 (forced labor), Sec. 1590 
(trafficking with respect to these offenses), Sec. 1591 (sex 
trafficking of children by force, fraud, or coercion), or Sec. 1594(a) 
(attempts to violate these offenses). Section 1592 also provides 
criminal penalties for 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 that 
traditionally have been sentenced under Sec. 2H4.1.
    The amendment provides an alternative, less punitive base offense 
level of level 18 for those who violate 18 U.S.C. 1592, an offense 
which limits participation in peonage cases to the destruction or 
wrongful confiscation of a passport or other immigration document. This 
alternative, lower base level reflects the lower statutory maximum 
sentence for section 1592 offenses (i.e., 5 years' imprisonment).
    Section 2H4.1(b)(2) has been expanded to provide a four-level 
increase if a dangerous weapon was used and a two-level increase if a 
dangerous weapon was brandished or its use was threatened. Prior to 
this amendment, only actual use of a dangerous weapon was covered. This 
change reflects the directive to consider an enhancement for the use or 
threatened use of a dangerous weapon. The commentary to Sec. 2H4.1 is 
amended to clarify that the threatened use of a dangerous weapon 
applies regardless of whether a dangerous weapon was actually present.
    The amendment also creates a new guideline, Sec. 2H4.2 (Willful 
Violations of the Migrant and Seasonal Agricultural Worker Protection 
Act), in response to the directive to amend the guidelines applicable 
to such offenses. These offenses, which have a statutory maximum 
sentence of one year imprisonment for first offenses and three years' 
imprisonment for subsequent offenses, were not, prior to this 
amendment, referred to any specific guideline. The amendment provides a 
base offense level of level 6 in recognition of the low statutory 
maximum sentences set for these cases by Congress. Further, these 
offenses typically involve violations of regulatory provisions. Setting 
the base offense level at level 6 provides consistency with guidelines 
for other regulatory offenses. See, e.g., Secs. 2N2.1 (Violations of 
Statutes and Regulations Dealing With Any Food, Drug, Biological 
Product, Device, Cosmetic, or Agricultural Product) and 2N3.1 (Odometer 
Laws and Regulations). Subsections (b)(1), an enhancement for bodily 
injury, and (b)(2), an enhancement applicable to defendants who commit 
the instant offense after previously sustaining a civil penalty for 
similar misconduct, have been established to respond to the directive 
that the Commission consider sentencing enhancement for this aggravated 
conduct. This provision addresses the Department of Justice's and the 
Department of Labor's concern regarding the need for enhanced penalties 
in cases involving prior administrative and civil adjudications.
    This amendment also addresses that portion of section 112 of the 
Act that amends chapter 77 of title 18, United States Code, to provide 
mandatory restitution for peonage and involuntary servitude offenses. 
The amendment amends Sec. 5E1.1 (Restitution) to include a reference to 
18 U.S.C. 1593 in the guideline provision regarding mandatory 
restitution.
    By enactment of various sentencing enhancements and encouraged 
upward departures for areas of concern identified by Congress, the 
Commission has provided for more severe sentences for perpetrators of 
human trafficking offenses in keeping with the conclusion that the 
offenses covered by this amendment are both heinous in nature and being 
committed with increasing frequency.
    In addition, to repromulgating the emergency amendment, this 
amendment responds to section 3613 of the Methamphetamine Anti-
Proliferation Act of 2000, Pub. L. 106-310, that amends 21 U.S.C. 
853(q) to provide mandatory restitution for offenses involving the 
manufacture of methamphetamine. Accordingly, the amendment amends 
Sec. 5E1.1 (Restitution) to include a reference to 21 U.S.C. 853(q) in 
the guideline provision regarding mandatory restitution.
    16. Amendment: Section 2H3.1 is amended in the title by striking 
``or'' and inserting a semicolon; and by inserting ``; Disclosure of 
Tax Return Information'' after ``Eavesdropping''.
    Section 2H3.1 is amended by striking subsection (a) and inserting 
the following:
    ``(a) Base Offense Level (Apply the greater):
    (1) 9; or
    (2) 6, if the defendant was convicted of 26 U.S.C. 7213A or 26 
U.S.C. 7216.''.
    Section 2H3.1(b)(1) is amended by striking ``conduct'' and 
inserting ``offense''.
    Section 2H3.1(c)(1) is amended by striking ``conduct'' and 
inserting ``offense''; and by striking ``that offense'' and inserting 
``that other offense''.
    The Commentary to Sec. 2H3.1 captioned ``Statutory Provisions'' is 
amended by inserting ``26 U.S.C. 7213(a)(1)-(3), (a)(5), (d), 7213A, 
7216;'' after ``2511;''.
    The Commentary to Sec. 2H3.1 captioned ``Application Note'' is 
amended by striking ``Note'' and inserting ``Notes''; by redesignating 
Note 1 as Note 2; and by inserting before Note 2, as redesignated by 
this amendment, the following:
    ``1. Definitions.--For purposes of this guideline, `tax return' and 
`tax return information' have the meaning given the terms `return' and 
`return information' in 26 U.S.C. 6103(b)(1) and (2), respectively.''.
    The Commentary to Sec. 2H3.1 captioned ``Application Notes'' as re-
captioned by this amendment, is amended in Note 2, as redesignated by 
this amendment, by inserting ``Satellite Cable Transmissions.--'' 
before ``If the''.
    The Commentary to Sec. 2H3.1 captioned ``Background'' is amended by 
adding at the end the following additional paragraph:
    ``This section also refers to conduct relating to the disclosure 
and inspection of tax returns and tax return information, which is 
proscribed by 26 U.S.C. 7213(a)(1)-(3), (5), (d), 7213A, and 7216. 
These statutes provide for a maximum term of imprisonment of five years 
for most types of disclosure of tax return information, but provide a 
maximum term of imprisonment of one year for violations of 26 U.S.C. 
7213A and 7216.''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to 26 U.S.C. 7212(b) the following new lines:

``26 U.S.C. Sec. 7213(a)(1) 2H3.1
26 U.S.C. Sec. 7213(a)(2) 2H3.1
26 U.S.C. Sec. 7213(a)(3) 2H3.1
26 U.S.C. Sec. 7213(a)(5) 2H3.1
26 U.S.C. Sec. 7213(d) 2H3.1
26 U.S.C. Sec. 7213A 2H3.1'';

    And by inserting after the line referenced to 26 U.S.C. Sec. 7215 
the following new line:

[[Page 30554]]

    ``26 U.S.C. Sec. 7216 2H3.1''.
    Reason for Amendment: This amendment responds to the Internal 
Revenue Service Restructuring and Reform Act of 1998, Public Law 105-
206 (``the Act''). The Act created new tax offenses pertaining to the 
unlawful disclosure of tax-related information contained on computer 
software and to unlawful requests for tax audits. In addition, the 
Taxpayer Browsing Protection Act of 1997, Public Law 105-35, created 
another tax offense pertaining to the unlawful inspection of tax 
information.
    Specifically, Public Law 105-35 expanded 26 U.S.C. 7213 to prohibit 
federal and state employees and certain other persons from disclosing 
tax-related computer software. Public Law 105-35 also created an 
offense at 26 U.S.C. 7213A making it unlawful for federal and state 
employees and certain other persons to inspect tax return information 
in any way other than that authorized under the Internal Revenue Code.
    This is a two-part amendment. First, this amendment updates 
Appendix A (Statutory Index) by referring most of these offenses to 
Sec. 2H3.1 (Interception of Communications and Eavesdropping). Prior to 
this amendment, no guideline provision or statutory reference was 
expressly promulgated to address tax offenses that implicated privacy 
interests. Under subsection (a) of Sec. 1B1.2 (Applicable Guidelines) 
and under Sec. 2X5.1 (Other Offenses), courts are required to use the 
most analogous offense guideline from Chapter Two (Offense Conduct) in 
each pending case brought under a statute having no reference in the 
guidelines' statutory index.
    In general, the guideline most analogous for these offenses is 
Sec. 2H3.1. Section 2H3.1 concerns offenses against privacy and, in 
large measure, these tax-related offenses are devoted to protecting 
taxpayer privacy interests. Section 2H3.1 also contains a cross 
reference to ``another offense'' if a greater offense level will 
result.
    Second, this amendment adds a three-level decrease in the base 
offense level under Sec. 2H3.1 for the least serious types of offense 
behavior, in which there was no intent to harm or obtain pecuniary 
gain. The base offense level for Sec. 2H3.1 is level 9 with a range of 
4 to 10 months (in criminal history Category I). The Commission 
determined that a base offense level of level 9 is too severe for the 
misdemeanor offenses contained in 26 U.S.C. Secs. 7213A (Unauthorized 
Inspection) and 7216 (Unauthorized Disclosure), and the three-level 
decrease addresses this concern.
    17. Amendment: Section 2K1.3(a) is amended by striking the text of 
subdivision (3) and inserting the following:
    ``16, if the defendant (A) was a prohibited person at the time the 
defendant committed the instant offense; or (B) knowingly distributed 
explosive materials to a prohibited person; or''.
    The Commentary to Sec. 2K1.3 captioned ``Statutory Provisions'' is 
amended by inserting ``(l)-(o), (p)(2),'' after ``(i),''.
    The Commentary to Sec. 2K1.3 captioned ``Application Notes'' is 
amended by striking the text of Note 3 and inserting the following:
    ``For purposes of subsection (a)(3), `prohibited person' means any 
person described in 18 U.S.C. 842(i).''.
    Section 2K2.1(a)(4)(B) is amended by striking ``is'' after ``(i)'' 
and inserting ``was''; and by inserting ``at the time the defendant 
committed the instant offense'' after ``prohibited person''.
    Section 2K2.1(a)(6) is amended by striking ``is'' after ``(A)'' and 
inserting ``was''; and by inserting ``at the time the defendant 
committed the instant offense'' after ``prohibited person''.
    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended by striking the text of Note 6 and inserting the following:
    ``For purposes of subsections (a)(4)(B) and (a)(6), `prohibited 
person' means any person described in 18 U.S.C. 922(g) or 922(n).''.
    Reason for Amendment: This amendment makes two revisions regarding 
the definition of ``prohibited person'' in subsection (a)(3) of 
Sec. 2K1.3 (Unlawful Receipt, Possession, or Transportation of 
Explosive Materials; Prohibited Transactions Involving Explosive 
Materials) and subsections (a)(4)(B) and (a)(6) of Sec. 2K2.1 (Unlawful 
Receipt, Possession, or Transportation of Firearms or Ammunition; 
Prohibited Transactions Involving Firearms or Ammunition). First, the 
amendment adopts the definitions of prohibited person found in specific 
statutes for explosive and firearm offenses. (There is no uniform 
statutory definition of prohibited person.) The relevant statutory 
provision for Sec. 2K1.3 is 18 U.S.C. Sec. 842(i), and the relevant 
statutory provisions for Sec. 2K2.1 are 18 U.S.C. 922(g) and (n).
    Second, the amendment clarifies that the pertinent alternative base 
offense level applies only when the offender attains the requisite 
status prior to committing the instant offense. This clarification is 
consistent with the amendment on prior felonies, which provides for 
increased punishment only when the offender sustains certain felony 
convictions prior to committing the instant offense.
    18. Amendment: Section 2K1.3(a)(1) is amended by striking ``had at 
least two prior felony convictions of either a crime of violence or a 
controlled substance offense; or'' and inserting ``committed any part 
of the instant offense subsequent to sustaining at least two felony 
convictions of either a crime of violence or a controlled substance 
offense;'';
    Section 2K1.3(a)(2) is amended by striking ``had one prior felony 
conviction of either a crime of violence or a controlled substance 
offense; or' and inserting `committed any part of the instant offense 
subsequent to sustaining one felony conviction of either a crime of 
violence or a controlled substance offense;''.
    The Commentary to Sec. 2K1.3 captioned ``Application Notes'' is 
amended by striking the text of Note 2 and inserting the following:
    ``For purposes of this guideline:
    ``Controlled substance offense'' has the meaning given that term in 
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.
    `Felony conviction' means a prior adult federal or state conviction 
for an offense punishable by death or imprisonment for a term exceeding 
one year, regardless of whether such offense is specifically designated 
as a felony and regardless of the actual sentence imposed. A conviction 
for an offense committed at age eighteen years or older is an adult 
conviction. A conviction for an offense committed prior to age eighteen 
years is an adult conviction if it is classified as an adult conviction 
under the laws of the jurisdiction in which the defendant was convicted 
(e.g., a federal conviction for an offense committed prior to the 
defendant's eighteenth birthday is an adult conviction if the defendant 
was expressly proceeded against as an adult).''.
    The Commentary to 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).''.

[[Page 30555]]

    Section 2K2.1(a)(1) is amended by striking ``had at least two prior 
felony convictions of either a crime of violence or a controlled 
substance offense; or'' and inserting ``committed any part of the 
instant offense subsequent to sustaining at least two felony 
convictions of either a crime of violence or a controlled substance 
offense;''.
    Section 2K2.1(a)(2) is amended by striking ``had at least two prior 
felony convictions of either a crime of violence or a controlled 
substance offense; or'' and inserting ``committed any part of the 
instant offense subsequent to sustaining at least two felony 
convictions of either a crime of violence or a controlled substance 
offense;''.
    Section 2K2.1(a)(3) is amended by striking ``had one prior felony 
conviction of either a crime of violence or controlled substance 
offense; or'' and inserting ``committed any part of the instant offense 
subsequent to sustaining one felony conviction of either a crime of 
violence or a controlled substance offense;''.
    Section 2K2.1(a)(4)(A) is amended by striking ``had one prior 
felony conviction of either a crime of violence or controlled substance 
offense; or'' and inserting ``committed any part of the instant offense 
subsequent to sustaining one felony conviction of either a crime of 
violence or a controlled substance offense; or''.
    Section 2K2.1(a) is amended in subdivision (4)(B) by striking ``; 
or'' after ``922(d)'' and inserting a semi-colon; in subdivision (5), 
by striking ``; or'' after ``921(a)(30)'' and inserting a semi-colon; 
and in subdivision (6) by striking ``; or'' after ``Sec. 922(d)'' and 
inserting a semi-colon.
    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended by striking Note 5 and inserting the following:
    ``5. For purposes of this guideline:
    ``Controlled substance offense'' has the meaning given that term in 
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.
    ``Felony conviction'' means a prior adult federal or state 
conviction for an offense punishable by death or imprisonment for a 
term exceeding one year, regardless of whether such offense is 
specifically designated as a felony and regardless of the actual 
sentence imposed. A conviction for an offense committed at age eighteen 
years or older is an adult conviction. A conviction for an offense 
committed prior to age eighteen years is an adult conviction if it is 
classified as an adult conviction under the laws of the jurisdiction in 
which the defendant was convicted (e.g., a federal conviction for an 
offense committed prior to the defendant's eighteenth birthday is an 
adult conviction if the defendant was expressly proceeded against as an 
adult).''.
    The Commentary to 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).''.
    Reason for Amendment: This amendment modifies subsections (a)(1) 
and (a)(2) of Sec. 2K1.3 (Unlawful Receipt, Possession, or 
Transportation of Explosive Materials; Prohibited Transactions 
Involving Explosive Materials) and subsections (a)(1), (a)(2), (a)(3) 
and (a)(4)(A) of Sec. 2K2.1 (Unlawful Receipt, Possession or 
Transportation of Firearms or Ammunition) to resolve a circuit conflict 
regarding whether a crime committed after the commission of the instant 
offense and before sentencing for the instant offense is counted as a 
prior felony conviction for purposes of determining the defendant's 
base offense level. Compare United States v. Pugh, 158 F.3d 1308, 1311 
(D.C. Cir. 1998) (finding the guideline language ambiguous but the 
commentary language clear, thereby counting prior felony conviction 
that was sentenced prior to sentencing for the instant federal offense, 
even if the defendant committed the prior felony offense after the 
instant federal offense); United States v. McCary, 14 F.3d 1502, 1506 
(10th Cir. 1994) (the defendant's base offense level is to be 
determined on the basis of the defendant's status as of the date the 
district court imposed sentence, not the date of the offense for which 
he had previously been convicted); and United States v. Laihben, 167 
F.3d 1364 (11th Cir. 1999) (district court properly considered 
defendant's conviction, which occurred after commission of, but before 
sentencing, on the federal firearms offense, in determining offense 
level), with United States v. Barton, 100 F.3d 43, 46 (6th Cir. 1996) 
(defendant's state drug crime, which was committed after federal 
offense of being a felon in possession of firearm, could not have been 
counted as prior felony conviction under Sec. 2K2.1(a), even though 
defendant was convicted and sentenced on state offense prior to 
sentencing on federal charge; only those convictions that occur prior 
to the commission of the firearm offense may be counted against the 
defendant in determining the base offense level)) and United States v. 
Oetken, 241 F.3d 1057 (8th Cir. 2001) (only convictions that occur 
prior to the commission of the offense qualify as ``prior 
convictions'').
    The amendment adopts the minority view that an offense committed 
after the commission of any part of the offense cannot be counted as a 
prior felony conviction. The amendment clarifies, in Sec. 2K1.3(a)(1) 
and (a)(2) and 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. In so doing, this 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).
    This amendment also clarifies that in cases in which more than one 
prior felony conviction is required for application of the base offense 
level in Sec. 2K1.3 or Sec. 2K2.1, the prior felony convictions must be 
counted separately under Chapter Four (Criminal History and Criminal 
Livelihood).
    The amendment makes nonsubstantive clarifying changes in the 
definitions of ``controlled substance offense'', ``crime of violence'', 
and ``felony conviction'' for purposes of Secs. 2K1.3 and 2K2.1.
    19. Amendment: Section 2K2.1(b)(1) is amended in the table by 
striking subdivisions (A) through (F) and inserting the following:

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


    The Commentary to Sec. 2K2.1 captioned ``Application Notes'' is 
amended in Note 16 by striking ``significantly'' and inserting 
``substantially''; and by striking ``fifty'' and inserting ``200''.
    Reason for Amendment: This amendment responds to a recommendation 
from the Bureau of Alcohol, Tobacco and Firearms (ATF) to increase the 
penalties in Sec. 2K2.1 (Unlawful Receipt, Possession or Transportation 
of Firearms or Ammunition) for offenses involving more than 100 
firearms.
    The amendment modifies the firearms table at Sec. 2K2.1(b)(1), to 
provide enhancements in two-level increments.

[[Page 30556]]

Prior to this amendment, the table provided enhancements in one-level 
increments. This change has the effect of compressing the table by 
providing a wider range in each subdivision of the table for the number 
of firearms involved in the offense. Compressing the table in this 
manner diminishes some of the fact-finding required to determine how 
many firearms were involved in the offense and provides some increase 
in penalties. The amendment provides additional two-level increases for 
offenses that involve either 100-199 firearms, or 200 or more firearms. 
These increases are provided to ensure adequate and proportionate 
punishment in cases that involve large numbers of firearms.
    The proposed amendment also makes a conforming change to 
Application Note 16 of Sec. 2K2.1 regarding upward departures.
    20. Amendment: Chapter Two, Part L, Subpart 1 is amended by 
striking Sec. 2L1.2, and its accompanying commentary, 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) Apply the Greatest:
    If the defendant previously was deported, or unlawfully remained in 
the United States, after--
    (A) a conviction for a felony that is (i) a drug trafficking 
offense for which the sentence imposed exceeded 13 months; (ii) a crime 
of violence; (iii) a firearms offense; (iv) a child pornography 
offense; (v) a national security or terrorism offense; (vi) a human 
trafficking offense; or (vii) an alien smuggling offense committed for 
profit, increase by 16 levels;
    (B) a conviction for a felony drug trafficking offense for which 
the sentence imposed was 13 months or less, increase by 12 levels;
    (C) a conviction for an aggravated felony, increase by 8 levels;
    (D) a conviction for any other felony, increase by 4 levels; or
    (E) three or more convictions for misdemeanors that are crimes of 
violence or drug trafficking offenses, increase by 4 levels.

Commentary

Statutory Provisions: 8 U.S.C. 1325(a) (second or subsequent offense 
only), 8 U.S.C. 1326. For additional statutory provision(s), see 
Appendix A (Statutory Index).

Application Notes

    1. Application of Subsection (b)(1).--
    (A) In General.''For purposes of subsection (b)(1):
    (i) A defendant shall be considered to be deported after a 
conviction if the defendant has been removed or has departed the United 
States while an order of exclusion, deportation, or removal was 
outstanding.
    (ii) A defendant shall be considered to be deported after a 
conviction if the deportation was subsequent to the conviction, 
regardless of whether the deportation was in response to the 
conviction.
    (iii) A defendant shall be considered to have unlawfully remained 
in the United States if the defendant remained in the United States 
following a removal order issued after a conviction, regardless of 
whether the removal order was in response to the conviction.
    (iv) If all or any part of a sentence of imprisonment was probated, 
suspended, deferred, or stayed, `sentence imposed' refers only to the 
portion that was not probated, suspended, deferred, or stayed.
    (B) Definitions.--For purposes of subsection (b)(1):
    (i) `Committed for profit' means committed for payment or 
expectation of payment.
    (ii) `Crime of violence'--
    (I) means an offense under federal, state, or local law that has as 
an element the use, attempted use, or threatened use of physical force 
against the person of another; and
    (II) includes murder, manslaughter, kidnapping, aggravated assault, 
forcible sex offenses (including sexual abuse of a minor), robbery, 
arson, extortion, extortionate extension of credit, and burglary of a 
dwelling.
    (iii) `Drug trafficking offense' means an offense under federal, 
state, or local law that prohibits the manufacture, import, export, 
distribution, or dispensing of a controlled substance (or a counterfeit 
substance) or the possession of a controlled substance (or a 
counterfeit substance) with intent to manufacture, import, export, 
distribute, or dispense.
    (iv) `Felony' means any federal, state, or local offense punishable 
by imprisonment for a term exceeding one year.
    (v) `Firearms offense' means any of the following:
    (I) An offense under federal, state, or local law that prohibits 
the importation, distribution, transportation, or trafficking of a 
firearm described in 18 U.S.C. 921, or of an explosive material as 
defined in 18 U.S.C. 841(c).
    (II) An offense under federal, state, or local law that prohibits 
the possession of a firearm described in 26 5845(a), or of an explosive 
material as defined in 18 841(c).
    (III) A violation of 18 U.S.C. 844(h).
    (IV) A violation of 18 U.S.C. 924(c).
    (V) A violation of 18 U.S.C. 929(a).
    2. Application of Subsection (b)(1)(C).--For purposes of subsection 
(b)(1)(C), `aggravated felony' has the meaning given that term in 8 
U.S.C. 1101(a)(43), without regard to the date of conviction of the 
aggravated felony.
    3. Application of Subsection (b)(1)(E).--For purposes of subsection 
(b)(1)(E):
    (A) `Misdemeanor' means any federal, state, or local offense 
punishable by a term of imprisonment of one year or less.
    (B) `Three or more convictions' means at least three convictions 
for offenses that (i) were separated by an intervening arrest; (ii) did 
not occur on the same occasion; (iii) were not part of a single common 
scheme or plan; or (iv) were not consolidated for trial or sentencing.
    4. Aiding and Abetting, Conspiracies, and Attempts.--Prior 
convictions of offenses counted under subsection (b)(1) include the 
offenses of aiding and abetting, conspiring, and attempting, to commit 
such offenses.
    5. Computation of Criminal History Points.--A conviction taken into 
account under subsection (b)(1) is not excluded from consideration of 
whether that conviction receives criminal history points pursuant to 
Chapter Four, Part A (Criminal History).''.
    Reason for Amendment: This amendment responds to concerns raised by 
a number of judges, probation officers, and defense attorneys, 
particularly in districts along the southwest border between the United 
States and Mexico, that Sec. 2L1.2 (Unlawfully Entering or Remaining in 
the United States) sometimes results in disproportionate penalties 
because of the 16-level enhancement provided in the guideline for a 
prior conviction for an aggravated felony. The disproportionate 
penalties result because the breadth of the definition of ``aggravated 
felony'' provided in 8 U.S.C. 1101(a)(43), which is incorporated into 
the guideline by reference, means that a defendant who previously was 
convicted of murder, for example, receives the same 16-level 
enhancement as a defendant previously convicted of simple assault. The 
Commission also observed that the criminal justice system has been 
addressing this inequity on an ad hoc basis in such cases by increased 
use of departures.
    This amendment responds to these concerns by providing a more 
graduated sentencing enhancement of between 8 levels and 16 levels, 
depending on the seriousness of the prior aggravated

[[Page 30557]]

felony and the dangerousness of the defendant. In doing so, the 
Commission determined that the 16-level enhancement is warranted if the 
defendant previously was deported, or unlawfully remained in the United 
States, after a conviction for certain serious offenses, specifically, 
a drug trafficking offense for which the sentence imposed exceeded 13 
months, a felony that is a crime of violence, a felony that is a 
firearms offense, a felony that is a national security or terrorism 
offense, a felony that is a human trafficking offense, and a felony 
that is an alien smuggling offense committed for profit. Other felony 
drug trafficking offenses will receive a 12-level enhancement. All 
other aggravated felony offenses will receive an 8-level enhancement.
    This amendment also deletes an application note providing that a 
downward departure may be warranted based on the seriousness of the 
offense if the 16-level enhancement applied and (1) the defendant has 
previously been convicted of only one felony offense; (2) such offense 
was not a crime of violence or firearms offense; and (3) the term of 
imprisonment for such offenses did not exceed one year. The Commission 
determined that the graduation of the 16-level enhancement based on the 
seriousness of the prior conviction negated the need for this departure 
provision. As a result, this amendment may have the indirect result of 
reducing the departure rate for cases sentenced under Sec. 2L1.2. In 
addition, this amendment renders moot a circuit conflict regarding 
whether the three criteria set forth in the application note are the 
exclusive basis for a downward departure from the 16-level enhancement. 
Compare United States v. Sanchez-Rodriguez, 161 F.3d 556 (9th Cir. 
1998) (holding that Application Note 5 to Sec. 2L1.2 does not limit the 
circumstances under which a downward departure from the 16-level 
enhancement is warranted); and United States v. Alfaro-Zayas, 196 F.3d 
1338 (11th Cir. 1999) (same), with United States v. Tappin, 205 F.3d 
536 (2d Cir. 2000) (holding that a defendant must satisfy all three 
criteria set forth in Application Note 5 in Sec. 2L1.2 to receive a 
downward departure from the 16-level enhancement).
    This amendment also makes a number of other minor changes to 
Sec. 2L1.2, to provide guidance regarding the application of the 
enhancement for the commission of three or more prior misdemeanors and 
to provide definitions for terms used in the guideline.
    21. Amendment: The heading to Chapter Two, Part M is amended by 
adding at the end ``And Weapons of Mass Destruction''.
    Section 2M5.1 is amended by striking subsection (a) and inserting 
the following:
    ``(a) Base Offense Level (Apply the greater):
    (1) 26, if national security controls or controls relating to the 
proliferation of nuclear, biological, or chemical weapons or materials 
were evaded; or
    (2) 14, otherwise.''.
    Section 2M5.2(a)(1) is amended by striking ``22'' and inserting 
``26''.
    The heading to Chapter Two, Part M, Subpart 6 is amended by 
striking ``Atomic Energy'' and inserting ``Nuclear, Biological, And 
Chemical Weapons And Materials, And Other Weapons of Mass 
Destruction''.
    Chapter Two, Part M is amended by striking Sec. 2M6.1 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, Toxins, or 
Delivery Systems, Chemical Weapons, or Other Weapons of Mass 
Destruction; Attempt or Conspiracy
    (a) Base Offense Level (Apply the Greatest):
    (1) 42, if the offense was committed with intent (A) to injure the 
United States; or (B) to aid a foreign nation or a foreign terrorist 
organization;
    (2) 28, if subsections (a)(1) and (a)(3) do not apply; or
    (3) 20, if the offense (A) involved a threat to use a nuclear 
weapon, nuclear material, or nuclear by-product material, a chemical 
weapon, a biological agent, toxin, or delivery system, or a weapon of 
mass destruction; but (B) did not involve any conduct evidencing an 
intent or ability to carry out the threat.
    (b) Specific Offense Characteristics
    (1) If (A) subsection (a)(2) or (a)(3) applies; and (B) the offense 
involved a threat to use, or otherwise involved (i) a select biological 
agent; (ii) a listed precursor or a listed toxic chemical; (iii) 
nuclear material or nuclear byproduct material; or (iv) a weapon of 
mass destruction that contains any agent, precursor, toxic chemical, or 
material referred to in subdivision (i), (ii), or (iii), increase by 2 
levels.
    (2) If (A) subsection (a)(2) applies; and (B)(i) any victim died or 
sustained permanent or life-threatening bodily injury, increase by 4 
levels; (ii) any victim sustained serious bodily injury, increase by 2 
levels; or (iii) the degree of injury is between that specified in 
subdivisions (i) and (ii), increase by 3 levels.
    (3) If (A) subsection (a)(2) or (a)(3) applies; and (B) the offense 
resulted in (i) substantial disruption of public, governmental, or 
business functions or services; or (ii) a substantial expenditure of 
funds to clean up, decontaminate, or otherwise respond to the offense, 
increase by 4 levels.
    (c) Cross References
    (1) If the offense resulted in death, apply Sec. 2A1.1 (First 
Degree Murder) if the death was caused intentionally or knowingly, or 
Sec. 2A1.2 (Second Degree Murder) otherwise, if the resulting offense 
level is greater than that determined above.
    (2) If the offense was tantamount to attempted murder, apply 
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) 
conduct that resulted in 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 such conduct in 
respect to each victim had been contained in a separate count of 
conviction.

Commentary

Statutory Provisions: 18 U.S.C. 175, 229, 831, 842(p)(2), 2332a 
(only with respect to weapons of mass destruction as defined in 18 
U.S.C. 2332a(c)(2)(B), (C), and (D), but including any biological 
agent, toxin, or vector); 42 U.S.C. 2077(b), 2122, 2131. For 
additional statutory provision(s), see Appendix A (Statutory Index).

Application Notes

    1. Definitions.''For purposes of this guideline:
    `Biological agent' has the meaning given that term in 18 U.S.C. 
178(1).
    `Chemical weapon' has the meaning given that term in 18 U.S.C. 
229F(1).
    `Foreign terrorist organization' (A) means an organization that 
engages in terrorist activity that threatens the security of a national 
of the United States or the national security of the United States; and 
(B) includes an organization designated by the Secretary of State as a 
foreign terrorist organization pursuant to section 219 of the 
Immigration and Nationality Act (8 U.S.C. 1219). ``National of the 
United States'' has the meaning given that term in section 101(a)(22) 
of the Immigration and Nationality Act (8 U.S.C. 1101(a)(22)).

[[Page 30558]]

    `Listed precursor or a listed toxic chemical' means a precursor or 
a toxic chemical, respectively, listed in Schedule I of the Annex on 
Chemicals to the Chemical Weapons Convention. See 18 U.S.C. 229F(6)(B), 
(8)(B). `Precursor' has the meaning given that term in 18 U.S.C. 
229F(6)(A). `Toxic chemical' has the meaning given that term in 18 
U.S.C. 229F(8)(A).
    `Nuclear byproduct material' has the meaning given that term in 18 
U.S.C. Sec. 831(f)(2).
    `Nuclear material' has the meaning given that term in 18 U.S.C. 
831(f)(1).
    `Select biological agent' means a biological agent or toxin 
identified by the Secretary of Health and Human Services on the select 
agent list established pursuant to section 511(d) of the Antiterrorism 
and Effective Death Penalty Act, Pub. L. 104-132. See 42 CFR part 72.
    `Toxin' has the meaning given that term in 18 U.S.C. 178(2).
    `Vector' has the meaning given that term in 18 U.S.C. 178(4).
    `Weapon of mass destruction' has the meaning given that term in 18 
U.S.C. 2332a(c)(2)(B), (C), and (D).
    2. Threat Cases.--Subsection (a)(3) applies in cases that involved 
a threat to use a weapon, agent, or material covered by this guideline 
but that did not involve any conduct evidencing an intent or ability to 
carry out the threat. For example, subsection (a)(3) would apply in a 
case in which the defendant threatened to contaminate an area with 
anthrax and also dispersed into the area a substance that appeared to 
be anthrax but that the defendant knew to be harmless talcum powder. In 
such a case, the dispersal of talcum powder does not evidence an intent 
on the defendant's part to carry out the threat. In contrast, 
subsection (a)(3) would not apply in a case in which the defendant 
threatened to contaminate an area with anthrax and also dispersed into 
the area a substance that the defendant believed to be anthrax but that 
in fact was harmless talcum powder. In such a case, the dispersal of 
talcum powder was conduct evidencing an intent to carry out the threat 
because of the defendant's belief that the talcum powder was anthrax.
    Subsection (a)(3) shall not apply in any case involving both a 
threat to use any weapon, agent, or material covered by this guideline 
and the possession of that weapon, agent, or material. In such a case, 
possession of the weapon, agent, or material is conduct evidencing an 
intent to use that weapon, agent, or material.
    3. Application of Special Instruction.--Subsection (d) applies in 
any case in which the defendant is convicted of a single count 
involving (A) the death or permanent, 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 this guideline or under another 
guideline in Chapter Two (Offense Conduct) by use of a cross reference 
under subsection (c).''.
    The Commentary to Sec. 2X1.1 captioned ``Application Notes'' is 
amended in Note 1 by inserting after the line referenced to 
``Sec. 2E5.1;'' the following: ``Sec. 2M6.1;''.
    The Commentary to Sec. 2X1.1 captioned ``Application Notes'' is 
amended in Note 1 by inserting after the line referenced to 
``Sec. 2H1.1'' the following: ``Sec. 2M6.1;''.
    Appendix A (Statutory Index) is amended by inserting after the line 
referenced to 18 U.S.C. Sec. 842(l)-(o) the following new line:
    ``18 U.S.C. Sec. 842(p)(2)  2K1.3, 2M6.1'';
    By inserting after the line referenced to 18 U.S.C. Sec. 155 the 
following new line:
    ``18 U.S.C. Sec. 175  2M6.1'';
    By inserting after the line referenced to 18 U.S.C. Sec. 228 the 
following new line:
    ``18 U.S.C. Sec. 229  2M6.1'';
    In the line referenced to 18 U.S.C. Sec. 2332a by striking ``2A1.1, 
2A1.2, 2A1.3, 2A1.4, 2A1.5, 2A2.1, 2A2.2, 2B1.3,'' and by inserting ``, 
2M6.1'' after ``2K1.4''; and
    By inserting after the line referenced to 50 U.S.C. App. Sec. 462 
the following new line:
    ``50 U.S.C. App. Sec. 1701  2M5.1, 2M5.2''.
    Reason for Amendment: This amendment responds to a statutory 
provision expressing a sense of Congress and addresses two offenses 
relating to biological and chemical weapons. Specifically, the 
amendment responds to section 1423(a) of the National Defense 
Authorization Act for Fiscal Year 1997, Public Law 104-201, that 
expressed a sense of Congress that guideline penalties are inadequate 
for certain offenses involving the importation and exportation of 
nuclear, chemical, and biological weapons, materials, or technologies 
by providing a four-level increase for those offenses in subsection 
(a)(1) of both Secs. 2M5.1 (Evasion of Export Controls) and 2M5.2 
(Exportation of Arms, Munitions, or Military Equipment or Services 
Without a Required Validated Export License). This increase serves to 
make the penalty structure for those offenses proportional to other 
national security guidelines in Chapter Two, Part M. In addition, 
Appendix A (Statutory Index) is amended to refer one of the offenses, 
50 U.S.C. 1701 (which prior to this amendment was not referenced in the 
Statutory Index), to both Secs. 2M5.1 and 2M5.2.
    The amendment also substantially revises Sec. 2M6.1 to incorporate 
offenses at 18 U.S.C. Sec. 175, relating to biological weapons, and 18 
U.S.C. 229, relating to chemical weapons. Specifically, the amendment 
modifies Sec. 2M6.1 as follows:
    First, the amendment provides three alternative base offense 
levels. The first alternative base offense level of level 42 applies if 
the offense was committed with the intent to injure the United States 
or to aid a foreign government or foreign terrorist organization and 
incorporates the 12-level enhancement previously at subsection (b)(1). 
Therefore, this change does not affect the overall offense level for 
these offenses. ``Foreign terrorist organizations'' are added because 
such groups are investing in the acquisition of unconventional weapons 
such as nuclear, biological, and chemical agents. This first 
alternative base offense level is expected to apply to cases previously 
covered by the guideline (i.e., the acquisition of nuclear material 
from nuclear facilities in order to assist foreign governments, thereby 
creating a threat to the national security), as well as to cases that 
implicate the national security and involve biological and chemical 
weapons and other weapons of mass destruction.
    The amendment provides that, if the base offense level of level 42 
applies, none of the adjustments in subsection (b) shall apply. 
However, if death results, the cross reference allows for the 
possibility of a greater offense level through application of the first 
degree murder guideline.
    The second alternative base offense level of level 28 applies to 
those cases that do not threaten the national security of the United 
States, and is expected to apply in most cases.
    The third alternative base offense level of level 20 applies to 
cases which involve a threat to use a nuclear, biological, or chemical 
weapon or material, or other weapon of mass destruction, but do not 
involve any conduct evidencing an intent or ability to carry out the 
threat and, accordingly, are less serious offenses.
    Second, the amendment provides a two-level enhancement in 
subsection (b)(1) if the offense or threat involved particularly 
dangerous types of nuclear, chemical, and biological weapons and 
materials that are defined in the

[[Page 30559]]

guideline commentary by reference to the applicable statutory and 
regulatory provisions. This enhancement reflects the distinctions 
already made in international treaties, provisions of title 18, United 
States Code, relevant regulatory schemes, and the fact that certain 
types of weapons and materials are inherently more lethal and pose a 
greater threat to the public safety.
    Third, the amendment provides a four-level enhancement in 
subsection (b)(2) if any victim died or sustained permanent or life-
threatening bodily injury, and a two-level enhancement if any victim 
sustained serious bodily injury. If the degree of injury is between 
permanent or life-threatening bodily injury and serious bodily injury, 
a three-level enhancement is provided. This enhancement is modeled 
after the enhancement found in Sec. 2N1.1 (Tampering or Attempting to 
Tamper Involving Risk of Death or Bodily Injury).
    Fourth, the amendment provides a four-level enhancement for cases 
involving a substantial disruption of public, governmental, or business 
functions or services, or the substantial expenditure of funds to clean 
up, decontaminate, or otherwise respond to the offense.
    Fifth, the amendment provides two cross references, applicable if 
the resulting offense level is greater and either death resulted (in 
which case the first or second degree murder guideline would apply), or 
if the offense was tantamount to attempted murder (in which case the 
attempted murder guideline would apply). These cross references are 
also modeled after the cross reference found in Sec. 2N1.1.
    Sixth, the amendment provides a special instruction that if the 
defendant is convicted of one count involving the death of, serious 
bodily injury to, or attempted murder of, more than one victim, the 
grouping rules will be applied as if the defendant had been convicted 
of separate counts for each such victim.
    Seventh, the amendment amends Appendix A to refer violations of 18 
U.S.C. Sec. 175 and 229 to Sec. 2M6.1 and to delete a number of 
guideline references for violations of 18 U.S.C. 2332a and instead 
provide a reference for that offense to Secs. 2K1.4 (Arson; Property 
Damage by Use of Explosives) and 2M6.1 (in the case of other weapons of 
mass destruction).
    Finally, the amendment amends the title of Sec. 2M6.1 to include 
attempts and conspiracies, and adds Sec. 2M6.1 under the sections 
addressing attempts and conspiracies in Application Note 1 of 
Sec. 2X1.1 (Attempt, Solicitation, or Conspiracy) to indicate that 
attempts and conspiracies are covered expressly by the Sec. 2M6.1 
offense guideline.
    22. Amendment: Chapter Two, Part S is amended by striking 
Sec. 2S1.1, and its accompanying commentary, 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 would be accountable for the underlying offense 
under subsection (a)(1)(A) of Sec. 1B1.3 (Relevant Conduct)); and (B) 
the offense level for that offense can be determined; or
    (2) 8 plus the number of offense levels from the table in 
Sec. 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to 
the value of the laundered funds, otherwise.
    (b) Specific Offense Characteristics
    (1) If (A) subsection (a)(2) applies; and (B) the defendant knew or 
believed that any of the laundered funds were the proceeds of, or were 
intended to promote (i) an offense involving the manufacture, 
importation, or distribution of a controlled substance or a listed 
chemical; (ii) a crime of violence; or (iii) an offense involving 
firearms, explosives, national security, terrorism, or the sexual 
exploitation of a minor, increase by 6 levels.
    (2) (Apply the Greatest):
    (A) If the defendant was convicted under 18 U.S.C. Sec. 1957, 
increase by 1 level.
    (B) If the defendant was convicted under 18 U.S.C. Sec. 1956, 
increase by 2 levels.
    (C) If (i) subsection (a)(2) applies; and (ii) the defendant was in 
the business of laundering funds, increase by 4 levels.
    (3) If (A) subsection (b)(2)(B) applies; and (B) the offense 
involved sophisticated laundering, increase by 2 levels.

Commentary

Statutory Provisions: 18 U.S.C. 1956, 1957. For additional statutory 
provision(s), see Appendix A (Statutory Index).

Application Notes

    1. Definitions.--For purposes of this guideline:
    `Crime of violence' has the meaning given that term in subsection 
(a)(1) of Sec. 4B1.2 (Definitions of Terms Used in Section 4B1.1).
    `Criminally derived funds' means any funds derived, or represented 
by a law enforcement officer, or by another person at the direction or 
approval of an authorized Federal official, to be derived from conduct 
constituting a criminal offense.
    `Laundered funds' means the property, funds, or monetary instrument 
involved in the transaction, financial transaction, monetary 
transaction, transportation, transfer, or transmission in violation of 
18 U.S.C. 1956 or 1957.
    `Laundering funds' means making a transaction, financial 
transaction, monetary transaction, or transmission, or transporting or 
transferring property, funds, or a monetary instrument in violation of 
18 U.S.C. 1956 or 1957.
    `Sexual exploitation of a minor' means an offense involving (A) 
promoting prostitution by a minor; (B) sexually exploiting a minor by 
production of sexually explicit visual or printed material; (C) 
distribution of material involving the sexual exploitation of a minor, 
or possession of material involving the sexual exploitation of a minor 
with intent to distribute; or (D) aggravated sexual abuse, sexual 
abuse, or abusive sexual contact involving a minor. ``Minor'' means an 
individual under the age of 18 years.
    2. Application of Subsection (a)(1).--
    (A) Multiple Underlying Offenses.--In cases in which subsection 
(a)(1) applies and there is more than one underlying offense, the 
offense level for the underlying offense is to be determined under the 
procedures set forth in Application Note 3 of the Commentary to 
Sec. 1B1.5 (Interpretation of References to Other Offense Guidelines).
    (B) Defendants Accountable for Underlying Offense.--In order for 
subsection (a)(1) to apply, the defendant must have committed the 
underlying offense or be accountable for the underlying offense under 
Sec. 1B1.3(a)(1)(A). The fact that the defendant was involved in 
laundering criminally derived funds after the commission of the 
underlying offense, without additional involvement in the underlying 
offense, does not establish that the defendant committed, aided, 
abetted, counseled, commanded, induced, procured, or willfully caused 
the underlying offense.
    3. Application of Subsection (a)(2).--
    (A) In General.--Subsection (a)(2) applies to any case in which (i) 
the defendant did not commit the underlying offense; or (ii) the 
defendant committed the underlying offense (or would be accountable for 
the underlying offense under Sec. 1B1.3(a)(1)(A)), but the offense 
level for the underlying offense

[[Page 30560]]

is impossible or impracticable to determine.
    (B) Commingled Funds.--In a case in which a transaction, financial 
transaction, monetary transaction, transportation, transfer, or 
transmission results in the commingling of legitimately derived funds 
with criminally derived funds, the value of the laundered funds, for 
purposes of subsection (a)(2), is the amount of the criminally derived 
funds, not the total amount of the commingled funds, if the defendant 
provides sufficient information to determine the amount of criminally 
derived funds without unduly complicating or prolonging the sentencing 
process. If the amount of the criminally derived funds is difficult or 
impracticable to determine, the value of the laundered funds, for 
purposes of subsection (a)(2), is the total amount of the commingled 
funds.
    4. Enhancement for Business of Laundering Funds.--
    (A) In General.--The court shall consider the totality of the 
circumstances to determine whether a defendant who did not commit the 
underlying offense was in the business of laundering funds, for 
purposes of subsection (b)(2)(C).
    (B) Factors to Consider.--The following is a non-exhaustive list of 
factors that may indicate the defendant was in the business of 
laundering funds for purposes of subsection (b)(2)(C):
    (i) The defendant regularly engaged in laundering funds.
    (ii) The defendant engaged in laundering funds during an extended 
period of time.
    (iii) The defendant engaged in laundering funds from multiple 
sources.
    (iv) The defendant generated a substantial amount of revenue in 
return for laundering funds.
    (v) At the time the defendant committed the instant offense, the 
defendant had one or more prior convictions for an offense under 18 
U.S.C. 1956 or 1957, or under 31 U.S.C. 5313, 5314, 5316, 5324 or 5326, 
or any similar offense under state law, or an attempt or conspiracy to 
commit any such federal or state offense. A conviction taken into 
account under subsection (b)(2)(C) is not excluded from consideration 
of whether that conviction receives criminal history points pursuant to 
Chapter Four, Part A (Criminal History).
    (vi) During the course of an undercover government investigation, 
the defendant made statements that the defendant engaged in any of the 
conduct described in subdivisions (i) through (iv).
    5. (A) Sophisticated Laundering under Subsection (b)(3).--For 
purposes of subsection (b)(3), `sophisticated laundering' means complex 
or intricate offense conduct pertaining to the execution or concealment 
of the 18 U.S.C. 1956 offense.
    Sophisticated laundering typically involves the use of--
    (i) fictitious entities;
    (ii) shell corporations;
    (iii) two or more levels (i.e., layering) of transactions, 
transportation, transfers, or transmissions, involving criminally 
derived funds that were intended to appear legitimate; or
    (iv) offshore financial accounts.
    (B) Non-Applicability of Enhancement.--If subsection (b)(3) 
applies, and the conduct that forms the basis for an enhancement under 
the guideline applicable to the underlying offense is the only conduct 
that forms the basis for application of subsection (b)(3) of this 
guideline, do not apply subsection (b)(3) of this guideline.
    6. Grouping of Multiple Counts.--In a case in which the defendant 
is convicted of a count of laundering funds and a count for the 
underlying offense from which the laundered funds were derived, the 
counts shall be grouped pursuant to subsection (c) of Sec. 3D1.2 
(Groups of Closely-Related Counts).''.
    Chapter Two, Part S is amended by striking section 2S1.2, and its 
accompanying commentary.
    The Commentary to Sec. 2S1.3 captioned ``Statutory Provisions'' is 
amended by inserting ``18 U.S.C. Sec. 1960;'' before ``26 U.S.C. 
Sec. 7203''; and by inserting ``, 5326'' after ``5324''.
    Appendix A (Statutory Index) is amended in the line referenced to 
18 U.S.C. 1957 and the line referenced to 21 U.S.C. 854 by striking 
``2S1.2'' and inserting ``2S1.1''; by inserting after the line 
referenced to 18 U.S.C. 1959 the following new line:
    ``18 U.S.C. 1960--2S1.3'';
    And by inserting after the line referenced to 31 U.S.C. 5324 the 
following new line:
    ``31 U.S.C. 5326  2S1.3, 2T2.2''.
    The Commentary to Sec. 1B1.3 captioned ``Application Notes'' is 
amended in Note 6 in the first paragraph by striking the second 
sentence and inserting the following:
    ``For example, in Sec. 2S1.1 (Laundering of Monetary Instruments; 
Engaging in Monetary Transactions in Property Derived from Unlawful 
Activity), subsection (b)(2)(B) applies if the defendant ``is convicted 
under 18 U.S.C. 1956'.''.
    The Commentary to Sec. 1B1.3 captioned ``Application Notes'' is 
amended in Note 6 in the second paragraph by striking the last sentence 
and inserting the following:
    ``For example, Sec. 2S1.1(b)(2)(B) (which is applicable only if the 
defendant is convicted under 18 U.S.C. 1956) would be applied in 
determining the offense level under Sec. 2X3.1 (Accessory After the 
Fact) in a case in which the defendant was convicted of accessory after 
the fact to a violation of 18 U.S.C. 1956.''.
    Section 3D1.2(d) is amended in the second paragraph by striking 
``2S1.2,''.
    Section 8C2.1(a) is amended by striking ``2S1.2,''.
    The Commentary to 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''.
    Reason for Amendment: This amendment consolidates the money 
laundering guidelines, Secs. 2S1.1 (Laundering of Monetary Instruments) 
and 2S1.2 (Engaging in Monetary Transactions in Property Derived from 
Specified Unlawful Activity), into one guideline that applies to 
convictions under 18 U.S.C. 1956 or 1957, or 21 U.S.C. 854. The 
amendment responds in several ways to concerns that the penalty 
structure existing prior to this amendment for such offenses did not 
reflect adequately the culpability of the defendant or the seriousness 
of the money laundering conduct because the offense level for money 
laundering was determined without sufficient consideration of the 
defendant's involvement in, or the relative seriousness of, the 
underlying offense. This amendment is designed to promote 
proportionality by providing increased penalties for defendants who 
launder funds derived from more serious underlying criminal conduct, 
such as drug trafficking, crimes of violence, and fraud offenses that 
generate relatively high loss amounts, and decreased penalties for 
defendants who launder funds derived from less serious underlying 
criminal conduct, such as basic fraud offenses that generate relatively 
low loss amounts.
    First, this amendment ties offense levels for money laundering more 
closely to the underlying conduct that was the source of the criminally 
derived funds by separating money laundering offenders into two 
categories for purposes of determining the base offense level. For 
direct money launderers (offenders who commit or would be accountable 
under

[[Page 30561]]

Sec. 1B1.3(a)(1)(A) (Relevant Conduct) for the underlying offense which 
generated the criminal proceeds), subsection (a)(1) sets the base 
offense level at the offense level in Chapter Two (Offense Conduct) for 
the underlying offense (i.e., the base offense level, specific offense 
characteristics, cross references, and special instructions for the 
underlying offense). For third party money launderers (offenders who 
launder the proceeds generated from underlying offenses that the 
defendant did not commit or would not be accountable for under 
Sec. 1B1.3(a)(1)(A)), subsection (a)(2) sets the base offense level at 
level 8, plus an increase based on the value of the laundered funds 
from the table in subsection (b)(1) of Sec. 2B1.1 (Theft, Fraud, 
Property Destruction).
    Second, in addition to the base offense level calculation, this 
amendment provides an enhancement designed to reflect the differing 
seriousness of the underlying conduct that was the source of the 
criminally derived funds. Subsection (b)(1) provides a six-level 
enhancement for third party money launderers who knew or believed that 
any of the laundered funds were the proceeds of, or were intended to 
promote, certain types of more serious underlying criminal conduct; 
specifically, drug trafficking, crimes of violence, offenses involving 
firearms, explosives, national security, terrorism, and the sexual 
exploitation of a minor. The Commission determined that defendants who 
knowingly launder the proceeds of these more serious underlying 
offenses are substantially more culpable than third party launderers of 
criminally derived proceeds of less serious underlying offenses.
    Third, this amendment provides three alternative enhancements, with 
the greatest applicable enhancement to be applied. These enhancements 
are designed to (1) ensure that all direct money launderers receive 
additional punishment for committing both the money laundering offense 
and the underlying offense, and (2) reflect the differing seriousness 
of money laundering conduct depending on the nature and sophistication 
of the offense. Specifically, subsection (b)(2)(A) provides a one-level 
increase if the defendant was convicted under 18 U.S.C. 1957, and 
subsection (b)(2)(B) provides a two-level increase if the defendant was 
convicted under 18 U.S.C. 1956. The one-level difference between these 
two enhancements reflects the fact that 18 U.S.C. 1956 has a statutory 
maximum penalty (20 years' imprisonment) that is twice as long as the 
statutory maximum penalty for violations of 18 U.S.C. 1957 (10 years' 
imprisonment). In addition, subsection (b)(3) provides an additional 
two-level increase if subsection (b)(2)(B) applies and the offense 
involved sophisticated laundering such as the use of fictitious 
entities, shell corporations, two or more levels of transactions, or 
offshore financial accounts. The Commission determined that, similar to 
fraud and tax offenses that involve sophisticated means, see subsection 
(b)(8) of Sec. 2B1.1 (Theft, Property Destruction, and Fraud), 
subsection (b)(2) of Sec. 2T1.1 (Tax Evasion; Willful Failure to File 
Return, Supply Information, or Pay Tax; Fraudulent or False Returns, 
Statements, or Other Documents), violations of 18 U.S.C. 1956 that 
involve sophisticated laundering warrant additional punishment because 
such offenses are more difficult and time consuming for law enforcement 
to detect than less sophisticated laundering. As a result of the 
enhancements provided by subsections (b)(2)(A), (b)(2)(B), and (b)(3), 
all direct money launderers will receive an offense level that is one 
to four levels greater than the Chapter Two offense level for the 
underlying offense, depending on the statute of conviction and 
sophistication of the money laundering offense conduct.
    With respect to third party money launderers, subsection (b)(2)(C) 
provides a four-level enhancement if the defendant is ``in the 
business'' of laundering funds. The Commission determined that, similar 
to a professional ``fence'', see Sec. 2B1.1(b)(4)(B), defendants who 
routinely engage in laundering funds on behalf of others, and who gain 
financially from engaging in such transactions, warrant substantial 
additional punishment because they encourage the commission of 
additional criminal conduct.
    Fourth, this amendment contains an application note expressly 
providing instructions regarding the grouping of money laundering 
counts with a count of conviction for the underlying offense. In a case 
in which the defendant is to be sentenced on a count of conviction for 
money laundering and a count of conviction for the underlying offense 
that generated the laundered funds, this application note instructs 
that such counts shall be grouped pursuant to subsection (c) of 
Sec. 3D1.2 (Groups of Closely-Related Counts), thereby resolving a 
circuit conflict on this issue. Compare United States v. Cusumano, 943 
F.2d 305 (3d Cir. 1991), cert. denied, 502 U.S. 1036 (1992) (affirming 
decision to group under Sec. 3D1.2(b) money laundering count with other 
offenses that ``were all part of one scheme to obtain money'' from an 
employee benefit fund); United States v. Leonard, 61 F.3d 1181 (5th 
Cir. 1995) (affirming decision to group fraud and money laundering 
offenses under Sec. 3D1.2(d) because defendant's money laundering 
activity and fraudulent telemarketing scheme constituted the same 
common plan and had the same victims); and United States v. Wilson, 98 
F.3d 281 (7th Cir. 1996) (district court erred in not grouping money 
laundering and mail fraud convictions under Sec. 3D1.2(d)), with United 
States v. Kneeland, 148 F.3d 6 (1st Cir. 1998) (affirming district 
court decision not to group fraud and money laundering counts under 
Sec. 3D1.2(d) because the offense level for fraud, unlike money 
laundering, is determined ``largely on the basis of total amount of 
harm or loss''); United States v. Napoli, 179 F.3d 1 (2d Cir. 1999), 
cert. denied, 528 U.S. 1162 (2000) (affirming decision not to group 
wire fraud and money laundering counts under Sec. 3D1.2(b) or (d) 
because the offenses have different victims and the offense level for 
money laundering, unlike fraud, is not based primarily on the amount of 
money involved); United States v. Hildebrand, 152 F.3d 756 (8th Cir.), 
cert. denied, 525 U.S. 1033 (1998) (finding that money laundering and 
fraud counts should not be grouped because the fraud and money 
laundering guidelines do not measure the same types of harm); United 
States v. Hanley, 190 F.3d 1017 (9th Cir. 1999) (affirming decision not 
to group money laundering and wire fraud counts under Sec. 3D1.2(d) 
because the guidelines for such offenses measure harm differently); and 
United States v. Johnson, 971 F.2d 562 (10th Cir. 1992) (district court 
erred in grouping money laundering and fraud counts under Sec. 3D1.2(d) 
because the measurement of harm for fraud is not the same as that for 
money laundering).
    Finally, this amendment provides that convictions under 18 U.S.C. 
1960 are referenced to Sec. 2S1.3 (Structuring Transactions to Evade 
Reporting Requirements). Operation of money transmitting businesses 
without an appropriate license is proscribed by 18 U.S.C. 1960, as are 
failures to comply with certain reporting requirements issued under 31 
U.S.C. 5330. The Commission determined that offenses involving these 
regulatory requirements serve many of the same purposes as Currency 
Transaction Reports, Currency and Monetary Instrument Reports, Reports 
of Foreign Bank and Financial Accounts, and Reports of Cash Payments 
over $10,000 Received in a

[[Page 30562]]

Trade or Business, violations regarding which currently are referenced 
to Sec. 2S1.3, and that, therefore, violations of 18 U.S.C. Sec. 1960 
also should be referenced to Sec. 2S1.3.
    23. Amendment: The Commentary to Sec. 3B1.2 is amended by striking 
Notes 1 through 4 and the background and inserting the following:
    ``1. Definition.--For purposes of this guideline, `participant' has 
the meaning given that term in Application Note 1 of Sec. 3B1.1 
(Aggravating Role).
    2. Requirement of Multiple Participants.--This guideline is not 
applicable unless more than one participant was involved in the 
offense. See the Introductory Commentary to this Part (Role in the 
Offense). Accordingly, an adjustment under this guideline may not apply 
to a defendant who is the only defendant convicted of an offense unless 
that offense involved other participants in addition to the defendant 
and the defendant otherwise qualifies for such an adjustment.
    3. Applicability of Adjustment.--
    (A) Substantially Less Culpable than Average Participant.--This 
section provides a range of adjustments for a defendant who plays a 
part in committing the offense that makes him substantially less 
culpable than the average participant.
    A defendant who is accountable under Sec. 1B1.3 (Relevant Conduct) 
only for the conduct in which the defendant personally was involved and 
who performs a limited function in concerted criminal activity is not 
precluded from consideration for an adjustment under this guideline. 
For example, a defendant who is convicted of a drug trafficking 
offense, whose role in that offense was limited to transporting or 
storing drugs and who is accountable under Sec. 1B1.3 only for the 
quantity of drugs the defendant personally transported or stored is not 
precluded from consideration for an adjustment under this guideline.
    (B) Conviction of Significantly Less Serious Offense.--If a 
defendant has received a lower offense level by virtue of being 
convicted of an offense significantly less serious than warranted by 
his actual criminal conduct, a reduction for a mitigating role under 
this section ordinarily is not warranted because such defendant is not 
substantially less culpable than a defendant whose only conduct 
involved the less serious offense. For example, if a defendant whose 
actual conduct involved a minimal role in the distribution of 25 grams 
of cocaine (an offense having a Chapter Two offense level of level 14 
under Sec. 2D1.1 (Unlawful Manufacturing, Importing, Exporting, or 
Trafficking (Including Possession with Intent to Commit These 
Offenses); Attempt or Conspiracy)) is convicted of simple possession of 
cocaine (an offense having a Chapter Two offense level of level 6 under 
Sec. 2D2.1 (Unlawful Possession; Attempt or Conspiracy)), no reduction 
for a mitigating role is warranted because the defendant is not 
substantially less culpable than a defendant whose only conduct 
involved the simple possession of cocaine.
    (C) Fact-Based Determination.--The determination whether to apply 
subsection (a) or subsection (b), or an intermediate adjustment, 
involves a determination that is heavily dependent upon the facts of 
the particular case. As with any other factual issue, the court, in 
weighing the totality of the circumstances, is not required to find, 
based solely on the defendant's bare assertion, that such a role 
adjustment is warranted.
    4. Minimal Participant.--Subsection (a) applies to a defendant 
described in Application Note 3(A) who plays a minimal role in 
concerted activity. It is intended to cover defendants who are plainly 
among the least culpable of those involved in the conduct of a group. 
Under this provision, the defendant's lack of knowledge or 
understanding of the scope and structure of the enterprise and of the 
activities of others is indicative of a role as minimal participant. It 
is intended that the downward adjustment for a minimal participant will 
be used infrequently.
    5. Minor Participant.--Subsection (b) applies to a defendant 
described in Application Note 3(A) who is less culpable than most other 
participants, but whose role could not be described as minimal.''.
    Reason for Amendment: This amendment resolves a circuit conflict 
regarding whether a defendant who is accountable under Sec. 1B1.3 
(Relevant Conduct) only for conduct in which the defendant personally 
was involved, and who performs a limited function in concerted criminal 
activity, is precluded from consideration for an adjustment under 
Sec. 3B1.2 (Mitigating Role). Compare United States v. Burnett, 66 F.3d 
137 (7th Cir. 1995) (``where a defendant is sentenced only for the 
amount of drugs he handled, he is not entitled to a Sec. 3B1.2 
reduction''), with United States v. Rodriguez De Varon, 175 F.3d 930 
(11th Cir. 1999) (a defendant is not automatically precluded from 
consideration for a mitigating role adjustment in a case in which the 
defendant is held accountable solely for the amount of drugs he 
personally handled). Although this circuit conflict arose in the 
context of a drug offense, the amendment resolves it in a manner that 
makes the rule applicable to all types of offenses.
    The amendment adopts the approach articulated by the Eleventh 
Circuit in United States v. Rodriguez De Varon, supra, that Sec. 3B1.2 
does not automatically preclude a defendant from being considered for a 
mitigating role adjustment in a case in which the defendant is held 
accountable under Sec. 1B1.3 solely for the amount of drugs the 
defendant personally handled. In considering a Sec. 3B1.2 adjustment, a 
court must measure the defendant's role against the relevant conduct 
for which the defendant is held accountable at sentencing, whether or 
not other defendants are charged.
    In contrast to the holding in United States v. Burnett, supra, this 
amendment allows the court to apply traditional analysis on the 
applicability of a reduction pursuant to Sec. 3B1.2, even in a case in 
which a defendant is held liable under Sec. 1B1.3 only for conduct 
(such as drug quantities) in which the defendant was involved 
personally.
    The substantive impact of this amendment in resolving the circuit 
conflict is to provide, in the context of a drug courier, for example, 
that the court is not precluded from considering a Sec. 3B1.2 
adjustment simply because the defendant's role in the offense was 
limited to transporting or storing drugs, and the defendant was 
accountable under Sec. 1B1.3 only for the quantity of drugs the 
defendant personally transported or stored. The amendment does not 
require that such a defendant receive a reduction under Sec. 3B1.2, or 
suggest that such a defendant can receive a reduction based only on 
those facts; rather, the amendment provides only that such a defendant 
is not precluded from consideration for such a reduction if the 
defendant otherwise qualifies for the reduction pursuant to the terms 
of Sec. 3B1.2.
    In addition to resolving the circuit conflict, the amendment makes 
the following non-substantive revisions to Sec. 3B1.2 to clarify 
guideline application: (1) Incorporating commentary from the 
Introduction to Chapter Three, Part B (Role in the Offense) that there 
must be more than one participant before application of a mitigating 
role adjustment may be considered; (2) incorporating into this 
guideline the definition of ``participant'' from Sec. 3B1.1 
(Aggravating Role); (3) moving into an application note significant 
background commentary that has been cited frequently in appellate 
decisions; (4) adding a section on fact-based

[[Page 30563]]

determinations to Application Note 3 that emphasizes the significant 
judicial role in decision-making on the applicability of Sec. 3B1.2; 
(5) maintaining commentary language that the minimal role adjustment is 
intended to be used infrequently; and (6) making technical amendments 
to the Commentary to clarify applicable rules (such as the addition of 
headings for, and the reordering of, application notes in the 
commentary) that are intended to have no substantive impact.
    The language regarding ``average participant'' is moved from the 
Background into Application Note 3(A) to provide guidance as to the 
applicability of Sec. 3B1.2. For a reduction to apply, the court, at a 
minimum, must make a factual determination that the defendant's role 
was significantly less culpable than the average participant.
    24. Amendment: The Commentary to Sec. 2J1.6 captioned ``Application 
Notes'' is amended in Note 3 in the first sentence of the second 
paragraph by striking ``In'' and inserting ``However, in''; and by 
inserting ``other than a case of failure to appear for service of 
sentence,'' after ``offense and the failure to appear,''.
    The Commentary to 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.''.
    Reason for Amendment: This amendment makes two minor technical 
changes. First, the amendment makes an editorial change in the 
commentary to Sec. 2J1.6 (Failure to Appear by Defendant) to improve 
the transition between the first and second paragraphs of Application 
Note 3. Second, the amendment adds an application note to Sec. 2M3.9 
(Disclosure of Information Identifying a Covert Agent) that implements 
the consecutive sentencing requirement of 50 U.S.C. 421, relating to 
the disclosure of information identifying a covert agent.
[FR Doc. 01-13966 Filed 6-5-01; 8:45 am]
BILLING CODE 2210-40-P; 2211-01-P

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