iOn December 26, 2023, the U.S. Sentencing Commission (“USSC”) proposed several amendments to its Guidelines Manual (the “Guidelines”). Two of these proposed amendments have the potential to especially impact sentencing decisions in white collar criminal cases. In particular, one amendment changes the rule for calculating loss, and another provides new options regarding the consideration of acquitted conduct.
Rule for Calculating Loss
The USSC’s proposed revision to the Guidelines’ rules for calculating loss arises out of an effort to continually evaluate and address evolving case law concerning the validity and enforceability of the Guidelines. 88 Fed. Reg. 60536 (Sept. 1, 2023). Specifically, the proposed amendment addresses the Third Circuit’s 2022 decision in United States v. Banks, which held that the Guidelines’ Application Note 3(A) of the Commentary to §2B1.1 (“the Commentary”) is not entitled to interpretive deference because the term “loss” in §2B1.1 is not ambiguous. 55 F.4th 246 (3d Cir. 2022).
As most white collar practitioners know, Section 2B1.1 contains the “loss table” which sets forth the stair-stepped increases to a defendant’s offense level based on the monetary loss resulting from an offense. The Commentary provided a general, interpretive rule to guide courts in applying the provision: “loss is the greater of actual loss or intended loss.” United States Sentencing Guidelines § 2B1.1, comment. (n.3.(A)). The Commentary also defined the terms “actual loss” and “intended loss.”
In Stinson v. United States, the U.S. Supreme Court held that commentary which “interprets or explains a guideline is authoritative unless it violates the Constitution or a federal statute, or is inconsistent with, or a plainly erroneous reading of, that guideline.” 508 U.S. 36, 38 (1993). In 2019, however, the U.S. Supreme Court narrowed the scope of deference to agency interpretations of regulations to situations in which the regulation is “genuinely ambiguous.” Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019). Subsequently, in Banks, the Third Circuit held that “loss” in the context of §2B1.1 unambiguously refers to “actual loss,” and thus the Commentary’s interpretive rule regarding calculating loss had “no weight.” 55 F.4th at 253, 258. As the Third Circuit is the only appellate court to reach this conclusion, the Banks decision created a circuit split on the interpretation and application of loss calculations.
In an effort to ensure consistent loss calculations for defendants throughout the country, the USSC’s proposed amendment creates Notes to the loss table in §2B1.1(b)(1) and moves the general rule for calculating loss from the Commentary to the Guideline itself. The proposed amendment also moves the definitions for terms such as “actual loss” and “intended loss” from the Commentary to those Notes, which are part of the Guideline itself.
This proposed change is poised to resolve the definition of loss to include intended loss. Clearly, this proposed change operates to the detriment of defendants whose actions included losses that did not actually occur, but were intended to occur. At the very least, this proposed change takes the wind out of the sails of the Banks decision.
Acquitted Conduct
The USSC also considered “possible amendments to the Guidelines Manual to prohibit the use of acquitted conduct in applying the guidelines.” 88 Fed. Reg. 60536 (Sept. 1, 2023). While acquitted conduct was not explicitly addressed in the Guidelines, the U.S. Supreme Court has held that consideration of acquitted conduct is permitted under the Guidelines through the operation of §1B1.3 (Relevant Conduct (Factors that Determine the Guideline Range)), in conjunction with §1B1.4 (Information to be Used in Imposing Sentence) and §6A1.3 (Resolution of Disputed Factors (Policy Statement)). United States v. Watts, 519 U.S. 148 (1997). Therefore, the proposed amendment offers three options for amending the Guidelines to temper the impact of acquitted conduct on a defendant’s guideline range.
Option 1
The USSC would amend §1B1.3 and the Commentary to §6A1.3 to make clear that acquitted conduct is not relevant conduct for purposes of determining the guideline range. “Acquitted conduct” would be defined as conduct underlying or constituting an element of a charge of which the defendant had been acquitted in federal court or upon a motion of acquittal pursuant to Federal Rule of Criminal Procedure 29. This proposed definition would exclude conduct that establishes, in whole or in part, the instant offense of conviction that was either admitted by the defendant during a guilty plea or found by a judge or jury beyond a reasonable doubt.
Option 2
The USSC would add a new note to the commentary for §1B1.3 providing that a downward departure from the sentencing guideline may be warranted if the use of acquitted conduct has a disproportionate impact in determining the guideline range relative to the offense of conviction. This option would also adopt the same definition of “acquitted conduct” as described in Option 1.
Option 3
The USSC would amend §6A1.3 to establish a preponderance of the evidence standard of proof for resolving disputes involving sentencing factors. However, the rule would exclude acquitted conduct from consideration unless the conduct was established by clear and convincing evidence. The USSC would also make conforming changes to the Commentary of §§6A1.3 and 1B1.3, and adopt the same proposed definition for “acquitted conduct” as described in Option 1.
Concluding Thoughts
These proposed amendments seek to accomplish two objectives: for loss calculation, to restore a consistent nationwide definition of loss to include intended loss; and regarding the use of acquitted conduct, to mitigate the impact of acquitted conduct on sentencing guideline ranges.
The final version of the amendments is likely to be published in the coming months as the deadline for public comment passed on February 22, 2024. We are continuing to monitor whether these proposed amendments are adopted and their impact on criminal cases moving forward.
