March 25, 2004
NOTICE OF PUBLIC MEETING
OF THE UNITED STATES SENTENCING COMMISSION
Pursuant to Rule 3.5 of the Rules of Practice and Procedure of the United States Sentencing Commission, a public meeting of the Commission is scheduled for Thursday, April 8, 2004 at 1:00 p.m.. The meeting will be held at the Thurgood Marshall Federal Judiciary Building, One Columbus Circle, N.E., in Suite 2-500 (South Lobby). It is expected that the public meeting will last approximately one hour to conduct the business detailed in the following agenda:
Report of the Commissioners
Report of the Staff Director
Votes to Promulgate Amendments
Hazardous Materials Offenses
Chapter Eight Organizational Guidelines
Updated information on Commission activities can be obtained on our website (http://www.ussc.gov/meeting.htm) or from the Commission’s public affairs office (202/502-4590).
Minutes of the April 8, 2004
United States Sentencing Commission
Vice Chair Castillo called the meeting to order at 1:10 p.m. in the Commissioners Conference Room.
The following Commissioners and staff participated in the meeting:
Ruben Castillo, Vice Chair
William K. Sessions, III, Vice Chair
John R. Steer, Vice Chair
Ricardo Hinojosa, Commissioner
Michael E. Horowitz, Commissioner
Michael E. O’Neill, Commissioner
Edward F. Reilly, Jr., Ex Officio Commissioner
Deborah J. Rhodes, Ex Officio Commissioner
Timothy B. McGrath, Staff Director
Charles Tetzlaff, General Counsel
Judith Sheon, Special Counsel
Vice Chair Castillo began the meeting by comparing himself to the third runner of a four-runner relay team, having been handed the baton by Judge Murphy. He noted that his job is to start the Commission’s meetings on-time. Vice Chair Castillo noted that the Commission’s fast runner, Judge Hinojosa, is waiting in the wings. Again he implored the Senate and the President to move forward on Judge Hinojosa’s nomination as Chair, so he can pass the baton to the Commission’s fast runner.
Staff Director McGrath addressed the imminent departure of Kevin Holmes, the Commission’s Office Manager. Staff Director McGrath thanked Kevin Holmes for the wonderful job he has done at the Commission. He noted his appreciation for Kevin Holmes’s services, and how Mr. Holmes has shielded him from many logistical nightmares. Vice Chair Steer also thanked Mr. Holmes for his great work at the Commission.
Vice Chair Castillo also thanked Kevin Holmes on behalf of all of the commissioners. He noted that Mr. Holmes has gone above and beyond the call of duty, and that Mr. Holmes will be missed.
Vice Chair Castillo stated that the minutes of the March public meeting had been circulated. Commissioner O’Neill moved to approve the minutes. Seconded by Vice Chair Steer. The minutes were approved unanimously by voice vote.
Vice Chair Castillo stated that, before addressing the fixed agenda, the commissioners had to consider a matter discussed during the March public meeting regarding the public corruption amendment. General Counsel Tetzlaff noted that there was a desire on the part of the Commission to revisit a small item that the commissioners voted on during the March public meeting regarding the public corruption guideline.
Commissioner O’Neill stated that, in moving for a minor technical amendment at the last meeting, his intent was to provide an non-exclusive list of examples of public officials holding sensitive positions in Application Note 3(B)(ii) of §2C1.1 (Offering, Giving, Soliciting, or Receiving a Bribe; Extortion Under Color of Official Right; Fraud Involving the Deprivation of the Intangible Right to Honest Services of Public Officials; Conspiracy to Defraud by Interference with Governmental Functions). However, in moving for this change, Commissioner O’Neill noted that a situation was created where it was left to the judge’s discretion whether a sensitive position level applied to jurors, law enforcement officers, or election officials. As a consequence, Commissioner O’Neill moved to reconsider and to have Application Note 3(B)(ii) of §2C1.1 and 2(B)(ii) of §2C1.2 the language that was approved on March 19, 2004, read as follows: "[e]xamples of public officials who hold a sensitive position include a juror, a law enforcement officer, an election official, and any other similarly situated individual." Commissioner O’Neill noted that the effect of this amendment was to provide a non-exclusive list. Commissioner O’Neill’s motion was seconded by Vice Chair Steer.
Vice Chair Castillo noted that this technical amendment conformed with the Commission’s original intent to have a broad application of this particular guideline. The motion was approved unanimously by voice vote. In response to General Counsel Tetzlaff’s inquiry, Vice Chair Castillo stated that this amendment has an effective date of November 1, 2004, and that staff is authorized to make technical and conforming changes, if needed.
General Counsel Tetzlaff expressed his admiration and appreciation to the Commission’s staff. He was impressed by the work accomplished by every team during the amendment cycle. He noted that it was a real eye-opener to see the work and the effort the staff invests into these amendments. He thanked all of the staff for their hard work.
Vice Chair Castillo, on behalf of the commissioners, also thanked the staff for its hard work and efforts. He noted that all of the commissioners appreciated the work that is accomplished by the staff under significant time pressure. Vice Chair Sessions also offered a special thanks to General Counsel Tetzlaff for his hard work.
General Counsel Tetzlaff stated that Vice Chair Steer expressed a desire in the past to waive the rule with respect to retroactivity. He noted that this was done during the meeting of March 19, 2004. He stated that a motion would be in order to temporarily suspend Rule 4.1 of the Rules of Practice and Procedure, requiring the consideration of retroactivity at the same time that an amendment is promulgated. General Counsel Tetzlaff noted that the commissioners have the authority to suspend a rule pursuant to Rule 1.2(b). This would enable them to take additional time to consider the retroactive application of any amendment promulgated during the public meeting that may result in reduced penalties.
Vice Chair Steer moved to temporarily suspend the retroactivity requirement of Rule 4.1 of the Rules of Practice and Procedure. Seconded by Commissioner Horowitz. The motion was approved unanimously by voice vote.
Hazardous Materials Offenses
General Counsel Tetzlaff stated that the Department of Justice requested that the Commission examine the guideline treatment of the illegal transportation of hazardous materials with the goal of possibly revising the guideline. The Department of Justice also expressed concerns about the vulnerability to terrorism that such transportation of hazardous materials may present. He noted that the proposed amendment amends the specific offense characteristics in §2Q1.2 (Mishandling of Hazardous or Toxic Substances or Pesticides; Recordkeeping, Tampering, and Falsification; Unlawfully Transporting Hazardous Materials in Commerce) to provide a two level increase for a defendant convicted under 49 U.S.C. § 5124, Hazardous Materials Transportation Act, or under 49 U.S.C. § 46312, Federal Aviation Act, which are the statutory provisions that relate directly to hazardous materials transportation offenses. General Counsel Tetzlaff stated that this amendment also adds upward departure language to the commentary of §2Q1.2 if the offense resulted in extreme psychological injury or was motivated by terrorism.
General Counsel Tetzlaff explained that Congress is in the process of reauthorizing the Hazardous Materials Transportation Act which could make changes to the scope of the Act, the overall statutory and regulatory scheme, and the criminal penalty provisions, including an increase in the statutory maximum from 5 to 20 years, if a hazardous material violation results in a release of hazardous materials. General Counsel Tetzlaff noted that it is his understanding that emergency amendment authority is likely to be included in such legislation.
General Counsel Tetzlaff stated that a motion would be in order to adopt the proposed amendment with an effective date of November 1, 2004, and to authorize staff to make technical and conforming changes, if needed.
Vice Chair Steer moved to adopt the proposed amendment regarding hazardous materials. Seconded by Commissioner O’Neill.
Vice Chair Steer stated that the hazardous materials issue would resurface most certainly in the next amendment cycle, either under emergency amendment authority or regular amendment authority. He noted that this amendment is not a complete fix to the issues which have been raised, but rather is an interim solution indicating the Commission’s concern regarding these particular offenses and its desire to punish these offenses accordingly.
Ex Officio Commissioner Rhodes stated that the Department of Justice has a strong interest in this issue because of domestic security concerns and of the environmental risks. She noted that the Department recognizes the considerable amount of work that the staff has already invested in this amendment. She stated that the Department sincerely hopes there will be emergency amendment authority and, if not, the Department looks forward to the Commission addressing this issue again next year so that the penalties may be brought in line with the nature of the offense.
Vice Chair Castillo noted the team’s frustration due to the short time-frame. He stated that the Commission is cognizant of the fact that Congress has pending legislation for which the Commission has suggested it be given emergency amendment authority. He noted that the Commission must show deference to the legislative leaders behind the Act. Vice Chair Castillo concluded by stating that, given these factors, this amendment is the best the Commission could offer, and he fully expects that this issue will be revisited next year.
Vice Chair Castillo called for a voice vote. The proposed amendment regarding hazardous materials was adopted unanimously by voice vote.
Chapter Eight Organizational Guidelines
General Counsel Tetzlaff introduced the proposed amendment to the Chapter Eight Organizational Guidelines. He stated that the proposed amendment is intended to provide expanded guidance to organizations and courts regarding the criteria for an effective program to prevent and detect criminal conduct. The proposed amendment adds to Chapter Eight, Part B, a new guideline, §8B1.2 (Effective Compliance and Ethics Program), that identifies the purposes of an effective compliance and ethics program, sets forth seven minimum requirements for such a program, and provides guidance for their implementation. General Counsel Tetzlaff stated that the Commission developed this proposed amendment with input from the Ad Hoc Advisory Group on the Organizational Sentencing Guidelines, which was empaneled by the Commission for the purpose of reviewing the general effectiveness of the guidelines for organizations, with particular emphasis on examining the criteria for an effective program to prevent and detect violations of law. He noted that the Commission considered and relied, in part, on the Advisory Group’s review and analysis, which can be found in its report of October 7, 2003.
General Counsel Tetzlaff stated that the amendment incorporates the seven minimum requirements for a compliance and ethics program, currently located in the commentary, and places it into a new guideline at §8B2.1 in order to emphasize the importance of compliance and ethics programs, and provide more prominent guidance on the attributes of such programs. The proposed amendment is intended to reflect emphasis on ethics and values incorporated into recent legislative and regulatory reforms, as well as the proposition that full compliance with all laws is the expected behavior within organizations.
General Counsel Tetzlaff stated that the proposed amendment provides greater guidance regarding some of the requirements by adding definitions and clarifying terms. The amendment also defines the specific roles and reporting relationships of particular categories of personnel with respect to compliance and ethics program responsibilities, such as the governing authority (most likely the Board of Directors), the organizational leadership, that is, management, and specific individuals all are set forth in this guideline.
General Counsel Tetzlaff stated that the proposed amendment requires that the organization use reasonable efforts and due diligence not to include within the substantial authority personnel any individual whom the organization knew, or should have known, has engaged in illegal activities or other conduct inconsistent with an effective program. The amendment also makes compliance training a requirement for the upper levels of an organization, as well as to the employees. In addition, the amendment mandates the use of auditing and monitoring systems designed to detect criminal conduct, as well as periodic evaluation of the effectiveness of its compliance and ethics program. The amendment references mechanisms that allow for anonymity or confidentiality whereby the organization’s employees may report criminal conduct without fear of retaliation.
General Counsel Tetzlaff stated that the amendment broadens the existing requirement that the compliance standards be enforced through disciplinary measures by adding that such standards also be encouraged through appropriate incentives to perform in accordance with the compliance and ethics program. He also noted that in addition to the seven criteria for a compliance and ethics program, the proposed amendment expressly provides for periodically assessing the risk that criminal conduct will occur. Furthermore, there is also guidance with respect to the implementation of compliance and ethics programs by small organizations.
Finally, General Counsel Tetzlaff stated that the proposed amendment changes the automatic preclusion for compliance program credit provided for small organizations defined as having fewer than 200 employees. Rather than precluding these small organizations from obtaining a compliance and ethics program credit if certain categories of high-level personnel are involved in the offense of conviction, the proposed amendment establishes that an offense by an individual within high-level personnel of the organization results in a rebuttable presumption for a small organization that it did not have an effective program. The automatic preclusion, however, for compliance program credit remains the same in all other respects. For all organizations, the guidelines continue to provide a rebuttable presumption that an organization did not have an effective compliance program, if an individual within substantial authority personnel, other than high-level personnel, participated in an offense.
General Counsel Tetzlaff concluded by raising the issue of the litigation dilemma. Pursuant to §8C2.5(g)(1) and (2), an organization’s culpability score will be reduced if it fully cooperated in the investigation of its wrongdoing, among other factors. The proposed amendment provides that waiver of the attorney-client privilege and of work product protections is not a prerequisite to a reduction in culpability score, unless such waiver is necessary in order to provide timely and thorough disclosure of all pertinent information known to the organization.
General Counsel Tetzlaff stated that a motion would be in order to adopt the proposed amendment with an effective date of November 1, 2004, and to authorize staff to make technical and conforming changes, if needed.
Commissioner Horowitz moved to adopt the proposed amendment regarding the Chapter Eight Organizational Guidelines. Seconded by Vice Chair Steer.
Commissioner Horowitz stated that the proposed amendment is the culmination of over two years of work. He explained how, prior to his nomination as a commissioner, he was part of the Ad Hoc Advisory Group formed in February of 2002. Commissioner Horowitz commended the Ad Hoc Advisory Group for the quality of its work. He noted that the Commission built upon the efforts of the Ad Hoc Advisory Group to put forward revised organizational guidelines that meet the mandate given by the Sarbanes-Oxley Act. He described how the revised organizational guidelines raise the standards for corporate America similar to the standards that many of the leading corporations already adhere to through their compliance efforts. Commissioner Horowitz concluded by stating that the revised organizational guidelines have made these guidelines again into the state of the art guidelines that they were back in 1991, and will provide an important roadmap for compliance officers and corporate officials throughout the country. He also commended the staff for their hard work in processing the information they received from the Ad Hoc Advisory Group.
Vice Chair Steer echoed Commissioner Horowitz’s comments and joined him in supporting the proposed amendments. He explained how originally the guidelines for individual defendants had to be promulgated within a tight time-frame of 18 months. However, he noted that the organizational guidelines did not carry a specific deadline and therefore the original commissioners took almost four years to draft the organizational guidelines. Vice Chair Steer noted that the original commissioners adopted the "carrot and stick" approach for the organizational guidelines, an approach that uses the criminal fine sanction coupled with other sanctions, such as probation. Vice Chair Steer stated that this approach has proved more than satisfactory and it was a remarkable innovation. He noted how the organizational guidelines have stood the test of time and, unlike the individual defendants’s guidelines, have required few amendments. However, Vice Chair Steer stated that, with the passage of time, there was a need to update the organizational guidelines in light of the Sarbanes-Oxley Act and other regulatory developments. He noted that the amended organizational guidelines will send a message far beyond the courtroom.
Vice Chair Castillo joined in the remarks of Commissioner Horowitz and Vice Chair Steer. He noted that both Commissioner Horowitz and Vice Chair Steer are recognized experts in the area of compliance. Vice Chair Castillo stated that the Commission raised the bar for compliance efforts. He stated that this proposed amendment is an example of the Commission operating at its finest. He explained that under the past leadership of Judge Murphy, the Commission formed an advisory committee on this issue. Vice Chair Castillo stated that this committee was ahead of its time, ahead of the curve, and ahead of all the corporate scandals. He stated that the organizational guidelines are considered a success in the industry because they have encouraged good corporate conduct. Vice Chair Castillo stated that the Commission’s message is clear - good corporate conduct means above all else ethical conduct. He stated that it was impossible to be a good corporate citizen in the United States without having ethics. Vice Chair Castillo commented on the members of the Ad Hoc Advisory Group and stated that it was the dream team of corporate compliance, each member being an expert in the field. He noted that the members of the Ad Hoc Advisory Group offered their services to the Commission on a pro bono basis. Vice Chair Castillo expressed his surprise when the Sarbanes-Oxley Act indicated that the organizational sentencing guidelines required some improving. He noted that, after reading the advisory committee’s report, he concluded the Commission could improve the organizational guidelines. Vice Chair Castillo stated that the amended organizational guidelines achieve the goal of promoting good corporate citizenship. He noted that, in this area of the law, there is true deterrence.
Vice Chair Castillo then addressed the issue of attorney-client waiver. He stated that any commissioner who had made a good living serving as an attorney recognizes the importance of the attorney-client privilege. He stated that a good attorney giving good advice to a corporation will usually result in ethical conduct. Vice Chair Castillo explained that the language used in the amendment indicates that waiver of attorney-client privilege and of the work-product protection is not a prerequisite to a reduction in culpability score, unless such waiver is necessary to provide timely and thorough disclosure of all pertinent information known to the organization. He noted that the Commission believes this language reflects the right compromise. Vice Chair Castillo thanked the staff, more specifically Ken Cohen, for drafting the waiver language. He stated that this is the correct outcome because on the one hand it recognizes the importance of the attorney-client privilege, but on the other hand it also recognizes that there are instances where the interests of the Department of Justice must be given priority. Vice Chair Castillo hopes the amended guidelines will result in true ethical and legal compliance in the corporate community. He stated that any CEO, corporate counsel, and CFO knows that the objective is good corporate citizenship; in this era, no company wants to be under investigation because there will be a direct market place price to be paid for having a company’s name played out in page one of the Wall Street Journal, or any other newspaper that covers this particular area. He noted that, while it takes years to build a company’s reputation, it only takes seconds to tarnish that reputation. Vice Chair Castillo is hopeful that, by raising the bar, the Commission accomplishes its objective, and that companies will meet the new standards.
Commissioner O’Neill stated that, as a firm believer in the market system, he believes it is important for companies to act ethically and to follow the dictates of the law. Ethical behavior and the provision of information are crucial to the functioning of America’s economic system. However, he believes that the role of the Sentencing Commission ought to be precisely what it does, namely providing punishment for those who break the law. Commissioner O’Neill supports the proposed amendments, although his support is accompanied by a certain amount of trepidation.
Commissioner O’Neill expressed concern about the Commission partaking in activities that appear to lie outside the ambit of its authority. He believes that the best the Sentencing Commission can do is to provide an incentive structure that will encourage compliance with the law and that will provide breaks to those individuals who timely report violations of the law and seek to provide information and truthful testimony to the government. He noted that, in the corporate area, this is the single most important thing that the Commission does in assuring compliance with the law. He expressed his wariness about the Commission’s ability and authority to encourage ethical behavior by companies. Commissioner O’Neill believes that most organizations and companies in the United States behave ethically and intend to follow and comply with the law. However, he noted that certain individuals or corporations do run afoul of the law and that is where the criminal justice system comes into play, and this is the area where the Sentencing Commission has its greatest authority and impact. Commissioner O’Neill also recognized that corporate players, unlike individual defendants, are the most sophisticated players; they have retained counsel, they are cognizant of the sentencing guidelines and of the criminal and civil penalties, and therefore are more sensitive to deterrence than individual criminals.
Commissioner O’Neill is concerned that with the failure and the difficulties recently encountered by many corporations, such as Enron, WorldCom, and Martha Stewart, the picture on the market place is not nearly as bad as it may appear. He stated that looking at the empirical data of the number of corporations sentenced under the guidelines - in 1997, 220 reported cases; in 1998, 218 reported cases; in 1999, 255 reported cases; in 2000, 304 reported cases; and in 2001, 238 reported cases - there appears to be no explosion in corporate crime. Commissioner O’Neill noted that it is important to recognize that corporate crime follows business cycles; when there is a boom and a bust in the economy, more problems occur with corporations as they are going through bankruptcy and other problems. Therefore he noted that the alleged explosion in corporate crime is somewhat of a misunderstanding. Finally, Commissioner O’Neill noted that the Commission has not established fine provisions under the organizational sentencing guidelines. He stated that when dealing with corporations, as opposed to individuals, the best way to achieve deterrence is not necessarily by jailing people, but by providing a rational fine structure. He stated that the Commission should consider establishing a fine structure in its future agenda.
Commissioner O’Neill then addressed the issue of small corporations and the adoption of compliance programs. He stated that small corporations, which are currently the bulk of corporations in the United States, have little incentive to establish a compliance program. He noted that when finances are limited, especially in small corporations, there is a need for an incentive structure to encourage small business organizations to adopt compliance programs. Commissioner O’Neill believes that a move in that direction could begin with the Department of Justice providing information, not only with respect to the companies that are actually prosecuted, but also data regarding circumstances in which compliance programs have been helpful in allowing corporations, large and small, to avoid criminal liability, circumstances in which the Department has declined prosecution, or circumstance in which the Department has used alternative methods of insuring compliance by not using the criminal justice system. Commissioner O’Neill noted that for a small business, looking at the small percentage of compliance programs being approved (three over the past thirteen years), it appears unlikely that, when applying a cost-benefit analysis, a small business would adopt a compliance program. Finally, Commissioner O’Neill noted that the Commission lacks the data as to whether the organizational sentencing guidelines have the effect of insuring compliance with the law. He acknowledged the difficulty of accessing this type of data and the difficulty in generating deterrence data. However, he noted that this type of information could help determine the circumstances in which compliance programs have allowed the Department of Justice to decline prosecution or impose lighter sentences. Commissioner O’Neill concluded by stating that such data would be extremely important for the market place, small businesses, and large businesses.
Commissioner O’Neill offered two amendments in order to achieve a more effective program. The first amendment dealt with a rebuttable presumption. In Commissioner O’Neill’s view, the drafts that staff initially presented regarding the issue of a per se rule or a rebuttable presumption under the culpability score of §8C2.5(3)(A) and (B), raised the concern that there is little incentive for a small organization to adopt compliance programs. Commissioner O’Neill stated that the concern was that if any high level individual within a small corporation was involved in wrongdoing, there was automatically a per se presumption that the corporation could not obtain the benefit of the program, and therefore virtually no small company would be encouraged to adopt compliance programs. Commissioner O’Neill stated that the current language goes a long way in helping small corporations, and he fully supports the language. However, he expressed a desire to apply the rebuttable presumption to all companies. Commissioner O’Neill then provided the factual scenario of a corporation with thousands of employees, and with hundreds of individuals in management. If the corporation has a couple of bad apples, and one of those bad apples happens to be the person in charge of compliance, or another of those bad apples happens to be the CEO of the corporation, it is not necessarily the case that the entire corporation ought to be penalized as a result of the conduct of a couple of bad apples. The reason being that a corporation is unlike an individual and the ripple effects of bringing down a corporation are enormous, affecting innocent stockholders, pensioners, and thousands of employees. Commissioner O’Neill believes that under those circumstances a per se rule is not necessarily the wisest way in which to encourage compliance and to insure ultimately the ability to save the corporation.
Accordingly, Commissioner O’Neill moved to strike §8C2.5(3)(A), and to strike §8C2.5(3)(B)(I) and (ii) and to allow the rebuttable presumption to apply to companies both large and small. Commissioner O’Neill recognized that this was a retreat and the Department of Justice would reject this motion, at least in part, because of the message that it is sending out. However, Commissioner O’Neill believed his proposal would create a situation in which it is more likely that other officers of the corporation, having rooted out misconduct by principals of the corporation, would report the information to the government. He stated that his proposal creates a better incentive structure and sends a better message.
Commissioner O’Neill moved for his first amendment. Seconded by Commissioner Horowitz.
Ex Officio Commissioner Rhodes commended the Commission for its work in this area. She noted that the Department of Justice believes the work culminating in the compliance guideline is beneficial and will deter and encourage compliance among corporations. However, Ex Officio Commissioner Rhodes noted two disagreements. First, the Department fundamentally disagrees that the way to incentivize effective compliance programs is through altering a rule that has been in existence since 1991, which is the automatic preclusion of a benefit to a corporation, by allowing the reduction in the culpability score when a high level personnel or director is involved in the criminal activity. She noted that this rule has applied to large and small corporations since 1991, and the Department does not agree that the creation of a separate rule for small corporations is consistent, or that it will result in an incentive for small corporations to institute a compliance program.
Ex Officio Commissioner Rhodes noted that the second issue the Department objects to is the waiver language concerning the reduction of the culpability score when a corporation decides to cooperate. The Department’s original position was that no language was necessary. She stated that ultimately the Department does not agree with the current language because the Department believes that language should express the complete picture, namely that the Department assesses cooperation of a corporation which has already been indicted, and the government is in the best position to assess whether or not the corporation has been timely and thorough in its cooperation.
Commissioner Horowitz supported Commissioner O’Neill’s amendment. He addressed the issue in the current draft regarding small corporations. He stated that this was an important change to the organizational guidelines. He noted that one of the main issues struggled with while he was with the Department of Justice, on the Ad Hoc Advisory Group, and with the Commission, is how to encourage small companies to implement compliance programs. He stated that much of corporate America has gone forward with the implementation of compliance programs, however the same cannot be said for small companies. Commissioner Horowitz believes that one of the reasons is based on statistics; most companies do not receive credit for having an effective compliance program. He noted that this is partially due to the fact that when small companies get charged, often a high level official is involved in the wrongdoing, and therefore they are automatically barred from getting credit for having an effective compliance program. Commissioner Horowitz concluded by stating that a small business owner looking at this data, will conclude that the likelihood of receiving any credit under the sentencing guidelines for having an effective compliance program is extremely small. Changing the rule to a rebuttable presumption does not imply that the company qualifies for having an effective program if high level officials are involved, it merely states that small companies can receive credit if they can explain why the program failed, but nevertheless the small company made its best efforts. Commissioner Horowitz concluded by stating that this is an important incentive for small companies, and therefore he supports Commissioner O’Neill’s motion.
Vice Chair Steer noted that this was a tough issue. He stated that he might support a similar motion in the future, but at the present time he was unwilling to support Commissioner O’Neill’s motion. Vice Chair Steer agreed with Commissioner Horowitz’s concerns regarding small companies. However, Vice Chair Steer believed that an automatic preclusion was currently necessary. Vice Chair Steer concluded by stating that he was comfortable with the current draft.
Vice Chair Castillo noted that throughout the deliberations concerning the organizational guidelines one of the main tensions was with regard to small companies, the issue being whether the Commission lowers the bar for small companies. He noted that on this issue Commissioner Horowitz is correct, that the bar should be lowered for small companies because there is a real issue about incentivizing small companies to undertake the capital investment in compliance programs. He noted that unfortunately small companies do not see the benefit that emanates from compliance programs. However, Vice Chair Castillo noted that the same is not true of larger companies. Larger companies need to know that when it comes to key personnel, and higher level officials, these officials can bind the company. He explained how companies have been brought down under criminal indictment and criminal investigation. Therefore, he stated that companies must be careful in the hiring and selection of their officials. Vice Chair Castillo concluded by stating that he had no reluctance in this instance in going against the dream team’s advice. He stated that this was not the time, nor the place, to lower the bar regarding the automatic preclusion if a high level official in a large company is involved in criminal misconduct. He stated that he fully concurred with Vice Chair Steer.
Vice Chair Castillo requested that Staff Director McGrath take a roll call vote on Commissioner O’Neill’s first amendment. Commissioner O’Neill voted yes. Commissioner Horowitz voted yes. Commissioner Hinojosa voted no. Vice Chair Steer voted no. Vice Chair Sessions voted no. Vice Chair Castillo voted no. Commissioner O’Neill’s first motion to amend the pending motion failed.
Commissioner O’Neill presented his second amendment. He stated that his second amendment addresses the issue of the waiver of attorney-client privilege. He stated that he is sympathetic to defense counsel’s position in the sense that waiver ought not be a prerequisite to a reduction of the culpability score. He noted that he was also very sympathetic to the Department of Justice’s position in that the Department is better situated to assess whether or not cooperation exists, and whether or not there is a need to waive the attorney-client privilege or of the work product protection. Commissioner O’Neill noted that ultimately counsel has a choice, even though it might be a difficult choice, to waive the attorney-client privilege or the work-product protection. Commissioner O’Neill stated that he talked to people at the Department and in the corporate world and there is no meeting of the minds as to how often this occurs; the Department stated that these waivers rarely occur and that it rarely requests them, however individuals within the corporate world stated that these waivers occur frequently.
Commissioner O’Neill stated that the problem seems to be a lack of data; the Commission does not know how often the Department requests these waivers and the Commission does not know how large a problem the waiver issue is within the corporate field. He stated that without this type of information, he is inclined to take a parsimonious approach. Commissioner O’Neill offered an amendment under Application Note 12 of §8C2.5 to strike the new language, that is, strike the last sentence of Application Note 12 which would return this application note back to the existing language supported by the Department of Justice. Commissioner O’Neill concluded by stating that this waiver issue would be better handled by Congress who could adopt a limited waiver attorney-client privilege.
Commissioner O’Neill moved for his second proposed amendment. Seconded by Commissioner Hinojosa.
Commissioner Hinojosa stated his reasons for supporting Commissioner O’Neill’s proposal. He stated that he is a firm believer in the attorney-client privilege. He expressed concern that any language in the Chapter Eight guidelines may lead to further discussions of the waiver of attorney-client privilege in other sections of the guidelines. Accordingly, he believed that the best solution is to leave any discussion regarding waiver of attorney-client privilege outside the ambit of the guidelines.
Vice Chair Castillo stated that his fellow commissioners were raising important issues. Regarding Commissioner Hinojosa’s concern, Vice Chair Castillo did not foresee a day where the Commission would be addressing the waiver of attorney-client privilege with regard to individuals. Regarding Commissioner O’Neill’s point about Congress needing to show leadership on this issue, he noted that obviously this would be the ideal situation. However, Vice Chair Castillo stated that the fact remains that nobody has shown leadership on this issue, not the Securities Exchange Commission, and no other government agencies. Consequently, Vice Chair Castillo sees an opportunity for the Commission to show some leadership. He concluded by noting his support for the inclusion of the attorney-client privilege language. He stated that this issue had been worked on by the experts in the field, namely the Ad Hoc Advisory Group’s dream team, and the Commission’s in-house dream-team.
Vice Chair Castillo requested that Staff Director McGrath take a roll call vote. Commissioner O’Neill voted yes. Commissioner Horowitz voted no. Commissioner Hinojosa voted yes. Vice Chair Steer voted no. Vice Chair Sessions voted no. Vice Chair Castillo voted no. Commissioner O’Neill’s second motion to amend the pending motion failed.
Vice Chair Castillo then called for a voice vote. The proposed amendment regarding the organizational guidelines was adopted unanimously by voice vote.
Before addressing the mitigating role cap issue, Vice Chair Castillo noted that Vice Chair Sessions would be leaving early, and therefore, following discussion of the mitigating role cap, Vice Chair Sessions would provide a summary of his remaining votes.
Mitigating Role Cap
General Counsel provided a brief summary on the mitigating role cap issue. He stated that there is presently a mitigating role cap in §2D1.1 (Unlawful Manufacturing, Importing, Exporting, or Trafficking (Including Possession with Intent to Commit These Offenses); Attempt or Conspiracy), wherein if an individual is eligible for the mitigating role cap, and meets certain other criteria, the base offense level will be capped at level 30. The proposed amendment makes several changes to the mitigating role cap. First, in lieu of the mitigating role cap, the proposed amendment sets forth a tiered approach: there is a two level reduction if the base offense level is at level 32; there is a three level reduction if the base offense level is at level 34 or 36; and there is a four level reduction if the base offense level is at level 38. Second, the proposed amendment makes this mitigating role tiered approach also applicable to §2D1.11 (Unlawfully Distributing, Importing, Exporting or Possessing a Listed Chemical; Attempt or Conspiracy).
General Counsel Tetzlaff stated that a motion would be in order to adopt the proposed amendment with an effective date of November 1, 2004, and to authorize staff to make technical and conforming changes, if needed.
Vice Chair Sessions moved to adopt the proposed amendment regarding the mitigating role cap. Seconded by Commissioner Horowitz.
Vice Chair Sessions noted the difficulty and the emotional response raised by the issue of the mitigating role cap. He stated that this issue represents a significant test for the Commission in the post-Diana Murphy era. He noted that these types of passionate issues test the core of the Commission. Vice Chair Sessions believed that this amendment will be controversial from the perspectives of the judiciary, the defense bar, the government, as well as in Congress. However, Vice Chair Sessions stated that he wholeheartedly endorsed the proposed amendment.
Vice Chair Sessions commented on how each commissioner comes to the table with passions and strong convictions regarding certain parts of the guidelines. However, even with these strong convictions, there remains an overwhelming sense of the need to listen to all points of view, and for the commissioners to incorporate these differing views within their own views. Vice Chair Sessions stated that the factors that the commissioners listen to, both inside and outside of the conference room, are very dramatic. He noted that eventually there arrives the sense of the need to reach a consensus for the health of the Commission, especially in light of the fact of the controversial aspect of the guidelines and the Commission. Vice Chair Sessions stated that a consensus is extraordinarily important, particularly a consensus among the various political groups. As a result, Vice Chair Sessions noted how everyone has acted in good faith. He stated that he has never been part of a commission where individuals can take on such difficult issues and ultimately come to a decision that maybe nobody likes, but that everyone respects. He stated that the commissioners walk out not as winners, but they also do not walk out as losers. He noted that in the long-run, if Washington D.C. was run in a similar fashion, it would probably be a whole lot better. Vice Chair Sessions concluded that he originally was not in favor of the proposed amendment, but he respects his fellow commissioners and the process by which the Commission arrived at the proposed amendment. Therefore he supports the proposed amendment.
Vice Chair Sessions then offered his position on the remaining proposals up for vote. He stated that he supported the proposed amendment for CAN SPAM, the proposed amendment for the immigration guidelines, and the proposed amendment for the drug guidelines. He expressed his concern about the ratcheting up of the penalties regarding the sexual abuse offenses, however he supports the proposed amendment for three reasons. First, he noted that Congress made a clear statement to the Commission, and therefore he respects and follows its directive. Second, he stated that the staff applied a balanced approach, not an overly punitive approach. He stated that he disagreed with a whole number of individual issues, but the staff has approached the matter in a balanced fashion. Finally, Vice Chair Sessions concluded by stating the he trusts the judgment of his fellow commissioners, even though he disagrees on individual issues and is concerned about the ratcheting process applied to the penalties. He commended the staff for their hard work, even though he disagreed with them on many points. Accordingly, Vice Chair Sessions stated his support for the proposed amendment regarding the sex guidelines.
Vice Chair Castillo called for a voice vote. The proposed amendment regarding the mitigating role cap was adopted unanimously by voice vote.
The public meeting then proceeded without the presence of Vice Chair Sessions who left the meeting at 2:20 p.m.
Vice Chair Castillo explained why he voted in favor of the mitigating role cap, after having been initially opposed to the amendment. He noted that the hallmark of a good judge is the ability to rethink his or her position and change his or her view if need be. He stated that over the past four years he has learned to listen to his fellow commissioners, as they have listened to him. He stated how at one point there was the possibility for the complete elimination of the mitigating role cap. Vice Chair Castillo thanked his fellow commissioners for listening to him by not adopting that proposition. He reasserted his strong position regarding the drug war. He noted that anyone wanting to see how he felt about the drug war should refer to United States v. Chaverra-Cardona, 879 F.2d 1551 (7th Cir. 1989). He stated that his experience in fighting the drug war has been no different than the other commissioners who are currently on the Commission or who have served in the past. Vice Chair Castillo specifically referred to Judge Sterling Johnson, who was in charge of the drug war in New York City, his experience ranging from being an undercover police officer to coordinating the drug prosecutions; Vice Chair Castillo noted that Judge Sterling Johnson was in favor of this mitigating role cap. He noted his initial concern as to why this issue was being revisited.
Vice Chair Castillo stated that he has listened to his fellow commissioners who have applied a graduated approach to the problem. He stated that he had no intention of undermining the Commission’s effort in combating drugs and drug dealers. However, he carefully stated that the current war on drugs is flawed. He stated that when he was prosecuting drug dealers, he knew he was prosecuting the right people. These defendants had considerable assets, were using mobile phones at a point in time when you had to carry them in a suitcase, and they had multiple vehicles and houses. These defendants were principally from Columbia, a source country. Vice Chair Castillo stated that currently many defendants are unfortunate souls who are making stupid and criminal decisions and are paying huge prices for those decisions. He stated that there is no question about sending these people to jail, the issue is the length of their imprisonment. Vice Chair Castillo firmly believes that the American taxpayer does not want to send the typical drug courier with no criminal history to jail for eight, nine, or ten years. He stated that there is no benefit to such sentences. Vice Chair Castillo concluded by stating his support for the mitigating role cap; he believes it is a fair resolution of the current problem. However he hopes that his fellow commissioners will continue to analyze what needs to be done to incentivize the Department of Justice to go after the real drug dealers, namely the defendants with real assets and the defendants that require a lot more investigative activity in the form of Title III wire-taps.
Commissioner O’Neill noted how initially he voted reluctantly for the mitigating role cap because it was part of a large political compromise and also because it was a crude tool. He stated that he could not agree more with Vice Chair Castillo and Vice Chair Sessions in terms of where the Commission needs to focus its efforts. He expressed his long-standing concern, having reviewed the Department of Justice’s declination data, as well as prosecution data, that the current focus and the types of people currently prosecuted, especially outside districts such as the District of Northern Illinois or the Southern District of New York, are not necessarily the right people. He expressed his concern regarding penalties, which are largely driven by drug quantity and drug type; this inadvertently provides an incentive to prosecutors to focus on individuals who are not at the top of the drug chain. Commissioner O’Neill noted that, while it is absolutely necessary to go after low level drug offenders in order to get to the drug leaders, he is concerned that the leaders are not pursued as vigorously and adequately as they should be.
Commissioner O’Neill stated that he is a great believer in the war on drugs. However, he noted that, given the limited federal resources, it is vital to target these resources by pursuing only the most serious and despicable drug dealers. He stated that, in order to accomplish this goal, role in the offense should be used as the primary determinative of the penalty, as opposed to simply consistently relying on either quantity of the drug or the type of drug. Commissioner O’Neill stated that the problem is exacerbated when relevant conduct and acquitted conduct are brought into the mix. He noted that it is tempting to bring these factors in at the sentencing phase for an individual who happens to be a drug courier and is not necessarily a higher up in an organization. He believes that there is a need to refocus the manner in which drug prosecutions are viewed, the need for better models as to how drug organizations function, and the need to target limited federal resources towards the individuals who are at the top of the drug chain. Accordingly, Commissioner O’Neill hopes the Commission will move away from an over-reliance on drug quantity and type and move towards culpability and role in the offense as being the primary determinant as to how drug defendants are prosecuted.
Ex Officio Commissioner Rhodes commended the Commission for wrestling with the issue of the mitigating role cap, especially since there is a broad divergence in ideas regarding this matter. She noted that the Department of Justice has argued strongly for a complete repeal of the mitigating role cap. She stated that nevertheless the Department appreciates the opportunity to be heard and to discuss this issue. Ex Officio Commissioner Rhodes commended the Commission for adopting the proposed amendment; the Department views this amendment as a step in the right direction. She noted that Commissioner O’Neill’s concern will be somewhat addressed by this amendment. She stated that it is those couriers with the largest amounts who are more trusted within an organization, and it is those couriers who are tied to larger organizations and are discouraged from cooperating against the higher ups in the organization. Ex Officio Commissioner Rhodes concluded by stating that the Department views this amendment as a step in the right direction which will assist in prosecuting those who are most culpable in the largest organizations.
General Counsel Tetzlaff introduced the proposed amendment in response to Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, the so-called CAN-SPAM Act of 2003. The Act directs the Commission to review and, as appropriate, amend the sentencing guidelines and policy statements to establish appropriate penalties for violations of 18 U.S.C. § 1037 and other offenses that may be facilitated by the sending of a large volume of unsolicited e-mail.
General Counsel Tetzlaff stated that the CAN-SPAM Act of 2003 further directs the Commission to consider providing sentencing enhancements for defendants convicted under 18 U.S.C. § 1037 who obtained e-mail addresses through improper means, including the harvesting of e-mail addresses from the users of a website, proprietary service, or other online public forum without authorization and the random generating of e-mail address by computer; or knew that the commercial e-mail messages involved in the offense contained or advertised an internet domain for which the registrant of the domain had provided false registration information.
General Counsel Tetzlaff stated that the amendment references the new offense at 18 U.S.C. § 1037 to §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). He also noted that the amendment addresses the directive by adding to §2B1.1 a two-level enhancement if a defendant is convicted under 18 U.S.C. § 1037 and the offense involved obtaining electronic mail addressed through improper means.
Lastly, General Counsel Tetzlaff explained that the amendment addresses the "mass marketing" aspect of the offense conduct in §2B1.1. Each offense under 18 U.S.C. § 1037 contains as an element the transmission of "multiple" commercial electronic messages, which are specifically defined in the statute. Because these offenses are achieved by the means of mass marketing, the proposed amendment provides an instruction in §2B1.1, Application Note 4, to apply to mass marketing in any case in which the defendant either is convicted under 18 U.S.C. § 1037 or committed an offense that involves conduct described in 18 U.S.C. § 1037.
Vice Chair Steer moved to adopt the proposed amendment pursuant to the CAN-SPAM Act. Seconded by Commissioner O’Neill.
On behalf of the Commission, Vice Chair Castillo stated the Commission attempted to work with Senator Nelson from Florida. He noted that the Commission is aware that Senator Nelson has been diligent in getting this legislation enacted. He stated that the Commission has been as responsive as possible given its considerable responsibilities during this amendment cycle. Vice Chair Castillo stated the Commission looks forward to working with Senator Nelson in the future. He noted that the Commission rendered its best effort in addressing Senator Nelson’s concerns.
Vice Chair Castillo called for a voice vote. The proposed amendment regarding the CAN-SPAM Act was adopted unanimously by voice vote.
Child Pornography and Sexual Abuse of Minors
General Counsel Tetzlaff introduced the proposed amendment regarding the sex offenses. He stated that the Prosecutorial Remedies and Other Tools to end the Exploitation of Children Today Act of 2003, also known as the PROTECT Act, directed the Commission to maker a number of changes to the child pornography and sexual abuse guidelines. The proposed amendment responds to those directives, as well as issues identified by case law, the Commission’s help-line calls, and the Department of Justice’s Child Exploitation and Obscenity Section.
General Counsel stated that, with regards to the child pornography offenses, Part A of the amendment consolidates §§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 2G2.4 (Possession of Materials Depicting a Minor Engaged in Sexually Explicit Conduct), into one guideline, §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; Possession of Materials Depicting a Minor Engaged in Sexually Explicit Conduct). Consolidation addresses concerns raised over several years by judges, probation officers, and practitioners regarding difficulties in determining the appropriate guideline (§2G2.2 or §2G2.4) for cases involving convictions under 18 U.S.C. § 2252, or § 2252A. General Counsel Tetzlaff noted that, as a result of amendments directed by the PROTECT Act, these guidelines have a number of similar specific offense characteristics.
General Counsel Tetzlaff stated that section 103 of the PROTECT Act created mandatory minimum terms of imprisonment for offenses related to trafficking of child pornography and also increased the statutory maximum terms of imprisonment. The PROTECT Act increased the statutory maximum penalty for possession offenses. General Counsel Tetzlaff stated that the proposed amendment provides an alternative base offense levels of 18, if the defendant was convicted of a possession offense, and a level 22 for all other offenses. A two-level decrease is provided for receipt or solicitation cases in which the defendant did not intend to traffic in or distribute the child pornography.
General Counsel Tetzlaff stated that the amendment broadens the computer enhancement to include "interactive computer services," as well as to apply to offenses in which the computer, or interactive computer service, was used for the possession of pornographic material. The amendment also adds a six-level enhancement if the offense involved distribution to a minor that was intended to persuade, induce, entice, or coerce a minor to engage in any illegal activity besides sexual conduct.
General Counsel Tetzlaff stated that the amendment makes changes to the commentary to §2G2.2 by providing a number of definitions including "computer," a "minor," "image" and "distribution." The commentary also clarifies that a defendant does not need to intend to possess, receive, or distribute sadistic or masochistic images for application of this four level enhancement.
Regarding the production offenses under §2G2.1, General Counsel Tetzlaff stated that, as a result of the PROTECT Act increasing mandatory minimums and statutory maximums for offenses related to the production of child pornography, this amendment increases the base offense level in §2G2.1 from level 27 to level 32. The amendment also adds a number of enhancements that may be associated with the production of child pornography. These enhancements help maintain the proportionality between these offenses and offense covered under §2G2.2.
With regards to the travel and transportation cases, General Counsel Tetzlaff stated that the amendment creates a new guideline §2G1.3 (Promoting a Commercial Sex Act or Prohibited Sexual Conduct with a Minor; Transportation of Minors to Engage in a Commercial Sex Act or Prohibited Sexual Conduct; Travel to Engage in Commercial Sex Act or Prohibited Sexual Conduct with a Minor; Use of Interstate Facilities to Transport Information about a Minor) to specifically address offenses under chapter 117 of title 18, Transportation for Illegal Sexual Activity and Related Crimes. General Counsel Tetzlaff noted that currently the travel cases are referenced to §2G1.1 (Promoting A Commercial Sex Act or Prohibited Sexual Conduct) or §2A3.2 (Criminal Sexual Abuse of a Minor Under the Age of Sixteen Years (Statutory Rape) or Attempt to Commit Such Acts). Because in recent years the majority of cases sentenced under the statutory rape guideline, §2A3.2, were travel cases, it was felt that creating a new guideline will better address issues specific to these travel cases, and allow the statutory rape guideline to be better tailored to deal with statutory rape issues which typically arise on Native American or federal lands.
General Counsel Tetzlaff stated that the proposed amendment provides a base offense level of 24 to account for the new mandatory minimum terms of imprisonment as required by the PROTECT Act. The amendment adds a number of enhancements, including commission of a sexual act or a commercial sex act, use of a computer, misrepresentation of identity, undue influence and custody issues, and if the minor was under the age of 12 years. General Counsel Tetzlaff noted that the base offense level of 18 remains unchanged in the §2A3.2 statutory rape guideline, nor did the PROTECT Act increase penalties for statutory rape offenses.
Regarding misleading domain names, General Counsel Tetzlaff stated that the PROTECT Act creates a new offense at 18 U.S.C. § 2252B which prohibits the knowing use of a misleading domain name on the Internet with the intent to deceive a person into viewing material constituting obscenity, and offenses under this statute are punishable by a maximum term of imprisonment of two years, or if the misleading domain name was intended to deceive a minor into viewing material that is harmful to minors, a maximum term of imprisonment of four years. General Counsel Tetzlaff noted that the amendment refers the new offense to §2G3.1, the obscenity guideline, and provides a two-level enhancement if the offense involved the use of a misleading domain name on the Internet with the intent to deceive a minor into viewing material on the Internet that is harmful to minors. A number of enhancements are also provided.
In the area of conditions of supervised release, General Counsel Tetzlaff stated that, in order to resolve a circuit conflict, this amendment adds a condition to the conditions of probation and the conditions of supervised release guidelines limiting the use of a computer or an interactive computer service in sex offenses in which the defendant used such items.
Regarding criminal sexual abuse amendments, General Counsel Tetzlaff stated that the PROTECT Act directs the Commission to amend the Sentencing Guidelines to ensure that Guidelines adequately reflect the seriousness of the offenses, such as sexual abuse of a ward. The amendment makes several amendments to the guidelines in Chapter Two, Part A (Criminal Sexual Abuse) to address the directive and to account for proportionality issues created by the increases in the Chapter Two, Part G guidelines. General Counsel Tetzlaff concluded by stating that a number of increases in base offense levels are made in other areas.
Vice Chair Steer moved to adopt the proposed amendment for child pornography and sexual abuse of minors guidelines. Seconded by Commissioner Horowitz.
Vice Chair Castillo commended the team for its work on this amendment. He stated that this is particularly difficult material, and that the task was made more daunting by the PROTECT Act and all of its provisions, and the sensitive nature of these crimes and their victims, coupled with the impact on the Native Americans. Vice Chair Castillo quoted Vice Chair Sessions and said that this amendment is a sensitive handling of all of these extraordinarily difficult issues.
Commissioner O’Neill also commended the staff for their good work in handling this difficult issue. He stated that, speaking on behalf of the junior varsity legislator, he would pose a matter to the senior varsity legislator, and that is to think about the way in which "images" are defined. He noted that one of the difficulties with the proliferation of computers, and the proliferation of child pornography being transmitted by computers, is that many of the old ideas used with respect to images or pictures have difficulty in standing up today. Commissioner O’Neill finds it difficult to justify why five-minute movie clips of the same behavior should be penalized more heavily than one-hour video in which a number of different people are performing. He noted that similar arguments can be made with regard to a single picture involving the abuse of four children and ten pictures all depicting the exact same image of only one child. Commissioner O’Neill concluded by stating that they are obviously a number of difficult issues that need to be addressed in the future not only by the Commission, but also by Congress. He stated that in this particular amendment the Commission has done its best in terms of assigning penalty values to the particular offenses and in defining "images."
Vice Chair Steer stated that the penalty increases in this package appear to be more in line with Congress’ expectations in terms of just punishment, and incapacitation of defendants. He hopes the societal benefits will substantially outweigh the increased costs of this increase in imprisonment, which will be substantial, perhaps in the order of two to three additional prisons over the life of the amendments. Vice Chair Steer stated that the Commission will be pointing this fact out to Congress.
Vice Chair Steer stated that with respect to Part A, he had a particular interest regarding the consolidation of the simple possession and the trafficking guideline. He expressed his satisfaction that his interest was carried through. He stated that the consolidation will ease the application difficulties faced by judges and probation officers. He stated that he had hoped to ensure that simple possession offenses and what he calls simple receipt and solicitation without any intent to traffic would be punished the same. Though this goal was not fully achieved, he recognizes that there is a slight difference in the elements of those offenses that may or may not be important for sentencing purposes, but certainly there is a difference in the way in which Congress has graded and assigned punishment for these offenses that has been taken into account. Vice Chair Steer concluded by stating that overall this is a good package, and he joined his fellow commissioners in commending the team for its hard work.
Vice Chair Castillo called for a voice vote. The proposed amendment to the child pornography and sexual abuse of minors guidelines was adopted unanimously by voice vote.
General Counsel Tetzlaff introduced the proposed amendment regarding the immigration guidelines. He stated that the proposed amendment addresses issues raised by the Department of State. The proposed amendment addresses issues involving immigration document fraud offenses under §2L2.2 (Fraudulently Acquiring Documents Relating to Naturalization, Citizenship, or Legal Resident Status for Own Use; False Personation or Fraudulent Marriage by Alien to Evade Immigration Law; Fraudulently Acquiring or Improperly Using a United States Passport). General Counsel Tetzlaff noted that the amendment provides a four-level enhancement at §2L2.2(b)(3) if the defendant fraudulently obtained or used a United States passport. Commentary is added to make clear that "use" includes cases involving an attempt to renew a previously issued passport. The amendment also provides an upward departure provision if the defendant fraudulently obtained or used a United States passport intending to enter the United States to engage in terrorist activity.
Vice Chair Steer moved to adopt the proposed amendment regarding the immigration guideline. Seconded by Commissioner O’Neill.
On behalf of the Commission, Vice Chair Castillo stated that the Commission responds gladly to Secretary Powell’s concerns, especially in light of the difficulties Secretary Powell is facing currently. He stated that the Commission is attempting to be responsive in this area, and he predicted that the area of immigration will be back on the Commission’s agenda. Vice Chair Castillo also noted that the Commission now has an expert in immigration among its commissioners in the form of soon-to-be chair, Commissioner Hinojosa.
Ex Officio Commissioner Rhodes commended the Commission for creating the special offense characteristic for the United States passport and for recognizing the very unique status that the United States passport provides to those who hold it in terms of being able to come and go freely, and the many other privileges that go with the holding of a passport. She noted that the Department of Justice looks forward to revisiting the issue of the base offense level by bringing it into parity with the significance of this offense in the context of other immigration issues which the Commission intends to address next year.
Vice Chair Castillo called for a voice vote. The proposed amendment regarding the immigration guideline was adopted unanimously by voice vote.
Drugs (Including GHB)
General Counsel Tetzlaff introduced the proposed amendment to the drug guidelines. He stated that this ten part amendment makes a number of amendments to §§2D1.1 (Unlawful Manufacturing, Importing, Exporting, or Trafficking (Including Possession with Intent to Commit These Offenses); Attempt or Conspiracy), 2D1.11 (Unlawfully Distributing, Importing, Exporting or Possessing a Listed Chemical; Attempt or Conspiracy), 2D1.12 (Unlawful Possession, Manufacture, Distribution, Transportation, Exportation, or Importation of Prohibited Flask, Equipment, Chemical, Product, or Material; Attempt or Conspiracy).
First, the amendment provides a new enhancement at §§2D1.1(b)(5), 2D1.11(b)(4), and 2D1.12(b)(3) for cases in which the defendant distributed a controlled substance, listed chemical, or prohibited equipment, through mass marketing by means of an interactive computer service. General Counsel Tetzlaff noted that this enhancement addresses the growing number of cases involving distribution of drugs and paraphernalia over the Internet.
Second, the amendment corrects a technical error in the Drug Quantity Table of §2D1.1 with respect to Schedule III substances.
Third, the amendment addresses section 608 of the PROTECT Act by increasing the offense levels for GHB, a Schedule I depressant, and GBL, a precursor for GHB. The proposed amendment increases the penalties for GHB in the Drug Equivalency Tables by providing a five- year sentence for offenses involving three gallons of GHB, and a ten-year sentence for offenses involving 30 gallons of GHB. General Counsel Tetzlaff noted that the amendment also increases the penalties for GBL, a precursor of GHB.
Fourth, the proposed amendment adds to Application Note 5 of §2D1.1 a reference to controlled substance analogues. The proposed amendment states that any reference to a particular controlled substance also includes any analogue of that controlled substance, except as otherwise provided. General Counsel Tetzlaff noted that the proposed amendment also provides an application note that would allow the court to take potency into account in determining the appropriate sentence in an analogue case to address an issue raised in a case out of the Ninth Circuit. The amendment provides an application note regarding controlled substances not currently referenced in §2D1.1. The note directs the court to use the marihuana equivalency of the most analogous controlled substance and sets forth factors for the court to consider, to the extent practicable, in determining which controlled substance referenced in §2D1.1 is the most analogous.
Fifth, General Counsel Tetzlaff stated that the proposed amendment addresses the case of United States v. Smack, 347 F.3d 533 (3rd Cir. 2003), in which the court noted a circuit conflict regarding whether the last sentence of Application Note 12 also applies to defendant-buyer in a reverse sting operation. The proposed amendment resolves the conflict to include a defendant-buyer in a reverse sting operation.
Sixth, the amendment provides a special instruction in §2D1.1(e) that would require application of the vulnerable victim adjustment in §3A1.1(b)(1) if the defendant commits a sexual offense by distributing a controlled substance to another individual, with or without that individual’s knowledge.
Seventh, General Counsel Tetzlaff stated that the proposed amendment updates the statutory references in §2D1.11(b)(2) and accompanying commentary to conform to statutory redesignations.
Eighth, the proposed amendment adds white phosphorus and hypophosphorous acid to the Chemical Quantity Table in §2D1.11(e). Both substances are direct substitutes for red phosphorus. General Counsel Tetzlaff noted that the Commission amended §2D1.11(e) last amendment cycle to include red phosphorus but, due to Federal Register notice issues, was unable at that time to include white phosphorus and hypophosphorous acid.
Ninth, the amendment provides an enhancement of six levels at §2D1.12, if the offense involved stealing anhydrous ammonia or transporting stolen anhydrous ammonia.
Finally, General Counsel Tetzlaff stated that the amendment modifies Appendix A (Statutory Index) by deleting 21 U.S.C. § 957, which is not a substantive criminal offense but rather a registration provision.
Vice Chair Steer moved to adopt the proposed amendment regarding the drug guidelines. Seconded by Commissioner Horowitz.
There was no discussion among the commissioners regarding the proposed amendment to the drug guidelines.
Vice Chair Castillo called for a voice vote. The proposed amendment regarding the drug guidelines was adopted unanimously by voice vote.
Vice Chair Castillo concluded the public meeting by noting that Judge Murphy would be very pleased to know that all amendments passed by unanimous voice vote.
Vice Chair Castillo adjourned the public meeting at 2:55 p.m.
Vice Chair Castillo then accepted comments from the public. Ms. Carmen Hernandez questioned the amendment regarding the public corruption guideline, she stated that she did not believe it was a technical amendment. Vice Chair Castillo stated that it was a technical amendment because it was a clarification of the Commission’s original intent to tighten up the public corruption guidelines.
General Counsel Tetzlaff also stated that it was not viewed as a technical amendment, nor was it treated as such. He stated that it was a formal motion to reconsider which is permissible under the Commission’s rules.
A gentleman from the audience informed the Commission that the North Carolina Bar Association unanimously passed a resolution earlier this spring calling for the repeal of the provisions of the Feeney Amendment.
Vice Chair Castillo thanked everyone and stated that he looked forward to seeing everyone at the conference in Miami.