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Daylight Between Sentencing Guidelines and Commentary? Third Circuit Says Yes, and 2B1.1 is Next

Is there daylight between the text of a sentencing guideline and the Sentencing Commission’s commentary? The Third Circuit said there is in two recent rulings that find their reasoning in a long line of Supreme Court decisions which define the scope of judicial deference to federal agency interpretations of their own rules. A year ago, the Third Circuit noted in United States v. Nasir that a trend toward less deference to agency interpretations applied to sentencing guideline commentary. Most recently, in United States v. Adair, No. 20-1463 (June 30, 2022), the Third Circuit held that the commentary to the Aggravated Role adjustment under section 3B1.1 for leader or organizer is “not controlling.” By applying current principles of judicial deference to a federal agency’s interpretation of its own regulations in both Nasir and Adair, the Third Circuit provided a possible road map to the defense by which to avoid the application of hurtful commentary. The Third Circuit has since acknowledged that the expansive definition of loss in the commentary to 2B1.1 may not survive such a challenge.


The commentary to Sentencing Guidelines is often quite extensive and sometimes adds a defense-adverse gloss to the text of the guideline itself. The Adair decision invites the defense to carefully examine the text of the guideline and the commentary for arguments that the guideline is not “genuinely ambiguous,” because the commentary will only be deemed authoritative if that’s the case.


The route to that conclusion is arcane and twisting but at heart follows a path set by the Supreme Court. In Stinson v. United States, 508 U.S. 36 (1993), Stinson argued that he should not have been sentenced as a career offender because his prior conviction for being a felon in possession of a firearm was not a crime of violence and, thus, he was not a career offender under sections 4B1.1 and 4B1.2. The district court disagreed, but while Stinson’s appeal was pending, the Sentencing Commission issued commentary which stated that a felon in possession of a firearm conviction was not a crime of violence. The court of appeals rejected the commentary, observing that it was of “limited authority,” and “not binding.”


The Supreme Court reversed, holding that guideline commentary is “authoritative unless it violates the Constitution, or a federal statute, or is inconsistent with, or a plainly erroneous reading of, that guideline.” Stinson, 508 U.S. at 38. The Court viewed the issue as falling squarely within the generally applicable principles of judicial deference that recognized an administrative agency’s interpretation of its own regulation as binding, subject to limited qualifications. Id. The mode of interpretation is known as Seminole Rock or Auer deference. See Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945) and Auer v. Robbins, 519 U.S. 452 (1997).


Since Stinson, however, unrelated to the Sentencing Guidelines, the Supreme Court cut back on Seminole Rock deference. In Kisor v. Wilkie, __U.S.__, 139 S.Ct. 2400, 2408 (2019), the Supreme Court “upheld” Auer and Seminole Rock, but took pains to note that it intended to “reinforce its limits,” and that such deference “is sometimes appropriate and sometimes not.” Deference is only appropriate if, at the outset, the regulation is “ambiguous” and a determination is made only after the exhaustion of all “traditional tools of construction.” Id. at 2416. Even then, the agency’s interpretation must be “reasonable” based on the “text, structure, history and so forth,” it must in some way implicate the agency’s “substantive expertise,” and must reflect a “fair and considered judgment” to receive deference. Id. at 2413-18.


Soon after Kisor was decided, in United States v. Nasir, 17 F.4th 459 (3d Cir. 2021), the Third Circuit addressed a difference between a guideline and its commentary: Section 4B1.1.2(b) of the Sentencing Guidelines does not mention inchoate offenses in its definition of career offenders, while the commentary includes attempts. The court noted that Kisor “cut back” what was previously understood to be an “uncritical and broad deference to agency interpretations” of regulations under Seminole Rock and Auer, and recognized that deference is required only if the regulation is “genuinely ambiguous.” Id. at 471. The Third Circuit reversed and remanded after it conducted the Kisor-required analysis to determine if the guideline was ambiguous, and concluded that it was not.


That brings us to Adair, in which the Third Circuit considered the application of the Aggravated Role adjustment under section 3B1.1(a) imposed by the sentencing court. The guideline used commonly understood words – “leader” and “organizer” – while the commentary treated organizers and leaders as interchangeable and used a “multi-factor test” to determine the applicability of the enhancement. The court reviewed the progression from Seminole Rock, to Stinson, through Kisor in great detail and, after applying the analysis required under Kisor, concluded that the guideline was not “genuinely ambiguous” and that the commentary was not authoritative. Adair, 38 F.4th at349-55.


Just a day ago, on August 2, 2022, the Third Circuit decided United States v. Yu Xue and United States v. Tao Li, in which defendants appealed their sentences based on insufficient evidence of “intended loss,” a concept defined by the commentary to the guideline. In a footnote, the Third Circuit acknowledged that it “previously suggested that the commentary to U.S.S.G. § 2B1.1 defining intended loss might sweep more broadly than the Guideline itself but declined to address the issue.” Nos. 21-2227 and 21-2228, slip op. at 9 n.4 (Aug. 2, 2022) (citing United States v. Kirschner, 995 F.3d 327, 333 (3d Cir. 2021)). Because neither the defendants or the government in Yu Xue and Tao Li challenged the expansive commentary to 2B1.1, the Third Circuit did not address whether it should be afforded deference. But there is no question that the Third Circuit is signaling that 2B1.1’s expansive commentary may be next on the chopping block.


Section 2B1.1 of the sentencing guidelines applies generally to theft, fraud, deceit, and counterfeiting offenses. The guideline calculation increases depending on the amount of “loss” and provides a chart of dollar amounts with corresponding increases in guideline sentence levels. For example, if the loss amount exceeded $6,500 but was less than $15,000, a court would add two levels to the guideline calculation, if it was more than $15,000 but less than $40,000, it would add four levels, and so forth.


The commentary, on the other hand, provides that “Loss under subsection (b)(1)” must be calculated according to a “General Rule”: “loss is the greater of actual loss or intended loss.” Moreover, actual loss means “reasonably foreseeable pecuniary harm that resulted from the offense,” while intended loss means “the pecuniary harm that the defendant purposely sought to inflict” and “includes intended pecuniary harm that would have been impossible or unlikely to occur.” U.S.S.G. § 2B1.1 Cmt. 3.


As the Third Circuit stated in Kirschner, “[o]nly th[e] comment, not the Guidelines’ text, says that defendants can be sentenced based on the losses they intended. By interpreting ‘loss’ to mean intended loss, it is possible that the commentary ‘sweeps more broadly than the plain text of the Guideline.’” 995 F.3d at 333 (quoting Nasir, 982 F.3d at 177).


2B1.1 is the quintessential defense-adverse commentary. The guideline itself provides a straightforward chart with loss amounts in dollars and corresponding guideline level increases. The commentary provides an incredibly expansive definition of loss which stunts any potential defense against circumstantial evidence of some pie-in-the-sky loss amount. Imagine a case in which a defendant discusses some potential $1,000,000 loss number with a co-conspirator, but could never, hard as he tried, have actually caused that amount of loss. A reasonable defense to that sentence would argue 1) the defendant did not actually cause anywhere near that amount of loss and 2) even though they discussed it, it never could have happened because the fraud was not designed to create that much loss. Under the commentary, the discussion is enough to increase the guideline amount for dollars that were not – and could not be – stolen.


Any court considering 2B1.1’s commentary would have to apply Kisor to determine how much deference it deserves. While the defendants in Kirschner and Yu Xue and Tao Li declined to challenge the language of the commentary, the next defendant who does may shave years off of their potential sentence.


By: Robert E. Welsh, Jr. & Richard D. Walk, III


United States v. Yu Xue and United States v. Tao Li (Aug
. 22, 2022)
Download 22, 2022) • 162KB





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