AMENDMENT 827
Section 2B1.1(b)(1) is amended by inserting the following at the end:
“ *Notes to Table:
(A) Loss.—Loss is the greater of actual loss or intended loss.
(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) For purposes of this guideline—
(i) ‘Actual loss’ means the reasonably foreseeable pecuniary harm that resulted from the offense.
(ii) ‘Intended loss’ (I) means the pecuniary harm that the defendant purposely sought to inflict; 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’ 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’ means pecuniary harm that the defendant knew or, under the circumstances, reasonably should have known, was a potential result of the offense.”.
The Commentary to §2B1.1 captioned “Application Notes” is amended in Note 3—
by striking subparagraphs (A) and (B) as follows:
“(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 the defendant purposely sought to inflict; 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 correcting the procurement action affected, plus any increased costs to procure the product or service involved that was reasonably foreseeable.
(III) Offenses Under 18 U.S.C. § 1030.—In the case of an offense under 18 U.S.C. § 1030, actual loss includes the following pecuniary harm, regardless of whether such pecuniary harm was reasonably foreseeable: any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other damages incurred because of 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.”;
inserting the following new subparagraph (A):
“(A) Rules of Construction in Certain Cases.—In the cases described in clauses (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 correcting the procurement action affected, plus any increased costs to procure the product or service involved that was reasonably foreseeable.
(iii) Offenses Under 18 U.S.C. § 1030.—In the case of an offense under 18 U.S.C. § 1030, actual loss includes the following pecuniary harm, regardless of whether such pecuniary harm was reasonably foreseeable: any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other damages incurred because of interruption of service.”;
and by redesignating subparagraphs (C), (D), (E), and (F) as subparagraphs (B), (C), (D), and (E), respectively.
The Commentary to §2B2.3 captioned “Application Notes” is amended in Note 2 by striking “the Commentary to §2B1.1 (Theft, Property Destruction, and Fraud)” and inserting “§2B1.1 (Theft, Property Destruction, and Fraud) and the Commentary to §2B1.1”.
The Commentary to §2C1.1 captioned “Application Notes” is amended in Note 3 by striking “Application Note 3 of the Commentary to §2B1.1 (Theft, Property Destruction, and Fraud)” and inserting “§2B1.1 (Theft, Property Destruction, and Fraud) and Application Note 3 of the Commentary to §2B1.1”.
The Commentary to §8A1.2 captioned “Application Notes” is amended in Note 3(I) by striking “Commentary to §2B1.1 (Theft, Property Destruction, and Fraud)” and inserting “§2B1.1 (Theft, Property Destruction, and Fraud) and the Commentary to §2B1.1”.
Reason for Amendment: This amendment is a result of the Commission’s continued study of the Guidelines Manual to address case law concerning the validity and enforceability of guideline commentary. In Stinson v. United States, 508 U.S. 36, 38 (1993), the Supreme Court held that commentary “that 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.” Following Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019), which limited deference to executive agencies’ interpretation of regulations to situations in which the regulation is “genuinely ambiguous,” the deference afforded to various guideline commentary provisions has been debated and is the subject of conflicting court decisions.
Applying Kisor, the Third Circuit has held that Application Note 3(A) of the commentary to §2B1.1 (Theft, Property Destruction, and Fraud) is not entitled to deference. See United States v. Banks, 55 F.4th 246 (3d Cir. 2022). Application Note 3(A) provides a general rule that “loss is the greater of actual loss or intended loss” for purposes of the loss table in §2B1.1(b)(1), which increases an individual’s offense level based on loss amount. In Banks, the Third Circuit held that “the term ‘loss’ [wa]s unambiguous in the context of §2B1.1” and that it unambiguously referred to “actual loss.” The Third Circuit reasoned that “the commentary expand[ed] the definition of ‘loss’ by explaining that generally ‘loss is the greater of actual loss or intended loss,’ ” and therefore “accord[ed] the commentary no weight.” Banks, 55 F.4th at 253, 258.
The loss calculations for individuals in the Third Circuit are now computed differently than elsewhere, where other circuit courts have uniformly applied the general rule in Application Note 3(A). The Commission estimates that before the Banks decision approximately 50 individuals per year were sentenced using intended loss in the Third Circuit.
To ensure consistent loss calculation across circuits, the amendment creates Notes to the loss table in §2B1.1(b)(1) and moves the general rule establishing loss as the greater of actual loss or intended loss from the commentary to the guideline itself as part of the Notes. The amendment also moves rules providing for the use of gain as an alternative measure of loss, as well as the definitions of “actual loss,” “intended loss,” “pecuniary harm,” and “reasonably foreseeable pecuniary harm,” from the Commentary to the Notes. In addition, the amendment makes corresponding changes to the Commentary to §§2B2.3 (Trespass), 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), and 8A1.2 (Application Instructions ― Organizations), which calculate loss by reference to the Commentary to §2B1.1.
While the Commission may undertake a comprehensive review of §2B1.1 in a future amendment cycle, this amendment aims to ensure consistent guideline application in the meantime without taking a position on how loss may be calculated in the future.
Effective Date: The effective date of this amendment is November 1, 2024.