Sentencing Guideline Deference Unchanged by Loper Bright, DOJ Says

UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
NICHOLAS LUCIDONIO,
Defendant-Appellant.

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

SUPPLEMENTAL BRIEF OF THE APPELLEE

Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), does not affect the deference granted to the advisory Sentencing Guidelines, which are authorized by Congress and promulgated by an independent commission in the judicial branch. Loper Bright instead addressed the propriety of applying “Chevron deference” to an executive agency's interpretation of an ambiguous statute. Loper Bright, moreover, did not alter Kisor v. Wilkie, 139 S. Ct. 2400 (2019), which this Court applies in deciding whether to defer to guidelines commentary. Loper Bright therefore has no impact on the guidelines interpretation issue presented here.

I. The Sentencing Guidelines are promulgated by a judicial commission, acting pursuant to an express congressional delegation of authority.

Congress, as part of the Sentencing Reform Act of 1984, created the United States Sentencing Commission — “an independent commission in the judicial branch.” 28 U.S.C. §991(a). The Commission's charge is to establish policies and practices that promote fair, effective sentencing. See 28 U.S.C. §991(b). To that end, Congress directed the Commission to “promulgate . . . guidelines . . . for use of a sentencing court in determining the sentence imposed in a criminal case.” 28 U.S.C. §994(a)(1).

Since the Supreme Court's decision in United States v. Booker, 543 U.S. 220 (2005), sentencing courts are not required to choose a sentence that falls within the range recommended by the guidelines. Nevertheless, the Court has repeatedly clarified that sentencing courts must use a properly calculated guidelines range as “the starting point and the initial benchmark” for any sentencing decision. E.g., Peugh v. United States, 569 U.S. 530, 536 (2013).

In short, “Congress has delegated substantial responsibility to the Sentencing Commission,” United States v. Nasir, 17 F.4th 459, 472 (3d Cir. 2021) (en banc), and sentencing courts must consider (though not necessarily follow) the guidelines that the Commission promulgates.

II. Loper Bright addressed a rule promulgated by an executive agency, acting without an express congressional delegation of authority.

Loper Bright did not address the validity of the Sentencing Guidelines. It did not even address the validity of a regulation that, like the guidelines, was promulgated pursuant to a statutory delegation of authority.

Loper Bright dealt with a different question of administrative law: whether to overrule the doctrine of agency deference established in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Loper Bright, 144 S. Ct. at 2254. Chevron held that, where a statute is silent or ambiguous with respect to a specific issue, a reviewing court should defer to a reasonable interpretation of the statute made by the executive agency responsible for administering it. Chevron, 467 U.S. at 842-44. Loper Bright concluded that Chevron deference violated the Administrative Procedures Act (“APA”) — specifically, the APA's command that the reviewing court, not the agency whose action it reviews, “shall decide all relevant questions of law.” 5 U.S.C. §706; see also Loper Bright, 144 S. Ct. at 2265. The Court rejected the theory that statutory ambiguities are “implicit delegations” of authority to executive agencies to fill in the “gaps” left by the statute. Loper Bright, 144 S. Ct. at 2265-66.

III. The demise of Chevron does not affect the Sentencing Guidelines.

Loper Bright does not affect the validity of the guidelines or the law governing their role at sentencing. In overruling Chevron, Loper Bright concluded that a reviewing court cannot, consistent with the APA, simply defer to an executive agency's interpretation of an ambiguous statute. But the Sentencing Commission is not an executive agency; as stated, it is an independent commission within the judicial branch. See also Mistretta v. United States, 488 U.S. 361, 384-85 (1989). As such, the Commission is not subject to the judicial-review provision of the APA, 5 U.S.C. §706, on which Loper Bright relied. See also United States v. Espinoza, 92 F. Supp. 3d 1210, 1215 (M.D. Fla. 2015) (“it is generally recognized that the Sentencing Commission is not an agency subject to the APA, but rather 'an independent entity in the judicial branch.'” (citing cases)).

Moreover, the Sentencing Guidelines do not represent an attempt by the Commission to resolve a legal question on which Congress has been “silent or ambiguous.” Loper Bright, 144 S. Ct. at 2264 (quoting Chevron, 467 U.S. at 842). Congress has expressly and unambiguously delegated to the Commission the authority to create the guidelines. 28 U.S.C. §994(a)(1). And as reaffirmed by Loper Bright, “when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation.” Loper Bright, 144 S. Ct. at 2273.

Lastly, as noted, the Supreme Court, in the line of cases beginning with Booker, has repeatedly affirmed that “'district courts must begin their analysis with the Guidelines and remain cognizant of them throughout the sentencing process.'” Peugh, 569 U.S. at 541 (quoting Gall v. United States, 552 U.S. 38, 50 (2007)). Loper Bright does not even discuss, let alone call into question, this line of authority, but even if it did, this Court remains “bound by” Booker and its progeny, and “must leave to the Supreme Court 'the prerogative of overruling its own decisions.'” Free Speech Coalition, Inc. v. Attorney General, 825 F.3d 149, 164 (3d Cir. 2016) (quoting Rodriguez de Quijas v. Shearson/Am. Exp., Inc., 490 U.S. 477, 484 (1989)).

In sum, Loper Bright does not affect the deference given to the guidelines.

IV. Loper Bright also does not change the deference given to guidelines commentary, and any such change would be irrelevant here.

With respect to the commentary to the Sentencing Guidelines, the Supreme Court has compared the commentary to “an agency's interpretation of its own legislative rule,” while recognizing that “the analogy is not precise.” Stinson v. United States, 508 U.S. 36, 44 (1993). Accordingly, in determining what deference is given to guidelines commentary, this Court applies the standards set forth in Kisor v. Wilkie, 139 S. Ct. 2400 (2019), for deferring to agency interpretations of regulations. See Nasir, 17 F.4th at 471. Under Kisor, a court may defer to the commentary if a guideline is “genuinely ambiguous,” the court has exhausted all other “traditional tools of construction,” and the commentary's interpretation of the guideline is “reasonable” and reflects the Sentencing Commission's “substantive expertise” and “considered judgment.” Ibid. (quoting Kisor).

Loper Bright does not cast doubt on the continued application of Kisor‘s deference standards to guidelines commentary. As discussed, Loper Bright addressed what deference may be given to an agency's interpretation of an ambiguous statute, not what deference may be given to an agency's interpretation of its own regulations. Moreover, Loper Bright cited Kisor with approval. See Loper Bright, 144 S. Ct. at 2261-62, 2268. For these reasons, courts have concluded that Loper Bright does not affect the standards for deferring to guidelines commentary. See United States v. Boler, 115 F.4th 316, 322 n.4 (4th Cir. 2024) (“Loper Bright dealt specifically with ambiguities in statutory directives to agencies and did not address the issue of agency interpretations of their own regulations.”); United States v. Ponle, 110 F.4th 958, 961 n.3 (7th Cir. 2024) (recognizing the distinction between the deference given to guidelines commentary and the “Chevron deference” overruled in Loper Bright); United States v. Trumbull, 114 F.4th 1114, 1118 n.2 (9th Cir. 2024) (“The Supreme Court did not call Kisor into question in Loper Bright . . . so we continue to apply it.”).

In any event, this appeal does not require the Court to determine whether Loper Bright portends a change in the standards for deferring to guidelines commentary. The issue here is whether defendant, by operating a fraudulent cash payroll scheme, “intended to encourage” other persons to violate the tax laws, within the meaning of USSG §2T1.9(b)(2). (See, e.g., Br. of Appellant at 1-2; Br. of Appellee at 2.) The district court, in concluding that defendant did “intend to encourage” others to violate the law, relied on the plain text of §2T1.9(b)(2) and did not defer to any guideline commentary. (See, e.g., Appendix to Appellant's Br. at A00016 (finding it “self-evident” that defendant's conduct was “intended to encourage” his employees to violate the tax laws).) Nor does the government on appeal rely on any guideline commentary to defend the §2T1.9(b)(2) sentencing enhancement. (See, e.g., Br. of Appellee at 17 (“agree[ing] with defendant that the text of §2T1.9(b)(2) is unambiguous, making it unnecessary to consult the guideline commentary”).) Thus, even if Loper Bright did affect the standards for deferring to guidelines commentary, it would not affect the outcome here.

Respectfully submitted,

DAVID A. HUBBERT
Deputy Assistant Attorney General

S. ROBERT LYONS
Chief, Criminal Appeals & Tax Enforcement Policy Section
KATIE BAGLEY
JOSEPH B. SYVERSON
GREGORY S. KNAPP
Attorneys
Tax Division
Department of Justice
Post Office Box 972
Washington, D.C. 20044
(202) 307-3350

DATED: October 11, 2024