This article is an update to the January 2023 article “Major Case Alert: Is the Fifth Circuit About to Transform How Courts Apply Sentencing Guidelines?“
On July 24, 2023, the United States Court of Appeals for the Fifth Circuit issued its much-anticipated en banc decision United States v. Vargas, 21-20140. The Court was tasked with deciding how much deference courts should give commentary to the U.S. Sentencing Guidelines following the Supreme Court’s decision in Kisor v. Wilkie, 139 S. Ct. 2400 (2019)—an opinion that limited judicial deference to agency interpretations. In a fractured decision, the Fifth Circuit held that Kisor does not extend to the Guidelines; rather, Stinson v. United States, 508 U.S. 36 (1993) continues to control without any alteration from Kisor. Thus, the current paradigm remains in the Fifth Circuit absent Supreme Court intervention: the Guidelines commentary is “authoritative unless it violates the Constitution or a federal statute, or is inconsistent with, or a plainly erroneous reading of, that guideline.”
Background – District Court & Appellate Proceedings
Andres Vargas pleaded guilty to conspiracy to possess with intent to distribute 500 grams or more of cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(B). At sentencing, the government asserted that Vargas qualified as a career offender under § 4B1.1(a) of the Guidelines because of his prior possession and conspiracy convictions, thereby subjecting Vargas to an enhancement to his criminal history category and offense level calculations.
Vargas objected, asserting that he did not qualify as a career offender because the text of § 4B1.2(b) of the Guidelines did not include inchoate offenses, meaning that his prior conspiracy convictions could not serve as predicate controlled substance offenses. Vargas recognized that the commentary to § 4B.2 interpreted “controlled substance offense[s]” to include inchoate offenses, but asserted that after the Supreme Court’s holding in Kisor, the commentary could not be used to expand the scope of that text. The District Court overruled Vargas’s objection, and his sentencing range subsequently increased from a range of 100-125 months’ imprisonment to a range of 188-235 months’ imprisonment. Vargas was then sentenced to 188 months’ imprisonment.
On appeal, the Fifth Circuit affirmed. The Court first noted that it previously held that “§ 4B1.1’s career-offender enhancement lawfully includes inchoate offenses” in United States v. Lightbourn, 115 F.3d 291 (5th Cir. 1997). It then rejected Vargas’s argument that an intervening change in law occurred through Kisor, holding that because Kisor did not discuss Stinson or the Guidelines, it did not present the Fifth Circuit with the “unequivocal language” necessary to overrule Lightbourn.
Following the panel’s decision in Vargas, Vargas filed a petition for rehearing en banc. The petition was granted and oral argument was held on January 24, 2023.
En Banc Opinion
The En Banc Court affirmed Vargas’s sentence in a divided opinion, holding that Stinson’s “highly deferential” standard governed the analysis and was not replaced with the “less deferential one in Kisor.” In Part III(A) of the Court’s opinion, eleven of sixteen judges concurred that Stinson, not Kisor, guided the Court’s decision.
According to the Court, “No one claims Stinson has been overruled. Vargas argues only that Stinson was modified by [Kisor].” In a twist of events, the Court then noted that the government agrees with Vargas. Nonetheless, the Court continued, it was required to determine the “controlling legal framework” for itself. The Court then held that Vargas, the government, and multiple of its sister circuits—namely, the Third, Sixth, Ninth, and Eleventh Circuits and a panel of the Fourth Circuit—were mistaken.
Joining the First, Second, Seventh, Eighth, and Tenth Circuits and a different Fourth Circuit panel, the En Banc Court provided multiple reasons in support of its holding that Kisor did not alter Stinson.
First, “nothing in Kisor suggests it meant to modify Stinson.” Kisor, the Court went on, did not mention the Guidelines, the Sentencing Commission, or the commentary. At most, Kisor cites Stinson in a string cite in a footnote to the opinion, but the footnote is “merely descriptive and is not even joined by a Court majority.”
Second, while Stinson “borrowed” from Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945), “Stinson deference differs from Seminole Rock in important ways.” Under Stinson, the commentary controls even when a guideline is unambiguous, but Seminole Rock only requires deference to an agency interpretation when a statute’s text is ambiguous. And, while the Sentencing Commission can interpret the Guidelines in a way that conflicts with judicial precedent, under Seminole Rock, an executive agency cannot “trump a court’s prior interpretation of an unambiguous statute.”
Third, the Court noted the fundamental differences between the Sentencing Commission and administrative agencies. The Sentencing Commission is a judicial entity that addresses federal judges; administrative agencies are executive entities that address the public. Further, the Sentencing Commission is comprised, in part, of federal judges and exists to ensure consistency in the application of the Guidelines. These differences, the Court concluded, “justify a distinct approach in considering Guidelines commentary, on the one hand, and an agency’s interpretation of its legislative rules, on the other.”
The Court then concluded its section on whether Kisor or Stinson governs by noting that while Kisor could be the “coming-soon trailer for a rethinking of Stinson,” until the Supreme Court overruled Stinson, it was its job as an inferior court to “adhere strictly to Supreme Court precedent, whether or not we think a precedent’s best days are behind it.”
After deciding that Stinson governed, the Court affirmed Vargas’s sentence, holding that: (1) the commentary controls under Stinson because the Court did not find a “‘flat inconsistency’ between the guideline definition of controlled substance offense and the commentary’s view that the definition includes conspiracies”; and (2) even under Kisor, the Court would defer to the commentary because the “definition’s text, structure, history, and purpose show that the commentary takes a reasonable view of a genuinely ambiguous guideline.”
The Vargas decision deepens the existing circuit split and signals that the U.S. Supreme Court will likely be called upon to decide definitely how much deference courts must give to Guidelines commentary. As explained in our preview of Vargas, a change in the deference afforded to the Guidelines would have major implications for white collar offenses. Section 2B1.1 of the Guidelines addresses financial “loss” for crimes of fraud and other economic offenses. In the Guideline, there is no definition of the word “loss,” yet the commentary states that “loss” includes “actual loss” and “intended loss.” In United States v. Banks, 55 F.4th 246 (3d Cir. 2022), relying on Kisor, the Third Circuit held that loss only includes a victim’s actual, monetary loss. The “actual loss” amount is almost always less than the “intended loss,” which should result in shorter sentences for defendants.
The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice. For questions related to the U.S. Sentencing Guidelines and the cases mentioned above, please contact Jennifer Freel, Michael Murtha, or a member of the Investigations & White Collar Defense practice.
Jennifer S. Freel is a partner in the Investigations & White Collar Defense practice of Jackson Walker’s Austin office. A former federal prosecutor, Jennifer advises businesses and individuals under investigation by the government and conducts internal investigations for companies seeking an independent party. She also represents clients in civil disputes at the pre-trial, trial, and appellate levels in state and federal court. She is an elected Fellow of the Texas Bar Foundation, a member of the Texas Supreme Court Historical Society’s Board of Trustees, a past chair of the Criminal Law Section of the Federal Bar Association, and a past president of the Austin Chapter of the Federal Bar Association. She has been ranked among the top Texas attorneys for Litigation: White-Collar Crime & Government Investigations by Chambers USA: America’s Leading Lawyers for Business since 2021, and was named among The Best Lawyers in America for Criminal Defense: White Collar (Austin) in 2022.
Michael J. Murtha is an attorney in the Trial & Appellate Litigation and Investigations & White Collar Defense practices of Jackson Walker’s Dallas office. A former federal clerk, Michael is experienced in legal drafting, courtroom hearings, complex commercial litigation, and white collar defense. Prior to Jackson Walker, Michael served as a judicial law clerk to the Honorable Edith Brown Clement of the U.S. Court of Appeals for the Fifth Circuit and to the Honorable Amos L. Mazzant, III of the U.S. District Court for the Eastern District of Texas. He also previously served as a law clerk in the Texas Office of the Solicitor General and advised Texas Senator John Cornyn’s office during the confirmation of Justice Amy Coney Barrett.