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[From the U.S. Government Publishing Office]


114th Congress   }                                  {    Rept. 114-603
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                  {           Part 1
======================================================================



 
              TRANSNATIONAL DRUG TRAFFICKING ACT OF 2015

                                _______
                                

  June 3, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Goodlatte, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3380]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 3380) to provide the Department of Justice with 
additional tools to target extraterritorial drug trafficking 
activity, and for other purposes, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                                CONTENTS

                                                                   Page

Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     5
New Budget Authority and Tax Expenditures........................     5
Congressional Budget Office Cost Estimate........................     5
Duplication of Federal Programs..................................     7
Disclosure of Directed Rule Makings..............................     7
Performance Goals and Objectives.................................     7
Advisory on Earmarks.............................................     7
Section-by-Section Analysis......................................     7
Changes in Existing Law Made by the Bill, as Reported............     8
Dissenting Views.................................................    16

                          Purpose and Summary

    H.R. 3380 amends Federal law\1\ to impose penalties for 
extraterritorial drug trafficking when the prosecution can 
prove that the defendant had ``reasonable cause to believe'' 
that the drugs will be imported into the United States, and to 
impose penalties on producers of precursor chemicals from other 
countries who (1) intend or know that these chemicals will be 
used to manufacture illegal drugs, and who (2) intend, know or 
have reasonable cause to believe that the drug will be imported 
into the United States. H.R. 3380 also amends Federal law to 
require the seller of a counterfeit drug to know the drug is 
counterfeit in order to be charged with a Federal crime.
---------------------------------------------------------------------------
    \1\21 U.S.C. Sec. 959.
---------------------------------------------------------------------------

                Background and Need for the Legislation

    In recent years, Federal law enforcement has witnessed a 
significant evolution in the practices of international drug 
trafficking organizations headquartered in many South and 
Central American nations. Increasingly, these organizations no 
longer rely on distribution networks in the United States, but 
instead sell their illicit products to Mexican traffickers, 
who, in turn, import the narcotics into the United States. 
Under current law, Federal prosecutors must prove that these 
``source-nation'' manufacturers, wholesale distributors, 
brokers, and transporters, intend for the drugs to reach the 
United States. But the use of intermediary traffickers in 
Mexico makes it difficult, if not impossible in some instances, 
for the government to prove knowledge that the drugs are bound 
for America. The result is that ``source-nation'' traffickers 
escape prosecution because they claim ignorance of the drugs' 
ultimate destination.
    H.R. 3380 addresses this problem by amending the Controlled 
Substances Import and Export Act\2\ (CSIEA) in two ways. First, 
it incorporates a ``reasonable cause to believe'' mens rea 
standard into the statute. This amendment will allow the 
Government to argue that the defendant had ``reasonable cause 
to believe'' the drugs he was conspiring to traffic were bound 
for the United States. Under this standard, a Federal 
prosecutor could use the circumstantial evidence of the drugs' 
nexus to the United States (use of U.S. dollars, drug route, 
packaging, etc.) as direct evidence that the defendant had 
reasonable cause to believe that the drugs were destined for 
the United States.
---------------------------------------------------------------------------
    \2\21 U.S.C. Sec. 951 et seq.
---------------------------------------------------------------------------
    Second, H.R. 3380 amends the CSIEA to prohibit 
extraterritorial trafficking of listed chemicals\3\ for the 
manufacture of controlled substances that are to be unlawfully 
imported into the United States. Current law only addresses 
extraterritorial trafficking of listed chemicals that results 
in the smuggling of the listed chemicals themselves or the 
finished controlled substance into the United States. H.R. 3380 
would amend the CSIEA to reach chemical traffickers who 
knowingly facilitate and benefit from the trafficking 
operation, even if they do not actually take part in the 
manufacturing and trafficking conspiracy.
---------------------------------------------------------------------------
    \3\``Listed chemicals'' are chemicals used in manufacturing 
controlled substances. See 21 U.S.C. Sec. 802(33)-(35).
---------------------------------------------------------------------------
    H.R. 3380 also amends Federal criminal counterfeit law to 
correct mistakes and to insert an intent requirement where 
Congress neglected to do so. This amendment is necessary 
because the Counterfeit Drug Penalty Enhancement Act,\4\ which 
imposed enhanced penalties for counterfeiting drugs, failed to 
include an intent requirement for anyone who ``traffics in a 
counterfeit drug.''\5\ The result is that anyone who transports 
a counterfeit drug--a truck driver, parcel service, or even a 
patient with a prescription--could be prosecuted under this 
statute, even if they did not know the drug was counterfeit. 
That was not Congress's intent in enacting this statute. 
Congress intended these penalties to apply to malefactors who 
traffic in drugs and knowingly use counterfeit marks on the 
drugs.\6\ H.R. 3380 amends Federal law to ensure the penalties 
will be applied properly.
---------------------------------------------------------------------------
    \4\See Pub. L. No. 112-144, Sec. 717, 126 Stat. 1026 (2012) 
(codified at 18 U.S.C. Sec. Sec. 2318, 2320).
    \5\18 U.S.C. Sec. 2320(a)(4).
    \6\For evidence of Congress's intent, see, e.g., 158 Cong. Rec. 
H3719 (daily ed. June 18, 2012) (statement of Rep. Smith of Texas: 
``Counterfeit drugs are fake drugs. They may be contaminated, contain 
the wrong ingredient or no ingredient at all, or have the right active 
ingredient but the wrong dose. They are intentionally packaged to 
convince the consumer they are genuine. Counterfeit drugs are illegal 
and can be harmful to a person's health and even deadly.'' (emphasis 
added)).
---------------------------------------------------------------------------
    During the Committee markup, there was considerable 
discussion about the applicability of the ``reasonable cause to 
believe'' standard. Ranking Member Conyers offered an amendment 
to limit the applicability of the standard only to persons who 
are organizers or leaders of the prohibited activity and in 
situations where the prohibited activity involves five or more 
participants. That amendment failed on a recorded vote. The 
Chairman opposed the amendment, because the intent of H.R. 3380 
is to give the U.S. government the ability to pursue and 
prosecute significant, contributing members of drug trafficking 
organizations who may not be the organizers or leaders, but who 
are invariably located in the source nation--specifically, the 
criminals who are smuggling, brokering, and supplying for sale 
illicit narcotics. The amendment would have had the effect of 
protecting Colombian, Peruvian, Honduran, Salvadoran, 
Guatemalan, and other foreign nationals who are significant 
members of a drug trafficking organization, and thus would gut 
the core purpose of the bill, which is to target these drug 
trafficking organizations at their heart.
    More specifically, the amendment sought to apply the most 
restrictive reading of the aggravating role enhancement in the 
U.S. Sentencing Guidelines to H.R. 3380,\7\ and require the 
government to prove beyond a reasonable doubt, to a jury, that 
a defendant is an organizer or leader of a drug trafficking 
organization and has employed 5 or more people. In the past, 
these terms have always been proven via a preponderance of the 
evidence during the sentencing phase of a criminal trial, and 
the ambiguity of who is an ``organizer or leader'' has led to a 
significant amount of litigation. By moving this responsibility 
from the judge to the jury, the amendment would have imposed a 
significant, inappropriate change from current practice that 
would make it extremely difficult for Federal prosecutors to 
pursue the foreign drug trafficking defendants targeted by H.R. 
3380.
---------------------------------------------------------------------------
    \7\U.S. Sentencing Guidelines Manual Sec. 3B1.1(a) (2014).
---------------------------------------------------------------------------
    Finally, it is worth noting that the costs of extraditing a 
defendant to the United States to stand trial can be 
significant.\8\ Given that, along with the fact that the U.S. 
government uses this provision to pursue individuals in source 
nations who are significant cogs in a drug organization's 
distribution chain, and not mere ``mules,'' any fear that this 
provision will be used to target so-called ``low-level'' 
offenders is unfounded.
---------------------------------------------------------------------------
    \8\See, e.g., ``Audit of the Department of Justice's Management of 
International Fugitive Removal Activities,'' Office of the Inspector 
General, U.S. Department of Justice, p. 39 (November 2014) (chart 
showing the cost of 64 separate international removal events in 2012 
and 2013).
---------------------------------------------------------------------------

                                Hearings

    The Committee on the Judiciary held no hearings on H.R. 
3380.

                        Committee Consideration

    On April 20, 2016, the Committee met in open session and 
ordered the bill H.R. 3380 favorably reported without 
amendment, by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
following rollcall votes occurred during the Committee's 
consideration of H.R. 3380.
    1. An Amendment offered by Mr. Conyers, to limit 
applicability of the ``reasonable cause to believe'' standard 
only to persons who are organizers or leaders of the prohibited 
activity, and in situations where the prohibited activity 
involves five or more participants. Defeated 16 to 6.

                             ROLLCALL NO. 1
 
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................              X
Mr. Smith (TX).................................
Mr. Chabot (OH)................................
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Labrador (ID)..............................      X
Mr. Farenthold (TX)............................
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
Ms. Walters (CA)...............................              X
Mr. Buck (CO)..................................              X
Mr. Ratcliffe (TX).............................
Mr. Trott (MI).................................              X
Mr. Bishop (MI)................................              X
 
Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................
Mr. Johnson (GA)...............................      X
Mr. Pierluisi (PR).............................              X
Ms. Chu (CA)...................................      X
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................
Mr. Jeffries (NY)..............................      X
Mr. Cicilline (RI).............................      X
Mr. Peters (CA)................................              X
                                                ------------------------
    Total......................................      6      16
------------------------------------------------------------------------


                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 3380, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 6, 2016.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3380, the 
``Transnational Drug Trafficking Act of 2015.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz, who can be reached at 226-2860.
            Sincerely,
                                                Keith Hall,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member




         H.R. 3380--Transnational Drug Trafficking Act of 2015.

      As ordered reported by the House Committee on the Judiciary 
                           on April 20, 2016.




    CBO estimates that implementing H.R. 3380 would have no 
significant cost to the Federal Government. Enacting the bill 
could affect direct spending and revenues; therefore, pay-as-
you-go procedures apply. However, CBO estimates that any 
effects would be insignificant. We estimate that enacting H.R. 
3380 would not increase net direct spending or on-budget 
deficits in any of the four consecutive 10-year periods 
beginning in 2027.
    H.R. 3380 would broaden the coverage of current laws 
relating to the illegal importation of controlled substances. 
As a result, the government might be able to pursue cases that 
it otherwise would not be able to prosecute. CBO expects that 
the bill would apply to a relatively small number of offenders, 
however, so any increase in costs for law enforcement, court 
proceedings, or prison operations would not be significant. Any 
such costs would be subject to the availability of appropriated 
funds.
    Because those prosecuted and convicted under H.R. 3380 
could be subject to criminal fines, the Federal Government 
might collect additional fines if the legislation is enacted. 
Criminal fines are recorded as revenues, deposited in the Crime 
Victims Fund, and later spent without further appropriation 
action. CBO expects that any additional revenues and subsequent 
direct spending would not be significant because the 
legislation would probably affect only a small number of cases.
    H.R. 3380 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on State, local, or tribal governments.
    On September 28, 2015, CBO transmitted a cost estimate for 
S. 32, the ``Transnational Drug Trafficking Act of 2015,'' as 
reported by the Senate Committee on the Judiciary on September 
17, 2015. The language for both pieces of legislation is 
similar and CBO's estimates of the budgetary effects are the 
same.
    The CBO staff contact for this estimate is Mark Grabowicz. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 3380 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 3380 specifically directs 
to be completed no specific rule makings within the meaning of 
5 U.S.C. Sec. 551.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
3380 amends Federal law to impose a ``reasonable cause to 
believe'' standard on certain extraterritorial drug 
traffickers; to impose a similar standard on extraterritorial 
producers of listed chemicals; and to require the seller of a 
counterfeit drug to know the drug is counterfeit in order to be 
charged with a Federal crime.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 3380 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    Section 1. Short Title. This section cites the short title 
of the bill as the ``Transnational Drug Trafficking Act of 
2015.''
    Section 2. Possession, Manufacture or Distribution for 
Purposes of Unlawful Importation. This section amends Section 
1009 of the Controlled Substances Import and Export Act\9\ to 
incorporate a ``reasonable cause to believe'' intent standard. 
This section also amends the CSIEA to prohibit extraterritorial 
trafficking of listed chemicals for the manufacture of 
controlled substances that are to be unlawfully imported into 
the United States, and similarly includes a ``reasonable cause 
to believe'' standard.
---------------------------------------------------------------------------
    \9\21 U.S.C. Sec. 959.
---------------------------------------------------------------------------
    Section 3. Trafficking in Counterfeit Goods or Services. 
This section, in subsection (1), amends Federal law to fix an 
error in citation since the relevant definitions section is 18 
U.S.C. Sec. 2320(f) and not Sec. 2320(e). In subsection (2), 
this section revises 18 U.S.C. Sec. 2320(a) to include an 
intent requirement, which will ensure these penalties are 
applied properly.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

              CONTROLLED SUBSTANCES IMPORT AND EXPORT ACT



           *       *       *       *       *       *       *
   TITLE III--IMPORTATION AND EXPORTATION; AMENDMENTS AND REPEALS OF 
REVENUE LAWS

           *       *       *       *       *       *       *


Part A--Importation and Exportation

           *       *       *       *       *       *       *


   possession, manufacture or distribution for purposes of unlawful 
                              importation

    Sec. 1009. (a) [It shall be unlawful for any person to 
manufacture or distribute a controlled substance in schedule I 
or II or flunitrazepam or listed chemical--]
            [(1) intending that such substance or chemical be 
        unlawfully imported into the United States or into 
        waters within a distance of 12 miles of the coast of 
        the United States; or
            [(2) knowing that such substance or chemical will 
        be unlawfully imported into the United States or into 
        waters within a distance of 12 miles of the coast of 
        the United States.]  It shall be unlawful for any 
        person to manufacture or distribute a controlled 
        substance in schedule I or II or flunitrazepam or a 
        listed chemical intending, knowing, or having 
        reasonable cause to believe that such substance or 
        chemical will be unlawfully imported into the United 
        States or into waters within a distance of 12 miles of 
        the coast of the United States.
    (b) It shall be unlawful for any person to manufacture or 
distribute a listed chemical--
            (1) intending or knowing that the listed chemical 
        will be used to manufacture a controlled substance; and
            (2) intending, knowing, or having reasonable cause 
        to believe that the controlled substance will be 
        unlawfully imported into the United States.
    [(b)] (c) It shall be unlawful for any United States 
citizen on board any aircraft, or any person on board an 
aircraft owned by a United States citizen or registered in 
United States, to--
            (1) manufacture or distribute a controlled 
        substance or listed chemical; or
            (2) possess a controlled substance or listed 
        chemical with intent to distribute.
    [(c)] (d) This section is intended to reach acts of 
manufacture or distribution committed outside the territorial 
jurisdiction of the United States. Any person who violates this 
section shall be tried in the United States district court at 
the point of entry where such person enters the United States, 
or in the United States District Court for the District of 
Columbia.

           *       *       *       *       *       *       *

                              ----------                              


                      TITLE 18, UNITED STATES CODE



           *       *       *       *       *       *       *
PART I--CRIMES

           *       *       *       *       *       *       *


CHAPTER 113--STOLEN PROPERTY

           *       *       *       *       *       *       *


Sec. 2318. Trafficking in counterfeit labels, illicit labels, or 
                    counterfeit documentation or packaging

    (a)(1) Whoever, in any of the circumstances described in 
subsection (c), knowingly traffics in--
            (A) a counterfeit label or illicit label affixed 
        to, enclosing, or accompanying, or designed to be 
        affixed to, enclose, or accompany--
                    (i) a phonorecord;
                    (ii) a copy of a computer program;
                    (iii) a copy of a motion picture or other 
                audiovisual work;
                    (iv) a copy of a literary work;
                    (v) a copy of a pictorial, graphic, or 
                sculptural work;
                    (vi) a work of visual art; or
                    (vii) documentation or packaging; or
            (B) counterfeit documentation or packaging,
shall be fined under this title or imprisoned for not more than 
5 years, or both.
    (b) As used in this section--
            (1) the term ``counterfeit label'' means an 
        identifying label or container that appears to be 
        genuine, but is not;
            (2) the term ``traffic'' has the same meaning as in 
        [section 2320(e)] section 2320(f) of this title;
            (3) the terms ``copy'', ``phonorecord'', ``motion 
        picture'', ``computer program'', ``audiovisual work'', 
        ``literary work'', ``pictorial, graphic, or sculptural 
        work'', ``sound recording'', ``work of visual art'', 
        and ``copyright owner'' have, respectively, the 
        meanings given those terms in section 101 (relating to 
        definitions) of title 17;
            (4) the term ``illicit label'' means a genuine 
        certificate, licensing document, registration card, or 
        similar labeling component--
                    (A) that is used by the copyright owner to 
                verify that a phonorecord, a copy of a computer 
                program, a copy of a motion picture or other 
                audiovisual work, a copy of a literary work, a 
                copy of a pictorial, graphic, or sculptural 
                work, a work of visual art, or documentation or 
                packaging is not counterfeit or infringing of 
                any copyright; and
                    (B) that is, without the authorization of 
                the copyright owner--
                            (i) distributed or intended for 
                        distribution not in connection with the 
                        copy, phonorecord, or work of visual 
                        art to which such labeling component 
                        was intended to be affixed by the 
                        respective copyright owner; or
                            (ii) in connection with a genuine 
                        certificate or licensing document, 
                        knowingly falsified in order to 
                        designate a higher number of licensed 
                        users or copies than authorized by the 
                        copyright owner, unless that 
                        certificate or document is used by the 
                        copyright owner solely for the purpose 
                        of monitoring or tracking the copyright 
                        owner's distribution channel and not 
                        for the purpose of verifying that a 
                        copy or phonorecord is noninfringing;
            (5) the term ``documentation or packaging'' means 
        documentation or packaging, in physical form, for a 
        phonorecord, copy of a computer program, copy of a 
        motion picture or other audiovisual work, copy of a 
        literary work, copy of a pictorial, graphic, or 
        sculptural work, or work of visual art; and
            (6) the term ``counterfeit documentation or 
        packaging'' means documentation or packaging that 
        appears to be genuine, but is not.
    (c) The circumstances referred to in subsection (a) of this 
section are--
            (1) the offense is committed within the special 
        maritime and territorial jurisdiction of the United 
        States; or within the special aircraft jurisdiction of 
        the United States (as defined in section 46501 of title 
        49);
            (2) the mail or a facility of interstate or foreign 
        commerce is used or intended to be used in the 
        commission of the offense;
            (3) the counterfeit label or illicit label is 
        affixed to, encloses, or accompanies, or is designed to 
        be affixed to, enclose, or accompany--
                    (A) a phonorecord of a copyrighted sound 
                recording or copyrighted musical work;
                    (B) a copy of a copyrighted computer 
                program;
                    (C) a copy of a copyrighted motion picture 
                or other audiovisual work;
                    (D) a copy of a literary work;
                    (E) a copy of a pictorial, graphic, or 
                sculptural work;
                    (F) a work of visual art; or
                    (G) copyrighted documentation or packaging; 
                or
            (4) the counterfeited documentation or packaging is 
        copyrighted.
    (d) Forfeiture and Destruction of Property; Restitution.--
Forfeiture, destruction, and restitution relating to this 
section shall be subject to section 2323, to the extent 
provided in that section, in addition to any other similar 
remedies provided by law.
    (e) Civil Remedies.--
            (1) In general.--Any copyright owner who is 
        injured, or is threatened with injury, by a violation 
        of subsection (a) may bring a civil action in an 
        appropriate United States district court.
            (2) Discretion of court.--In any action brought 
        under paragraph (1), the court--
                    (A) may grant 1 or more temporary or 
                permanent injunctions on such terms as the 
                court determines to be reasonable to prevent or 
                restrain a violation of subsection (a);
                    (B) at any time while the action is 
                pending, may order the impounding, on such 
                terms as the court determines to be reasonable, 
                of any article that is in the custody or 
                control of the alleged violator and that the 
                court has reasonable cause to believe was 
                involved in a violation of subsection (a); and
                    (C) may award to the injured party--
                            (i) reasonable attorney fees and 
                        costs; and
                            (ii)(I) actual damages and any 
                        additional profits of the violator, as 
                        provided in paragraph (3); or
                            (II) statutory damages, as provided 
                        in paragraph (4).
            (3) Actual damages and profits.--
                    (A) In general.--The injured party is 
                entitled to recover--
                            (i) the actual damages suffered by 
                        the injured party as a result of a 
                        violation of subsection (a), as 
                        provided in subparagraph (B) of this 
                        paragraph; and
                            (ii) any profits of the violator 
                        that are attributable to a violation of 
                        subsection (a) and are not taken into 
                        account in computing the actual 
                        damages.
                    (B) Calculation of damages.--The court 
                shall calculate actual damages by multiplying--
                            (i) the value of the phonorecords, 
                        copies, or works of visual art which 
                        are, or are intended to be, affixed 
                        with, enclosed in, or accompanied by 
                        any counterfeit labels, illicit labels, 
                        or counterfeit documentation or 
                        packaging, by
                            (ii) the number of phonorecords, 
                        copies, or works of visual art which 
                        are, or are intended to be, affixed 
                        with, enclosed in, or accompanied by 
                        any counterfeit labels, illicit labels, 
                        or counterfeit documentation or 
                        packaging.
                    (C) Definition.--For purposes of this 
                paragraph, the ``value'' of a phonorecord, 
                copy, or work of visual art is--
                            (i) in the case of a copyrighted 
                        sound recording or copyrighted musical 
                        work, the retail value of an authorized 
                        phonorecord of that sound recording or 
                        musical work;
                            (ii) in the case of a copyrighted 
                        computer program, the retail value of 
                        an authorized copy of that computer 
                        program;
                            (iii) in the case of a copyrighted 
                        motion picture or other audiovisual 
                        work, the retail value of an authorized 
                        copy of that motion picture or 
                        audiovisual work;
                            (iv) in the case of a copyrighted 
                        literary work, the retail value of an 
                        authorized copy of that literary work;
                            (v) in the case of a pictorial, 
                        graphic, or sculptural work, the retail 
                        value of an authorized copy of that 
                        work; and
                            (vi) in the case of a work of 
                        visual art, the retail value of that 
                        work.
            (4) Statutory damages.--The injured party may 
        elect, at any time before final judgment is rendered, 
        to recover, instead of actual damages and profits, an 
        award of statutory damages for each violation of 
        subsection (a) in a sum of not less than $2,500 or more 
        than $25,000, as the court considers appropriate.
            (5) Subsequent violation.--The court may increase 
        an award of damages under this subsection by 3 times 
        the amount that would otherwise be awarded, as the 
        court considers appropriate, if the court finds that a 
        person has subsequently violated subsection (a) within 
        3 years after a final judgment was entered against that 
        person for a violation of that subsection.
            (6) Limitation on actions.--A civil action may not 
        be commenced under this subsection unless it is 
        commenced within 3 years after the date on which the 
        claimant discovers the violation of subsection (a).

           *       *       *       *       *       *       *


Sec. 2320. Trafficking in counterfeit goods or services

    (a) Offenses.--Whoever intentionally--
            (1) traffics in goods or services and knowingly 
        uses a counterfeit mark on or in connection with such 
        goods or services,
            (2) traffics in labels, patches, stickers, 
        wrappers, badges, emblems, medallions, charms, boxes, 
        containers, cans, cases, hangtags, documentation, or 
        packaging of any type or nature, knowing that a 
        counterfeit mark has been applied thereto, the use of 
        which is likely to cause confusion, to cause mistake, 
        or to deceive,
            (3) traffics in goods or services knowing that such 
        good or service is a counterfeit military good or 
        service the use, malfunction, or failure of which is 
        likely to cause serious bodily injury or death, the 
        disclosure of classified information, impairment of 
        combat operations, or other significant harm to a 
        combat operation, a member of the Armed Forces, or to 
        national security, or
            [(4) traffics in a counterfeit drug,]
            (4) traffics in a drug and knowingly uses a 
        counterfeit mark on or in connection with such drug,
or attempts or conspires to violate any of paragraphs (1) 
through (4) shall be punished as provided in subsection (b).
    (b) Penalties.--
            (1) In general.--Whoever commits an offense under 
        subsection (a)--
                    (A) if an individual, shall be fined not 
                more than $2,000,000 or imprisoned not more 
                than 10 years, or both, and, if a person other 
                than an individual, shall be fined not more 
                than $5,000,000; and
                    (B) for a second or subsequent offense 
                under subsection (a), if an individual, shall 
                be fined not more than $5,000,000 or imprisoned 
                not more than 20 years, or both, and if other 
                than an individual, shall be fined not more 
                than $15,000,000.
            (2) Serious bodily injury or death.--
                    (A) Serious bodily injury.--Whoever 
                knowingly or recklessly causes or attempts to 
                cause serious bodily injury from conduct in 
                violation of subsection (a), if an individual, 
                shall be fined not more than $5,000,000 or 
                imprisoned for not more than 20 years, or both, 
                and if other than an individual, shall be fined 
                not more than $15,000,000.
                    (B) Death.--Whoever knowingly or recklessly 
                causes or attempts to cause death from conduct 
                in violation of subsection (a), if an 
                individual, shall be fined not more than 
                $5,000,000 or imprisoned for any term of years 
                or for life, or both, and if other than an 
                individual, shall be fined not more than 
                $15,000,000.
            (3) Counterfeit military goods or services and 
        counterfeit drugs.--Whoever commits an offense under 
        subsection (a) involving a counterfeit military good or 
        service or [counterfeit drug] drug that uses a 
        counterfeit mark on or in connection with the drug--
                    (A) if an individual, shall be fined not 
                more than $5,000,000, imprisoned not more than 
                20 years, or both, and if other than an 
                individual, be fined not more than $15,000,000; 
                and
                    (B) for a second or subsequent offense, if 
                an individual, shall be fined not more than 
                $15,000,000, imprisoned not more than 30 years, 
                or both, and if other than an individual, shall 
                be fined not more than $30,000,000.
    (c) Forfeiture and Destruction of Property; Restitution.--
Forfeiture, destruction, and restitution relating to this 
section shall be subject to section 2323, to the extent 
provided in that section, in addition to any other similar 
remedies provided by law.
    (d) Defenses.--All defenses, affirmative defenses, and 
limitations on remedies that would be applicable in an action 
under the Lanham Act shall be applicable in a prosecution under 
this section. In a prosecution under this section, the 
defendant shall have the burden of proof, by a preponderance of 
the evidence, of any such affirmative defense.
    (e) Presentence Report.--(1) During preparation of the 
presentence report pursuant to Rule 32(c) of the Federal Rules 
of Criminal Procedure, victims of the offense shall be 
permitted to submit, and the probation officer shall receive, a 
victim impact statement that identifies the victim of the 
offense and the extent and scope of the injury and loss 
suffered by the victim, including the estimated economic impact 
of the offense on that victim.
    (2) Persons permitted to submit victim impact statements 
shall include--
            (A) producers and sellers of legitimate goods or 
        services affected by conduct involved in the offense;
            (B) holders of intellectual property rights in such 
        goods or services; and
            (C) the legal representatives of such producers, 
        sellers, and holders.
    (f) Definitions.--For the purposes of this section--
            (1) the term ``counterfeit mark'' means--
                    (A) a spurious mark--
                            (i) that is used in connection with 
                        trafficking in any goods, services, 
                        labels, patches, stickers, wrappers, 
                        badges, emblems, medallions, charms, 
                        boxes, containers, cans, cases, 
                        hangtags, documentation, or packaging 
                        of any type or nature;
                            (ii) that is identical with, or 
                        substantially indistinguishable from, a 
                        mark registered on the principal 
                        register in the United States Patent 
                        and Trademark Office and in use, 
                        whether or not the defendant knew such 
                        mark was so registered;
                            (iii) that is applied to or used in 
                        connection with the goods or services 
                        for which the mark is registered with 
                        the United States Patent and Trademark 
                        Office, or is applied to or consists of 
                        a label, patch, sticker, wrapper, 
                        badge, emblem, medallion, charm, box, 
                        container, can, case, hangtag, 
                        documentation, or packaging of any type 
                        or nature that is designed, marketed, 
                        or otherwise intended to be used on or 
                        in connection with the goods or 
                        services for which the mark is 
                        registered in the United States Patent 
                        and Trademark Office; and
                            (iv) the use of which is likely to 
                        cause confusion, to cause mistake, or 
                        to deceive; or
                    (B) a spurious designation that is 
                identical with, or substantially 
                indistinguishable from, a designation as to 
                which the remedies of the Lanham Act are made 
                available by reason of section 220506 of title 
                36;
        but such term does not include any mark or designation 
        used in connection with goods or services, or a mark or 
        designation applied to labels, patches, stickers, 
        wrappers, badges, emblems, medallions, charms, boxes, 
        containers, cans, cases, hangtags, documentation, or 
        packaging of any type or nature used in connection with 
        such goods or services, of which the manufacturer or 
        producer was, at the time of the manufacture or 
        production in question, authorized to use the mark or 
        designation for the type of goods or services so 
        manufactured or produced, by the holder of the right to 
        use such mark or designation;
            (2) the term ``financial gain'' includes the 
        receipt, or expected receipt, of anything of value;
            (3) the term ``Lanham Act'' means the Act entitled 
        ``An Act to provide for the registration and protection 
        of trademarks used in commerce, to carry out the 
        provisions of certain international conventions, and 
        for other purposes'', approved July 5, 1946 (15 U.S.C. 
        1051 et seq.);
            (4) the term ``counterfeit military good or 
        service'' means a good or service that uses a 
        counterfeit mark on or in connection with such good or 
        service and that--
                    (A) is falsely identified or labeled as 
                meeting military specifications, or
                    (B) is intended for use in a military or 
                national security application;
            (5) the term ``traffic'' means to transport, 
        transfer, or otherwise dispose of, to another, for 
        purposes of commercial advantage or private financial 
        gain, or to make, import, export, obtain control of, or 
        possess, with intent to so transport, transfer, or 
        otherwise dispose of; and
            [(6) the term ``counterfeit drug'' means a drug, as 
        defined by section 201 of the Federal Food, Drug, and 
        Cosmetic Act, that uses a counterfeit mark on or in 
        connection with the drug.]
            (6) the term ``drug'' means a drug, as defined in 
        section 201 of the Federal Food, Drug, and Cosmetic Act 
        (21 U.S.C. 321).
    (g) Limitation on Cause of Action.--Nothing in this section 
shall entitle the United States to bring a criminal cause of 
action under this section for the repackaging of genuine goods 
or services not intended to deceive or confuse.
    (h) Report to Congress.--(1) Beginning with the first year 
after the date of enactment of this subsection, the Attorney 
General shall include in the report of the Attorney General to 
Congress on the business of the Department of Justice prepared 
pursuant to section 522 of title 28, an accounting, on a 
district by district basis, of the following with respect to 
all actions taken by the Department of Justice that involve 
trafficking in counterfeit labels for phonorecords, copies of 
computer programs or computer program documentation or 
packaging, copies of motion pictures or other audiovisual works 
(as defined in section 2318 of this title), criminal 
infringement of copyrights (as defined in section 2319 of this 
title), unauthorized fixation of and trafficking in sound 
recordings and music videos of live musical performances (as 
defined in section 2319A of this title), or trafficking in 
goods or services bearing counterfeit marks (as defined in 
section 2320 of this title):
            (A) The number of open investigations.
            (B) The number of cases referred by the United 
        States Customs Service.
            (C) The number of cases referred by other agencies 
        or sources.
            (D) The number and outcome, including settlements, 
        sentences, recoveries, and penalties, of all 
        prosecutions brought under sections 2318, 2319, 2319A, 
        and 2320 of title 18.
    (2)(A) The report under paragraph (1), with respect to 
criminal infringement of copyright, shall include the 
following:
            (i) The number of infringement cases in these 
        categories: audiovisual (videos and films); audio 
        (sound recordings); literary works (books and musical 
        compositions); computer programs; video games; and, 
        others.
            (ii) The number of online infringement cases.
            (iii) The number and dollar amounts of fines 
        assessed in specific categories of dollar amounts. 
        These categories shall be: no fines ordered; fines 
        under $500; fines from $500 to $1,000; fines from 
        $1,000 to $5,000; fines from $5,000 to $10,000; and 
        fines over $10,000.
            (iv) The total amount of restitution ordered in all 
        copyright infringement cases.
    (B) In this paragraph, the term ``online infringement 
cases'' as used in paragraph (2) means those cases where the 
infringer--
            (i) advertised or publicized the infringing work on 
        the Internet; or
            (ii) made the infringing work available on the 
        Internet for download, reproduction, performance, or 
        distribution by other persons.
    (C) The information required under subparagraph (A) shall 
be submitted in the report required in fiscal year 2005 and 
thereafter.
    (i) Transshipment and Exportation.--No goods or services, 
the trafficking in of which is prohibited by this section, 
shall be transshipped through or exported from the United 
States. Any such transshipment or exportation shall be deemed a 
violation of section 42 of an Act to provide for the 
registration of trademarks used in commerce, to carry out the 
provisions of certain international conventions, and for other 
purposes, approved July 5, 1946 (commonly referred to as the 
``Trademark Act of 1946'' or the ``Lanham Act'').

           *       *       *       *       *       *       *


                            Dissenting Views


                              INTRODUCTION

    H.R. 3380, the ``Transnational Drug Trafficking Act of 
2015,'' amends section 959 of the Controlled Substances Act\1\ 
to make it easier for prosecutors to convict foreign drug 
traffickers responsible for importing into the United States 
illegal drugs and chemicals used to make those drugs by 
lowering the requisite proof of intent. Nevertheless, by 
lowering the intent requirement required to obtain a conviction 
under section 959, the bill would inherently subject more 
individuals to mandatory minimum penalties. We have long-
opposed the imposition of mandatory minimum sentences because 
of their extraordinary injustice, role in causing prison 
overcrowding, and the excessive costs to taxpayers they cause. 
Mandatory minimum sentences have had a particularly devastating 
impact on minority communities across our Nation. Given the 
fact that H.R. 3380 would subject more individuals to mandatory 
minimum sentences, we must respectfully dissent.
---------------------------------------------------------------------------
    \1\Section 959 provides:

---------------------------------------------------------------------------
(a) Manufacture or distribution for purpose of unlawful importation

  It shall be unlawful for any person to manufacture or distribute a 
controlled substance in schedule I or II or flunitrazepam or listed 
chemical-

  G  (1) intending that such substance or chemical will be unlawfully 
imported into the United States or into waters within a distance of 12 
miles of the coast of the United States; or

  G  (2) knowing that such substance or chemical will be unlawfully 
imported into the United States or into waters within a distance of 12 
miles of the coast of the United States.

(b) Possession, manufacture, or distribution by person on board 
aircraft

  It shall be unlawful for any United States citizen on board any 
aircraft, or any person on board an aircraft owned by a United States 
citizen or registered in the United States, to-

  G  (1) manufacture or distribute a controlled substance or listed 
chemical; or

  G  (2) possess a controlled substance or listed chemical with intent 
to distribute.

(c) Acts committed outside territorial jurisdiction of United States; 
venue

  This section is intended to reach acts of manufacture or distribution 
committed outside the territorial jurisdiction of the United States. 
Any person who violates this section shall be tried in the United 
States district court at the point of entry where such person enters 
the United States, or in the United States District Court for the 
District of Columbia.

21 U.S.C. Sec. 959 (2016).

                       DESCRIPTION AND BACKGROUND

    Section 959(a) of the Controlled Substances Act outlaws the 
manufacture or distribution of controlled substances and 
certain chemicals with knowledge or intent that they will be 
illegally imported into the United States. This prohibition 
applies to anyone in the United States or outside our borders 
because section 959 is not limited to the prosecution of 
foreign nationals. Section 959 only provides that it is 
intended to be used to prosecute acts committed outside the 
territorial jurisdiction of the United States. Under this law, 
the government is required to prove as an element of the 
offense that a defendant manufactured or distributed a 
controlled substance or listed chemical with the intent 
(section 959(a)(1)) or knowledge (section 959(a)(2)) that such 
substance or chemical would be illegally imported into the 
United States or within 12 miles of the coast of the United 
States. A conviction under this statute may result in the 
imposition of a mandatory minimum sentence of five or ten 
years, depending on the quantity and type of controlled 
substance involved, pursuant to section 960 of title 21 of the 
United States Code, which sets forth the applicable penalties 
for section 959.
    The Department of Justice (DOJ) asserts that the burden of 
proving actual knowledge is very difficult to meet as there is 
often no direct evidence that a defendant knew drugs or 
chemicals used to make such drugs were intended to be imported 
into the United States. The DOJ argues that many suppliers, 
manufacturers, wholesale distributors, brokers, and 
transporters from Columbia and Peru avoid prosecution because 
the final destination of drugs is rarely if ever discussed 
among conspirators.\2\ As a result, the DOJ ``faces barriers in 
building extradition cases against foreign drug kingpins, 
particularly from Colombia and Peru, the leading global 
producers of cocaine.''\3\ Kingpins from these countries often 
use Mexican traffickers as intermediaries to transport 
narcotics into the United States. An explanation of the 
substantive provisions of H.R. 3380 follows.
---------------------------------------------------------------------------
    \2\Combating Transnational Organized Crime: International Money 
Laundering as a Threat to Our Financial Systems: Hearing Before the 
Subcomm. on Crime, Terrorism, and Homeland Security of the H. Comm. on 
the Judiciary, 112th Cong. 21 (2012) (statement of Jennifer Shasky 
Calvery, Chief, Asset Forfeiture and Money Laundering, U.S. Department 
of Justice).
    \3\Press Release, Senator Dianne Feinstein, U.S. Senate, Senate 
Passes Bill to Combat Transnational Drug Trafficking (Oct. 8, 2015).
---------------------------------------------------------------------------
    Section 2 of the bill amends section 959 of title 21 of the 
United States Code. It redesignates subsections (b) and (c) of 
section 959 as subsections (c) and (d). Subsection (a), as 
amended, would make it unlawful to manufacture or distribute a 
controlled substance in schedule I or II or flunitrazepam or a 
listed chemical if the individual intended, knew or had 
reasonable cause to believe that such substance or chemical 
would be illegally imported into the United States or into 
waters within a distance of 12 miles of the coast of the United 
States. Section 2 adds subsection (b) to section 959, which, as 
amended, makes it unlawful for any individual to manufacture or 
distribute a listed chemical, intending or knowing that the 
listed chemical would be used to manufacture a controlled 
substance if such individual intended, knew, or had reasonable 
cause to believe that the controlled substance would be 
illegally imported into the United States.
    Section 3 amends section 113 of title 18 of the United 
States Code to add a knowledge requirement to the offense of 
trafficking a drug with a counterfeit mark. As amended, section 
113 would require the government to prove that an individual 
knew that a drug sold, distributed, or otherwise trafficked had 
or used a counterfeit mark.

                                CONCERNS

    Without question, drug abuse has taken a devastating toll 
on communities across our Nation. While it is clear that we 
must take steps to reduce the flow of illegal drugs into the 
United States, H.R. 3380 is not the solution. By amending 
section 959 to allow prosecution under a lower intent threshold 
and thereby no longer require proof that a defendant knew or 
intended that the drugs would be imported into the United 
States, this measure would establish liability if an individual 
had ``a reasonable cause to believe'' that the drugs would be 
imported into the United States. As a result of lowering the 
intent standard, H.R. 3380 may unjustly lead to unreasonably 
long sentences being imposed on lower-level offenders through 
the imposition of mandatory minimum sentences pursuant to 
section 960 of the Controlled Substances Act, which is made 
applicable to convictions under section 959. H.R. 3380 would 
inherently expose more individuals to the potential imposition 
of mandatory minimums.
    As a matter of longstanding principle, we believe mandatory 
minimum sentences are unjust and unwise. Mandatory minimum 
sentencing has led to extraordinary injustice, prison 
overcrowding, and excessive costs to taxpayers. Intended to, 
among other things, reduce unwarranted disparity among 
similarly situated defendants, mandatory minimum sentencing has 
instead produced both unwarranted uniformity and disparity. The 
United States Sentencing Commission ``unanimously agreed that 
mandatory minimum sentences in their current form often apply 
too broadly, are set too high, and are unevenly applied.''\4\ 
For example, in drug offenses, the type and weight of a drug is 
alone sufficient to trigger a mandatory minimum sentence. The 
type and quantity of drugs are, however, poor proxies for 
culpability, because very different offenders, with varying 
degrees of culpability, can be subject to the same mandatory 
minimum sentence. ``Mandatory minimums currently apply in large 
numbers to every function in a drug organization.''\5\ This 
unwarranted uniformity means that a drug ``mule'' carrying a 
backpack filled with drugs on several occasions, for relatively 
small amounts of remuneration, may potentially be subject to 
the same sentence as a drug kingpin, who arranges the trips and 
reaps enormous profits.
---------------------------------------------------------------------------
    \4\Sentencing Reform and Corrections Act of 2015: Hearing on S. 
2123 Before the S. Comm. on the Judiciary, 114th Cong. __ (2015) 
(statement of Hon. Patti B. Saris, Chair, U.S. Sentencing Commission, 
at 1)
    \5\Id. at 3.
---------------------------------------------------------------------------
    While we would prefer that mandatory minimum sentences be 
removed from Federal law altogether, we believe the amendment 
offered by Ranking Member John Conyers, Jr. represented a 
reasonable compromise that would have addressed some of our 
concerns while not harming the goal of the bill. The amendment 
would have limited the application of the ``reasonable cause to 
believe'' addition to the statute to individuals who are 
organizers or leaders of the prohibited activity, when such 
activity involved five or more participants. This modification 
would have focused the bill's changes to current law, and any 
expanded application of mandatory minimum sentences, on those 
we understand the bill was drafted to cover, namely the true 
leaders of drug organizations, otherwise known as ``drug 
kingpins.'' If adopted, lower-level offenders would not have 
been absolved of liability, but would still have been subject 
to the prohibitions under the terms of the current statute. 
Unfortunately, this amendment failed by a vote of 6 to 16.\6\
---------------------------------------------------------------------------
    \6\Unofficial Tr. of Markup of H.R. 3380, the ``Transnational Drug 
Trafficking Act,'' by the H. Comm. on the Judiciary, 114th Cong. 61 
(2016).
---------------------------------------------------------------------------

                               CONCLUSION

    Transnational trafficking of illegal drugs that are 
imported into the United States is a serious problem and 
appropriate steps should be taken to address this issue. While 
H.R. 3380 is a well-intentioned effort to combat the 
importation of controlled substances into the United States, it 
unfortunately has the result of expanding the scope of 
mandatory minimum sentencing, which should, at the very least, 
be focused on only the high-level offenders that we understand 
to be the real focus of this bill. Instead, H.R. 3380, as 
reported by the Committee, retains the possibility that lower-
level offenders may be subjected to sentences intended for 
kingpins, a result that we cannot support.
    For the foregoing reasons, we respectfully dissent.

                                   Mr. Conyers, Jr.
                                   Ms. Jackson Lee.
                                   Mr. Johnson, Jr.
                                   Mr. Richmond.
                                   Mr. Jeffries.
                                   Mr. Cicilline.




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