                            In the

    United States Court of Appeals
               For the Seventh Circuit
                    ____________________
No. 15-2528
UNITED STATES OF AMERICA,
                                               Plaintiff-Appellee,

                               v.

JOSEPH A. PHELPS,
                                           Defendant-Appellant.
                    ____________________

          Appeal from the United States District Court
                 for the Central District of Illinois.
         No. 12-CR-10095-001 — Joe Billy McDade, Judge.
                    ____________________

    SUBMITTED OCTOBER 2, 2015 — DECIDED MAY 24, 2016
                ____________________


   Before POSNER, SYKES, and HAMILTON, Circuit Judges.
   SYKES, Circuit Judge. Joseph Phelps was convicted of con-
spiracy to manufacture methamphetamine and was sen-
tenced to 120 months in prison, the statutory minimum, well
below the Sentencing Guidelines range of 188–235 months.
A year later the government moved for a sentence reduction
as a reward for his substantial assistance. See FED. R. CRIM.
2                                                No. 15-2528

P. 35(b). The district court granted the motion and reduced
the sentence to 60 months.
   Several months later Amendment 782 to the Sentencing
Guidelines took effect, retroactively reducing Phelps’s
guideline range to 151–188 months. As permitted by
18 U.S.C. § 3582(c)(2), Phelps moved for a sentence reduction
based on the retroactive amendment. He asked the court to
reduce his sentence to 48 months, citing the policy statement
in U.S.S.G. § 1B1.10(b)(2)(B), which contains the Sentencing
Commission’s guidance for handling a § 3582(c)(2) motion in
a case involving a defendant who is serving a below-
guideline sentence based on substantial assistance to the
government. In that situation the Commission advises that
“a reduction comparably less than the amended guideline
range … may be appropriate.” U.S.S.G. § 1B1.10(b)(2)(B)
(emphasis added).
    The judge calculated that a “reduction comparably less
than” the amended range in Phelps’s case would be
75 months, not 48 months as Phelps had argued. The judge
arrived at this higher figure by comparing Phelps’s
60-month sentence to the below-guideline sentence of
120 months that the court had originally imposed before the
government’s substantial-assistance motion. The 60-month
term was 50% of the original sentence, so the judge applied
the same percentage to the amended range, the bottom of
which was 151 months. That approach yielded a term of not
less than 75 months. Because this term was greater than
Phelps’s 60-month sentence, the judge found him ineligible
for a § 3582(c)(2) reduction and denied the motion.
    We reverse. To calculate a sentence that is “comparably
less than the amended guideline range,” the Sentencing
No. 15-2528                                                  3

Commission instructs the court to compare the defendant’s
current below-guideline sentence to the original unamended
guideline range, convert the difference to a percentage, and
apply that percentage reduction to the amended range. See
§ 1B1.10(b)(2)(B) cmt. n.3. This approach applies for all
defendants serving a below-guideline sentence based on
substantial assistance, even where (as here) the govern-
ment’s substantial-assistance motion came after the court
imposed a below-range sentence for some other reason (e.g.,
based on the factors listed in 18 U.S.C. § 3553(a)).
   The judge’s misstep in this case was to compare Phelps’s
current 60-month sentence to his initial below-guideline
120-month sentence rather than to the original unamended
guideline range. Phelps performed the correct calculation:
His “comparably less” sentence is not less than 48 months,
so he is eligible for a sentence reduction under § 3582(c)(2).
                       I. Background
    Phelps pleaded guilty in January 2013 to a charge of con-
spiring to manufacture more than 500 grams of metham-
phetamine. See 21 U.S.C. §§ 841(b)(1)(A)(viii), 846. Under the
then-applicable 2012 Sentencing Guidelines, the presentence
report began with a base offense level of 32, added three
levels for environmental harm, and three more levels for
Phelps’s role as a manager or supervisor, and finally sub-
tracted three levels for acceptance of responsibility. U.S.S.G.
§§ 2D1.1(c)(4) (base offense), 2D1.1(b)(13)(C)(ii) (environ-
mental harm), 3B1.1(b) (manager and supervisor), 3E1.1(a)
(acceptance of responsibility). This yielded an adjusted
offense level of 35, which together with a criminal-history
category of II, produced a guideline range of 188–
235 months.
4                                                  No. 15-2528

    At sentencing in May of that year the judge adopted
these findings but imposed the statutory minimum sentence
of 120 months, see § 841(b)(1)(A), well below the bottom of
the guideline range. This substantial downward variance
was based on the judge’s consideration of the sentencing
factors in § 3553(a). In July 2014 the prosecutor moved to
reduce Phelps’s sentence based on his substantial assistance
to the government. See FED. R. CRIM. P. 35(b). The judge
granted the motion and reduced the sentence to 60 months.
    In November 2014 the Sentencing Commission promul-
gated Amendment 782, which reduced the base offense level
for most drug crimes by two levels. See U.S.S.G. app. C.,
amend. 782, p. 65 (2014). The Commission later made the
amendment retroactive. See id. amend. 788, p. 87. Phelps
filed a pro se motion under § 3582(c)(2) seeking a sentence
reduction based on the retroactive amendment. His appoint-
ed counsel later amended the motion, explaining that
Amendment 782 had the effect of dropping Phelps’s base
offense level to 30, his adjusted offense level to 33, and his
guideline range to 151–188 months. Counsel argued that
although Phelps’s current 60-month sentence was below the
amended guideline range, the policy statement in
§ 1B1.10(b)(2)(B) (the Commission’s guidance for handling
§ 3582(c)(2) motions by defendants serving below-guideline
sentences for substantial assistance) made him eligible for a
new sentence of not less than 48 months.
    The government agreed with Phelps’s reading of
§ 1B1.10(b)(2)(B) but urged the judge to decline, in his discre-
tion, to award any further sentence reduction. The judge
rejected the parties’ interpretation of § 1B1.10(b)(2)(B),
concluding instead that applying the policy statement to
No. 15-2528                                                   5

Phelps’s situation yielded a new sentence of not less than
75 months. Because this newly calculated term was greater
than Phelps’s 60-month sentence, the judge held that Phelps
was not eligible for the § 3582(c)(2) reduction and denied the
motion.
                        II. Analysis
    Section 3582(c)(2) authorizes the district court to reduce
the sentence of a defendant who is serving a term of impris-
onment “based on a sentencing range that has subsequently
been lowered by the Sentencing Commission.” The court
may reduce the defendant’s sentence “after considering the
factors set forth in section 3553(a) to the extent that they are
applicable,” but only “if such a reduction is consistent with
applicable policy statements issued by the Sentencing Com-
mission.” § 3582(c)(2) (emphasis added).
    The statute requires a two-step inquiry: “First, the court
determines whether a sentence reduction is consistent with
the applicable policy statements promulgated by the Sen-
tencing Commission; if it is, then the court considers wheth-
er a reduction is warranted after weighing any applicable
§ 3553(a) factors.” United States v. Koglin, Nos. 15-1943 &
15-1946, 2016 WL 2865620, at *2 (7th Cir. May 17, 2016)
(citing Dillon v. United States, 560 U.S. 817, 826–27 (2010)).
   In this case the judge never reached step two; instead, he
found Phelps ineligible for a § 3582(c)(2) sentence reduction
under the Commission’s policy statement, § 1B1.10(b)(2).
That guideline states a general rule: The court “shall not
reduce the defendant’s term of imprisonment … to a term
that is less than the minimum of the amended guideline
range.” § 1B1.10(b)(2)(A). But there’s an exception for a
6                                                 No. 15-2528

defendant (like Phelps) who is serving a below-guideline
sentence based on substantial assistance to the government:
      If the term of imprisonment imposed was less
      than the term of imprisonment provided by the
      guideline range applicable to the defendant at
      the time of sentencing pursuant to a govern-
      ment motion to reflect the defendant’s substan-
      tial assistance to authorities, a reduction compa-
      rably less than the amended guideline range … may
      be appropriate.
§ 1B1.10(b)(2)(B) (emphasis added).
   The precise question here is how to calculate a reduction
“comparably less than the amended guideline range” when
the defendant’s original sentence was below the guideline
range for reasons other than substantial assistance and the
credit for substantial assistance came later, reducing the
sentence further still.
    Application note 3 to § 1B1.10 gives an example for the
perhaps more common scenario of a defendant who re-
ceived credit for substantial assistance at the original sen-
tencing proceeding. In that situation the note instructs the
court to calculate the ratio between the defendant’s below-
guideline sentence and the bottom of the original unamend-
ed guideline range and apply that same ratio to the bottom
of the amended range. That computation produces the
“comparable reduction,” which the Commission suggests
“may be appropriate” in the exercise of the court’s discre-
tion. § 1B1.10 cmt. n.3.
  But the application notes do not explicitly address the
more complicated situation presented here. Phelps was
No. 15-2528                                                                 7

initially sentenced to a term of imprisonment—120
months—that was below the original unamended guideline
range, but for reasons unrelated to substantial assistance.
Only later did the court reduce the sentence based on the
government’s substantial-assistance motion. Phelps argues
that in this situation a sentence reduction “comparably less
than the amended guideline range” requires the same sort of
approach specified in application note 3: a straightforward
calculation of the ratio between his current 60-month sen-
tence and the original unamended guideline range. The
government agrees. 1
   The district judge saw things differently, interpreting
§ 1B1.10(b)(2)(B) to require a more limited inquiry into the
specific portion of the defendant’s below-guideline sentence
that is attributable solely to the substantial-assistance motion.
On this understanding, the judge tried to isolate the effect of
Phelps’s substantial-assistance credit by comparing his
current 60-month sentence to his initial below-guideline
120-month sentence.
    It’s true that the timing of the substantial-assistance mo-
tion in Phelps’s case distinguishes it from the example in
application note 3. But we don’t think the distinction re-
quires a different approach. Section 1B1.10(b)(2)(B) simply

1 In an earlier case the government took the opposite position. See Brief
of Plaintiff-Appellee at 8, 11–14, United States v. Nichols, 789 F.3d 795 (7th
Cir. 2015) (No. 15-1108) 2015 WL 1805151. We did not reach the issue,
however, finding the defendant’s challenge to his § 3582(c)(2) sentence
reduction waived. United States v. Nichols, 789 F.3d 795, 796 (7th Cir.
2015). The government acknowledges that its current position represents
a change in its view of how § 1B1.10(b)(2)(B) applies in this situation.
8                                                         No. 15-2528

asks whether the defendant’s current term of imprisonment
is less than the original unamended guideline range and
whether that term was imposed pursuant to a substantial-
assistance motion. It doesn’t ask if that motion came during
or after the original sentencing proceeding. Though the
application notes could be clearer, we agree with the parties
that the two-step computation explained in application
note 3 applies regardless of whether the substantial-
assistance reduction came at the time of the original sentenc-
ing or after.
    Under this approach Phelps is eligible to receive a new
sentence of not less than 48 months. 2 Whether he deserves
that reduction in his sentence, something less, or no reduc-
tion at all is a question for the judge to consider on remand
based on an examination of any applicable § 3553(a) factors.
                                         REVERSED and REMANDED.




2 Here’s the math: Phelps’s current sentence is 60 months. The bottom of
his original unamended guideline range was 188 months. Sixty months is
31.9% of 188 months. When this percentage is multiplied by the bottom
of the amended guideline range (151 months), the result is approximate-
ly 48 months.
