Paul Brewer appeals from the district court's imposition of a thirteen-month consecutive sentence pursuant to Sec. 5G1.3 of the Sentencing Guidelines. Brewer, who pleaded guilty to the false and fraudulent use of a social security number and who at the time of sentencing was serving an undischarged state-imposed sentence, received a twenty-month concurrent and thirteen-month consecutive sentence. We vacate Brewer's sentence and remand to the district court for resentencing consistent with this opinion.

Brewer's state and federal sentences both result from his fraudulent activity occurring in Cedar Falls, Iowa. Using a false name and social security number, Brewer opened a bank account under the name of Mark Latham. While working for the Salvation Army under Latham's name, Brewer developed a relationship with a co-worker, Pat Chambers. Planning on purchasing a home together with Brewer, Chambers borrowed $15,000 for a down payment on a house. Most of these funds were deposited by Brewer in his bank account. A few days later, without Chambers' permission, Brewer withdrew $13,900 in cash from his account. Brewer also wrote a number of checks on the now nearly depleted account, overdrawing the account and leaving a number of merchants uncompensated for goods sold to him.

Brewer was charged in Iowa state court with the theft of Chambers' money and writing "bad" checks. While the state charges were pending, Brewer was charged in federal court with three bank-related counts, one of which included use with an intent to deceive of a false social security number in violation of 42 U.S.C. Sec. 408(a)(7)(B) (Supp. IV 1992). Before final disposition of the federal charges, Brewer received a ten-year state indeterminate sentence1 for the theft of Chambers' money (Iowa Theft). He subsequently entered into a plea agreement in federal court whereby he pleaded guilty to the Sec. 408 (Social Security) count and the other two counts were dismissed.

The guidelines required the district court to apply Sec. 5G1.3 to determine the extent to which Brewer's federal sentence should be served consecutive to his state-imposed sentence. As part of the sentencing determination, the district court first assigned Brewer a criminal history category of V and an offense level of 12, resulting in a twenty-seven- to thirty-three-month sentencing range and the imposition of a thirty-three-month sentence. Although Brewer's presentence report (PSR) included the Iowa Theft conduct in its calculation of the estimated offense level, the district court, disagreeing with the PSR, refused to take the state conduct into account when it calculated the offense level of 12. Tr. at 184-87. Brewer does not appeal from the district court's determination that twenty-seven to thirty-three months is the proper sentencing range for the Social Security offense.

Second, the district court determined that had Brewer been charged and sentenced in federal court for both the federal Social Security and state Iowa Theft offenses, the offenses would have been grouped together, resulting in an offense level of 15, a criminal history category of IV, and a sentencing range of thirty to thirty-seven months. Id. at 237. The court assumed it would have imposed a thirty-seven-month sentence. Brewer does not challenge these calculations.

Lastly, the district court was faced with whether the federal term was to be served concurrent with or consecutive to the state sentence, thus requiring consideration of Sec. 5G1.3. The district court determined that Brewer should receive eight months credit for the time he had already served on his state sentence. Id. at 238. The government thus requested that the court impose a twenty-nine-month consecutive sentence. Id. at 240. Brewer requested a wholly concurrent sentence. Id. The district court, applying U.S.S.G. Sec. 5G1.3(c), p.s. (Nov. 1, 1992), made an "educated guess" that Brewer would serve at least twenty-four months in state custody. Id. at 242-43. Articulating that it was attempting to impose a reasonable incremental punishment as required by Sec. 5G1.3(c), the district court imposed a twenty-month concurrent and thirteen-month consecutive sentence. Brewer timely appealed.

Section 5G1.3 of the guidelines applies to the imposition of a sentence upon a defendant subject to an undischarged term of imprisonment. The "guideline is intended to result in an appropriate incremental punishment for the instant offense that most nearly approximates the sentence that would have been imposed had all the sentences been imposed at the same time." U.S.S.G. Sec. 5G1.3, comment. (backg'd.).2 A sentencing court is guided by Sec. 5G1.3 in its determination of an appropriate point within the sentencing range to order the sentence to run concurrent with or consecutive to the undischarged term of imprisonment. Id. comment. (n.3). Brewer contends the district court improperly applied Sec. 5G1.3(c) (subsection (c))3 when it imposed a thirteen-month consecutive sentence, thus failing to impose a reasonable incremental punishment.4

The government frames the issue on appeal as a challenge to the district court's factual findings. It asserts that Brewer challenges the district court's finding that Brewer will probably serve no more than twenty-four months of his state indeterminate sentence. Hence, according to the government, the clearly erroneous standard applies to our review. See United States v. Kelly, 989 F.2d 980, 985 (8th Cir.), cert. denied, --- U.S. ----, 114 S. Ct. 206, 126 L. Ed. 2d 163 (1993). In contrast, Brewer frames the issue as a challenge to the district court's application of the guideline. Brewer thus argues that the de novo standard applies to our review. See United States v. Gullickson, 981 F.2d 344, 346 (8th Cir.1992). We agree with Brewer and review de novo. We are not reviewing the correctness of the district court's factual findings, but rather whether the district court properly applied subsection (c) to its imposition of Brewer's sentence.

Subsection (c) requires a sentencing court to impose a consecutive sentence to the extent necessary to "achieve a reasonable incremental punishment for the instant offense."5 U.S.S.G. Sec. 5G1.3(c). The commentary to subsection (c) directs the district court to "consider a reasonable incremental penalty to be a sentence for the instant offense that results in a combined sentence of imprisonment that approximates the total punishment that would have been imposed under Sec. 5G1.2 (Sentencing on Multiple Counts of Conviction) had all of the offenses been federal offenses for which sentences were being imposed at the same time." Id. comment. (n. 3). The district court made a finding that for Brewer, a reasonable incremental penalty for the combined state and federal offenses would be thirty-seven months of imprisonment.

Despite the district court's uncontested determination that a reasonable incremental punishment for the combined offenses would be thirty-seven months of imprisonment, the district court reasoned that Brewer's indeterminate state sentence precluded accurate imposition of such a penalty. The district court, consequently, made an "educated guess" as to the length of Brewer's state incarceration.6 The district court's "educated guess" resulted in a failure to impose the "reasonable incremental [combined] punishment" required by Sec. 5G1.3. Under the sentence imposed by the district court, Brewer ultimately could stay in prison for thirty-three months7--thus receiving less than a reasonable incremental penalty--or significantly more than thirty-seven months8--thus receiving more than a reasonable incremental penalty. Unless the district court departs, the district court lacks discretion to impose a federal sentence that may or may not impose a reasonable incremental punishment. See Gullickson, 981 F.2d at 349; see also U.S.S.G. Sec. 5K2.0 (1992).9

In light of Brewer's indeterminate state sentence, the district court believed that it was unable to fashion a means for imposing a thirty-seven-month combined punishment. The illustrations to the Sec. 5G1.3 commentary provide the sentencing court with guidance.10 The illustrations to the subsection (c) commentary instruct that when a defendant is under an indeterminate state sentence, as is Brewer, the sentencing court should first determine the sentencing range for the instant offense. See id. comment. (n. 3(A)). The court should next determine how much of the defendant's state sentence has been served. See id. Then the district court should determine what the total punishment would have been had the defendant been sentenced for all offenses at the same time in federal court. See id. Finally, the district court should subtract the time served on the state sentence from the hypothetical combined sentence. As long as the resulting sentence is within the guideline range calculated for the instant offense, this is the sentence that should be imposed concurrent with the indeterminate state sentence. See id. comment. (n. 3) ("this methodology does not, itself, require the court to depart from the guideline range established for the instant federal offense"). Applying this procedure would impose upon a defendant a total sentence that would be no longer than the sentence he would have received had all offenses been prosecuted in federal court, thus properly implementing Sec. 5G1.3's purpose. See id. comment. (n. 3(A)).11 If the defendant serving a state indeterminate sentence is released from state custody before the concurrent sentence is completed, he would finish the federal sentence in federal custody. Contrary to the district court's concerns, despite the indeterminate time of Brewer's release from Iowa's custody, the district court could impose a sentence that would assure that Brewer served at least thirty-seven months in prison and, at the same time, that Brewer served no more than thirty-seven months in prison as a result of his Social Security offense.

The government argues that the district court had discretion pursuant to 18 U.S.C. Sec. 3584 (1988), notwithstanding subsection (c), whether to impose a concurrent to consecutive sentence. We agree, but such discretion is not unfettered. See Gullickson, 981 F.2d at 348-49. When determining whether to impose a consecutive or concurrent sentence, Sec. 3584 directs the courts to "consider" the applicable guidelines and policy statements in effect at the time of sentencing. See id. at 348; see also 18 U.S.C. Sec. 3553(a) (1988). Although "sentencing courts do not have discretion ... to ignore section 5G1.3(c)," Gullickson, 981 F.2d at 349, the district court may depart from the range suggested by Sec. 5G1.3 when sufficient justification for departure exists. Id. "In determining whether sufficient justification for departure exists, district courts must follow usual guideline procedures." Id. Thus, a district court may depart from the mandate imposed by Sec. 5G1.3, but it may not do so without justifying such a departure. See id. In the instant case, the district court did not state it was departing from Sec. 5G1.3.

The government also contends that subsection (c) is a policy statement and thus is not binding on the courts. Agreeing that subsection (c) is a policy statement does not end the inquiry. A "policy statement[ ] interpreting a guideline, or prohibiting a district court from taking a specified action, [is] authoritative and binding on the courts." United States v. Levi, 2 F.3d 842, 845 (8th Cir.1993). The relevant inquiry is thus whether subsection (c) interprets a guideline. We hold it does. Subsection (c) directs the court in mandatory language to impose a consecutive sentence to the extent necessary to achieve a reasonable incremental punishment for the instant offense. See supra note 5. This policy statement interprets Sec. 5G1.3, whose purpose is to impose "appropriate incremental punishment for the instant offense that most nearly approximates the sentence that would have been imposed had all the sentences been imposed at the same time," U.S.S.G. Sec. 5G1.3, comment. (backg'd.). Accordingly, unless the district court departs under guideline procedures, subsection (c) must be applied by the sentencing court.

By imposing a thirteen-month consecutive sentence that would be served regardless of the amount of time Brewer would ultimately spend in state custody, the district court failed to impose a reasonable incremental penalty for the combined offenses. The district court failed to choose an appropriate point within the sentencing range to order the sentence to run concurrent with or consecutive to the undischarged term of imprisonment. See id. comment. (n. 3). As the district court recognized:

If the defendant gets out sooner than 24 months in the state sentence [sic], well, the defendant sort of--he's gotten a break, so to speak. If he gets out in more than 24 months, he hasn't gotten a break. But in either event, the defendant will serve 13 months and only 13 months in the federal sentence [sic] consecutive to the state sentence, whatever that ultimately turns out to be....

Tr. at 246-47. This sentence potentially imposed less than a reasonable incremental punishment or a greater incremental punishment than the district court found was reasonable. See supra notes 7, 8. As such, the sentence represents an improper application of Sec. 5G1.3, and therefore, we must vacate Brewer's sentence and remand to the district court.

We vacate the sentence imposed by the district court, and we remand for resentencing in light of this decision.