The new policy, approved in a vote of 4-3, was part of a broader package of amendments, and represent the most sweeping criminal justice reforms the commission has enacted in more than four years.
The seven-member U.S. Sentencing Commission is the agency tasked with setting sentencing guidelines for federal judges.
Commission Chairman Judge Carlton Reeves said the panel had received thousands of public comments on its slate of reforms from across the country.
"If the commission is to select a correct policy, the fair policy, the just policy, we must listen to those who have lived out the consequences of our choices," he said.
"If you have spoken to the commission, whether from the halls of Congress or the desk of a prison library, you have been heard."
The First Step Act, signed into law by former President Donald Trump in 2018, expanded compassionate release criteria for sick and elderly federal inmates. Requests for compassionate release then surged during the COVID-19 pandemic, with 7,014 motions filed in fiscal year 2020. Those requests have not been granted on a consistent basis without the panel's guidance.
The new compassionate release guidelines approved on Wednesday expanded the criteria for what can qualify as "extraordinary and compelling reasons" to grant compassionate release, and it will give judges more discretion to determine when a sentence reduction is warranted.
Among the new categories that could make an inmate eligible for compassionate release is if he or she becomes the victim of sexual assault by a corrections officer.
Three members of the panel opposed the final policy, saying they disagreed with a provision that could allow judges to grant compassionate release to inmates if changes to federal sentencing laws renders their prison term inequitable.
The policy "makes a systemic, structural change without congressional authorization," commission member Candice Wong said.
The commission had been considering a vote on another high-profile reform to limit federal judges from imposing longer sentences on defendants based on alleged crimes even if a unanimous jury has acquitted the defendant of those very same allegations in a split verdict.
However, Reeves said the commission decided it needed more time before making a final determination.
Under current practice, a defendant who is acquitted on some counts and convicted on others could still face a harsher sentence if the judge factors the acquitted conduct into the sentencing calculations.
Michael P. Heiskell, the President-Elect of the National Association of Criminal Defense Lawyers, said he was disappointed by the delay.
“Permitting people to be sentenced based on conduct for which a jury has acquitted them is fundamentally unfair because it eviscerates the constitutional right to trial and disrespects the jury’s role," he said in a statement.
Other reforms approved on Wednesday include the implementation of a major gun law passed last year which would stiffen prison sentences for straw purchasers who buy a firearm on behalf of someone else, and for people who knowingly sell pills laced with deadly fentanyl, or who act with willful blindness.