PSH-12-0006

* The original of this document contains information which is subject to withholding from
disclosure under 5 U.S.C. 552. Such material has been deleted from this copy and replaced with
XXXXXX’s.
United States Department of Energy
Office of Hearings and Appeals
In the matter of Personnel Security Hearing )
)
Filing Date: January 23, 2012 ) Case No.: PSH-12-0006
)
____________________________________)
Issued: April 4, 2012
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Hearing Officer Decision
______________________
Steven J. Goering, Hearing Officer:
This Decision concerns the eligibility of XXXXXXXX (hereinafter referred to as “the individual”)
for access authorization under the regulations set forth at 10 C.F.R. Part 710, entitled “Criteria and
Procedures for Determining Eligibility for Access to Classified Matter or Special Nuclear
Material.”1 For the reasons set forth below, I conclude that the DOE should not restore the
individual’s access authorization at this time.2
I. BACKGROUND
The individual is an employee of a DOE contractor and holds a suspended access authorization. A
Local Security Office (LSO) summoned the individual for an interview (PSI) with a personnel
security specialist on November 9, 2011, Exhibit 4, in order to address issues surrounding his
finances. Id. at 12-13. After the PSI, the LSO determined that derogatory information existed that
cast into doubt the individual’s eligibility for access authorization. The LSO informed the individual
of this determination in a letter that set forth the DOE’s security concerns and the reasons for those
concerns. Exhibit 1. The Notification Letter also informed the individual that he was entitled to a
hearing before a hearing officer in order to resolve the substantial doubt concerning his eligibility for
an access authorization.
1 An access authorization is an administrative determination that an individual is eligible for access to classified
matter or special nuclear material. 10 C.F.R. § 710.5. Such authorization will be referred to in this Decision as access
authorization or a security clearance.
2 Decisions issued by the Office of Hearings and Appeals (OHA) are available on the OHA website located at
http://www.oha.doe.gov. The text of a cited decision may be accessed by entering the case number of the decision in the
search engine located at http://www.oha.doe.gov/search.htm.
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The individual requested a hearing in this matter. The LSO forwarded this request to OHA, and I
was appointed the hearing officer. The DOE introduced five exhibits into the record of this
proceeding. The individual introduced 21 exhibits, and presented the testimony of six witnesses, in
addition to his own testimony.
II. DEROGATORY INFORMATION AND THE
ASSOCIATED SECURITY CONCERNS
The Notification Letter cited information pertaining to paragraph (l) of the criteria for eligibility for
access to classified matter or special nuclear material set forth at 10 C.F.R. § 710.8. Exhibit 1.3
Under this criterion, the LSO cited the individual’s failure to file federal and state tax returns for
2009 and 2010, and his admission that he owed $1,050 in state taxes and $2,025 in federal taxes for
tax year 2008. Exhibit 1. On January 18, 2012, the individual filed a response stating that, as of
January 12, 2012, he had filed his past due state and federal tax returns, and had paid $75 toward his
2008 state tax liability. Exhibit 2.
The above information adequately justifies the DOE’s invocation of criterion (l), and raises
significant security concerns. The failure or inability to live within one's means, satisfy debts, and
meet financial obligations, including the failure to file tax returns as required, may indicate poor
self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can
raise questions about an individual's reliability, trustworthiness and ability to protect classified
information. See Revised Adjudicative Guidelines for Determining Eligibility for Access to
Classified Information, The White House, Guideline F (December 19, 2005) [hereinafter
Adjudicative Guidelines]. Further, an individual who is financially overextended is at risk of having
to engage in illegal acts to generate funds. Id.
III. REGULATORY STANDARDS
The criteria for determining eligibility for security clearances set forth at 10 C.F.R. Part 710 dictate
that in these proceedings, a hearing officer must undertake a careful review of all of the relevant
facts and circumstances, and make a “common-sense judgment . . . after consideration of all relevant
information.” 10 C.F.R. § 710.7(a). I must therefore consider all information, favorable and
unfavorable, that has a bearing on the question of whether restoring the individual’s security
clearance would compromise national security concerns. Specifically, the regulations compel me to
consider the nature, extent, and seriousness of the individual’s conduct; the circumstances
surrounding the conduct; the frequency and recency of the conduct; the age and maturity of the
individual at the time of the conduct; the absence or presence of rehabilitation or reformation and
other pertinent behavioral changes; the likelihood of continuation or recurrence of the conduct; and
any other relevant and material factors. 10 C.F.R. § 710.7(c).
A DOE administrative proceeding under 10 C.F.R. Part 710 is “for the purpose of affording the
individual an opportunity of supporting his eligibility for access authorization.”
10 C.F.R. § 710.21(b)(6). Once the DOE has made a showing of derogatory information raising
3 Paragraph (l) defines as derogatory information that an individual has “[e]ngaged in any unusual conduct or is
subject to any circumstances which tend to show that the individual is not honest, reliable, or trustworthy; or which
furnishes reason to believe that the individual may be subject to pressure, coercion, exploitation, or duress which may
cause the individual to act contrary to the best interests of the national security.” 10 C.F.R. § 708.8(l).
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security concerns, the burden is on the individual to produce evidence sufficient to convince the
DOE that granting or restoring access authorization “will not endanger the common defense and
security and will be clearly consistent with the national interest.” 10 C.F.R. § 710.27(d). The
regulations further instruct me to resolve any doubts concerning the individual’s eligibility for
access authorization in favor of the national security. 10 C.F.R. § 710.7(a).
IV. ANALYSIS
As noted above, the individual has not disputed the allegations set forth in the Notification Letter.
Exhibit 2. He has, however, offered some evidence of progress toward resolving the concerns raised
by the allegations. Nonetheless, as discussed below, I cannot find that the individual has resolved
the concerns raised by his failure to file income tax returns, nor has he established a pattern of
financial responsibility that would resolve the risk of a recurrence of his past financial
irresponsibility.
A. Failure to File Income Tax Returns
Regarding his failure to file tax returns for 2009 and 2010, the individual testified that he “was under
the impression that you had three years to file taxes, and I actually found a statute in the federal
guidelines there that says that you have three years to file taxes, seven years to pay them.” Hearing
Transcript (Tr.) at 59; see Tr. at 64 (citing Department of Treasury, Internal Revenue Service,
Publication 17, Your Federal Income Tax 17 (2011) [hereinafter IRS Publication 17].
The individual’s reference to this IRS publication in no way mitigates the concern raised by his
failure to file state and federal income tax returns in 2009 and 2010. First, the individual would have
no reason to believe that this publication applied to his obligation to timely file a state income tax
return. Second, the portion of the IRS publication the individual cited is found under the heading
“How Long to Keep Records,” and unambiguously sets forth not how long an individual has to file
a tax return, but rather “the period of time in which you can amend your return to claim a credit or
refund or the IRS can assess additional tax.” IRS Publication 17 at 17.4
Most important, the individual testified that he first became aware of this IRS publication only six to
eight months prior to the March 2012 hearing, Tr. at 90, and that before this “didn't really know
exactly how it's supposed to be, because I've -- I guess I've never really had to read up on the way
the tax laws were.” Id. at 86. As such, the publication, regardless of its content, can offer no
explanation as to his claimed misunderstanding, at the time he was required to file his state and
federal tax returns, of his legal obligation to file the returns, and appears to be to have been offered
only as a post hoc justification of his failure to file. See Exhibit 4 at 101. Indeed, in the November
2011 PSI, Exhibit 4, the individual makes no mention of the IRS publication, nor his purported
impression, related at the hearing, that he “had three years” to file tax returns. Instead, asked if he
was aware of his legal obligation, he responded that he “didn't know legally I had to, but I, I knew I
should file them. . . . I knew I had to file 'em.” Id. at 101.
4 Just as clearly set forth in the same publication is the April filing deadline, under the heading “When Do I
Have to File,” as well as the procedure for requesting a “6-month” filing extension. Id. at 9-10.
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A more credible reason for the individual’s failure to file his 2009 and 2010 returns is found in his
January 18, 2012, response to the Notification Letter, in which he does not claim that he was not
aware of his obligation to file tax returns, but instead states that he “did not file the 2009 and 2010
[federal and state] income taxes because I was having some financial difficulty and I put them off
hoping I would be able to satisfy them in a timely manner.” Exhibit 2 at 1. Similarly, in the
November 2011 PSI, the individual indicated that he did not file returns for 2009 and 2010 because
he did not feel he could afford to pay the taxes due. Exhibit 4 at 97.
However, even this reason, while on its face more credible, becomes more difficult to believe in
light of other evidence in the record. The individual provided IRS documents showing that he filed
his 2008 federal tax return on July 13, 2009, but did not pay the taxes due at that time. Exhibit I. In
his PSI, the individual explained that he “didn’t have the money to pay the whole amount back
then.” Exhibit 4. Thus, the individual clearly knew that he could satisfy his obligation to file
income tax returns without, at the same time, having to pay the taxes due. Nonetheless, the
individual failed to file his 2009 and 2010 federal tax returns until January 2012.5
Finally, the individual testified to being “overwhelmed” due to a divorce, child support obligations,
and issues between him and his ex-wife over their two children. Tr. at 87-88. Yet, the individual’s
divorce took place in April of 2005, Exhibit 5 at 16, and he nonetheless managed to comply with his
obligation to file returns for previous tax years 2005 through 2007 and, albeit three months late, for
tax year 2008. Moreover, the individual appears to have filed these returns despite financial
problems that led him to file a Chapter 7 Bankruptcy Petition in December 2009. In fact, the
individual’s failure to file his 2009 and 2010 tax returns occurred after his debts were discharged
through the bankruptcy in April 2010, Exhibit 3 at 1, presumably relieving his financial burdens.
Nonetheless, the individual contended at the hearing that he “in no way blatantly disregard[ed] the
law. I didn't interpret that it was a breaking of the law for not filing my taxes, and I acknowledge that
it was my fault for not doing so. You know, I take full responsibility for not doing that.” Tr. at 66.
He gave assurances that, in the future, there would be no more “problems as far as anything goes on
me breaking the law.” Id.
Despite the individual’s statement that he has taken responsibility for his actions, I find, running
through the various explanations for his failure to follow the law, a common thread of minimization
of the seriousness of his actions, particularly as to whether they were deliberate. Based upon my
evaluation of the record, I conclude that the individual knew that he was required to file and pay his
taxes on time, but made a conscious decision to not do so. That he has now filed his delinquent tax
returns is certainly a good thing. But, given that he has done so only recently, and without a more
unqualified acceptance of responsibility for his past actions, I am not confident that the concerns
raised by the individual’s failure to file tax returns have yet been resolved. See 10 C.F.R. § 710.7(c)
(relevant factors include “recency of the conduct”).
5 The IRS records indicate that the individual did timely file with the IRS an application for extension of time to
file his 2010 tax return, Exhibit O, though the records do not show any such application was ever filed with respect to his
2009 tax return. Exhibit J. In any event, the application for tax year 2010 clearly states that its purpose was solely to
“apply for 6 more months” to file a tax return, and did not excuse an indefinite delay in filing. Department of Treasury,
Internal Revenue Service, Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax
Return 1 (2010).
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B. Financial Irresponsibility and Unwillingness or Inability to Satisfy Debts
In the Notification Letter, the LSO characterized the individual’s outstanding state and federal
income tax liability as evidence of his “financial irresponsibility and unwillingness or inability to
satisfy his debts.” Exhibit 1. In his written response to the Notification Letter, he stated that, when
he contacted both the IRS and state authorities “to make payment arrangements, I was told that I
couldn’t make any payment until” he filed his 2009 and 2010 income tax returns.
At the hearing, the individual presented documents from both the IRS and his state showing that he
filed these past due returns in January 2012, and that he had made arrangements to make monthly
payments of $124 and $50, respectively, toward his federal and state income tax liability. Exhibits J,
L, M, O, R, and S. After the hearing, the individual submitted evidence of initial payments made to
both the IRS and his state. Exhibit U. The individual has also submitted an estimate of his monthly
expenses and net income, showing total expenses of $1,904 and net pay of $2,550. Exhibit D.
In prior cases involving financial considerations, Hearing Officers have held that “[o]nce an
individual has demonstrated a pattern of financial irresponsibility, he or she must demonstrate a new,
sustained pattern of financial responsibility for a period of time that is sufficient to demonstrate that
a recurrence of the past pattern is unlikely.” See, e.g., Personnel Security Hearing, Case No. TSO-
1078 (2011); Personnel Security Hearing, Case No. TSO-0878 (2010); Personnel Security Hearing,
Case No. TSO-0746 (2009).
Here, there is a clear pattern of financial irresponsibility with regard to his failure, until very
recently, to pay anything toward tax liabilities that have been delinquent since early 2009. The
individual’s claim that he was unable to make any payment arrangements regarding his 2008 tax
year liability until he filed his 2009 and 2010 returns, while credible, in no way mitigates the
concern caused by his inaction. In fact, if true, this impediment to making payment arrangement
should have simply underscored for the individual the need to file his 2009 and 2010 returns.
The fact that the individual has recently made arrangements to pay off his tax debts may mark the
beginning of a sustained pattern of financial responsibility. Such a pattern, however, has clearly not
yet been established. In the meantime, there are reasons to remain cautious as to the risk of a
recurrence of the individual’s past pattern of irresponsibility.
First, in a November 2009 PSI, conducted when he was preparing to file for bankruptcy, the
individual stated that he had contacted both state and federal authorities regarding his 2008 tax
liability, and that he had it “set up” to make payments to satisfy that liability once he was through
the bankruptcy proceeding. Exhibit 5 at 22-24. However, the individual did not follow through on
this plan, despite having his other debts discharged through the Chapter 7 bankruptcy in April 2010.
Exhibit 3 at 1.
Moreover, if the estimate of income and expenses submitted by the individual is accurate, and his
monthly income exceeds his expenditures by over $600 per month, one would have expected the
individual to have accumulated a commensurate amount in savings each month. But, as of the time
of the March 2012 hearing, the individual estimated that he had a total of $600 in savings. Tr. at 74.
When I pointed this out to the individual, he responded by noting that, prior to October of 2011, his
child support payment had been higher, as he had been paying for support of his then-minor son. Tr.
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at 75. Though the individual submitted documents demonstrating that his monthly child support
payments did decrease by $300 as of October 2011, Exhibits A and B, this still would mean that the
individual’s income would have exceeded his expenses by $300 per month. In fact, the amount of
excess monthly income would have been even greater prior to January 2011, when, according to the
individual’s response to the Notification Letter, he changed job positions and took a “large pay cut.”
Exhibit 2.
Other than noting purchases he made for Christmas and that he “had to buy some tires,” Tr. at 75,
the individual has offered no explanation that comes close to reconciling these discrepancies in the
account of his finances. This is not to say that the individual may not be able to follow through in
paying off his debts going forward, but until he has actually demonstrated his ability to do so, I
cannot find that he has resolved the concerns raised by the past mishandling of his finances.
V. CONCLUSION
In the above analysis, I have found that there was sufficient derogatory information in the possession
of the DOE that raises serious security concerns under Criterion L. After considering all the relevant
information, favorable and unfavorable, in a comprehensive common-sense manner, including
weighing all the testimony and other evidence presented at the hearing, I have found that the
individual has not brought forth sufficient evidence to mitigate the security concerns at issue. I
therefore cannot find that restoring the individual’s access authorization will not endanger the
common defense and is clearly consistent with the national interest. Accordingly, I have determined
that the individual’s access authorization should not be restored. The parties may seek review of this
Decision by an Appeal Panel under the regulations set forth at 10 C.F.R. § 710.28.
Steven J. Goering
Hearing Officer
Office of Hearings and Appeals
Date: April 4, 2012