PSH-12-0023

* 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: March 20, 2012 )
) Case No.: PSH-12-0023
__________________________________________)
Issued: June 27, 2012
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Decision and Order
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David M. Petrush, Hearing Officer:
This Decision considers the eligibility of XXXXXXX (the individual) to hold an access
authorization1 under the regulations at 10 C.F.R. Part 710, entitled “Criteria and
Procedures for Determining Eligibility for Access to Classified Matter or Special Nuclear
Material.” As I explain below, the Department of Energy (DOE) should not restore the
individual’s access authorization.
I. Background
The individual is employed in a position that requires him to maintain a DOE access
authorization, which he was granted in August 2007. See Tr. at 10; Ex. 8; Ex. 16 at 9.
On an October 2011 Questionnaire for National Security Positions (QNSP), the
individual disclosed delinquent debts, a home foreclosure, and a wage garnishment. Ex.
14 at 8-9. (Similarly, an October 2011 credit report showed more than $2,000 in
collection accounts, more than $1,600 in charged-off accounts, and a home foreclosure of
more than $155,000. Ex. 3 at 1-2; Ex. 12 at 1-3.) In November 2011 and January 2012,
the local security office (LSO) invited the individual to personnel security interviews
(PSI), where he described a history of financial problems. See Ex. 16; Ex. 17.
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.
In February 2012, the LSO issued the individual a Notification Letter advising him that it
possessed reliable information that created a substantial doubt about his eligibility to hold
an access authorization. Ex. 1. In an attachment, the LSO explained that the derogatory
information falls within the potentially disqualifying criterion in the security regulations
at 10 C.F.R. § 710.8 (l) (Criterion L).2
After the individual received the Notification Letter, he invoked his right to an
administrative review hearing under the Part 710 regulations. Ex. 2 at 1-2. On
March 20, 2012, the Director of the Office of Hearings and Appeals (OHA) appointed me
Hearing Officer, and I conducted the hearing. The individual testified on his own behalf
and called his financial counselor, his wife, and two co-workers. Each side offered
several exhibits.
II. The Notification Letter and the Security Concerns
The LSO supported its Criterion L security concern with the following allegations of
financial irresponsibility:
 The individual owes $2,435 to six collection accounts, $1,696 to three charged-off
accounts, and $2,378 of student loan debt that is 120 days past-due;
 At an April 2007 PSI, the individual acknowledged the DOE’s concerns with his
finances and stated that he intended to pay his outstanding bills. Yet, in July
2010, his house was foreclosed on for non-payment;
 At a September 2010 PSI, the individual said that he would settle all of his
delinquent accounts. Yet, by January 2012, he had failed to contact or arrange to
pay three collection accounts totaling $2,029, three charged-off accounts totaling
$1,696, and another collection account for a $5,369 auto loan (In 2005, the car
had been repossessed for non-payment); and
 At a January 2012 PSI, the individual admitted that he is not financially
responsible.
Ex. 1 at 1-2.
I find that the above information constitutes derogatory information that raises questions
under Criterion L. Failure or inability to live within one’s means, satisfy debts, and meet
financial obligations may indicate poor self-control, lack of judgment, or unwillingness to
obey rules and regulations. These can raise questions about an individual’s reliability,
2 Criterion L includes “unusual conduct” and “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.” Id. at § 710.8(l).
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trustworthiness, and ability to protect classified information. Guideline F, STEPHEN J.
HADLEY, THE WHITE HOUSE, ADJUDICATIVE GUIDELINES FOR DETERMINING ELIGIBILITY
FOR ACCESS TO CLASSIFIED INFORMATION (2005) 9.
III. Regulatory Standard
An administrative review under Part 710 is not a criminal matter, where the government
must prove the defendant guilty beyond a reasonable doubt. Rather, the standard places
the burden on the individual because it protects national security interests. This is not an
easy burden for the individual to sustain. The standard implies a presumption against
granting or restoring an access authorization. See Dep’t of Navy v. Egan, 484 U.S. 518,
531 (1988) (“security determinations should err, if they must, on the side of denials”);
Dorfmont v. Brown, 913 F.2d 1399, 1403 (9th Cir. 1990) (strong presumption against the
issuance of a security clearance).
A. The Individual’s Burden
The individual must present evidence to convince the DOE that granting an 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 Part 710 regulations
permit the individual wide latitude to present evidence to mitigate the security concerns.
Even appropriate hearsay evidence may be admitted. Id. at § 710.26(h).
B. The Basis for the Hearing Officer’s Decision
The Hearing Officer must issue a Decision that reflects his or her comprehensive,
common-sense judgment, after considering all relevant evidence, favorable and
unfavorable, whether granting or restoring an individual’s access authorization will not
endanger the common defense and security and is clearly consistent with the national
interest. 10 C.F.R. § 710.7(a). The Hearing Officer must resolve doubt in favor of the
national security. Id.
To reach a common-sense judgment, the Hearing Officer must consider the factors listed
in 10 C.F.R. § 710.7(c)3 (the “whole person concept”) and the Adjudicative Guidelines.
The Adjudicative Guidelines contain “conditions” or circumstances that may mitigate the
allegations supporting each type of security concern.
3 These factors include the nature, extent, and seriousness of the conduct; the circumstances surrounding
the conduct, including knowledge and participation; the frequency and recency of the conduct; the age and
maturity of the individual at the time of the conduct; the voluntariness of participation; the absence or
presence of rehabilitation or reformation and other pertinent behavior changes; the motivation for the
conduct; the potential for pressure, coercion, exploitation, or duress; the likelihood of continuation or
recurrence; and other relevant and material factors. Id. at § 710.7(c).
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IV. Findings of Fact
The individual encountered financial problems around 2002. He was in school and lost a
source of financial aid. Tr. at 53. Then his stepdaughter developed a brain tumor, had
three surgeries, and became legally blind. Id. at 83-84; 87-88; Ex. 16 at 10-11, 40. The
individual fell behind on her medical expenses because her public assistance did not
cover everything. Tr. at 45, 84, 95; Ex. 16 at 10, 19. (His financial difficulties had not
stemmed from lavish spending. See Tr. at 87-88; 103-04.) Personal loans were used to
pay bills. Id. at 28-29; Ex. 17 at 18-20, 23.
The individual’s financial problems grew.4 In 2005, his vehicle was repossessed.
Tr. at 33. By 2007, the individual could no longer afford his student loan payments,
which went into default. Id. at 29, 31; Ex. 16 at 34. (He had graduated in May 2004.
Tr. at 55.) Also in 2007, his wife was laid off, he had knee surgery, and his insurance did
not cover his physical therapy. Id. at 20-21, 85; Ex. 16 at 9. By 2008, he was delinquent
on his mortgage. Ex. 17 at 28. (He had moved into the house in December 2006.
Tr. at 55; Ex. 16 at 14.) He refinanced in 2009, but he could not afford the payments
when they went from $1,260 to $1,600. Ex. 16 at 15; Ex. 17 at 12, 28-29. He made two
or three payments and let the house go into voluntary foreclosure. Tr. at 84;
Ex. 18 at 19-20. He moved out in July 2010 and now rents for $975. Tr. at 24;
Ex. 16 at 15, 63; Ex. 18 at 21.
By October 2011, the individual had six collection accounts totaling $2,435 and three
charged-off accounts totaling $1,696. Ex. 3; Ex. 12 at 1-2. He also owed $5,369 for a
repossessed vehicle and $36,967 in student loans. Ex. 3; Ex. 13 at 2. The individual’s
wife had handled their bills, and he thought that she was paying them. Tr. at 36; Ex. 16
at 30; Ex. 19 at 13-14.
The individual began to take control of his finances in January 2012, when he approached
a consumer credit organization because he needed the help. Tr. at 22, 36, 40. He
spearheaded the effort and took his wife. Id. at 50, 82. The organization did not provide
credit counseling. Id. at 46. It did, however, help the individual to draft a budget. Id.;
see Ex. D. His budget lists his income after all taxes and deductions. Tr. at 54. His
budget expenses include his stepdaughter’s medical costs. Id. at 45, 96. Sometimes
those costs run $50 over, but he has extra money because he no longer has one budget
expense, tool rental, that had been included for $336 a month. Id. at 39, 45.
The organization also helped the individual draft a debt management plan. Tr. at 46;
see Ex. D. Under the plan, the organization works with six creditors listed in the
Summary of Security Concerns. They include the creditors owning the debts for $1,085,
$896, $517, $408, $406, and $290. Tr. at 13-14, 20, 25, 27. The individual pays the
4 The individual filed for bankruptcy in 1999, and it was discharged around 2000. Ex. 17 at 12, 45;
Ex. 19 at 7. The bankruptcy stemmed from his divorce from his previous wife. Ex. 18 at 33. I make no
finding about the bankruptcy because the LSO does not include it as a basis for its security concern.
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organization $159 a month, and the organization pays the creditors. Id. at 42, 69. He
began paying in February 2012 and has paid on time each month through May 2012. Id.
at 40, 70, 79; Ex. L.
The individual has addressed all of his remaining liabilities outside of his debt
management plan. The sale of his house covered the mortgage. Tr. at 84; Ex. C. (In
May 2012, his credit report had listed a mortgage balance, but he filed a dispute. Tr. at
58; Ex. 21 at 3.) The individual’s wages are garnished $450 a month to pay child
support, which he will pay until September 2012. Tr. at 53, 97; Ex. 16 at 58-60; Ex. 17 at
46. He has made three consecutive student loan payments of $250. Tr. at 29, 42-43, 57;
Ex. B. After nine payments, his student loans will be returned from default. Tr. at 29-31,
57. In March 2012, he paid his vehicle debt with a loan from his 401(k), for which he
pays $100 a month. Id. at 33-34, 61-63; Ex. A. He has extra money in his budget for this
because, as noted above, he no longer rents tools. Id. at 63. In March 2012, he also paid
the creditors owning the two smallest debts on the Summary of Security Concerns, the
debts for $70 and $67. Id. at 11-13; Ex. D. He waited until March 2012 to settle the
vehicle loan and the small debts because he could not have paid his bills otherwise. Tr. at
35. The individual disputed the only other debt listed in the Summary of Security
Concerns, the debt for $392. Id. at 26, 48; Ex. G; Ex I.
Since going to the consumer credit organization in January 2012, the individual has taken
an increased role in managing his finances. Tr. at 49. His wife still helps manage, but
now the two communicate more openly. Id. at 51. They evaluated all of their expenses
and listed them in monthly spreadsheets. Id. at 36, 89, 93. They lowered expenses where
they could, such as reducing their cell phone plan, and decided not to take on any more
expenses. Id. at 39, 88-91. They continue to confer on expenses every week, and when
she pays the bills, he is present. Id. at 93-94, 98. They also established a savings
account. Id. at 39-40, 92.
The individual’s increased involvement has given him a greater awareness of his bills,
when they are paid, and exactly where his money goes. Tr. at 37, 50. His greater
awareness has allowed him to stick with his budget, which he has found to work well.
Id. at 41, 44, 87, 92-93. Because he sticks with his budget, since adopting it, he has not
had to take a personal loan to pay his bills. Id. at 37, 44. To stay on track, each month,
the individual follows-up with the organization counselor via telephone or e-mail.
Id. at 71, 77, 91. Also to stay on track, in May 2012, he took a webinar on understanding
credit scores and reports. Ex. M.
If the individual continues to stay on track, he will become debt-free in April 2014.
Tr. at 17, 75. He intends not to over-extend himself again. Id. at 40.
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V. Analysis
To determine whether the individual has mitigated the LSO’s allegations of financial
irresponsibility, I will consider the relevant factors from 10 C.F.R. § 710.7(c) and the
relevant mitigating conditions from Guideline F of the Adjudicative Guidelines –
Financial Considerations.5
At the outset, I find that before January 2012, the individual showed an astounding lack
of sophistication in handling his finances, despite having earned an MBA in December
2010. Ex. 16 at 31-32. He had little or no role in managing his own finances. His
inexperience, in turn, caused his financial problems to snowball from temporary
circumstances or unique circumstances that were out of his control – such as his
stepdaughter’s medical problems and his own medical problem – into financial problems
that stemmed from poor choices and his inability to manage his money. For example, in
2006, he took out a mortgage when he was already behind on the major financial
obligation of his vehicle payment. In 2009, he thought that his refinanced mortgage rate
was fixed, but it was not – which ostensibly defeated the purpose of refinancing.
Ex. 18 at 19-20. By November 2011, after the individual’s house was foreclosed on
because he could not afford the payments, he did not know the outcome of the
foreclosure sale. Ex. 17 at 30-31. As recently as that time, he also did not even know
when his student loans and personal loans had become delinquent. Id. at 20, 23-26.
The individual presented evidence to show improved financial management. He
recognized that he needed help and sought it by reaching out to a consumer credit
organization, which helped him draft a budget that includes the significant expense of his
stepdaughter’s care, which had greatly contributed to his financial instability. The
organization also helped him create a debt management plan to pay his creditors. He has
5 Guideline F contains the following relevant mitigating conditions:
(a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances
that it is unlikely to recur and does not case doubt on the individual’s current reliability,
trustworthiness, or good judgment;
(b) the conditions that resulted in the financial problem were largely beyond the person’s control
(e.g., loss of employment, a business downturn, unexpected medical emergency, or a death,
divorce or separation), and the individual acted responsibly under the circumstances;
(c) the person has received or is receiving counseling for the problem and/or there are clear
indications that the problem is being resolved or is under control;
(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;
(e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the
cause of the problem and provides documented proof to substantiate the basis of the dispute or
provides evidence of actions to resolve the issue[.]
ADJUDICATIVE GUIDELINES at 10.
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shown good faith efforts to follow through on the debt management plan by making four
monthly payments through the consumer credit organization. He also settled or
addressed each debt not included in his debt management plan, which required diligence,
attention to detail, and persistence.
The individual has also shown signs of financial responsibility by living within his
budget since January 2012, summarizing and reviewing his expenses, cutting expenses,
better communicating with his wife, and taking advantage of an online resource to
educate himself on the basics of personal finance. His progress showed in the
remarkable, comprehensive level of organization of his exhibits and the sense of ease and
confidence that he projected at the hearing. His financial counselor testified that his
competency has improved and that she does not hear him express frustrations in the
monthly handling of his finances. Tr. at 77, 79. Indeed, she testified, the individual will
probably continue his newfound financial stability because those who survive the first
few months often maintain their stability. Id. at 74.
I find, however, that the individual has not yet resolved the LSO’s security concern.
Hearing Officers have held that once an individual has shown a pattern of financial
irresponsibility, he or she must show a new, sustained pattern of financial responsibility
long enough to demonstrate that a recurrence of the past pattern is unlikely. Personnel
Security Hearing, PSH-11-0015 (Feb. 9, 2012).6 For the following reasons, the
individual has not sustained a pattern of financial responsibility long enough.
The individual’s financial recovery has just begun. After more than ten years of
mismanagement and indifference, only in March 2012 could he finally pay relatively
modest debts without further destabilizing his finances. His student loan status also
shows only a tentative recovery; he must make several more payments before his loans
come out of default. By that time, he will no longer be under a court order to have his
wages garnished for child support. And with more time, he may solidify his financial
recovery and competently handle not only modest debts and his student loans, but the
unexpected expenses and budget adjustments that he will inevitably face.
To handle inevitable challenges, the individual will need to continue to develop his skills.
The consumer credit organization has set the individual on the right path to do so. It
provided the invaluable contribution of helping him draft a budget and implement a debt
management plan, as noted above, but it provided no actual counseling in personal
financial management. It does offer webinars to teach nuts and bolts topics, but the
individual has only taken one training session. That is an important step, but still an early
one.
6 OHA decisions are available through the online search engine at
http://www.oha.doe.gov/main_search.asp.
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VI. Conclusion
Because the individual has not resolved the Criterion L security concern, I find that he
has not demonstrated that restoring his access authorization would not endanger the
common defense and would be clearly consistent with the national interest. Therefore, I
find that the DOE should not restore his access authorization.
The parties may seek review of this Decision by an Appeal Panel, under the regulation set
forth at 10 C.F.R. § 710.28.
David M. Petrush
Hearing Officer
Office of Hearings and Appeals
Date: June 27, 2012
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