PSH-12-0044

* 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 7, 2012 )
) Case No.: PSH-12-0044
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Issued: July 20, 2012
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Hearing Officer Decision
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Richard A. Cronin, Jr., Hearing Officer:
This Decision concerns the eligibility of XXXXXXXXXXXX (“the Individual”) to hold a
Department of Energy (DOE) access authorization.1 This Decision will consider whether, based
on the testimony and other evidence presented in this proceeding, the Individual’s suspended
DOE access authorization should be restored. For the reasons detailed below, I find that the DOE
should not restore the Individual’s access authorization at this time.
I. BACKGROUND
The Individual is a contractor employee at a DOE facility and has possessed a security clearance
on various occasions since 1978. Exhibit (Ex.) 8 at 2. In December 2011, the Individual reported
to the Local Security Office (LSO) that his wages were being garnished for back federal taxes.
Ex. 13 at 1. Consequently, the LSO conducted a personnel security interview (PSI) with the
Individual in January 2012. Ex. 15. Because the PSI and further investigation indicated that the
Individual had not filed state and federal tax returns for several years and had a number of
delinquent financial accounts, the LSO informed the Individual in a March 2012 notification
letter (Notification Letter) that derogatory information existed which raised security concerns
under 10 C.F.R. § 710.8 (l) (Criterion L) and that his security clearance was suspended. Ex. 1.
The Individual requested a hearing on this matter. At the hearing, the DOE counsel introduced
15 exhibits into the record (Exs. 1-15) but did not present any witnesses. The Individual
1 Access authorization, also known as a security clearance, is an administrative determination that an individual is
eligible for access to classified matter or special nuclear material. 10 C.F.R. § 710.5.
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presented his own testimony, as well as the testimony of three co-workers. See Transcript of
Hearing, Case No. PSH-12-0044 (hereinafter cited as “Tr”). The Individual additionally
submitted six exhibits (Exs. A-F) into the record.
II. REGULATORY STANDARD
The regulations governing the Individual’s eligibility for access authorization are set forth at
10 C.F.R. Part 710, “Criteria and Procedures for Determining Eligibility for Access to Classified
Matter or Special Nuclear Material.” The regulations identify certain types of derogatory
information that may raise a question concerning an individual’s access authorization eligibility.
10 C.F.R. § 710.10(a). Once a security concern is raised, the individual has the burden of
bringing forward sufficient evidence to resolve the concern.
In determining whether an individual has resolved a security concern, the Hearing Officer
considers relevant factors, including the nature of the conduct at issue, the frequency or recency
of the conduct, the absence or presence of reformation or rehabilitation, and the impact of the
foregoing on the relevant security concerns. 10 C.F.R. § 710.7(c). In considering these factors,
the Hearing Officer also consults adjudicative guidelines that set forth a more comprehensive
listing of relevant factors. See Revised Adjudicative Guidelines for Determining Eligibility for
Access to Classified Information (issued on December 29, 2005 by the Assistant to the President
for National Security Affairs, The White House) (Adjudicative Guidelines).
Ultimately, the decision concerning eligibility is a comprehensive, common-sense judgment
based on a consideration of all relevant information, favorable and unfavorable. 10 C.F.R.
§ 710.7(a). In order to reach a favorable decision, the Hearing Officer must find that “the grant or
restoration of access authorization to the individual would not endanger the common defense and
security and would be clearly consistent with the national interest.” 10 C.F.R. § 710.27(a). “Any
doubt as to an individual’s access authorization eligibility shall be resolved in favor of the
national security.” Id; see generally Dep’t of the Navy v. Egan, 484 U.S. 518, 531 (1988) (Egan)
(the “clearly consistent with the interests of national security” test indicates that “security
clearance determinations should err, if they must, on the side of denials”).
III. FINDINGS OF FACT AND ANALYSIS
A. Whether the LSO Properly Invoked Criterion L
1. Failure to file Tax Returns and Delinquent Accounts
The facts of this case are essentially undisputed. Tr. at 30. A credit report obtained by the LSO in
December 2011 indicated that the Individual had 17 credit accounts in collection which totaled
$14,662. Ex. 11. Additionally, the Individual had four credit accounts, totaling $24,562, where
the holder of the account charged-off the amount due. Ex. 11. The credit report also indicated
that the Individual had an $8,115 state tax lien filed against him in March 2008. Ex. 11; See Ex.
10 at 1.
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During the PSI, the Individual admitted that he had not filed federal tax returns for the years
2002 through 2007 and 2009 and that he had not filed state tax returns for the years 2002 through
2007. Ex. 15 at 13, 68. The Individual explained at the PSI that the primary reason he did not file
tax returns was that he was concerned as to the amount of his financial liability.2 Ex. 15 at 19,
69. At the time of the interview, the Individual stated that $3,000 of his biweekly wages was
being garnished because of an estimated federal tax debt of approximately $300,000. Ex. 15 at 7.
The Individual admitted in the PSI that in 2008 or 2009 a judgment was filed against him for an
approximately $5,000 in delinquent debt on a credit card. Ex. 15 at 36-38, 52. The Individual
also admitted that, as of the date of the PSI, he had not satisfied that judgment. Ex. 15 at 36-38.
The Individual went on to disclose that he had improperly used a corporate credit card by
charging $4,000 in personal purchases and charging more than the credit card limit. Ex. 15 at 57-
59. During the PSI, the Individual stated that his purchase of a vacation house and a new car,
along with a failure to properly budget, were factors in creating his current financial problems.
Ex. 15 at 75, 77-78.
2. The Associated Security Concerns
Criterion L concerns circumstances tending to show that an 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. § 710.8(l). Unwillingness to abide by rules and
regulations, such as the requirement to file income tax returns, can raise questions about an
individual’s reliability, trustworthiness and ability to protect classified information. Adjudicative
Guideline F, ¶ 19(g); Personnel Security Hearing, Case No. TSO-1072 (October 17, 2011).
Additionally, failure to honor debts may indicate a questionable judgment and reliability.
Adjudicative Guideline F, ¶ 18; Personnel Security Hearing, Case No. PSH-12-0010 (March 5,
2012). Given the information indicating that the Individual has a history of financial
delinquencies and has failed to file state and federal tax income returns for a number of years, the
LSO had sufficient grounds to invoke Criterion L.
B. Whether the Individual Has Mitigated the Security Concerns
At the hearing, the Individual presented his own testimony and that of three co-workers to
establish that he is now addressing his tax and financial problems and that he has consistently
demonstrated good judgment and reliability. This testimony is summarized below.
The Individual testified that his financial problems originated with some problematic decisions
he and his wife made in the past. Tr. at 30. Contributing to this errant decision-making was some
“dysfunction” in the Individual and his spouse’s relationship and the Individual’s tendency to
focus on work and not on personal matters. Tr. at 30, 52. The Individual’s spouse typically
handled paying their bills and the Individual did not exercise oversight as to whether the bills
were being paid. For a number of the overdue accounts, the Individual assumed that his health
insurance would cover the expenses. Tr. at 30. Other factors, such as buying a more expensive
2 This tax liability resulted from the Individual inheritance stock worth approximately $600,000 in the year 2000 and
his subsequent sale of the stock in the following years through 2003 or 2004. Tr. at 46-48.
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house, moving to a higher-cost of living state, the failure to budget for extra expenses, and his
spouse’s loss of her full-time employment also contributed to their financial difficulties. Tr. at
30-31.
Regarding his failure to file tax returns, the Individual testified that he became overwhelmed
when he realized the large amount of tax liability he accrued because of the sale of his stock. Tr.
at 48-51. The Individual, in January 2012, employed a tax lawyer to settle his federal tax issues.
Tr. at 34. As a result of his lawyer’s intervention, the Internal Revenue Service (IRS) has
determined that the Individual’s actual tax liability is approximately $39,000, not $300,000 as he
previously reported. Tr. at 34-35. The Individual has now filed federal tax returns for the years in
question and has filed a request with the IRS to enter into an installment plan to pay off his tax
debt. See Ex. C, E, and F; Tr. at 56. However, the Individual has not yet filed his delinquent state
income tax returns. Tr. at 85. Nonetheless, he has contacted one State’s revenue department to
resolve the $8,000 tax lien. Tr. at 85; Ex. D. As of the date of the hearing, the Individual has not
contacted his creditors about resolving his outstanding debts. Tr. at 43-46. However, with regard
to his misuse of the corporate credit card, the Individual testified that he paid the resulting
indebtedness approximately 18 months ago. Tr. at 71.
The Individual has also contacted his employer’s financial counseling program to get help in
resolving his financial problems. Tr. at 36-37. The Individual testified as to his intention of
personally paying his family’s bills and has submitted a copy of his personal budget that he will
be using for his household. Ex. B; Tr. at 39-40, 88. The budget includes installment payments to
the IRS and an allotment of $750 per month to resolve his outstanding debts. Tr. at 40-41.
All three co-workers testified as to the Individual’s excellent work record and the fact that the
Individual did not have any disciplinary actions taken against him as an employee. Tr. at 14-15,
22-23, 60-61. None of the co-workers could recall any security incidents involving the
Individual. Tr. at 12, 18-19, 23, 25, 63. The co-workers also testified as to their opinion that the
Individual’s character was excellent and that his judgment and reliability were superior. Tr. at
19-20, 23-24, 62-63, 65.
In deciding whether an individual has mitigated the security concerns, a Hearing Officer must
consider all relevant factors having a bearing on an individual’s fitness to obtain or retain a
security clearance. See 10 C.F.R. § 710.7(c). According to the Adjudicative Guidelines, among
the factors that may serve to mitigate security concerns raised by an individual’s financial
problems or his failure to file required tax returns, are that the conduct happened long ago or was
infrequent; the financial problems were largely beyond the person’s control and the individual
acted responsibly under the circumstances; or that an individual has initiated a good faith effort
to repay his or her outstanding creditors. Adjudicative Guidelines, Guideline F, ¶ 20; see
Personnel Security Hearing, Case No. TSO-0971 (March 1, 2011) (individual filed tax returns
once he received necessary information from bankruptcy trustee); Personnel Security Hearing,
Case No. TSO-1072 (October 17, 2011).
After reviewing the evidence before me, I cannot find that the Individual has mitigated the
security concerns raised by his history of financial delinquencies. As of the date of the hearing,
the Individual has not yet begun to resolve his outstanding debts. Tr. at 75 (Individual’s
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testimony that he is planning to resolve his debts); see Tr. at 40-41 (new budget with $750 per
month debt repayment drawn up one week before hearing). Additionally, in the absence of a
sustained period of financial responsibility, I cannot find that the Individual’s relatively recent
repayment of the misused corporate credit card provides any mitigation of the concerns raised by
that incident. In sum, the Individual has not presented sufficient evidence to mitigate the security
concern raised by his financial delinquencies.
I also find that the Individual has not mitigated the security concern raised by his recent,
repeated, failure to file state and federal income tax returns. The Individual has presented some
mitigating factors on his behalf – his recent filing of his federal tax returns, his recent increased
attention to his financial matters, his excellent work record and general character. However, the
Individual’s admitted lapse in judgment – his failure to file tax returns for a period of five years –
is relatively recent and extensive. The severity of this lapse in judgment is highlighted by the fact
that, at the hearing, the Individual admitted that an Office of Personnel Management investigator
in 2006 questioned the Individual about his failure to file taxes yet the Individual failed to take
any action. Tr. at 52.
The record indicates that the Individual is a hardworking and dedicated employee who has not
been involved any type of security lapse at work. Nonetheless, the Individual has demonstrated a
significant lapse in judgment in failing to file tax returns and has only recently begun to remedy
his tax issues. Absent a longer period where the Individual demonstrates compliance with his
legal and financial responsibilities, I cannot find, as of the date of the hearing, that the Criterion
L concerns have been resolved. See Personnel Security Hearing, Case No. PSH-11-0036 (March
28, 2012) (despite individual’s excellent record in security matters at work, individual’s recent
repeated failure to comply with the law by filing tax returns is such to require non-restoration of
clearance).
IV. CONCLUSION
Upon consideration of the entire record in this case, I find that there was sufficient evidence to
raise doubts regarding the Individual’s eligibility for a security clearance under Criterion L of the
Part 710 regulations. I also find that the Individual has not presented sufficient information to
resolve the concerns raised by the Criterion L derogatory information. Therefore, I cannot
conclude that restoring the Individual’s suspended access authorization “would not endanger the
common defense and security and would be clearly consistent with the national interest.” 10
C.F.R. § 710.7(a). Accordingly, I find that the DOE should not restore the Individual’s
suspended access authorization at this time.
The parties may seek review of this Decision by an Appeal Panel, under the regulation set forth
at 10 C.F.R. § 710.28.
Richard A. Cronin, Jr.
Hearing Officer
Office of Hearings and Appeals
Date: July 20, 2012