PSH-12-0058

* 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: May 16, 2012 )
) Case No.: PSH-12-0058
__________________________________________)
Issued : August 9, 2012
______________________
Hearing Officer Decision
______________________
William M. Schwartz, Hearing Officer:
This Decision concerns the eligibility of XXXXXXXXXXXX (hereinafter referred to as
“the individual”) to hold an access authorization1 under the Department of Energy’s
(DOE) regulations set forth at 10 C.F.R. Part 710, Subpart A, entitled, “General Criteria
and Procedures for Determining Eligibility for Access to Classified Matter or Special
Nuclear Material.” As fully discussed below, after carefully considering the record before
me in light of the relevant regulations and Adjudicative Guidelines, I have determined
that the individual’s access authorization should not be restored at this time.
I. Background
The individual is employed by a DOE contractor in a position that requires him to hold a
DOE security clearance. For more than seven years, the individual has experienced
financial difficulties, which resulted in the Local Security Office (LSO) conducting three
personnel security interviews with him.
In March 2012, the LSO sent a letter (Notification Letter) to the individual advising him
that it possessed reliable information that created a substantial doubt regarding his
eligibility to hold a security clearance. In an attachment to the Notification Letter, the
1 Access authorization is defined as “an administrative determination that an individual is eligible for
access to classified matter or is eligible for access to, or control over, special nuclear material.” 10 C.F.R.
§ 710.5(a). Such authorization will be referred to variously in this Decision as access authorization or
security clearance.
2
LSO explained that the derogatory information fell within the purview of one potentially
disqualifying criterion set forth in the security regulations at 10 C.F.R. § 710.8,
subsection (l) (hereinafter referred to as Criterion L).2
Upon his receipt of the Notification Letter, the individual exercised his right under the
Part 710 regulations by requesting an administrative review hearing. The Director of the
Office of Hearings and Appeals (OHA) appointed me the Hearing Officer in the case and
I subsequently conducted an administrative hearing in the matter. At the hearing, the LSO
presented no witnesses; the individual presented his own testimony and that of his wife.
The LSO submitted 24 exhibits into the record; the individual tendered 11 exhibits.3
II. Regulatory Standard
A. Individual’s Burden
A DOE administrative review proceeding under Part 710 is not a criminal matter, where
the government has the burden of proving the defendant guilty beyond a reasonable
doubt. Rather, the standard in this proceeding places the burden on the individual because
it is designed to protect national security interests. This is not an easy burden for the
individual to sustain. The regulatory standard implies that there is a presumption against
granting or restoring a security clearance. See Department of Navy v. Egan, 484 U.S.
518, 531 (1988) (“clearly consistent with the national interest” standard for granting
security clearances indicates “that security determinations should err, if they must, on the
side of denials”); Dorfmont v. Brown, 913 F.2d 1399, 1403 (9th Cir. 1990), cert. denied,
499 U.S. 905 (1991) (strong presumption against the issuance of a security clearance).
The individual must come forward with evidence to convince the DOE that restoring his
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 individual is
afforded a full opportunity to present evidence supporting his eligibility for an access
authorization. The Part 710 regulations are drafted so as to permit the introduction of a
very broad range of evidence at personnel security hearings. Even appropriate hearsay
evidence may be admitted. 10 C.F.R. § 710.26(h). Thus, an individual is afforded the
utmost latitude in the presentation of evidence to mitigate the security concerns at issue.
B. Basis for the Hearing Officer’s Decision
In personnel security cases arising under Part 710, it is my role as the Hearing Officer to
issue a Decision that reflects my comprehensive, common-sense judgment, made after
2
Criterion L relates to information that a person 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.
§710.8(l).
3 OHA decisions are available on the OHA website at www.oha.doe.gov. A decision may be accessed by
entering the case number in the search engine at www.oha.gov/search.htm.
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consideration of all the relevant evidence, favorable and unfavorable, as to whether the
granting or continuation of a person’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). I am instructed by the regulations to resolve any doubt as to a person’s access
authorization eligibility in favor of the national security. Id.
III. The Notification Letter and the Security Concerns at Issue
As previously noted, the LSO cites one criterion as the basis for suspending the
individual’s security clearance, Criterion L. To support its allegations, the LSO lists the
individual’s current delinquent debts, which total approximately $19,000, and chronicles
a pattern of unwillingness or inability to satisfy delinquent debts that dates back to 2005.
The individual’s failure to live within his means, to satisfy his debts and to meet his
financial obligations raises a security concern under Criterion L, because his actions may
indicate “poor self-control, lack of judgment, or unwillingness to abide by rules and
regulations,” all of which can raise questions about the individual’s reliability,
trustworthiness and ability to protect classified information. See Guideline F of the
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). Moreover, a person who is
financially overextended is at risk of having to engage in illegal acts to generate funds.
Id.
IV. Findings of Fact
In 2005, the LSO questioned the individual about his financial status. During a Personnel
Security Interview (PSI), the individual explained that he had failed to surrender a car
after the term of its lease expired; the vehicle was repossessed and auctioned and he owed
the difference between its value and its auction price. Exhibit 24 (Transcript of May 10,
2005, Personnel Security Interview) at 38-40. He was delinquent on a number of bills,
including his water, gas, electricity, and credit card accounts and medical and hospital
bills. Id. at 17, 21, 23, 27, 30, 31, 33. He admitted that his family was overspending in
relation to his income. Id. at 55. He maintained, however, that he now had taken control
of the problem and intended to pay off his debts. Id. at 49, 57, 91.
In November 2009 the individual completed a Letter of Interrogatory for the LSO, in
which he acknowledged six accounts in collection, many of them the same debts that he
carried in 2005. Exhibit 17. He also committed to begin paying them in December 2009.
Id.
A second PSI in 2010 revealed that the individual owed, and was slowly paying, property
taxes on the family home and on mineral rights that produced monthly oil royalties.
Exhibit 23 (Transcript of July 21, 2010, Personnel Security Interview) at 9, 18, 21, 27,
30. As in 2005, he had fallen behind on his monthly phone, electricity, and cable bills.
Id. at 34-36. He stated that he intended to pay his debts, but expensive house and truck
repairs had taken the money he would have used to pay those debts. Id. at 33, 76. He
also stated that he had taken out payday loans, at exorbitant interest rates, on two
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occasions to cover expenses. Id. at 59, 73. He recognized that he had grown to depend
on his monthly oil royalty checks as income; though the checks were consistently for
about $2000 a month when he started receiving them in 2007 or 2008, they then dropped
to about $600 a month. Id. at 56-58. He further recognized that he needed to reduce his
standard of living so that he and his family could live off his paychecks alone, without
depending on oil revenue, since his current expenses exceeded his take-home pay by
about $1000 a month, not including debts he was not paying at all. Id. at 132-36. He
committed to contacting all of his creditors, and to reducing some of his less necessary
expenses, such as eating out and buying books. Id. at 69, 117, 123.
In February 2012, the LSO conducted a third PSI. Exhibit 22 (Transcript of February 14,
2012, Personnel Security Interview). The individual admitted that he still had not paid
many of the debts that were outstanding in 2005, and was still delinquent on his property
taxes. Id. at 57, 80. He explained that his young daughter developed diabetes late in
2010, which added unforeseen expenses and stress for his family. Id. at 13, 41, 64, 69.
His wife needed to stay home to be available in case their daughter needed immediate
attention; she had not, however, worked before the diagnosis, either. Id. at 21. He had
not contacted many of his creditors, and with those that he did contact he did not follow
up, because he was overwhelmed. Id. at 80, 90. For the same reason, he ignored bills
and letters from collection agencies. Id. at 101-02.
V. Analysis
I have thoroughly considered the record of this proceeding, including the submissions
tendered in this case and the testimony of the witnesses presented at the hearing. In
resolving the question of the individual’s eligibility for access authorization, I have been
guided by the applicable factors prescribed in 10 C.F.R. § 710.7(c)4 and the Adjudicative
Guidelines. After due deliberation, I have determined that the individual’s access
authorization should not be restored. I cannot find that restoring the individual’s DOE
security clearance will not endanger the common defense and security and is clearly
consistent with the national interest. 10 C.F.R. § 710.27(a). The specific findings that I
make in support of this decision are discussed below.
A. Testimonial Evidence
In their testimony, the individual and his wife focused on unforeseen expenses and their
ability to live within their current income. As examples of unforeseen expenses, they
pointed out, first and foremost, their daughter’s recent diagnosis of diabetes. Although
insurance covered most of the costs arising from treating this disease, including the bulk
of a hospitalization and doctor visits, they have faced a co-pay ($20) and gas for
4 Those factors include the following: the nature, extent, and seriousness of the conduct, the circumstances
surrounding the conduct, to include knowledgeable participation, the frequency and recency of the conduct,
the age and maturity at the time of the conduct, the voluntariness of his participation, the absence or
presence of rehabilitation or reformation and other pertinent behavioral 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.
5
transportation ($40), for each of the nine visits to date, monthly medical costs ($25-30),
and the occasional meal on the road, if the child needs to eat while they are en route to or
from the doctor. Transcript of Hearing (Tr.) at 33-34, 71. Because the daughter is nine
years old, she needs fairly constant supervision to measure her blood sugar levels, which
are extremely volatile. Id. at 12, 14, 18, 25. Consequently, the wife does not work
outside the home; she maintains that any job she might qualify for would not be flexible
enough to permit her to leave the workplace to respond to her daughter’s needs. Id. at 16,
45. The wife identified as additional unforeseen expenses a brake repair on her vehicle,
which she needs in case a child needs medical attention, and a school fee assessed to
another of their children for damaging a computer. Id. at 58, 61-63.
The individual and his wife also testified that they can meet their current monthly
expenses. Id. at 39-40, 52, 93. The individual has received a raise in salary, and his wife
has recently started an online publishing house that they anticipate will bring additional
income into the home. Id. at 47, 123-24. He estimates that his current monthly
household expenses are $4884, and his monthly income is $5630, including $2200 in oil
royalties. Exhibit E; Tr. at 73-74. When questioned about the availability of the
estimated $750 of surplus income, the individual conceded that the estimates must not be
accurate, because they continue to live from “paycheck to paycheck.” Tr. at 104-05. To
demonstrate that he can become solvent at any time, the individual testified that a number
of people have offered to purchase his mineral rights outright for between $45,000 and
$88,000. Id. at 76. In addition, he recently received a mail offer to loan him up to 25
times his monthly royalty amount. Exhibit H; Tr. at 77, 81-83.
The individual testified that, while he intends to repay all of his debts, he is taking care of
his family first, and then addressing the debts. Id. at 107, 109, 136. His wife conceded,
however, that they cannot address their old debts at this time. Id. at 67-68, 93. The
individual has now contacted the creditors and explained his situation. Id. at 135. He
made one payment of $120 to satisfy two doctors’ bills shortly before the hearing.
Exhibit J. The individual pointed out that no drugs, alcohol, or gambling were involved
in the creation of the old debts, they have not incurred any new debt in the past two to
three years, and they do not intend to amass new debt. Id. at 109, 140-42.
The individual’s wife testified that they develop budgets to account for their household
expenses. Id. at 37. On further questioning, the wife explained that they look ahead two
to three paychecks and decide which bills will be paid from which paycheck (and
anticipated royalty check). Id. at 38, 145. They attempt to set aside some money for
paying off debts, but that money often gets used for “the extra things that come up, like
getting the brakes fixed.” Id. at 39. Money is set aside for emergencies only to the extent
there is any available after earmarking the income for paying current expenses. Id. at 40,
45. As of the hearing, the emergency fund contained between $60 and $100. Id. at 93.
As a result, the individual and his wife remain delinquent on their property taxes, and still
face most of the debts that concerned the LSO in 2005. Id. at 116-34, 147.
B. Hearing Officer Evaluation of Evidence
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In considering the evidence before me, I first looked to the Adjudicative Guidelines. As
an initial matter, I find that the individual is living beyond his means. While I fully
recognize that he and his family are not enjoying a lavish lifestyle, the fact remains that
their estimated expenses far exceed his earned income. Consequently, he must rely on
his oil royalty income to meet his expenses, and that income varies greatly from month to
month. Moreover, even when the royalty income is substantial, the individual has been
unable to make substantial inroads into his existing debt. While he has consistently
stated his intention to pay off these debts, he has been unable to act on that intention until
recently, and then only to a very limited extent. I cannot mitigate the security concerns at
issue here under Guideline F at ¶ 20(a), which addresses behavior that occurred long ago
or very infrequently, because the behavior is current and has been ongoing for at least
seven years, and I cannot find at this point that the financial problems will not occur
again.
Second, though the individual and his wife convincingly testified that they face
unexpected medical difficulties dealing with a young daughter’s diabetes, the financial
consequences of her condition are relatively limited, as much of the associated expense is
covered by insurance. There is no evidence that their child’s diabetes caused, or even
significantly contributed to, the individual’s financial problems. To the contrary, the
unpaid debts existed before her diagnosis in 2010, the wife did not earn income before
then, and they have managed not to create any new debt since then. As for other
situations that they consider to be unexpected, such as major vehicle repair, I do not
agree; such circumstances occur and are not unforeseeable. Based on these findings, I
cannot mitigate the individual’s financial issues under Guideline F at ¶ 20(b), i.e. the
conditions that resulted in the financial problems were largely beyond the person’s
control.
Third, though the individual has received some advice regarding his finances, Tr. at 94-
95, he continues to face routine monthly expenses and unbudgeted expenses, such as
home and vehicle repairs, that exhaust his current income, leaving him with no resources
to address outstanding debt or to set aside for emergencies. Based on the record before
me, I cannot find for purposes of Guideline F at ¶ 20(c) that there are clear indications
that the financial problem is under control. The individual has not convinced me that he
will be able to maintain the financial discipline to reduce his expenses to fall in line with
his reliable income, which consists of his salary alone.
To his credit, I find that the individual’s recent payment of $120 to resolve two
outstanding doctors’ bills is evidence of his good-faith effort to repay overdue creditors.
Guideline F at ¶ 20(d). The recency and limited amount of this repayment, however, in
comparison to the age and size of his debt, limit the weight of this mitigating evidence.
While I found the testimony of the individual and his wife credible that they intend to
repay the outstanding debts they have accumulated, I am concerned that the individual
has made similar representations to the LSO on four other occasions in the past and has
not had the resolve or discipline to monitor his finances. Moreover, I am not convinced
that the individual’s good intentions will be sustainable in the long term. His recent
payment of two old doctors’ bills, though laudable, does not demonstrate a pattern of
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behavior nor his ability to continue paying off his debts. In his testimony, the individual
emphasized that he is not unwilling, but merely unable, to address his debts. Tr. at 136.
He stated that “[T]hings are looking up. Things are getting better.” Id. at 111. Despite
his optimism, his financial condition will improve only if (a) his income from oil
royalties remains consistently high, (b) his wife’s recent business venture begins to earn
income, and (c) no emergencies requiring financial expenditures arise, because they have
no savings. Despite their planning for distribution of income from paychecks and royalty
income, the individual and his wife have no long-range budgets or financial plans in
place that address repayment of their outstanding debts. Although the individual
contended at the hearing that he does not face financial difficulties, because he is meeting
his monthly expenses, id. at 135, I believe that he does, for the reasons stated above.
I am further concerned about the poor judgment the individual demonstrated when he
took out payday loans. Although he was well aware of the egregiously unfavorable terms
of the first loan, he nevertheless took a second one. He acknowledges that these two
loans have contributed to his present financial straits; one was for $3000, on which he
pays $700 per month in interest charges. Id. at 69. Nevertheless, at the hearing he
offered as a possible solution a loan based on his royalty income. When questioned about
that loan offering, the individual was unable to describe any terms of that offer or provide
any assurance that such a loan would be any more advantageous than his payday loans.
Id. at 149-51. I remain concerned about the individual’s judgment regarding future
financial decisions.
In prior cases involving financial irresponsibility, 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 Personnel
Security Hearing, Case No. PSH-11-0015 (2011); Personnel Security Hearing, Case No.
TSO-1078 (2011); Personnel Security Hearing, Case No. TSO-1048 (2011); Personnel
Security Hearing, Case No. TSO-0878 (2010); Personnel Security Hearing, Case No.
TSO-0746 (2009). At this point, it is simply too early for me to find that the individual
has demonstrated a sustained pattern of financial responsibility for a significant period of
time relative to his lengthy past period of financial irresponsibility.
Based on the foregoing, I find that the individual has not mitigated the security concerns
associated with Criterion L.
C. 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 associated with Criterion L. 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
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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.
William M. Schwartz
Hearing Officer
Office of Hearings and Appeals
Date: August 9, 2012