PSH-12-0069

* 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: June 6, 2012 ) Case No.: PSH-12-0069
)
___________________________________ )
Issued: August 30, 2012
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Decision and Order
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Janet R. H. Fishman, Hearing Officer:
This Decision concerns the eligibility of XXXXXXXXXXXXX (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 Individual’s access authorization
should not be restored.
I. Procedural History
The Individual is employed by a Department of Energy (DOE) contractor in a position that
requires a DOE security clearance. Based upon the receipt of derogatory information, the Local
Security Office (LSO) called the Individual in for a Personnel Security Interview (PSI). DOE
Ex. 14. After the PSI, the LSO informed the Individual that derogatory information created a
substantial doubt concerning his eligibility for access authorization. Notification Letter dated
May 3, 2012; DOE Ex. 1; 10 C.F.R. § 710.8(l) (Criterion L).
The Notification Letter 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 access
authorization. The Individual requested a hearing on this matter, and I was appointed the
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 also be referred
to in this Decision as a security clearance.
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Hearing Officer. I conducted a hearing within the required regulatory time frame. At the
hearing, the DOE introduced 16 exhibits into the record of this proceeding. The Individual
submitted 26 exhibits and presented the testimony of three witnesses, in addition to testifying
himself.
II. Regulatory Standards
Under Part 710, certain types of information raise concerns about whether an individual is
eligible for access authorization. In considering whether an individual has resolved a security
concern, the Hearing Officer considers various factors, including the nature of the conduct at
issue, how frequently it occurred, how recently it occurred, 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). The decision concerning eligibility is a comprehensive, common-sense
judgment based on a consideration of all relevant information, both favorable and unfavorable.
Id. § 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.” Id. § 710.27(a).
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).
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
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.” Id. § 710.27(d). “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) (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.") 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).
III. Findings of Fact and Analysis
A. Criterion L Concern
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Criterion L applies where an individual has engaged in conduct casting doubt on whether he is
“honest, reliable, and trustworthy.” 10 C.F.R. § 710.8(l); The Adjudicative Guidelines list
criteria under Personal Conduct that support a Part 710 Criterion L Concern. Adjudicative
Guidelines ¶ 16(e) (personal conduct that creates a vulnerability to exploitation, manipulation, or
duress). In addition, the Adjudicative Guidelines list criteria under Financial Considerations
that also support a Criterion L Concern. Adjudicative Guidelines ¶ 19(a) (inability or
unwillingness to satisfy debts). Financial issues raise a Criterion L concern because they can
indicate an unwillingness to follow rules and also brings into question whether an individual is
honest, reliable, and trustworthy in his financial dealings.
At the time of the Notification Letter, the Individual and his wife were in substantial debt to a
number of lenders. DOE Ex. 1 at 1-2. Accordingly, I find that the LSO properly raised a
security concern under Criterion L.
B. Possible Mitigation of Criterion L Concerns
The Adjudicative Guidelines list a number of conditions that the Individual could use to mitigate
the concerns raised under Criterion L regarding his financial difficulties. The conditions are:
(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;
Adjudicative Guidelines ¶ 20 (b), (c), (d).
Security concerns arise in these types of cases where an individual has engaged in a pattern of
financial irresponsibility. Even in cases involving bankruptcy, the security concern arises not
from the bankruptcy filing per se, but rather from the circumstances surrounding a person’s
bankruptcy and his attendant financial problems. See Personnel Security Hearing, Case No.
VSO-0509 (2002); Personnel Security Hearing, Case No. VSO-0414 (2001), aff’d, OSA,
(2001).2/ Once a pattern of financial irresponsibility has been established, it is the individual’s
burden to demonstrate a new pattern of financial responsibility. In prior cases involving
financial irresponsibility, Hearings 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. TSO-1078
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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(2011); Personnel Security Hearing, Case No. TSO-0878 (2010); Personnel Security Hearing,
Case No. TSO-0746 (2009); Personnel Security Hearing, Case No. TSO-0732 (2009).
In addition to a substantial number of overdue debts, the Notification Letter raises the issue that
during a November 2009 PSI, the Individual stated that he would contact his creditors for the
delinquent accounts, which totaled $51,800 in October 2009, but his debts had increased three
years later as of March 2012, when his current credit report showed debts of $75,889. DOE Ex.
1 at 2. While some of this amount can be attributed to the new car that was purchased in 2011,
there is an additional amount unaccounted for. The Individual speculated at the hearing that the
additional amount, over the amount of the car loan, must have been interest on the credit card
accounts, which he consolidated in 2008. As an example, he noted that the credit limit on one of
the cards is $2,500, yet it showed a balance of over $4,000.
Included in the debts referenced by the Notification Letter was an amount previously owed to his
state for taxes, which was paid by garnishing his wages. DOE Ex. 1. The Individual and his
wife explained that when they filed their taxes for tax year 2010, they owed a substantial amount
to their state, which they could not afford to pay given their financial situation. They were
advised to pay a small amount and wait for a tax bill. Tr. at 43. Somehow, both the Individual
and his wife missed the bill. Tr. at 43. They received a notice that their wages were being
garnished. Tr. at 43. The tax bill is now paid in full. Tr. at 43.
The Individual and his wife testified that they believe a series of salary decreases led to their
financial difficulties. The Individual’s wife testified that between September 2005 and
November 2008, she was employed sporadically and often only in a part-time position. The wife
testified that she was self-employed until September 2005, when her business ceased to exist.
Tr. at 9-10. She was unemployed for a couple of months and then found a part-time job in
March 2006. Tr. at 10. She was laid off from that position in December 2007. Tr. at 11, 21. In
February 2008, she got a part-time job in her current occupation and was hired on in a full-time
position in November 2008. Tr. at 12, 21. The Individual testified that, in addition to his wife’s
employment difficulties, in September 2008, his hours were substantially decreased, leading to a
decrease in pay. Tr. at 15, 40. Also, because of his loss of security clearance, he moved to a
different position, which also caused a decrease in pay. Tr. at 40. The Individual’s two
co-workers, who are also friends, testified that the Individual is honest and reliable. Tr. at 26,
68. Neither of them has seen him spend extravagantly. Tr. at 26, 68. The Individual’s co-
workers, both of whom have known him for over 10 years, attributed the Individual’s bankruptcy
filing and difficulty with his finances to his loss of salary due to his job changes. Tr. at 25, 67.
The Individual and his wife testified that beginning in early 2008, they realized they were having
financial difficulties. Therefore, they consolidated their credit card debt in June 2008. Tr. at 13,
37. The Individual and his wife testified that they have not used a credit card since June 2008.
Tr. at 13, 37. In March 2009, although they had not incurred any additional credit card debt,
they again had trouble paying their bills. Tr. at 13. They did not testify as to what steps they
took at that time to rectify the situation.
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The Individual and his wife testified that they have been attempting to solve their financial
situation for over two years. They consulted an attorney about filing for bankruptcy in March
2010. Ind. Ex. X at 1; Tr. at 58. The attorney submitted an affidavit stating that the couple
consulted her in March 2010, at which time she told them to consult with her again after the loan
modification on their existing residence was completed. Ind. Ex. X at 1. According to the
exhibits submitted by the Individual, the loan modification was completed in December 2010.
Ind. Ex. W. In July 2011, the Individual and his wife met with the bankruptcy attorney again.
At that time, the loan modification was completed and she reviewed the “Means Test”
calculations and determined that they did not qualify for Chapter 7 bankruptcy. Ind. Ex. X at 1.
At the July 2011 meeting, the Individual and his wife informed the attorney that they wanted to
purchase a new car because their car had high mileage and their child would be driving in the
near future. Ind. Ex. X at 2. The attorney advised them that such a purchase seemed reasonable
to her and that it would be easier to make the purchase prior to filing bankruptcy, rather than
after the bankruptcy discharge. Ind. Ex. X at 2. When the Individual and his wife purchased the
new car in late summer 2011, they signed a reaffirmation agreement, stating that they would not
put the new car loan into bankruptcy, should they decide to file. Ind. Ex. X at 2. When the
Individual and his wife next met with the attorney in April 2012, they informed her that they
would be willing to include their family residence in the bankruptcy because their debt had
become overwhelming. Ind. Ex. X at 2. They signed and filed a Chapter 7 bankruptcy petition
on May 17, 2012. Ind. Ex. X at 2. The bankruptcy was discharged on August 22, 2012. Ind.
Ex. Z at 1.
The Individual and his wife stated that in an attempt to correct their finances, they are living
within a budget. Tr. at 33. They only purchase items they need for themselves or their children.
Tr. at 33. They last made a payment on their house in January 2012. Tr. at 36. They have not
used a credit card since June 2008. Tr. at 37. They will save $200 in fuel costs when they move
out of their house and closer to work. Tr. at 51. They know that they can only afford $1,500 in
rent. Tr. at 51. Their older vehicle will be paid off in four months. Tr. at 53.
I find that the Individual has not mitigated the concern raised under Criterion L. The Individual
has a pattern of financial irresponsibility dating back prior to 2008, a period of over four years.
He testified that he consolidated his credit card debt in June 2008 and stopped using credit cards
at that time. When that did not solve the situation because of his and his wife’s salary decreases,
he consulted an attorney about filing for bankruptcy. He followed his attorney’s advice
regarding the bankruptcy filing, but without any apparent urgency. The Individual and his wife
first consulted with an attorney in March 2010 but were told to wait until their mortgage loan
modification was completed. The loan modification was completed in December 2010, over
nine months after first consulting with the attorney. After the loan modification was completed,
they did not consult with the attorney again until July 2011, over six months after the loan
modification was completed. Ind. Ex. W; Ind. Ex. X. In addition, although on the advice of
counsel but while still heavily in debt, they purchased a new vehicle. I find that this does not
show a sustained pattern of financial responsibility. In addition, I am concerned that they are not
living within their budget. The Individual stated that they can afford $1,500 in rent payments
going forward. Tr. at 51. They have not paid their mortgage since January 2012, a period of six
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months. Yet, he testified that they have only $5,000 in savings. To extrapolate, six of months of
$1,500 rent payments would lead to $9,000 in savings, not $5,000.
But most importantly, as stated above, after a showing of a pattern of financial irresponsibility,
our case law requires an individual to demonstrate a sustained pattern of financial responsibility
to mitigate a concern raised under Criterion L for financial irregularities. See Personnel Security
Hearing, Case No. TSO-1078 (2011); Personnel Security Hearing, Case No. TSO-0878 (2010);
Personnel Security Hearing, Case No. TSO-0746 (2009); Personnel Security Hearing, Case No.
TSO-0732 (2009). The Individual has not yet established a sustained pattern of financial
stability. The bankruptcy was filed on May 17, 2012, after he received the Notification Letter,
and discharged on August 22, 2012. Ind. Ex. Z. As of the time of the hearing, the Individual
was not yet living within a budget. He was not paying either a mortgage or rent, a substantial
payment for most individuals. His savings do not reflect that he and his wife have been saving
an amount equivalent to their projected rent payment. I find that as of the time of the hearing,
the Individual had not shown a sustained pattern of financial stability. Therefore, I find that the
Individual has not mitigated the Criterion L security concern.
IV. Conclusion
Upon consideration of the entire record in this case, I find that there was sufficient evidence that
raised 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 those concerns. Therefore, I cannot conclude that restoring the Individual’s access
authorization “would not endanger the common defense and security and would be clearly
consistent with the national interest.” 10 C.F.R. § 710.27(a). Consequently, it is my decision
that the Individual’s access authorization should not be restored at this time. The parties may
seek review of this decision by an Appeal Panel. 10 C.F.R. § 710.28(b)-(e).
Janet R. H. Fishman
Hearing Officer
Office of Hearings and Appeals
Date: August 30, 2012