PSH-12-0114

* 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: August 28, 2012 ) Case No.: PSH-12-0114
)
_________________________________________ )
Issued: November 13, 2012
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Hearing Officer Decision
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Diane DeMoura, Hearing Officer:
This Decision concerns the eligibility of XXXXXXXXXX (“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 employed by a DOE contractor and has held a DOE access authorization since
1992. DOE Exhibit (Ex.) 7. In September 2010, the Local Security Office (LSO) received
potentially derogatory information from an anonymous source regarding the Individual’s
delinquent property taxes. DOE Ex. 13. After receiving this information, the LSO reviewed the
Individual’s credit report and, ultimately, requested that she participate in a Personnel Security
Interview (PSI) in order to discuss concerns raised by the Individual’s finances. DOE Exs. 12,
15. The Individual’s security clearance was continued at that time. DOE Ex. 7. During a
subsequent reinvestigation of the Individual’s security clearance in 2012, concerns regarding the
Individual’s delinquent accounts and alleged pattern of financial irresponsibility again surfaced.
As a result, the LSO requested that the Individual participate in a May 2012 PSI and complete a
June 2012 Letter of Interrogatory (LOI) to address issues pertaining to her finances. DOE Exs.
10, 14; see also DOE Ex. 11 (May 2012 Credit Report). After reviewing the Individual’s
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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personnel security file, the LSO informed the Individual in an August 2012 Notification Letter
that there existed derogatory information that raised security concerns under 10 C.F.R. § 710.8(l)
(Criterion L). See Notification Letter, August 2, 2012. The Notification Letter also informed the
Individual that she was entitled to a hearing before a Hearing Officer in order to resolve the
security concerns. Id.
The Individual requested a hearing on this matter. DOE Ex. 2. The LSO forwarded her request
to the Office of Hearings and Appeals, and I was appointed as Hearing Officer. At the hearing,
the Individual presented her own testimony, as well as the testimony of her husband. The
Individual submitted seven exhibits (Indiv. Exs. A-F, including Indiv. Ex. E.1). The DOE
counsel presented no witnesses, and submitted eighteen exhibits into the record (DOE Exs. 1-
18). See Transcript of Hearing, Case No. PSH-12-0114 (hereinafter cited as “Tr.”).
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, 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 of the individual at the time of the conduct; the
voluntariness of 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,” 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
made after 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) (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”).
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III. FINDINGS OF FACT
During the course of their marriage, the Individual and her husband have held separate bank
accounts, and their paychecks are automatically deposited into their own accounts. Tr. at 11.
The Individual’s husband is responsible for maintaining the family’s major financial obligations,
including the home mortgage and insurance, as well as for filing the couple’s tax returns. Id.; see
also DOE Ex. 14 at 7-9. The Individual, in turn, handles the family’s day-to-day finances, such
as household groceries and childcare-related expenses. Tr. at 11. The Individual admits that she
has relied on her husband to manage the family’s finances and does not know many of the
specific details of the family’s finances, but states that she is able to look up their financial
information when necessary. Tr. at 26.
The Individual attributes her family’s financial difficulties to an unexpected tax debt in 2008.
Tr. at 38. Since 2000, the Individual and her spouse claimed twenty exemptions on their federal
income tax withholdings in an effort to ensure both that sufficient funds were withheld to cover
the taxes that they owed, and that they would not have a large refund at the end of each year.
Indiv. Ex. A. As a result, the Individual and her husband received small refunds each year from
2000 to 2007. Id. In 2008, the couple’s taxable income increased, but they did not adjust their
withholdings. Consequently, rather than receiving a small refund, they owed approximately
$13,500 and were unable to pay the bill.2 Tr. at 38-39. Moreover, they could not adjust their
withholdings in 2008 to cover the increased tax owed due to their higher taxable income, because
doing so would have reduced their take-home pay, which they could not afford. Tr. at 53. As a
result, they owed approximately $18,300 in federal taxes in 2009, $21,500 in 2010, and $17,500
in 2011. DOE Ex. 51-53; Indiv. Ex. A.
The Individual maintains that the 2008 tax debt caused her and her husband to fall behind on
other bills, such as their state taxes and one of her husband’s credit card accounts. Tr. at 38 In
addition, her home mortgage was an adjustable rate mortgage and, once the interest rate adjusted
upward, she and her husband could no longer afford the payments. Tr. at 40. She stated that
they attempted to refinance the mortgage prior to the interest rate’s adjustment, but were unable
to do so due to the home’s decreased value. Tr. at 40-41. They then attempted to obtain a
modification of their mortgage, but were told that the lender would only negotiate a modification
if the mortgage was in arrears. Id., Indiv. Ex. E. Therefore, the Individual and her husband
allowed themselves to fall behind on their mortgage in the hopes of negotiating a modification.
Id. The Individual and her husband have engaged legal counsel to help them work with their
2 While the Individual maintained at the hearing that the unexpected 2008 federal income tax bill was the catalyst for
her family’s financial hardship, the record of this proceeding indicates that it is more likely that the Individual and
her husband were either living above their means or were barely living within their means prior to the 2008 tax bill
and, as a result, were unable to weather the additional debt when it arose. For example, they borrowed $170,000
from the Individual’s mother in 2005, which her mother ultimately designated as a gift, for expenses related to their
home purchase, including furniture, paint, and window treatments. Tr. at 15, 32. In addition, the Individual recently
borrowed $13,000 from her father to pay an existing loan on her 401(k) account so that she could take a new loan
from the same 401(k) account in the amount of $38,000. According to the Individual, the borrowed funds have been
put toward their taxes and other bills, but at the hearing she was unsure of how the money was spent. See Tr. at 33-
36. Finally, the Individual’s husband has been previously interviewed by the DOE regarding the couple’s finances.
In his interview, he specifically attributed the couple’s financial delinquencies to the fact that they did not pay
attention to their finances and lived beyond their means for several years. See Tr. at 55-57; see also DOE Ex. 18 at
33, 42.
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lender to modify their mortgage. Tr. at 22, 50-51; Indiv. Ex. E. Their lender is currently
reviewing their case and has not yet informed the Individual and her husband whether they will
be approved for a modification. Tr. at 22-23; Indiv. Ex. E.1.
As of the hearing, the Individual had paid her outstanding state taxes. Tr. at 27-28; Indiv. Ex. C.
She paid that debt by borrowing from her 401(k) retirement account. Tr. at 43. Currently, she
and her husband owe approximately $33,000 in federal income taxes. Tr. at 33, 54. They are on
a payment plan with the Internal Revenue Service (IRS) to satisfy that debt. Tr. at 23-24, 54;
Indiv. Ex. B. In an attempt to pay the federal tax debt more quickly, the Individual and her
husband have made an offer in compromise to the IRS. Id. They expect to be notified by
January 2013 whether the IRS will accept the offer in compromise. Id. In addition, the
Individual and her husband owe approximately $3,800 on a charged off credit card account used
by the Individual’s husband. Tr. at 44. They are currently on a payment plan to settle that debt,
paying approximately $350 per month, and they expect to pay off the amount by April 2014. Tr.
at 28, 44; Indiv. Ex. D.
The Individual acknowledged that the DOE made her aware of its concerns regarding her
finances in 2012. Tr. at 15, 25; see also DOE Ex. 15. She intended to be more involved in
maintaining the family’s finances from that point forward, but she “allowed him to take more of
the lead” while she focused on their children. Tr. at 16. Nonetheless, the Individual contends
that she is involved in managing their finances because, even though she does not know specific
details or numbers with respect to her finances, she and her husband have set up an area in their
home containing all of their financial information, allowing her to access information regarding
their finances when necessary. Tr. at 25-26. According to the Individual, she and her husband
have taken several other steps to resolve their financial situation in addition to setting up
payment plans for their outstanding debts and attempting to secure a modification of their
mortgage. Specifically, they have reached out to, and intend to meet with, a financial counselor
whose services are provided through their employer. Tr. at 16. In addition, the Individual’s
husband has adjusted their tax withholdings to prevent a recurrence of the unexpected tax
liability that exacerbated their financial struggles. Id. Finally, they have created a family budget
that they intend to follow. Tr. at 16. According to the budget, their monthly net income is
approximately $15,430, and their monthly expenditures total $15,350.3 Indiv. Ex. F.
IV. ANALYSIS
A. The Notification Letter and Associated Security Concerns
As stated above, after reviewing the Individual’s personnel security file, the LSO issued a
Notification Letter identifying security concerns under Criterion L of the Part 710 regulations.
See Notification Letter, August 2, 2012. Specifically, the LSO found that the Individual’s
delinquent federal and state income taxes, her delinquent debt on the charged off credit card
account, and her past due mortgage constituted derogatory information raising security concerns
under Criterion L. Id. The LSO further noted that the Individual’s alleged continued financial
3 According to the Individual’s budget, their current daycare bill, $395 per month, will end in May 2013. In
addition, the payments on the Individual’s husband’s credit card are scheduled to decrease as follows: from $1407 to
$949 in April 2013, to $600 in April 2014, to $0 in July 2014. See Indiv. Ex. A.
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irresponsibility, despite her awareness of the DOE’s concerns regarding her finances, also raised
Criterion L concerns. Id.
Criterion L concerns conduct tending to show that the Individual was “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). In this case, the Criterion L concerns
arise from the Individual’s delinquent debts and purported financial irresponsibility. See
Adjudicative Guidelines, Guideline F, ¶ 19 (“[An] inability or unwillingness to satisfy debts,” “a
history of not meeting financial obligations,” and a “failure to file annual Federal, state, or local
income tax returns as required” raise security concerns); see also Personnel Security Hearing,
Case No. PSH-12-0053 (2012); Personnel Security Hearing, Case No. TSO-1005 (2011);
Personnel Security Hearing, Case No. TSO-0916 (2010). Given the Individual’s extent of the
Individual’s delinquent debts, the LSO had ample grounds to invoke Criterion L.
B. Whether the Individual Has Mitigated the Security Concerns
Among the factors that may serve to mitigate security concerns raised by an individual’s
financial problems are that “the behavior happened so long ago, was so infrequent, or happened
under such circumstances that it is unlikely to recur or does not cast doubt on the individual’s
current reliability, trustworthiness, or good judgment,” “the conditions that resulted in the
financial problem were largely beyond the person’s control … and the individual acted
responsibly under the circumstances,” “the [individual] 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,” and “the individual initiated a good-faith effort to repay overdue creditors or otherwise
resolve debts[.]” Adjudicative Guidelines, Guideline F, ¶ 20.
In this case, I am unable to conclude that the Individual has resolved the Criterion L concerns
raised in the Notification Letter. The Individual and her husband have made some progress in
addressing their finances by paying their delinquent state taxes, setting up payment plans to
address their federal tax debt and the charged-off credit card debt, and beginning the process of
seeking a modification of their home mortgage. Tr. at 23-24, 27-28, 40, 44. The Individual also
appears to have identified a resource at her place of employment to obtain financial counseling.
Tr. at 16. Finally, she and her husband have outlined a budget that they intend to follow in order
to pay off their remaining debts. Tr. at 16; Indiv. Ex. F.
While these are all positive steps, the Individual is a long way from establishing financial
stability. The Individual’s largest debts – the delinquent federal taxes and the home mortgage –
remain in an uncertain state. While the Individual expects that the IRS will accept the offer in
compromise, she will not know whether that is the case until January 2013 at the earliest. See
Indiv. Ex. B. Similarly, the Individual had not yet been informed whether her mortgage lender
approved a modification of the mortgage. See Indiv. Ex. E.1. Moreover, a review of the
Individual’s family budget indicates that the current household income is barely enough to cover
current expenses. See Indiv. Ex. F. While the Individual expects her household’s expenses to
decrease, they currently appear to have no room for error with respect to their finances. Id.
Consequently, should they be faced with an unexpected or emergency expense, the progress they
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have begun to make in righting their finances could easily be reversed. Finally, I am troubled by
the fact that the Individual apparently has little specific knowledge of her own finances. It
became clear at the hearing that the Individual relies on her husband to manage the family’s
major financial decisions, despite the fact that they carry their debts and financial obligations
equally. For example, the Individual was unsure at the hearing of exactly how the money she
borrowed from her 401(k) account was spent and even the specific amount of the loan. Tr. at 33-
36. This leads me to conclude that the Individual is not yet well in control of her own finances.
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. TSO-1078 (2011); Personnel Security Hearing, Case No. TSO-0878 (2010); Personnel
Security Hearing, Case No. TSO-0732 (2009); see also Adjudicative Guidelines, Guideline F,
¶ 20. Given the facts of this case, including the tenuous state of the Individual’s current financial
situation as described above, as well as her apparent lack of insight into her own finances, I
cannot conclude that the Individual’s financial situation is stable at this time or that her financial
difficulties are in the past and unlikely to recur and, therefore, do not cast doubt on her current
reliability, trustworthiness, or good judgment.
IV. CONCLUSION
Upon consideration of the entire record in this case, I find that there was evidence that raised
doubts regarding the Individual’s eligibility for a security clearance under Criterion L of the Part
710 regulations. I further find that the Individual has not presented sufficient information to
fully resolve those security concerns. Therefore, I cannot conclude that restoring the Individual
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.
Diane DeMoura
Hearing Officer
Office of Hearings and Appeals
Date: November 13, 2012