PSH-14-0035

*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: April 9, 2014 )
) Case No.: PSH-14-0035
__________________________________________)
Issued: July 11, 2014
______________________
Administrative Judge Decision
______________________
William M. Schwartz, Administrative Judge:
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 be restored.
I. Background
The individual is employed by a DOE contractor in a position that requires her to hold a
DOE security clearance. The individual has experienced financial difficulties since about
2006, which resulted in the Local Security Office (LSO) monitoring her credit reports
and conducting three personnel security interviews with her.
In March 2014, the LSO sent a letter (Notification Letter) to the individual advising her
that it possessed reliable information that created a substantial doubt regarding her
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.
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eligibility to hold a security clearance. In an attachment to the Notification Letter, the
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 her receipt of the Notification Letter, the individual exercised her 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 Administrative Judge in the
case and I subsequently conducted an administrative hearing in the matter. At the
hearing, the LSO presented no witnesses; the individual presented her own testimony and
that of the attorney who assisted her in filing a petition for bankruptcy. The LSO
submitted 15 numbered exhibits into the record; the individual tendered six exhibits,
which have been labelled A through F.
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 or her 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.
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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).
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B. Basis for the Administrative Judge’s Decision
In personnel security cases arising under Part 710, it is my role as the Administrative
Judge to issue a Decision that reflects my comprehensive, common-sense judgment,
made after 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 debt, which totals $13,155, and over $100,000 in charged-
off debt. The LSO also notes the individual’s failure to resolve a number of debts,
despite her stated intentions to do so during her 2008 and 2011 PSIs, as evidence of a
pattern of unwillingness or inability to satisfy debts. The individual’s failure to live
within her means, to satisfy her debts and to meet her financial obligations raises a
security concern under Criterion L, because her 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). In addition, the LSO cites three occasions on which the
individual failed to fully disclose to the LSO the extent of her financial difficulties:
disclosure of her home, during a 2008 PSI, and a number of collection and charged-off
accounts on Questionnaire for National Security Positions (QNSPs) she completed in
2011 and 2013. Deliberate omission, concealment, or falsification of relevant facts from
forms or in communications used to determine eligibility for access authorization can
raise questions about the individual’s honesty, reliability, and trustworthiness, qualities
upon which the LSO must rely when determining eligibility for access authorization.
Adjudicative Guidelines at Guideline E at ¶ 16.
IV. Findings of Fact
The individual bought a house in 2004. Exhibit (Ex.) 13 (Transcript of January 28, 2014,
Personnel Security Interview) at 38. At the time of the purchase, she and her husband
were both working at full-time jobs. Transcript of Hearing (Tr.) at 9, 10. A first-time
home buyer, she quickly learned that her mortgage was based on an interest-only loan,
and the monthly payment increased by about $500 every six months. Id. at 10; Ex. 13 at
37. Nevertheless, they were able to meet the increasing monthly payments with their
combined income. Tr. at 13. About a year after the house purchase, her estate agent,
who was her stepsister, convinced her to obtain a second mortgage on the home for
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$93,000. Id. at 14-15.3 Her husband lost his job in 2006, and since that time he has
worked as a musician, contributing to the household income sporadically and
unpredictably. Id. at 9, 17; Ex. 13 at 64. With only one income, the monthly payments
on the two mortgages became unmanageable. By the third year of the mortgage, the
individual was making only partial payments on the mortgage and was having difficulty
paying other creditors as well. Ex. 13 at 18-19, 37-38. By December 2007, she had lost
the home to foreclosure and moved her family to the rental property where they continue
to reside. Id. at 39.
Following the 2007 foreclosure, the individual stopped using credit cards and managed
the household expenses on a cash-only basis, relying only on her income for budgeting
purposes. Tr. at 31. At the hearing she stated that she always intended to pay back the
debts she incurred while she was trying to meet the mortgage payments, as she had stated
during her 2008 and 2011 PSIs. Id. at 12. Nevertheless, she testified that she did not
enter into payment plans with her creditors, because she did not want to commit to plans
she might not be able to adhere to, and money was too tight to pay back debts. Id. at 48.
The individual also testified that she did not file for bankruptcy until recently, though
debt counselors she consulted in 2008 recommended it for her. See Ex. 14 (Transcript of
April 13, 2011, Personnel Security Interview) at 40. When questioned why she had
resisted filing for bankruptcy, the individual gave three reasons: she was embarrassed;
she had always intended to pay the bills she had incurred, though she never had enough
income to do so; and she could not afford the cost of hiring an attorney or the filing fees
associated with a bankruptcy proceeding. Tr. at 12; Ex. 13 at 48. After her January 2014
PSI, however, the individual realized that her current income would never be sufficient to
pay her back debts in addition to her household expenses. Tr. at 25. She also learned
that her legal services insurance plan, deducted from her paycheck, would cover the
attorney’s fees associated with a bankruptcy proceeding. Id. at 26. Armed with that
knowledge, the individual filed for bankruptcy within two weeks of the PSI. Exs. C, D,
F. The bankruptcy was discharged on May 27, 2014. Ex. E.
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
3 When questioned during the hearing as to what purpose the second mortgage served, the individual
testified that she had no idea: neither she nor her husband had ever seen any of the proceeds of that
mortgage. As a first-time homeowner, she simply followed the stepsister’s advice, obtained the mortgage,
and made monthly payments. Id. at 15-16.
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.
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authorization should be restored. I 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. Financial Matters
At the hearing, the individual testified about the circumstances that led to her incurring
debt. Because she appears to have been debt-free until she purchased a home in 2004 and
her husband lost his job in 2006, I agree with the individual that the house purchase and
the job loss are the chief causative factors in her indebtedness. Credit reports that the
LSO obtained on the individual in 2007 through 2014 demonstrate that her outstanding
debt accounts, both overdue and in collection, date back to a period ending in 2007. See
Exs. 4-8. There is no evidence that the individual has incurred new debt, or even opened
a new credit card account, since that time. Id.
During the LSO’s most recent review of the individual’s eligibility for a security
clearance, the individual completed a monthly budget statement. Ex. 10. She testified
that she included only her income on that statement, though her husband does contribute
to the household as well. Tr. at 17. The individual stated that her husband earns $700 to
$800 a month when he has work, but estimated that he brings in $3000 to $4000
annually. Id. at 27, 52. She is committed to running the household on her income alone,
as his is unpredictable. This approach is commendable, if somewhat conservative. At
the hearing, we reviewed the budget and adjusted a few expense items to somewhat
higher levels. Id. at 21-24. Nevertheless, the individual’s budget, even as modified,
demonstrates that she is living within her means and can successfully, though frugally,
maintain her household on her salary alone. As the DOE Counsel pointed out, however,
the husband’s income serves as a valuable cushion when unexpected expenses arise.
Given the tightness of her budget, I find that the individual was reasonable to file for
bankruptcy once she realized she could afford to do so. Initiating bankruptcy is in some
cases a wise decision, and not one that necessarily demonstrates poor financial judgment.
It often reflects the consequences of the individual’s past pattern of poor financial
decisions. Although the individual’s bankruptcy was made final just recently, the debts
discharged all date from a period before her December 2007 foreclosure. Therefore, in
this particular situation, the bankruptcy has relieved the individual from the crushing
burden of debts so old that they do not cast a shadow on her current financial conduct.
In considering the evidence before me, I first looked to the Adjudicative Guidelines. As
an initial matter, I find that the individual demonstrated a pattern of living beyond her
means for a relatively short period of time, from 2006, when her husband lost his job, to
the December 2007 foreclosure. During this period, the family’s income was effectively
cut in half, yet the monthly mortgage payments continued to increase. The period ended
when they moved to a rental property and no longer carried a mortgage, and the
individual has managed her household expenses responsibly since then. In light of the
circumstances surrounding the individual’s financial problems, I find the LSO’s security
concerns about the individual’s finances to be mitigated under Guideline F at ¶ 20(a),
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which addresses behavior that occurred so long ago or so infrequently or under such
circumstances that it is unlikely to recur and does not cast doubt on the individual’s
current reliability, trustworthiness or good judgment.
Second, the conditions that resulted in the individual’s financial problems were, to some
degree, beyond her control. Her husband’s loss of employment in 2006 contributed
significantly to the family’s inability to meet the monthly house payments and other
routine household expenses. With two small children, the couple was not unreasonable
in deciding that the husband should stay home with the children to avoid the cost of
daycare. See Ex. 13 at 72. Having reached that decision, the individual made sure that
she could manage all the household expenses, but not the outstanding indebtedness, on
her income alone. Based on these findings, I 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, and the individual acted responsibly under the
circumstances.
Third, I find, for purposes of Guideline F at ¶ 20(c), that there are clear indications that
the individual’s financial problems are resolved or under control. The individual has
exercised financial discipline since at least 2007. The only aspect of her finances that
was not under control was the outstanding indebtedness, which was incurred in 2006
through 2007. The individual’s recent bankruptcy has now discharged those debts. It
clearly took the individual more time that it should have to overcome her reluctance to
file for bankruptcy, but she has done so. The positive effect of the bankruptcy is that she
no longer is responsible for those old debts. Her new debt-free status, when combined
with her ability to meet her household expenses and her long-time commitment to not
create new debt, including the use of credit cards, demonstrates that her financial
problems have been resolved.
In prior cases involving financial irresponsibility, Administrative Judges (formerly called
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-12-0134 (2013),
and cases cited therein.5 In that case, the Hearing Officer found that eight months of
responsible financial behavior was too short a period to demonstrate a sustained pattern
of financial responsibility for a significant period of time relative to the individual’s
lengthy past period of financial irresponsibility. In contrast, the record in this case
reflects financial decisions made between seven and ten years ago by an unsophisticated
first-time home buyer who was misguided by her stepsister; her indebtedness, while
substantial, did not arise from willful irresponsibility. In any event, the individual in this
case, though saddled with debt from an earlier period, has lived within her means,
frugally and conservatively, since she lost her home in 2007. The intervening period of
about seven years represents a sustained pattern of financial responsibility that, when
coupled with her testimony explaining how her financial difficulties arose, sufficiently
demonstrates that her past pattern of financially risky behavior is unlikely to recur.
5 OHA decisions are available on the OHA website at www.energy.gov/oha.
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B. Omission of Information
The individual addressed the LSO’s concerns regarding her omission of adverse financial
information on two QNSPs and during a PSI. In her response to the Notification Letter,
the individual wrote that at the time of her 2008 PSI, she had received no documentation
concerning her December 2007 foreclosure and was unsure of its status; as a result, she
did not raise it in response to general questions about her financial position. Ex. 2. At
the hearing, the individual testified that she had not obtained a copy of her credit report
before completing her PSIs; working from memory, she listed most of her debts, but
failed to recall all of them. Tr. at 29. In her testimony, she emphasized that she did not
deliberately misstate her finances at any time. She accepted full responsibility for not
securing credit reports before completing those forms, and committed to being as
accurate as possible on all future QNSPs. Id. at 30. I note that the individual did report
her foreclosure during later PSIs and further note that she was not consistent in her
omissions of the various debts on the two QNSPs. I find that the individual’s past
inattention to detail in reporting her financial condition, while not commendable, does not
demonstrate a deliberate intent to omit or conceal critical information from the LSO. In
addition, her commitment to accuracy in the future mitigates any lingering doubts I may
have in this regard.
Based on the foregoing, I find that the individual has mitigated the security concerns
associated with Criterion L.
VI. 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 brought forth sufficient
evidence to mitigate the security concerns associated with Criterion L. I therefore 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 determined that
the individual’s access authorization should 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
Administrative Judge
Office of Hearings and Appeals
Date: July 11, 2014