PSH-16-0071

*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 )
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Filing Date: August 29, 2016 ) Case No.: PSH-16-0071
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Issued: November 22, 2016
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Administrative Judge Decision
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William M. Schwartz, Administrative Judge:
This Decision concerns the eligibility of XXXXX XXXXX XXXX (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
discussed below, after carefully considering the record before me in light of the relevant
regulations and 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), I have determined that
the individual’s access authorization should be granted.
I. Background
The individual works for a DOE contractor in a position that requires that he hold a DOE
security clearance. From 2004 through 2015, the individual accumulated debt and failed to pay
his federal income taxes for several of those years. During Personnel Security Interviews (PSIs)
conducted in January and April 2016, the individual described the nature of his debts and the
causes underlying them.
On July 7, 2016, the local security office (LSO) sent a letter (Notification Letter) to the
individual advising him that it had reliable information that created a substantial doubt regarding
his eligibility to hold a security clearance. In the attachment to the Notification Letter, the LSO
explained that the derogatory information fell within the purview of one potentially disqualifying
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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criterion set forth in the security regulations at 10 C.F.R. § 710.8(l) (hereinafter referred to as
Criterion L).2
Upon receipt of the Notification Letter, the individual exercised his right under the Part 710
regulations to request an administrative review hearing, and I was appointed the Administrative
Judge in the case. At the hearing, the individual presented the testimony of one witness, his
wife, and he testified on his own behalf. There were no witnesses for the LSO, but it submitted
14 numbered exhibits into the record. The individual submitted six exhibits, which I labeled as
Exhibits A-F. The exhibits will be cited in this Decision as “Ex.” followed by the appropriate
numeric or letter designation. The hearing transcript in the case will be cited as “Tr.” followed
by the relevant page number.
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 at the hearing with evidence to convince the DOE that
granting or continuing 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). Hence, an individual is afforded the utmost latitude in
the presentation of evidence to mitigate the security concerns at issue.
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
2 Criterion L concerns information that indicates that the individual has “engaged 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. Such conduct or circumstances
include, but are not limited to, . . . a pattern of financial irresponsibility ….” 10 C.F.R. § 710.8(l).
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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 cited Criterion L as the basis for administrative review of the
individual’s eligibility for security clearance. Failure or inability to live within one’s means,
satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or
unwillingness to abide by rules and regulations, all of which may raise questions about an
individual’s reliability, trustworthiness, and ability to protect classified information.
Adjudicative Guidelines at Guideline F, ¶ 18.
The LSO’s security concerns under Criterion L arose when it obtained information from the
individual in 2012 that he had acquired outstanding delinquent debts and had failed to pay his
federal taxes for 2004, 2006, 2007, 2008, 2008, 2009, and 2010. After the individual was laid
off from his employment at the DOE facility in January 2103 and then re-hired at the facility in
February 2015, the LSO continued its inquiry into his financial difficulties, learning that he had
not repaid his earlier debts and tax liability, had acquired additional debt, and had not paid his
federal taxes for 2014. Although he told the LSO during a January 2016 PSI that he intended to
contact creditors to resolve his debts, he did not do so by April 2016, nor had he addressed his
tax liability. Despite the individual’s acknowledgment in 2012 that he understood the DOE’s
concerns regarding his financial irresponsibility, he nevertheless had over $57,000 in outstanding
delinquent debts in July 2016. Ex. 1.
I find that there is ample information in the Notification Letter to support the LSO’s reliance on
Criterion L. The individual has accumulated debt since 2004, if not earlier, and as of the date of
the Notification Letter had not repaid his creditors. Moreover, though he had duly filed his
federal taxes each year, he had not paid the taxes he owed for several years’ income. His pattern
of continuing to accumulate debt without resolving his old debts demonstrates that he has been
living beyond his means and has been financially irresponsible. This behavior clearly raises
questions about his self-control, lack of judgment, and possibly his willingness to follow rules
and regulations, which in turn could affect his ability to protect classified information.
IV. Findings of Fact
Citing a January 2016 credit report and an April 2016 PSI, the Notification Letter reflects the
following debts incurred by the individual: a motor vehicle loan delinquent by 60 days, two
motor vehicle loans charged off with combined past due balances of over $10,000, and about
$5,315 of debt currently in collection, the aftermath of obtaining payday loans. Exs. 1, 4, 12.
During that PSI, the individual admitted that he owes over $40,000 to the Internal Revenue
Service (IRS) for unpaid taxes for 2006, 2007, 2008, 2009, and 2010.3 The individual does not
3 It appears that any federal tax liability for 2004 and 2014 has now been resolved through the application of tax
refunds the individual has received on returns for other years. See Tr. at 69.
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dispute the validity of any of these debts though, as discussed below, he challenges the balance
due on one of the motor vehicle loans. At his January 2016 PSI, he stated that he would contact
two of his creditors to resolve the amounts due and pay them. Ex. 13 at 32-34, 39. When
questioned at his April 2016 PSI, however, he revealed that he had not yet contacted them.
Ex. 12 at 49-60.
The individual has attempted to address his outstanding federal tax liability twice. He explained
at a 2012 PSI that he had entered into payment plan with the IRS in 2008 to repay outstanding
taxes due for 2004, 2006, and 2007 at $250 a month, but never made any payments. Ex. 14 at 50-
57. At the April 2016 PSI, he explained that he had recently attempted to set up a payment plan
with the IRS to repay all of his outstanding tax liability, but the IRS rejected the plan because the
monthly payment he proposed, $250, was significantly less than the minimum monthly payment
the IRS calculated, $684, to pay off the total liability within six years. Ex. 5; Ex. 12 at 14.
At the hearing, the individual and his wife provided additional details concerning the causes of
his many outstanding debts and his attempts to resolve them. Starting in 2000, the individual
worked as an electrician on jobs obtained through his union placement office. He had steady
work until about 2004, when construction projects, and work for electricians, began to taper off.
There were fewer and fewer jobs available through the union hall, and he was out of work for
periods as long as six months. Tr. at 41-42. He was “desperate at the time . . . to do what [he]
thought was right” for his family. Id. at 44. He learned from other electricians that they would
declare 99 dependents on their federal tax withholding declarations, in order to have no federal
taxes withheld and therefore maximize their take-home pay; he did the same. Id. at 45. He did
not believe that there was anything illegal about this behavior; his intention was to provide for
his family to the fullest extent while he had work. Id. at 67-68. The effect of having no tax
withheld from his paychecks, however, was that, at the end of the year, he needed to pay his tax
liability and had no resources to do so. Id. at 43. The years for which he owed money to the IRS
are precisely those years in which he had long periods of unemployment and declared 99
dependents when he did have income from work. He managed to secure reliably consistent work
at the DOE facility from 2011 through January 2013, when he was laid off, and then again
starting in January 2015. Id. at 48. He did not declare 99 dependents while working at the DOE
facility, and intends never to do so in the future. Id. at 45, 69.
The individual’s other debts, described below, also accrued in those years in which he had long
periods of unemployment. His attempt at a payment arrangement with IRS in 2008 failed for
similar reasons: he was laid off between the time he signed the agreement and the time of his
first payment due. Id. at 72. In contrast, as a result of his consistent work at the DOE facility
since January 2015, he now has sufficient funds to pay off his debts, and he has taken steps to do
so where possible.
One of his largest debts, now charged off, was a car loan he acquired in December 2012, shortly
before being laid off from his job at the DOE facility. Ex. 4. He realized that he could not meet
the payments, and turned the vehicle in to the creditor. Since the date of the Notification Letter,
he has communicated with the bank and has been offered a settlement. He challenges the
amount owed because he believes the bank resold the vehicle and recouped virtually all its costs
through the resale. He has spoken with bank representatives, including one who committed to
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providing him with details regarding the resale of his car. Tr. at 25; Ex. 2; Ex. D. He is awaiting
confirmation from the bank, and stated that he is committed to repaying the bank an amount that
takes into account the resale of his car, up to the offered settlement amount. Tr. at 20-21; Ex. F.
He stated that he would be able to pay off the settlement amount within a year, and the monthly
budget statement he submitted supports his assertion. Tr. at 22, 65; Ex. E.
The individual also reached out to a company from which he obtained a payday loan and owed
$315. After failing to reach the creditor on a number of attempts, he succeeded in October 2016
and entered into an agreement with the company through which he is making four automated
payments to repay the loan in full. The last of these payments will be made in early
December 2016. Tr. at 32-34; Ex. C.
The individual and his wife both testified about their efforts to repay other debts that have failed
because the creditors cannot be located. With respect to a second, older vehicle loan, they have
tried for several years, most recently in March 2016, to complete payment on the note but have
failed to locate the lienholder, which has apparently gone out of business. Tr. at 28-29; Ex. 7
at 3. They have faced similar difficulty regarding one of the payday loans. As recently as
March 2016, they have been referred from office to office, ultimately reaching a non-functioning
phone number, and they have received no written communication from the creditor, so they feel
that they have no way to discuss the loan or negotiate a settlement. Ex. 7 at 4; Ex. 12 at 61-66.
I note that neither of these debts appear on the January 2016 credit report for the individual, even
as charged-off debts. Ex. 4.
The individual’s testimony at the hearing provided a favorable update regarding his repayment of
delinquent federal tax liability. In late April 2016, he and his wife entered into a new agreement
with the IRS to repay their overdue taxes at the rate of $694 per month for five years, beginning
in June 2016. Tr. at 48; Ex. A. He submitted reliable evidence that he has made the scheduled
payments in a timely manner as of the date of the hearing. Ex. B. When completed, the
agreement will resolve all outstanding liability to IRS. Ex. A. The monthly budget the
individual submitted into the record demonstrates that he has sufficient income to meet this
monthly payment. Ex. E. Moreover, he will not incur additional debt with the IRS, because he
now declares no dependents, ensuring a tax refund each year, which will go toward further
reducing his current debt. Tr. at 46.
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) and the Adjudicative Guidelines. After due
deliberation, I have determined that the individual’s DOE security clearance should be granted. I
find that granting 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.
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As an initial observation, I note that the record contains no evidence of the individual living
extravagantly at any time, either during periods of underemployment or now, when his work, and
income, is steady. The debts he acquired arose from used car purchases and paycheck loans
secured when money was tight. His tax liability similarly arose from a short-sighted practice of
over-declaring dependents in order to maximize his take-home income when he had only
sporadic employment. He consistently stated that the only reason he ever had financial problems
was unemployment. See, e.g., Tr. at 40. The facts in this case support his assertion.
I find that the individual’s financial difficulties occurred under circumstances that are unlikely to
recur and do not cast doubt on the individual’s current reliability, trustworthiness, or good
judgment. Adjudicative Guidelines at Guideline F, ¶ 20(a). Their underlying cause was the
individual’s underemployment, a situation that was beyond his control. Id. at ¶ 20(b). That
situation has been rectified by his obtaining his current position at the DOE facility, where he is
no longer subject to the vagaries of employment opportunities available through the union hall.
While underemployed, he may have employed questionable judgment in acquiring payday loans
and declaring 99 dependents, but his rationale was to provide for his family within the
boundaries of the law. He has clearly learned that neither of these approaches was wise in the
long run, and he testified that he will never engage in either practice in the future. Furthermore,
there are clear indications that his financial difficulties are being resolved and are under control.
Id. at ¶ 20(c). The individual has engaged in good-faith efforts to repay overdue creditors. Id. at
¶ 20(d). He has attempted to contact each of the creditors that the LSO identified in its
Notification Letter, with varying results. In two cases, he was unable to communicate with them,
but in two others, including the IRS, he has entered into repayment agreements, and he is
working with the final creditor to resolve a disputed amount of past-due debt. Id. at ¶ 20(e). I
find that he has taken responsibility for his past debts and taken steps to prevent accumulation of
debt in the future. I therefore find that the individual’s behavior, and the record’s reflection of
the individual’s whole person, adequately resolve this concern under Criterion L.
VI. 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 also find that the individual has presented sufficient information to fully
resolve those concerns. Therefore, I conclude that granting the individual’s DOE 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). Accordingly, I find that the DOE should grant the
individual’s DOE access authorization.
The parties may seek review of this Decision by an Appeal Panel, under the regulation set forth
at 10 C.F.R. § 710.28.
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William M. Schwartz
Administrative Judge
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Office of Hearings and Appeals
Date: November 22, 2016