PSH-16-0074

*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: September 19, 2016 ) Case No.: PSH-16-0074
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Issued: January 11, 2017
Administrative Judge Decision
Janet R. H. Fishman, Administrative Judge:
This Decision concerns the eligibility of XXXX XXXX XXXXX., (“the Individual”) for access
authorization under the Department of Energy’s (DOE) regulations set forth at 10 C.F.R. Part 710,
Subpart A, 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 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. The Local Security Office (LSO) received potentially derogatory information
regarding the Individual’s failure to file and pay federal income taxes. In order to address those
concerns, the LSO summoned the Individual for an interview with a personal security specialist in
June 2016.
On August 11, 2016, 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. See 10 C.F.R. § 710.21. In the Notification Letter, the LSO explained that the
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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derogatory information fell within the purview of one potentially disqualifying criterion set forth
in the security regulations at 10 C.F.R. § 710.8(l) (hereinafter referred to as Criterion L).2
After receipt of the Notification Letter, the Individual exercised his right under the Part 710
regulations to request an administrative review hearing. The LSO forwarded this request to the
Office of Hearings and Appeals (OHA), and the OHA Director appointed me as the Administrative
Judge. At a hearing convened pursuant to 10 C.F.R. § 710.25 (e) and (g), the DOE introduced
nine exhibits (DOE Exs. 1-9) into the record. The Individual presented his own testimony and the
testimony of his tax advisor. See Transcript of Hearing, Case No. PSH-16-0072 (Tr.).
II. Regulatory Standard
The criteria for determining eligibility for security clearances set forth at 10 C.F.R. Part 710
dictates that, in these proceedings, an Administrative Judge must undertake a careful review of all
of the relevant facts and circumstances, and make a “common-sense judgment . . . after
consideration of all relevant information.” 10 C.F.R. § 710.7(a). I must therefore consider all
information, favorable and unfavorable, that has a bearing on the question of whether granting or
restoring a security clearance would compromise national security concerns. Specifically, the
regulations compel me to consider the nature, extent, and seriousness of the Individual’s conduct;
the circumstances surrounding the conduct; the frequency and recency of the conduct; the age and
maturity of the Individual at the time of the conduct; the absence or presence of rehabilitation or
reformation and other pertinent behavioral changes; the likelihood of continuation or recurrence
of the conduct; and any other relevant and material factors. 10 C.F.R. § 710.7(c).
A DOE administrative proceeding under 10 C.F.R. Part 710 is “for the purpose of affording the
individual an opportunity of supporting his [or her] 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.” 10 C.F.R. § 710.27(d). This standard implies
that there is a presumption against granting or restoring a security clearance. 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); see also Dep’t of the Navy v.
Egan, 484 U.S. 518, 531 (1988) (“clearly consistent with the national interest” standard indicates
“that security determinations should err, if they must, on the side of denials”).
III. Notification Letter and Associated Security Concerns
As previously noted, the LSO cites Criterion L as the basis for suspending the Individual’s security
clearance. The Criterion L derogatory information that the LSO relies upon is the Individual’s
failure to file and pay his 2007, 2008, 2012, 2013, and 2014 federal income taxes. DOE Ex. 1; see
2 Criterion L refers to information indicating 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, criminal behavior, a pattern of financial irresponsibility, conflicting allegiances, or violation of any
commitment or promise upon which DOE previously relied to favorably resolve an issue of access authorization
eligibility.” 10 C.F.R. § 710.8(l).
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DOE Ex. 8 at 10-13, 13-24, 26-33, 38-40. The failure to file annual Federal, state, or local income
tax returns as required may indicate poor self-control, lack of judgment, or unwillingness to abide
by rules and regulations, all of which can raise questions about an individual’s reliability,
trustworthiness, and ability to protect classified information. Revised Adjudicative Guidelines for
Determining Eligibility for Access to Classified Information, The White House (December 19,
2005), Guideline F, at ¶ 19 (g) (Adjudicative Guidelines).
IV. Hearing Testimony and Evidence
The Individual does not dispute the accuracy of the information cited in the Notification Letter.
During a June 2016 Personnel Security Interview (PSI), the Individual admitted that he had not
filed his 2012, 2013, and 2014 federal income taxes. DOE Ex. 1; DOE Ex. 8 at 10-13, 13-24, 26-
33, 38-40. During the PSI and at the hearing, the Individual testified that he filed his 2007 and
2008 income tax returns, but the IRS never withdrew the money from his account. DOE Ex. 8 at
10-13; Tr. at 8, 35. He stated that he used the same tax preparer both years. Tr. at 7-8. His current
tax advisor testified that she knew his previous tax preparer, who is an enrolled agent and registered
tax preparer. Tr. at 34-35. She opined very strongly that the Individual’s previous tax preparer
did file the Individual’s tax returns. Tr. at 34-35, 47. She stated that it is very common for the
IRS to lose tax returns, especially ones that are filed electronically. Tr. at 35.
As to the Individual’s 2012, 2013, and 2014 tax returns, both he and his current tax advisor testified
that he had formed a limited liability corporation (LLC), which made his return more difficult. Tr.
at 26, 40. In addition to the added complexity of having the LLC, the Individual’s wife and son
were not cooperating regarding information required for his tax returns. Tr. at 20, 40, 53. The
Individual and his current tax preparer both also testified that he approached other tax preparers to
help him file his returns, but the other tax preparers did not follow through, some after taking the
fee to prepare the return. Tr. at 36, 40, 44.
As of the date of the hearing, the Individual has filed all his tax returns, paid all the taxes due and
is on a payment plan for the penalty and interest that may be due. Tr. at 15-16, 43; DOE Ex. 2.
He is presently waiting to hear from the IRS regarding the amount of penalty and interest that will
be owed. Tr. at 43; DOE Ex. 2. However, the tax advisor stated that it is her opinion that he will
not be required to pay penalties and interest and will get a refund once the IRS processes his
returns. Tr. at 43.
The tax advisor also stated that, although the Individual and his wife are separated, he needs
cooperation from his wife that he was not getting. Tr. at 40. The Individual’s situation was further
exacerbated due to that fact that his son was in legal trouble and the Individual’s wife was hiding
the situation from the Individual. Tr. at 40. The tax advisor concluded that the Individual has been
extremely cooperative since he first consulted with her in June 2016. Tr. at 45.
V. Administrative Judge’s Findings and 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 access authorization should be restored. I find that restoring the
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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.
As an initial matter, I find that the LSO has properly raised security concerns under Criterion L
regarding the Individual’s failure to file his federal taxes. A failure or inability to 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 can raise questions about an individual’s reliability,
trustworthiness, and ability to protect classified information. Adjudicative Guidelines, ¶ 18. A
condition which may raise a security concern would be the failure to file annual Federal income
tax returns. Adjudicative Guidelines, ¶ 19 (g).
In considering whether the Individual has resolved the properly raised security concerns, I must
look to the Adjudicative Guidelines in evaluating the evidence before me. The relevant paragraph
lists conditions that could mitigate the Criterion L security concern, including:
(a) the behavior happened so long ago, was so infrequent, or occurred under such
circumstances that it is unlikely to recur and does not cast doubt on the individual’s
current reliability, trustworthiness, or good judgment;
(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 (a), (c)-(d).
Given the above factors, I find that the Individual has resolved the security concerns raised by the
LSO.
Regarding the Individual’s failure to file his 2007 and 2008 Federal tax returns, the Individual and
his tax advisor testified that the returns were filed properly and on time. There is no evidence to
show that the Individual had not filed his taxes prior to 2007 and in fact, he filed his 2009, 2010,
and 2011 tax returns in a timely manner. The Individual’s tax advisor testified that it is common
for the IRS to lose tax returns and she was not surprised that it claimed not to have received his
returns. At the time of the hearing, both tax returns had been filed and the taxes paid. Regarding
the Individual’s failure to file his 2012, 2013, and 2014 Federal tax returns, the Individual and his
tax advisor both testified that he did not know how to account for a Limited Liability Corporation
(LLC), which started in 2012. Further, they both testified that he was not getting all the
information regarding that LLC that he needed to file his taxes. The Individual did consult with
other tax preparers, who could not help him with those tax years. Further, the record reflects that
he consulted his current tax preparer prior to receiving the Notification Letter. Due to the fact that
the Individual is current on filing his tax returns, I find that he has satisfied paragraphs 20 (a), (c),
and (d), above.
Based on the foregoing, I find that he has resolved the concerns related to his 2007, 2008, 2012,
2013, and 2014 Federal taxes.
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VI. Conclusion
In the above analysis, I have found that there was derogatory information in the possession of the
DOE that was sufficient to raise 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 resolve the associated security concerns. 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.
Janet R. H. Fishman
Administrative Judge
Office of Hearings and Appeals
Date: January 11, 2017