PSH-16-0088

*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: December 5, 2016 ) Case No.: PSH-16-0088
)
__________________________________________)
Issued : March 16, 2017
__________________________
Administrative Judge Decision
__________________________
Wade M. Boswell, Administrative Judge:
This Decision concerns the eligibility of XXXX XXXXX XXXXX (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 not be restored at this time.
I. Background
The individual is employed by a DOE contractor in a position that requires him to hold
DOE access authorization. During his initial security investigation in 2010, the Local
Security Office (LSO) noted that the individual had a number of financial delinquencies
(including two unpaid judgments) and had filed a bankruptcy petition approximately four
years prior to his application for access authorization. See Exhibits 3 and 12. These
financial matters were deemed mitigated and the individual was granted access
authorization. As a holder of DOE access authorization, the individual is subject to periodic
security reinvestigations and, during a recent periodic reinvestigation, the LSO learned that
the individual continued to have outstanding financial delinquencies, including the
judgments that had been noted in 2010. See Exhibit 5. As a result of this information, the
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.
- 2 -
LSO conducted a personnel security interview (PSI) with the individual in April 2016. See
Exhibit 10.
The PSI did not resolve the security concerns arising from the individual’s financial matters
and, on September 27, 2016, the LSO advised the individual in a letter (Notification Letter)
that it possessed reliable information that created substantial doubt regarding his 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 See Exhibit 1.
Upon his receipt of the Notification Letter, the individual exercised his right under the Part
710 regulations by requesting an administrative review hearing. See Exhibit 2. The Director
of the Office of Hearings and Appeals (OHA) appointed me the Administrative Judge in
the case and, subsequently, I conducted an administrative hearing in the matter. At the
hearing, the LSO presented no witnesses; the individual presented the testimony of four
witnesses, including himself. The LSO introduced 12 numbered exhibits3 into the record;
the individual tendered nine lettered exhibits (Exhibits A – I). The exhibits will be cited in
this Decision as “Ex.” followed by the appropriate numeric or alphabetic designation. The
hearing transcript in the case will be cited as “Tr.” followed by the relevant page number.4
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).
An individual must come forward with evidence to convince the DOE that granting or
restoring his or her 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).
2 See Section III below.
3 The LSO’s Exhibits Index lists 13 exhibits; however, the LSO elected not to submit the Office of Personnel
Management security investigation of the individual, which had been listed as Exhibit 13 on the DOE Exhibit
Index. Transcript at 6-7.
4 OHA decisions are available on the OHA website at www.energy.gov/oha. A decision may be accessed by
entering the case number in the search engine at www.energy.gov/oha.
- 3 -
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.
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 cited one criterion as the basis for suspending the
individual’s security clearance, Criterion L. Criterion L concerns information that an
individual has engaged in conduct “which tends to show that the individual is not honest,
reliable, or trustworthy….” 10 C.F.R. § 710.8(l). Conduct involving questionable
judgment, lack of candor, dishonesty, or unwillingness to comply with rules and
regulations can raise questions about an individual’s reliability, trustworthiness and ability
to protect classified information. See Guidelines E and 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). With respect to Criterion L, the LSO alleged, inter
alia, that the individual: (1) had outstanding two judgments, two charge-off accounts and
four collection accounts aggregating $18,683; and (2) had demonstrated financial
irresponsibility by (a) failing to follow through on his assurances in a 2011 PSI that he
would commence payment on four outstanding accounts and (b) acknowledging in a 2010
PSI that the primary reason that he had filed a bankruptcy petition in 2006 was to avoid
financial responsibility on an automobile loan which he had co-signed for a relative. Ex. 1
at 1-2.
In light of the information available to the LSO, the LSO properly invoked Criterion L.
- 4 -
IV. Findings of Fact
Although the individual (through his testimony and written submissions) challenged
certain factual matters alleged in the Notification Letter, his testimony endorsed the
accuracy of most of the financial matters set forth in the Notification Letter. In those
instances where the individual contested matters set forth in the Notification Letter, I have
carefully considered the totality of the individual’s testimony, the entirety of the written
record, and the arguments presented by both the individual and the LSO in reaching the
findings of fact set forth below.
2006 Bankruptcy. The individual co-signed a loan to assist his father in the purchase of a
used automobile. Ex. 12 at 76. The vehicle experienced serious mechanical problems (some
of which the individual assisted in having repaired) and his father fell behind in the loan
payments. Id. at 77. Eventually, his father refinanced the vehicle to incorporate missed
payments and fees for double the amount of the original loan and at an interest rate of
approximately 29% per annum. Id. at 77. When the vehicle experienced additional serious
mechanical issues and the individual’s father was laid-off from his job, his father defaulted
on the loan and the individual did not have the financial resources to meet his obligations
as a co-signer. Tr. at 32-33. On the advice of legal counsel, the individual filed for Chapter
7 bankruptcy protection and his obligations as co-signer of his father’s automobile loan
were discharged pursuant to his bankruptcy petition. Ex. 12 at 74, 79-80; Tr. at 32-33.
2009 Judgment. The individual financed the purchase of a used vehicle, which developed
significant transmission problems prior to his having completed the loan payments. Tr. at
61. He tendered the vehicle to his lender and, in 2009, the lender was awarded a judgment
against the individual for approximately $6,100 for its unrecovered amounts on the loan.
The individual testified that he commenced monthly payments on this judgment in
November 2016 and submitted receipts evidencing three subsequent payments of $100
each. Ex. G at 1; Tr. at 47.
2010 Judgment. The individual vacated an apartment with approximately six months
remaining on the lease in 2009. Tr. at 60-61. The landlord received a judgment against the
individual in the amount of $3,125, representing the full amount of the remaining lease
term. Id. at 45. The individual made a limited number of monthly payments to the landlord
towards this judgement; however, as a result of a change in management of the apartment
complex, the resident agent declined to accept additional payments and the individual
allowed the obligation to lapse. Id. at 61. Following suspension of the individual’s access
authorization, the individual obtained pro bono legal representation to locate the original
counsel to the landlord. See Ex. F. Although the landlord’s counsel negotiated payment
options with the individual, those payments have not commenced. The individual credibly
testified that he has negotiated the option of satisfying the judgment in full for a cash
payment of 60% of the original judgment or making monthly cash payments. Tr. at 46.
Further, the individual credibly testified as to his intent to use his 2016 Federal tax refund
to satisfy this debt; however, he is still waiting to receive his tax refund. While waiting to
receive his tax refund, the landlord’s counsel deferred acceptance of monthly payments
- 5 -
pending court ratification of the payment plan and the individual has filed a motion in local
court to facilitate such monthly payments. Ex. G at 4-6.
Pay Day Loans. The LSO noted two delinquent accounts which the individual stated
originated as “pay day” loans. The individual credibly testified that one (listed as a
collection account) had been fully satisfied significantly prior to the hearing; it appears on
the individual’s most recent credit report as “paid and closed.” Ex. B at 4; Tr. at 43. The
individual testified that the other “pay day” loan (listed by the LSO as a charge-off account)
had been settled for a discounted amount shortly prior to the hearing. Id. at 40-41, 65. The
individual’s documentation with respect to this account corroborates the individual’s
testimony with respect to the amount of his payment, but does not evidence that the creditor
accepted the payment as full satisfaction of the debt. Ex. G at 2.
The individual credibly testified that he no longer uses “pay day” loans and these two were
incurred many years ago (six or seven years ago) before he was employed within the DOE
complex or within the very early period of such employment. Tr. at 43-44.
2010 Automobile Charge-Off. The individual financed the purchase of a used vehicle,
which developed significant engine problems prior to his having completed the loan
payments. He tendered the vehicle to his lender in 2010 and he owes the lender
approximately $7,500 for its unrecovered amounts on the loan. Id. at 38-39, 59. This
account no longer appears on the individual’s credit report, but he acknowledges his
liability for the account. Id. at 40, 63. Prior to the hearing, the individual negotiated to settle
the account at a discounted amount. Ex. A; Tr. at 38-39. Further, the individual credibly
testified as to his intent to use his 2016 Federal tax refund to satisfy this debt. Id. at 64. His
professionally prepared tax return shows an expected refund in excess of the amount
needed to pay the discounted settlement on this account (as well as the discounted amount
negotiated to satisfy the 2010 judgment related to his early termination of an apartment
lease); however, the individual is still waiting to receive his tax refund and the settlement
offer on the automobile charge-off has expired and will need to be renegotiated. Ex. A; Ex.
H.
Medical Collection Accounts. The LSO noted two medical collection accounts, both of
which the individual acknowledges. He believes that one represents emergency room
charges for one of his children and, despite numerous efforts to contact the creditor, the
creditor has not responded to him. Tr. at 42. The second account resulted from a charge
when the individual missed an appointment for a medical test. Id. at 41. Prior to the hearing,
he had negotiated a payment schedule to satisfy this account within six months. Id. His
post-hearing submission reflects that he has accelerated his payments on this account and
the account is nearly 50% paid. Ex. G at 1.
Utility Account. The LSO alleged that the individual had a collection account with a cable
provider in the amount of $340. Ex. 1 at 1. The individual credibly testified this account
was paid several years ago and he continued to utilize this cable provider until he recently
opted to change providers. Tr. at 42, 62-63. No such delinquent account appears on the
individual’s recent credit reports. See Ex. 8; Ex. B.
- 6 -
Credit Counseling; Budget. The individual and his wife completed a money management
and credit workshop in November 2016 and, since then, have met at least monthly with a
credit counselor. Ex. D. At the hearing, the individual’s testimony reflected an
understanding of his finances and an appropriate strategy to resolve his outstanding
financial problems. Tr. at 52. With the assistance of his credit counselor, the individual has
prepared a budget that reflects all of the payment arrangements that he has made with his
creditors (discussed above). Ex. E. He has been living on that budget for several months.
The budget shows that he and his family will have a monthly surplus, even with the
payment plans to his creditors. The budget also contemplates his income only. His wife
had lost her job shortly after the individual’s 2011 PSI and, as a result of their having two
children within a one-year period of time, she was unable to return to work due to the
expense of childcare for two young children. Tr. at 36-37. His wife is now able to resume
employment and plans to do so. Her future income is not reflected in their current budget.
Id. at 52-53.
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)5 and the Adjudicative
Guidelines. After due deliberation, I have determined that the individual’s access
authorization should not be restored at this time. I cannot 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. Mitigating Evidence
In mitigation of the Criterion L security concerns relating to his finances, the individual’s
primary arguments are that: he is incurring no new debt; he either has entered into or is in
the process of entering into payment arrangements with respect to all of his delinquent
accounts; and his present income is sufficient to allow him to meet his present financial
obligations and fulfill the payment arrangements that he has entered into with his creditors.
To the extent that he has not previously satisfied his delinquent financial obligations as he
had committed to do during his 2011 PSI, it is due to the unexpected loss of his wife’s
employment (and income) and the subsequent birth of two children within a one-year
period, which necessitated his wife staying at home to care for their two youngest children.
5 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.
- 7 -
Tr. at 36-37. Additionally, the individual asserts that he and his wife have completed a
money management and credit workshop and, subsequently, have been meeting at least
monthly with a credit counselor and, therefore, will be better positioned to manage their
finances in the future. Ex. D.
For these reasons, the individual argues that he has sufficiently mitigated the security
concerns noted by the LSO under Criterion L.
B. Administrative Judge Evaluation of Evidence
The individual does not contest his liability for the delinquent debts described in the
Notification Letter, although he presented credible evidence that two of those accounts
were resolved prior to the issuance of the Notification Letter. Ex. 8; Ex. B; Tr. at 42-43,
62-63. These debts were primarily incurred prior to, or near the beginning of, the
individual’s employment within the DOE complex in 2010; his only more recent debts are
two medical collection accounts which relate to services received approximately five years
ago. The individual’s credit reports support his testimony at the hearing that he has not
used credit cards or “pay day” loans since 2010 (or earlier). Id. at 43-44.
The Notification Letter cites eight delinquent financial accounts: two had been fully
satisfied prior to the issuance of the Notification Letter; one may have been fully satisfied
prior to the hearing (although the documentation is inconclusive);6 two were subject to
negotiated monthly payment plans that had commenced; two were subject to negotiated
payment arrangements without any payments having yet been made; and, on the final
account, the individual’s efforts to contact the creditor had been unsuccessful. The
individual’s diligence in negotiating and commencing payment plans on two accounts
(including an unpaid judgment) is commendable. The budget presented by the individual
at the hearing appears realistic for his family of seven and reflects his ability to fulfill these
monthly payment plans. See Ex. E.
Notwithstanding the individual’s efforts to resolve these financial matters, he continues to
have three unresolved financial matters. The first is a charge-off account on which the
creditor has agreed to a discounted payment. The individual testified as to his intent to pay
this amount with his 2016 Federal tax refund and he submitted into the record his
professionally prepared tax return to evidence his ability to make such payment. See Ex. I.
However, the creditor’s offer expired prior to the individual receiving his tax refund and,
therefore, new negotiations will need to occur. See Ex. A. There is no certainty that the
creditor will extend sufficiently favorable terms to the individual that will allow him to
immediately satisfy this account.
6 The individual testified that the lender of a “pay day” loan had accepted a partial payment as full satisfaction
of the outstanding debt. Tr. at 40-41, 65. The receipt submitted subsequent to the hearing corroborates the
individual’s testimony with respect to the amount paid, but does not reflect the lender’s acceptance of that
amount as fully satisfying the debt. Ex. G at 2. To the extent that the individual is in error that this debt has
been satisfied, the amount outstanding would be relatively modest (approximately $300) and payment of
such amount is contemplated in the individual’s budget.
- 8 -
The second unresolved matter is a judgment to a prior landlord for the remainder of a lease
term after the individual had vacated a rental unit. The individual’s initial efforts to pay
this judgment failed when a new management agent at the rental complex was not familiar
with the case and declined to accept payment. Tr. at 61. Subsequent to the individual’s
access authorization being suspended, he sought pro bono legal services to resolve this
matter. Ex. F. He testified that the lawyer who had previously represented the landlord had
agreed to accept a 60% immediate payment in full satisfaction of the judgment or a monthly
payment plan. Tr. at 46. The individual’s 2016 Federal tax refund would be sufficient to
make the 60% payment (as well as the discounted amount on the charge-off account
discussed above); however, the individual has not yet received his tax refund. See Ex. I.
His budget also reflects the monthly payments agreed upon by the landlord’s counsel;
however, when the individual attempted to commence such monthly payments, the
landlord’s original lawyer indicated that the payment plan should be approved by the court.
Ex. E; Ex. G at 4-6. To the individual’s credit, he filed a motion in local court seeking such
approval and, as of the closing of the record in this case, had received a hearing date.
Although the individual has made laudable efforts to resolve this account, it remains
unresolved. Until the final terms are approved by the local court, it is unclear if the
individual will succeed in resolving this judgment.
The final unresolved account is a medical collection account for emergency room services
for one of his children. The creditor has not responded to the individual’s request for
information. Tr. at 42. Although the account is for an amount ($380) that the individual
should be able to easily resolve on his current budget, it remains outstanding and
unresolved.
While these three accounts remain unresolved, the individual continues to be vulnerable to
pressure, coercion, exploitation, or duress. See 10 C.F.R. § 710.8(l).
In addition to alleging security concerns arising from the individual’s outstanding
delinquent debt, the Notification Letter also raised security concerns arising from the
individual’s alleged financial irresponsibility. The LSO cited two bases for this allegation.
Ex. 1 at 2. First, the LSO stated that the individual acknowledged during his 2016 PSI that
he failed to commence paying on four delinquent financial accounts, notwithstanding his
commitment to do so during his 2011 PSI. One of those accounts cited was a delinquent
utility account which the individual succeeded in resolving prior to the 2016 PSI. Tr. at 42,
62-63. With respect to the remaining accounts, the individual states that he was unable to
fulfill his commitment as a result of his wife losing her job, subsequent to the 2011 PSI,
and their having two children within a one-year period, which precluded his wife from
returning to work due to the expense of child care. Id. at 36-37. These subsequent events
were events outside of the control of the individual and, notwithstanding his inability to
repay pre-exiting debt, he managed the financial affairs of his seven member family in such
a manner that no significant financial delinquencies exist with respect to the last five years.
Cf. Adjudicative Guidelines at Guideline F ¶ 20(b) (mitigation possible where
circumstances were largely beyond the individual’s control (e.g., loss of employment) and
the individual acted responsibly under the circumstances).
- 9 -
Secondly, the LSO stated that the individual acknowledged in his 2010 PSI that he had
filed for bankruptcy protection in 2006 to “avoid repayment on a vehicle that he had co-
signed on behalf of [his father.]” Ex. 1 at 2. During the 2010 PSI, the individual explained
that the bankruptcy petition was filed on the advice of legal counsel after his father’s used
automobile loan was restructured at approximately double the original principal amount
and at an interest rate of approximately 29% per annum. Ex. 12 at 74-80. Prior to filing for
bankruptcy protection, the individual assisted his father in obtaining major repairs on the
vehicle. Id. at 77. Bankruptcy laws exist in order to allow individuals to legally discharge
debts that they cannot satisfy; under the circumstances described, I find that the bankruptcy
petition that the individual filed over 10 years ago does not reflect financial irresponsibility.
Cf. Adjudicative Guidelines at Guideline F ¶ 20(a).
Additionally, with respect to the individual’s currently delinquent accounts, I note that the
two medical collection accounts are for services received approximately five years ago (or
longer) and that all of the other cited accounts relate to even earlier periods of time. The
individual’s intent to repay this older debt has been frustrated, as discussed above, by his
wife’s loss of income and the birth of their two youngest children. Tr. at 36-37.
Notwithstanding these factors, the individual has provided for a family of seven without
recourse to credit cards or other temporary credit over the prior five years. He and his wife
have attended a money management and credit workshop and are working with a credit
counselor. Ex. D. Of the eight accounts cited in the Notification Letter, five have either
been paid or are in the process of being paid and the individual has articulated a reasonable
plan with respect to satisfying the remaining three accounts. For these reasons, I conclude
that the individual is not currently financially irresponsible and has not been for at least
five years and, therefore, the individual has resolved the security concerns with respect to
financial irresponsibility.
However, as discussed above, the individual continues to be vulnerable to pressure,
coercion, exploitation, or duress as a result of his three unresolved delinquent financial
accounts and, therefore, I find that the individual has not resolved the security concerns
associated with Criterion L arising from those accounts.
V. Conclusion
In the above analysis, I have found that the individual has sufficiently mitigated certain of
the matters alleged with respect to Criterion L. Notwithstanding such mitigation, other
derogatory information in the possession of the DOE raises different serious security
concerns under Criterion L and, 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
not brought forth sufficient evidence to resolve all of these security concerns. Accordingly,
I have determined 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 under the
regulations set forth at 10 C.F.R. § 710.28.
- 10 -
Wade M. Boswell
Administrative Judge
Office of Hearings and Appeals
Date: March 16, 2017