PSH-19-0036

*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: July 8, 2019 ) Case No.: PSH-19-0036
)
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Issued: September 27, 2019
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Administrative Judge Decision
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Kimberly Jenkins-Chapman, Administrative Judge:
This Decision concerns the eligibility of XXXXXXXXXXX (the Individual) to hold an access
authorization under the United States Department of Energy’s (DOE) regulations, set forth at 10
C.F.R. Part 710, “Procedures for Determining Eligibility for Access to Classified Matter and
Special Nuclear Material.”1 As discussed below, after carefully considering the record before me
in light of the relevant regulations and the National Security Adjudicative Guidelines for
Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive
Position (June 8, 2017) (Adjudicative Guidelines), I conclude that the Individual should not be
granted access authorization.
I. BACKGROUND
A DOE contractor employs the Individual in a position that requires him to hold a security
clearance. On October 12, 2017, the Individual completed an electronic Questionnaire for
Investigations Processing (e-QIP). Ex. 7 at 50. The Individual disclosed on the e-QIP that he had
twice filed for Chapter 13 bankruptcy and that he owed over $63,000 in unpaid federal and state
personal income taxes, but claimed that he had not been delinquent with respect to any routine
accounts in the seven years prior to completing the e-QIP. Id. at 42–47. However, during a
background investigation of the Individual, the Office of Personnel Management (OPM)
discovered that the Individual failed to disclose numerous delinquent accounts. Ex. 8 at 70–73.
As part of its evaluation of the Individual’s eligibility for a security clearance, the local security
office (LSO) issued a letter of interrogatory (LOI) to the Individual to provide him with the
opportunity to address the concerns raised by the e-QIP and the OPM background investigation.
Ex. 4. The Individual’s response to the LOI did not resolve the security concerns, and the LSO
informed the Individual, in a letter dated March 11, 2019 (Notification Letter), that it possessed
reliable information that created substantial doubt regarding the Individual’s eligibility to hold a
1 The regulations define access authorization 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). This
Decision will refer to such authorization as access authorization or security clearance.
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security clearance. In an attachment to the Notification Letter, the LSO explained that the
derogatory information raised security concerns under Guideline F (Financial Considerations) of
the Adjudicative Guidelines. Ex. 1.
The Individual exercised his right to request an administrative review hearing pursuant to 10 C.F.R.
Part 710. Ex. 2. The Director of the Office of Hearings and Appeals (OHA) appointed me as the
Administrative Judge in this matter, and I subsequently conducted an administrative hearing
regarding the matter. The LSO submitted eight numbered exhibits (Ex. 1–8) into the record, and
the Individual submitted forty-seven lettered exhibits (Ex. A–T1).2 The Individual presented the
testimony of nine witnesses, including his own testimony.
II. THE NOTIFICATION LETTER AND THE ASSOCIATED SECURITY CONCERNS
The LSO cited Guideline F (Financial Considerations) of the Adjudicative Guidelines as the basis
for denying the Individual a security clearance. Ex. 1.
Failure to live within one’s means, satisfy debts, and meet financial obligations may indicate poor
self-control, lack of judgement, or unwillingness to abide by rules and regulations. Adjudicative
Guidelines at ¶ 18. In invoking Guideline F, the Notification Letter indicated that the Individual:
was subject to federal and state tax liens totaling $63,341; incurred $75,518 in charged-off debts;
and was delinquent on an account on which he owed $1,204. Ex. 1 at 1–2. The Individual’s inability
or unwillingness to satisfy debts, history of not meeting financial obligations, and failure to pay
state and federal taxes justify the LSO’s invocation of Guideline F in the Notification Letter.
Adjudicative Guidelines at ¶ 19(a)–(c), (f).
III. REGULATORY STANDARDS
A DOE administrative review proceeding under Part 710 requires me, as the Administrative Judge,
to issue a Decision that reflects my comprehensive, common-sense judgment, made after
consideration of all of 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). 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 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). 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
2 The Individual designated exhibits showing an initial action with an identifying letter, and exhibits showing activity
related to that initial action, such as a subsequent payment or follow-up communication, with the same letter and a
number. For example, a payment agreement might be labeled Ex. A, and payments made pursuant to the agreement
might be labeled Ex. A1, Ex. A2, and so forth.
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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.
IV. FINDINGS OF FACT
The Individual disclosed on the e-QIP that he had filed for bankruptcy under Chapter 13 of the
Bankruptcy Code in 2014 and 2016, but that both filings had been dismissed. Ex. 7 at 42–43. The
Individual admitted that he owed over $33,000 in U.S. personal income taxes and over $4,000 in
state personal income taxes for the 2016 tax year, and asserted that his income was “only enough
to pay current obligations,” and that he could not afford to pay personal income taxes. Id. at 45–
46. The Individual also disclosed that he had failed to pay state income taxes for the 2009, 2010,
2011, and 2012 tax years, and indicated that he had tried to have these tax obligations discharged
through bankruptcy but that his bankruptcy petitions had been dismissed. Id. at 44–45.
The Individual checked a box on the e-QIP indicating that he had not experienced delinquency
involving routine accounts in the seven years prior to the date that he completed the e-QIP. Id. at
46–47. However, a credit report obtained by OPM during its background investigation of the
Individual identified numerous delinquent accounts. Ex. 8 at 233–39. The credit report also
revealed $63,341 in federal and state tax liens against the Individual stemming from his unpaid
personal income taxes. Id. at 231–32. In addition to the credit report, OPM obtained the bankruptcy
petitions filed by the Individual which showed that his income exceeded his obligations. On his
2016 petition for bankruptcy, the Individual reported $15,500 in gross monthly income and a net
monthly income of $2,476 after expenses. Id. at 121, 124. On his 2014 petition for bankruptcy, the
Individual reported $12,262 in gross monthly income and a net income of $88 after expenses. Id.
at 186, 189. When asked for an explanation for his financial issues by an OPM investigator, the
Individual reported that he lived outside of his means because his wife liked to maintain “a certain
lifestyle.” Id. at 73–74.
On November 28, 2018, the LSO issued a letter of interrogatory to the Individual to provide him
with the opportunity to clarify his financial situation. Ex. 4 at 1. In his response, the Individual
indicated that, other than contacting the taxing authorities about the possibility of a settlement, he
had not taken any action to resolve the federal or state tax liens. Id. at 8–11. With respect to the
delinquent debts identified from his credit report, the Individual reported that some charged-off
debts were resolved through the negotiated surrender of collateralized vehicles, and that he
intended to pay several others. Id. at 8–10. With respect to the only delinquent debt not yet charged
off, the Individual indicated that he had retained a credit repair service to assist him in negotiating
a settlement. Id. at 9–10. The Individual attributed his financial problems to “poor spending habits,
blatant money mismanagement, [and] unemployment.” Id. at 10.
At the hearing, several of the Individual’s supervisors and co-workers testified as to his outstanding
work ethic, reliability, and personal character. Tr. at 12–13, 21–22, 34, 39–40, 56–57. One of the
Individual’s co-workers testified that the Individual had manifested a resistance to learning about
financial management and taking steps to improve his financial position in the past, but that the
Individual had recently shown signs of genuine change and accepted the importance of financial
freedom. Id. at 48–49. Several of the Individual’s witnesses, including his mother and a friend of
twenty-five years, testified that they had observed the Individual living “lavishly” in the past, but
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had believed that the Individual’s earnings were enough to support his lifestyle. Id. at 26–28, 63,
66–67.
The Individual’s wife testified that the Individual acted as the head of the household, and that she
was unaware that the family was experiencing serious financial problems until 2014. Id. at 74–77,
81. The Individual’s wife indicated that she had taken a job to pay for some household expenses.
Id. at 85; see also Ex. 2 at 15 (indicating that the Individual’s wife pays for home and auto insurance
and groceries). The Individual’s wife expressed that she prefers to drive luxury vehicles, but was
abstaining from purchasing one at this time due to the family’s financial difficulties. Tr. at 85, 89.
The Individual’s wife also testified as to her intention to purchase a new luxury vehicle as soon as
she saved sufficient money from her job. Id. at 91.
The Individual testified that his financial problems began in 2004 when he changed employers and
began to fall behind on payments for his family’s home and luxury automobiles. Id. at 106–07. The
Individual’s financial problems grew when he failed to adequately withhold taxes from his
paycheck and took an early distribution from his 401(k) account without accounting for the tax
consequences. Id. at 112–13. The Individual subsequently resorted to pawning possessions and
taking payday loans to make ends meet. Id. at 126, 144. The Individual continued to purchase
luxury vehicles despite recognizing the instability of his financial position and having to move out
of his home due to foreclosure. Id. at 111, 115–16. Eventually, the Individual pursued Chapter 13
bankruptcy, but the bankruptcy proceeding was dismissed after the Individual’s employment was
terminated based on a verbal altercation with another employee and he could no longer make the
payments required under the bankruptcy plan. Id. at 102–03, 107–08.
According to the Individual, he made repeated efforts to arrange payment plans for his unpaid taxes
but found the monthly payments proposed by his state taxing authority unacceptably high and the
wait times to speak with an IRS representative by phone too lengthy. Id. at 110, 119–20. By June
2019, the Individual’s combined state and federal tax liability had increased to $87,198. Ex. 2 at 8;
Ex. B. In July 2019, the Individual successfully reached an IRS representative and entered into an
installment agreement pursuant to which he is to make monthly payments of $650 for seventy-two
months. Ex. A at 3. As of the date of the hearing, the Individual had made two payments to the IRS
pursuant to the installment agreement. Ex. A1; Ex. A3. The Individual also asserted that he had
entered into a repayment agreement with a collection agency acting on behalf of the state taxing
authority, pursuant to which he was to make monthly payments of $350 for forty-two months. See
Ex. B (an unsigned letter from a law firm indicating that the Individual had agreed to a payment
agreement); see also Ex. B4 (a notarized one-page letter signed by the Individual stating that he
will pay the state taxing authority pursuant to a payment agreement). The Individual provided
documentation of three debit card transactions through his bank which he alleged were payments
made pursuant to the payment plan. Ex. B1; Ex. B2; Ex. B3.
On the subject of his delinquent accounts, the Individual asserted that most of the debts identified
by the LSO had been discharged through bankruptcy. Tr. at 132–42; see also Ex. 2 at 4 (identifying
vehicles surrendered by the Individual to satisfy debts); see also Ex. L2 (credit report indicating
that several of the debts identified by the LSO had been dismissed as of August 2019). The
Individual also provided evidence that he had paid the three smallest debts identified by the LSO.
Ex. C; Ex. D; Ex. O. However, the Individual acknowledged that he was not sure of the status of
all of his debts, and that he may have to make payments in the future on some debts currently in
dispute. Tr. at 135–36, 140–142 (testifying that he is unsure of the status of one of his debts in
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dispute, but that “[n]o one is actively coming after [him]”); see also Ex. 2 at 2 (indicating that he
was disputing three debts totaling $27,017).
According to the Individual, he “did not give any credence” to his financial obligations in the past,
but now that his financial standing “mattered” with respect to his employment he was “following
and being compliant.” Id. at 117–18. The Individual testified that the steps he had taken to address
his financial issues included working as much overtime as was available to earn extra income,
pursuing credit counseling with a not-for-profit organization, abstaining from purchasing
additional vehicles for himself or his wife, and withdrawing over $10,000 from his 401(k) account
to pay debts. Id. at 160–61, 165–66, 171–72, 177–78. The Individual estimated that, as of the date
of the hearing, he had between $3,000 and $4,000 remaining in his 401(k) and $2,000 in cash with
no other savings. Id. at 172–74.
At the hearing, the Individual estimated that his monthly income, not including overtime, was
approximately $4,100 after tax withholding and deductions. Id. at 177–78. The Individual
estimated that his monthly expenses totaled $4,125. Id. at 189–90; see also Ex. 2 at 15 (budgeting
$3,825 in expenses per month based on an estimate that understated the Individual’s IRS repayment
plan by $300). The Individual’s budget did not include any estimated expenditures for common
expenses, such as household toiletries and supplies, medical expenses, grooming, or clothing. Ex.
2 at 15. The budget also relied upon the forbearance or deferment of the Individual’s student loans,
the principal of which totaled $116,210. Id.; Ex. R; Ex. R.1.
V. ANALYSIS
A. Guideline F
An individual may mitigate security concerns under Guideline F if 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; 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
financial counseling; the individual initiated and is adhering to a good-faith effort to repay overdue
creditors or otherwise resolve debts; the individual has a reasonable basis to dispute the legitimacy
of the past-due debt which is the cause of the problem and provides documented proof to
substantiate the basis of the dispute or provides evidence of actions to resolve the issue;
unexplained affluence resulted from a legal source of income; or the individual has made
arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance
with those arrangements. Guideline F at ¶ 20(a)–(g).
In this case, I am not convinced that the financial issues giving rise to the security concerns will
not recur. The repayment agreements the Individual entered into with the IRS and his state taxing
authority, efforts to resolve his other debts, and decision to pursue credit counseling from a not-
for-profit entity to bring his financial problems under control are all potentially mitigating
conditions under Guideline F. Adjudicative Guidelines at ¶ 20(c)–(d), (g). However, the
Individual’s efforts are too recent for me to conclude that the Individual has satisfied the mitigating
conditions, and his plans for stabilizing his financial situation are precarious and underdeveloped.
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In order to resolve his substantial tax liability, the Individual will need to develop a sustainable
budget that will allow him to make payments for up to the seventy-two month term of his IRS
repayment plan. The budget provided by the Individual, which omits clothing, medical expenses,
household goods, and other necessities, is not sufficiently developed for me to conclude that the
Individual has such a plan. The budget also relies in small part on the participation of the
Individual’s wife, whose testimony did not lead me to believe that she has fully accepted the
lifestyle changes that the Individual is trying to effectuate in the household. If any one of many
adverse events should occur, such as the Individual’s unaccounted expenses being greater than he
perceives them to be, opportunities for overtime diminishing, his substantial student loan debts not
remaining in forbearance, the taxes he owes on his latest 401(k) withdrawal exceeding his
withholding from his paycheck, the debts he is currently disputing resulting in additional liabilities,
or the occurrence of any unexpected event resulting in a significant expense, he will likely find
himself unable to meet his financial obligations once again.
Furthermore, the Part 710 regulations require me to take into account the age and maturity of the
Individual at the time that he engaged in the conduct giving rise to the security concerns, the nature,
extent, and seriousness of the conduct, and the frequency and recency of the conduct. 10 C.F.R.
§ 710.7(c). The Individual is over fifty years of age, owed as much as $96,000 in unpaid taxes until
a few weeks before the hearing, and has experienced financial problems due to reckless spending
continuously for at least fifteen years. In light of the Individual’s maturity, the lengthy pattern of
his financial irresponsibility, and the amount of his tax liability, more time is needed before the
Individual’s efforts will be sufficient to establish the mitigating conditions set forth under Guideline
F.
While the Individual has taken important first steps towards improving his financial condition, the
Individual has not established a sufficient record of financial responsibility for me to conclude that
he has resolved the security concerns asserted by the LSO under Guideline F.
VI. CONCLUSION
In the above analysis, I found that there was sufficient derogatory information in the possession of
the DOE that raised security concerns under Guideline F of the Adjudicative Guidelines. After
considering all of 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 find that the Individual has not brought forth sufficient evidence to resolve the security
concerns set forth in the Notification Letter. Accordingly, I have determined that the Individual
should not be granted access authorization. Either party may seek review of this Decision by an
Appeal Panel pursuant to 10 C.F.R. § 710.28.
Kimberly Jenkins-Chapman
Administrative Judge
Office of Hearings and Appeals