Case No. VSO-0153, 26 DOE ¶ 82,795 (H.O. Freimuth September 30, 1997)

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* 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 XXXXXXX's.

September 30, 1997

DEPARTMENT OF ENERGY

OFFICE OF HEARINGS AND APPEALS

Hearing Officer's Opinion

Name of Case: Personnel Security Hearing

Date of Filing: April 17, 1997

Case Number: VSO-0153

This Opinion concerns whether XXXXXXXXXX (hereinafter "the Individual") is eligible for access authorization. As explained below, I recommend that the Individual be granted access authorization.

I. Background

A. The Applicable Regulations

The Department of Energy (DOE) regulations governing this matter are set forth at 10 C.F.R. Part 710 ("Criteria and Procedures for Determining Eligibility for Access to Classified Matter or Special Nuclear Material"). As the title indicates, these regulations specify the criteria and the procedures for determining whether an individual is eligible for access to classified matter or special nuclear material. The determination that an individual is eligible for such access is referred to as "access authorization" or a "security clearance."

An individual is eligible for access authorization if such authorization "would not endanger the common defense and security and would be clearly consistent with the national interest." 10 C.F.R. § 710.(7)(a). The regulations contain criteria which identify the principal types of derogatory information that create

a question as to eligibility. Id. § 710.7(b). The ultimate decision concerning eligibility is a comprehensive, common sense judgment based on a consideration of all relevant information. Id. § 710.7(a), (c). Such information includes the nature of the conduct at issue, the absence or presence of reformation or rehabilitation, and the impact of the foregoing on the relevant security concerns. Id. § 710.(7)(a), (c).

When there are unresolved issues concerning an individual's eligibility for access authorization, the matter is referred for "administrative review." 10 C.F.R. § 710.20. The purpose of administrative review is to afford the individual the opportunity to resolve those questions. 10 C.F.R. § 710.21(b). Thus, the burden is on the individual to present testimony or evidence to demonstrate that 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(b). This standard is designed to protect the national interest and thus differs from the standard applicable to criminal proceedings in which the prosecutor must prove guilt beyond a reasonable doubt.

B. This Proceeding

In 1995, the Individual signed and dated a Standard Form 86, "Questionnaire for Sensitive Positions for National Security" (the QSP). In March through May 1996, the Office of Personnel Management (OPM) interviewed the Individual and issued a report (the OPM Report). In September 1996, a DOE security specialist conducted a Personnel Security Interview (the PSI) of the Individual. The transcript of the PSI will be cited as "PSI Tr. at ___."

In March 1997, the DOE office responsible for determining the Individual's eligibility for access authorization (the DOE office) commenced this administrative review proceeding by issuing a Notification Letter to the Individual. The Notification Letter stated that the DOE office possessed information that created a substantial doubt concerning the Individual's eligibility for access authorization. The Notification Letter stated that the information indicated a pattern of financial irresponsibility, which raises a concern under 10 C.F.R. § 710.8(l) (Criterion L) that the Individual is not "honest, reliable or trustworthy" or may be subject to "exploitation." The Notification Letter also stated that the Individual's QSP did not list his financial delinquencies that exceeded 180 days, as required by the form, which raises a security concern under 10 C.F.R. § 710.8(f) (Criterion F) that the Individual is not honest.

In response to the Notification Letter, the Individual requested a hearing, and I was appointed the Hearing Officer. In accordance with 10 C.F.R. § 710.25(e) and (g), a hearing was held. The Hearing transcript will be cited as "Hrg. Tr. at __."

Three witnesses testified at the hearing. Two witnesses were called by the DOE office. The first was the DOE security specialist. The second was a DOE security official. The Individual testified on his own behalf. The DOE office and the Individual submitted written evidence. The record was closed on September 22, 1997.

The relevant facts are not in dispute.

C. Relevant Facts

Many of the relevant facts are reflected in various credit reports contained in the record. The most recent credit report in the record is DOE Exhibit 28.

Prior to April 1993, the Individual resided with his parents. DOE Ex. 21 at 2. At that time, the Individual had a pre-existing obligation to repay a student loan. Id. at 1-2.

In April 1993, the Individual purchased a home. DOE Ex. 28 at 1. The Individual financed his home purchase through a mortgage loan. Id. In October 1993, the Individual opened a charge account at a local department store. Id. at 1. The Individual stated that he used the account to finance the purchase of a stereo and television, and other consumer items. PSI Tr. at 40-41. It appears that those purchases totaled approximately $2000. DOE Ex. 28.

In April 1994, the Individual obtained a $6,000 loan in order to purchase a seven-year old car. June 17, 1997 Submission at 4 (car title). Also, in 1994, he made purchases of household items through two mail order charge accounts, which totaled approximately $200. DOE Exs. 16 & 28.

At the end of 1994, the Individual was delinquent on some of his financial obligations, i.e., a 1994 traffic ticket and the amounts due on the mail order accounts. DOE Exs. 16 & 28. In April 1995, the Individual was delinquent on the foregoing as well as the department store charge account and a $600 balance on his 1994 federal income taxes. DOE Exs. 5, 15, 16, 28. Interest on the department store charge account was accruing at the rate of 21.6 percent per annum. DOE Ex. 7. In April 1996, the Individual's 1995 federal tax refund satisfied the balance owing for 1994, but the Individual remained delinquent on the other obligations. DOE Exs. 5, 16, 28. The Individual was also delinquent on his 1995 state income taxes, his 1995 traffic and parking tickets, and his student loan. DOE Exs. 8, 14, 23 at 2. During this time period, the Individual wrote two checks that were returned for insufficient funds. The Individual attributed the problem to not balancing his checkbook and began using money orders in lieu of checks. PSI Tr. at 58; June 17, 1997 Submission at 2, 7, 8, 9.

During the time that the foregoing delinquencies arose, the Individual continued to make his mortgage payment. DOE Ex. 28. The Individual also made sporadic payments on his department store charge account and his student loan. DOE Ex. 23 at 13, 15. The Individual contacted the department store and stated his intent to pay his debt when he was able. Id. at 13. The Individual received a forbearance on his student loan during the period February 1995 to November 1995. Id. at 15.

In June 1995, the Individual signed and dated a QSP. DOE Ex. 21. The QSP asks whether the individual is over 180 days delinquent on any financial obligation. The Individual answered "no." At the time, the Individual was over 180 days delinquent on the 1994 traffic ticket and the two small mail order accounts. DOE Ex. 28.

The record indicates that, in March 1996, a security staff member obtained confirmation from the Individual that the information on his June 1995 QSP was still correct. The Individual's June 1995 QSP contains the initials of a security staff member and a March 1996 date. The record also contains a "Certification of Amended Investigation Form," signed by the security staff member. Ex. 22. The security specialist testified that the processing of the Individual's QSP was delayed because OPM required additional justification for a security clearance for the Individual's position. The security specialist testified that in such instances, it is common practice for a security staff member to telephone an individual and ask if there have been any changes in the information reported on the form. The security specialist testified that the lack of any noted changes indicate that the Individual told the staff member that there were no changes. As of March 1996, the Individual had a number of financial obligations that were over 180 days delinquent. They included the obligations that were over 180 days delinquent as of June 1995, i.e., the 1994 traffic ticket and the two mail order accounts, as well as the department store charge account and the 1995 parking and traffic tickets. DOE Ex. 28.

In March 1996, an investigator from OPM interviewed the Individual. The OPM Report is DOE Exhibit 23. The OPM Report indicates that the Individual made detailed disclosure of his financial problems to the OPM investigator. Hrg. Tr. at 39-41 (testimony of security specialist).

During the September 1996 PSI, the Individual discussed his financial delinquencies. With respect to the accumulation of debt that resulted in the delinquencies he stated, "I've learned my lesson, and I definitely won't make that mistake again." PSI Tr. at 63. The Individual provided receipts showing that he had recently paid the amount owing on his 1995 parking and traffic tickets, which had doubled as the result of his failure to pay the tickets when originally due. PSI Tr. at 23; DOE Ex. 8. The Individual stated that he intended to repay all of his remaining obligations as soon as he was able. PSI Tr. at 53, 71. The Individual stated that he still owed the small debts because he was attempting to pay the larger debts first. Id. at 50. The Individual stated that he had sought to supplement his income with a second job, but thus far had been successful in obtaining only sporadic work. Id. at 53; see also DOE Ex. 16 at 2 (OPM verification of outside employment listed in DOE Ex. 21 at 3). The Individual produced a financial statement showing $15,000 in indebtedness, exclusive of his mortgage loan. DOE Ex. 11. Of that $15,000, almost $12,000 was attributable to three obligations: a student loan ($8500), a car loan ($1500), and 1996 state taxes ($1900). Id. The financial statement further indicated that the Individual had a $200 monthly shortfall of income necessary to pay his obligations. Id. With respect to the omissions from his QSP, the Individual stated that any omissions were not intentional. PSI Tr. at 74. At the conclusion of the PSI, the DOE security specialist gave the Individual information on credit counseling. See id. at 60-62; Notification Letter, Encl. at II.I.

In October 1996, the Individual provided to the security specialist a copy of his application for credit counseling. DOE Ex. 10. In November 1996, the security specialist contacted the Individual, who stated that he had canceled his appointment for credit counseling. Notification Letter, Encl. at II-I. The Individual told the security specialist that he intended to continue to pursue a second job as the solution to his financial problems. Id.

After the November 1996 conversation, the DOE security specialist recommended that the Individual's eligibility for access authorization be referred to administrative review. DOE Ex. 2 at 2. Accordingly, in March 1997, the DOE office issued the Notification Letter, which cited (i) the financial delinquencies as derogatory information under Criterion L and (ii) the failure to disclose certain delinquencies on the QSP as derogatory information under Criterion F.

Between the time of the Individual's November 1996 conversation with the security specialist and the issuance of the Notification Letter, the Individual obtained a second job from a former employer. The record contains pay stubs showing that the Individual earned $1,000 in March and another $1,000 in May. June 17, 1997 Submission at 8.

Over the period from September 1996 to July 1997, the Individual addressed his financial delinquencies.

· As indicated above, in September 1996, the Individual paid his 1995 traffic and parking tickets, which had doubled as a result of his failure to pay them in a timely manner. DOE Ex. 8.

· In April 1997, the Individual (i) satisfied his mail order charge card debts and (ii) entered into an agreement for the payment of his indebtedness on his department store charge account and his student loans. June 17, 1997 Submission at 1- 3; July 10, 1997 Submission at 2, 5; September 12, 1997 Submission.

· In May 1997, the Individual made the final $200 monthly payment on his car loan. June 17, 1997 Submission at 3-4.

· In June 1997, the Individual (i) made two $500 payments on his delinquent 1996 state taxes and (ii) paid the amount owing on his 1994 traffic ticket, which had doubled as the result of his failure to make payment when originally due. June 17, 1997 Submission at 9; July 10, 1997 Submission at 6, 7; DOE Ex. 23 at 12.

By the end of June 1997, the Individual had cured all of the delinquencies, with the exception of the remaining $400 owing on his 1995 state taxes. As indicated above, during June 1997, the Individual had made two $500 payments on his state taxes. These payments, together with an offset of his 1996 refund, reduced the aggregate amount owing from $2200 ($1500 in assessed tax plus $700 in interest and penalties) to $400. June 17, 1997 Submission at 9; July 10, 1997 Submission at 6.

At the hearing, the Individual testified concerning the foregoing. In addition, the Individual testified that he had arranged to take annual leave the next week in order to earn $600 at his second job. Hrg. Tr. at 62. The Individual testified that he would use that income to further reduce his indebtedness. Id.

At the hearing, the Individual also testified that his overall financial situation had improved to the point that he would be able to meet his financial obligations in the future. The Individual provided a financial statement showing that his salary had increased and that his expenses had been reduced. Hrg. Tr. at 23. The Individual testified that he had not included any income from his second job, because of its irregular nature. Id. at 75. The most significant reduction in the Individual's expenses was attributable to the fact that the Individual no longer had a $200 monthly car payment.

Having set forth the facts and testimony relevant to the issues raised by the Notification Letter, it is appropriate to turn to an analysis of whether the Individual is eligible for a security clearance, i.e. whether issuance of a clearance "will not endanger the common defense and be clearly consistent with the national interest." 10 C.F.R. § 710.28(d).

II. Analysis

A. The Criterion L Concern

Criterion L applies where an individual has "[e]ngaged in unusual conduct or is subject to any circumstances which tend to show that the individual is not honest, reliable or trustworthy; or may be subject to pressure, coercion, exploitation, or duress which might cause him to act contrary to the best interests of the national security." 10 C.F.R. § 710.8(l). Criterion L specifies that a "pattern of financial irresponsibility" raises such concerns. Id.

There is no question that the information cited in the Notification Letter raises Criterion L concerns. As discussed above, in November 1996, after the PSI, the Individual was delinquent on a number of obligations. Moreover, the Individual did not have any mechanism in place to cure the delinquencies. The Individual had declined to avail himself of credit counseling and had not yet secured a second job. Accordingly, the information available to the DOE office indicated a "pattern of financial irresponsibility."

Given that the information cited in the Notification Letter raises a Criterion L concern, the issue is whether the Individual has submitted sufficient information to resolve that concern. The Individual has presented evidence concerning (i) the seriousness and recency of the conduct and (ii) reformation and rehabilitation.

Although financial delinquencies may indicate dishonesty or general irresponsibility, dishonesty and general irresponsibility are not present in this case. The Individual's indebtedness was incurred prior to his federal and state tax delinquencies. The Individual has consistently acknowledged his responsibility for paying his debts. With the exception of an inquiry concerning a car loan (which would have replaced an existing loan), the Individual did not seek to borrow any money or to make any credit purchases once he became delinquent on some of his obligations. DOE Ex. 28. The Individual continued to make timely mortgage payments. Id. The fact that the Individual was rehired by a former employer indicates that he performed responsibly on the job.

Although financial problems are a security concern, the problems in this case were relatively limited. Excluding his mortgage, the Individual's maximum indebtedness during the relevant period was $15,000. The Individual was able to cure his delinquencies through the income from a second job. As of the date of the hearing, the Individual had reduced his indebtedness by approximately $3,000 and was able to meet his existing obligations. DOE Ex. 11. Thus, although the Individual clearly had had a financial problem, it was limited in degree.

The record contains evidence of reformation and rehabilitation. As indicated above, with respect to the accumulation of debt, the Individual stated at the PSI, "I've learned my lesson, and I definitely won't make that mistake again." PSI Tr. at 63. The Individual's actions support that statement. By the time of the hearing, the Individual had cured all of the delinquencies except for the remaining $400 due on his state taxes. He testified that he would further reduce his indebtedness with the $600 that he would earn the following week at his second job. The $600 would be sufficient to pay the $400 balance on his state taxes, as well as further reduce non-delinquent debt. Finally, the Individual demonstrated that he now has sufficient income to meet his financial obligations.

At the hearing, the security official expressed concern that the Individual had not provided sufficient evidence of reformation and rehabilitation. The security official expressed concern that (i) the Individual failed to cure his delinquencies until they negatively impacted his eligibility for a clearance, (ii) the Individual declined the opportunity to pursue credit counseling in November 1996, and (iii) the Individual's actions in curing his delinquencies were too recent to conclude that the Individual had established a pattern of meeting his financial obligations in a timely manner.(1)

The record indicates that the Individual's primary motivation was to fulfill his financial obligations, rather than simply to remove an obstacle to obtaining a security clearance. First, there is evidence that the process of reformation and rehabilitation began in 1995, before the Individual applied for a clearance. As stated above, except for an inquiry concerning a car loan (which would have replaced his existing car loan), the Individual did not attempt to borrow money or make additional credit purchases after 1994. DOE Ex. 28. The Individual recognized his obligations in contacts with his lenders. DOE Ex. 23 at 13, 15. Moreover, the Individual cured his delinquencies by paying the amounts due, rather than seeking bankruptcy protection or a compromise of his indebtedness. Thus, the Individual's actions indicate that his primary motivation was meeting his financial obligations, rather than just eliminating his indebtedness in the most expedient manner.

The record also indicates that the Individual's failure to pursue credit counseling was attributable to a failure to recognize the potential benefit of credit counseling, rather than irresponsibility. The Individual told the security specialist that he thought that obtaining a second job and using the income to cure the delinquencies was preferable to credit counseling. The fact that the Individual obtained a second job and used the income to cure his delinquencies lends credence to the sincerity of this statement. Thus, the Individual's failure to pursue the potential benefits of credit counseling was not indicative of an indifferent attitude toward curing the delinquencies. In fact, the Individual's failure to pursue the potential benefits of credit counseling ultimately required that he demonstrate greater initiative in working out a payment plan with the department store and the student loan creditor.

Finally, given all the relevant information, the Individual has demonstrated responsibility for a sufficient period of time to demonstrate that he is reformed and rehabilitated. As indicated above, once the Individual realized in 1994 that he could not meet all his financial obligations, he did not borrow any additional money. The Individual began curing his delinquencies in September 1996. Once the Individual obtained a second job in March 1997, he cured one delinquency after another. Four months later, he had cured all the delinquencies except for his state tax obligation, which he had reduced to $400. The Individual's responsible actions - continuing to pay his mortgage payment, not accumulating any additional debt, obtaining a second job, and repaying his debts rather than seeking a compromise or a discharge - are evidence of a pattern of responsible behavior with respect to his financial obligations. This pattern, coupled with his pattern of responsible behavior in the workplace, is sufficient to resolve the security concern that the past delinquencies indicate that the Individual is not "honest, reliable, or trustworthy." Finally, the Individual's current ability and commitment to meet his remaining obligations means that he is not subject to "pressure, coercion, exploitation, or duress" that might cause him to act contrary to the national security. Accordingly, I find that the Individual has resolved the Criterion L security concern.

B. The Criterion F Concern

Criterion F concerns information that indicates that an individual "[d]eliberately misrepresented, falsified, or omitted significant information" during an official inquiry concerning his eligibility for a clearance. Such information raises serious doubts about whether an individual should be entrusted with responsibility for safeguarding classified information or special nuclear material.

The Individual did not correctly answer the question on his QSP concerning financial delinquencies. The question asks whether the individual is over 180 days delinquent on any financial obligation. At the time that the Individual signed the QSP, he was over 180 days delinquent on the 1994 traffic ticket and the approximately $200 obligation on the two mail order accounts. At the time that the security staff member initialed the form in March 1996, the Individual was over 180 days delinquent on the foregoing, as well as the 1995 traffic tickets. In addition, the Individual was over 180 days delinquent on his department store charge account, because his payment six months earlier was less than the amount due at that time.

The Individual's completion of his June 1995 QSP and the March 1996 initials of the security staff member raise the issue whether the Individual "[d]eliberately misrepresented ... or omitted significant information" on his QSP. The Individual testified that his failure to report the matters until his March 1996 OPM interview was not the result of any intent to deceive. Hrg. Tr. at 58-59. The Individual indicated that did not think of the 1994 traffic ticket and mail order accounts when he completed the QSP. The Individual stated that he did not recall being contacted by anyone in March 1996 to update the information on his QSP.

As an initial matter, the issue of the March 1996 update needs to be addressed. The security staff member who initialed the QSP and signed the related form did not testify at the hearing. Those forms, however, coupled with the testimony of the security specialist concerning the standard practice of updating information, indicate to me that the Individual was contacted. Nonetheless, I do not doubt the Individual's testimony that he does not recall the contact because, as discussed below, the record supports the Individual's related testimony that he did not intend to conceal his financial delinquencies.

The testimony and written evidence corroborate the Individual's testimony that he did not intend to conceal his financial delinquencies. The security specialist testified that the OPM report indicates that the Individual volunteered information concerning his financial delinquencies in his March 1996 OPM interview. Hrg. Tr. at 39-41; see also PSI Tr. at 22, 40. In fact, in the March 1996 OPM interview, the Individual disclosed a delinquency not reflected on his credit report. DOE Ex. 23 at 1 (disclosure of mail order account not shown on DOE Ex. 28). The Individual's testimony concerning his lack of any intent to deceive is further supported by the fact that the Individual made these disclosures in the same month that the security staff member initialed the form. Based on the foregoing, plus the nature of the information and the Individual's demonstration of honesty in paying his indebtedness, I find that the Individual did not intend to conceal the existence of the delinquencies.

The fact that the Individual did not intend to deceive does not, however, completely address the security concerns arising from the Individual's failure to disclose his delinquencies prior to the OPM interview. A failure to report information on the QSP may also indicate a carelessness that is incompatible with the responsibilities of a clearance holder. In this case, the Individual has established a pattern of responsible behavior toward his affairs in general. Accordingly, I find that it is highly unlikely that he would not exercise appropriate care with respect to security matters in the future, including the completion of official forms.

III. Conclusion

As the foregoing demonstrates, I have concluded that the Individual has resolved the security concerns arising under Criteria L and F. Accordingly, I have concluded that a grant of 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). Based on that conclusion, I recommend that the Individual be granted access authorization.

The regulations set forth at 10 C.F.R. § 710.28(a) provide that the Office of Security Affairs or the individual may file a request for review of the Hearing Officer's Opinion within 30 calendar days of receipt of the Opinion. Any such request must be filed with the Director, Office of Hearings and Appeals, Washington, D.C. 20585-0107, and served on the other party. If either party elects to seek review of the Opinion, that party must file a statement identifying the issues on which it wishes the OHA Director to focus. This statement must be filed within 15 calendar days after the party files its request for review. The party seeking review must serve a copy of its statement on the other party, who may file a response within 20 days of receipt of the statement.

Janet N. Freimuth

Hearing Officer

Office of Hearings and Appeals

Date: September 30, 1997

(1)Although the security official cited a one-year pattern of responsible behavior as a benchmark, he indicated that the period of time would vary, depending on the circumstances of the case.