1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ------------------------- ) ISCR Case No. 16-01901 ) Applicant for Security Clearance ) Appearances For Government: Andre M. Gregorian, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ KATAUSKAS, Philip J., Administrative Judge: Applicant contests the Defense Department’s intent to revoke her eligibility for access to classified information. She presented sufficient evidence to explain, extenuate, or mitigate the security concern stemming from her problematic financial history. Accordingly, this case is decided for Applicant. Statement of the Case On August 31, 2016, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) sent Applicant a Statement of Reasons (SOR) alleging that her circumstances raised security concerns under the financial considerations guideline.1 Applicant answered the SOR on September 25, 2016, and requested a hearing to establish her eligibility for continued access to classified information. On May 22, 2017, a date mutually agreed to by the parties, a hearing was held. Applicant testified at the hearing, and the exhibits offered by the parties at the hearing 1 The DOD CAF took this action under Executive Order (E.O.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended, and Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive). 2 were admitted into the administrative record without objection. (Government Exhibits (GE) 1 – 3; Applicant’s Exhibits (AE) A – D.) The transcript of the hearing (Tr.) was received on June 1, 2017. At the request of Applicant, without objection, the record remained open until June 21, 2017. Applicant, however, made no post-hearing submissions. Procedural Issue On December 10, 2016, the Security Executive Agent issued Directive 4 (SEAD- 4), establishing a “single, common adjudicative criteria for all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position.”2 The National Security Adjudicative Guidelines (hereinafter “new adjudicative guidelines” or “AG”), which are found in Appendix A to SEAD-4, are to be used in all security clearance cases decisions issued on or after June 8, 2017.3 In light of this explicit direction (and absent lawful authority to the contrary), I have applied the new adjudicative guidelines. ISCR Case No. 02-00305 at 3 (App. Bd. Feb. 12, 2003) (security clearance decisions must be based on current DoD policy and standards).4 DOD CAF adjudicators reviewed this case using the previous version of the adjudicative guidelines, dated September 1, 2006, which were in effect at the time. My Decision and Formal Findings under the revised Guideline F would not be different under the 2006 Guideline F. Findings of Fact Applicant is 38 years old. She is a high school graduate and earned her nursing certificate in 2003. She has three children ages 18, 16, and 7, who live with her. Applicant married in August 2013 but separated from her husband in April 2016, because he had a drinking problem, was financially unreliable, never had a full-time job, and contributed little or nothing to household expenses. Her financial situation worsened after her marriage. Her husband provides no child support. Just before or just after Applicant separated from her spouse, he was laid off from whatever job he had at that time. Applicant has always been the family’s sole provider.5 Since 2006, Applicant has worked as a security assistant for a defense contractor. She makes about $54,000 to $55,000 a year. After paying her bills, Applicant has a monthly remainder of between $250 and $500. She has a savings account with almost a zero balance, no retirement account, and no stocks or mutual funds. She did have a 2 SEAD-4, ¶ B, Purpose. 3 SEAD-4, ¶ C, Applicability. 4 See also ISCR Case No. 07-00029 at 3 (App. Bd. Dec. 7, 2007) (when the guidelines were last revised, the Board stated: “Quasi-judicial adjudications must be made within the bounds of applicable law and agency policy, not without regard to them.”) 5 GE 1; Tr. 17-18, 20-24, 54-56. 3 401(k), but as her finances became more difficult, she stopped having that deduction taken out of her paycheck.6 After separating from her husband, Applicant went back to night school to qualify for a better paying job. She has already completed two years of community college and two years at an online four-year university, but she has not completed enough to earn her degree. She calculated that if she takes two online courses per semester, she will have her bachelors degree in two years. She was unable to complete her online university work, because she gave birth to her youngest child, a daughter, after surviving a high risk pregnancy. Her daughter was born three months prematurely, necessitating extensive medical attention, until she was about two years old. Applicant, therefore, incurred significant medical debts.7 Applicant has consulted with a debt-consolidation agency but has not yet enrolled, because that too costs money. She is a seeking part-time employment to supplement her full-time salary.8 The SOR alleges 20 delinquent debts totaling $30,378. Applicant admitted all but four of those debts (SOR ¶¶ 1.(d), (m), (q), and (t) (totaling $2,705).) I will address the SOR debts by grouping them in several categories. The first category has three delinquent auto loans, one for a $10,006 judgment, a second judgment for $7,637, and one for a repossession with a balance due of $5,024. (SOR ¶¶ 1.(a), (b), and (c).) Applicant was paying $400 per month on the first judgment but could no longer afford that when her spouse was laid off. She voluntarily surrendered the auto, once she knew she could no longer make the monthly payments. During Applicant’s September 2015 interview, she said that she had been working with that creditor to make payments, but at the hearing Applicant testified that she had not yet made any payments to that creditor.9 The second judgment ($7,637) was a loan for a vehicle that never worked properly. Applicant got “the run-around” by the dealership. The dealership would repair the auto, and it would work for a week but then become inoperable again. Ultimately, Applicant returned the auto to the dealership. Applicant has not been able to afford payments on that judgment.10 6 Tr. 18-20, 50. 7 GE 1; Tr. 21, 28-29, 40, 44-49. 8 Tr. 25-26; 53. 9 Tr. 35-36. 10 Tr. 37-38. 4 The last auto loan is a repossession ($5,024). Applicant testified that this was a voluntary repossession and that she surrendered the auto, when she realized she could not afford the payments. Since then, she has set up a monthly payment plan with automatic withdrawals from her checking account.11 The second category of debts constitute educational loans with past due amounts totaling $2,375. (SOR ¶¶ 1.e-j.) Because Applicant returned to school this year taking two courses per semester, she applied for and was granted a deferment for four educational loans.12 (SOR ¶¶ 1.g-j.) The last educational loan ( SOR ¶ 1.e for $1,052) was for an online course that Applicant was unable to complete, due to her high risk pregnancy. Applicant has set up a payment plan with automatic monthly payments drawn from her checking account.13 The third category is medical indebtedness. The SOR alleged five debts identified as medical accounts. (SOR ¶¶ 1.k-l, n-p.) At the hearing, Applicant identified four other accounts that were medical debts but were not identified as such in the SOR.14 The nine medical debts total $3,049. These medical debts were for the medical treatments her daughter received, because she was born prematurely. Applicable has not been able to pay those debts. Not all of her medical expenses were covered by insurance.15 The final category has three miscellaneous debts totaling $2,287.16 The largest of these debts ($2,150) is a charge by a cable company for Applicant’s mistaken failure to return cable boxes and a router when she moved residences. She has since returned that equipment and is waiting for the creditor to remove this account from her credit report.17 Applicant was not aware of the remaining two debts, totaling $137.18 Although those debts appeared on the July 2015 credit report, they do not appear on the October 2016 credit report.19 11 Tr. 38-39; AE B. 12 Tr. 44-45; AE D. Department Counsel asked Applicant if she enrolled in classes to have her loans deferred. She answered “No,” and that it is important to her to obtain.a business management degree, which will help her get a better-paying job. Tr. 45-46. I find Applicant’s testimony on this point to be credible. 13 Tr. 40-41; AE C. 14 Tr. 31-34, 43. SOR ¶¶ 1.f, m, q and t. 15 Tr. 33-34, 43-44. 16 SOR ¶¶ 1.d, r and s. 17 Tr. 29-31. 18 Tr. 49-50. 19 GE 2 & 3. 5 Law and Policies “[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). Individuals are eligible for access to classified information “only upon a finding that it is clearly consistent with the national interest” to authorize such access. E.O. 10865 § 2; SEAD-4, ¶ E.4. When evaluating an applicant’s eligibility for a security clearance, an administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations, the guidelines list potentially disqualifying and mitigating conditions. The guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies the guidelines in a commonsense manner, considering all available and reliable information, in arriving at a fair and impartial decision. SEAD-4, Appendix A, ¶¶ 2(c), 2(d). Department Counsel must present evidence to establish controverted facts alleged in the SOR. Directive ¶ E3.1.14. Applicants are responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven . . . and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.” Directive ¶ E3.1.15. Administrative Judges are responsible for ensuring that an applicant receives fair notice of the issues raised, has a reasonable opportunity to litigate those issues, and is not subjected to unfair surprise. ISCR Case No. 12-01266 at 3 (App. Bd. Apr. 4, 2014). In resolving the ultimate question regarding an applicant’s eligibility, “[a]ny doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.” SEAD-4, Appendix A, ¶ 2(b). See also SEAD-4, ¶ E.4. Moreover, the Supreme Court has held that officials making “security clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531. A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours. The Government reposes a high degree of trust and confidence in individuals to whom it grants access to classified information. Decisions include, by necessity, consideration of the possible risk an applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information. 6 Discussion Guideline F, Financial Considerations The SOR alleges that Applicant has a number of delinquent debts, which purportedly raise a security concern under Guideline F. The financial considerations security concern is explained at AG ¶ 18, which in pertinent part, states: Failure to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual's reliability, trustworthiness, and ability to protect classified or sensitive information. Financial distress can also be caused or exacerbated by, and thus can be a possible indicator of, other issues of personnel security concern such as excessive gambling, mental health conditions, substance misuse, or alcohol abuse or dependence. Guideline F is not limited to a consideration of whether a person with financial issues might be tempted to compromise classified information or engage in other illegality to pay their debts. It also addresses the extent to which the circumstances giving rise to delinquent debt and other security-significant financial issues cast doubt upon a person’s self-control, judgment, and other qualities essential to protecting classified information.20 In assessing Applicant’s case, I considered the following pertinent disqualifying and mitigating conditions: AG ¶ 19(a): inability to satisfy debts; AG ¶ 19(c): a history of not meeting financial obligations; AG ¶ 20(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; AG ¶ 20(b): the conditions that resulted in the financial problem were largely beyond the person's control (e.g., loss of employment, a business downturn, unexpected medical emergency, a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; AG ¶ 20(c): the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control; and, 20 ISCR Case No. 11-05365 at 3 (App. Bd. May. 1, 2012). 7 AG ¶ 20(d): the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts. A security clearance adjudication is not a debt-collection process. Rather, an administrative judge examines the way an applicant handles his or her personal financial obligations to assess how they may handle their security obligations.21 Here, Applicant’s security clearance eligibility was called into question by her past financial problems and, primarily, her failure to address the debts associated with her auto loans and student loans. I conclude that disqualifying conditions AG ¶ 19(a) and (c) apply. The next inquiry is whether any mitigating conditions apply. A confluence of factors contributed to Applicants’ financial woes. First, she had a problem pregnancy that caused her now seven-year-old daughter to be born three months prematurely. The pregnancy itself caused Applicant to forego her college studies. When her daughter was born, she needed extensive medical treatment for the first two years of her life. This resulted in medical debts, not all of which were covered by insurance. Second, she married in August 2013. Her spouse, however, turned out to be a deadbeat. He never held a full-time job, rarely if ever contributed to the family finances, and had a serious drinking problem. Before her marriage, Applicant had been the sole provider of her family of three children. Her marriage did not improve her family finances, and in April 2016, Applicant separated from her spouse. Third, because Applicant was working full-time to care for her three children, especially the newly born daughter, she was unable resume her quest for a college degree until recently. As a result of delaying her return to her schooling, her educational loans became past due. I conclude that the circumstances that caused Applicant’s financial problems are unlikely to recur, do not cast doubt on her current reliability, and were caused by circumstances largely beyond her control. AG ¶¶ 20(a) and (b) apply. To be fully applicable, AG ¶ 20(b) requires an inquiry whether Applicant acted responsibly under the adverse circumstances she confronted. Applicant has two judgments and one balance due for auto loans. Two of the loans were for autos that Applicant surrendered when she realized she could not afford to make the payments. For the repossession, Applicant has put in place a monthly payment plan. A third auto loan was for an auto that turned to be a “lemon,” which she returned to the dealer. She has been working with the first judgment creditor to set up a payment plan but has not done so yet. Applicant returned to school this year, taking two online courses per month, with the goal of earning her degree in two years and then using that degree to find a better- 21 See generally ISCR Case No. ISCR Case No. 12-09719 at 2-3 (App. Bd. Apr. 6, 2016). 8 paying job. Because Applicant is enrolled in college courses, she succeeded in having the majority (four of five) education loans deferred. For the fifth loan, she has set up a monthly payment plan. In sum, Applicant has mitigated one of her three delinquent auto loans and all five of her educational debts. I conclude that Applicant acted responsibly under the circumstances and that AG ¶ 20(b) is fully applicable to those debts. AG ¶ 20(d) also applies. Applicant’s plan is to (1) adhere to the payment plans already in place, (2) complete her college courses, (3) obtain part-time employment, and (4) seek a better- paying job once she finishes college.22 I have given little weight to the nine medical debts that are unresolved. Medical debt is sui generis, in that it is unlike other types of debt. First, it is presumed that medical debt is incurred for necessary medical care and treatment, as opposed to frivolous or irresponsible spending, or otherwise living beyond one’s means. Second, medical debt is usually unplanned, unexpected, and nondiscretionary. Third, it can add hundreds if not thousands of dollars in debt in a very short period, which can be overwhelming for a debtor. In my view, having just over $3,000 of unresolved medical debt in this case is not evidence of Applicant’s poor judgment or lack of reliability. Accordingly, SOR allegations ¶¶ 1.f-j, m, p, q, and t are decided for Applicant.23 Conclusion The record does not raise doubts about Applicant’s reliability, trustworthiness, good judgment, and ability to protect classified information. In reaching this conclusion, I weighed the evidence as a whole and considered if the favorable evidence outweighed the unfavorable evidence or vice versa. I also gave due consideration to the whole-person concept.24 Accordingly, I conclude that Applicant met her ultimate burden of persuasion to show that it is clearly consistent with the national interest to grant her eligibility for access to classified information. 22 An applicant is not required to show that every debt in the SOR has been paid. Rather, an applicant is required to demonstrate that he or she has “established a plan to resolve his [or her] financial problems and taken significant actions to implement that plan.” ISCR Case No. 07-06482 at 2 (App. Bd. May 21, 2008). See also ISCR Case No. 14-00504 at 3 (Aug. 4, 2014). 23 I gave no weight to the three miscellaneous debts. Those debts are de minimis and pose no security concern. 24 AG ¶ 2(a)(1)-(9). 9 Formal Findings Formal findings for or against Applicant on the allegations set forth in the SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are: Paragraph 1, Guideline F (Financial Considerations): For Applicant Subparagraphs 1.a – 1.t: For Applicant ____________________ Philip J. Katauskas Administrative Judge