Egan v. Department of Navy

• Citation: 802 F.2d 1563
• Decision Date: 01 October 1986
• Docket Number: No. 86-579,86-579
• Parties: Thomas E. EGAN, Petitioner, v. DEPARTMENT OF the NAVY, Respondent. Appeal
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1563

802 F.2d 1563

Thomas E. EGAN, Petitioner, v. DEPARTMENT OF the NAVY, Respondent.

Appeal No. 86-579.

United States Court of Appeals, Federal Circuit.

Oct. 1, 1986.

William J. Nold, Nold, Mosley, Clare, Hubbard & Towns, Louisville, Ky., for petitioner.

Robert A. Reutershan, Asst. Director, Commercial Litigation Branch, Dept. of Justice, Washington, D.C. argued for respondent. With him on the brief were Richard K. Willard, Asst. Atty. Gen. and David M. Cohen, Director. Lt. Cdr. Claude Goddard, Judge Advocate General's Corps, Office of Counsel, Office of Civilian Personnel Management, Dept. of Navy, Washington, D.C. of counsel.

Stuart A. Kirsch and Mark Roth, Gen. Counsel, American Federation of Government Employees, AFL-CIO, College Park, Md., was on the brief, for amicus curiae, Ralph B. Bogdanowicz.

Before MARKEY, Chief Judge, PAULINE NEWMAN, Circuit Judge, and SWYGERT, Senior Circuit Judge. ^*

PAULINE NEWMAN, Circuit Judge.

Thomas E. Egan seeks review of a final decision of the Merit Systems Protection Board ("Board"), sustaining his removal from employment by the Department of the Navy ("agency"). Egan v. Department of the Navy, 28 M.S.P.R. 509 (1985). We vacate the Board's decision and remand for further proceedings.

Background

Mr. Egan was appointed to a Veterans Readjustment Appointment effective November 29, 1981 as a laborer, WG-3502-03, at the Trident Naval Refit Facility in Bremerton, Washington. A condition precedent to the retention of his employment was "satisfactory completion of security and medical reports", as shown on his Standard Form (SF)-50. A National Agency Check Investigation was initiated at the time of Mr. Egan's appointment. Mr. Egan was thereafter assigned to the "noncritical-sensitive" ¹ position of laborer leader, WL-3502-03, on April 18, 1982.

On February 16, 1983 the Director of Naval Civilian Personnel Command issued a notice of the agency's intention to "deny/revoke" Mr. Egan's security clearance. The notice stated that agency regulations

require[ ] this Command to adjudicate information on civilian personnel to determine their eligibility for a security clearance and/or assignment to sensitive duties. A determination is based on the individual's loyalty, reliability, trustworthiness, and judgment. Information contained in personal security investigations and from other relevant sources is used in making the determination.

The notice also stated that "[i]f a final adverse security determination is made by this Command, an individual will not be assigned to sensitive duties", and that Mr. Egan's access to classified information was suspended until a final determination was made.

The stated reason for this action was the existence of various California and Washington state criminal records showing, inter alia, Mr. Egan's convictions for second degree assault and for being a felon in possession of a pistol. The agency stated that Mr. Egan had failed to list, on his Personnel Qualifications Statement (SF-171) of September 7, 1981, two previous convictions for carrying a loaded firearm. The agency also referred to Mr. Egan's sworn statement of August 5, 1982 concerning his past drinking habits, and to the fact that he had spent the final twenty-eight days of one sentence at an alcohol rehabilitation program.

Mr. Egan was given an opportunity to reply in writing "to explain, mitigate or refute" the stated reasons for the action. Mr. Egan's designated representative Richard A. Brown, President of the International Association of Machinists Nipsic Lodge No. 282, provided a written reply dated May 6, 1983. In brief, this reply stated that Mr. Egan did not list certain of the charges referred to by the agency because he had not been found guilty of the charges, because they had been dismissed, or because they had occurred outside of the seven year time period designated in the employment application. The reply stated that the two convictions within the last seven years were listed in his application and that Mr. Egan's debt to society for these offenses had been paid in full. In addition to explaining the factual circumstances of some of the charges, the reply stated that alcohol had not been a problem for Mr. Egan for more than three years. The reply included favorable statements from Mr. Egan's supervisors as to his background and character.

On May 27, 1983 the Director of Naval Civilian Personnel Command issued its final determination:

[2.] The information provided by you does not sufficiently explain, mitigate, or refute the reason(s) on which the intended denial/revocation action is based. Accordingly, your security clearance is denied/revoked effective today. As a result of this determination, you are not eligible to occupy a sensitive position with the Department of the Navy.

3. The activity head will annotate your OPNAV Form 5520/20 (Certificate of Personnel Security Investigation, Clearance and Access)....

On June 17, 1983 the agency issued a notice of proposed removal "for failure to meet the requirements of your position due to denial of your security clearance". The notice stated that his position required "a security clearance due to access to classified information regarding arrival/departure of submarines and access to classified/restricted areas or equipment aboard the submarines" and that maintenance of a security clearance was a mandatory condition of employment "necessary to ensure the security of classified defense information from potential espionage efforts by hostile foreign powers". Reassignment to a nonsensitive position was not feasible at the facility.

Mr. Egan did not respond orally or in writing to the notice of proposed removal, and on July 15, 1983 the agency issued its final decision to remove Mr. Egan.

Mr. Egan filed a timely appeal to the Board. On December 22, 1983, the presiding official reversed the agency's decision. The presiding official reviewed the standards for evaluating an agency's denial of an employee's security clearance:

As a logical first step the agency must initially establish the standard for obtaining a security clearance by showing the specific criteria used to determine whether to deny, grant, or revoke the security clearance. Additionally, in order to avoid arbitrary or perfunctory decisions, it must show that these criteria are rationally related with those concerns connected with our national security. See Schwartz v. United States Department of the Army, [16 M.S.P.R. 642 (1983) ], citing Hoska [v. United States Department of the Army, 677 F.2d 131, 138 (D.C.Cir.1982) ]. Any subsequent investigation of an employee should be evaluated within the framework of these criteria. As a result of its investigation an agency must be able to show how an employee's alleged misconduct has an actual or potentially detrimental effect on national security interests. The final decision made on the basis of such an evaluation must be "reasonable and warranted." Schwartz, [16 M.S.P.R. at 644].

Applying these standards, the presiding official stated that it was "impossible" to determine whether the agency's decision was "reasonable" because the agency failed to "establish what specific criteria are used to determine whether to deny, grant, or revoke an employee's security clearance, or to prove that such criteria are rationally related to our national security". Despite warnings by the presiding official concerning deficiencies in the evidence and the agency's burden of proof, the agency had elected to rely solely on the conclusory statements in its letters of proposed and final denial of clearance and on the allegations in its brief, unsubstantiated by evidence.

The presiding official also held that the agency "failed to present any evidence showing it conscientiously weighed the circumstances surrounding appellant's alleged misconduct and reasonably balanced it against the interests of national security", including whether Mr. Egan actually concealed prior offenses on his SF-171, whether offenses for which Mr. Egan had been arrested but subsequently found not guilty had been considered as proof of his misbehavior, and whether the statements from Mr. Egan's supervisors had been considered.

The agency petitioned for review of the presiding official's decision by (1) challenging the Board's authority to review the merits of a security clearance denial; (2) alleging error in the presiding official's assessment of the evidence submitted; and (3) assuming arguendo that the Board had authority to review the merits of the denial and that the agency had failed to meet its burden of proof, contending that the appropriate remedy was not to reverse the removal but to remand the case to the agency to correct any errors. Egan, 28 M.S.P.R. at 512.

The Board, having before it numerous petitions for review containing issues of law common to those in Egan, solicited amicus briefs on issues (1) and (3) above, 49 Fed.Reg. 48,623-24 (1984), and on the following supplemental question:

C. When an agency wishes to base an action listed in 5 U.S.C. 7512 on the revocation of security clearance, may it do so pursuant to 5 U.S.C. 7513, or is 5 U.S.C. 7532 the exclusive basis for such an action?

50 Fed.Reg. 2,355 (1985).

Twelve amici filed briefs. The Board treated Egan as the lead case concerning the Board's authority in security clearance cases. After discussing the statutory framework, the relevant case law, and the arguments and policy considerations raised by the parties and the amici, the Board rejected its previous decision in Bogdanowicz v. Department of the Army, 16 M.S.P.R. 653 (1983), which in turn implemented the D.C. Circuit's decision in Hoska v. United States Department of the Army, 677 F.2d 131 (D.C.Cir.1982). The Board decided:

[I]n an adverse action over which the Board has jurisdiction and which is based substantially on the agency's revocation or denial of a security clearance, the Board has no authority to review...