[Federal Register Volume 76, Number 22 (Wednesday, February 2, 2011)]
[Proposed Rules]
[Pages 5729-5732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-2214]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 156

[DOD-2008-OS-0160; RIN 0790-AI42]


Department of Defense Personnel Security Program (PSP)

AGENCY: Department of Defense.

ACTION: Proposed rule.

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SUMMARY: This rule would update policies and responsibilities for the 
Department of Defense (DoD) Personnel Security Program (PSP) in 
accordance with the provisions of current U.S. Code, Public Laws, and 
Executive Orders (E.O.).

DATES: Comments must be received by April 4, 2011.

ADDRESSES: You may submit comments, identified by docket number and/or 
Regulatory Information Number (RIN) number and title, by any of the 
following methods:
     Federal Rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Federal Docket Management System Office, 1160 
Defense Pentagon, OSD Mailroom 3C843, Washington, DC 20301-1160.
    Instructions: All submissions received must include the agency name 
and docket number or Regulatory Information Number (RIN) for this 
Federal Register document. The general policy for comments and other 
submissions from members of the public is to make these submissions 
available for public viewing on the Internet at http://www.regulations.gov as they are received without change, including any 
personal identifiers or contact information.

FOR FURTHER INFORMATION CONTACT: Stacey Jefferson, (703) 604-1236.

SUPPLEMENTARY INFORMATION: The Department of Defense Directive (DoDD) 
5200.2, Personnel Security Program (PSP), codified at 32 CFR 156, was 
issued April 9, 1999. The Department is reissuing the DoD Directive as 
a DoD Instruction to update existing policy regarding the DoD Personnel 
Security Program and also incorporate new policy related to Homeland 
Security Presidential Directive-12 (HSPD-12).
    This rule provides PSP policy fundamental to preventing 
unauthorized disclosure of sensitive and classified information that 
could cause irreparable damage to national security. The policy portion 
relating to HSPD-12 implements investigative and adjudicative policy 
for the Department's personal identity verification credential.
    Updates to the policy reflect Joint Security and Suitability Reform 
Team efforts to incorporate the foundational policy changes needed to 
implement reform. The Intelligence Reform and Terrorism Prevention Act 
of 2004, E.O. 13467, E.O. 12968, E.O. 10865, and HSPD-12 are some of 
the current Federal laws, directives and statutes that impact the DoD 
PSP. Since this rule was last published, additional executive orders 
have been issued directing alignment of security, suitability and 
reciprocal acceptance of prior investigations and favorable 
determinations.
    The procedural guidance for the DoD PSP is currently being updated 
and will subsequently be proposed as rule codified at 32 CFR part 154. 
The investigative and adjudication procedural guidance for the DoD 
Federal personal identity verification credential pursuant HSPD-12 is 
undergoing coordination and will also be proposed a separate rule.

E.O. 12866, ``Regulatory Planning and Review''

    It has been certified that 32 CFR part 156 does not:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy; a section of the 
economy; productivity; competition; jobs; the environment; public 
health or safety; or State, local, or tribunal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another Agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs, or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this E.O.

Section 202, Public Law 104-4, ``Unfunded Mandates Reform Act''

    It has been certified that 32 CFR part 156 does not contain a 
Federal mandate that may result in the expenditure by State, local and 
tribunal governments, in aggregate, or by the private sector, of $100 
million or more in any one year.

Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)

    It has been certified that 32 CFR part 156 is not subject to the 
Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if 
promulgated, have a significant economic impact on a substantial number 
of small entities.

Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)

    It has been certified that 32 CFR part 156 does not impose 
reporting or recordkeeping requirements under the Paperwork Reduction 
Act of 1995.

E.O. 13132, ``Federalism''

    It has been certified that 32 CFR part 156 does not have federalism 
implications, as set forth in E.O. 13132. This rule does not have 
substantial direct effects on:
    (1) The States;
    (2) The relationship between the National Government and the 
States; or
    (3) The distribution of power and responsibilities among the 
various levels of Government.

List of Subjects in 32 CFR Part 156

    Government employees; Security measures.

    Accordingly, 32 CFR part 156 is revised to read as follows.

PART 156--DEPARTMENT OF DEFENSE PERSONNEL SECURITY PROGRAM (PSP)

Sec.
156.1 Purpose.
156.2 Applicability.
156.3 Definitions.
156.4 Policy.
156.5 Responsibilities.
156.6 Procedures-sensitive positions, duties, and classified access.
156.7 Procedures--common access card investigation and adjudication.


[[Page 5730]]


    Authority:  E.O. 12968, as amended; E.O. 10450, as amended; E.O. 
10865, as amended; E.O. 13526; E.O. 12829, as amended; E.O. 13467; 
E.O. 13488; E.O. 12333, as amended; sections 301 and 7532 of 5 
U.S.C.; section 1072 of Public Law 110-181, as amended; section 
278g-3 of 15 U.S.C.; section 11331 of 40 U.S.C.; title 10 U.S.C.; 
section 435c. and chapter 23 of 50 U.S.C.; and parts 731, 732 and 
736 of 5 CFR.


Sec.  156.1  Purpose.

    This part updates policies and responsibilities for the Department 
of Defense (DoD) Personnel Security Program (PSP) consistent with E.O. 
12968, as amended; E.O. 10450, as amended; E.O. 10865, as amended; E.O. 
13526; E.O. 12829, as amended; E.O. 13467; E.O. 13488; E.O. 12333, as 
amended; sections 301 and 7532 of 5 U.S.C.; section 1072 of Public Law 
110-181, as amended; section 278g-3 of 15 U.S.C.; section 11331 of 40 
U.S.C.; title 10 U.S.C.; parts 147, 154 through 156 of 32 CFR; section 
435c. and chapter 23 of 50 U.S.C.; and parts 731, 732 and 736 of 5 CFR.


Sec.  156.2  Applicability.

    This part applies to the Office of the Secretary of Defense, the 
Military Departments, the Office of the Chairman of the Joint Chiefs of 
Staff and the Joint Staff, the Combatant Commands, the Office of the 
Inspector General of the Department of Defense, the Defense Agencies, 
the DoD Field Activities, and all other organizational entities within 
the Department of Defense (hereafter referred to collectively as the 
``DoD Components'').


Sec.  156.3  Definitions.

    These terms and their definitions are for the purposes of this 
part:
    Continuous evaluation. Defined in section 1.3(d) of E.O. 13467.
    Fitness. Defined in E.O. 13488.
    Sensitive position. Any position so designated under E.O. 10450, as 
amended.


Sec.  156.4  Policy.

    It is DoD policy that:
    (a) The Department shall establish and maintain a uniform DoD PSP 
using appropriate standards in accordance with E.O. 12968, as amended; 
E.O. 10450, as amended; E.O. 10865, as amended; E.O. 13526; E.O. 12829, 
as amended; E.O. 13467; E.O. 13488; E.O. 12333, as amended; parts 147, 
154 through 156 of 32 CFR; parts 731, 732 and 736 of 5 CFR; sections 
301 and 7532 of 5 U.S.C; section 1072 of Public Law 110-181, as 
amended; section 278g-3 of 15 U.S.C.; section 11331 of 40 U.S.C.; title 
10 U.S.C.; section 435c. and chapter 23 of 50 U.S.C.; and the 
Intelligence Community Directive Number 704 (ICD 704).\1\
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    \1\ Copies available on the Internet at http://www.dni.gov/electronic_reading_room/ICD_704.pdf.
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    (b) Policies and procedures shall be aligned using consistent 
standards to the extent possible; provide for reciprocal recognition of 
existing investigations and favorable adjudications; be cost-effective, 
timely and provide efficient protection of the national interest; and 
provide fair treatment of those upon whom the Federal Government relies 
to conduct the Nation's business and protect national security.
    (c) Discretionary judgments used to determine eligibility for 
access to classified information, to hold a sensitive position, or 
perform a sensitive duty are inherently governmental functions, and 
adjudications supporting these judgments shall be performed by 
appropriately trained and favorably adjudicated Government personnel or 
appropriate automated procedures.
    (d) No negative inference may be raised solely on the basis of 
mental health counseling. Such counseling may be a positive factor in 
rendering eligibility determinations. However, mental health 
counseling, where relevant to adjudication for classified access or to 
hold a sensitive position, may justify further inquiry to assess risk 
factors that may be relevant to the DoD PSP.
    (e) The Department of Defense shall not discriminate on the basis 
of race, color, religion, sex, national origin, disability, or sexual 
orientation, and no inference may be raised solely on the basis of an 
individual's sexual orientation.
    (f) Discretionary judgments that determine eligibility for access 
to classified information, to hold a sensitive position, or perform a 
sensitive duty shall be clearly consistent with the interests of 
national security and any doubt shall be resolved in favor of national 
security.
    (g) No person shall be deemed to be eligible for access to 
classified information, to hold a sensitive position, hold a DoD CAC, 
or perform a sensitive duty merely by reason of Federal service or 
contracting, licensee, certificate holder, or grantee status, or as a 
matter of right or privilege, or as a result of any particular title, 
rank, position, or affiliation.
    (h) Eligibility for access to classified information, hold a 
sensitive position, or perform a sensitive duty shall be granted only 
to persons who are United States citizens for whom the investigative 
and adjudication process has been completed. However, based on mission 
needs, temporary eligibility may be granted prior to completion of the 
investigative and adjudicative process.
    (i) As an exception, a non-U.S. citizen, who possesses an expertise 
that cannot be filled by a cleared or clearable U.S. citizen, may hold 
a sensitive position or granted a Limited Access Authorization for 
access to classified information in support of a specific DoD program, 
project, or contract.
    (j) The Department shall establish investigative and adjudicative 
policy and procedures to determine whether to issue, deny or revoke 
CACs in accordance with the Homeland Security Presidential Directive 
(HSPD)-12;\2\ Office of Management and Budget Memorandum (OMB) M-05-
24;\3\ Federal Information Processing Standards Publication 201-1(FIPS 
201-1) \4\; Federal Acquisition Regulation \5\; section 278g-3 of title 
15, U.S.C.; section 11331 of title 40, U.S.C., and the Office of 
Personnel Management (OPM) Memorandum, ``Final Credentialing Standards 
for Issuing Personal Identity Verification Cards under HSPD-12.'' \6\
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    \2\ Copies available on the Internet at http://georgewbush-whitehouse.archives.gov/news/releases/2004/08/20040827-8.html.
    \3\ Copies available on the Internet at http://www.whitehouse.gov/sites/default/files/omb/memoranda/fy2005/m05-24.pdf.
    \4\ Copies available on the Internet at http://csrc.nist.gov/publications/fips/fips201-1/FIPS-201-1-chng1.pdf.
    \5\ Copies available on the Internet at https://www.acquisition.gov/Far/loadmainre.html.
    \6\ Copies available on the Internet at http://www.opm.gov/investigate/resources/final_credentialing_standards.pdf.
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Sec.  156.5  Responsibilities.

    (a) The Under Secretary of Defense for Intelligence (USD(I)) shall:
    (1) Develop, coordinate, and oversee the implementation of policy, 
programs, and guidance for the DoD PSP. For the DoD intelligence 
agencies this responsibility shall be exercised in consultation with 
the Director of National Intelligence.
    (2) In coordination with the Under Secretary of Defense for 
Personnel and Readiness (USD(P&R)) and the General Counsel of the 
Department of Defense (GC, DoD), establish policy for military and 
civilians for the CAC personnel security investigation (PSI) and 
adjudication in accordance with HSPD-12; E.O. 13467; E.O. 13488, 
section 11331 of title 40, U.S.C.; section 278g-3 of 15 U.S.C.; OMB 
Memo M-05-24; and OPM Memorandum, ``Final Credentialing Standards for 
Issuing

[[Page 5731]]

Personal Identity Verification Cards under HSPD-12.''
    (3) In coordination with the Under Secretary of Defense for 
Acquisition, Technology and Logistics and the GC, DoD, establish policy 
for contractor fitness investigations and CAC adjudication, outside the 
purview of the National Industrial Security Program, under the terms of 
applicable contracts of HSPD-12; E.O. 13467; E.O. 13488, section 11331 
of title 40, U.S.C.; section 278g-3 of 15 U.S.C.; OMB Memo M-05-24; and 
OPM Memorandum, ``Final Credentialing Standards for Issuing Personal 
Identity Verification Cards under HSPD-12;'' the Federal Acquisition 
Regulation; and the Defense Federal Acquisition Regulation.
    (4) Develop guidance implementing the policy in this part.
    (b) The Deputy Under Secretary of Defense (HUMINT, 
Counterintelligence & Security) DUSD(HCI&S), under the authority, 
direction, and control of USD(I) shall:
    (1) Ensure that the program is consistent, cost-effective, 
efficient, and balances the rights of individuals with the interests of 
national security.
    (2) Develop and publish revisions to 32 CFR part 154.
    (3) Approve, coordinate, and oversee all DoD personnel security 
research initiatives and activities to improve the efficiency, 
effectiveness, and fairness of the DoD PSP.
    (4) Ensure the Defense Security Service provides education, 
training, and awareness support to the DoD PSP.
    (5) Serve as the primary contact between DoD, the Red Cross, United 
Service Organizations, and other organizations with direct DoD 
affiliation for all matters relating to the PSI policy and procedures 
prescribed herein.
    (6) When appropriate, approve requests for exceptions to the DoD 
PSP for access to classified information except North Atlantic Treaty 
Organization (NATO) classified information. Requests for exceptions 
involving access to NATO classified information shall be sent to the 
Office of the Under Secretary of Defense for Policy.
    (7) Issue policy guidance, interpretation, and clarification as 
needed.
    (8) Conduct oversight inspections of the DoD Components for 
implementation and compliance with DoD personnel security policy and 
operating procedures.
    (9) Develop a framework setting forth an overarching strategy 
identifying goals, performance measures, roles and responsibilities, a 
communications strategy, and metrics to measure the quality of security 
clearance investigations and adjudications to ensure a sound DoD PSP 
that will continue to meet the needs of DoD.
    (c) The GC, DoD shall:
    (1) Provide advice and guidance as to the legal sufficiency of 
procedures and standards involved in implementing the DoD PSP and 
exercise oversight of the established administrative due process 
procedures of the DoD PSP.
    (2) Perform functions relating to the DoD PSP including the 
maintenance and oversight of the Defense Office of Hearings and 
Appeals.
    (d) The Under Secretary of Defense for Policy shall approve 
requests for exceptions to the DoD PSP involving access to NATO 
classified information. Requests for exceptions involving access to any 
other classified information shall be sent to the DUSD(HCI&S).
    (e) The Heads of the Office of the Secretary of Defense and DoD 
Components shall:
    (1) Designate a senior agency official who shall direct and 
administer the DoD PSP consistent with this part.
    (2) Comply with the policy and procedures regarding investigation 
and adjudication for CAC issuance and distribute this part to local and 
regional organizations.
    (3) Provide funding to cover requirements for PSIs, adjudication, 
and recording of results to comply with the DoD PSP.
    (4) Enforce requirements for prompt reporting of significant 
derogatory information, unfavorable administrative actions or adverse 
actions to the appropriate personnel security, human resources 
official(s), or counterintelligence official(s), as appropriate, within 
their respective Component.
    (5) Provide requested information and recommendations, as 
appropriate, on any aspect of this part and the DoD PSP to the USD(I).


Sec.  156.6  Procedures--sensitive positions, duties, and classified 
access.

    (a) Procedures. The objective of the personnel security program is 
to ensure persons deemed eligible for access to classified information, 
to hold a sensitive position, or perform a sensitive duty are and 
remain reliable and trustworthy. Duties considered sensitive and 
critical to national security do not always involve classified 
activities or classified matters. Personnel security procedures for 
sensitive positions or duties and classified access are set forth in 
E.O. 12968, as amended; 32 CFR 154; ICD 704; and DoD Regulation 
5220.22-R.
    (b) Sensitive Compartmented Information (SCI) Eligibility. 
Investigative and adjudicative requirements for SCI eligibility shall 
be executed in accordance with this part and ICD 704. Employees filling 
SCI designated positions within the IC must maintain eligibility for 
access to SCI as a mandatory condition of employment.
    (c) Adjudication. (1) Personnel security criteria and adjudicative 
standards are described in E.O. 12968, as amended; parts 154 and 155 of 
32 CFR; ICD 704, and DoD Regulation 5220.22-R in accordance with 32 CFR 
part 147.
    (2) To ensure consistency and quality in determinations of 
eligibility for access to classified information and for sensitive 
positions or duties, adjudicators must successfully complete the full 
program of professional training provided by the Defense Center for 
Development of Security Excellence (or equivalent training) and be 
certified through the DoD Professional Certification Program for 
Adjudicators within two years of program implementation or, for new 
hires, within two years of eligibility for certification testing.
    (d) Appeal Procedures-Denial or Revocation of Eligibility. 
Individuals may elect to appeal unfavorable personnel security 
determinations in accordance with the procedures set forth in E.O. 
12968, as amended; parts 154 and 155 of 32 CFR; ICD 704, and DoD 
Regulation 5220.22-R or as otherwise authorized by law. Such procedures 
shall not be diminished but may be enhanced to achieve a common process 
to achieve efficiency from consolidation of functions.
    (e) Polygraph. Under certain conditions, DoD Components are 
authorized to use polygraph examinations to facilitate national 
security information access decisions.
    (f) Continuous Evaluation. All personnel determined to be eligible 
or who currently have access to classified information shall be subject 
to continuous evaluation consistent with E.O. 12968, as amended; E.O. 
13467; 32 CFR 154; and the ICD 704.
    (g) Financial Disclosure. DoD Component implementation of the 
electronic financial disclosure requirement shall be completed by the 
end of calendar year 2012 as described in E.O. 12968.
    (h) Reciprocal Acceptance of Eligibility Determinations (1) DoD 
reciprocally accepts existing national security determinations or 
clearances from other government agencies in accordance with E.O. 
13467, 5 CFR part 731, Office of Management Budget Memorandums 
``Reciprocal Recognition of Existing Personnel Security

[[Page 5732]]

Clearances'' dated December 12, 2005 \7\ and July 17, 2006.\8\
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    \7\ Copies available on the Internet at http://www.whitehouse.gov/sites/default/files/omb/assets/omb/memoranda/fy2006/reciprocal121205.pdf.
    \8\ Copies available on the Internet at http://www.whitehouse.gov/sites/default/files/omb/assets/omb/memoranda/fy2006/m06-21.pdf.
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    (2) Personnel who have been determined eligible for access to 
classified information or a sensitive position shall not be subject to 
additional security reviews or determinations unless potentially 
disqualifying conditions are present that have not been previously 
adjudicated. This does not preclude requirements for suitability 
determinations.
    (3) Reciprocity for SCI eligibility shall be executed in accordance 
with the ICD 704.
    (i) National Security Agency (NSA)/Central Security Service (CSS). 
Employees, contractors, military assignees, and others with similar 
affiliations with the NSA/CSS must maintain SCI eligibility for access 
to sensitive cryptologic information in accordance with chapter 23 of 
50 U.S.C.
    (j) Support of the Operation Warfighter Program. PSIs in support of 
wounded warriors may be submitted and processed regardless of the time 
remaining in military service. Investigations will be accelerated 
through a special program code established by the Office of the USD(I) 
to ensure expedited service by the investigating and adjudicating 
agencies.
    (1) Category 2 wounded, ill, or injured Uniformed Service personnel 
who expect to be separated with a medical disability rating of 30% or 
greater may submit PSIs for Top Secret clearance eligibility prior to 
medical separation provided they are serving in or have been nominated 
for a wounded warrior internship program.
    (2) The investigations will be funded by the DoD sponsoring agency 
that is offering the internship. If the sponsoring agency does not have 
funds available, the owning Military Service may choose to fund the 
investigation.


Sec.  156.7  Procedures--common access card investigation and 
adjudication.

    (a) A favorably adjudicated National Agency Check with Inquiries 
(NACI) is the minimum investigation required for the CAC.
    (b) All final adjudicative determinations must be made by cleared 
and trained Government personnel. Automated adjudicative processes 
shall be used to the maximum extent practicable.
    (c) Adjudication decisions of CAC investigations shall be 
incorporated into Central Adjudication Facility consolidation as 
directed by the Deputy Secretary of Defense.
    (d) CAC applicants or holders may appeal CAC denial or revocation. 
No separate administrative appeal process is allowed when an individual 
has been denied a CAC as a result of a negative suitability 
determination under 5 CFR part 731, an applicable decision to deny or 
revoke a security clearance, or based on the results of a determination 
to disqualify the person from an appointment in the excepted service or 
from working on a contract for reasons other than eligibility for a 
Federal credential as described in the OPM Memorandum, ``Final 
Credentialing Standards for Issuing Personal Identity Verification 
Cards under HSPD-12.'' If a later denial or revocation of a CAC results 
from an applicable denial or revocation of a security clearance, 
suitability decision or other action for which administrative process 
was already provided on grounds that support denial or revocation of a 
CAC, no separate appeal for CAC denial or revocation is allowed.
    (1) Civilian applicants who have been denied a CAC, and for whom an 
appeal is allowed under this paragraph, may elect to appeal to a three 
member board containing one security and one human resources 
representative from the sponsoring activity.
    (2) Contractor employees who have had their CAC revoked, and for 
whom an appeal is allowed under this paragraph, may appeal to the 
Defense Office of Hearings and Appeals under the established 
administrative process set out in 32 CFR part 155. Decisions following 
appeal are final.
    (e) Reciprocity of CAC Determinations. (1) The sponsoring activity 
shall not readjudicate CAC determinations for individuals transferring 
from another Federal department or agency, provided:
    (i) Possession of a valid PIV or CAC can be verified by the 
individual's former department or agency.
    (ii) The individual has undergone the required NACI or other 
equivalent suitability, public trust, or national security 
investigation and received favorable adjudication from the former 
agency.
    (2) Reciprocity may be granted as long as there is no break in 
service greater than 24 months and the individual has no actionable 
information since the date of the last completed investigation.
    (3) Reciprocity shall be based on final adjudication only.
    (4) Determinations for CACs issued on an interim basis are not 
eligible to be transferred.

    Dated: January 14, 2011.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2011-2214 Filed 2-1-11; 8:45 am]
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