Federal Register / Vol. 79, No. 62 / Tuesday, April 1, 2014 / Rules and Regulations 18161 

(ii) * * * (A) In 2016, A does not include 

the $15,000 section 951(a)(1)(A) income 

inclusion in A’s net investment income 

under section 1411(c)(1)(A)(i) and § 1.1411– 

1(a)(1)(i). * * * 

* * * * * 

Martin V. Franks, 

Chief, Publications and Regulations Branch, 

Legal Processing Division, Associate Chief 

Counsel, (Procedure and Administration). 

[FR Doc. 2014–07160 Filed 3–31–14; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Parts 1 and 602 

[TD 9644] 

RIN 1545–BK44 

Net Investment Income Tax; Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations; correction 

SUMMARY: This document contains 

corrections to final regulations (TD 

9644) that were published in the 

Federal Register on Monday, December 

2, 2013 (78 FR 72394). The final 

regulations provide guidance on the 

general application of the Net 

Investment Income Tax and the 

computation of Net Investment Income. 

DATES: This correction is effective April 

1, 2014 and applicable December 2, 

2013. 

FOR FURTHER INFORMATION CONTACT: 

Adrienne M. Mikolashek, at (202) 317– 

6852 (not a toll free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The final regulations (TD 9644) that 

are the subject of this correction is 

under section 1411 of the Internal 

Revenue Code. 

Need for Correction 

As published, the final regulations 

(TD 9644) contain errors that may prove 

to be misleading and are in need of 

clarification. 

Correction of Publication 

Accordingly, the final regulations (TD 

9644), that are the subject of FR Doc. 

2013–28410, are corrected as follows: 

1. On page 72399, first column, in the 

preamble, ninth line of the first full 

paragraph, the language ‘‘provides that 

the section 1411 is applied’’ is corrected 

to read ‘‘provides that section 1411 is 

applied’’. 

2. On page 72405, second column, in 

the preamble, twelfth line from the top 

of the page, the language 

‘‘1411(c)(1)(A)(i). See part 5.b.ii.a of 

this’’ is corrected to read 

‘‘1411(c)(1)(A)(i). See part 5.b.ii.a. of 

this’’. 

3. On page 72405, second column, in 

the preamble, fifteenth line from the top 

of the page, the language ‘‘purpose of 

section 1411’’ is corrected to read 

‘‘purposes of section 1411’’. 

4. On page 72406, first column, in the 

preamble, sixteenth line from the top of 

the page, the language 

‘‘1411(c)(1)(a)(iii)’’ is corrected to read 

‘‘1411(c)(1)(A)(iii)’’. 

5. On page 72406, third column, in 

the preamble, fourth line from the 

bottom of the page, the language 

‘‘Described in Section 1411(C)(1)(b)’’ is 

corrected to read ‘‘Described in Section 

1411(c)(1)(B)’’. 

6. On page 72407, first column, in the 

preamble, fifteenth line from the bottom 

of the page, the language ‘‘trades or 

business, rents, and royalties,’’ is 

corrected to read ‘‘trades or businesses, 

rents, and royalties,’’. 

7. On page 72409, first column, in the 

preamble, twelfth line of the first full 

paragraph, the language ‘‘reasonable 

methods may lead to’’ is corrected to 

read ‘‘reasonable methods may lead’’. 

8. On page 72411, second column, in 

the preamble, twentieth line of the first 

full paragraph, the language 

‘‘considered passive activity. However,’’ 

is corrected to read ‘‘considered a 

passive activity. However,’’. 

9. On page 72412, second column, in 

the preamble, seventh and the eighth 

lines of the first full paragraph, the 

language ‘‘participates in rental real 

estate activities for more than 500 hours 

per’’ is corrected to read ‘‘participates in 

a rental real estate activity for more than 

500 hours per’’. 

10. On page 72412, second column, in 

the preamble, thirteenth and fourteenth 

lines of the second full paragraph, the 

language ‘‘taxpayer has participated in 

rental real estate activities for more than 

500 hours’’ is corrected to read 

‘‘taxpayer has participated in a rental 

real estate activity for more than 500 

hours’’. 

11. On page 72415, first column, in 

the preamble, ninth line from the top of 

the page, the language ‘‘469(e)(1)(A)) by 

§ 1.469–2T(f)(10). In the’’ is corrected to 

read ‘‘469(e)(1)(A)) by § 1.469–2(f)(10). 

In the’’. 

12. On page 72415, first column, in 

the preamble, eighteenth line from the 

bottom of the page, the language 

‘‘covered by § 1.469–2T(f)(10) and’’ is 

corrected to read ‘‘covered by § 1.469– 

2(f)(10) and’’. 

13. On page 72420, second column, in 

the preamble, third line of the first full 

paragraph, the language ‘‘election under 

§ 1.1411–10(g) election’’ is corrected to 

read ‘‘election under § 1.1411–10(g)’’. 

Martin V. Franks, 

Chief, Publications and Regulations Branch, 

Legal Processing Division, Associate Chief 

Counsel, (Procedure and Administration). 

[FR Doc. 2014–07162 Filed 3–31–14; 8:45 am] 

BILLING CODE 4830–01–P 

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: Final rule. 

SUMMARY: This rule updates 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.). This 

rule establishes policy and assigns 

responsibilities related to the operation 

of the DoD PSP, including investigative 

and adjudicative policy for determining 

eligibility to hold a national security 

position. This rule also establishes 

investigative and adjudicative policy for 

the Department’s personal identity 

verification (PIV) credential. 

DATES: Effective Date: This rule is 

effective May 1, 2014. 

FOR FURTHER INFORMATION CONTACT: Dr. 

Kelly Buck, (703) 604–1130. 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

I. Purpose and Legal Authority for This 

Rule 

This rule updates policies, assigns 

responsibilities, and prescribes 

procedures 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.). This 

rule establishes PSP policy related to 

the operation of the DoD PSP, including 

investigative and adjudicative policy for 

determining eligibility to hold national 

security positions. This rule also 

establishes Homeland Security 

Presidential Directive (HSPD)–12 

investigative and adjudicative policy for 

the Department’s personal identity 

verification (PIV) credential. Legal 

authorities for this rule are E.O. 12968, 


wreier-aviles on DSK5TPTVN1PROD with RULES
18162 Federal Register / Vol. 79, No. 62 / Tuesday, April 1, 2014 / Rules and Regulations 

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; 5 

U.S.C. 301 and 7532; section 1072 of 

Public Law 110–181, as amended; 15 

U.S.C. 278g–3; 40 U.S.C. section 11331; 

10 U.S.C. 1564; 50 U.S.C.; 3343; 5 CFR 

parts 731, 732 and 736, and Homeland 

Security Presidential Directive (HSPD)– 

12. 

II. Summary of Major Provisions of 

This Rule 

The DoD Directive (DoDD) 5200.2, 

Personnel Security Program (PSP), 

codified at 32 CFR Part 156, was issued 

April 9, 1999. The Department is 

reissuing the DoD Directive as a DoD 

Instruction to update existing policy 

regarding operation of the DoD 

Personnel Security Program and to 

establish new policy implementing 

HSPD–12. 

The updated policy incorporates Joint 

Security and Suitability Reform Team 

efforts to revise Executive branch-wide 

policy and procedures needed to 

implement reform. The Intelligence 

Reform and Terrorism Prevention Act of 

2004, E.O. 13467, E.O. 12968, as 

amended, E.O. 10865, and HSPD–12 are 

some of the current Federal laws, 

directives and statutes that affect 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 

determinations. 

The procedural guidance for the DoD 

PSP is currently being updated and will 

subsequently be proposed as a rule 

codified at 32 CFR Part 154. The 

investigative and adjudication 

procedural guidance for the DoD 

Federal PIV credential pursuant HSPD– 

12 is undergoing coordination and will 

also be proposed a separate rule. 

III. Costs and Benefits of This Rule 

This is an update to an existing rule 

regarding personnel security 

investigative and adjudicative policy 

and implements new department policy 

related to HSPD–12. The personnel 

security program has no discernable 

increase in anticipated costs and 

benefits as the program is being updated 

to conform to current national security 

guidance. The latter dealing with 

HSPD–12 is an unfunded mandate. 

However, this rule does not increase 

costs; rather it implements the 

requirements of HSPD–12 in the most 

efficient and effective manner possible 

by ensuring uniform implementation. 

The benefits inherent to both the 

personnel security and HSPD–12 

programs enhance security as directed 

by the Intelligence Reform and 

Terrorism Prevention Act of 2004 and 

subsequent implementing policies. 

Public Comments 

The Department of Defense (DoD) 

published a proposed rule on February 

2, 2011 (76 FR 5729). One comment was 

received and is addressed below: 

Comment: Given the increasing use of 

DNA (deoxyribonucleic acid) as an 

investigatory tool by federal, state, and 

local law enforcement agencies, the DoD 

should consider requiring applicants to 

provide a DNA sample. That provided 

DNA sample would be profiled and 

compared to available databases. This 

would help insure that no applicant for 

a clearance is a subject of an active 

federal, state, or local criminal 

investigation based on DNA evidence. 

This would achieve the same end as 

the current collection of fingerprints 

from applicants that are run against 

Federal Bureau of Investigation 

databases. However, the additional use 

of DNA would recognize the greater 

prevalence of DNA evidence in criminal 

investigations. 

I do note that DNA is distinctly 

different from fingerprints in that a 

search of databases may produce a 

result that does not link to the DoD 

clearance applicant but could instead 

provide a linkage to a familial relative 

of the applicant. This secondary issue 

would have to be examined by DoD and 

the legal community. 

I also believe other federal agencies 

with similar personnel security 

programs should consider the collection 

of DNA samples from applicants to 

insure appropriate reciprocity of 

clearances between those agencies and 

DoD. 

DoD Response: The Federal 

Government is looking into the 

feasibility of using biometric identifiers 

other than fingerprints in the security 

clearance process. However, any such 

requirement such as the suggested 

collection of DNA from clearance 

applicants would be covered in a 

separate rulemaking. As the comment 

correctly notes, such a policy would be 

best coordinated with the other federal 

agencies with personnel security 

programs to insure appropriate 

reciprocity of clearances between 

agencies. 

Additional Changes by DoD: Other 

changes were made to the final rule 

from what was in the proposed due to 

additional coordination within the 

Department. These changes include: 

(a) The title for § 156.5 has been 

changed from ‘‘Procedures-sensitive 

positions, duties, and classified access’’ 

to ‘‘National Security Positions’’ to 

incorporate the positions, duties, and 

access into one common phrase. The 

term is listed in the definitions section 

and its use in the part provides for ease 

of reading. 

(b) Adjustments were made to the part 

to apply correct U.S. Code, Public Laws, 

or Executive Orders to the appropriate 

paragraph(s). 

(c) Changes were made in the 

‘‘Responsibilities’’ section to update the 

new title name for the Deputy Under 

Secretary of Defense for Intelligence and 

Security (previously known as the 

Deputy Under Secretary of Defense for 

HUMINT, Counterintelligence, and 

Security). 

(d) Required responsibilities were also 

added for the Under Secretary of 

Defense for Acquisition, Technology, 

and Logistics and the Under Secretary of 

Defense for Policy. 

(e) Verbiage was added that prohibits 

the use of DoD adjudication systems of 

record for use as a pre-hiring tool. 

Additional language directs the removal 

of personnel from national security 

positions who have received 

unfavorable security determinations. 

(f) Any other changes made to the part 

were made for ease and clarity of 

reading. 

Regulatory Procedures 

E.O. 12866, ‘‘Regulatory Planning and 

Review’’ and EO 13563, ‘‘Improving 

Regulation and Regulatory 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 tribal 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 these Executive Orders. 

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 tribal governments, in 

aggregate, or by the private sector, of 

$100 million or more in any one year. 


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Federal Register / Vol. 79, No. 62 / Tuesday, April 1, 2014 / Rules and Regulations 18163 

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 Policy. 

156.4 Responsibilities. 

156.5 National security positions. 

156.6 Common access card (CAC) 

investigation and adjudication. 

156.7 Definitions. 

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; 

5 U.S.C 301 and 7532; section 1072 of Pub. 

L. 110–181, as amended; 15 U.S.C. 278g–3; 

40 U.S.C. 11331; 10 U.S.C. 1564; 50 U.S.C. 

3343; 5 CFR parts 731, 731.101, 732, and 736; 

and HSPD–12. 

§ 156.1 Purpose. 

This part updates policies and 

responsibilities for the 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; 5 U.S.C. 301 and 7532; 

section 1072 of Public Law 110–181, as 

amended; 15 U.S.C. 278g–3; 40 U.S.C. 

11331; 10 U.S.C. 1564; 32 CFR parts 

147, 154 through 156; 50 U.S.C. 3343; 5 

CFR parts 731, 731.101, 732 and 736; 

and HSPD–12. 

§ 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 

DoD, the Defense Agencies, the DoD 

Field Activities, and all other 

organizational entities within the DoD 

(hereinafter referred to collectively as 

the ‘‘DoD Components’’). 

§ 156.3 Policy. 

It is DoD policy that: 

(a) The Department shall establish 

and maintain a uniform DoD PSP to the 

extent consistent with standards and 

procedures in 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; 32 CFR parts 147, 

154 through 156; 5 CFR parts 731, 

731.101, 732 and 736; 5 U.S.C. 301 and 

7532; section 1072 of Public Law 110– 

181, as amended; 15 U.S.C. 278g–3; 

section 11331 of 40 U.S.C.; 10 U.S.C. 

1564; 50 U.S.C. 3343; and the 

Intelligence Community Directive 

Number 704 (ICD 704) (available on the 

Internet at http://www.dni.gov). 

(b) DoD PSP policies and procedures 

shall be aligned using consistent 

standards to the extent possible; provide 

for reciprocal recognition of existing 

investigations and 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 national 

security positions are an inherently 

governmental function and shall be 

performed by appropriately trained and 

favorably adjudicated Federal 

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 that, by itself, shall 

not jeopardize the rendering of 

eligibility determinations or temporary 

eligibility for access to national security 

information. However, mental health 

counseling, where relevant to 

adjudication for a national security 

position, may justify further inquiry to 

assess risk factors that may be relevant 

to the DoD PSP. 

(e) The DoD shall not discriminate nor 

may any inference be raised on the basis 

of race, color, religion, sex, national 

origin, disability, or sexual orientation. 

(f) Discretionary judgments that 

determine eligibility for national 

security positions shall be clearly 

consistent with the national security 

interests of the United States. Any doubt 

shall be resolved in favor of national 

security. 

(g) No person shall be deemed to be 

eligible for a national security position 

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) No person shall be appointed or 

assigned to a national security position 

when an unfavorable personnel security 

determination has been rendered. 

(i) Eligibility for national security 

positions shall be granted only to 

persons who are U.S. citizens for whom 

the investigative and adjudicative 

process has been favorably completed. 

However, based on exceptional 

circumstances where official functions 

must be performed prior to completion 

of the investigative and adjudicative 

process, temporary eligibility for access 

to classified information may be granted 

while the investigation is underway. 

(j) 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 national security 

position or be granted a limited access 

authorization to classified information 

in support of a specific DoD program, 

project, or contract following a favorable 

security determination by an authorized 

adjudication facility. 

(k) The DoD shall establish 

investigative and adjudicative policy 

and procedures to determine whether to 

issue, deny or revoke common access 

cards (CACs) in accordance with the 

standards of the Homeland Security 

Presidential Directive (HSPD)–12 

(available in the Public Papers of the 

Presidents of the United States: George 

W. Bush (2004, Book II, page 1765) 

found on the Internet at http://

www.gpo.gov/); Office of Management 

and Budget Memorandum (OMB) M– 

05–24 (available on the Internet at 

http://www.whitehouse.gov/omb); 

Federal Information Processing 

Standards Publication 201–1 (FIPS 201– 

1) or successor (available on the Internet 

at http://csrc.nist.gov/); 48 CFR, Chapter 

1, Parts 1–99 (Federal Acquisition 

Regulation); 48 CFR, Chapter 2, Parts 

201–253 (Defense Federal Acquisition 

Regulation Supplement), and the Office 

of Personnel Management (OPM) 


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18164 Federal Register / Vol. 79, No. 62 / Tuesday, April 1, 2014 / Rules and Regulations 

Memorandum, ‘‘Final Credentialing 

Standards for Issuing Personal Identity 

Verification Cards under HSPD–12,’’ 

dated July 31, 2008 (available on the 

Internet at http://www.opm.gov/), as 

applicable. 

(l) Information about individuals 

collected as part of the investigative and 

adjudicative process shall be managed 

in accordance with applicable laws and 

DoD policies, including those related to 

privacy and confidentiality, security of 

information, and access to information. 

§ 156.4 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. 

(2) In coordination with the Under 

Secretary of Defense for Personnel and 

Readiness (USD(P&R)) and the General 

Counsel of the DoD (GC, DoD), develop 

policy for DoD personnel for the CAC 

personnel security investigation (PSI) 

and adjudication in accordance with 

HSPD–12; OMB Memorandum M–05– 

24; FIPS 201–1; and OPM 

Memorandum, ‘‘Final Credentialing 

Standards for Issuing Personal Identity 

Verification Cards under HSPD–12.’’ 

(3) In coordination with the Under 

Secretary of Defense for Acquisition, 

Technology and Logistics (USD(AT&L)) 

and the GC, DoD, develop policy for 

contractor investigations for CAC 

adjudication, outside the purview of the 

National Industrial Security Program, 

under the terms of applicable contracts 

in accordance with HSPD–12; OMB 

Memorandum M–05–24; FIPS 201–1; 

the Federal Acquisition Regulation; the 

Defense Federal Acquisition Regulation 

Supplement; and OPM Memorandum, 

‘‘Final Credentialing Standards for 

Issuing Personal Identity Verification 

Cards under HSPD–12.’’ 

(4) Issue guidance implementing the 

policy in this part. 

(b) The Deputy Under Secretary of 

Defense for Intelligence & Security 

(DUSD(I&S)), under the authority, 

direction, and control of the USD(I) 

shall: 

(1) Ensure that the PSP 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 that the Defense Security 

Service (DSS) 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 DoD PSP. 

(6) When appropriate, approve 

requests for exceptions to the DoD PSP 

relating to national security eligibility 

requirements 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) Develop guidance, interpretation, 

and clarification regarding the DoD PSP 

as needed. 

(8) Conduct oversight inspections of 

the DoD Components for 

implementation and compliance with 

DoD personnel security policy and 

operating procedures. 

(9) In furtherance of coordinated 

Government-wide initiatives under E.O. 

13467, 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 USD(AT&L) shall: 

(1) Establish acquisition policy, 

procedures, and guidance, in 

coordination with the USD(I) that 

facilitate DoD Component compliance 

with the DoD PSP. 

(2) Establish regulatory requirements 

within the Federal Acquisition 

Regulation and Defense Federal 

Acquisition Regulation for contracts and 

agreements that require non-DoD 

personnel to adhere to personnel 

security procedures in the performance 

of a contract or agreement. 

(d) The Under Secretary of Defense for 

Policy (USD(P)) is the approval 

authority for requests for exceptions to 

the DoD PSP involving access to NATO 

classified information. 

(e) 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 (DOHA). 

(f) The Heads of the DoD Components 

shall: 

(1) Designate a senior agency official, 

consistent with the provisions of E.O. 

12968, as amended, 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 guidance to local and 

regional organizations. 

(3) Provide funding to cover 

Component 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, and adverse actions to the 

appropriate personnel security, human 

resources, and counterintelligence 

official(s), as appropriate, within their 

respective Component. 

(5) Perform functions relating to the 

DoD Security Professional Education 

Development Program to ensure the 

security workforce in their respective 

Component has the knowledge and 

skills required to perform security 

functional tasks. 

(6) Provide requested information and 

recommendations, as appropriate, on 

any aspect of this part and the DoD PSP 

to the USD(I). 

(7) Enforce the requirement that DoD 

personnel security adjudication 

system(s) of records, within their 

respective Components, shall only be 

used as a personnel security system of 

records and shall not be used as a prehiring screening tool. 

§ 156.5 National security positions. 

(a) Procedures. The objective of the 

PSP is to ensure persons deemed 

eligible for national security positions 

remain reliable and trustworthy. 

(1) Duties considered sensitive and 

critical to national security do not 

always involve classified activities or 

classified matters. Personnel security 

procedures for national security 

positions are set forth in E.O. 12968, as 

amended; E.O. 10865, 32 CFR parts 

154–155; ICD 704; and DoD Regulation 

5220.22–R. The specific procedures 

applicable in each case type are set forth 

in DoD issuances. 

(2) Employees with access to 

automated systems that contain active 

duty, guard, or military reservists’ 

personally identifiable information or 

information pertaining to Service 

members that are otherwise protected 

from disclosure by section 552a of title 

5 United States Code, may be designated 

as national security positions within 

DoD, where such access has the 

potential to cause damage to national 

security. 


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Federal Register / Vol. 79, No. 62 / Tuesday, April 1, 2014 / Rules and Regulations 18165 

(b) Sensitive Compartmented 

Information (SCI) Eligibility. 

Investigative and adjudicative 

requirements for SCI eligibility shall be 

executed in accordance with this part 

and ICD 704. 

(c) Adjudication. (1) Personnel 

security criteria and adjudicative 

standards are described in E.O. 12968, 

as amended; 32 CFR parts 147, 154 and 

155; ICD 704, and DoD Regulation 

5220.22–R, as applicable, in accordance 

with Adjudicative Guidelines for 

Determining Eligibility for Access to 

Classified Information and other types 

of protected information or assignment 

to national security positions. 

Adjudications of eligibility for national 

security positions, regardless of whether 

they involve access to classified 

information, must be made in 

accordance with the Adjudicative 

Guidelines for Determining Eligibility 

for Access to Classified Information. 

(2) When an unfavorable personnel 

security determination is rendered: 

(i) Individuals cannot be appointed or 

assigned to national security positions. 

(ii) An individual currently occupying 

a national security position will be 

immediately removed from the national 

security position and placed, in 

accordance with agency policy, in an 

existing non-sensitive position if 

available. Placement in a non-sensitive 

position requires compliance with 

employment suitability standards. The 

national security position is not to be 

modified or a new position created to 

circumvent an unfavorable personnel 

security determination. The individual 

is to be placed in an appropriate status, 

in accordance with agency policy, until 

a final security determination is made. 

A final security determination is the 

granting, denial or revocation by an 

appropriate central adjudications 

facility or an appeal board decision, 

whichever is later. 

(iii) To ensure consistency and quality 

in determinations of eligibility for 

national security positions, adjudicators 

must successfully complete the full 

program of professional training 

provided by the DSS Center for 

Development of Security Excellence (or 

equivalent training) and be certified 

through the DoD Professional 

Certification Program for Adjudicators 

within 2 years of program 

implementation or, for new hires, 

within 2 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 as applicable 

or as otherwise authorized by law. 

(e) Polygraph. Under certain 

conditions, DoD Components are 

authorized to use polygraph 

examinations to resolve credible 

derogatory information developed in 

connection with a personnel security 

investigation; to aid in the related 

adjudication; or to facilitate classified 

access decisions. 

(f) Continuous Evaluation. All 

personnel in national security positions 

shall be subject to continuous 

evaluation. 

(g) Financial Disclosure. DoD 

Component implementation of the 

electronic financial disclosure 

requirement, consistent with E.O. 

12968, shall be completed by the end of 

calendar year 2012. 

(h) Reciprocal Acceptance of 

Eligibility Determinations. (1) DoD 

reciprocally accepts existing national 

security eligibility determinations or 

clearances from other government 

agencies in accordance with E.O. 13467, 

OMB Memorandums ‘‘Reciprocal 

Recognition of Existing Personnel 

Security Clearances’’ dated December 

12, 2005 (Copies available on the 

Internet at http://www.whitehouse.gov/

omb) and July 17, 2006 (Copies 

available on the Internet at http://

www.whitehouse.gov/omb). 

(2) Reciprocity for SCI eligibility shall 

be executed in accordance with ICD 704 

and associated Director of National 

Intelligence guidance. 

(3) Personnel who have been 

determined eligible for national security 

positions should not be subjected to 

additional security reviews, completion 

of a new security questionnaire, or 

initiation of a new investigative check, 

unless credible derogatory information 

that was not previously adjudicated 

becomes known, or the previous 

adjudication was granted by a 

condition, deviation, or waiver pursuant 

the provisions of OMB Memorandums 

‘‘Reciprocal Recognition of Existing 

Personnel Security Clearances’’ dated 

December 12, 2005, or there has been a 

break in service of more than 24 

months. Exceptions for access to SCI or 

special access programs are listed in the 

OMB Memorandums ‘‘Reciprocal 

Recognition of Existing Personnel 

Security Clearances’’ dated July 17, 

2006. 

(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 50 U.S.C. chapter 23. 

(j) Wounded Warrior Security and 

Intelligence Internship 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 percent or greater 

may submit a PSI for Top Secret 

clearance with SCI 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 Component that is offering 

the internship. If the DoD Component 

does not have funds available, the 

Military Service in which the uniform 

service personnel served may choose to 

fund the investigation. 

§ 156.6 Common access card (CAC) 

investigation and adjudication. 

(a) General. Individuals entrusted 

with access to Federal property, 

information systems, and any other 

information bearing on national security 

must not put the Government at risk or 

provide an avenue for terrorism. 

(1) All individuals requiring a CAC 

must meet credentialing standards of 

OPM Memorandum, ‘‘Final 

Credentialing Standards for Issuing 

Personal Identity Verification Cards 

under HSPD–12.’’ For those individuals 

who are subject to an interim 

credentialing decision before a security, 

suitability, or equivalent adjudication is 

completed, the OPM credentialing 

standards will be the basis for issuing or 

denying a CAC. The subsequent 

credentialing decision will be made 

upon receipt of the completed 

investigation from the ISP. 

(2) If an individual is found 

unsuitable for employment in a covered 

position under 5 CFR 731.101, ineligible 

for access to classified information 

under E.O. 12968, or disqualified from 

appointment in the excepted service or 

from working on a contract, the 

unfavorable decision is a sufficient basis 

for non-issuance or revocation of a CAC, 

but does not necessarily mandate this 

result. 

(b) Investigation. A favorably 

adjudicated National Agency Check 

with Inquiries (NACI) is the minimum 

investigation required for a final 

credentialing determination for CAC. 


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18166 Federal Register / Vol. 79, No. 62 / Tuesday, April 1, 2014 / Rules and Regulations 

(1) An interim credentialing 

determination can be made based on the 

results of a completed National Agency 

Check or an Federal Bureau of 

Investigation National Criminal History 

Check (fingerprint check), and 

submission of a request for investigation 

(NACI or greater). 

(2) Individuals identified as having a 

favorably adjudicated investigation on 

record, equivalent to (or greater than) 

the NACI do not require an additional 

investigation for CAC issuance. 

(3) There is no requirement to 

reinvestigate CAC holders unless they 

are subject to reinvestigation for 

national security or suitability reasons 

as specified in applicable DoD 

issuances. 

(4) Existing CAC holders without the 

requisite background investigation on 

record must be investigated in 

accordance with OMB Memorandum 

M–05–24, ‘‘Implementation of 

Homeland Security Presidential 

Directive (HSPD) 12—Policy for a 

Common Identification Standard for 

Federal Employees and Contractors,’’ 

dated August 5, 2005. 

(c) Adjudication. The ultimate 

determination whether to authorize 

CAC issuance or revoke the CAC must 

be an overall common-sense judgment 

after careful consideration of the basic 

and, if applicable, supplemental 

credentialing standards in OPM 

Memorandum, ‘‘Final Credentialing 

Standards for Issuing Personal Identity 

Verification Cards under HSPD–12,’’ 

each of which is to be evaluated in the 

context of the whole person. These 

standards shall be evaluated to 

determine if there is a reasonable basis 

to believe that issuing a CAC to the 

individual poses an unacceptable risk. 

(1) Each case is unique and must be 

judged on its own merits. To the extent 

pertinent to the individual case, when 

evaluating the conduct, the adjudicator 

should consider: the nature and 

seriousness of the conduct, the 

circumstances surrounding the conduct, 

the recency and frequency of the 

conduct, the individual’s age and 

maturity at the time of the conduct, 

contributing external conditions, and 

the presence or absence of rehabilitation 

or efforts toward rehabilitation. 

(2) Final credentialing standards are: 

(i) Basic Credentialing Standards. All 

CAC adjudications must apply the basic 

credentialing standards. CAC shall not 

be issued when a disqualifying factor 

cannot be mitigated. 

(ii) Supplemental Credentialing 

Standards. The supplemental 

credentialing standards, in addition to 

the basic credentialing standards, shall 

apply generally to individuals who are 

not subject to adjudication for eligibility 

for a sensitive position or access to 

classified information, suitability for 

Federal employment or fitness. These 

standards may be applied based on the 

risk associated with the position or 

work on the contract. 

(3) All interim and final adjudicative 

determinations shall be made by cleared 

and trained Federal Government 

personnel. Automated adjudicative 

processes shall be used to the maximum 

extent practicable. 

(4) Adjudication decisions of CAC 

investigations shall be incorporated into 

the Consolidated Central Adjudication 

Facility as directed by the Deputy 

Secretary of Defense. 

(5) CAC adjudicators must 

successfully complete formal training 

through a DoD adjudicator course from 

the DSS Center for Development of 

Security Excellence to achieve 

maximum consistency and fairness of 

decisions rendered. 

(6) Federal Government credentialing 

standards do not prohibit employment 

of convicted felons who have been 

released from correctional institutions, 

absent other issues, if they have 

demonstrated clear evidence of 

rehabilitation. 

(d) Appeals. CAC applicants or 

holders may appeal CAC denial or 

revocation. 

(1) 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 an excepted 

service position or from working on a 

contract for reasons other than 

eligibility for a Federal Credential as 

described in 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. 

(2) Initial civilian and contractor 

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 no more than one security 

representative from the sponsoring 

activity. 

(3) Contractor employees who have 

had their CAC revoked, and for whom 

an appeal is allowed under this 

paragraph, may appeal to DOHA under 

the established administrative process 

set out in 32 CFR Part 155. 

(4) Decisions following appeal are 

final. 

(5) Individuals whose CACs have 

been denied or revoked are eligible for 

reconsideration 1 year after the date of 

final denial or revocation, provided the 

sponsoring activity supports 

reconsideration. Individuals with a 

statutory or regulatory bar are not 

eligible for reconsideration while under 

debarment. 

(e) Foreign Nationals. Special 

considerations for conducting 

background investigations of non-U.S. 

nationals (foreign nationals) are 

addressed in OPM Memorandum, 

‘‘Final Credentialing Standards for 

Issuing Personal Identity Verification 

Cards under HSPD–12.’’ The following 

criteria shall be met prior to CAC 

issuance to foreign nationals: 

(1) The background investigation 

must be completed and favorably 

adjudicated before issuing CACs to 

foreign nationals. 

(2) Foreign nationals are not eligible 

to receive CAC on an interim basis. 

(3) At foreign locations: 

(i) Foreign national background 

investigations may vary based on 

standing reciprocity treaties concerning 

identity assurance and information 

exchange that exist between the United 

States and its allies. This includes 

foreign military, civilian, or contract 

support with a visit status and security 

assurance that has been confirmed, 

documented, and processed in 

accordance with USD(P) policy. 

(ii) The type of background 

investigation may also vary based upon 

agency agreements with the host 

country when the foreign national CAC 

applicant (such as a DoD direct or 

indirect hire) has not resided in the 

United States for at least 3 of the past 

5 years or is residing in a foreign 

country. The investigation must be 

consistent with NACI, to the extent 

possible, and include a fingerprint 

check against the Federal Bureau of 

Investigation (FBI) criminal history 

database, an FBI Investigations Files 

(name check) search, and a name check 

against the Terrorist Screening Database. 

(4) At U.S.-based locations and in U.S. 

territories: 

(i) Foreign nationals who have resided 

in the United States or U.S. territory for 

3 years or more must have a NACI or 

greater investigation. 

(ii) Components may delay the 

background investigation of foreign 

nationals who have resided in the U.S. 

or U.S. territory for less than 3 years 


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Federal Register / Vol. 79, No. 62 / Tuesday, April 1, 2014 / Rules and Regulations 18167 

until the individual has been in the U.S. 

or U.S. territory for 3 years. When the 

investigation is delayed, the Component 

may, in lieu of a CAC, issue an 

alternative facility access credential at 

the discretion of the relevant 

Component official based on a risk 

determination. 

(f) Recording Final Adjudication. 

Immediately following final 

adjudication, the sponsoring activity 

shall record the final eligibility 

determination (active, revoked, denied, 

etc.) in the OPM Central Verification 

System as directed by OPM 

Memorandum, ‘‘Final Credentialing 

Standards for Issuing Personal Identity 

Verification Cards under HSPD–12,’’ 

and maintain local records for posting 

in a DoD repository when available. 

(g) Reciprocity of CAC 

Determinations. (1) The sponsoring 

activity shall not re-adjudicate CAC 

determinations for individuals 

transferring from another Federal 

department or agency, provided: 

(i) Possession of a valid personal 

identity verification (PIV) card 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. 

(iii) 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. 

(2) Interim CAC determinations are 

not eligible to be transferred or 

reciprocally accepted. Reciprocity shall 

be based on final favorable adjudication 

only. 

§ 156.7 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. 

Contractor. Defined in E.O. 13467. 

Employee. Defined in E.O. 12968, as 

amended. 

Limited access authorization. Defined 

in 32 CFR Part 154. 

National security position. (1) Any 

position in a department or agency, the 

occupant of which could bring about, by 

virtue of the nature of the position, a 

material adverse effect on the national 

security. 

(i) Such positions include those 

requiring eligibility for access to 

classified information. 

(ii) Other such positions include, but 

are not limited to, those whose duties 

include: 

(A) Protecting the nation, its citizens 

and residents from acts of terrorism, 

espionage, or foreign aggression, 

including those positions where the 

occupant’s duties involve protecting the 

nation’s borders, ports, critical 

infrastructure or key resources, and 

where the occupant’s neglect, action, or 

inaction could bring about a material 

adverse effect on the national security; 

(B) Developing defense plans or 

policies; 

(C) Planning or conducting 

intelligence or counterintelligence 

activities, counterterrorism activities 

and related activities concerned with 

the preservation of the military strength 

of the United States; 

(D) Protecting or controlling access to 

facilities or information systems where 

the occupant’s neglect, action, or 

inaction could bring about a material 

adverse effect on the national security; 

(E) Controlling, maintaining custody, 

safeguarding, or disposing of hazardous 

materials, arms, ammunition or 

explosives, where the occupant’s 

neglect, action, or inaction could bring 

about a material adverse effect on the 

national security; 

(F) Exercising investigative or 

adjudicative duties related to national 

security, suitability, fitness or identity 

credentialing, where the occupant’s 

neglect, action, or inaction could bring 

about a material adverse effect on the 

national security; 

(G) Exercising duties related to 

criminal justice, public safety or law 

enforcement, where the occupant’s 

neglect, action, or inaction could bring 

about a material adverse effect on the 

national security; or 

(H) Conducting investigations or 

audits related to the functions described 

in paragraphs (1)(ii)(B) through (G) of 

this definition, where the occupant’s 

neglect, action, or inaction could bring 

about a material adverse effect on the 

national security. 

(2) The requirements of this part 

apply to positions in the competitive 

service, positions in the excepted 

service where the incumbent can be 

noncompetitively converted to the 

competitive service, and career 

appointments in the Senior Executive 

Service within the executive branch. 

Departments and agencies may apply 

the requirements of this part to other 

excepted service positions within the 

executive branch and contractor 

positions, to the extent consistent with 

law. 

Unacceptable risk. Threat to the life, 

safety, or health of employees, 

contractors, vendors, or visitors; to the 

Government’s physical assets or 

information systems; to personal 

property; to records, privileged, 

proprietary, financial, or medical 

records; or to the privacy of data 

subjects, which will not be tolerated by 

the Government. 

Dated: March 20, 2014. 

Aaron Siegel, 

Alternate OSD Federal Register Liaison 

Officer, Department of Defense. 

[FR Doc. 2014–06544 Filed 3–31–14; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 100 

[Docket Number USCG–2013–1059] 

RIN 1625–AA08 

Special Local Regulations for Marine 

Events, Tred Avon River; Between 

Bellevue, MD and Oxford, MD 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary final rule. 

SUMMARY: The Coast Guard is 

establishing special local regulations 

during the ‘‘Oxford-Bellevue Sharkfest 

Swim’’, a marine event to be held on the 

waters of the Tred Avon River on May 

10, 2014. These special local regulations 

are necessary to provide for the safety of 

life on navigable waters during the 

event. This action is intended to 

temporarily restrict vessel traffic in a 

portion of the Tred Avon River during 

the event. 

DATES: This rule is effective from 9 a.m. 

to 11:59 a.m. on May 10, 2014. 

ADDRESSES: Documents mentioned in 

this preamble are part of docket [USCG– 

2013–1059]. To view documents 

mentioned in this preamble as being 

available in the docket, go to http://

www.regulations.gov, type the docket 

number in the ‘‘SEARCH’’ box and click 

‘‘SEARCH.’’ Click on Open Docket 

Folder on the line associated with this 

rulemaking. You may also visit the 

Docket Management Facility in Room 

W12–140 on the ground floor of the 

Department of Transportation West 

Building, 1200 New Jersey Avenue SE., 

Washington, DC 20590, between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this rule, call or 

email Mr. Ronald Houck, U.S. Coast 

Guard Sector Baltimore, MD; telephone 

410–576–2674, email Ronald.L.Houck@

uscg.mil. If you have questions on 

viewing or submitting material to the 


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