DEPARTMENT OF THE NAVY, PETITIONER V. THOMAS M. EGAN

   No. 86-1552

   In the Supreme Court of the United States

   October Term, 1987

   On Writ of Certiorari to the United States Court of Appeals for the
Federal Circuit

   Reply Brief for the Petitioner

   Respondent's job at the Trident Refit Facility entailed physcial
access to the interiors of nuclear submarines, as well as knowledge of
their arrivals and departures.  We demonstrated in our opening brief
that the President has instructed the defense agencies not to employ
any person in a position entailing access to classified information
unless doing so is "clearly consistent with the interests of the
national security" and that the MSPB, whose mission is not the
security of the nation but the protection of employees, properly
concluded that it had no authority to review the substance of the
Navy's determination to deny respondent a clearance.  Respondent and
his supporting amici, focusing on respondent's conceded right to MSPB
review of his removal, argue that an employee would be better
protected against overcaution or excessive zeal or error on defense
agency's part if the Navy were required to persuade the MSPB that it
was appropriate to deny a clearance.  These arguments mistake the
objective of the clearance process, which is to deny access to
classified information to anyone who might deliberately or
inadvertently compromise it.  /1/

   1. The dispute in this case is a narrow one.  The President has
directed each defense agency not to employ any individual in a
sensitive position unless it finds that the "clearly consistent"
standard is met.  See Gov't Br. 18.  /2/ The Navy has adopted
regulations pursuant to which it designates positions as sensitive,
and it has so designated respondent's position.  /3/ The Navy has also
adopted regulations pursuant to which it clears civilian personnel for
access to classified information.  Respondent has not challenged the
validity or constitutionality of these Navy regulations, nor has he
contended that the Navy did not follow them in this case.  /4/ Nor has
respondent disputed the fact that, if he was validly denied a
clearance, he fails to meet one of the proper requirements of any
position at the Trident Facility and may be removed for cause.  His
only contention is that upon his removal he was entitled to MSPB
review of the substance of the Navy's decision to deny him a
clearance.

   2. As the MSPB stated (Pet. App. 47a-48a), nothing in the language
or legislative history of the Civil Service Reform Act of 1978 (CSRA)
addresses that contention, and the extensive discussions in the
opposing briefs (Resp. Br. 6-11;  NFFE Amicus Br. 14-16;  Bogdanowicz
Amicus Br. 6-26;  ACLU Amicus Br. 23-36;  AFL-CIO Amicus Br. 27-28) do
not set forth any actual evidence on the issue.  We argued in our
opening brief (at 22-40) that the MSPB's interpretation of the statute
as not empowering it to review the substance of a clearance
determination is supported by the prior practice of the Civil Service
Commission (CSC), the nature of a security clearance determination,
and the quite inconsistent nature of MSPB (and arbitrator) review.  We
will not repeat those arguments here except to respond to three
points.

   a. Respondent (Br. 11) and two amici (Bogdanowicz Br. 6;  NFFE Br.
11) assert that the statute provides for MSPB review of removals
without distinguishing between those based on loss of a security
clearance and other removals.  We agree:  /5/ the CSRA, 5 U.S.C.
7512(1) and 7513(d), gave respondent the right to MSPB review of his
removal.  But the scope of the Board's power, on such review, to
overturn other determinations bearing on the employee's qualifications
is a different question, not answered by the statute or its
legislative history.  On that question, the Board followed what are
(despite our opponents' contrary assertions (Bogdanowicz Br. 12;  ACLU
Br. 33)) analogous precedents:  Zimmerman v. Department of the Army,
755 F.2d 156 (Fed. Cir. 1985), in which the court affirmed the Board's
action sustaining the removal of a civilian employee of the Army for
failure to remian in good standing in her reserve unit, while refusing
to review the circumstances of her forced transfer out of the unit;
and Buriani v. Department of the Air Force, 777 F.2d 674 (Fed. Cir.
1985), in which the court affirmed the Board's action sustaining the
demotion of a civilian employee of the Air Force for failure to
receive a promotion in the Air Force Reserve, while declining to
review the merits of the failure to promote.  Like the unreviewable
collateral decisions in those cases, the Navy's decision in this case
not to grant respondent access to its submarines was, we submit, a
decision properly committed to the discretion of the defense agency.

   Contrary to the claims of amici Bogdanowicz (Br. 8-9) and ACLU (Br.
25-27), a separate and otherwise unreviewable discretionary decision
by the employing agency does not become subject to full review on its
merits merely because it leads to a removal.  The agency decisions
involved in Losure v. ICC, 2 M.S.P.R. 195 (1980) (a "reorganization")
and Ketterer v. Department of Agriculture, 2 M.S.P.R. 294 (1980) (a
"reassignment") were both attacked as mere pretexts for otherwise
unjustified removals.  The Board in each case required the agency to
prove that its determination was "bona fide" and not a mere "veil":
it said in Losure (2 M.S.P.R. at 200) that it would "not allow the
circumvention of adverse action procedures where the 'reorganization'
has no substance and is in reality a pretext for summary removal";
and it said in Kitterer, citing Losure, that "agency discretion to
reassign may no more properly be invoked as a veil to effect an
employee's separation than may a reduction in force" (2 M.S.P.R. at
299 n. 8 (emphasis added)).  But it said in the same breath that if
such an agency action was due to bona fide management considerations,
"this Board will not review the management considerations which
underlie that exercise of agency discretion" (ibid.).  /6/ No one has
suggested that the denial of respondent Egan's security clearance was
not motivated by a bona fide concern for security and was a mere
pretext for removing him for nonsecurity reasons.

   b. Amicus NFFE (Br. 14-15) disputes our contention that the Civil
Service Commission -- whose review responsibilities, aside from
certain specifically enumerated exceptions, passed generally unchanged
to the MSPB -- did not have power to review the merits of security
clearance determinations.  They cite two cases, Cole v. Young, 351
U.S. 536 (1956), and Karpoff v. United States, 142 Ct. Cl. 93 (1958),
in support of their argument.  Neither case is on point.  /7/

   In an unpublished decision that is on point, the Commission's
Appeals Review Board itself made clear, shortly after the passage of
the CSRA, /8/ that it did not believe it had such power.  In re
Silver, No. DC752B90033 (Civ. Serv. Comm'n Nov. 2, 1978).  /9/ On
review of the suspension and removal of an employee for cause
following the loss of his security clearance, the Appeals Board
stated:  "Determinations with respect to security clearances are made
by the agencies and this office has no jurisdiction to substitute its
judgment for that of the agency in determining whether the appellant
was suitable for a clearance" (slip op. 6).  The Appeals Board went on
however, to review the procedures afforded by the agency in revoking
the clearance and, finding them "fatally procedurally defective,"
reversed the employee's suspension and removal.  That is what the MSPB
concluded it had the power to do here.

   c. Four amici argue (ACLU Br. 25-37;  Bogdanowicz Br. 4-5, 26-28;
NFFE Br. 5-11;  AFL-CIO Br. 18-27) that MSPB review of clearance
determinations would normally involve "mundane question(s) of fact"
(AFL-CIO Br. 18) and would be "neither different nor more difficult
than standard Board fare" (ACLU Br. 31).  They are wrong for a reason
that goes, we think, to the heart of the matter:  even where the
denial of a security clearance stems from instances of misconduct, the
question is not whether the employee "deserves" to be removed for his
misdeeds, but whether the agency can predict with confidence that he
will not in the future compromise sensitive information.

   There will, no doubt, be instances where the agency makes a mistake
of fact.  But the Navy and other defense agencies have their own
strong incentive to avoid mistakes:  it is expensive to recruit,
train, and clear a replacement for an experienced employee.  That is
why the Navy and other agencies have established elaborate procedures
to avoid mistakes, including insistence on the concurrence of
personnel at more than one level in any revocation of a clearance.
/10/ Requiring the agency to satisfy the MSPB or an arbitrator by a
preponderance of the evidence that denial of a clearance is warranted
would, no doubt, result in the granting of more clearances, including
many to employees who would never in fact compromise sensitive
information.  But the "clearly consistent" standard established in
Executive Order No. 10,450 means that the process of determining
whether individuals should be cleared for access to nuclear submarines
and other sensitive areas and information should err (if it must) on
the side of overexclusion.  There is no reason to think that Congress
intended in the CSRA to reverse that assumption.  /11/

   Two amici (NFFE Br. 5-6;  ACLU Br. 28) argue that without MSPB
review of clearance decisions an agency could arbitrarily deny a
clearance as a different and improper one.  But this is certainly not
such a case, and there is no reason to think that the risk is a
substantial one.  As just noted, the Navy and other agencies have
their own incentives and procedures to avoid arbitrary clearance
decisions.  And MSPB review of the removal or other adverse action,
which provides an outside check on whether those procedures were
properly followed, should be a significant deterrent to subterfuge.

   3. Respondent (Br. 11-14) and two amici (NFFE Br. 3-4;  ACLU Br.
40-52) contend that due process requires an MSPB hearing on the denial
of his clearance.  But there is no due process question in this case.
Respondent received notice and a full statement of the reasons why the
Navy proposed to deny his clearance, and he responded at length, with
the assistance of his union.  He did not challenge any fact, or ask to
cross-examine anyone, or ask to be heard further by the Navy.  /12/
When he sought review by the MSPB, although the presiding official was
willing to consider the merits, respondent twice failed to respond to
the Board's notice that a hearing would be convened at his request.
The only thing respondent has placed in issue in this case is the
Navy's judgment, based on the written record, that a clearance should
be denied.

   Were the question presented whether the Navy /13/ was obliged to
afford an evidentiary hearing in connection with the denial of
respondent's security clearance, we would argue strenuously to the
contrary.  Certainly respondent had no right to such a hearing in
connection with the denial of the clearance as such:  that point was
settled in Cafeteria Workers v. McElroy, 367 U.S. 886, 894-898 (1961),
holding that the Navy could exclude a concessionaire employee from the
Navy Gun Factory on unspecified security grounds, without notice,
opportunity to respond or explanation, so long as the exclusion was
not "patently arbitrary or discriminatory" (367 U.S. at 898).

   We do not dispute the contention, made primarily by amici
(Bogdanowicz Br. 29;  ACLU Br. 42) that under Cleveland Board of
Education v. Loudermill, 470 U.S. 532 (1985), respondent had a
property interest in his job.  /14/ But that interest was conditioned
not, as asserted in Loudermill, on prescribed "procedures for its
deprivation" (470 U.S. at 539), but on the concededly valid
substantive requirement (see job description at C.A. App. 3) that
respondent obtain a clearance making him eligible to, inter alia, go
on board nuclear submarines.  Loudermill does not hold or suggest that
a federal employee is consitutionally entitled to an evidentiary
hearing in connection with any determination that he fails to meet one
of the substantive qualifications for his job.

   The question what process is due a Navy employee in connection with
the Navy's determination of his substantive qualifications need not be
reached in this case, but the answer, surely, is that it depends on
the circumstances.  See Mathews v. Eldridge, 424 U.S. 319, 334 (1976).
 Here, we note once again, respondent received, under Navy
regulations, notice of the proposed denial of his security clearance
(including a written statement of reasons), an opportunity to reply in
writing with the assistance of his union, the right to a written
response stating the final determination with reasons, and the right
to appeal to a higher authority within the Navy (OPNAVINST 5510.1F
para. 16-105).  He received, under 5 U.S.C. 7513, notice of his
removal (stating the specific reasons), the right to respond and be
represented, and the right to appeal to the MSPB (including the right
to a hearing, which he waived);  in that appeal, the MSPB determined
that the position required a clearance, that the Navy had in fact
denied the clearance, and that in doing so it had satisfied the
requirements of due process.  The MSPB's decision on these points was
subject to judicial review.  We suggest that the Court would conclude,
upon "analysis of the governmental and private interests that are
affected" (424 U.S. at 334), that the process by which respondent was
denied a security clearance and subsequently removed amply satisfied
constitutional requirements.

   4. Respondent (Br. 15-16) and three amici (ACLU Br. 21-23;
Bogdanowicz Br. 28-30;  AFL-CIO Br. 27-30) argue that the availability
of 5 U.S.C. 7532 indicated that Congress intended the MSPB to review
the merits of any denial of a security clearance that leads to removal
for cause where Section 7532 is not invoked.  That is a nonsequitur
for the reasons stated in our opening brief (at 40-44).  We add two
points.

   a. Respondent and two amici argue (Resp. Br. 16;  AFL-CIO Br. 29;
Bogdanowicz Br. 29) that an employee is entitled to a trial-type
hearing (albeit after summary suspension without pay) before removal
under 5 U.S.C. 7532, and he must therefore be entitled to an MSPB
hearing on the merits of the denial of his security clearance in
connection with a removal for cause.  But even if the premise were
clearly correct, /15/ the conclusion would not follow;  the two
procedures are simply different, and afford different protections.
Section 7532 provides no process at all before suspension without pay,
and no outside review of any kind afterwards.  In contrast, the denial
of a security clearance under OPNAVINST requires notice, a statement
of reasons, and an opportunity to respond before action is taken;  and
any resulting adverse action under 5 U.S.C. 7513 carries the right to
MSPB review (including a hearing), which provides a cross-check on
whether proper procedures were followed in the denial of a clearance
and on whether the suspension or removal was justified by the denial
of the clearance.

   b. Congress expressly excluded "a suspension or removal under
Section 7532" from the definition in 5 U.S.C. 7512 of actions to which
the subchapter (providing for MSPB review) applies.  There is a
similar exclusion in 5 U.S.C. 7121(c), which provides for grievance
procedures.  Three amici (AFL-CIO Br. 28-29;  ACLU Br. 21-23;
Bogdanowicz Br. 28-30) argue that the specific reference to Section
7532, instead of a reference to all "matters involving national
security" (which had appeared in the Senate version of what became 5
U.S.C. 7121), shows that Congress intended to provide for review of
the substance of clearance decisions unless Section 7532 is invoked.
But if the broader language had been used, respondent in this very
case would not have been entitled to the important protections
afforded by 5 U.S.C. 7513.  The fact the Congress chose to exclude in
toto only actions where Section 7532 is invoked says nothing about the
appropriate scope of MSPB review in the case of a removal that is
properly before it, as this one was.

   For the foregoing reasons, and the reasons stated in our opening
brief, the judgment of the court of appeals should be reversed.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   NOVEMBER 1987

   /1/ As the Senate Select Committee on Intelligence explained
recently, "Clearances should go to individuals whose records
demonstrate a clear aptitude for security.  That is, their background
and personal qualities should show a high sense of responsibility --
not just the absence of proved disqualifying factors." Meeting the
Espionage Challenge:  A Review of United States Counterintelligence
and Security Programs -- Report of the Select Comm. on Intelligence,
S. Rep. 99-522, 99th Cong., 2d Sess. 71 (1986).

   /2/ Respondent (Br. 14) and amicus Bogdanowicz (Br. 17) argue,
citing Greene v. McElroy, 360 U.S. 474, 508 (1959), that the President
must "explicit(ly) authoriz(e)" any procedure by which any person may
be denied access to a military facility without a trial-type hearing,
if the result is that he cannot hold a paricular job.  Cafeteria
Workers v. McElroy, 367 U.S. 886 (1961), disposes of that claim.  In
that case (which, like Greene, involved a contractor employee), the
Court "proceed(ed) on the premise that the explicit authorization
found wanting in Greene must be shown" (367 U.S. at 890);  after
stating (ibid.) that "both the legislative and executive branches are
wholly legitimate potential sources of such explicit authority," the
Court found the necessary authorization in Article 0734 of Navy
Regulations (as approved by the President), which excluded "tradesmen
or their agents * * * except as authorized by the commanding officer"
(see 367 U.S. at 892).  Sections 2 and 3 of Executive Order No. 10,450
(Pet. App. 77a-78a) are considerably more explicit in their
instructions to exclude persons on national security grounds.  See
also Executive Order No. 12,356, Section 4.1, 3 C.F.R. 174 (1983).

   /3/ The Department of Defense accounts for 94% of all government
employee positions requiring security clearances, and the Departments
of Energy, Justice, State, and Treasury account for most of the
remainder.  See Federal Government Security Clearance Programs:
Hearings Before the Permanent Subcomm. on Investigations of the Senate
Comm. on Governmental Affairs, 99th Cong., 1st Sess. 27 (1985)
(testimony of Bill W. Thurman, Dep. Dir., National Security and
International Affairs Div., GAO).  As we have previously observed
(Pet. 11), the question whether the MSPB could review the propriety of
designating a position as sensitive is not presented in this case.
Cf. Cole v. Young, 351 U.S. 536 (1956).

   /4/ Respondent has not challenged the MSPB's ruling (Pet. App. 59a)
that the Navy afforded him procedural due process in connection with
the clearance determination, nor has respondent argued at any stage
that the Navy did not follow its own regulations.  It appears (see
Gov't Br. 4) that after the Director of Naval Civilian Personnel
Command determined to deny his clearance, respondent appealed this
determination to the Navy's Personnel Security Appeals Board, but the
Navy removed him before the Board affirmed the Director's
determination.  We do not believe this sequence of events, on which
neither the MSPB nor the court of appeals commented, has any material
bearing on the question presented to this Court.

   /5/ We strongly disagree with the suggestion of amicus Washington
Legal Foundation (Br. 22-26) that the Navy in effect terminated
respondent summarily under 5 U.S.C. 7532, so that its actions are not
subject to any outside review.  Both parties (see Resp. Br. 16), as
well as other amici (Bogdanowicz Br. 28;  ACLU Br. 21;  AFL-CIO Br.
29) agree with the court of appeals (Pet. App. 12a) and the MSPB (Pet.
App. 55a-56a) that Section 7532, which was not invoked here, does not
bar an agency from removing an employee for cause for failure to
maintain a security clearance that is a requirement of his job.  That
question is presented in Carlucci v. Doe, petition for cert. pending,
No. 87-751 (filed Nov. 4, 1987).  We have given respondent a copy of
the petition appendix in that case.

   /6/ The other cases cited by amici and the court of appeals did not
involve any review of agency discretion.  Huber v. MSPB, 793 F.2d 284
(Fed. Cir. 1986), cert. denied, No. 86-354 (Jan. 12, 1987), involved
the question whether a particular action constituted a "reduction in
force" rather than a "removal action personal to appellants" (793 F.2d
at 286), a mixed question of law and fact of jurisdiction significance
under 5 U.S.C. 7512.  In Bavier v. Department of Transportation, 4
M.S.P.R. 548 (1981), the question was whether a medically disqualified
air traffic controller had become medically fit for duty and hence was
AWOL and removable;  the Board ordered the Federal Aviation
Administration to restore him to leave without pay status because "the
Federal Air Surgeon gave no reasons whatsoever for the change" from
medically disqualified to medically qualified status (id. at 549);  it
did not -- and certainly should not -- second guess medical judgments
as to fitness to act as an air traffic controller.

   /7/ The holding of Cole was that the Act of August 26, 1950, the
predecessor of Section 7532, did not authorize an agency (there the
Department of Health, Education and Welfare) to remove an employee
from a nonsensitive position (food and drug inspector) on "loyalty"
grounds.  The Court noted (351 U.S. at 544 n.7) that prior to 1953 a
loyalty dismissal was subject to review by the CSC's Loyalty Review
Board.  (This is discussed in our opening brief (at 28 n.14), where we
note that this Board's review function was advisory only and was
terminated in 1953.) Nothing in Cole suggests that the Civil Service
Commission would ever have had power to reverse the Navy's decision,
on security grounds, not to clear a particular person to enter a Naval
facility.

   Karpoff involved a summary removal under the Act of August 26,
1950.  Executive Order No. 10,450, Section 8(b), gave the Civil
Service Commission power to conduct security investigations of
employees in cases where the employing agency did not have the
resources to do so.  (That responsibility has passed in the current
version of the Executive Order not to the MSPB, the CSC's adjudicative
successor, but to the Office of Personnel Management (see Pet. App.
82a).) In Karpoff, "the employing agency had no facilities for
investigation" and, thus, under Executive Order No. 10,450, Section
8(b), "the Civil Service Commission, acting for the agency, made the
investigation" (142 Ct. Cl. at 95, 97).  The CSC determined that
Karpoff should be removed on security grounds but that determination
was later reversed on internal CSC review.  The Court of Claims ruled
that at that point Karpoff was entitled to reinstatement and back pay
precisely because "the Civil Service commission was in effect the
agent" of the employing agency in performing its investigation and
review (id. at 97).  As the MSPB itself noted here (Pet. App. 57a
n.7), the opinion in no way suggests that the Commission had power to
review another agency's denial of a clearance.

   /8/ The CSRA was enacted on October 13, 1978, and its review
provisions were made effective 90 days from that date.

   /9/ We have lodged copies of this decision (which is recorded only
on microfiche) with the Clerk and furnished a copy to respondent's
counsel.

   /10/ Statistics cited in our opening brief (at 23 n.12) indicate
that Navy procedures often result in reversal or modification of an
initial determination to deny or revoke a clearance.

   /11/ Amicus AFL-CIO argues (Br. 12-18) that the 1974 amendment to
the Freedom of Information Act (FOIA), 5 U.S.C. 552, authorizing the
federal courts to review documents in camera to determine whether they
are in fact properly classified and hence exempt from FOIA disclosure,
demonstrates that Congress intended MSPB review here.  We think the
history of the 1974 amendment shows, if anything, the opposite:  the
1974 amendment to FOIA inspired vigorous debate in both Houses of
Congress, as the AFL-CIO notes (Br. 14-16), and was passed over a
presidential veto.  It is hardly likely that Congress turned over the
far more sensitive matter of security clearances to MSPB review or
binding arbitration without saying so and without debate.

   /12/ Respondent did indicate that he misread the government's
standard personnel application form:  it asked (in bold face) "Have
you ever been convicted * * * (of) any firearms or explosives offense
against the law?" but respondent listed only his two convictions
within the last seven years.  Respondent also asserted that in his own
judgment he was now free of the alcohol problem that by his own
statement had afflicted him literally from childhood to his
imprisonment in 1980.

   /13/ No decision of this Court holds that due process requires an
evidentiary hearing before a tribunal outside the employing agency.
In Mathews v. Eldridge, 424, U.S. 319, 349 (1976), and Cleveland Board
of Education v. Loudermill, 470 U.S. 532, 546-547 (1985), in upholding
the limited pre-denial procedures challenged in those cases, the Court
took comfort from the availability of post-denial evidentiary
proceedings;  in both cases, the tribunal provided was in fact outside
the agency, but the Court nowhere suggested that the Constitution
required this.

   /14/ We do dispute the contention (Bogdanowicz Br. 20-21;  ACLU Br.
44) that respondent has a relevant "liberty" interest.  Respondent was
denied a clearance expressly because of his criminal record and
history of alcohol abuse, matters that were already a part of the
public record for any future employer to consider.  His good name and
ability to seek employment elsewhere can hardly have been materially
affected by the Navy's inability to conclude, based on that record,
that it would be "clearly consistent with the interests of the
national security" to allow him access to information about nuclear
submarines.  See Cafeteria Workers v. McElroy, 367 U.S. at 898;
Moleria v. FBI, 749 F.2d 815, 824 (D.C. Cir. 1984).

   /15/ There has been no authoritative determination of what sort of
hearing is required under Section 7532.  We note that Section
7532(c)(1)(A) provides that the employee is entitled to a statement of
reasons only "stated as specifically as security considerations
permit." Section 7532(c)(1)(C) then requires only "a hearing, at the
request of the employee, by an agency authority duly constituted for
this purpose."