The opinion
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
RICHARD O. HENRY, )
Plaintiff, §
v. § Civil Case No. 13-183 (RJL)
SECRETARY OF THE §
TREASURY, et al., § F I L E D
Defendants. ) SEP 26 2011
MEM()RA']€'[;}.M OP]NI()N Clork. U.S. Dlstrlct & Bankruptcy
Courts for the Dlstrict of Go\umbla
(S@ptember Z°’, 2017) [Dkrs. ## 25, 26]
Former IRS contractor Richard O. Henry (“plaintiff’ or “Henry”) brings this action
against the Secretary of the Treasury, the Commissioner of the Intemal Revenue Service
(“IRS”), and the IRS’s Director of Personnel Security (collectively, “defendants” or “IRS”)
to challenge the IRS’s decision to revoke plaintiffs “staff-like access” to IRS facilities and
information systems. The IRS revoked plaintiff’s access on the ground that plaintiff failed
to register With the Selective Service before the age of 26 - a fact the IRS contends renders
plaintiff ineligible for staff-like access under current IRS policy. Plaintiff asserts that the
IRS violated the Administrative Procedure Act (“APA”) by revoking his staff-like access
in contravention of IRS regulations and precedent. See Compl. [Dkt. # l].
Counts I and IV of the complaint have already been dismissed for failure to state a
claim. See 2/29/ 16 Mem. Op. & Order lO, 17 [Dkt. # 15]. Currently before the Court are
plaintiff’s Motion for Summary Judgment [Dkt. # 26] on the remaining counts, Counts II
and III, of the complaint and the IRS’s Renewed Motion to Dismiss or, in the Alternative,
Motion for Summary Judgment [Dkt. # 25]. Upon consideration of the pleadings, the
evidentiary record, and the relevant case laW, the Court agrees With the prior Memorandum
Opinion and Order issued in this case that plaintiffs claims are justiciable and that there is
subject matter jurisdiction over the action. On the merits, the Court concludes that the IRS
is entitled to summary judgment because the agency did not violate the APA by revoking
plaintiffs staff-like access due to his failure to meet the Selective Service registration
requirement Therefore, the lRS’s Renewed Motion to Dismiss or, in the Alternative,
Motion for Summary Judgment [Dkt. # 25] is DENIED in part and GRANTED in part, and
plaintiffs Motion for Summary Judgment [Dkt. # 26] is DENIED.
BACKGROUND
The facts required to resolve this case are undisputed Plaintiff Richard O. Henry is
an employee of Booz Allen Hamilton (“Booz Allen”). Pl.’s Stmt. Material Facts (“Pl.’s
Stmt.”) [Dkt. # 27], EX. A, Decl. of Richard O. Henry (“Henry Decl.”) il 3. From 2001 to
March 2012, plaintiff Worked for the IRS as a contractor employee. Id. W 3, 16. In that
role, he Was responsible for designing, developing, and implementing software information
systems. Id. 1 3. ln order to Work as an IRS contractor, plaintiff required “staff-like access”
to IRS facilities and information Id. 1l4. IRS regulations define “staff-like access” as
“[u]nescorted access to IRS owned or controlled facilities, information systems
(passwords), security items and products (as determined by Treasury/bureau officials),
and/or sensitive but unclassified information by contractor employees.” Pl.’s Stmt., Ex. B,
July 18, 20001nternalRevenue Manual(“20001RM”), ch. 2, § l.23.2.2.l.3(15), at 4.
Two primary sources of IRS policy and procedure govern the employment and
privileges of IRS contract employees. First, the Treasury Security Manual sets forth
minimum “investigative requirements for contract employees” who require “staff-like-
access” to Treasury-affiliated facilities, such as IRS facilities. Defs.’ Mot. Dismiss [Dkt.
# 9], EX. l, Treasury Security Manual TDP 15-7l (“TDP”), ch. 2, § 2, il l. Second, and
more importantly for purposes of this case, the Internal Revenue Manual (“lRl\/I”) provides
additional details regarding when and how the IRS will investigate contractors to determine
their eligibility and suitability for initial or continued staff-like access. See generally Defs.’
Mot. Dismiss, EX. 3, Apr. 4, 2008 lRl\/l (“2008 lRl\/[”), ch. 2. Each of those manuals is
periodically updated with revised procedures and substantive requirements See, e.g., id.
at cover.
At the time plaintiff applied for staff-like access in 2001, his application was
governed by the lRl\/l then in effect, which was the 2000 lRl\/l. The 2000 lRl\/l set forth the
procedures that the IRS would use when investigating whether a contractor should be
granted staff-like access. Of pertinence here, those investigation provisions required all
contractor employees to receive a background investigation prior to being granted staff-
like access. 2000 IRM, ch. 2, § l.23.2.2.2.3, at 7. The provisions also required all
contractor employees to be re-investigated every five years “from the completion date of
the most recent Background lnvestigation.” Ia’. § l.23.2.2.3(l), at 8. The 2000 IRM made
clear, however, that the IRS reserved the right to investigate contractors “at any time during
the period of access” to determine “whether they continue to meet the requirements for
staff-like access.” Id. § l.23.2.2.8.l(l), at l7.
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Pursuant to the investigation provisions of the 2000 IRM, the IRS investigated
plaintiff to determine whether he should be granted staff-like access. Henry Decl. 111 3-4.
As part of that investigation, plaintiff completed the “OF 306” form. Id. 11 5; cf Defs.’
Mot. Dismiss, Ex. 5, Henry 201 l OF 306 (“Henry OF 306”). That form asks whether the
applicant is a male born after December 31, 1959, and, if so, whether he is registered with
the Selective Service System. See, e.g., Henry OF 306 at 1. lf the applicant admits to not
having registered before the age of 26, he must explain that failure to register on the form.
Id. ln his 2001 OF 306, plaintiff disclosed that he had not registered for the Selective
Service. Henry Decl. 11 6. His failure to register with the Selective Service
notwithstanding, the IRS granted plaintiff staff-like access in 2001. Ia’. il 8.
In 2006, pursuant to the mandatory re-investigation requirements of the then-current
IRM (which was the 2003 lRl\/I), plaintiff underwent a second background investigation
See Pl.’s Stmt., Ex. F, Feb. l, 2003 lRl\/l (“2003 lRl\/l”), ch. 2, § 1.23.2.3(1), at 7. Plaintiff
again admitted his failure to register for the Selective Service and again was approved for
staff-like access. Henry Decl. M 10-11. In a January 2007 memorandum confirming that
approval, the IRS informed plaintiff that, pursuant to the re-investigation provisions of the
2003 IRM then in effect, plaintiff would “require an update background investigation” by
February 2012. Pl.’s Stmt., EX. I, Mem. from IRS Assoc. Dir. Personnel Sec. to
Contracting Offlcer’s Tech. Representative (Jan. 29, 2007) (“Jan. 2007 IRS Mem.”).
Then, in 2008 and 201 1, the IRS made two changes to its lRl\/l that are relevant to
this case. First, the IRS established a new set of criteria that contractors must meet in order
to be eligible for staff-like access. Those criteria include the requirement that “all males
4
born after 1959[] must be registered with Selective Service or have an exception.” Defs.’
Mot. Dismiss, Ex. 2, Nov. 15, 2011 IRM (“2011 IRM”), ch. 2, § 10.23.2.2(2), at 2; see also
2008 lRl\/l, ch. 2, § 10.23.2.2(2), at 1. Second, the IRS changed the periodic re-
investigation requirement The 2008 and 201 l lRl\/ls clarified that contractors in “moderate
risk” positions would not be subject to a mandatory re-investigation every five years, but
instead would need only to submit “updated Federal tax compliance checks and a FBI
fingerprint check every five years.” 2011 IRM, ch. 2, § 10.23.2.14(2), at 8; see also 2008
IRM, ch. 2, § 10.23.2.14(2), at 8. Unchanged, however, was the lRl\/l provision noting that
“[a]ll contractor employees shall be subject to investigation prior to being granted staff-
like access” and “at any time during the period of access to ascertain whether they continue
to meet the requirements for staff-like access.” 2011 lRl\/I, ch. 2, § 10.23.2.6(1), at 5; see n
also 2003 lRl\/l, ch. 2, § 1.23.2.8.1(1), at 15. All three ofthose provisions -the registration
requirement, the tax and fingerprint procedure, and the “at any time” investigation
provision - remained in effect at all times relevant to this case.
ln 2011, plaintiff was informed by Booz Allen that his IRS re-investigation was due
by February 2012. See Henry Decl. jj 14; Pl.’s Stmt., EX. Q, E-mail from Mona Peloquin,
Strategy & Organization, Booz Allen, to Richard Henry (Oct. 21, 2011). ln accordance
with BooZ Allen’s instructions, plaintiff completed and submitted additional background
investigation paperwork at the end of 2011. Henry Decl. 11 14. Plaintiff disclosed his
failure to register with the Selective Service when completing the background check forms,
explaining that he failed to register “on conscientious grounds.” Henry OF 306 at 2. Unlike
with his previous background checks, however, plaintiffs materials were evaluated under
5
the contractor eligibility requirements adopted in 2008 - including, as relevant here, the
Selective Service registration requirement
By letter dated February 2, 2012, IRS Director of Personnel Security Donna King
proposed to deny plaintiffs staff-like access because the IRS had “determined that [he]
may not meet the eligibility requirements for being granted access.” Attach. A to Compl.,
Letter from Donna S. King, Director, IRS Personnel Security, to Richard O. Henry (Feb.
2, 2012) (“Feb. 2012 IRS Letter”). The letter explained that plaintiffs “condition which
raises a concern and may be disqualifying in this case” was his “non-registration with
Selective Service.” Ia’. The letter gave plaintiff an “opportunity to respond in writing” and
instructed plaintiff to “include an explanation of why you are not registered.” Ia’.
Plaintiff responded by letter one week later. See Def`s.’ Mot. Dismiss, Ex. 6, Letter
from Richard O. Henry, to IRS Personnel Security Dep’t (Feb. 9, 2012) (“Henry Letter”).
He explained that his failure to register “was not a willful act of civil disobedience.” Ia’.
Rather, he stated that “[a]t the time,” he “did not fully realize the importance of registering
and just kept putting it off until [he] had failed to do so before reaching the age of 26.” Icl.
Plaintiff acknowledged that his explanation was “not a good excuse,” but noted that he was
“just trying to be honest here” and did not “have any better explanation.” Ia’.
After reviewing plaintiffs response, the IRS made a final decision to deny
plaintiff s staff-like access. See Attach. B to Compl., Letter from Donna S. King, Director,
IRS Personnel Security, to Richard O. Henry (Mar. 20, 2012) (“Mar. 2012 IRS Letter”).
Plaintiff, through counsel, asked the IRS to reconsider its decision. See Defs.’ Mot.
Dismiss, Ex. 7, Letter from Rachel L.T. Rodriguez, to Donna S. King, Director, IRS
6
Personnel Security (Apr. 18, 2012) (“Rodriguez Letter”). Plaintiffs counsel noted that the
Selective Service registration requirement was reinstated at a time when plaintiff was in
college and changed addresses frequently, meaning that any announcements likely “would
have failed to reach him.” Ia’. at 6. Those facts and others, according to plaintiff s counsel,
indicated that plaintiffs failure to register was “not willful but excusable.” Ia’.
The IRS declined to reverse its determination ln another letter, this time addressed
to plaintiffs counsel, the IRS explained that, pursuant to the lRl\/l eligibility provisions,
Selective Service registration was a requirement for staff-like access for male contractors
in plaintiffs position Attach. C to Compl., Letter from Donna S. King, Director, IRS
Personnel Security, to Rachel L.T. Rodriguez (May 16, 2012) (“l\/lay 2012 IRS Letter”), at
1. The letter went on to recount the conflicting explanations plaintiff had provided for his
failure to register. Icl. Specifically, in his February 9, 2012 letter, plaintiff acknowledged
that he had knowingly put off registration until it was too late. See ia’. (citing Henry Letter).
But in his 2011 background paperwork, plaintiff attested under penalty of law that he did
not register “on conscientious grounds.” Ia’. (citing Henry OF 306). After recounting those
conflicting pieces of information, the letter concluded that plaintiffs “explanation failed
to show by a preponderance of the evidence that his failure to register was neither knowing
nor willful.” Ia’. at 2. The IRS therefore stuck by its decision to deny plaintiff staff-like
access. Ia’. Without staff-like access, plaintiff could not maintain his position as a
contractor with the IRS. A few months after his departure from IRS, plaintiff was approved
for staff-like access at the U.S. Census Bureau. Henry Decl. jj 17.
Plaintiff brought suit to challenge the IRS’s revocation of his staff-like access. 1n
his four-count complaint, plaintiff alleges that the IRS’s decision was unlawful under the
APA. See generally Compl. 1n a l\/Iemorandum Opinion and Order issued February 29,
2016, the judge previously assigned to this action denied the IRS’s motion to dismiss
Counts 11 and 111 of plaintiffs complaint for lack of subject matter jurisdiction, but
dismissed Counts 1 and 1V. See 2/29/16 Mem. Op. & Order 4-10, 12-14, l7. Currently
before the Court are plaintiffs Motion for Summary Judgment on the remaining counts,
Counts 11 and 111, of the complaint and the IRS’s Renewed Motion to Dismiss or, in the
Alternative, Motion for Summary Judgment.
STANDARD ()F REVIEW
A. Motion to Dismiss
The IRS has moved to dismiss the complaint under Federal Rule of Civil Procedure
12(b)(l). According to the IRS, this Court lacks subject matter jurisdiction over the action
because plaintiffs claims relate to security decisions that are “committed to agency
discretion by law,” 5 U.S.C. § 701(a)(2), and thus unreviewable under Department of the
Navy v. Egan, 484 U.S. 518 (1988). Our Circuit has clarified, however, that the question
whether an “agency action is committed to agency discretion by law” is properly analyzed
under Federal Rule of Civil Procedure 12(b)(6), not 12(b)(1). See Sz'erra Clab v. Jackson,
648 F.3d 848, 853-54 (D.C. Cir. 2011). 1 therefore apply the 12(b)(6) standard of review
to the IRS’s motion to dismiss.
Under that standard, the plaintiffs allegations, when read in a light most favorable
to the plaintiff, must “raise a right to relief above the speculative level.” Bell Atl. Corp. v.
8
Twombly, 550 U.S. 544, 555 (2007). A court must “assume the truth of all material factual
allegations in the complaint and construe the complaint liberally, granting plaintiff the
benefit of all inferences that can be derived from the facts alleged.” Am. Nat’l lns. Co. v.
Fea’. Deposz'z‘ Ins. Corp., 642 F.3d 1137, 1139 (D.C. Cir. 2011) (internal quotation marks
omitted). But a court need not accept “factual inferences drawn by plaintiffs if those
inferences are not supported by facts alleged in the complaint,” nor must a court give
credence to “plaintiff s legal conclusions.” Disner v. Um`tecl States, 888 F. Supp. 2d 83,
87 (D.D.C. 2012) (internal quotation marks omitted).
B. Summary Judgment
Summary judgment may be granted “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a); see, e.g., Celotex Corp. v. Calrett, 477 U.S. 317, 322 (1986). When
evaluating cross-motions for summary judgment, the reviewing court examines each
motion “separately on its own merits to determine whether any of the parties deserves
judgment as a matter oflaw. Lee Mem ’l Health Sys. v. Barwell, 206 F. Supp. 3d 307, 322
(D.D.C. 2016) (internal quotation marks and brackets omitted). The court must accept as
true the evidence of, and draw “all justifiable inferences” in favor of, the party opposing
summaryjudgment. Anclerson v. Lz'berly Lol)by, lnc., 477 U.S. 242, 255 (1986).
When reviewing the decision of an administrative body under the APA, the
reviewing court generally will not resolve factual disputes, but instead reviews the decision
as an appellate court addressing issues of law. See James Maa’ison Lta’. v. Luclwig, 82 F.3d
1085, 1096 (D.C. Cir. 1996); All. Sea Islana’ Grp. LLC v. Connaughton, 592 F. Supp. 2d
9
l, 12-13 (D.D.C. 2008). 1n other words, summary judgment “serves as the mechanism for
deciding, as a matter of law, whether the agency action is supported” by the record “and
otherwise consistent with the APA standard of review.” Remml`e v. Mabus, 898 F. Supp.
2d 103, 115 (D.D.C. 2012).
C. Administrative Procedure Act
The APA requires a reviewing court to “hold unlawful and set aside agency action”
that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with
law.” 5 U.S.C. § 706(2). “The scope ofreview under the ‘arbitrary and capricious’ standard
is narrow and a court is not to substitute its judgment for that of the agency.” Motor Vehz'cle
Mfrs. Ass’n v. Stal‘e Farm Mut. Aato. Ins. Co., 463 U.S. 29, 43 (1983). “In other words,
the question is not what [the Court] would have done, nor whether [the Court] agree[s]
with the agency action,” but “whether the agency action was reasonable and reasonably
explained.” Ams.for Clean Erzergy v. EPA, 864 F.3d 691, 726 (D.C. Cir. 2017) (internal
quotation marks omitted).
Under that deferential standard, an agency action will be set aside as arbitrary and
capricious if the agency has failed to follow procedures required by law, failed to examine
the relevant data and articulate an adequate explanation for its action including a rational
connection between the facts found and the choice made, or failed to consider an important
aspect ofthe issue. See id.; Kisser v. Cisneros, 14 F.3d 615, 618-19 (D.C. Cir. 1994). At
a minimum, the agency must consider relevant data and articulate an explanation from
which its “path may reasonably be discerned,” even if the explanation itself is not “a model
of clarity.” Banner Health v. Price, 867 F.3d 1323, 1356 (D.C. Cir. 2017) (internal
10
quotation marks omitted). 1n short, the agency’s decision is entitled to a “presumption of
procedural regularity and substantive rationality.” Plzarm. Research & Mfrs. of Am. v.
FTC, 790 F.3d 198, 212 (D.C. Cir. 2015). A court, moreover, must take “due account” of
the “rule of prejudicial error” when reviewing allegedly unlawful agency action 5 U.S.C.
§ 706.
ANALYSIS
A. Motion to Dismiss
The IRS renews its argument, rejected by the court previously assigned to this
action, see 2/29/16 Mem. Op. 12-14, that plaintiffs claims should be dismissed as non-
justiciable under Departmem of the Navy v. Egan, 484 U.S. 518 (1988), because they
implicate a security decision that is committed to the discretion of the Executive Branch.
See Defs.’ Mem. P. & A. Supp. Summ. .1. (“Defs.’ Mem.”) 5-7.l Like the previous judge
to consider this issue, 1 disagree.
1n Egan, the Supreme Court held that the Merit Systems Protection Board did not
have authority to review the substance of the Navy’s decision to deny an employee a
security clearance 484 U.S. at 520, 529-30. Although accepting the presumption in favor
of review as a “general proposition of administrative law,” the Court noted that the
presumption “runs aground when it encounters concerns of national security” such as the
“sensitive and inherently discretionary judgment call” of whether to grant a security
' As previously noted, 1 evaluate the IRS’s renewed motion under the Rule 12(b)(6) standard, not
the Rule l2(b)( l) standard That said, the differences between the standards matter little in this case. Under
either standard, this Court may review the lRS’s renewed argument See Fed. R. Civ. P. 54(b). And under
either standard, the lRS’s argument fails because this Court has subject matterjurisdiction over plaintiffs
claims and the complaint states a valid claim upon which relief may be granted
11
clearance Ia’. at 526-27. Noting that it is “not reasonably possible” for courts to “review
the substance of such a judgment,” the Court held that security clearance decisions were
necessarily “committed to the broad discretion of the agency responsible” and thus
unreviewable Icl. at 529; see also Ryan v. Reno, 168 F.3d 520, 524 (D.C. Cir. 1999)
(holding that “under Egan an adverse employment action based on denial or revocation of
a security clearance is not actionable under Title V11”).
1n contrast to the security clearance decision at issue in Egan, the IRS’s decision
here does not involve a determination about who may access sensitive “information bearing
on national security.” 484 U.S. at 527; see also Ryan, 168 F.3d at 524. 1ndeed, the
evidence in this case confirms that staff-like access is decidedly different than a security
clearance, both when it comes to the investigations required to obtain it and the information
it allows a contractor to view. See Pl.’s Stmt., Ex. V, Dep. of Donna S. King (“King Dep.”)
at 15 (a “security clearance is totally different in nature” than staff-like access); see also
ld. at 80.
To be sure, staff-like access does allow individuals to access some sensitive
information not related to national security. Therefore, if plaintiff were challenging the
substance of the IRS’s staff-like access eligibility standards or an IRS eligibility decision,
Egan would arguably control because it could be said that plaintiff would be asking a court
“to review the substance of’ a “sensitive and inherently discretionary judgment call” about
who should be trusted to access IRS information Egan, 484 U.S. at 527, 529. But plaintiff
has made no such arguments to this Court 1nstead, the contested issue here is a
“procedural” one “divorced from any substantive security determination”: Namely,
12
whether the IRS improperly declined to follow or explain certain procedures set forth in its
1nternal Revenue Manual. Ryan, 168 F.3d at 524. Those IRM procedures provide
justiciable criteria against which to measure the IRS’s action in this case Put differently,
resolving plaintiffs claims does not require this Court to “review the substance” or
“validity” of an agency’s “[p]redictive judgment” regarding an individual’s authorization
to access sensitive information Egan, 484 U.S. at 529; Ryan, 168 F.3d at 524. Having
concluded that 1 may review the merits of plaintiffs claims, 1 now turn to the cross-motions
for summary judgment
B. Summary Judgment
Before examining plaintiffs APA challenge to the IRS’s 2012 decision, it is worth
clarifying the scope of the parties’ dispute By 2011, the IRS had adopted a new
requirement applicable to contractors: To be eligible to receive staff-like access, all male
contractors born after 1959 “must be registered with Selective Service” or have a valid
“exception” for failing to register. 2011 1Rl\/1, ch. 2, § 10.23.2.2(2), at 1-2; see also 2008
IRM, ch. 2, § 10.23.2.2(2), at 1-2.
Plaintiff`, a male born after 1959, admits that he did not register for the Selective
Service See Henry Decl. 1111 6-7. 1t is also uncontested that the IRS revoked plaintiffs
staff-like access based on his “non-registration with Selective Service.” Feb. 2012 IRS
Letter; see also May 2012 IRS Letter. Notwithstanding those facts, plaintiff contends that
the IRS’s decision to revoke his staff-like access violated the APA for two reasons: 1) the
IRS contravened agency regulations by improperly subjecting plaintiff to a full background
investigation in 2011 and 2) the IRS departed from agency precedent and failed to explain
13
and apply the proper standard when it revoked plaintiffs access based on his failure to
register for the Selective Service For the following reasons, 1 reject each of those
arguinents.
1. The IRS’s 2011 1nvestigation ofPlaintiff
Plaintiffs first challenge relates to how the IRS obtained the information regarding
his failure to register for the Selective Service Specifically, plaintiff contends that the IRS
violated agency regulations by relying upon the superseded pre-2008 IRM re-investigation
provisions as the basis for subjecting him to a full background investigation in 2011. See
Pl.’s Mem. Supp. Mot. Summ. .1. (“Pl.’s Mem.”) 11-15. Plaintiff correctly notes, for
example, that IRS correspondence regarding the need for plaintiffs 2011 investigation
cites superseded provisions ofthe 1Rl\/[. See, e.g., Jan. 2007 IRS Mem. (citing 2003 IRM);
Pl.’s Stmt., Ex. N, Mem. from Donna S. King, Director, IRS Personnel Security, to
Contracting Officer’s Technical Representative (May 5, 2011) (citing 2003 1Rl\/1).
According to plaintiff, it was the information derived from the improper 2011 background
investigation that led the IRS to revoke his staff-like access based on its Selective Service
registration requirement
The IRS counters that agency practice was to re-investigate all contractors in
plaintiffs position ~ that is, contractors whose five-year re-investigation due dates were
set prior to the 2008 change to the re-investigation provisions. For support, the IRS cites
the deposition testimony of IRS Senior Technical Advisor David Waters. Based on his
review of IRS records, Waters testified that contractors, like plaintiff, who occupied
“moderate risk positions” and were “originally investigated prior to [the 2008] IRM
14
update . . . did, in fact, receive five-year re-investigations later.” Defs.’ Mot. Summ. J.,
Ex. A, Dep. of David Waters (“Waters Dep.”) at 122:15-21. Waters produced a list to
show that the IRS had a “consistent approach” of re-investigating individuals who were
last investigated prior to the 2008 1Rl\/1 update ]a'. at 123:19; see Pl.’s Stmt., Ex. G, Defs.’
Objs. & Resps. to Pl’s lst Set 1nterrogs. 6 (producing list). The IRS contends that this
practice was permissible under agency regulations. See Defs.’ Mem. 10.
Plaintiff does not dispute the Waters testimony that “it is the practice of the IRS to
subject contractors to reinvestigation” if “their prior investigation was completed before
the IRM April 2008 revisions.” Pl.’s Opp’n to Defs.’ Mot. 14 n.7. 1nstead, plaintiff
protests that the IRS’s practice is improper because it is not authorized by any “policy
statement” and lacks a “reasoned basis.” Ia’. at 14. Plaintiff is wrong on both points.
To start, the fact that the IRM does not specifically speak to the practice of pursuing
re-investigations already scheduled does not mean that the IRS’s practice “violat[ed] its
own regulations.” Pl.’s Mem. 12. The revised 2008 IRM specifies that, moving forward,
contractors will not be required to undergo background re-investigations every five years.
But it is unclear about the effect, if any, the altered re-investigation provisions have on
investigations scheduled prior to the 2008 changes. Plaintiff insists that the alterations to
the lRl\/l prohibited the IRS from commencing with the 2011 investigation of plaintiff
Plaintiff s argument however, rests on a faulty premise: The fact that the IRS’s 2011
investigation of plaintiff was no longer mandatory under the applicable 1Rl\/1 does not
mean, as plaintiff contends, that it was inconsistent with or impermissible under the
applicable lRl\/l.
15
Notably, were plaintiffs reading of the relevant regulations correct, a contractor
who happened to have his latest background investigation prior to the 2008 establishment
of the Selective Service registration requirement would be effectively immunized from
review for continued eligibility. As Waters explained, the IRS did not adopt a policy that
“grandfathered in” contractors in that manner. Waters Dep. at 123:18. Given the
ambiguity regarding the lRM’s effect on re-investigations already scheduled, the 1RS’s
reading of its regulations - a reading that helps ensure that all contractors are in fact eligible
for staff-like access under the new 2008 requirements - is entitled to deference See Taylor
v. Haerta, 723 F.3d 210, 213 (D.C. Cir. 2013) (agency interpretation ofits own regulation
“is to be accorded deference unless it is clearly contrary to the plain and sensible meaning
of the regulation”) (internal quotation mark and alteration omitted).
1f the IRM makes one thing clear, moreover, it is that the IRS’s 201 1 investigation
of plaintiff was allowed: Each and every version of the 1Rl\/1 cited by plaintiff contains a
provision specifying that the IRS has broad power to investigate a contractor’s continued
eligibility f`or staff-like access “at any time.” 2011 IRM, ch. 2, § 10.23.2.6(1), at 5
(emphasis added); see also 2003 IRl\/l, ch. 2, § 1.23.2.8.1(1), at 15. Therefore, even
accepting plaintiffs argument that the IRS initiated plaintiffs investigation under the
wrong provision, plaintiff cannot show (as he must) that the IRS’s error was “prejudicial”
given that the IRS had the power to commence its investigation and indeed already had the
information regarding plaintiffs failure to register in its possession 5 U.S.C. § 706; see
16
PDK Labs., Inc. v. U.S. Drug Enforcement Aa’ml`n., 362 F.3d 786, 799 (D.C. Cir. 2004).
Plaintiffs APA claim fails for that independent reason, too.2
1n the final analysis, plaintiffs troubles arise from the IRS’s 2008 adoption of the
Selective Service registration requirement and the fact that he is not registered - not the
manner in which the IRS became aware of his failure to register. Because agency
regulations did not prohibit the IRS from obtaining information regarding plaintiffs
Selective Service registration, the IRS’s 2011 investigation of plaintiff did not violate the
APA.
2. The IRS’s Decision to Revol<e Plaintiff s Staff-Like Access
Plaintiff makes two arguments challenging the actions the IRS took once it became
aware of plaintiffs failure to register for the Selective Service Unfortunately for plaintiff,
however, neither has merit
First, plaintiff argues that the IRS arbitrarily departed from its precedent when it
revoked plaintiffs staff-like access on the basis of his failure to register despite plaintiffs
ten-year history at the agency. That contention can be rejected swiftly, as it ignores that
the Selective Service registration requirement was not established until 2008. See 2008
lRl\/l at cover, “Nature of Changes,” no. 4. What the IRS may or may not have done with
respect to plaintiffs Selective Service information prior to 2008 is irrelevant because the
2 As an alternative argument plaintiff implies that the IRS should have investigated him using
“solely the superseded provisions” of the 2003 IRl\/I to determine his eligibility in 2011. Pl.’s Mem. 14.
Plaintiffs own arguments, however, foreclose that option, as it is plaintiff who stresses that “each revision
of’ an lRl\/I section “supersedes all prior regulatory provisions of that section.” Pl.’s Reply Supp. Mot.
Summ. J. 6.
17
Selective Service registration requirement did not exist at that time Cf. Pl.’s Stmt., Ex. C.,
at 96:7-8 (“Selective Service registration would not have been checked” before 2008).
Second, plaintiff argues that the IRS’s decision was arbitrary and capricious because
the IRS “fail[ed] to adjudicate” or properly investigate whether plaintiff s failure to register
for the Selective Service was “knowing or willful.” Pl.’s Mem. 6. According to plaintiff,
the “knowing and willful” standard ~ set forth in 5 U.S.C. § 3328 and implemented by 5
C.F.R. §§ 300.701-.707, among other regulations - applies to those contractors who have
failed to register for the Selective Service Under that standard, an individual’s failure to
register is disqualifying unless the individual can demonstrate by a preponderance of the
evidence that he did not “kn[o]w the requirements ofthe law and deliberately refrain[] from
complying” with those requirements Unz'tecl Stales v. Couming, 445 F.2d 555, 557 (lst
Cir. 1971); cf Dz`xon v. Unz`tea’ States, 548 U.S. 1, 5 (2006) (defining terms “knowingly”
and “willfully”). Granting for sake of argument that the “knowing and willful” standard
applies to contractors,3 plaintiffs argument fails nonetheless.
As discussed, the February 2, 2012 proposed denial letter from the IRS gave plaintiff
the opportunity to provide a written “explanation of why” he was not registered Feb. 2012
IRS Letter. 1n response, plaintiff sent a letter to the IRS stating that his failure to register
“was not a willful act of civil disobedience” but instead resulted from the fact that plaintiff
“did not fully realize the importance of registering and just kept putting it off until [he] had
3 Some of the evidence indicates that the IRS will excuse a contractor from the Selective Service
eligibility requirement only when he has an official letter of exemption from the Selective Sei'vice. See
Pl.’s Stmt., Ex. K, Dep. of Jenneth Rae Dalton at 67-68; King Dep. at 63:5-8. Plaintiffs claim would fail
under that standard as well, as he does not purport to have an exemption letter.
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failed to do so before reaching the age of 26.” Henry Letter. Plaintiff acknowledged that
his explanation “was not a good excuse,” but noted he was “just trying to be honest” and
did not “have any better explanation” ]a’. The IRS stated that plaintiffs response did not
“mitigate” its concerns and denied plaintiffs access. l\/lar. 2012 IRS Letter.
At that point, plaintiff submitted more explanation regarding his failure to register,
this time through an extensive memorandum to the IRS drafted by counsel. 1n the
memorandum, plaintiffs counsel recounted the facts surrounding plaintiffs failure to
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register and argued that plaintiffs actions were “not willful but excusable Rodriguez
Letter at 6. Notably, not only did plaintiffs February and April explanations conflict with
each other, they also conf1icted with a third explanation plaintiff previously gave for his
failure to register. Specifically, in plaintiffs 2011 OF 306 paperwork, plaintiff attested
that he had failed to register “on conscientious grounds.” Henry OF 306 at 2.
1n May 2012, the IRS issued a final letter providing additional explanation of its
decision to revoke plaintiffs staff-like access and denying plaintiff s request to reconsider
that decision The letter recounted the information the IRS had received from plaintiff,
including his statements that his “failure to register was not an act of civil disobedience”
and that he “did not realize the importance of registering and just kept putting it off until”
it was too late. May 2012 IRS Letter at 1. The letter also recited plaintiffs inconsistent
2011 OF 306 statement that “he did not register on conscientious grounds.” Ia'. After
setting out that information, the IRS explained that plaintiff had failed to show that his
failure to register “was neither knowing nor willful” and that a “final determination was
made to deny his staff-like access.” Ia’. at 2.
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Plaintiff argues that the IRS did not adequately investigate whether his failure to
register was “knowing and willful.” According to plaintiff, the IRS should have followed
the investigation procedures set forth in 5 C.F.R. §§ 300.701-.707. See Pl.’s Mem. 20-21.
But all those provisions require is that an individual receive the opportunity to provide an
“explanation ofhis failure to register.” 5 C.F.R. § 300.705(d)(1); see also id. § 300.706(a).
Plaintiff had an opportunity to explain his failure to register - indeed, he had three
opportunities. See Henry OF 306; Henry Letter; Rodriguez Letter. Having received all of
that correspondence, it is hard to see what additional investigation the IRS could have
conducted
Plaintiff also contends that the agency failed to adequately explain its decision to
revoke plaintiffs staff-like access. Not so. For starters, the final letter from the IRS
exhibits the agency’s consideration of the “relevant data” - here, plaintiffs failure to
register and his (varied) explanations regarding that failure Slate Farm, 463 U.S. at 43.4
The letter also articulates the basis for the IRS’s final revocation decision Specifically,
the IRS: 1) referenced plaintiffs February 2012 letter, in which plaintiff implicitly
conceded knowledge of the registration requirement and said he “just kept putting it off’
until it was too late and 2) noted that plaintiff s 2012 explanations for his failure to register
were different than his 201 l OF 306 explanation that he failed to register on “conscientious
4 Plaintiff asks this Court to ignore the analysis contained in the May 2012 IRS letter because some
IRS representatives were unaware ofthe “knowing and willful” standard See Pl.’s Mem. 16-17. But those
representatives did not draft the l\/lay 2012 letter. See Dalton Dep. at 81 :18-20; King Dep. at 77:13. Given
the “presumption of procedural regularity” applicable to the lRS’s final action, l decline plaintiffs
invitation to ignore the statement in the l\/lay 2012 letter that the agency applied a “knowing and willful”
standard and concluded that plaintiffs inconsistent explanations failed to satisfy that standard Pharm.
Research & Mfrs. ofAm., 790 F.3d at 212.
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grounds.” After recounting those two facts - facts indicating that plaintiff had knowledge
of the registration requirement and may have been untruthful When attempting to explain
his failure to satisfy the requirement _ the agency concluded that plaintiff had “failed to
demonstrate that his failure to register was neither knowing nor Willful.” May 2012 IRS
Letter at 2. When properly viewed in context, the letter contains sufficient explanation to
allow “the agency’s path [to] reasonably be discemed.” Banner Health, 867 F.3d at 1356
(internal quotation marks omitted). Applying the “narrow” standard of review of agency
reasoning, State Farm, 463 U.S. at 43, 1 easily conclude that the IRS’s decision to revoke
plaintiffs staff-like access was “reasonable and reasonably explained” and was neither
arbitrary nor capricious under the APA, Americans for Clean Energy, 864 F.3d at 726
(internal quotation mark omitted).
CONCLUSION
For the foregoing reasons, the Court DENIES plaintiffs Motion for Summary
Judgment and DENIES in part and GRANTS in part defendants’ Renewed Motion to
Dismiss or, in the Alternative, Motion for Summary Judgment An Order consistent with
this decision accompanies this Memorandum Opinion.
CZMW
RICHARD“J-.'LEON
United States District Judge
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