(a) Definitions
In this section:

(1) Controlled substance
The term "controlled substance" has the meaning given that term in section 802 of title 21.

(2) Covered person
The term "covered person" means—

(A) an officer or employee of a Federal agency;

(B) a member of the Army, Navy, Air Force, or Marine Corps who is on active duty or is in an active status; and

(C) an officer or employee of a contractor of a Federal agency.

(3) Restricted Data
The term "Restricted Data" has the meaning given that term in section 2014 of title 42.

(4) Special access program
The term "special access program" has the meaning given that term in section 4.1 of Executive Order No. 12958 (60 Fed. Reg. 19825).

(b) Prohibition
After January 1, 2008, the head of a Federal agency may not grant or renew a security clearance for a covered person who is an unlawful user of a controlled substance or an addict (as defined in section 802(1) of title 21).

(c) Disqualification

(1) In general
After January 1, 2008, absent an express written waiver granted in accordance with paragraph (2), the head of a Federal agency may not grant or renew a security clearance described in paragraph (3) for a covered person who—

(A) has been convicted in any court of the United States of a crime, was sentenced to imprisonment for a term exceeding 1 year, and was incarcerated as a result of that sentence for not less than 1 year;

(B) has been discharged or dismissed from the Armed Forces under dishonorable conditions; or

(C) is mentally incompetent, as determined by an adjudicating authority, based on an evaluation by a duly qualified mental health professional employed by, or acceptable to and approved by, the United States Government and in accordance with the adjudicative guidelines required by subsection (d).

(2) Waiver authority
In a meritorious case, an exception to the disqualification in this subsection may be authorized if there are mitigating factors. Any such waiver may be authorized only in accordance with—

(A) standards and procedures prescribed by, or under the authority of, an Executive order or other guidance issued by the President; or

(B) the adjudicative guidelines required by subsection (d).

(3) Covered security clearances
This subsection applies to security clearances that provide for access to—

(A) special access programs;

(B) Restricted Data; or

(C) any other information commonly referred to as "sensitive compartmented information".

(4) Annual report

(A) Requirement for report
Not later than February 1 of each year, the head of a Federal agency shall submit a report to the appropriate committees of Congress if such agency employs or employed a person for whom a waiver was granted in accordance with paragraph (2) during the preceding year. Such annual report shall not reveal the identity of such person, but shall include for each waiver issued the disqualifying factor under paragraph (1) and the reasons for the waiver of the disqualifying factor.

(B) Definitions
In this paragraph:

(i) Appropriate committees of Congress
The term "appropriate committees of Congress" means, with respect to a report submitted under subparagraph (A) by the head of a Federal agency—

(I) the congressional defense committees;

(II) the congressional intelligence committees;

(III) the Committee on Homeland Security and Governmental Affairs of the Senate;

(IV) the Committee on Oversight and Government Reform of the House of Representatives; and

(V) each Committee of the Senate or the House of Representatives with oversight authority over such Federal agency.

(ii) Congressional defense committees
The term "congressional defense committees" has the meaning given that term in section 101(a)(16) of title 10.

(iii) Congressional intelligence committees
The term "congressional intelligence committees" has the meaning given that term in section 3003 of this title.

(d) Adjudicative guidelines

(1) Requirement to establish
The President shall establish adjudicative guidelines for determining eligibility for access to classified information.

(2) Requirements related to mental health
The guidelines required by paragraph (1) shall—

(A) include procedures and standards under which a covered person is determined to be mentally incompetent and provide a means to appeal such a determination; and

(B) require that no negative inference concerning the standards in the guidelines may be raised solely on the basis of seeking mental health counseling.