Court says TSA did not overcharge for security

A federal appeals court panel has rejected most claims of airlines that the government overcharged them by about $98 million a year for security after the 2001 terror attacks.

A three-judge panel of the U.S. Court of Appeals in Washington said Tuesday that the Transportation Security Administration made some mistakes in its calculations but generally followed a 2004 law in deciding how much to charge airlines.

Before the 2001 terror attacks, airlines paid for the cost of screening passengers and bags themselves. That duty was taken over by TSA, which levies fees on passengers and airlines to cover its costs.

A group of 22 carriers, with Southwest Airlines Co. as the lead plaintiff, sued the TSA, saying the airline fee was arbitrary and flawed.

A spokesman for Dallas-based Southwest said the carrier’s lawyers were still reviewing the decision and had no immediate comment.

The judges ruled that TSA wrongly interpreted an overall limit that Congress placed on the airline fees and was wrong to reject a solo appeal by Spirit Airlines, but mostly followed the law. The judges specifically rejected separate appeals by American Airlines and Northwest Airlines.

Congress approved the airline fees to make up any gap between TSA’s costs and the amounts raised by a fee on passengers. Congress limited the airline fees to the amount that the airlines themselves spent on security in 2000, the last full year before the terror attacks.

That limit gave airlines a motive to lowball their actual security costs in 2000, and the Government Accountability Office estimated the underreporting at $129 million.

The TSA went after airlines that spent less than the industry average on screening per passenger in 2000 unless the carrier could produce an audited explanation.

The airlines argued that TSA had no right to compare their individual 2000 security spending to an industry average, but the judges rejected the claim.

The judges, however, said TSA should not have included the amounts airlines paid in 2000 to screen non-passengers — before the terror attacks, people without a boarding pass could go through security checkpoints — and it sent the matter back to TSA to fix the numbers.

But they rejected a claim by AMR Corp.’s American Airlines that TSA owed it about $14 million for installing a baggage-security system, calling it a contract matter that American should pursue with the government.

And the judges turned down an appeal from Northwest, which said it was wrongly charged for security duties that the TSA didn’t take over. Northwest, now part of Delta Air Lines Inc., was more than $3 million in arrears on payments in 2005, the judges said.