Effective August 20, 2009, the new Transportation Security Administration (TSA) regulations increased the maximum amount of its monetary penalties against aircraft operators and freight forwarders/indirect air carriers (IACs) for violations of the Transportation Security Regulations.  TSA also made significant change to its Investigative and Enforcement Procedures in 49 CFR Part 1503.

Following the tragic events of September 11, 2001, when the United States was attacked by terrorists, the U.S. Congress and President George Bush quickly passed the Aviation and Transportation Security Act of 2001 which created the Transportation Security Administration (TSA). The primary responsibilities of the TSA was to ensure the security of passengers and cargo in air transportation.  Many responsibilities formerly handled by the Federal Aviation Administration (FAA) were transferred to the TSA.  After moving from the U.S. Department of Transportation to the U.S. Department of Homeland Security, as part of the Homeland Security Act of 2002, the TSA had its first Administrator to lead the agency, and moved into its current physical headquarters office in Arlington, Virginia.

In a critical U.S. General Accountability Office report entitled “Aviation Security: Vulnerabilities and Potential Improvements for the Air Cargo System,” dated December 2002, the GAO stated:

U.S. air carriers transport billions of tons of cargo each year in both passenger planes and all-cargo planes. Typically, about one-half of the hull of each passenger aircraft is filled with cargo. As a result, any vulnerabilities in the air cargo security system potentially threaten the entire air transport system.  Numerous government and industry studies have identified vulnerabilities in the air cargo system. These vulnerabilities occur in the security procedures of some air carriers and freight forwarders and in possible tampering with freight at various hand-offs that occur from the point when cargo leaves a shipper to the point when it is loaded onto an aircraft. As a result, any weaknesses in this program could create security risks.

It was a serious and urgent challenge for the TSA to correct these weaknesses.

The Transportation Security Regulations, 49 CFR Parts 1500 to 1572, were issued on July 23, 2002, and implemented the various laws that created and outlined the functions and expanded powers of the TSA.  Important operational regulations are Part 1542 (Airport Security), Part 1544 (Aircraft Operator Security), Part 1546 (Foreign Air Carrier Security), and Part 1548 (Indirect Air Carrier Security) whereby the TSA sets forth all the many new and comprehensive requirements that attempt to prevent any person, luggage, provisions, or cargo getting aboard an aircraft that could cause it to crash.

What is most important for this discussion is the amended TSA regulation at 49 CFR Part 1503 (Investigative and Enforcement Procedures) whereby the TSA describes how and when it may issue a monetary civil penalty against an airline or IAC (a.k.a. “freight forwarder”) for a violation of the Transportation Security Regulations.

In the new TSA regulations, the TSA announced that certain penalties that previously were at a maximum of $25,000 per violation are now $27,500, and those that were at a maximum of $10,000 per violation are now $11,000.  More importantly, the TSA announced:  “TSA may assess a maximum penalty per case of $50,000 if the violation is committed by an individual or small business.  TSA may assess a maximum penalty amount per case of $400,000 if the violation is committed by a person other than an individual or small business.”  Those are big numbers by any count in the airline and cargo transportation business.

Often, a monetary civil penalty is issued months after the violation actually occurred. Typically a TSA Inspector visits the airline or warehouse of an IAC unannounced to verify that it is complying with all of the relevant TSA regulations.  If a violation is discovered, the TSA Inspector issues a Letter of Investigation (LOI) to the alleged violator, and allows 30 days for a written response. If the response is not forthcoming or is not satisfactory to the TSA Inspector, the case is referred to an attorney for TSA in its Office of Chief Counsel.  The TSA attorneys are located at all major international airports in the United States.

The TSA attorney drafts a Notice of Proposed Civil Penalty against the alleged violator. The Notice describes the facts which supported the violation, identifies the statute, regulation, or order violated, and provides 30 days for the recipient of the letter to respond.  Often, the letter is sent by certified mail to the President or CEO of the company, or to the TSA-designated security coordinator.

The airline operator, foreign air carrier, airport, IAC, or flight school that receives such a Notice has several options:

1) pay the penalty in full;

2) demand a hearing before an Administrative Law Judge;

3) plead that the individual or company does not have the money to pay the penalty;

4)  write back to the TSA and attempt to persuade the TSA that the violation did not occur; or

5) request an informal conference with the TSA attorney identified in the Notice.

In my experience, it is best to meet with the TSA attorney who issued the letter as part of an informal conference. Informal conferences may be held by telephone or in person. If in person, I usually bring with me an officer of the company that allegedly violated the cited TSA regulations, a security manager, and perhaps another person who can describe the incident that led to the Notice and the corrective actions taken by the company.  The meeting may take place in the TSA attorney’s office or nearby conference room.  Documentation is usually presented to the TSA attorney identifying and describing that the violation did not occur, or listing the mitigating factors to reduce the penalty if there was a violation.

The TSA attorney has the authority to settle the case at the informal conference, and many cases are settled at this time.  Payment may be made to TSA by check, credit card or wire transfer within 60 days after receiving the Final Notice setting forth the agreement in writing from the TSA.   If the case is not settled, the alleged violator may still demand a hearing before an Administrative Law Judge.

Another new and generally unknown policy of the TSA is its Voluntary Disclosure Program. The TSA has created something similar to what the U.S. Customs and Border Protection  (CBP) and the Bureau of Industry and Security (BIS) have long had, and that is a formal voluntary disclosure program whereby if an apparent violation is disclosed to the TSA, then no penalty will be issued by the TSA. The requirements of receiving such an excellent benefit are: (1) the violation must have been inadvertent, (2) once discovered, the violation must have been promptly reported to the TSA, (3) the violation must have been immediately terminated once discovered, and (4) corrective action must have been taken or is being discussed.  Please note that a voluntary disclosure cannot take place during an inspection by a TSA officer.

In conclusion, the TSA Investigative and Enforcement Procedure Regulations at 49 CFR Part 1503, as amended and effective August 20, 2009, are consistent with the other agencies within the Departments of Transportation, Commerce, and Homeland Security.  The TSA Voluntary Disclosure Program provides more generous benefits to the violator than other Federal agencies. The TSA done a pretty good job in drafting and issuing regulations and then implementing them to address the GAO concerns stated in 2002.  As a relatively new agency with new and changing regulations, the TSA seems much more interested in compliance with its security regulations than collecting money from the companies it regulates. And that’s the way it should be.

For more information about this topic, cargo screening requirements, and TSA regulations and requirements generally, please attend the Air Cargo Security Summit taking place in Orlando, Florida, on October 27-28, at which I will be a guest speaker.