Special Edition
November 22, 2002

AVIATION’S PLACE IN THE NEW HOMELAND SECURITY DEPARTMENT

The President is expected to sign the Homeland Security Act next week. This will be the largest federal government reorganization since 1947 when the Department of Defense was created out of the various service branches. Though it will not become effective until sixty days after the President signs it, the Administration has already begun shifting resources to reflect the new law. The Act makes a myriad of significant changes to the aviation security program created last year and requires a major reorganization of numerous federal agencies into a new department aimed at combating domestic terrorism.

The Act will have specific effects on aviation, and the highlights in that regard are discussed below. But it also will place the responsibility for aviation security, a regulatory regime that has a direct and significant impact on the future of the industry, under the supervision of a vast new law enforcement bureaucracy.

The Act creates the Department of Homeland Security (DHS) to accomplish several primary goals, identified by the statute as: preventing terrorist attacks within the United States; reducing the nation’s vulnerability to terrorism; minimizing the damage of, and assisting in the recovery from, terrorist attacks that do occur; and monitoring connections between illegal drug trafficking and terrorism and coordinating efforts to sever such connections.

DHS will swallow, at least in part, twenty-two agencies to fulfill this mission, organized into four sub-departments, or "directorates." DHS will start with 170,000 employees and have an estimated annual budget of $37 billion. The Administration has one year from the effective date of the statute to consolidate the designated agencies.

The Border and Transportation Security Directorate is the most important for the aviation industry because it includes the TSA. This directorate unifies authority over major federal security operations related to U.S. borders, territorial waters, and transportation systems. In addition to TSA, it will include the functions of the Immigration and Naturalization Service (including the Border Patrol), the "non-revenue" functions of the Customs Service, the Animal and Plant Health Inspection Service, the Federal Law Enforcement Training Center, and the GSA’s Federal Protective Service. This will be the largest directorate in DHS by a wide margin.

While the TSA initially will be a distinct entity within DHS, that separateness will sunset on the second anniversary of enactment. The TSA’s attenuated ties to the aviation community may weaken even more as it is absorbed into a massive department whose mission is not aviation or transportation per se but rather preventing domestic terrorism.

The Act makes some changes to existing aviation security laws and regulations.

1. Baggage screening deadline. The TSA and the airport community have been working with a year-end deadline for the implementation of EDS inspections for all checked baggage. The Act allows TSA to defer this deadline with respect to any airport for up to one year, until the end of 2003. In determining whether an airport should receive a deferral, TSA must consider (1) the nature and extent of the required modifications to the airport’s terminal buildings; (2) the need to ensure that such modifications are effective; and (3) the feasibility and cost-effectiveness of deploying EDSs in the baggage sorting area or other non-public area, rather than in the lobby of the airport’s terminal. TSA must respond to an airport’s request within 14 days of receiving that request, but there is no right of appeal from an agency’s denial of such a request. For those airports that do receive a deferral, TSA must report to Congress on how and when the agency will meet the EDS deadline.

In view of the timing, TSA will receive and will have to act upon requests for deferrals before the new statute actually takes effect.

2. War-risk insurance. The Act extends the federal government’s guarantee of war-risk insurance to carriers through at least August 31, 2003 and, at DHS’s option, through December 31, 2003. In addition, the statute eliminates the deductible to be paid for war-risk coverage, and expands the scope of such coverage to include hull loss and injuries to passengers and crew. Finally, the Act caps the total premium paid by any carrier for war-risk insurance at no more than twice the premium the carrier was paying DOT for its third party policy as of June 19, 2002.

Congress also has passed (and the President is expected to sign) the Terrorism Risk Insurance Act. This law establishes the Terrorism Insurance Program in the Department of the Treasury. The program aims to ensure the availability of property and casualty insurance for terrorism risk by having the federal government temporarily share the burden of compensating for insured losses. The program lasts until December 31, 2005. Losses in connection with terrorist acts that are incurred by passenger or cargo air carriers, United States flag vessels, and qualifying vessels based principally in the United States are covered by the program, regardless of where the loss occurs.

3. Arming pilots. The Act requires DHS to establish a program for arming pilots, though participation in the program remains voluntary.

The program is limited to Part 121 passenger air carriers. A potentially eligible pilot is defined, if more than one pilot is required to operate the aircraft, as "the individual designated as second in command." Such pilots may volunteer for training in the use of firearms to defend the flight deck against "acts of criminal violence or air piracy." Those who complete the training will be deputized as "Federal flight deck officers." The TSA will provide the training at no cost to either the pilot or the carrier involved. Carriers may not prohibit any pilot they employ from participating or fire a pilot solely for participating. Participating pilots will carry their firearms with them from flight to flight, i.e., the gun will go with the pilot and not the aircraft. Any conflicting state law is preempted. The program covers international as well as domestic flights, a feature that, when implemented, is sure to generate controversy with non-U.S. aviation authorities.

The Act immunizes carriers from liability for damages "arising out of a Federal flight deck officer’s use of or failure to use a firearm." Participating pilots, too, are immune from liability for their actions defending the flight deck unless they are guilty of gross negligence or willful misconduct.

TSA is required to issue implementing regulations for this program and begin training pilots within three months of enactment. This regulation will address a host of issues, including the length and composition of the training program, the types of firearms to be used, and the storage and transportation of firearms between flights. Unlike previous legislation introduced earlier this year, the Act contains no phase-in period before the program is fully implemented, nor does it require a threshold level of interest from pilots as a prerequisite to launching the program in the first place. The Act has at least one escape clause, i.e., TSA may take "such actions as are necessary" if it determines that carrying firearms runs the risk of "catastrophic failure of an aircraft as a result of discharge (including an accidental discharge)." Additionally, TSA may suspend the program if it "determines that a shortcoming in standards, training, or procedures was responsible for [an] accidental discharge."

4. Flight attendant training. The Act requires that carriers include methods of self-defense within their security training programs for flight attendants. In contrast to the Federal flight deck officer program, this program is mandatory for all flight attendants, and carriers must pay their flight attendants for time spent on the training. However, no one is required to go through any hands-on activity that the person "believes will have an adverse impact on his or her health or safety." The Act also directs TSA to study the benefits of arming flight attendants with non-lethal weapons such as tasers, and to submit a report detailing the agency’s conclusions by May 2003.

5. Screener citizenship. TSA screeners presently are required to be U.S. citizens. The Act amends this to include persons who "owe allegiance to the U.S.," a term of art that may be limited to residents of the Trust Territories but that was probably intended to be broader. A U.S. District Court in Los Angeles recently held that the citizenship requirement is unconstitutional, so the last chapter on this has yet to be written.

6. Airport Improvement Program. The Act requires DOT to consult with the DHS before approving an application for airport development grants concerning security equipment or airport reconfiguration necessary for the installation of that equipment. Given the statutory language, the Secretary of Homeland Security may ultimately gain de facto control over these grant decisions.

7. Civil penalties for violating security regulations. The Act increases civil penalties for violations of aviation security regulations to a maximum penalty of $25,000 for air carriers and other corporate entities. The maximum penalty under previous law was $10,000.

8. Contracting with DHS. The Act makes significant changes to the ways that the government can procure security-related equipment and services. Those will be addressed in a future edition of the Aviation Advisor.

Editor’s note: The material in this edition largely was prepared by Robert DeHaan, associate, and Adam Hulbig, former associate, in the firm’s Aviation Group.

The AVIATION ADVISOR is published by Zuckert, Scoutt & Rasenberger, L.L.P., a Washington, D.C. law firm.  For further information regarding any of the developments discussed in this issue, please contact a member of the firm’s Aviation Group:

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