American Airlines prevails in D.C. Circuit appeal challenging TSA funding decision

Client(s) American Airlines, Inc.

In 2002, the Transportation Security Administration (TSA) asked Jones Day client American Airlines, Inc. to incorporate an "in-line" baggage-screening system in its new terminal at JFK International Airport rather than a less expensive terminal lobby solution. American agreed on the understanding that TSA would reimburse the airline once it had congressional authority to do so. American ultimately spent more than $28 million on the project and, once Congress granted authorization, sought reimbursement from TSA. The agency denied the request, citing limited funding and a preference for addressing "ongoing" risks rather than completed projects.

Jones Day represented American in petitioning the D.C. Circuit for review of that denial, which granted the petition and remanded the matter to TSA for further proceedings. The court observed that Congress had required the agency to develop a prioritization list in 49 U.S.C. 44923, while TSA treated the list as an "initial guide" from which it could depart on a case-by-case basis. Invoking the familiar Chevron two-step inquiry, the court found that TSA either had not created the kind of prioritization list demanded by Congress or, if its submitted list satisfied the act, had arbitrarily and capriciously deviated from it and thereby failed to base its decision on the appropriate criteria. The court vacated the decision to deny reimbursement and remanded to TSA for further proceedings.

American Airlines, Inc. v. Transportation Security Administration, Case No. 10-1418 (D.C. Cir., Dec. 6, 2011)