WASHINGTON (Reuters) - U.S. homeland security officials were ordered on Tuesday to review their refusal to reimburse American Airlines nearly $30 million in airport security upgrades following the September 11 hijack attacks.
The U.S. Appeals Court for the District of Columbia Circuit found for American, a unit of bankrupt AMR Corp AMR.N , in its complaint against the Transportation Security Administration TSA.L.
In its petition for a new agency review, the carrier said TSA promised to reimburse the airline for enhancing its automated baggage screening system at New York’s JFK airport in 2002.
American said TSA urged it to adopt a more expensive approach than the airline initially planned for its new terminal.
TSA subsequently denied American’s claim for a nearly $30 million payment, saying it had limited funds and had to prioritize security risks.
TSA was created in the aftermath of the attacks on New York and Washington and was under orders from Congress to ensure that all passengers and bags would be screened for bombs and other weapons by the end of 2002.
American first sought reimbursement in 2004, and Congress has since amended federal law to make grants available to airlines for streamlining bag screening systems. American failed in 2010 to win TSA approval for reimbursement.
The Appeals Court case is American Airlines Inc v Transportation Security Administration, No. 10-1418 . (Reporting by John Crawley, editing by Matthew Lewis)