On May 26, 2006, the Federal government’s Transportation Security Administration (“TSA”) published the new Air Cargo Rule, which is a sweeping revision to the older rules and which will impose compliance costs and burdens on air and expedited motor carriers.  The new Air Cargo Rule is scheduled to go into effect on October 23, 2006, and will impose strict new security requirements in four areas: background checks, training, secure I.D.’s, and known shipper lists.

I. Background Checks & Security Assessment Threats
Under the new requirements, air and expedited motor carriers will not have unescorted access to cargo until and unless their employees undergo a background check and a security threat assessment.  The new Air Cargo Rule extends background check requirements to employees or agents of “indirect air carriers.” 

The Rule defines “indirect air carriers” as “any person or entity in the United States not in possession of an FAA air carrier operating certificate, …, which uses for all, or any part, of such transportation the services of an air carrier.”  See 49 CFR 1540.5.  Although most air and expedited motor carriers do not themselves qualify as “indirect air carriers,” all do make airport-to-airport connecting runs and deliver cargo to airports, and therefore act as agents for “indirect air carriers.”  “Indirect air carriers” face heavy new regulation under the Rule, some of which will impact those AEMCA members who are only agents of “indirect air carriers.” 

Under the new Rule any air and expedited motor carrier that does deal directly with an air carrier and therefore “uses the transportation services” of an air carrier, whether passenger airline or all-cargo airline, will be considered an “indirect air carrier” subject to all the regulations discussed below.

Before an “indirect air carrier” gives any of its employees or agents unescorted access to cargo to be transported on an aircraft or held in a facility where an “indirect air carrier” consolidates cargo, that “indirect air carrier’s” employee or agent must complete either a “Security Threat Assessment” or another background check which the TSA deems “comparable” to a “Security Threat Assessment.”  See 49 CFR 1548.15.

In order for the TSA to conduct a “Security Threat Assessment,” the company applying must submit a signed application form for each individual including: name, all residential addresses for the last five years, date and place of birth, Social Security number (“voluntary although recommended”), country of citizenship, and if naturalized in the U.S., the date of naturalization and certificate number, and a check for $28.00.

The TSA has not clarified what background checks it will deem “comparable” to a “Security Threat Assessment,” but has said that it will consider any person who holds a CDL with a hazmat endorsement as having satisfied the requirement.  See 49 CFR 1572.  The TSA has also said in its response to written comments when the rule was proposed that “TSA does not anticipate accepting the background check of a private company or state agency as comparable.”

Indirect air carriers forced to pay for the background checks and the security threat assessments may seek to pass these costs on to AEMCA members.

Not only employees or agents of indirect air carriers must submit to the new background checks, but also the officers, partners, directors, and owners of any indirect air carriers must undergo the background checks.

After conducting the Security Threat Assessment, the TSA sends either a “Determination of No Security Threat” (good) or an “Initial Determination of Threat Assessment” (bad).  The TSA has no legal time limit in which to makes this determination, but has said that it “hopes” to complete the determination within 10 working days.  Rejected individuals have 30 days in which to appeal or request in writing an extension of time.

TSA has said that it “expects that the percentage of false positives among new hires will be minimal.”

II. Training
Each “indirect air carrier” is also required to ensure that every employee or agent who “accepts, handles, transports, or delivers cargo” complete annual security training on: his or her duties under the new Rule, local airport security programs, and the indirect air carrier’s own security program.  The TSA is currently developing the curriculum, including computer-based instructional materials.  The “indirect air carrier” itself must pay for this required annual training of its employees, which the TSA estimates at approximately $100 per employee.

Truckers will have to actually take the annual training, even if the “indirect air carrier” employing them pays for the training.  If a trucker works for several “indirect air carriers,” the Rule gives no guidance as to which indirect air carrier would pay for the training

III. Secure I.D.’
The Rule expands the airport “security identification display area” (SIDA) to include any area on an airport where cargo is present after an indirect air carrier accepts it.  See 49 CFR 1542.205.  This expansion includes areas of operation used by air and expedited motor carriers such as: cargo facilities, loading and unloading vehicle docks, areas where an aircraft operator, foreign air carrier, or indirect air carrier sorts, stores, stages, consolidates, processes, screens or transfers cargo.

IV. Known Shipper Lists
Effective October 23, 2006, before any cargo is loaded onto an aircraft in the United States, each “indirect air carrier” must have and carry out a known shipper program.  Indirect air carriers must submit known shipper data for inclusion in a centrally-managed web-based TSA database.  Only if a shipper is known in the system can an indirect air carrier transport their cargo on an aircraft.  TSA will operate and manage the known shipper database, but indirect air carriers will submit the data of which it is composed.  UPS and Fed Ex argue that the TSA database may not be able to handle the volume of known shipper requests, and may become inoperable at inopportune times, while the TSA disagrees with these concerns.

V. Other Requirements
No indirect air carrier may offer cargo to an aircraft operator unless it has a TSA-approved “security program.”  Every indirect air carrier that does not already have a written security program must have one in place no later than November 22, 2006, and in any event 90 day calendar days “before the applicant intends to begin operations.”  See 49 CFR 1548.5; 49 CFR 1548.7.  The security program must provide for the security of the aircraft as well as that of persons and property traveling in air transportation against acts of criminal violence and the introduction of explosives from the time the indirect air carrier accepts the cargo to the time it transfers it to someone who is not an employee or agent, as well as any time it is stored in transit, and regardless of whether the indirect air carrier has or ever had physical possession of the cargo.

Indirect air carriers must maintain an original of the security program at their corporate office, as well as a copy at every office where cargo is accepted, and make a copy available to TSA upon request, but must restrict the distribution of the security plan only to those with a “need to know.”  Indirect air carriers must make certain required certifications, including that they will ensure every subject employee has completed the required annual training and has had the required background check.

Each indirect air carrier must designate and use an “Indirect Air Carrier Security Coordinator” (IACSC), who is the primary contact for security-related activities and communications with TSA.  Either the IACSC or an alternate must be personally available for questions 24 hours a day.

VI. Conclusion – Impact on AEMCA Members
The key definition in the new Rule is “Indirect Air Carrier.”  As long as AEMCA members are the agents of an “Indirect Air Carrier,” and not actually an “Indirect Air Carrier” under the Rule, only the Security Threat Assessment (background check), Secure I.D., and training requirements apply to them.  Those AEMCA members who deal directly with an airline in arranging for transportation services risk becoming an “Indirect Air Carrier” under the Rule, subject to all the regulations discussed above.

AEMCA truckers should be careful to avoid directly negotiating the transportation of goods by an air carrier, as this might constitute “using the services of an air carrier for transportation,” and thereby transform a trucker from a mere cartage agent into an “indirect air carrier” subject to all the provisions of the new rules.

If you have any questions on particular provisions of the new Rule, or need assistance in complying with the regulations, please contact the Law Office of Seaton & Husk at (703)-573-0700, www.transportationlaw.net.

Article Written By Douglas H. Wood
Law Office of Seaton & Husk, L.P.
Douglas.h.wood@gmail.com