You misunderstand the nature of oral arguments in an appeals court. The questions are very often (as in this case) hypotheticals meant to explore the boundaries of what the advocate perceives to be the law. There's been no posted transcript of the hearing, but knowing the way these arguments work, I'm almost certain you are misinterpreting what was said.

The way I understand the exchange, the court was trying to address the issue of regulatory authority, whether TSA needs to have a formal regulatory process or can just make a change in checkpoint procedures without such a process. TSA was claiming the latter. To explore the boundaries of that, the court asked a question, specifying what everybody understood would be an unacceptable procedure. The TSA's answer was that was no matter what the procedure, they didn't need to go through a formal regulatory process. The discussion there was about the process of changing the procedure, not the acceptability of specific procedures, and indeed the US attorney said that such a procedure would have 4th Amendment issues.