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Journal of Commerce Reports on Transportation Secretary-Designate Chao

Trump’s transport chief pick has record of rolling back regs

As reported by Reynolds Hutchins in Journal of Commerce

WASHINGTON — President-elect Donald Trump’s pick to head the Department of Transportation, former Labor Secretary Elaine Chao, has a track record of rolling back regulation and a pro-business bent that has run afoul of labor unions.

If confirmed by the Senate, Chao, the wife of Republican Senate Majority Leader Mitch McConnell, is poised to be Trump’s advocate for the administration’s trademark trillion-dollar infrastructure investment plan. Chao will also be taking the reins of an agency in mid-gallop as it nears the final mile of the Obama White House regulatory agenda: a list that runs the gamut from mandatory electronic logging devices and speed limiters in truck cabs to metrics designed to monitor productivity and efficiency at the nation’s ports.

Chao represents a thoroughly establishment pick for a thoroughly anti-establishment president-elect. Not only has she served as labor secretary during the most recent Bush administration — the only member of President Bush’s cabinet to serve a full eight-year term — but she also served as deputy secretary of transportation from 1989 to 1991 under the first Bush administration. Before that, Chao served as deputy administrator for DOT’s Maritime Administration and as chairwoman of the Federal Maritime Commission in the 1980s.

Chao also has roots in the shipping industry. Her father, James S.C. Chao, founded the shipping, trading, and finance enterprise Foremost Group in 1964, where he serves as chairman to this day.

Those are solid qualifications for an incoming transportation secretary, according to some of the shipping industry’s leading lobbying groups.

“We are particularly pleased to see a nominee who has experience with the maritime industry,” Jean Godwin, executive vice president and general counsel at the American Association of Port Authorities, said in a statement.

Similar thoughts were echoed by Edward R. Hamberger, president and CEO of the Association of American Railroads, who noted Chao’s prior time with the DOT and offered it as evidence that “she has a full appreciation of the vital role freight and passenger rail play.”

“Chao understands the issues we face as we try to keep America’s freight moving safely and efficiently,” said Chris Spear, president and CEO of the American Trucking Associations, who worked alongside Chao at the Labor Department from 2001 through 2004.

In spite of her uneasy relationship with labor, even Edward Wytkind, president of the Transportation Trades Department at the AFL-CIO, lauded Chao and said he was optimistic that the secretary-designate would transform the President-elect’s campaign commitments on transportation and jobs into reality.

Adding, however, “This includes opposing the agenda of special interests and their congressional allies when they push wrongheaded policies that lower wages and weaken the rights of working people — the very people that the president-elect said he would fight for in the Oval Office.”

However, others were less convinced. Her qualifications are solid, but they are nevertheless dated, said Susan Kohn Ross, an international trade attorney with Mitchell Silberberg & Knupp.

The same instincts that Chao had almost a decade ago at Department of Labor won’t guarantee that she’ll exercise similar instincts at DOT, and it leaves the agency’s fate and Chao’s role there “as clear as mud,” Ross said.

“She’s formerly in the Department of Transportation so she has some idea of what’s going on, but she’s so far removed from it,” Ross said. Her tenure at the DOT under the first Bush administration came to an end a quarter-century ago and was marked more by airline deregulation and less by infrastructure investment and motor carrier safety. “We’re dealing with a whole different set of regulations. What does she really know about transportation at this point today?”

Chao’s time at the Department of Labor has also left her vulnerable to critics before her Senate nomination hearing.

When Chao left the department in 2009, she faced a deluge of criticism. Many complained Chao favored employers over workers and was lax with regulation, not only on enforcement but on worker safety.

Chao has asserted her critics, often labor unions, were unfair and “partisan.” The former labor secretary characterized her approach to her work at the agency as “compliance assistance,” a strategy that involved close cooperation with the private sector.

“We have many rules and regulations that can be sometimes confusing and complicated,” Chao told the New York Times in January 2009. “By reaching out to the employer community and educating them on what their responsibilities and obligations are to their workforce, that, along, with strong enforcement, is the best way to protect workers.”

That pro-business approach could be a big win for the motor carriers who have faced a laundry list of new regulations under the Obama administration that, while aimed at increasing driver safety, threaten to tighten capacity and hike shipping rates.

Under more conservative leadership, there is a chance that some elements of the regulatory tsunami prepared to hit motor carriers will be avoided entirely, according to industry analysts, many singling out a proposed truck speed limiter mandate introduced by the Federal Motor Carrier Safety Administration and National Highway Traffic Safety Administration in August.

If Chao is looking for regulations or programs to streamline, transport interests will be quick to suggest the controversial Compliance, Safety, Accountability, or CSA initiative. The revision of other existing regulations, such as the driver coercion rule that took effect this spring or hours-of-service regulations, is considered less likely. For example, speakers at JOC’s Inland Distribution Conference didn’t expect the electronic logging mandate, required by law, to be sidelined.

“There are a lot of other things in flight now — the speed limiter rule, a detention time study, minimum insurance standards for truckers,” C. Randal “Randy” Mullett, founder and principal of Mullett Strategies, told attendees at the JOC conference. “With the change of administrations, I think ELDs are going on. But perhaps we don’t move forward with speed limiters.”

Chao’s ties to the business community — and Congress — may put some momentum behind the incoming administration’s big infrastructure push.”

The president-elect’s $1 trillion infrastructure investment plan is reliant on public-private partnerships. Though the details are still sketchy, under Trump, the government would avoid direct spending and instead subsidize private development with significant tax credits — equivalent to 82 percent of the equity private financiers spend on infrastructure. Developers would own the infrastructure and benefit directly from the collection of tolls and fees.

When the plan was announced in the days immediately after Trump’s election, Democrats and Republicans alike said they were encouraged by the much-needed funding boost, which would allow shippers to avoid disruptions and save on transport costs.

Weeks later, the road ahead now seems littered with potholes for the president-elect and his chosen transportation secretary. Some Democrats are now calling the work program, reminiscent of Democratic New Deal programs in the 1930s, a “Trojan horse.”

“There’s danger in the details, danger that these projects will be a Trojan horse for tax breaks and giveaways to investors who simply get credits to do projects we’re already doing,” Sen. Richard Blumenthal, D-Conn., told Roll Call earlier this week.

For AFL-CIO’s Wytkind the initiative could still be a success for American infrastructure and workers.

“Chao has an opportunity to play a large role in living up to the commitments made by President-elect Trump that he would rebuild the middle class,” Wytkind said. “Advancing massive federal investment in new transportation projects is one of the best policy strategies for improving our economy, boosting American competitiveness and putting millions to work.”

But, that’s if the private sector even agrees to fund infrastructure projects. It has, after all, been an area in which developers have shown little interest in the past, Ross said. Even Congress has shown little interest in infrastructure development, subsidized or otherwise. McConnell, Chao’s own husband and Senate leader, has said infrastructure would not be a top priority for the new Congress come 2017.

Chao’s ties — to her husband, to Congress, to business interests — are going to be critical if she intends to champion Trump’s plans.

“It undoubtedly will help that she has a pro-business background, that she has undoubtedly learned something from her father and everyone else in her life,” Ross said. “But, for the private sector to put that kind of money in, there has to be a good reason.”

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