| | | | |  | | By Alex Daugherty | With help from Oriana Pawlyk and Tanya Snyder
| | | — A Los Angles search warrant has complicated the timeline for President Joe Biden's pick to lead the FAA. — What's next for freight rail workers after Thursday's tentative agreement to avert a potential strike. — The new EV tax credit may well violate international trade rules, but foreign governments angry with the new law will likely have a hard time fighting it. IT'S MONDAY: You're reading Morning Transportation, your Washington policy guide to everything that moves. As always, send tips, pitches, feedback and song lyrics to adaugherty@politico.com. You can find all of us on Twitter: @alextdaugherty, @TSnyderDC and @Oriana0214. "You bridge and tunnel crowd/Hanging your trousers down at heel/This is the realest thing/As ancient choirs sing/A rushing rabble revels from above/Los Angeles, my love"
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| | | NO REASON TO RUSH: A Los Angeles County criminal probe that involves Phil Washington, Biden's pick to head the FAA, has some in the aviation industry on edge, Oriana and Kathy report . After a summer of travel woes, ongoing 5G broadband deployment issues and changes to safety oversight following two fatal crashes of Boeing's 737 MAX, it's increasingly likely that Washington won't be confirmed before the election or even during the lame duck session. "It certainly has everyone's attention," one former Transportation Department official said Friday. Five officials from various sectors of the aviation industry said they expect the new attention to prolong Washington's confirmation process, maybe even into next year — and the FAA hasn't had a confirmed administrator since March. "We have an agency in dire need of a leader," said the official. WHAT HAPPENED: Last week, Los Angeles County sheriff's investigators executed a search warrant at a county supervisor's home that sought, among other evidence, correspondence with Washington. An attached affidavit includes a whistleblower's allegations about Washington's handling of a no-bid contract during his past job heading the county Metropolitan Transportation Authority. DENIAL : Washington, the CEO of Denver International Airport since last year, has not responded to POLITICO's requests for comment about the probe. But on Thursday he said at an airline pilots' conference that "all the allegations are false," Bloomberg reported. The White House has declined to comment on the substance of the Los Angeles case, saying that Washington's confirmation continues to work "its way through the Senate." LACK OF CAPITAL : One airport lobbyist said he doubts Washington's confirmation will happen this year, in light of the latest news. "I think the Republicans will keep trying to stall stuff out and I don't think the Democrats will be all that anxious to use a lot of political capital to push it through," the lobbyist said. Washington has yet to receive a hearing before the Senate Commerce Committee, which is responsible for vetting the nomination.
| | | NEW DEADLINE: While a rail strike was averted for now, the new deadline to watch is mid-October, when rank-and-file union members will need to ratify the tentative agreement reached by union leaders and freight rail executives on Thursday. Unlike last week, however, if a ratification vote fails both parties must begin negotiations again. BIG CHANGES: Thursday's new deal includes wage increases, health care cost freezes and changes in work rules. Changes to time-off policies, something the railroads fiercely opposed, was the biggest hangup in negotiations. But the tentative agreement may not be an easy sell, especially for the members of the unions that had earlier opposed the Presidential Energy Board's recommendations. BUT STILL CONCERNS : Some workers could have qualms about agreeing to a deal that doesn't deliver everything they initially sought. Thursday's agreement "doesn't mean our employees didn't want to strike, because they're angry," Dennis Pierce, president of the Brotherhood of Locomotive Engineers and Trainmen, one of the holdouts on the emergency board's recommendations, told Eleanor Mueller, Tanya and Nick Niedzwiadek after the tentative deal was reached. "Our job now is to go out and explain to them what we were able to accomplish that can help improve their lives."
| | | WTO WHO? Doug Palmer reports that the new electric vehicle tax credit passed by Congress under President Joe Biden may do more to damage the World Trade Organization than protectionist policies pursued by former President Donald Trump. THAT'S A FOUL : U.S. lawmakers and Biden passed and enacted a provision that most legal experts see as an obvious violation of international trade rules. The move shows a potentially irreversible shift started under Trump, where domestic political concerns heavily outweigh a global rules-based trade order the administration contends it supports. "The Congress and the Biden administration seem to be ignoring our legal obligations as a member of the WTO whenever they find it inconvenient," former WTO Appellate Body Judge James Bacchus said. GOOD LUCK IN COURT: The new tax credit may well violate key WTO rules, but any countries that move to contest it will likely find a dead end at the global institution's already-weakened dispute settlement system. Even if a dispute were to proceed, the U.S. could invoke a "national security" exception to justify the law, which can often act as a bullet-proof defense in WTO trade litigation. LET'S HASH IT OUT : A more likely outcome might be a negotiated settlement between the U.S. and the three major allies hurt by the provision: Japan, South Korea and the European Union. There are already signs of a possible deal between the U.S. and the EU, whose trade chiefs met this week on the sidelines of a G-7 trade ministers meeting.
| | | Auf wiedersehen:Tesla is considering moving battery cell production to the United States to take advantage of expanded tax incentives in the new clean energy law intended to incentivize domestic electric vehicle production, though Tesla still likely can't take advantage of all of them, Tanya reports. The Wall Street Journal reported this week that Tesla has been working to bring more battery production in-house and is discussing bringing some manufacturing capacity previously planned for Germany to the United States instead. Tesla already does some U.S. battery manufacturing at its Giga Nevada plant. FIRST STEP : Bringing a battery cell plant to the United States is a start, but won't immediately make Teslas eligible for the tax credit as long as critical minerals are sourced abroad. China currently dominates the global market for lithium, nickel and cobalt — minerals essential for EV batteries.
| | | USE YOUR AUTHORITY: Sen. Elizabeth Warren (D-Mass.) wrote DOT last week , urging them to take proactive steps to evaluate the proposed merger between JetBlue and Spirit Airlines. While Warren didn't explicitly call for DOT to reject the merger, the letter was essentially Warren's argument to DOT that the merger is bad for competition and that DOT can act faster than the Justice Department to block a merger without having to go to court. "DOT must make its own independent competition assessments and take its own actions accordingly without deferring to DOJ," Warren wrote in a letter to DOT Secretary Pete Buttigieg. "Congress explicitly granted DOT a role in ensuring robust competition in the airline industry for a reason: DOT is the primary repository of expertise on the airline industry."
| | | — "Hundreds of European flights hit by air traffic control strike." CNN. — "LaGuardia Airport Is No Longer the Worst. This Team Fixed It." Wall Street Journal. — "Why hybrid work schedules have made some commutes worse." Washington Post. — "Small plane lands on I-66 near Front Royal, Va." Washington Post. — "Here's the best time to buy your plane ticket if you're flying for the holidays this year." Arizona Republic. — "3 confirmed dead after midair collision in Boulder County." 9 News. — "Electric Vehicles Took Off. Car Makers Weren't Ready." Wall Street Journal.
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