U.S. Senate Minority Leader Mitch McConnell (R-KY) waves to supporters with his wife, former United States Secretary of Labor Elaine Chao, at his midterm election night rally in Louisville, Kentucky, November 4, 2014. Television news networks are projecting that McConnell will win the election. REUTERS/John Sommers II

By David Shepardson

WASHINGTON (Reuters) - President-elect Donald Trump plans to nominate former Labor Secretary Elaine Chao to head the Transportation Department, a source with knowledge of the decision said on Tuesday.

The source, who requested anonymity, confirmed the pick to Reuters. Chao, the wife of Republican Senate Majority Leader Mitch McConnell, served as labor secretary under President George W. Bush and was the first Asian-American woman to hold a Cabinet position. The formal announcement was expected Tuesday afternoon.

Although Trump spoke on the campaign trail about wanting to "drain the swamp" in Washington, more than half of Trump's nine key appointments so far have been accomplished Washington insiders, such as Chao.

Chao will face a number of big decisions at the agency that overseas the nation's vehicles, airplanes, railroads, pipelines, ports and highways - including how to proceed on the use of self-driving cars on U.S. roads, the use of small unmanned aerial vehicles, or drones, over people and whether U.S. fuel efficiency standards should be revised.

There are dozens of other pending regulatory issues the next administration will face, including railroad safety and staffing rules, requiring event data recorders in all U.S. vehicles and whether to set rules for airlines requiring them to give additional passengers with disabilities seats with extra leg room and whether to formally ban or restrict all mobile phone calls made on personal phones on U.S. flights.

She may also take a leading role in Trump's plans to rebuild U.S. infrastructure. Trump has called for $1 trillion in infrastructure spending over 10 years to rebuild airports, bridges and other projects, but it is unclear how much of the funding would come from the federal budget.

Former U.S. House Speaker Newt Gingrich praised Chao's expected nomination. She will be a "great Secretary of Transportation.She really understands the federal government-can lead rebuilding our infrastructure," he wrote on Twitter.

Chao is a former U.S. deputy transportation secretary and sits on the boards of Wells Fargo & Co , Ingersoll-Rand Co [IRCOM.UL], News Corp and Vulcan Materials Co .

Chao, a Chinese immigrant, arrived in the United States at age 8. Her father, James S.C. Chao, is the founder of the Foremost Group, an international shipping, trading and finance company.

(Reporting by David Shepardson; Writing by Doina Chiacu; Editing by Eric Walsh and Jonathan Oatis)