In the latest sign of turmoil within the Chicago Fire Department, a high-ranking officer was recently demoted and placed on paid administrative leave after being charged with drunken driving and possession of a handgun following a traffic accident.

By voluntarily resigning his $147,000-a-year job as deputy district chief – and returning to the lesser rank of battalion chief – Loyal Nichols Jr. now has union protection, officials said.

That’s significant because the union contract includes a policy of “progressive discipline,” with specific steps that must be followed before union members can be punished for transgressions.

Nichols’ criminal case, meanwhile, still is wending its way through the court system.

“CFD member Loyal Nichols was arrested on charges concerning an accident in his personal car while off-duty,” fire department spokesman Larry Langford said via email. “The Police Department tells us he was charged with leaving the scene, driving under the influence and having a weapon in the car.”

“Nichols was a deputy district chief at the time of the arrest. Subsequent to that arrest, he has decided to voluntarily resign his position…and return to his career service rank of battalion chief. He will still be subject to the disciplinary process concerning violations of the code of conduct for members of the department….He is on paid administrative leave pending the progress of the police and CFD investigation.”

The embarrassing incident occurred on Nov. 27. After getting into an accident and allegedly leaving the scene, Nichols was pulled over by Chicago Police in the 200 block of West 107th Street. While searching for his insurance papers, police found a 9-millimeter handgun in the center console of Nichols’ vehicle, according to the arrest report.

It wasn’t the first time Nichols has been involved in controversy. Last summer, a fire department Ford Expedition that he had been traveling in rolled into a lagoon at Sherman Park and had to be fished out by city crews. Langford said Nichols was a passenger in the SUV as it was parked atop an incline during a training exercise. He and the driver exited, and the vehicle somehow rolled into the water, Langford said.

The city’s inspector general, Joe Ferguson, still is investigating how the lagoon incident occurred, sources said. Nobody was punished in the wake.

Numerous attempts to reach Nichols, 53, were unsuccessful.

His household has been generous to local politicians, donating $8,560 to campaign funds affiliated with alderman-turned-county commissioner William Beavers, according to the Illinois State Board of Elections. Nichols once dated Beavers’ daughter, according to Beavers.

Nichols’ next court date is Dec. 21, records show.

This latest turmoil comes as the fire department’s Internal Affairs Division continues to investigate an even more embarrassing fracas that got Mayor Rahm Emanuel’s plan to merge the police and fire marine units off to a rocky start.

The Sun-Times and BGA reported last month that a Chicago Police officer is demanding the arrest of the son of a former fire commissioner who allegedly slammed the police officer to the ground during a Nov. 1 river rescue. The apparent turf battle did not impede the early-morning rescue of two men who had apparently fallen into the water near Goose Island. The alleged aggressor was fire Capt. Mark Altman, son of former Chicago Fire Commissioner Edward Altman. The victim was Chicago Police Officer Joseph J. Smith.

undefined“He grabbed me and slammed me backwards and I fell on the ground. He unlawfully put his hands on me. That is a battery. He should be arrested for that,” said Smith, who is assigned to the Police Department’s Marine Unit.

“I was totally shocked by this. My intention was to save two people. That was taken away from me by that particular fireman. I later found out he’s a politically connected fireman. That doesn’t change the facts. I am a good guy. I just want justice to be done and fairness.”

Earlier this year, Fire Commissioner Robert Hoff dumped the deputy commissioner in charge of the Fire Prevention Bureau after firing just four of the 54 firefighters accused of padding mileage expenses to the tune of $100,000 in 2009 alone. Six other firefighters have retired and 43 others face suspensions ranging from 30 to 60 days. Ferguson had recommended that all 54 firefighters be fired and that the Fire Prevention Bureau be disbanded and replaced by civilian employees of the city’s Department of Buildings.