Several times a year, a convoy including an unmarked truck and heavily-armed chase vehicles moves from a government plant in Oak Ridge, Tennessee, along major highways to others in Irwin, Tennessee, or Lynchburg, Virginia. Later, similar convoys with special guards move from those sites to naval bases in King’s Bay, Georgia, or Kitsap, Washington.

This is the nerve-wracking, but largely hidden dance of highly-enriched, weapons-usable uranium in the United States, a steady movement of nuclear explosive material along public routes from one protected government site to another, all to supply fuel for the reactors that power the U.S. Navy’s submarines and aircraft carriers.

The Navy has been relying on such highly-enriched uranium (HEU) shipments since 1953, when the first nuclear-powered vessel, the USS Nautilus had its reactor core installed.  Although the shipments are constantly monitored and the trucks are equipped with counterterror measures, it’s a fraught experience for many of those involved. HEU is generally considered a choice target for terrorists, since it can be readily used to create a devastating nuclear explosive.

Now some experts are wondering: Does the U.S. Navy have to keep doing this? And if it does, will the Navy encourage military officials in other countries to do it as well –to build submarines and other vessels powered by nuclear reactors that consume HEU that has to be moved regularly from one place to another, rather than using a more benign fuel that cannot as readily fuel nuclear weapons?

The experts say the issue is on the table now because countries like Iran, Argentina and Pakistan are claiming they intend to build nuclear-powered submarines – and any policy change by the U.S. military would take years to implement.

A good way to reduce the terror risks posed by HEU would  would be for the U.S. Navy to stop using it to power submarines and aircraft carriers and replace it with low-enriched uranium, which isn’t suitable for use in weapons, a group convened by the Federation of American Scientists said in a report released on March 19. For two decades, the Navy has refused this idea, insisting that the low-enriched fuel can’t match the superb performance of the HEU inside its shipborne reactors.

It’s clear that to satisfy the Navy’s concerns, engineers would need to develop compact new reactors capable of operating more efficiently than existing reactors when fueled by low-enriched uranium, said the  group, which included a physicist, four nuclear engineers -- one of them a retired Navy vice admiral -- and three nuclear policy experts.

In a press conference in Washington, they recommended that the government begin a major effort to develop such a propulsion system next year, before an international summit meeting opens in Chicago in 2016, for the purpose of promoting nuclear security around the globe.

While it’s already too late for the Navy to convert to low-enriched uranium for use in the Ohio-class ballistic and cruise missile subs, scheduled to begin construction in 2021, it could potentially produce a new reactor in time for the next generation of attack submarines and aircraft carriers, scheduled for deployment in the 2030s and 2040s, if it starts the program in 2017, the group said.

The report said, moreover, that the United States is slowly but steadily using up its highly-enriched uranium set aside for naval nuclear fuels. By the 2060s, it said, the Navy will be faced a need to produce more of the weapons explosive, undercutting U.S. nonproliferation policy, unless it shifts gears.

If the United States resumes production, said Alan Kuperman, coordinator of the Nuclear Proliferation Prevention Project at the University of Texas and an author of the report, “we won’t have a leg to stand on when we tell other countries not to produce highly-enriched uranium.”

The report, “Naval Nuclear Propulsion: Assessing the Benefits and Risks,” was financed by the MacArthur Foundation, which has also funded work by the Center for Public Integrity.

Officials from the Office of Naval Reactors – a part of the Energy Department -- said in a report to Congress in January 2014, that substituting low-enriched for highly-enriched uranium would raise operating costs, cause more radiation exposure for crews and maintenance workers and generate more radioactive waste.

But the report also said “the potential exists” to develop a new generation of more efficient low-enriched uranium naval reactors that could address these concerns. A spokeswoman for the Naval Nuclear Propulsion Program said this week that the service could not immediately comment further.

The Navy estimated the effort could cost up to $2 billion over ten to fifteen years. Kuperman said that the figure, while large, was only a small portion of the overall nuclear Navy budget.

The goal of this research, the task force report said, should be to match the longevity of the reactors currently in production for the Virginia-class attack submarines, which are designed to operate without refueling for the three-decade operating lifetime of the vessel.

“The task force endorses this objective because of the downsides of refueling, in terms of operational and shipbuilding costs, and other issues such as minimizing radiation exposures to workers,” the report said.

The task force said the threat of the theft or diversion of weapons-grade uranium intended for naval use is real, citing five separate reported thefts or diversions of naval fuels in Russia in the 1990s.

In one of the Russian incidents, two Navy enlisted personnel were convicted of stealing two fuel rods containing a total of about four pounds of highly-enriched uranium from a storage facility in Murmansk.

“Non-state actors such as terrorists groups or criminal gangs could steal, buy, or be given HEU that they could then form into improvised nuclear devices, which are crude but powerful nuclear explosives,” the report says.

Five countries besides the United States already have nuclear-powered vessels: Russia, the United Kingdom, France, China and India. Of those, only the United States and the United Kingdom use uranium enriched to 90 percent or higher, the level preferred by weapons designers.

The U.S. nuclear fleet is by far the largest, with 82 vessels, including 10 aircraft carriers, 14 ballistic missile submarines, four cruise missile submarines and 54 attack submarines. Russia, with the second-largest fleet, has a total of 54 nuclear-powered warships and six civilian nuclear-powered icebreakers.

Overall, naval reactors consume a total of about three tons of highly-enriched uranium worldwide each year, the task force report says, about double the amount used for other non-weapons purposes.           

Charles Ferguson, the president of the Federation of American Scientists, an independent nonprofit group in Washington, said that the burden is on the Navy to prove that its nuclear vessels can’t be run on low-enriched fuel.  “We’re saying, show us if it’s not technically feasible,” he said. “This is a serious issue.”

Ferguson, a graduate of the Naval Academy who studied nuclear engineering and served on a ballistic missile sub, chaired the task force. The other members included retired U.S. Navy Vice Admiral Charles Leidig, who teaches engineering at the U.S. Naval Academy and has served on both attack and ballistic missile subs; Bethany Goldblum, a nuclear engineering professor at the University of California, Berkeley; Kuperman;  Alireza Haghighat, professor of nuclear engineering at Virginia Tech; Paul Ingram, executive director of a London-based think tank, the British American Security Information Council; Nick Ritchie, a lecturer in international security at the University of York in Britain; and Bojan Petrovic, professor of nuclear and radiological engineering at the Georgia Institute of Technology.

This is a fuller, more detailed account of the issues surrounding an alarming break-in at Pelindaba than the Center for Public Integrity published with a partner on March 15.

PELINDABA– To gain access to South Africa’s main nuclear research center here, where nearly a quarter-ton of nuclear explosives are stored, approved visitors are supposed to be checked by fingerprint scanners at the three main entrances, installed as part of an American-financed security upgrade.

Unless, of course, the scanners are not working, in which case the guard may just wave a visitor through a vehicle entrance several steps away – as happened with a reporter, twice, during visits a few days apart to this remote, scrubland site last year.

Pelindaba, situated west of the capital of Pretoria, is considered a “national key point” by the South African government, a highly-sensitive facility that is a potential target for sabotage. It was once the center of South Africa’s clandestine nuclear weapons program, which built 6 bombs and left behind a reservoir of weapons-usable fuel.

Whether that stockpile -- enough highly-enriched uranium (HEU) for more bombs like the one that devastated Hiroshima -- is adequately guarded from theft has been a recurrent source of friction between Washington and Pretoria, according to officials in both capitals.

A break-in at Pelindaba by two armed groups more than seven years ago convinced senior U.S. officials and some independent security experts that the vault holding the fuel lacks adequate counter-terror protections. As a result, Washington has been waging a quiet, but unsuccessful, diplomatic campaign to convince South Africa to relinquish the vault’s HEU.

Government officials here depict the break-in as a routine burglary, and complain that Washington is needlessly obsessed about Pelindaba’s security. The nuclear arsenals of the world’s militaries pose far greater dangers than the highly-enriched uranium located here, senior South African diplomats say. 

In two private letters, President Barack Obama has asked South African president Jacob Zuma to transform the South Africa’s weapons-usable uranium into a more benign form with U.S. help. But Zuma has not accepted either suggestion, and current and former U.S. officials have said that they worry that the security upgrades made at Pelindaba are insufficient or poorly maintained – as suggested by the malfunctioning fingerprint scanner.

A confidential South African report, moreover, backs up the U.S. account of the gravity of the break-in and the risks of another assault, according to persons familiar with its contents.

The author of the report, who formerly worked for Kroll Inc., an international intelligence and investigations firm, concluded that the raid was a carefully planned operation, that it relied on inside help, that those involved had special training, and that it probably targeted the nuclear explosives, these sources say.

The 98-page document, which was written for the national utility that runs Pelindaba, pointed to suspects that were never arrested or questioned, they add. It has never been released — or even acknowledged — in South Africa, but was obtained by foreign intelligence agencies and described to the Center for Public Integrity by multiple sources.

Asked for comment about this story, Clayson Monyela, a spokesman for South Africa’s foreign ministry said “we are aware that there has been a concerted campaign to undermine us by turning the reported burglary into a major risk. Attempts by anyone to manufacture rumours and conspiracy theories laced with innuendo are rejected with the contempt they deserve.”

Seizing the security control center

Experts consider HEU the terrorists’ nuclear explosive of choice. Physicists say a sizable nuclear blast could be readily achieved by slamming two shaped chunks of it together at high speed. Foreign experts say about 485 pounds of the HEU, initially packed inside South Africa’s nuclear bombs, are stored in Pelindaba’s vault now.

Although Pelindaba, located a half-hour’s drive west of Pretoria, is named after Zulu words that mean "the discussion is finished,” it has long been a magnet for controversy. Its nuclear scientists learned their craft working on a civilian reactor built there by the United States in the 1960s and fueled by U.S.-supplied. highly-enriched uranium at a time when Washington was less attentive to the associated risks.

Still the country’s main nuclear research center, Pelindaba employs about 2,000 workers and consists of dozens of brown concrete research labs, production facilities, and narrow cooling towers, all flanked by grasslands and spreading acacia trees where monkeys, warthogs and other wildlife roam.

The structures are clustered on a series of hilltops, dotted with acacia trees and circled by a 6.8-mile-long, electrified fence. Tucked in the basement of one is a special vault originally built to hold silver intended for reactor fuel rods. After the apartheid government’s six bombs were dismantled and their explosive cores melted down and cast into ingots, the vault was repurposed as their storage site.

According to the confidential South African report, the 2007 raid began shortly after midnight on a cold Thursday morning when four armed men sliced through the fence, peeled it back, and secured the flaps with locking plastic straps, and then one-by-one slowly crawled underneath. Around the same time, a second group of intruders breached another section of the fence about a mile away.

The spot chosen by the first group was at the edge of video coverage, close to a control box and at the nearest point to the vital Emergency Control Center. The second team’s breach came when nearby cameras were pointed elsewhere.

The first of the raiders to get inside went straight to the electrical box, where he circumvented a magnetic anti-tampering mechanism, disabled the alarms, cut the communications cable, and shut down power to a portion of the fence and to alarms on a gate 250 feet away– opening a path for a vehicle to exit.

This was not simply a matter of pulling a switch, a source familiar with the report said, but required electrical skills and knowledge of the security systems. Those who participated, the report said, had special training.

Once inside, the gang walked three-quarters of a mile uphill toward the fire station next to the emergency center. Working swiftly, the assailants broke in, found a hidden latch securing a fire truck ladder, and used the ladder to climb to the Center’s second-floor landing.

The raiders arrived, moreover, on a night when they may have expected little resistance. The Emergency Center supervisor scheduled to be on duty then used a wheelchair. But as it happened, he wanted to attend a party that night, and arranged for a colleague to take his place. She brought along her dog and her fiancé, Frans Antonie Gerber, an off-duty firefighter.

Security forces never directly confronted the raiders. But the dogs’ barking – which led Gerber to spy the intruders and his girlfriend to pick up the phone and call for help just as they burst in -- thwarted the intrusion. Three intruders attacked Gerber, one with a pipe. Gerber resisted, and was shot in the chest, with the bullet narrowly missing his spine. (Gerber, who is still employed at Pelindaba, did not respond to interview requests.)

Frightened off by the fracas and the phone call, the first team of raiders fled. The second team did not go far before they left, prompting the investigator to speculate they had communicated with the first team.

Two guards who were supposed to monitor video cameras were fired; a manager was also suspended. But eight years later, no one has been charged with a crime and no suspects have been identified. One person was arrested: a Malawian man using a SIM card from a cellphone stolen during the raid. But police concluded he found it on the ground outside Pelindaba’s fence, and he was simply deported.

The private investigator tracked down some of the cellphone records of calls made in the Pelindaba area the night of the raid, which in combination with interviews and polygraph tests led him to two South Africans he ultimately suspected of having participated, as well as several others who may have been accomplices.

But the suspects were never arrested or even questioned by police, according to two South African sources.

One major cellphone provider in the area, the MTN group, refused to turn over its records, despite a police subpoena. “MTN is obliged to respond to a subpoena that has been secured by a member of the South African Police Services and not a private investigator,” said Graham de Vries, a spokesman for the company’s chief corporate services office.

A South African expert who read the report said he concluded that the raiders most likely targeted the nuclear explosives, perhaps to sell them on the black market, where they could have fetched millions of dollars. He based his conclusion, he said, on the expertise the raid required, the risk the raiders faced, and the difficulty of planning simultaneous assaults by two different teams.

Having the run of the place

William H. Tobey, the deputy administrator of the U.S. National Nuclear Security Administration at the time of the break-in, is among many current and former U.S. officials that share these concerns. While he remains uncertain of the raiders’ objectives, he mentioned the groups’ ability to use the hidden ladder latch as a reason he became “convinced … there was insider participation.”

Rather than face the implications of the assault, Tobey said, South African officials are in denial about it.

Whatever the raider’s intent, a former U.S. intelligence official said on condition he not be named, they “had the run of the place. The more we learned, the more horrifying it was …. They could have gotten the stuff” if they had been more determined to do so.

Matthew Bunn, a Clinton White House science official who also advised the Bush administration on nuclear security matters, called the South African government’s view that the raiders were common criminals “utterly nonsensical.”

“Nobody breaks through a 10,000-volt security fence to steal someone’s cellphone,” he said. “The obvious question is, What else at the site justifies having two well-trained, knowledgeable teams at the site at the same time? The assumption … to be disproved is that they were … after the highly-enriched uranium.”

South African Police Service officials didn’t respond to repeated requests for comment. Ronnie Kasrils, South Africa’s minister of intelligence services at the time of the raid, said in a brief email that he had ordered a thorough investigation and that “from reports it did indeed appear to be a routine burglary.” Suyabonga Cwele, his successor in 2009, declined to be interviewed.

South African opposition parties have demanded a more concerted inquiry, but the ruling African National Congress has brushed the issue aside. Then-Defense Minister Mosiuoa Lekota told lawmakers in 2008 that the break-in was “a clear criminal act” and a matter for police to pursue.

Bismark Tyobeka, a U.S.-trained engineer who is now chief executive of South Africa’s National Nuclear Regulator, said he believes the chances of a repeat of the 2007 assault on Pelindaba are “very low” but expressed concern about the lack of progress in answering questions raised by the incident.

“If it happened to my installation I would be bugging the state or the police to want to know what is happening,” he said. “It leaves everybody worried because to date none of the perpetrators has been apprehended.”

“Either the perpetrators were very sophisticated in the operation, or the investigations have not been very effective,” Tyobeka said. “We hope very shortly that the perpetrators will be brought to book, we will have closure on this, because as a regulator we can never rest until we know what exactly happened there so that it does not happen again.”

Asked if he planned to pressure the police and Pelindaba’s managers to close the case, Tyobeka said that not his responsibility. “I say we would not really be interested to be chasing the case with the SAPS,” he said, referring to the South African Police Service.

Washington insists on security upgrades

After the raid, the Bush administration offered to help tighten security at Pelindaba, but the Pretoria government refused, according to officials and documents. South Africans chose instead to seek a special IAEA review of the site, and in January 2008, an IAEA team issued a 74-word statement that a security upgrade plan set by the government a year before the raid provided an "appropriate basis" for protecting the site.

The statement — which under IAEA rules had to be cleared by the South African government — said further there was “no evidence that sensitive nuclear areas were under any threat at any time” during the raid.

For many South African officials, the report was vindication. Abdul Minty, who at the time served as South Africa’s representative on the IAEA board, said he asked his American colleagues, “Don’t you trust the IAEA? This is the organization you created. They come here, they inspect, they report, the stuff is under 24-hour surveillance, it’s in a vault. What’s your problem?”

U.S. experts say instead that the report illustrates the challenge of ensuring sound security practices are used at nuclear explosive storage sites when no international standards exist and no country is obligated to report details about its handling of specific incidents to others. Roger Johnston, a physicist who from 1992 until early this year led a team of Energy Department scientists studying nuclear security, calls this approach “security by obscurity.”

Officials at the South African Nuclear Energy Corporation, which runs Pelindaba, were less sanguine than the ministry officials and sought help from U.S. government nonproliferation experts, according to a September 2009 State Department diplomatic cable.

The cable, released by Wikileaks, said Joseph Shayi, NECSA’s top security manager, told the Americans he needed additional motion sensors as well as new video cameras, fencing and training for Pelindaba. Shayi declined a request for an interview.

But other South African officials said at the time that the upgrades weren’t required, and worried that spending money on security would sap funds needed for other nuclear work, according to U.S. officials involved in the negotiations. The South Africans also raised charges of U.S. hypocrisy on nuclear security, pointing to the July 2012 break-in at the U.S. weapons-grade uranium storage site outside Knoxville, Tennessee, by an 82-year old nun and two other peace activists.

That break-in — which prompted bruising internal security reviews and eventual upgrades — did “affect our credibility” overseas as a secure guardian of nuclear explosives, Steven C. Erhart, the head of the U.S. nuclear weapons production office testified in May 2013 at the trial of those arrested.

In the end, Pretoria agreed to install the upgrades only after Washington offered to pay $8 million toward the cost and threatened to withhold fuel shipments for South Africa’s U.S.-built research reactor, which profitably produces medical isotopes.

NECSA says it spent another $1.4 million to build a new perimeter fence designed with help from experts at Sandia National Laboratories in New Mexico, and to harden defenses at the site’s Emergency Operations Center, which the 2007 raiders so easily commandeered.

But the government refused to buy security system software suggested by Washington, fearing that it might contain “trap doors” that could be exploited by the Americans.  Two sources familiar with the security arrangements also say that the vault building still has no special guard force deployed full-time at its perimeter, unlike similar repositories in the United States.

American security concerns persist

Waldo Stumpf, a senior official in South Africa’s nuclear programs under both the apartheid and democratic governments until 2001, said in an interview that due to various security upgrades made at the site, “there’s no way” that unauthorized parties could get into the vault.

But Johnston, the former Energy Department security expert, said that “as far as I can tell nothing is impregnable.”

The author of more than 115 technical papers and winner of numerous awards for his work, Johnston is best known for his study of seals, including the kind used by the IAEA to detect the diversion of nuclear explosives. After testing 850 seals over the last two decades, he and his team concluded that all of them could be defeated, meaning opened and resealed without leaving a trace — some by one person working alone for two hours or less.

Johnston, who recently formed his own security consulting firm, emphasized that he has only read about and discussed the Pelindaba raid with colleagues. But in general, he said, anyone who says any vault couldn’t be broken into “hasn’t really thought through the security issues. Because, if they had, they would be sweating bullets.”

The break-in at Pelindaba, he explained, was a “classic” failure of what’s known as “layered” security, meaning that authorities felt complacent behind layers of guns, guards, alarms and fences.

“It’s just not a business where you should ever be confident,” Johnston said.

Some of Washington’s enduring concerns are delineated in its recent counterterrorism reports. South African nationals have acted as al Qaida financiers and facilitators, the State Department’s 2012 report said, and a South African nonprofit was suspected of funneling money to Bangladeshi militant groups. Informal cash transfer businesses, called hawalas, widely used by South Africa’s large Muslim community, have likely transferred money to violent extremists in East Africa, it added.

Meanwhile, the country’s security service has engaged in minimal cooperation with U.S. counterterrorism officials, according to the 2013 annual report, the most recent published. “South Africa borders remain porous,” and terrorist groups have exploited the holes to move throughout the continent, the report said. “Due to allegations of corruption, attrition, the lack of receipt of timely intelligence requests, and bureaucracy within multiple South African law enforcement entities, [counterterrorism] challenges remain.”

“The feeling in the White House was: Who is better at protecting this material? Us or them?” said Donald Gips, President Obama’s ambassador to South Africa from 2009 to 2013. “If a real terrorist organization tried to break in there, they’re going to get in.”

No matter how much security gear the South Africans added, Gips said it was his impression that “we were not going to be happy. No matter what country, we wanted that stuff out of everywhere, all over the world.”

Gary Samore, who served as President Obama’s principal advisor on nuclear terrorism until 2013, said government experts during his tenure regarded Pelindaba as one of the “most vulnerable” stockpiles of weapons uranium in the world. The 2007 assault on Pelindaba, Samore said, “was certainly one of the main reasons South Africa would be on that list, because that really freaked people out.”

Birch reported from Washington and South Africa. Smith reported from Washington.

A Center for Public Integrity collaboration with InsideClimate News and The Weather Channel exploring the toxic air emissions in the Eagle Ford Shale region of South Texas has been awarded first place in the Association of Health Care Journalists Investigative (Large) category.

The Big Oil, Bad Air series focused on the epicenter of the nation’s hydraulic fracturing - fracking - boom. Drilling in the Eagle Ford Shale has generated billions of dollars for oil companies but also air pollution that threatens public health.

The series found that residents in drilling areas blame these emissions for making them sick, and that industry-friendly state regulators offer little help. It showed how Texas has weakened air pollution guidelines to industry’s benefit. Texas eventually installed a new air monitor in the heart of the Eagle Ford Shale after the series revealed the scope and seriousness of residents’ complaints.

“Big Oil, Bad Air” was the product of a three-way, 20-month investigative reporting partnership with InsideClimate News and The Weather Channel. AHCJ judges said the series stood out for its “penetrating reporting, eloquent writing and disturbing findings.” They noted that while much reporting has focused on contaminated drinking water caused by fracking, “This series focused instead on airborne pollutants that have harmed the health and destroyed the wellbeing of rural families in the vast Eagle Ford region of Texas.”

The AHCJ awards recognize the best health reporting across eleven categories. This was the 11th contest with more than 420 entries that were screened and judged by more than 50 working journalists or journalism professors.

The AHCJ launched the awards program amid growing concern that too many journalism awards are sponsored by special interest groups that seek to sway media coverage. No health care companies or agencies fund the program.

Second place in the investigative (large) category went to the KMSP-Minneapolis/St. Paul (TV) investigation into coercion affecting psychiatric drug trials and patients at the University of Minnesota, and third-place winner The Chicago Tribune for their work on taxpayer-funded residential treatment centers for disadvantaged children.

A second Center series focused on health care, Medicare Advantage Money Grab, also won second place in the Business (Large) category. The same series also won this year’s Philip Meyer award.

The awards will be presented on April 25 in Santa Clara, California during the association’s annual conference, Health Journalism 2015.

Congratulations to all the winners; see the full announcement and other categories here.

Follow @Publici, @InsideClimate and @WeatherChannel on Twitter.

Interior Secretary Sally Jewell announced new rules for hydraulic fracturing on federal and tribal lands Friday, arguing that the cost of stronger water and air protections will pay off for industry as well as people living near oil and gas wells.

“I don’t think anybody would say it’s common sense to keep regulations in place that were created over 30 years ago,” Jewell, a conservationist and former petroleum engineer, said in a conference call with reporters. “I know there are comments coming out of Congress trying to undermine this, but I think at the end of the day, the industry certainly recognizes that thoughtful regulation can help them, because it reassures the public that there are rules in place that protect them.”

Industry groups see the Interior Department's action differently. The Independent Petroleum Association of America and Western Energy Alliance immediately filed suit over the rule — which includes a ban on waste pits — and called it “a reaction to unsubstantiated concerns.” The groups contend that the federal government should leave such regulations to the states.

U.S. Sen. James M. Inhofe (R-Okla.), chairman of the Senate Environment and Public Works Committee, said Friday that he has introduced legislation to require that.

The Interior Department said only 13 of the 32 states with oil and gas leases on federally managed land have fracking regulation in place. The agency calls the federal rule a baseline standard and said it includes a variance process for states and tribes with equal or tighter protections.

More than 100,000 oil and gas wells have been sunk on federally managed lands, and about 90 percent of those now drilled use fracking techniques, the agency says.

Reaction from environmental groups Friday was mixed. The Natural Resources Defense Council gave the new requirements a thumbs-down, saying they “put the interests of big oil and gas above people’s health.” Earthworks said the rule didn’t go far enough but praised two of the standards — well-integrity tests and the ban on waste pits — as “a significant improvement over business-as-usual.”

Rather than temporarily storing waste fluids in pits, operators on federally managed land will have to use storage tanks, except in very limited circumstances where tanks could not be used. Janice Schneider, Interior’s assistant secretary for land and minerals management, said many operators have told her they’re using tanks already and others said it “would not be a substantial issue” to switch.

Tanks would reduce risks to air and water, the agency said. Emissions from oil and gas sites can contribute to air pollution, including ozone — a particular problem in northeast Utah, where many wells are on federally managed lands.

The new rules, due to take effect in 90 days, also require companies to disclose fracking chemicals to the FracFocus website so the information is publicly available.

The rules were four years in the making. Reaction to the proposal, including more than 1.5 million comments, highlighted what Jewell said was “a lot of public concern” about oil and gas development, “particularly about the safety of groundwater and the impact of these operations.”

Such concerns have been raised across the country in the last decade as technological advances allowed companies to dramatically increase oil and gas production in the United States, bringing drilling booms to populated areas. The Center for Public Integrity, InsideClimate News and The Weather Channel spent months investigating community impacts from oil and gas sites in Texas.

Interior said Friday that it estimates the cost of its new rule at less than one-quarter of 1 percent of the total expense of drilling a well, under $14,000 on average.

The Western Energy Alliance, a trade group for oil and gas companies,  estimated the additional cost at nearly $97,000 per well in 2013, while the rules were  evolving. The group said Friday that it anticipated the cost would be even higher, given additional requirements such as waste storage in tanks.

“This is a classic case of federal overreach, with the government taking on even more control that will stifle economic growth and job creation while limiting the return to American taxpayers on the energy they all own,” Tim Wigley, president of the alliance, said in a statement.

Center for Public Integrity reporter Talia Buford contributed to this article.

March 21 marks the end of this year's Sunshine Week — seven days to celebrate and encourage transparency in government.

The first Sunshine Week took place in 2005 and has since become the darling of journalists and fans of open government across the country. But while things have certainly improved in the past 10 years, truly transparent government still has a long way to go.

From long-lost Freedom of Information Act requests to the old fashioned “no comment”, here are some of the many ways government officials can withhold information.

1. Blacked out FOIA responses

Center for Public Integrity senior reporter Fred Schulte filed a Freedom of Information Act (FOIA) request in May of 2013 with the federal Centers of Medicare and Medicaid Services. He asked for a wide range of Medicare Advantage records, including copies of program audits, billing data, emails and other documents that identified any private insurance plans suspected of overcharging the government.

After getting no response for a year, the Center for Public Integrity filed suit in federal court in May of 2014 to force the government to release the records. Earlier this month, officials sent a batch of records, including dozens of emails. Almost everything said in the emails was blacked out.

2. Delay and redirect

Managing editor for politics and finance Alison Fitzgerald filed a series of FOIA requests to the Department of Justice when she first arrived at the Center for Public Integrity in 2013. The department's response, a year and a half later in one case, included redirecting the request to another department within the DOJ. (Note: The subject of the FOIAs has been removed because they are part of an ongoing investigation.)

3. The 'no comment'

In 2014, the Center for Public Integrity launched a Tumblr to collect the many ways government officials say the same thing: "no comment."

We've also published some of those instances, like this 3 month exchange with the Environmental Protection Agency as part of our "Big Oil, Bad Air" investigation. Since publishing this exchange, the Center for Public Integrity conducted an on-the-record interview with Ron Curry, EPA regional administrator in Dallas, Texas, about the environmental issues associated with oil and gas production.

4. Varying disclosure laws

Last spring, the Center for Public Integrity graded each state on the degree to which state supreme court judges had to disclose their financial ties. Forty-two states and the District of Columbia received a failing grade in a Center evaluation of disclosure requirements for supreme court judges.

The investigation found 14 instances in the past three years in which justices participated in cases where they or their spouses owned stock in companies involved in the litigation. In an reviewing similar financial disclosures for federal appellate judges, the Center found that the reports were often heavily redacted.

5. Old fashioned paper filings

Unlike other federal candidates, such as those who will be running for president in 2016, U.S. Senate candidates are currently not required to file their campaign finance documents electronically. The Senate Campaign Disclosure Parity Act would change that. As an added bonus, the Congressional Budget Office estimates e-filing could save taxpayers up to $500,000 a year. Despite enjoying bipartisan support, this bill to make Senate campaigns more transparent has yet to reach the Senate floor.

The Obama administration went to great lengths last week to inform us that it recovered $3.3 billion in fraudulent payments to Medicare health care providers in fiscal year 2014. Officials even went so far as to give an advance copy of their report to The Wall Street Journal, which, like the Center for Public Integrity, has been investigating Medicare fraud and abuse.

In a story that appeared in the Journal before the official release of the report, WSJ reporter Stephanie Armour wrote that the recovery “was part of an effort by the Obama administration to improve enforcement and prevent abusive billing practices.” That effort is run jointly by the Department of Health and Human Services the Justice Department.

HHS secretary Sylvia Burwell was quoted in the story as saying that “we’ve cracked down on tens of thousands of health care providers suspected of Medicare fraud,” an effort she said is helping to extend the life of the Medicare Trust Fund.

That’s good news, of course. Taxpayers benefit when doctors and other health care providers get caught trying to rip off the government.

But when it comes taking on big and well-connected insurance companies that have been ripping off the Medicare program for years, the administration has been far less aggressive in catching, much less punishing, the abusers.

As the Center for Public Integrity reported last week, officials in the Obama administration were advised as long ago as 2009 that a formula the government uses to pay private insurers that participate in the Medicare Advantage program “triggered widespread billing errors and overcharges” that waste billions of tax dollars every year.

There was no press release issued by the administration about that 2009 report; in fact, the administration buried it. The report probably never would have surfaced at all had the Center for Public Integrity not filed a Freedom of Information request seeking records going back several years regarding payments to Medicare Advantage plans.

The Medicare Advantage program is a privately run alternative to standard Medicare. Close to a third of Medicare-eligible Americans are now enrolled in insurance company-operated Medicare Advantage plans. People enrolled in these plans typically pay less out of pocket for their care—which explains their appeal—but also typically have a smaller network of providers to choose from.

As Center reporter Fred Schulte explained in his March 13 story, the federal government pays these private health plans a set monthly fee for each patient based on a formula known as a risk score. Risk scores were put in place by the government to measure the state of Medicare Advantage enrollees’ health. “Sicker patients merit higher rates than those in good health,” Schulte wrote.

Schulte’s investigation into risk score payments last year uncovered evidence that the government has been overpaying private insurers for years. That’s because the risk scores can be manipulated by insurers to make it appear that enrollees are sicker than they actually are. Just last week, the Government Accountability Office estimated that “improper payments” to Medicare Advantage plans totaled more than $12 billion in 2014 alone.

When Schulte came across the unpublished 2009 report, he asked CMS why it was never made public.

The explanation he got was preposterous. According to a CMS spokesperson, the agency wanted to publish the report but was told it was too long, that to be considered for publication on a government-run research site, it would have to be “substantially shortened.” This despite the fact that some of the reports that have been published on that site are even longer than the one on risk score manipulation.

The story gets even more incredible. The CMS spokesperson said that “given competing workload demands we were not able to revise and resubmit the article.”

I don’t doubt that the folks at CMS were especially busy in 2009. That’s the year debate began on what would eventually become Obamacare.

To make Obamacare work, the administration needed to have the support of the insurance industry. Insurers had to agree to change many of their profitable but anti-consumer practices in exchange for billions of dollars in new revenue from the government.

Insurance industry lobbyists are among the most powerful and well connected in Washington. Could the administration have put the kibosh on the 2009 report because it didn’t want to jeopardize its relationship with insurers and put the reform law at risk?

We’ll probably never know. But if the administration is really as serious about reducing Medicare fraud as it said last week it is, let’s hear more from CMS about what it’s doing to end abuses in the Medicare Advantage program.

The Wall Street Journal reported that the owners of a home health care company that defrauded the government were recently sentenced to prison terms of up to 120 months each. How much do you want to bet that executives of Medicare Advantage plans that are overbilling taxpayers out of far more money will ever see the inside of a jail cell?

Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.

Sen. Ted Cruz, R-Texas, today becomes the first high-profile politician to formally announce a 2016 presidential bid. He enjoys certain advantages — and faces significant challenges — as he attempts to raise huge amounts of money to fuel a nationwide campaign.

Center for Public Integrity reporters Michael Beckel, Carrie Levine, Dave Levinthal and Dan Wagner have detailed many of them in this series of tweets:

Federal health officials say a heavy workload caused by the Affordable Care Act, government technology limits and staff shortages are causing unusually long delays in filling public records requests — waits that in some cases could stretch out a decade or more.

The Freedom of Information Act requires federal agencies to respond to records requests in 20 working days, though providing documents often takes much longer. The FBI, for instance, recently reported that complex requests could average more than two years to fill.

The Centers for Medicare and Medicaid Services has a backlog of some 3,000 FOIA requests and says it may need 10 years or more to dig out from under some large cases. The Justice Department disclosed the bottleneck in court papers filed Friday in a FOIA lawsuit brought by the Center for Public Integrity against the Department of Health and Human Services, the parent agency of CMS.

The suit, filed in May 2014, seeks a broad array of records as part of the Center’s ongoing investigation into overcharges by private Medicare Advantage insurance plans for the elderly. The Center filed suit after failing to receive any records as a result of its initial FOIA request in 2013.

In its court filing, the Justice Department argued that CMS resources “have been placed under unusual strain” in the past year due to demands of launching Obamacare. 

“The ability of HHS to meet its obligations under the FOIA is limited by the scarcity of its available resources,” officials wrote. The CMS office that handles FOIA requests has “only a staff of 19 people to discharge the agency’s FOIA responsibilities,” officials wrote.

Justice lawyers also said CMS has been “handicapped by a lack of technology.”

That’s particularly the case when it comes to providing email communications. CMS said it has about 80 gigabytes of information, mostly emails, stored on software for delivery in other FOIA lawsuits, which it said totaled 8 million pages.

Looking for more, the agency said, is “already straining labor hours and budget of the FOIA staff.” CMS said it had only recently acquired software which should speed things up.

Liz Hempowicz, a public policy associate at the Project on Government Oversight in Washington, dubbed the status quo “ridiculous.” “I think the excuse that record keeping is not up to date is absurd in 2015,” she said. “These agencies need to get record keeping systems up to date. It shouldn’t take that long.”

The emails CMS has delivered to the Center for Public Integrity so far have been less than revelatory. Scores of messages in which CMS officials appear to be discussing important policy matters, such as how generously to pay Medicare Advantage plans, are totally blacked out.

Justice lawyers called 2014 an “unusual year” for CMS because the open enrollment period for Obamacare health insurance exchanges “was a period of high activity at the agency.” CMS also is dealing with a “significant number of requests” for records about the exchanges.

Given the workload, the Justice Department asked for court approval to hand over 500 pages of Medicare Advantage records every two months, a pace that the Center argues would require 16 to 25 years to disgorge all the Medicare Advantage records the government says exist. The Center did receive 1,144 pages of records in January and 587 in March, though some of that material was available on public websites. 

On Monday, U.S. District Judge John D. Bates ordered HHS to process at least 1,000 pages per month for April, May and June, and directed the parties in the lawsuit to confer with an eye toward both narrowing the Center’s request and agreeing on a “production schedule.” The judge set a hearing on the issue for June 4.

Bates noted that the Center was seeking a “very extensive volume” of documents. “And the Court recognizes that defendant is currently strained by a number of other voluminous FOIA requests. But – be that as it may – the Court is deeply concerned about a proposed production schedule that may take decades to complete,” he wrote.

Even some advocates who’ve grown accustomed to tales of FOIA woes were surprised at the government’s stretched out time frame and its decision to lay the blame for delays at least partly on Obamacare. 

“I have never heard of Obamacare being given as a reason for things taking a long time,” said Hempowicz, of the Project on Government Oversight. She said that “super long turnaround times” are sometimes used to deter people from seeking records. “That’s my feeling,” she said.

The 2016 House and Senate budget proposals for war spending that moved toward a congressional floor vote this week were loaded up with tens of billions of dollars more than the Defense Department requested, representing the largest increase lawmakers have attempted to add to the executive branch’s requests for such funds.

These moves — which come as the Obama administration tries to wind down the U.S. war in Afghanistan and to steer clear of a large new incursion in Iraq — were pushed through by Republican lawmakers that since 2003 have received a total $8 million in contributions from the political action committees and employees of top defense contractors, according to an analysis by the Center for Public Integrity.

The proposals emerged from a convoluted congressional debate that pitted pro-defense hawks against federal deficit hawks, with the former — backed by defense industry lobbying — emerging triumphant.

The impetus for boosting war spending is that Congress enacted strict controls on regular Pentagon spending in 2011 and alleviated them only slightly last fiscal year, making a cut likely unless the Pentagon and the defense industry found new funds elsewhere. Supportive lawmakers as a result turned to the only military account not subject to spending caps, namely the Overseas Contingency Operations (OCO), a funding category created in 2001 for temporary expenditures associated with combat operations in Iraq and Afghanistan.

As the Center for Public Integrity reported in December, OCO over the years has become a slush fund for lawmakers and administration officials seeking to retain or expand military programs with no direct relationship to those wars.

But they’ve never sought to do it as blatantly or unashamedly as they did this month, when the Senate Budget Committee voted in a straight party-line vote to spend $96 billion in the OCO budget for 2016, and the House Budget Committee voted similarly to spend $94 billion. The amount appropriated for OCO in 2015 was $63 billion. While no precise listing of theadditional programs to be funded under the Republican proposals has yet been released, lawmakers who favored the OCO increases did not assert that the extra funds were needed only for the wars.

Senators Lindsey Graham (R-S.C.) and Kelly Ayotte (R-N.H.) were the principal sponsors of the successful Senate amendment to grow the OCO account. In urging a positive vote, Graham — who is exploring a presidential run — provided a long but imprecise list of security threats: “Everything that you have in common, radical Islam hates, and if somebody doesn’t do something about it soon, they will come our way again,” he told the committee, adding that increases to the OCO account were needed “to defend the nation.”

Signaling a difference of views among Republicans, the House Rules Committee on Monday night approved two versions of the OCO provision, requiring a final decision on the House floor. One sets OCO spending at $94 billion but requires $20 billion of that sum to be offset by spending cuts elsewhere, and another sets OCO spending at $96 billion while not requiring any offsets.

In total, the 67 current members of the House and Senate Budget and House Rules committees have received $15.6 million in adjusted dollars from the 2013 fiscal year top 75 defense contractors’ PACS and employees, from 2003 through the end of the 2014 election season.

On average, the top defense contractors gave Republicans $264,244 apiece while Democrats and Independents received $189,881. The lion's share of contractor support went to the Senate Budget Committee’s 12 Republicans. The contractors' PACs and employees contributed $5.7 million to their campaigns and leadership PACs, or an average of $472,219 per lawmaker.

Republicans on the House Rules committee received a total of $2.3 million, making them the second-highest average recipients of contractor largesse.

Graham received $760,244. The other sponsor of the amendment to increase the OCO fund, Ayotte, has less seniority than Graham but is one of the top average recipients of defense contractor contributions, calculated on a two-year basis, among the 67 committee members. First elected to the Senate in 2010, she's raised $363,205 from the top contractors.

Two Senate Budget Democrats were also among the top 10 recipients of defense contractor contributions, though they voted against the Graham and Ayotte amendment. Hailing from a state that many defense companies call home, Sen. Mark Warner of Virginia received $1,053,271 in adjusted dollars. He was followed by Sen. Patty Murray of Washington, the fourth highest recipient overall, who received $823,536 in adjusted dollars.

Sen. Bernie Sanders (D-Vt.) disputed Graham’s claims during last week’s Senate Budget Committee hearing, saying the United States already spends more on defense than the next nine countries, and he rebuked his fellow senators for adding to the national deficit. “Republicans took us into protracted wars in Afghanistan and Iraq—and ran up our national debt by trillions because they chose not to pay for those wars,” he said in a prepared statement.

The Center calculated campaign contributions in 2014 dollars from the top 75 defense contractors, as ranked in fiscal 2013, using campaign data compiled by The Center for Responsive Politics as well as data from the Federal Election Commission.

LAKE RIDGE, Va. —  Wedged between a nail salon and a pizza shop in a strip mall about 25 miles south of Washington, D.C., is a postal supply store where a small brass mailbox sits stuffed with unopened envelopes.

It’s the unlikely home of one of the country’s most mysterious political hit squads.

The Law Enforcement Alliance of America once had offices in a nearby office park, but it abandoned them more than a year ago. It hasn’t filed required IRS reports in two years, and its leaders, once visible on television and in congressional hearings, have all but vanished.

But the nonprofit that calls itself“the nation's largest coalition of law enforcement professionals, crime victims and concerned citizens” still has teeth. It has succeeded in helping knock out 12 state-level candidates in 14 years, including an Arkansas judicial candidate last year. In doing so, the group helped launch the current governors of Texas and Nevada to their stepping-stone positions as state attorneys general.

The LEAA uses brute tactics — parachuting into otherwise small-dollar races close to the end and buying up TV ads that accuse candidates of siding with “baby killers” and sexual predators.

“They can put out some sort of horrible attack ad on any judges that they want and really influence an election with a fairly small amount of money,” former Mississippi Supreme Court Justice Oliver Diaz said. “They're buying seats on supreme courts in states all around the country."

Diaz knows. He’s among those who have been pushed out of office after being targeted by the LEAA, which spent about $660,000 in the last two weeks of his 2008 campaign running ads linking him to rapists and murderers.

“When a 6-month-old child was raped and murdered, Supreme Court Justice Diaz was the only one voting for the child’s killer,” the ad’s two announcers said. “An elderly woman kidnapped, beaten and raped: Diaz, the only one voting for the rapist.”

How the LEAA pays for the campaigns is a mystery that political opponents, state officials and advocacy groups have fought unsuccessfully for years to unravel. The group, which has ties to the National Rifle Association but no public connections to official law enforcement agencies, has repeatedly gone to court to fend off such efforts. A dispute over whether the group violated Texas campaign laws is expected to wrap up this month, but the group’s donor list has so far remained a closely guarded secret.

The LEAA and its current leader, Chief Operating Officer Ted Deeds, did not respond to repeated calls and emails. Lawyers representing the group said they were not authorized to speak on its behalf, and the LEAA’s accountant referred questions back to the group. In the past, its leaders have argued that its anonymously funded activities are protected under the right to free speech.

The group is an extreme example of a growing cadre of political organizations — from the conservative Crossroads GPS to the environmental advocate League of Conservation Voters — that insert themselves into elections, flood the airwaves with attack ads and often tip the scales in favor of the candidate they prefer. All the while, voters have no idea who is behind the effort and what their motives are because of a gap in disclosure laws.

The LEAA is among the most mysterious and successful, coming into races like a stealth assassin, then all but disappearing when the race ends.

In the LEAA’s sights

Two weeks before last year’s Arkansas Supreme Court election, the LEAA swooped in to take out a trial attorney it didn’t like.

“Tim Cullen worked to throw out the sentence of a repeat sexual predator, arguing that child pornography was a victimless crime,” said the voiceover in one ad. “Victimless? Tell that to the thousands of victims robbed of their childhoods and left with permanent psychological and physical scars.”

Cullen responded, saying the ad misrepresented his argument.

The Annenberg Public Policy Center's Factcheck.org, which monitors the truthfulness of political messages, mostly agreed, calling the LEAA’s ad “beyond the pale.”

The group spent at least $320,000 airing the attack ads, as well as some supporting Cullen’s opponent, Court of Appeals Judge Robin Wynne, according to local TV station records. It was the first time a group unconnected to candidates or political parties bought ads in an Arkansas court race.

Wynne, who denied any involvement with the ads, won by a 4-percentage-point margin.

The ads not only contributed to Cullen’s loss, they also led him to give up politics, even though his supporters want him to run again.

“Because I still do not know their motives or the source of their funding, I am concerned that they (or whoever is behind them) might again hijack any future race if I was a candidate,” Cullen said in an email.

A bill that would have required groups like the LEAA to reveal their donors failed in the Arkansas House this week, the Arkansas Democrat-Gazette reported.

The Arkansas race was simply the latest in a string of judicial elections in which the LEAA helped determine the winners.

Two years before, the group spent at least $450,000 airing ads that criticized losing Mississippi Supreme Court candidate Flip Phillips. And in 2010, the LEAA spent $800,000 airing ads that attacked Michigan Judge Denise Langford Morris, who subsequently lost her campaign for state supreme court, according to Justice at Stake, an advocacy group critical of judicial elections.

In the Diaz case, Mississippi’s Special Committee on Judicial Election Campaign Intervention condemned the ads, causing Comcast to pull them from its stations, according to Mississippi’s The Clarion-Ledger. Still, he lost by 16 percentage points, despite the $100,000 he estimated his campaign spent fighting back.

The group also jumped into races for at least two more supreme court justices, seven attorneys general, two state legislators, plus four congressional races. Each time, the LEAA made a name for itself with harsh attack ads, and almost every time, its candidate won.

Taking aim at gun control

The LEAA was created by the National Rifle Association in 1991 to represent pro-gun police officers willing to defend their right to bear arms, according to Leroy Pyle, an 18-year veteran of the San Jose, California, police department, whom the NRA tapped to launch the group.

At its peak in the late 1990s and early 2000s, the group had about eight employees, two former staffers recalled.

Today the group describes itself as a coalition of thousands of dues-paying law enforcement professionals around the country. The number of members is not publicly verifiable.

“LEAA was established early to give a voice to cops so that when the police chiefs would show up and have a press conference and say, ‘Well, this is what cops think,’ that the public at least have some indication that this is not what all cops think,” said former employee David Bufkin, who now owns a communications firm outside of Washington, D.C.

However, the International Union of Police Associations and the Fraternal Order of Police, two major national police labor groups, disavow any link between the LEAA and their organizations.

"If we have ever agreed with them, it's been totally coincidental,” said FOP spokesman Jim Pasco.

Officials speaking on behalf of state chapters of the FOP have used even stronger language to distance themselves from the LEAA.

For example, when the LEAA ran ads criticizing now-Illinois Attorney General Lisa Madigan in her 2002 race, the state branch of the FOP said it was an “insult for this group to pretend to represent police when they promote policies that would endanger the lives of law enforcement officers,” according to the Chicago Tribune.

Changing tactics with changing leaders

For most of its early existence, LEAA staff regularly lobbied Congress and state legislatures, usually opposing measures that would restrict gun ownership.

Jim Fotis, the group’s full-time executive director from about 1993 until 2006 and a member of the  board of directors until 2010, was a regular presence on Capitol Hill. A former cop in Lynbrook, New York, for 14 years, he also represented the group in “hundreds of TV and radio programs as a commentator on sensitive issues ranging from gun control to international terrorism,” according to his LinkedIn profile.

Fotis could not be reached for comment.

The LEAA’s focus shifted more toward elections in the 2000s, and its newest leader, Deeds, has kept a much lower profile. He also has a tenuous connection to law enforcement.

The 51-year-old worked as a corrections officer for three months in 1984 in the Arlington County Sheriff’s Department and for seven months in 1986 for the Loudoun County Sheriff’s Department, both in Virginia. He was fired from both jobs, according to county personnel records obtained by the Center for Public Integrity. The Virginia Employment Commission later found no evidence to show misconduct connected with his work in Arlington County, but he was not reinstated.

Guns and money

In its early years, the LEAA would not have survived without the NRA, according to Stephen Chand, the group’s legislative director for a few years in the mid-1990s.

“There were other gun groups that were involved, other unions that were involved, but the close tie was really the NRA,” Chand said. “Every time it looked like we were going belly up in the first couple of years, they came in to help float the bills.”

Money was tight enough that the group couldn’t do much, especially when it came to influencing elections, Chand said.

“I remember one year we were handing out $50 to some candidates — the best we could come up with,” he said.

After Chand left in the late 1990s, he was surprised to see the LEAA spending vastly larger sums on state races.

The NRA gave the group at least $2 million over seven years, ending with a grant of $180,000 in 2010, according to the NRA’s tax documents. Since then, the NRA’s tax filings don’t show money going to the LEAA. The NRA did not respond to requests for comment.

Despite the financial links, then-LEAA spokesman Kevin Watson denied his group was a front for the NRA in a 2001 Pittsburgh Post-Gazette story.

“There are a great chunk of issues that have nothing to do with the NRA,” he said.

Chand said the LEAA also had close ties to Americans for Tax Reform, the nonprofit run by NRA board member Grover Norquist, who is known for seeking public pledges from elected officials to not raise taxes.

The U.S. Chamber of Commerce also collaborated with the LEAA to influence the 2001 Virginia attorney general’s race, according to a memo the Center for Public Integrity obtained from a meeting between LEAA staff and its accountant.

Representatives of Americans for Tax Reform and the U.S. Chamber of Commerce did not respond to questions about whether they helped to fund the group’s efforts.

Operating in secrecy

It’s hard to know whether the LEAA still has links to such groups because it conducts business in near-complete secrecy.

The organization has no known office, having left just a box of posters and pile of unopened mail at the now-vacant space it listed on its last tax form. The LEAA’s current address leads instead to the mailbox in the Lake Ridge, Virginia, postal supply store.

The IRS said the LEAA has not filed mandatory forms with the federal tax agency since the ones that covered 2011 — something that could carry a fine of up to $50,000. The group also failed to release its tax records in response to the Center for Public Integrity’s requests, as required by law.

Even if the LEAA had filed the required documents, they likely wouldn’t have revealed much. Federal law doesn’t require a nonprofit like the LEAA, which is regulated under section 501(c)(4) of the U.S. Tax Code, to reveal the names of donors publicly or to offer many details about how it spends money.

Known as “social welfare organizations,” these nonprofits have become frequent vehicles for political activity by groups whose donors don’t want their names revealed. Unlike candidates, such nonprofits can raise unlimited amounts of money from unions and corporations, plus spend unlimited amounts.

In down-ballot races like those for state supreme court, the secrecy of such nonprofits is particularly problematic, because the groups may be the only ones offering information about the candidates, according to Jessica Levinson, a Loyola Law School professor who specializes in election law.

“People typically aren't as ill-informed about who's running for president or governor or even secretary of state as they are about judicial races,” Levinson said. “A few well-placed radio or TV ads can make a big difference because that can be the only thing that people remember about the candidate."

Fighting in court

The LEAA has repeatedly fought efforts by state officials and opponents to require it to reveal its donors.

After the group failed to register as a political committee in Pennsylvania in 2001, a judge there ordered the LEAA to remove from the air ads attacking state supreme court candidate Kate Ford Elliott. Registering would have required revealing details about donors and spending.

In response, Deeds repeated an argument the LEAA has used frequently: that the First Amendment protects the group’s right to spend money on ads without revealing its donors.

Elliott lost in the end anyway, and the Pennsylvania Supreme Court shifted to Republican control.

Three years later, two Texas candidates sued after claiming the LEAA spent more than $1 million opposing their 2002 candidacies. The LEAA had aired ads saying Democratic state Sen. Kirk Watson, who was running for attorney general, “made millions suing doctors, hospitals and small businesses, hurting families and driving up the cost of health care.”

And less than a week before the election, the LEAA accused Democratic state house candidate Mike Head of being on the side of “convicted baby killers” via postcards sent throughout his district.

“What they were doing was just ethically and morally wrong,” Head said. “It misrepresented what I do, and when it hits every mailbox — your friends, family, church members, your children’s [friends’] parents — it certainly will give you pause before you put yourself out there to do that again.”

The LEAA argued that its right not to reveal donors’ identities is protected under the group’s right to free speech.

The legal fight dragged on for more than a decade. The two Democrats reached a settlement agreement with the LEAA in late February 2015, their attorney told the court, and the case is expected to be dismissed this week. Watson declined to comment, and the attorney for both Watson and Head did not return calls.

Yet the effect of the election cannot be undone. Former state Supreme Court Justice Greg Abbott beat Watson to become the attorney general. Today, Abbott, a Republican, is the governor of Texas.

Alan Suderman contributed to this story.

Dozens of groups are calling on federal regulators to protect released prison inmates from steep fees they must pay to access their own money via prison-issued payment cards.

People who are released from prison often receive their remaining wages and money sent by relatives on prepaid debit cards — a practice detailed in a Center investigation about prison bankers last year. The cards often carry unavoidable costs that eat into inmates’ meager resources, including weekly account maintenance charges and fees to close the account and get the balance on a paper check.

“Incarcerated people have no meaningful consumer choice and are particularly susceptible to victimization by abusive business practices,” Prison Policy Initiative said in a comment filed last week with the Consumer Financial Protection Bureau.

The CFPB last year proposed new rules aimed at protecting users of prepaid cards, which are similar to bank debit cards but are not attached to a checking account. The proposal would strengthen safeguards for people who receive government benefits on the cards. For example, no one could be forced to receive benefit payments on a specific card without being offered alternatives like direct deposit or a paper check.

Yet the proposal did not mention cards issued to people as they are released from jail or prison. These products are gaining widespread acceptance, according to a survey of state prisons last year by the Association of State Correctional Administrators.

At least 71 groups have submitted or signed comments calling on the bureau to ban the practice of forcing released inmates to use a particular card.

Cards given to inmates “often have high fees, lack for clear disclosures and offer little or no ... security,” wrote Adam Rust, research director for Reinvestment Partners, which advocates against predatory and high-cost financial products marketed to low-income people and those without bank accounts.

Because prisoners usually have less than $100 when they are released from prison, the fees can account for “a large share” of their available funds, Rust wrote.

Cards offered by Keefe Commissary, the leading operator of prison stores, can charge released inmates $25 to close the account, $6 each month for maintenance and a $2 penalty simply for failing to use the card, according to Rust’s comment. 

Such fees take inmates’ “property without due process or just compensation,” the National Consumer Law Center said in a separate comment, adding that people should have a choice in how their money is returned, and all choices should make it possible to recoup their money without paying fees.

Paul Wright, executive director of Human Rights Defense Center, said in a statement that the companies providing these cards “literally have a captive market” and prisoners “do not have regulatory tools to protect themselves.” Wright’s group submitted a comment that was co-signed by 68 other organizations representing current and former inmates.

Prison Policy Initiative said in its comment that the bureau should go farther and craft regulations covering companies that provide money transfers into prisons. One of those companies, Miami-based JPay Inc., was another focus of the Center’s investigation.

The public comment period on the CFPB’s proposed rule ended on Sunday. The agency is expected to issue a final rule later this year.

FARMINGTON HILLS, Mich. — The tiny bottles of 5-hour Energy that made Manoj Bhargava a billionaire are just about everywhere. But the Princeton dropout and former Hindu monk is nearly invisible.

Bhargava’s investment firm ETC Capital gave $2.5 million to the Republican Governors Association last year, joining conservative billionaires Sheldon Adelson and David Koch on the list of top five donors to the group that works to elect Republican governors.  

Yet RGA Chairman and Tennessee Gov. Bill Haslam said, “I don’t know him.”

The 62-year-old Bhargava and several of his Michigan-based companies have given at least $5.3 million to candidates for state office and political groups around the country since 2009, according to state and federal campaign filings. But Bhargava remains a mystery man, even to many of the people who are benefiting from his largesse, including Bobby Schostak, who received a $25,000 donation from ETC Capital in 2010 during his first campaign for Michigan Republican Party chairman.

Schostak, who recently left the job, said, “I would have trouble knowing it was him if he walked in the door, honestly.”

Few people have given as much to politics at the state level as Bhargava and his companies in the past five years, and donors of such generosity are typically well known and aggressively courted by politicians who need their favor and funding to pay for campaigns. Yet Bhargava avoids the spotlight, both in politics and life: he said in a 2012 television interview that fame puts “a bull’s-eye on your forehead.” And he’s gone to great lengths to obscure his political activity, even as his signature product draws more scrutiny from some of the same politicians he’s supporting.

Only a fraction of the donations were made in Bhargava’s name or by the companies that oversee the production and marketing of 5-hour Energy. But an investigation by the Center for Public Integrity found that he makes donations through several of his more than 70 limited liability companies. As such, the motives for his political giving are as muddy as the circuitous way in which the donations are made.

He gives most heavily to Republicans but has donated to Democrats, too. Many of the donations appear to have ties back to Michigan, where his businesses are based. Nearly a quarter of the donations affiliated with Bhargava went to candidates for state attorney general, who have the power to investigate his business, and the organizations that support their election efforts.

Attorneys general in five states are suing Bhargava’s energy shot business, accusing it of deceptive marketing practices. A federal court in California is considering nine consolidated class-action lawsuits brought against 5-hour Energy in seven states, though the cases have been partially dismissed. And the Food and Drug Administration is investigating the safety of the shot, having received reports of more than 20 deaths potentially linked to its consumption. The political giving tied to Bhargava has only increased as investigations have multiplied.

Bhargava did not return multiple calls and emails sent over the past month seeking comment about his political giving, and a reporter who recently visited the two-story brick-and-glass headquarters of his companies was told Bhargava was not available. Several people who have worked with or live near him declined to comment, citing a fear of legal reprisals, or legal agreements barring them from speaking about Bhargava and 5-hour Energy.

Political operatives in Michigan say the relative anonymity seems to be how Bhargava prefers to do business.

“People are very conscious of the fact that he’s very secretive,” said Mark Brewer, the former chairman of Michigan’s Democratic Party.

The price of privacy

Bhargava grew up in Lucknow, India, a city of roughly 5 million in the northern state of Uttar Pradesh. He moved with his family at 14 to Philadelphia so that his father could pursue a Ph.D. at the University of Pennsylvania’s Wharton School of Business. He won a scholarship to The Hill School, a prestigious boarding school in suburban Philadelphia and, later, admission to Princeton University.

But Bhargava only spent a year at the Ivy League school, dropping out in 1973, according to The Daily Princetonian. He then spent more than a decade traveling between Hindu monasteries in India as a monk and working odd jobs back in the U.S. He returned to the U.S. permanently in the early 1990s and took over the family’s plastics company, Prime PVC, in 1996, growing it into a multimillion-dollar business that he sold to a private equity firm in 2007, according to multiple news reports.

By then, he had moved to Michigan and was on the hunt for a new business. He abandoned his first venture, the anti-hangover pill Chaser, but he won big with 5-hour Energy — a flavored energy drink that contains caffeine, vitamins and amino acids. As he has told it, Bhargava replicated an energy drink he stumbled upon at a trade show in 2003 after its developers refused to sell him the recipe. Sales of the 1.93-ounce bottles propelled Bhargava onto Forbes’ list of billionaires in 2012.

Bhargava credits much of 5-hour Energy's success to the decision to place the small yellow and red bottles at checkout counters, rather than in coolers with the other energy drinks. The business has also engaged in an aggressive pattern of litigation, having sued more than a dozen competitors for producing or distributing similar products. Bhargava’s office is said to contain a mock graveyard, made up of the bottles of failed competitors.

In 2012, Bhargava publicly took the giving pledge championed by Bill and Melinda Gates and Warren Buffett, which encourages billionaires to donate the majority of their wealth to charity. Three years earlier, he transferred a stake appraised at $623.6 million in Innovation Ventures, a parent company of 5-hour Energy, to his Rural India Supporting Trust, which he has described as “the largest charity in India that nobody knows.” The organization has spent more than $60 million since 2008 supporting development projects in India, according to tax forms it has filed with the Internal Revenue Service.

In public speeches, Bhargava has prided himself on his modest lifestyle. He lives today in Farmington Hills, the same well-off Detroit suburb where 5-hour Energy is headquartered. While his five-bedroom, six-bath home is worth about $1.7 million, he has forgone the flashier Bloomfield Hills or other tony Detroit suburbs where someone of his wealth might be expected to live.

In many respects that home — and the fight to build it — highlight both the pugnaciousness of Bhargava and his quest for privacy while staying in the middle of everything.

Instead of a single home, the low-profile multimillionaire planned a 17-house development sandwiched between two existing tracts of homes, with a gated entrance, private road and a second, eight-foot fence surrounding his home in a city with only a handful of other gated neighborhoods.

By the time other homes in the development hit the market last year, listed at more than $600,000, Bhargava’s team had already sued both its initial developer and a neighbor who distributed fliers opposing the development. Both suits were settled, confidentially.

A complex web

When the trim, slightly balding Bhargava speaks publicly about his energy shot company, he emphasizes its common-sense approach. No one in the company uses business-school jargon, he told a 2012 meeting of the Asian Pacific American Chamber of Commerce, and he jokes that he doesn’t even know how to spell the words “strategic initiatives.” He says that his job is to make complex ideas simple.

But Bhargava’s various business ventures are anything but easy to follow. More than 70 limited liability companies, some of which are no longer active, have been registered at the address of 5-hour Energy's headquarters. Such businesses, which as their name implies limit the personal liability of their owners, also offer tax benefits and, in Michigan and elsewhere, aren’t subject to the same restrictions on political activity as other corporations. Those LLCs include a host of other ventures, such as investment funds and Bhargava’s backing of several upcoming Hollywood films. The business of running 5-hour Energy itself is composed of three separate LLCs: Innovation Ventures, Living Essentials and MicroDose Sales.

For political purposes, Bhargava’s most active company has been ETC Capital, which bills itself on its website as “founded on the basis of opportunistic investing” and invests in companies that don’t qualify for traditional loans or private equity.

Since 2009, ETC Capital has given nearly $4.9 million to state candidates and political groups across the country, which helped it become one of the top 50 donors to state races in 2014. It’s unclear why the giving has come in ETC Capital’s name or who in the company decides which political groups merit donations.

In at least one case, a donation given by ETC Capital to Washington Attorney General Bob Ferguson was later publicly represented as sponsorship of a fundraiser by 5-hour Energy, according to The New York Times.

Seven donations totaling $319,500 were made during 2009 and 2010 in the name of Ted Mills, a former managing director at ETC Capital. Mills, however, told the Center for Public Integrity he didn’t make the donations, which were spread across five political action committees. Three of those were connected to Mike Bishop, a former Michigan Senate majority leader who ran for state attorney general in 2010. Mills declined further comment.

Matt Miner, treasurer of the three committees connected to Bishop, said the committees’ policies for handling donations from limited liability corporations, like ETC Capital, was to attribute them to someone affiliated with the corporation, such as Mills.

Giving to state investigators

Since 2009, companies tied to Bhargava have donated more than $1.2 million to candidates for attorney general and political committees that support them, according to data from the IRS and the National Institute on Money in State Politics.

The bulk of that giving, more than $850,000, has benefited two Republican groups: the Republican Attorneys General Association and the Republican State Leadership Committee. Bhargava’s companies also donated more than $310,000 to the Democratic Attorneys General Association, and more than $40,000 went directly to state attorney general candidates from both parties in at least seven states.

Those donations haven’t insulated Bhargava and 5-hour Energy. Since 2013, 33 state attorneys general have investigated the marketing or safety of 5-hour Energy. Five of those states — Indiana, Hawaii, Oregon, Vermont and Washington — have sued the company since last July, accusing it of making deceptive claims in its marketing. Ohio settled with the company in July without filing suit, after investigating the company for deceptive marketing, with the energy drink company agreeing to pay $1 million for research or public education on childhood disease. Ohio and Indiana are the only states among the six with Republican attorneys general.

Two of the five attorneys general to sue Bhargava’s company in the past year received campaign donations from him as candidates. Washington’s Ferguson, a Democrat, returned a $1,000 donation from ETC Capital in July 2014, one day after his state filed the suit against 5-hour Energy. When asked recently about the donations, his office referred to prior public statements in which Ferguson has acknowledged personally soliciting a donation from Bhargava’s company.

Indiana’s Greg Zoeller, a Republican, also sued Bhargava’s company after receiving a total of $7,500 in donations from the Bhargava-connected Oakland Law Group in 2011 and 2012, which placed the law firm among Zoeller’s top 10 donors in that two-year period.

Andrew Buroker, the treasurer of Zoeller’s campaign, said in an email that while Zoeller doesn’t solicit contributions from organizations under investigation, these donations wouldn’t be returned because they were made before the state’s investigation into 5-hour Energy began.

After The New York Times last year highlighted efforts by 5-hour Energy to influence states not to file suit, Bhargava and his company accused attorneys general of soliciting political contributions from the company while it was being investigated by them.

“Ninety percent of my money is pledged to charity,” Bhargava said in a statement to the newspaper. “I am certainly not going to take it from the poor and give it to the attorney general.”

Not showing up in Michigan

Donations to Michigan political groups given in the name of ETC Capital, Mills and Bhargava totaled more than $450,000 in 2009 and 2010, according to IRS and state filings. Since then, none of them has donated directly to Michigan groups or candidates. But national groups that have received the biggest checks from Bhargava’s companies have been very active in Michigan politics. The timing of the donations and the spending by such groups in the state raises questions about whether the money was earmarked for Michigan.

For example, eight weeks after ETC Capital gave $275,000 to the Republican Governors Association in October 2013, the group gave $276,000 to the Michigan Republican Party. In 2014, Bhargava’s company gave $2.5 million to the governors' association, which paid $3.2 million on the same day to the media company it used to place ads backing the re-election of Republican Michigan Gov. Rick Snyder.

Bhargava’s company also gave heavily to Republican groups active in Michigan’s 2014 attorney general race. In 2013, ETC Capital gave $125,000 to the Republican State Leadership Committee, which donated $34,000 to Republican incumbent Bill Schuette’s campaign on the same day.

Yet numerous Michigan politicians, ranging from his local mayor to statewide political bosses, say they barely know Bhargava, even the ones who have benefited from the political donations of his various companies.

A spokeswoman for Schuette said he has never met with Bhargava and doesn’t know him. Snyder, who won re-election in 2014 thanks, in part, to an estimated $7.4 million in ad spending by the RGA, has met with Bhargava only once —  during Snyder’s first year in office in 2011, according to a spokeswoman.

Several Michigan political insiders also said they don’t know of particular pieces of legislation or policy issues that Bhargava has tried to influence.

“What was strange is he never asked for anything back,” said Ron Weiser, a former chairman of the Michigan Republican Party and an ex-national finance chairman for the Republican National Committee. “Usually people want something.”

Bhargava’s low-key approach stands in stark contrast to other wealthy political donors in the state, such as the scions of Richard DeVos, who made a fortune after co-founding Amway Corp., the world’s largest direct seller.

“In Michigan everyone knows the DeVos family,” said Susan Demas, publisher of the political newsletter Inside Michigan Politics. “They’ve made no secret of the fact that they’re willing to be big donors and fundraisers.”

Bhargava’s name, meanwhile, appears sparingly in campaign finance filings. He appears to have made only two political donations in his own name: $1,000 to President George W. Bush’s campaign in 1999 and $500 a decade later to the campaign of Jim Townsend, a Democratic state representative in nearby Royal Oak.

Despite the donation to Bush, the bulk of political giving by Bhargava’s companies has so far been focused on state-level races. Michigan isn’t scheduled to elect a new governor until 2018, but presidential contenders are already visiting the state to shore up support for 2016. Last month, Republican presidential contender Jeb Bush was in town talking to a packed room at Detroit’s convention center.

“Everybody who’s a player and who wants to be a player was there,” said Dennis Darnoi, a political consultant in Bhargava’s home base of Oakland County. “But he wasn’t.”

Associated Press reporter David Eggert contributed to this story.

A top adviser to 5-hour Energy founder Manoj Bhargava was given a rare pardon in 2014 by Michigan Gov. Rick Snyder, according to the Associated Press.

Snyder pardoned Alan Gocha Jr. in December following the Michigan parole board’s recommendation,  “one of only 11 pardons out of roughly 750 applications since the governor took office,” the AP reported.

Gocha, who received the pardon for a 2007 drunken-driving arrest, is a lawyer at the Oakland Law Group that works on behalf of the companies that oversee 5-hour Energy. He has held other positions at a Bhargava investment firm, ETC Capital, as well.

Snyder denied that politics had anything to do with Gocha’s pardon.

“He never contributed to my campaign, not had any financial connection at all,” Snyder told the AP.

As the Center for Public Integrity reported Thursday, companies associated with Bhargava have given more than $5.3 million since 2009 to help candidates running for state office nationwide.

In October 2013, ETC Capital gave $275,000 to the Republican Governors Association, then eight weeks later the governors’ association gave $276,000 to the Michigan Republican Party. 

In August 2014, the investment company gave $2.5 million to the governors' group, which paid $3.2 million on the same day to the media company it used to place ads backing Snyder. The RGA spent an estimated $7.4 million on ads helping Snyder, a Republican, win re-election in 2014.

Gocha was listed as ETC Capital’s managing director or general counsel from at least September 2010 to as late as September 2014.

The timing of ETC Capital’s contributions to the Republican Governors Association raises questions about whether its money was earmarked for Michigan, and ultimately benefited Snyder. The RGA did not respond to questions about the donations.

The giving from Bhargava-connected companies hasn’t made Bhargava a household name, even to recipients of the cash. RGA Chair and Tennessee Gov. Bill Haslam said of Bhargava, “I don’t know him.” A spokeswoman for Snyder said the Michigan governor had only met Bhargava once.

However, Snyder told the AP that he met Gocha “on several occasions at different events" and even corrected an AP reporter's pronunciation of Gocha's name (Go-SHAY'). Gocha serves on Snyder’s Talent Investment Board, which focuses on Michigan job creation.

Gocha has also served as a public face of Bhargava's interests at political events. The New York Times reported that Gocha was a listed attendee at a meeting of the Republican Attorneys General Association. The Center for Public Integrity confirmed with an attendee of Democratic Attorneys General Association meetings that Gocha was listed there, as well. Those appearances come as 33 state attorneys general are investigating the marketing or safety of 5-hour Energy. Five states have filed suit, while a sixth settled with Bhargava’s companies in the past year.

Gocha himself has donated more than $28,000 to political groups in Michigan and elsewhere, including $26,500 to the Michigan Chamber of Commerce political action committee between 2011 and 2013, according to Michigan state filings, the IRS and data from the National Institute on Money in State Politics. He also gave $1,000 to Colorado Republican Attorney General John Suthers in 2010.

As the AP reported, one of Gocha’s references for his pardon application was a former lawyer to Michigan’s chamber.

Gocha, who did not respond to numerous interview requests from the Center, told the AP he was “sort of puzzled” that the pardon is “of any interest.”

Updated: 2:36 p.m., March 27, 2015

Felled by charges of mismanagement, the chairman of the U.S. Chemical Safety Board has resigned.

The departure of Rafael Moure-Eraso was first reported on the board’s Twitter account Thursday evening. In a prepared statement Friday morning, Moure-Eraso said, “It has been a privilege to serve the agency since June 2010. My wishes are for the continued success and productivity of the Board.” Moure-Eraso’s five-year term as chairman was to have ended in June. He will remain on the board as a regular member until mid-April, a spokeswoman said.

The board is an independent agency modeled after the National Transportation Safety Board. It issues recommendations to regulatory agencies following industrial accidents.

Nearly two years ago, the Center for Public Integrity published a lengthy piece describing the slow pace of board investigations and reports of sinking staff morale. A former board member told the Center the board was "grossly mismanaged." The Environmental Protection Agency’s inspector general has been investigating board officials’ use of personal email accounts for agency business, a violation of the Federal Records Act.

In recent weeks, members of Congress had stepped up cries for the chairman’s ouster. On Wednesday, the chairman and ranking member of the House Committee on Oversight and Government Reform said the board was “in desperate need of new leadership...Dr. Moure-Eraso’s mismanagement of the CSB, abuse of power, employee retaliation, and lack of honesty in his communications with Congress are among the many reasons why his resignation is the right step for this federal agency.”

In a March 18 letter, 14 members of the committee asked President Obama to remove Moure-Eraso and two other top board officials – Managing Director Daniel Horowitz and General Counsel Richard Loeb – from their positions. The board spokeswoman did not respond to a request for comment on Horowitz’s and Loeb’s status.

On March 3, Obama nominated Vanessa Allen Sutherland to become board chairman when Moure-Eraso’s term expired. Sutherland has been chief counsel for the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration since 2011.

Mike Wright, director of health, safety and environment for the United Steelworkers, said by phone Friday that "the president did the right thing" in asking for Moure-Eraso's resignation as chairman. "I don't really want to dwell on the past. I think what we really have to do now is work as effectively as we can to make sure the new board can really go back to the kind of organization that it was ... under some of the previous board chiefs."

Of Sutherland, Wright said, "We’ve not talked to her yet. But I’ve looked at some things on her background and it’s quite impressive. So, we would like to talk to her before the congressional hearings and hope to do that in the next couple of weeks."

Bill Wright, who served as a board member from 2006 to 2011, said Moure-Eraso's departure as chairman was "long overdue." However, he said, Horowitz and Loeb contributed to the board's inability to finish investigative reports in a timely fashion. "Whether it was one of them or all three of them, the agency hasn't made any progress on reports," Bill Wright said. At its most recent public meeting, in January, the board terminated three investigations, each of which had been open for at least five years. At the time, board member Manny Ehrlich said there was "no realistic opportunity" to issue reports on those cases.

Talia Buford contributed to this story.

It’s not what they teach in civics class, but the best way to snag a leadership position in Congress is by giving generously to one’s colleagues. By that measure, U.S. Sen. Charles Schumer, D-N.Y., is well-positioned to be the next Senate Minority Leader.

Sen. Harry Reid, the top Democratic leader in the Congress’ upper chamber,  said today he will not run for re-election in 2016, prompting speculation as to his potential successor. Two senators — Schumer and Dick Durbin of Illinois — have risen to the top of the list.

Schumer’s leadership political action committee, known as “IMPACT,” doled out almost $1.5 million from 2010 through 2014, according to data gleaned from the Federal Election Commission by the Center for Public Integrity. The total includes at least $720,000 donated to Senate Democrats.

Durbin’s Prairie PAC gave away $1.3 million from 2010 through 2014, with at least $675,000 going to Senate Democrats.

But the real difference is in party committee giving. During the same time period, Schumer, via his campaign committee and leadership PAC, gave $5.1 million to the Democratic Senatorial Campaign Committee, more than twice the $2.2 million that Durbin raised with, and contributed to the committee.

Leadership PACs are political committees used by members of Congress to win friends and influence people. They have in the past been criticized as legal slush funds, used for all manner of expenses.

“It’s just unimaginable that anyone would even have a hope of running for Senate leader without having been an active giver,” said Meredith McGehee, policy director at the Campaign Legal Center. “You wouldn’t even have a chance in hell of winning.”

Schumer, the third-ranking Democrat in the Senate, gained visibility and allies when he was chairman of the DSCC from 2005 to 2009. He helped Democrats take control of the Senate in 2006. Despite his role as favorite — Reid is backing him — he is actually outranked by Durbin, who is No. 2.

The New York senator’s ascension would be good news for Wall Street — his top three contributors from 1989 through 2014 were the employees and political action committees of Goldman Sachs ($543,000), Citigroup Inc. ($484,000) and JPMorgan Chase & Co. ($365,000) according to the Center for Responsive Politics. The securities and investment industries are by far his top donors having given more than $10.4 million over that time frame.

Schumer serves on the Senate Finance Committee as well as the Banking, Housing and Urban Affairs Committee.

As for Reid, his retirement will be a blow to the gambling industry, which has been a staunch supporter of the 75-year-old former boxer over his tenure. Three of his top five donors are in the gambling business, including his top benefactor, MGM Resorts International, which has given more than $375,000, according to CRP.

Durbin, meanwhile, while also a friend of Wall Street, is a favorite of lawyers and law firms, according to CRP data. He’s raised nearly $5 million from members of the profession and their political action committees since 1989. The securities and investments industry came in at No. 2, with more than $1.4 million in donations.

Reid has been recovering from injuries suffered in an accident that occurred while he was exercising. The bruised Las Vegas senator said in a lavishly produced video released Friday that his injuries had nothing to do with his decision to step down.

“The decision I have made has absolutely nothing to do with my injury, has nothing to do with my being minority leader, and it certainly has nothing to do with my ability to be re-elected,” he said.

Reid has led the Democrats in the Senate since 2005. The party lost control in the 2014 election, relegating Reid to the role of minority leader. Since then he has been a vocal critic of the billionaire donors to Republican causes, Charles and David Koch, a thorn in the side of Republicans in both the House and Senate, and a staunch supporter of President Obama’s policies.

Carrie Levine contributed to this report.

In late February, the U.S. Chamber of Commerce, the nation’s biggest and most powerful lobbying group, gathered its members from around the country together on a conference call to talk politics.

The business group invited a special guest, Sen. Dan Sullivan, a newly elected Republican from Alaska. And Sullivan didn’t mince words in saying thanks.

“Without your support,” Sullivan told the listeners, “I think it’s very doubtful I’d be sitting here as your U.S. senator, talking to you right now.”

Sullivan has plenty of company.

The Chamber spent tens of millions of dollars to elect a Republican-dominated Congress in 2014 and just about ran the table: 94 percent of the 268 mostly Republican federal candidates endorsed by the business lobby won their races.

In the wake of that stellar win-loss record, a Chamber celebration should be in order — but that’s not how it’s playing out. In fact, as Congress leaves town for two weeks of Easter recess, there’s been remarkably little progress in the first three months of the new Congress on many of the biggest items on the Chamber’s wish list — comprehensive tax reform, immigration reform, a long-term highway bill — and the prospects for action later this year are equally bleak.

But leaders of the business lobby are soldiering on undaunted. Instead, the Chamber, whose imposing limestone headquarters fronted by Corinthian columns stand watch over the White House in the heart of Washington, D.C., is taking the long view. Perhaps that's a natural strategy for an institution that has represented business in the halls of political power for more than a century.

The Chamber’s strategy will include a greater emphasis on recruiting the right sort of business-friendly GOP candidates and intervening in primaries as it attempts to sculpt a compliant Congress that mirrors its priorities. In other words, the Chamber will double down on its political juggernaut, and will no longer take breaks between elections.

“We’re just going to run it 24 months in a row, cycle after cycle after cycle,” said Thomas Donohue, 76, the Chamber’s longtime president and chief executive officer, during the Feb. 19 conference call.

The group is already raising money for upcoming special elections in New York and Mississippi. And after Labor Day, it plans to launch image-boosting campaigns in states like Illinois, Wisconsin and Pennsylvania, which all have Chamber-friendly Republican Senate incumbents up in 2016.

The long-haul strategy could well pay off — but it also might prove a tough sell to a fractious membership that wants quicker returns on the mountains of cash they pump into the Chamber. The Chamber is seemingly on a political roll, in some ways at the height of its power — but is finding it tougher and tougher to get what it really wants.

A booming voice

The U.S. Chamber of Commerce describes itself as businesses’ “voice in Washington, D.C.”

It’s also their army for hire. But it doesn’t come cheap.

The Chamber is easily the nation’s biggest business trade association, with an annual budget that has ranged from $145 million to $210 million each year from 2008 through 2013.

In 2014, the Chamber and its subsidiaries reported spending more than $124 million on lobbying, according to the Center for Responsive Politics, or roughly $340,000 per day.

It doesn’t disclose a full member list, although its board members include representatives of massive corporations such as ConocoPhillips, AT&T Inc. and IBM, together with scores of others whose products and services are woven through every aspect of American life. And it doesn’t volunteer who provides the money that fuels its influence efforts. Some companies disclose their memberships and their dues themselves, and the membership roster is revealed in other ways as well. The Chamber’s building, for example, is dotted with conference rooms named for companies, including Amway, 3M Co. and Nabisco.

The Chamber has ties to other groups who spend money to influence elections, many of which don’t reveal their donors, including the network of nonprofits linked to the billionaire industrialists Charles and David Koch.

Freedom Partners Chamber of Commerce Inc., one of the major groups tied to the Koch brothers and the current nerve center of the Koch network, gave the Chamber $3.5 million between November 2011 and December 2013.

Big checks from giant corporate members drive the Chamber’s operations. In 2013, the Chamber reported receiving 30 contributions of $1 million or more, according to its most recent available tax filing. That included one contribution of more than $5 million.

Don’t expect such secrecy to ebb: The Chamber fights fiercely against disclosing any more information about its supporters than it must.

Anonymity gives the Chamber “maximum freedom to raise money and to spend money,” said Bruce Freed, the president of the Center for Political Accountability, which pushes for more corporate political spending transparency.

The 30 contributions totaled a little more than $53 million — about 34 percent of the Chamber’s contributions in 2013. Many associations, small businesses and local chambers pay far less.

The trade association aggressively put that money and clout to use during the last election. It played a major part in the campaign to save Republican Sen. Thad Cochran’s seat in a tight Mississippi primary runoff, jumped in early with ads for Sen. Mitch McConnell, who became Senate majority leader, and spent millions to elect Republican freshmen such as Sen. Thom Tillis in North Carolina.

Now the Chamber is trying to figure out how best to take advantage of its electoral success to push for its policy goals.

“This is the maximum point of leverage, and we can’t let it be fleeting,” the Chamber’s national political director, Rob Engstrom, told the members on the conference call in February.

In an interview, Bruce Josten, the Chamber’s longtime head of government affairs, said the group is playing “a long-haul game” when it comes to legislative priorities.

“I can honestly and fairly say I’ve been working on immigration reform for close to 20 years,” said Josten, who himself marked 40 years with the Chamber last summer. ”The design of the Congress and the separation of powers was deliberate not to make it easy to enact a lot of law. It is just what it is.”

Like everyone else in politics, the business lobby finds itself navigating an increasingly polarized Washington, though the Chamber also sits at the center of a debate over whether it’s contributing to that atmosphere or reacting to it. With moderates vanishing on both sides of the aisle, the Chamber is working to elbow Republicans toward its views.

The split in the Republican Party helped drive the Chamber’s 2014 election strategy as it pushed for candidates it said would govern rather than obstruct.

But Donohue is known for his mane of bright white hair and thunderous rhetoric — during an event last December, he said proponents of corporate political spending disclosure want businesses to be “targeted, harassed, criticized and boycotted” and forced from the political arena — shows no sign of stepping back.

In a letter to members dated Feb. 2 obtained by the Center for Public Integrity, he praised early signs of action by Congress on the Chamber’s priorities but struck an urgent tone.

“Issues that divide Republicans, but shouldn’t — including immigration reform, infrastructure, and the Ex-Im Bank — must see positive action,” he wrote. Congress, he said, must “meet a series of upcoming fiscal deadlines to ensure the continuity of essential government services.”

To be sure, the House and Senate last week both passed budgets, though they must still reconcile them. The House also passed a measure to replace the formula-setting pay for doctors who treat Medicare patients. House leaders billed the legislation as a step towards entitlement reform, a larger Chamber priority.

Nonetheless, the dispute over funding for the Department of Homeland Security, which left Congress scrambling to avoid the agency’s partial shutdown, signals a tough slog ahead.

All in for Republicans

The Chamber may not be quite as Republican as, say, the Republican National Committee, but it’s gotten pretty close.

The Chamber endorsed six Democrats in 2014, all running for the House, out of 268 federal candidates it supported.

Out of the $35.5 million it told the Federal Election Commission it spent advocating for candidates during the 2014 election cycle, only about $500,000 — roughly 1.4 percent — was spent to benefit Democrats: incumbent House members John Barrow in Georgia and Scott Peters in California, according to the Center for Responsive Politics, which tracks campaign finance data.

It wasn’t always this way. In 2008, the Chamber endorsed 38 Democrats, including some running for Senate such as Louisiana’s Mary Landrieu and Arkansas’ Mark Pryor, who both lost their seats this time around. In 2010, the Chamber endorsed 21 Democrats, and in 2012, five.

The 2012 elections went poorly for the Chamber when its attempts to defeat unfriendly Democratic senators fizzled and most won re-election. In the wake of that bitter November, the Chamber’s leadership ordered a full review of its political operation and decided it needed better candidates on the Republican side.

So during the 2014 cycle, the Chamber injected itself into Republican primaries to knock out “candidates out there running on the Republican side that want to come to Washington and shut the place down,” said Scott Reed, the Chamber’s senior political strategist, during a Wall Street Journalpanel last year.

The Chamber ran nearly 17,000 television spots mentioning a Senate candidate during the 2014 election cycle, according to a Center for Public Integrity analysis of advertising data provided by Kantar Media/CMAG, an advertising tracking service. It also ran ads in two dozen House races.

It boosted advertising on social media, placing ads on sites ranging from Facebook to music streaming service Pandora.

It drafted buzzy spokesmen, including NASCAR driver Richard Petty for North Carolina Republican Thom Tillis and football great Brett Favre, who cut an ad urging Mississippi voters to re-elect U.S. Sen. Thad Cochran. It also made use of several likely 2016 Republican presidential contenders, including former Florida Gov. Jeb Bush and Sens. Marco Rubio and Rand Paul.

Bush and Rubio did Spanish-language ads in states such as Colorado and Arizona, and the Chamber deployed Paul in states such as North Carolina, where a Libertarian candidate threatened to siphon votes from a Chamber-backed Republican.

The Chamber is already reviewing the 2016 electoral map to figure out which spokesmen would make the most effective messengers for the states in play.

The Chamber insists it isn’t aligned with either party. Still, the increasingly partisan tilt raises questions for some Chamber members who point out it will need Democratic votes on legislative priorities that don’t necessarily break down along partisan lines, such as trade, tax reform, immigration reform and infrastructure funding.

“Where do they plan to go from here? Are they going to achieve their legislative goals with those numbers?” said a lobbyist for one Chamber member company who requested anonymity because his company did not grant him permission to speak on the record. His company routinely pays the Chamber six figures annually.

The Chamber’s policy work began right after the election, Josten said: meeting with members and organizing briefings. It successfully pushed for the reauthorization of the Terrorism Risk Insurance Act, a program under which the federal government repays businesses’ costs after a catastrophic terrorist attack.

Other issues are proving significantly stickier to resolve.

Republicans acknowledge comprehensive tax reform isn’t likely happening this Congress, and more modest tax legislation will also have to leap serious hurdles. Immigration reform shows no sign of life. The president wants so-called “fast-track” authority to negotiate trade agreements, something the Chamber strongly supports, but a significant number of Democrats and some Republicans are opposed.

While there’s broad agreement more money is needed to rebuild roads, bridges and other infrastructure, lawmakers can’t agree on how much to spend or how they’ll pay for it all — and it has been a decade since the last time Congress successfully passed a long-term transportation bill.

One top priority issue: reauthorization of the Export-Import Bank, a bank that makes and guarantees loans for American companies doing business in other countries. Its charter expires in June and reauthorization is garnering vigorous resistance from a hefty number of Republicans. On the list of the opposed: House Financial Services Chairman Jeb Hensarling, who Josten acknowledges presents a challenge.

Hensarling, a Texas Republican, has called the Ex-Im bank “a sweetheart deal” for big companies like Boeing Co. and Caterpillar Inc. (both Chamber members) that doesn’t do enough to help small business. North Carolina’s Tillis, who enjoyed more than $5.6 million in help from the Chamber, is also opposed.

Josten said he’s working on the Ex-Im bank issue constantly, both with members and other associations, to bring pressure to bear and help harvest some votes.

Scoring votes

Democrats have their own take on the Chamber.

It’s hardly flattering.

“I have long viewed them as a wholly owned subsidiary of the Republican Party,” said former Rep. Earl Pomeroy, a North Dakota Democrat who lost his seat in 2010, thanks in large part to $270,000 the Chamber spent against him.

Of course, many argue the Chamber is doing exactly what it should be doing.

“When you talk about why is it important that the Chamber was successful in these elections, it’s so they have a stronger voice,” said Patricia Elizondo, a senior vice president at Xerox Corp. and a member of the Chamber's board of directors since 2008.

Bill Miller, who helped build the Chamber’s political machine and oversaw its 2010 election efforts before he left in 2011, said members expect the Chamber to support legislators who are "vulnerable and helpful to the agenda.”

The Chamber’s Josten says the organization chooses which candidates to support based on their votes on key issues, which it tallies in an annualscorecard.

“Everybody likes to fixate on some of the big issues we care about and say, well, jeez, Bruce, you guys favor comprehensive immigration reform and Joe Blow’s against it,” he said. “Yeah, OK, so? And Joe Blow’s an 87 percenter with us on everything else, or a 92 percenter.”

The Chamber’s Senate scorecard for 2013 — the most recent available — includes eight votes, from major appropriations bills to immigration reform to reauthorizing the Federal Helium Reserve to sell helium to private entities.

As for why the Chamber has endorsed and spent for fewer Democrats lately, Josten said ironclad party discipline has yielded shrinking numbers of Democrats who vote with the Chamber often enough to score well.

He portrayed the Chamber’s political activity as promoting moderates.

“Obviously, I can’t say that our efforts led to a full restoration … of the middle, but it certainly was the beginning of a process of trying to restore a middle,” he said.

Chamber members don’t always like how the candidates fare on the scorecard. For instance, insurance companies, which heavily supported Pomeroy, a former insurance commissioner, weren’t thrilled when the Chamber targeted him.

Rep. John Sarbanes, a Maryland Democrat who is sponsoringlegislation aimed at reducing the impact of groups that spend money to sway elections, said the Chamber is enormously influential, though many of its priorities are unlikely to pass this Congress.

But “it’s in the nature of organizations like that to take the long view," he said. "I don’t know if they need a win anytime soon.”

When major bills move, he said, the Chamber will have a say.

Wrangling members

The Chamber’s effectiveness depends on forging accord among businesses of all sizes, types and regions, said Dirk Van Dongen, the longtime head of the National Association of Wholesaler-Distributors, a Chamber member.

“The Chamber has the challenge of kind of herding all the business community cats, if you will, into some coherency,” Van Dongen said.

The policy process is elaborate.

“It’s not Tom Donohue throwing darts at a dartboard in his office to decide how to position the U.S. Chamber,” said David Adkisson, the president and chief executive officer of the Kentucky Chamber of Commerce and U.S. Chamber board member. “It’s a very deliberate, relatively formal process.”

Some issues, such as the major Chamber priorities of trade and infrastructure spending, aren’t particularly divisive.

Others are tougher. Donohue has repeatedly acknowledged net neutrality divides the tech community, but the Chamber opposes the Federal Communications Commission’s move last month to reclassify Internet service so it’s treated more like a utility.

Then there are issues such as tax reform, where “you’ll never get the business community all on one page,” said Josten.

Donohue, who earned about $5.5 million from the Chamber in 2013, encourages debate and brings in experts to guide members to a policy position.

When a decision is made, he doesn’t back off, says Xerox’s Elizondo, even if members threaten to walk.

“I have seen the outcome where there is a faction of the group that doesn’t agree and sometimes there is a price to pay, but it’s good to know the process for getting to the answer is a pretty good one at the Chamber,” she said.

High-profile disputes have been bleeding into the public domain.

During 2009 and 2010, a group of companies, including Apple Inc., Exelon Corp. and Pacific Gas and Electric, quit the Chamber over its opposition to the Environmental Protection Agency’s plans to regulate greenhouse gases and other climate-change-related issues. Nike Inc. left the Chamber’s board. Other members, including Microsoft Corp. and Johnson & Johnson, issued statements disagreeing with the Chamber’s position.

In 2011, Yahoo Inc. also quit,reportedly over intellectual property legislation the Chamber supported and Yahoo opposed.

More than 40 local chambers issued statements distancing themselves from the national organization’s 2010 midterm election spending, citing a backlash, Politicoreported. Several local chamber presidents interviewed by the Center for Public Integrity said, sometimes with deep sighs, they are frequently called upon to explain their relationship with the U.S. Chamber.

“People come in and say we don’t want to be a member of the Fayetteville Chamber because we don’t want to be a member of the U.S. Chamber because we don’t agree with the policies of the U.S. Chamber,” said Steve Clark, the president of the Fayetteville Chamber of Commerce in Arkansas.

But not everyone who quits can stay away.

Bob Linscheid, head of the San Francisco Chamber of Commerce, said his group left the U.S. Chamber for a few years, a rupture caused largely by differences over climate change and other environmental issues.

Linscheid re-upped its membership in early 2013. “I felt it best to not take our marbles and go home,” he said.

The two groups agree on the need for immigration reform, although Linscheid doesn’t believe it will happen anytime soon, no matter what the Chamber wants.

“They’re not going to be able to deliver. I’m frustrated by that, but I’m also a realist.” Linscheid said.

Exelon, the giant electric utility, rejoined in 2012, said spokesman Paul Adams.

Internal strife

Worse than disagreements among members, sometimes the Chamber publicly disagrees with itself.

Last year, the U.S. Trade Representative’s office was trying to prod foreign countries to improve enforcement of intellectual property rights — the kind of arcane but routine Washington ritual that can have high stakes for companies doing business abroad.

In February 2014, the U.S. Chamber’s Global Intellectual Property Center urged the trade representative to downgrade India’s status because it “has not shown a record of engagement on these issues.”

The U.S.-India Business Council, another Chamber program that represents companies doing business in India, didn’t agree. Ron Somers, then the council’s president, wrote in March 2014 that a downgrade would be unwarranted.

Two weeks later, David Chavern, then the Chamber’s chief operating officer, sent a third letter to the trade representative stressing the U.S.-India Business Council’s policy autonomy — and the Chamber’s disagreement with its position.

“We understand that a number of Chamber and USIBC joint members, including some companies identified as directors on the USIBC’s letterhead, do not support key elements of the USIBC’s submission,” he said.

Pfizer Inc., a member of both groups, sent its own letter saying it didn’t support the U.S.-India Business Council’s position, and soon its name disappeared from council’s online list of members, though it was recently restored.

By mid-April, Somers resigned to start a consulting practice.

'Hand in glove' with the Senate

In January, with the new Congress getting underway, the new chairman of the powerful Senate Finance Committee, Orrin Hatch, unveiled his 2015 agenda in a speech at the Chamber.

The Utah Republican called tax reform the top priority and said “all the people [at the Chamber] work hand in glove with us and help us to understand when we’re wrong and help us to understand how to make things right.”

It will certainly keep doing that. And just like in past election cycles, the Chamber is positioned to be a major player during the 2016 election cycle and will likely continue to throw its considerable weight behind Republicans.

Strategists on its February call said they are already building up resources, and Donohue told members they were welcome to come in and talk about individual races.

The Chamber will put its resources to work immediately. Reed, the political strategist, said it would back Richmond County District Attorney Dan Donovan, a Republican, in New York’s upcoming special election for a congressional seat representing Staten Island and part of Brooklyn.

In Mississippi, where there’s another special election, “It’s tea party central. We’ve got to keep an eye on this,” Reed said during the call, adding it is likely to go to a runoff.

And 2016 planning is already well underway.

The Chamber traditionally avoids directly participating in presidential politics, and it’s offered no indication it will change this philosophy for 2016. Nevertheless, it’s certain to have a major say in which politicians succeed farther down the ticket.

That’s a role Donohue relishes.

During the February conference call, Sullivan, the new senator from Alaska, recounted how an earthquake hit the state during the public event that marked the unveiling of the Chamber’s endorsement of him. He went on to praise the calm way the Chamber’s Engstrom handled the quake.

Donohue interrupted.

“I want to tell you, senator, why he handled it so calmly,” Donohue quipped. “He had arranged the earthquake.”

Vintage Donohue swagger — but the Chamber may find the ground easier to move than this Congress.

Health insurance executives and lobbyists have for years told us that one of the main reasons they charge us so much for coverage is the cost shifting that results from Uncle Sam’s stinginess.

The story goes like this: hospitals are paid so inadequately by government programs like Medicare and Medicaid that they have to charge private insurers more to keep their doors open.

One of the regular communicators of this theory is Karen Ignagni, CEO of America’s Health Insurance Plans, the industry’s biggest PR and lobbying group.

Ignagni pushed this line incessantly during the health care reform debate. She even cited it in response to a question about why the industry was so opposed to the creation of a government-run “public option” health plan.

“What we have is a significant amount of cost shifting because the government underpays,” she said. “Our [premium] rates are higher as a result of that. If you set up a public structure, whatever you call it, and it has the benefit of government rates, we are still being disadvantaged because of the cost shifting.”

A few months later, on March 23, 2010, to be precise, the day President Obama signed the Affordable Care Act, Cigna CEO David Cordani, predicted that cost shifting was only going to get worse because of the new law. He was quoted as saying that the “cost shift from Medicaid to private insurance would worsen as millions of eligible people are added to the Medicaid rolls.”

Three years later, Ignagni was still blaming cost shifting for higher premiums.  In a 2013 speech she stated that, “In the past, when governments reduced reimbursement rates for Medicaid and Medicare, private insurers have generally paid more to make up for it.”

Health care executives have talked about cost shifting for so long it has become conventional wisdom. We’ve all come to believe it without challenging it.

But what if it hasn’t really been happening, at least not in recent years?

Health economist Austin Frakt  presented compelling evidence in a New York Times op-ed last week that just because the government often pays a lower rate than many hospital executives would like, that doesn’t mean they can simply force private insurance companies to pay more. In fact, as he pointed out, reduced government reimbursement rates often result in lower—not higher—private insurance reimbursement rates.

Frakt cited a study published in the May 2013 edition of Health Affairs that found that a 10 percent reduction in Medicare payments was associated with an almost 8 percent reduction in private prices. In other words, not only did hospitals not charge private insurance companies more between 1995 and 2009 because of lower payments from the government, they actually charged them less.

It seems that about the only time hospitals can get away with shifting more costs to private insurers is when there are not many other hospitals in the same geographical area competing with them.

That was the conclusion of the authors of a 2010 Health Affairsarticle. They wrote that hospitals that face little competition are less efficient and have higher costs. Because of the lack of competition, private insurers have less leverage and usually are forced to cover those higher costs.

The dynamic is completely different, though, in markets with significant competition. Although hospitals in a competitive market might want to charge private insurers more, they can’t. Insurers are in a better position to say thanks but no thanks when a hospital with one or more competitors tries to gouge them.

“Put it together and it is hospitals’ underlying costs, driven by competition—not cost shifting,” that determine how much hospitals are able to charge private insurers, Frakt wrote.

So if health insurers’ talking point about having no choice but to hike premiums because of low government payments is based more on myth than reality, why do premiums continue to grow, even as hospitals in many markets actually charge them less—not more—when Medicare and Medicaid rates decline?

My hunch is that they’re able to get away with it because nobody has called their bluff.  Masters of spin that they are, insurance executives and lobbyists have led us all to believe that cost shifting is the inevitable result of government bureaucrats being too tightfisted. They can get away with it because so many Americans are willing to accept as truth just about any talking point that reinforces their deep-seated belief that the government is to blame for everything that ails us.

So it’s little wonder that we’re willing to buy the insurance industry’s suggestion that our premiums would be lower if it weren’t for cost shifting.

As long as we keep buying it, insurance company bureaucrats will keep jacking up our rates by more than they could otherwise get away with. And they’ll keep grinning all the way to the bank as they do it.

It was less than a month before the 2012 election when a spokesman for Black Men Vote, a political group backed by hip-hop musicians including Common and Pras Michel, publicly announced: “I want a $500,000 donor.”

Three days later, his wish was all but granted.

That’s when a cool $400,000 landed in the bank account of Black Men Vote, a super PAC whose goal was mobilizing young black men to support President Barack Obama’s re-election. Super PACs are political committees that can raise unlimited amounts of money to help elect or defeat political candidates.

The source of the money? An obscure limited liability company identified as“SPM Holdings LLC” with an address in Palm Beach Gardens, Florida.

By Election Day, SPM Holdings would double down and make an additional six-figure contribution, bringing its total financial support of Black Men Vote to $875,000.

It was one of the largest donations to a super PAC ever by a limited liability company, according to a Center for Public Integrity review of federal campaign finance records.

Moreover, the LLC money represented two-thirds of the $1.3 million Black Men Vote raised in 2012.

That’s a larger portion of money than any other top-tier super PAC has received from limited liability companies — business entities that can be used to shield the identities of the actual people making large political contributions.

Federal records would eventually show that Pras, a Grammy-winning rapper and founding member of the Fugees, provided $250,000 in seed money for the super PAC’s efforts and another $100,000 before Election Day.

“The best way we can make a change is empowering one another,” Pras told the Center for Public Integrity in a recent interview. “I put my money where my mouth was.”

But the donor (or donors) behind SPM Holdings would remain — until now — a mystery.

The allure of LLCs

Super PACs, which were created in the wake of the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision and a related federal court case in 2010, are supposed to be transparent political committees, publicly disclosing who funds them.

However, limited liability companies such as SPM Holdings can serve as vehicles for mega-donors to contribute to the groups — many of which are aligned with specific political candidates — while hiding their identities from voters.

“This is an avenue that will appeal to people who want to spend money politically and not necessarily be disclosed,” said Elizabeth Kingsley, a Washington, D.C.-based attorney who specializes in campaign finance law.

That’s because some states, such as Delaware and Wyoming, don’t require LLCs to identify the living, breathing people who own or control them. Instead, they need to provide only the name of a “registered agent,” which is often a company that exists only to serve as the registered agents for LLCs.

“You don’t even have to have a human being as a member of certain LLCs,” said Ciara Torres-Spelliscy, a law professor at Stetson University College of Law. “It can get quite byzantine very quickly.”

The allure of using LLCs to influence politics could become even stronger if the Internal Revenue Service institutes proposed new rules that would require“social welfare” nonprofits organized under Section 501(c)(4) of the U.S. tax code to be less politically active. Today, hundreds of millions of dollars in largely untraceable “dark money” flow through such groups for political expenditures.

At least $33 million — and counting

LLCs are already playing politics. Collectively, they’ve pumped at least $33 million into super PACs since 2010, according to a Center for Public Integrity review of federal campaign finance data.

That’s only about 2 percent of all of the money that super PACs have raised, but it’s been concentrated in contributions to several of the nation’s most powerful super PACs. The amount of money may also be higher because super PACs do not always identify an LLC donor as a limited liability company in campaign finance filings.

Democratic-aligned Senate Majority PAC, for example, has received more than $3.7 million from LLCs since 2010, including $1.65 million last October from the Council for American Job Growth LLC, an offshoot of a pro-immigration reform group founded by Facebook CEO Mark Zuckerberg.

In a rare move, the Council for American Job Growth itself spent $720,000 last fall on ads boosting Democratic Sen. Jeanne Shaheen of New Hampshire, rather than donating it to an established political group.

It’s unclear who funds the Council for American Job Growth.

Meanwhile, two massive Republican super PACs — Restore Our Future and American Crossroads— have amassed more money from LLCs than any others, the Center for Public Integrity’s analysis indicates. In most cases the people behind the contributions have been identified, but not always.

Restore Our Future, the main super PAC that supported Republican 2012 presidential nominee Mitt Romney, raised more than $10 million from LLCs — more than any other super PAC.

Energy companies Oxbow Carbon LLC and Huron Carbon LLC — two LLCs connected to billionaire William Koch, the lesser-known brother of conservative bankrollers Charles and David Koch — ranked among Restore Our Future’s largest donors, giving $2.75 million and $1 million respectively.

Restore Our Future also received a $1 million contribution from a shadowy, Delaware-based outfit called W Spann LLC. That company’s gift made headlines after NBC News detailed how this LLC formed, made the seven-figure contribution and dissolved within a matter of months.

Within days of the story, campaign watchdogs filed complaints with the Federal Election Commission and Department of Justice accusing W Spann LLC of simply being a conduit for someone to make a political contribution — and for also failing to register as a political action committee.

Ed Conard, a former official at private equity firm Bain Capital who had close ties to Romney, ultimately came forward as the mystery man behind W Spann LLC. Conard insisted he acted legally. But he also asked Restore Our Future to amend its campaign finance report to name him, not his company, as the donor.

To this day, Paul S. Ryan, an attorney at the Campaign Legal Center— one of the watchdog groups that filed complaints against W Spann LLC — argues that Conard broke the law by using an LLC to “hide” his identity.

Limited liability companies, Ryan said, cannot be used to “simply launder funds.”

The complaints are still pending.

Delaware, where paper trails dead-end

Like W Spann LLC, SPM Holdings LLC — the entity that helped bankroll Black Men Vote — is also difficult to unpack.

First, state business registration records don’t show any company named “SPM Holdings LLC” in Florida, where federal election records say it’s located.

Florida real estate records, however, do show a company named “SPM 2012 Holdings LLC” at the same Florida address that the Black Men Vote super PAC listed for SPM Holdings LLC in its campaign finance filing.

SPM 2012 Holdings LLC is likewise not registered in Florida. Instead, it’s officially registered in Delaware, where records list only a registered agent: Dover, Delaware-based Registered Agent Solutions Inc., a for-profit company that boasts of being “an innovative leader in the registered agent and transactional service industry.”

An employee of Registered Agent Solutions Inc. said it was the company’s policy not to give out client information. “There is no public information that I can provide,” she added.

Back in Florida, a business and financial consulting firm called Cruden Bay Partners LLC also shares the same address as SPM 2012 Holdings LLC. But even some people there said they were unfamiliar with it.

One Cruden Bay employee told the Center for Public Integrity “there’s no SPM here” and said “you might have the wrong number” before hanging up the telephone.

Reached via email, Lawrence Rovin, a lawyer who owns Cruden Bay Partners, wrote: “I am not at liberty to provide you with any information regarding SPM 2012 Holdings, LLC.”

Who is SPM Holdings?

Black Men Vote ultimately spent nearly $850,000 during the fall of 2012 on radio ads in Virginia and Ohio that supported the president’s re-election. Obama handily carried black voters in both battleground states.

Exit polls showed that black voters made up a larger share of the vote in the Buckeye State than they had four years earlier, increasing from 11 percent of all voters in 2008 to 15 percent in 2012. In Virginia, one out of every five voters during both elections was black.

It’s hard to definitively say how large a role Black Men Vote played in either state, but officials with the super PAC say they were pleased with their efforts.

“We know that we were a part of the equation,” said Jeff Johnson, a former BET host and the spokesman for Black Men Vote who made the $500,000 fundraising appeal two years ago.

Pras, too, said he believes the group was successful. And as it turns out, he actually gave more money than the federal filings themselves indicated.

The former Fugees star confirmed that SPM Holdings LLC — which is officially called SPM 2012 Holdings LLC — was his, adding that it was “just a holding company to do my everyday business through.”

This acknowledgment means that Pras provided $1.2 million in total to Black Men Vote, or more than 90 percent of its receipts.

William Kirk, the founder and treasurer of Black Men Vote, said he was grateful for the resources provided by Pras and the super PAC’s other supporters.

“Hopefully people will see Black Men Vote as an example,” he said of the group, which effectively ceased operations after the 2012 election.

Kirk was talking about using a super PAC to reach a specific demographic, such as the 18-to-34-year-olds targeted by Black Men Vote. But others could draw a different lesson from the group as well: It’s a road map for how to opaquely fund a super PAC.

No consensus for new rules

While the major LLC donor behind Black Men Vote has now — more than two years after the 2012 election — voluntarily revealed his identity, federal law does not require this disclosure. And ideological divisions on the Federal Election Commission, the nation’s top campaign regulator, may sink any proposal that would try to do so.

Even as the Citizens United ruling has reshaped the nation’s political landscape, new rules for LLCs haven’t been discussed.

Individuals have long been allowed to use LLCs to make donations to federal candidates — but contribution records must show both the name of the LLC and the name of the person, or people, responsible for the money. That’s to ensure that individuals don’t exceed campaign contribution limits and that candidates don’t receive corporate money.

Neither of those regulatory rationales apply to the world of super PACs, as these political committees may accept contributions of unlimited size, including money from corporations. But activists in some states, such as New York, are currently pushing to change how contributions from LLCs to state politicians are treated.

The FEC’s three Republican commissioners, who are often at odds with their three Democratic-leaning counterparts, declined to comment for this story.

David Mason, a former Republican FEC chairman, said it’s “pointless” to create additional reporting requirements for LLCs that give money to super PACs because “anybody who didn’t want that information disclosed would simply do the exact same activity through a corporation.”

But at least two of the commission’s Democratic members don’t see it that way.

“It is another situation where we have a failure to require important disclosure that the public’s entitled to have,” said Ann Ravel, the Democrat who currently serves as the commission’s chairwoman.

Her sentiments were echoed by fellow Democratic FEC Commissioner Ellen Weintraub, who stressed that super PACs are supposed to be transparent.

“If you don’t know who’s behind it,” Weintraub said, “then you don’t know what you don’t know. Could be a foreign citizen. Could be a foreign government. Could be anybody.”

The Campaign Legal Center today filed complaints with the Federal Election Commission against four potential presidential candidates — Jeb Bush, Rick Santorum, Scott Walker and Martin O'Malley— accusing them of full-on acting the part without officially registering campaign committees.

Good luck with that: If the nonpartisan campaign reform group is fortunate, FEC commissioners will rule on these cases sometime before the 2020 presidential election.

Indeed, the FEC, which exists largely to regulate and enforce campaign finance laws, sometimes takes longer to rule on complaints than it took the United States to win World War II.

Its fellow governmental agency NASA sent its Cassini-Huygens space probe flying past the planet Jupiter (after first swinging it around Venus) in shorter order than the FEC has resolved matters pending against some presidential candidates.

As the Center for Public Integrity previously reported, a 2003 complaint by the American Conservative Union against a supporter of former Democratic Sen. John Edwards’ 2004 presidential committee was ultimately resolved — in 2012.

More recently, Republican Sen. John McCain’s 2008 presidential committee won dismissal of a case against it in mid-2013.

A complaint filed in 2011 by the Campaign Legal Center and fellow reform group Democracy 21 against a limited liability company supporting Republican Mitt Romney's White House dreams? Still pending.

So, too, is a 2011 complaint by watchdog group Citizens for Responsibility and Ethics in Washington against Republican Herman Cain's presidential campaign — as is a separate complaint from the same year against Republican Newt Gingirch's presidential campaign.

Why is this so?

FEC commissioners aren't compelled by law to move quickly, or much at all, when investigating accusations of campaign law violations. If they want to delay or otherwise extend a case, even beyond the boundaries of an election cycle in which a complaint is made, there's little stopping them.

Even if FEC commissioners did move quickly, they often deadlock on high-profile matters, particularly if the person or committee under scrutiny is a staunch partisan.

Meanwhile, the FEC has also gone without a general counsel, who leads its legal department, for about 21 months.

"To say the FEC's process is broken is an understatement," said Paul S. Ryan, senior attorney at the Campaign Legal Center.

In interviews this year, FEC commissioners — both Democratic and Republican appointees — acknowledge that ideological differences have prevented them from taking speedy action on some matters before them.

Democratic Chairwoman Ann Ravel has expressed frustration with her Republican colleagues for what she considers a largely laissez-faire approach to enforcing campaign laws in an age when certain political organizations may raise and spend unlimited amounts of money to advocate for the election or defeat of politicians.

Republican Commissioner Lee Goodman has advocated against “unnecessary political regulation" at the FEC, a philosophy largely mirrored by his GOP colleagues Caroline Hunter and Matt Petersen.

Both sides have nevertheless resolved to work together, in the words of Goodman, "when possible," but in recent months, cooperation has not been the norm.

Also worth noting: Four of the six FEC commissioners — two Republicans, one Democrat and one independent aligned with Democrats — continue to occupy their posts despite their six-year terms having long ago expired.

President Barack Obama has not floated nominees to replace them — something he could do this afternoon, should he choose to.

More than a quarter of Americans cannot go online at home to check their children’s grades at school, apply for jobs, pay bills or research health issues. They don’t have what has become a crucial service for participation in modern society: Internet service at home.

The proportion of households with Internet service had been rising steadily for decades, according to the Pew Research Center, until the past few years when the adoption rate slowed.

One reason? The high cost of broadband and the lack of competition that leads to those high prices.

A Center for Public Integrity analysis of Internet prices in five U.S. cities and five comparable French cities found that prices in the U.S. were as much as 3 1/2 times higher than those in France for similar service. The analysis shows that consumers in France have a choice between a far greater number of providers — seven on average — than those in the U.S., where most residents can get service from no more than two companies. The Center’s analysis echoes the findings of several studies on Internet pricing disparities worldwide.

By mapping the service areas of U.S. providers,  The Center for Public Integrity also found that telecommunications companies appear to carve up territory to avoid competing with more than one other provider.

Higher broadband prices don’t just mean fewer dollars in Americans’ wallets at the end of every month. They make it difficult for low- to middle-income families to afford fast Internet service, which has become a necessity for job training, education, health care.

According to data in a report by the U.S. National Technology and Information Administration, more than 8 percent of U.S. households say they cannot afford broadband. President Barack Obama this year called for faster, more affordable Internet service for everyone.

“Just like we today expect clean running water, sewage and electricity as essential, so is broadband necessary to partake in society, to interact with government, to learn, to inform and be informed, to be a fully functioning member of society,” said Rudolf van der Berg, a telecommunications and broadband policy analyst who studies policy at the Organisation for Economic Co-operation and Development (OECD).

Many studies have been conducted looking at price and competition. The Center’s research isn’t as comprehensive. Rather, it’s a snapshot meant to show the state of broadband for some American cities. The high prices and lack of competition and in towns like these — and there are many — add to a growing divide between the connected and unconnected. And for the unconnected, the increasing gap will be measured in fewer economic opportunities, less access to healthcare and other inequities.

The non-competitive advantage

When it comes to shopping for Internet service, most Americans don’t have much of a choice.

Consider the Seattle, Washington, metropolitan area, which includes Bellevue, Tacoma and Redmond. The area boasts three providers who offer residents Internet service of more than 10 megabits per second: Comcast, CenturyLink and Frontier Communications.

But no Seattle resident has a choice of all three. While Comcast serves 95 percent of the Seattle metro area, CenturyLink only offers service in a territory south of the city, to about 31 percent of the area’s residents, according to data compiled by the Federal Communications Commission and mapped by the Center for Public Integrity. Frontier Communications serves residents north of the city, and covers just 29 percent of the metro area. The two companies’ service areas rarely overlap. That leaves the vast majority of residents in the metropolitan area that's home to tech giant Microsoft Corp. with a choice of just two Internet providers.

Coverage areas in other U.S. cities the Center mapped are similar. Most residents have to choose between one company that offers Internet via cable and another via DSL, or a fast telephone line.

In the five French cities that the Center studied, residents have a choice of at least six providers for high-speed Internet access. What makes that possible is open access, a regulatory requirement that allows companies to share networks for a fee, said Roslyn Layton, a fellow at the American Enterprise Institute who studies broadband at Aalborg University in Copenhagen.

The U.S. Internet system, where territory appears to be deliberately carved up to minimize competition, grew from the telephone and cable television system that was already in place.

Most Internet providers — including CenturyLink, Frontier and AT&T — started out as, or bought, phone companies, giving them control of one of the only physical lines that serve each household. The second choice comes from the cable TV providers who in turn own the cables that enter almost every home. Wireless and satellite companies try to compete but those technologies still can’t reliably provide high speeds, and often cap the amount of data consumers can use.

Some researchers argue that lower population density in the United States leads to higher prices. But van der Berg doesn’t see it that way.

“Population density is an important factor in the cost of broadband, when you compare Hong Kong to Sweden or the USA,” van der Berg said in an email. “However just as decisive is the amount of competition or the lack of it.”

A choice of just two, even three, providers isn’t enough to create a competitive market that will keep a check on prices, said Nicholas Economides, an economics professor at New York University who studies telecommunications.

“The only competition that remains is between telephone Internet service providers and cable Internet service providers — if you have it,” Economides said. “That’s the real problem, and that’s why we don’t have enough competition and higher prices.”

Higher costs

If you live in Columbus, Ohio, and you want fast Internet service, you have two choices: Time Warner Cable’s $70-per-month plan or AT&T’s $61-per-month package, after any discount expires.

If you live in Nice, France, it’s a different story. You can choose service from six Internet providers, and you’ll pay between $19 and $40 a month for a comparable, or even faster, service.

Columbus and Nice aren’t atypical, according to the analysis by The Center for Public Integrity. U.S. broadband providers charge more for high-speed Internet connections in four other U.S. cities when compared with cities in France that had similar population densities, the Center found. In some cases, prices in the French cities are nearly half those in the U.S. for speeds that are up to 10 times faster. (Read an explanation of the center’s methodology.)

American Internet companies argue that they provide better service and that’s why they charge more. Most of the connections in the French cities the Center studied were sent over copper wires rather than cable or fiber. Unlike cable, which 96 percent of Americans have access to, speeds slow over copper the farther a customer is from the central office where the signal originates.

DSL — as copper connections are called — is the primary reason European Internet providers deliver just 74 percent of their advertised speeds, according to the European Commission. U.S. providers give their users the speeds that they advertise, the Federal Communications Commission reported.

“Europeans pay less because they get less,” Layton said in an email. Layton says competition in Europe depresses revenue and discourages investment in faster and better service. “Americans may pay more, but we get more.”

But even accounting for the slower speeds, Internet packages in France are still a better deal. For example, in Nice, French provider OVh Telecom offers the most expensive service, at $35.28 per month for 19 megabits per second, or $1.86 per megabit. Reducing the speeds by the 74 percent of what European telecoms truly deliver increases the cost per megabit to $2.50. That’s still 28 percent less than the $3.50 per megabit Time Warner Cable charges for nearly the same speed, and 26 percent less than what AT&T charges. In all but two instances, all Internet packages in the five French cities were a greater value.

The findings “are not surprising, unfortunately,” said Danielle Kehl, a policy analyst at the Open Technology Institute in Washington, D.C., and one of the authors of a study that also found U.S. broadband prices are higher than those in most other foreign cities.

Other studies have come to similar conclusions.

The U.S. has the ninth most expensive broadband service among the 34 OECD countries, which are among the largest economies in the world. The comparison looked at 15 megabit-per-second downloads, a speed fast enough to conduct most of today’s routine Internet applications with two devices running at the same time.

The conservative American Enterprise Institute and a professor at the University of Pennsylvania Law School who supports fewer regulations for the telecom industry, have each concluded that U.S. prices for broadband are higher than European countries for faster speeds, but lower for slower service.

Internet providers in the five U.S. cities studied defended their higher prices. Verizon Communications said its prices are “very competitive” and offer “great value.” An AT&T official didn’t answer a question asking why their prices were higher, but referred the center — “in an attempt to broaden your perspective,” according to an email — to two studies that actually concluded U.S. Internet providers charge higher prices for faster connections than providers in the European Union.

CenturyLink said in an email it “seriously questions whether these are appropriate comparisons to make” because of differences in population densities, the kinds of services providers offer and different regulations that affect the operations of U.S. and European companies.

Time Warner Cable said in an email that comparing prices of stand-alone Internet systems “doesn’t reflect typical consumer behavior in the U.S. and could well skew any price comparison to a different marketplace” because that majority of their customers bundle Internet with cable television. Cox Communications and Frontier Communications did not respond to questions.

Why Price Matters

The higher price Americans pay for fast Internet leads many lower-income people to forego the service.

The percentage of Americans with a home Internet connection has steadily risen since 2000, leveling off over the past few years at 73 percent of all households in 2013, according to the latest figures from the Pew Research Center.

A 2012 survey on Internet use in Illinois conducted by John Horrigan, who studied Internet adoption when working on the Obama administration’s 2010 National Broadband Plan, found that 29 percent of those who didn’t have Internet service in their homes said the high cost, including the price of a computer, was the reason.

The study showed a stronger link between price and adoption than previous and later studies, which didn’t specifically ask consumers if price affected their decision on whether to connect.

In a 2013 survey conducted by the U.S. Economics and Statistics Administration, nearly half of those without a home connection said the Internet was not relevant to their lives or they weren’t interested. Only 28 percent cited high costs as the reason for not buying an Internet connection.

Those findings have led some researchers such as Richard Bennett, a visiting fellow at the American Enterprise Institute, to argue that policies to teach computer skills are more important to increasing Internet use than focusing on lowering prices or providing subsidies. Higher prices do have a secondary effect, he said.

Horrigan, however, argues the earlier studies are flawed because of the way the questions were asked. In past surveys, those who said they didn’t have an in-home Internet connection were asked to provide reasons why. Interviewers didn’t offer any reasons. Responses were then grouped into categories, with the most popular answer being the Internet isn’t relevant.

When surveyors offered specific reasons, including cost, that factor rose to the top.

“Based on years of studying this, I am convinced that price is clearly the main reason” Americans don’t connect to the Internet, Horrigan said. “If you solve the price problem alone, we’re still going to have people not choosing to take the service. But you have to start with price.”

Will Fitzgibbon, a reporter with the International Consortium for Investigative Journalists in Washington, D.C., contributed to this report.