The Department of Justice announced that it no longer wants to do business with for-profit prison corporations that jail federal prisoners.
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Yates wrote that private prisons “served an important role during a hard time period”, but they had proven less effective than facilities run by the government. Shares of the two largest operators of US private prisons rebounded on Friday on bets that a move by the administration of President Barack Obama to phase out the use of some for-profit corrections facilities would not cascade across the country and decimate the industry. There are 13 such facilities in the federal system, housing 12 percent of the federal prison population, and each of those contracts will come up for renewal in the next five years. However, both Corrections Corporation of America and GEO Group incarcerate more than just federal inmates. Federal prisoners make up just 14% of almost 1.5 million prison inmates nationwide, while the vast majority are instead held in state correctional facilities.
Of the seven facilities GEO Group operates for the Federal Bureau of Prisons, none are located in Florida. She said the drop in federal inmates gave officials the opportunity to reevaluate the use of private prisons.
In 2015, the Bureau of Prisons ended its contract with the Willacy County Correctional Center in deep south Texas after inmates set fires and damaged property beyond the contractor’s ability to continue services required by the federal monitor. Government-run prisons are often funded by and use phone, transportation, commissary, and medical services from private companies. Not only that, but privately run prisons do not save the US taxpayers any substantial amount of money. Since the announcement, the publicly traded private prison company has seen it’s stocks plummet nearly 40 percent by the closing bell.
“The report’s authors freely admit that they ‘were unable to evaluate all of the factors that contributed to the underlying data, ‘ and they failed to account for the impact of elements such as population demographics or the scope and efficacy of efforts to mitigate contraband”, Burns said.
The private prisons on the chopping block are operated by three private companies Corrections Corporation of America, GEO Group Inc., and Management and Training Corporation.
At the close of the Stock Exchange Thursday, GEO Group shares lost almost half of their value during the day, over 40 percent at one point.
But Yates’ directive won’t have any bearing on lucrative contracts that for-profit prison companies have with states, including Hawaii.
In a blog post to department employees, the deputy attorney general pointed out that the federal prison population has been dropping overall, to fewer than 195,000 inmates, because of a shift in how low-level, nonviolent drug criminals are treated.
Texas officials “could start by phasing out one or more private state jail contracts when they expire next year”, said Rebecca L Robertson, legal and policy director for the ACLU of Texas.
Jamie Fellner, a former prison researcher for Human Rights Watch, said, “when the government does delegate, it’s done a bad job of supervising” and adjusting the contracts accordingly.
That announcement triggered fears other federal and state agencies would follow suit, and wiped out almost a third of the companies’ market value on the New York Stock Exchange. Some states, such as Kentucky, already have.
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The number of inmates housed in federal contract prisons is small. The Nation magazine also recently reported about deaths under questionable circumstances in privately operated facilities. AP material published by LongIsland.com, is done so with explicit permission. Ultimately, investors will have to watch and see if this carries over the states, which would have a much greater impact.
