Where one door closes: what will the recent US Department of Justice decision mean for private prisons?

Last month, the US Department of Justice announced that it would phase out, with a view to ending, its use of private prisons. In this expert blog, David Fathi, Director of the American Civil Liberties Union National Prison Project and a PRI Board Member, gives his predictions for the future involvement of private companies in US corrections.

The United States is the world’s leading incarcerator, and is well known for its devotion to the market. Put those two facts together, and it’s no surprise that since the 1980s, the use of private prisons in the United States has grown exponentially. In 1990 there were fewer than 8,000 people in U.S. private prisons; by 2014, the number had grown to over 131,000.  But on August 18, that long-term trend was abruptly reversed, as the Department of Justice announced that the federal Bureau of Prisons (BOP), the nation’s largest prison system, would phase out and eventually end its use of private prisons.

In a memorandum announcing the decision, Deputy Attorney General Sally Q. Yates wrote that private prisons “compare poorly to our own Bureau facilities.  They simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and … they do not maintain the same level of safety and security”. She added, “[t]he rehabilitative services that the Bureau provides, such as educational programs and job training, have proved difficult to replicate and outsource – and these services are essential to reducing recidivism and improving public safety”.

The decision followed a scathing report from the Department’s Inspector General, which found that private prisons had significantly more violence and more lockdowns than publicly run prisons, and failed to provide adequate medical and security staffing. Indeed, private prisons in the United States have compiled an appalling record of incompetence, neglect, and abuse. In 2010, two prisoners escaped from a private prison in Kingman, Arizona, and murdered an elderly couple while on the run.  A subsequent investigation found that prison staff were inexperienced, undertrained, and routinely ignored alarms. Five years later, a riot at the same prison resulted in multiple injuries and badly damaged much of the facility. In 2015, prisoners angered by poor medical care rioted at a private prison in Texas, resulting in numerous injuries and destroying the prison.

The Department of Justice announcement was unexpected, and reaction was swift. The stock of Corrections Corporation of America and The GEO Group – the nation’s largest private prison companies – lost over a third of its value in a single day. Days later, the Department of Homeland Security (DHS), which operates immigration detention facilities, announced formation of a panel to study its own use of private prisons.

Is this the end of the private prison industry in the United States? The answer to that question is likely “no”, or at least, “not immediately”.

Incarceration in the United States is highly decentralized. Each of the 50 states has its own prison system, as does the federal government, and there are literally thousands of local jails – facilities where pretrial detainees are held, as well as convicted prisoners serving short sentences. Use of private prisons varies widely – some states have never used them, while others have 20, 30, or even 40 per cent of their prison population in private facilities.

The BOP currently has about 22,500 prisoners in private prisons. Loss of this market, over a period of several years, will certainly hurt the industry but is unlikely by itself to be fatal. The largest single user of private prisons in the United States is actually DHS, which holds about 24,000 detained immigrants in for-profit facilities. A decision by DHS to phase out private prisons, coming on the heels of BOP’s decision, would be a heavy blow. But given DHS’s significant reliance on private prisons – more than 62% of all detained immigrants are in private facilities – any phase-out would likely be gradual.

State prison systems collectively account for the large majority of private prison use in the United States, and private prison companies will no doubt seek to replace lost federal business by increasing contracts with the states. They can also be expected to look overseas; private prisons already operate in the UK, Australia, New Zealand, and South Africa. In addition, these companies are diversifying their holdings into incarceration alternatives like community corrections, re-entry centers, and electronic monitoring.

All of these variables make any long-term predictions about the private prison industry difficult or impossible. On September 15, the state of Mississippi closed a private prison that had been described by a federal judge as “a picture of such horror as should be unrealized anywhere in the civilized world”. But a few days later, as hope faded that the U.S. Congress will pass major sentencing reform legislation this year, The GEO Group’s stock ticked upward.

About the author

David C. Fathi is Director of the American Civil Liberties Union National Prison Project, which brings challenges to conditions of confinement in prisons, jails, and other detention facilities, and works to end the policies that have given the United States the highest incarceration rate in the world. He worked as a staff lawyer at the Project for more than ten years before becoming director in 2010, and has special expertise in challenging “supermax” prisons, where prisoners are held for months or years at a time in conditions of near-total isolation. From 2012 to 2015 he represented the ACLU in negotiations leading to adoption of the United Nations Revised Standard Minimum Rules for the Treatment of Prisoners, known as the “Nelson Mandela Rules.”

From 2007 to 2010, Fathi was Director of the US Program at Human Rights Watch. He has lectured nationally and internationally on criminal justice issues. His op-eds have appeared in the Los Angeles Times, Chicago Tribune, Houston Chronicle, and other major media outlets. He serves on the Board of Penal Reform International, a UK-based NGO that works for criminal justice reform around the world. He is a graduate of the University of Washington and the Boalt Hall School of Law at the University of California, Berkeley.