Why the federal government’s use of private prisons is far from over

This morning the Department of Justice made a huge announcement that it will begin the process of phasing out the use of private prisons in the Bureau of Prisons, which it manages.

It’s a very big deal. A total of 13 BOP facilities will stand to be impacted. Yet the announcement leaves a major stone unturned: the Department of Homeland Security’s massive private prison system, which is used to house immigrants.

The nation’s immigration detention centers, which are run by the Immigration and Customs Enforcement agency under the DHS, detain nearly 400,000 immigrants a year, compared to the roughly 200,000 that are held at any given time by the BOP. About 18% of the beds that are used in immigration enforcement are owned by for-profit companies, according to a 2015 study from the Center for American Progress, a progressive advocacy group. Another 24% are located in facilities owned by state and local governments that exclusively house immigrants for ICE.

Like their counterparts in the Justice Department, the ICE prisons have become notorious. ICE has been accused of failing to investigate allegations of abuse at these for-profit immigration facilities. Special centers that were supposed to specifically cater to holding immigrant families have been accused of holding children in prison-like conditions. Women have filed complaints about alleged sexual abuse by private prison guards. A report issued last year by the National Immigrant Justice Center and the Detention Watch Network complained of inadequate medical care and elevated levels of violence that often lead to suicides.

While the announcement leaves this massive private immigration system untouched, advocates hope that the DOJ’s decision will shake things up at the federal level.

“If I was sitting in the DHS or at a state or municipality, I would be looking at what the DOJ is doing and think: ‘I should take heed of this,'” Lisa Graybill, the legal director of the Southern Poverty Law Center, told Fusion in a phone call. “What the DOJ does doesn’t directly affect what the DHS is doing, but [the DHS] is a sister agency and they should be able to read the writing on the wall.”

The shift in policy, first reported by the Washington Post, came on the heels of an Inspector General’s report issued last week, which was cited as a major factor. “[Private prisons] simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department’s Office of Inspector General, they do not maintain the same level of safety and security,” Deputy Attorney General Sally Yates wrote in a memo quoted by the paper.

Inspector General reports are taken seriously by federal departments because they are independent and non-partisan, said Graybill. The implication is that similar findings would be reached if a report was made in the DHS or at the state level.

“This puts the DHS in a very strange position if it’s going to insist on keeping the services of these companies, because the memo was put out by [Yates], a very high ranking official in the DOJ,” Carl Takei, a staff attorney at the National Prison Project of the American Civil Liberties Union, told Fusion.

“It makes continued reliance on those companies by ICE very difficult to justify,” he added.

Immediately after the announcement, stock prices of the Corrections Corporation of America and the GEO Group, the two largest private prison contractors in the nation, tumbled. Both companies rely on BOP contracts for large parts of their revenue. CCA pulls in 9% of its budget from the BOP, according to its 2016 first quarter investors presentation. GEO pulled in 15% of its revenue from the BOP in 2015, according to the company’s annual report.

The business models would be even more at risk if the DHS were to follow suit; the CCA gets 28% of its revenue from ICE, while GEO pulls in 18% from the agency.

States make up large percentages of the rest of the revenue. Here’s a pie chart of the CCA’s revenue.

The CCA's list of customersCorrections Corporation of America

The CCA's list of customers

And here’s the GEO Group’s pie chart:

The GEO Group's "customer" pie chartGEO Group

The GEO Group's "customer" pie chart


But changes to the privately-operated ICE facilities are still prospective, if not somewhat anticipated in the foreseeable future. In the shorter term, the DOJ’s announcement will first impact the thirteen BOP prisons that hold about 20,000 immigrants per day in the for-profit Criminal Alien Requirement (CAR) prisons. While this might be related to the ICE detention programs, it is separate; a Fusion investigation last year outlined how federal officials across three administrations created a new class of classification of federal prisons only for immigrants, while still operating under the BOP.

“All of the contracts for the CAR prisons are up for new bids this next year, and from what we read today it doesn’t look like they will be renewed,” said Takei of the ACLU.

“What this stands to do is immediately start the process of ending the segregation of populations because of immigration status in the BOP,” said Graybill. “It’s a step in the right direction. But it’s not a small step, let’s be clear: it’s a huge step.”