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What You Need to Know About the Private Prison Phase-Out

With the feds cutting back, the companies are down but not out.

The Justice Department announced plans Thursday to phase out the use of privately-run federal prisons. The announcement, first reported by the Washington Post, came as a memo written by Deputy Attorney General Sally Yates.

Here is what you need to know to understand the news:

How many people will this affect?

The new policy affects a relatively small portion of the federal prison population, roughly 22,000 of 193,000 prisoners. These inmates are housed at 13 privately-run federal “contract” prisons, which primarily house “criminal aliens,” or noncitizens convicted of crimes, many of whom may be deported at the end of their sentences. They’re in California, New Mexico, Texas, Oklahoma, Georgia, Mississippi and North Carolina. The Bureau of Prisons, by contrast, runs more than 100 prisons.

According to the memo, as each of these contracts comes up for renewal over the next five years, the bureau will “either decline to renew that contract or substantially reduce its scope.”

The policy shift has no bearing on the private operation of immigrant detention facilities. As of December, 62 percent of the 34,000 beds for people detained by Immigration and Customs Enforcement are in privately-run facilities. They are under the authority of the Department of Homeland Security, not the Department of Justice. The vast majority of privately-run prisons in the U.S. are at the state level, and will be unaffected by the DOJ announcement. As of 2014 they housed 91,244 state prisoners, or 6.8 percent of the total state prison population, according to the Bureau of Justice Statistics.

What brought this on?

Last week, the federal Inspector General released a report concluding that federal prisons run by private companies are substantially less safe and secure than ones run by the Bureau of Prisons, and feature higher rates of violence and contraband. The report, which followed years of pressure by advocacy groups, highlighted a series of riots at these facilities in recent years, often sparked by substandard food and medical care and generally poor conditions.

Carl Takei of the American Civil Liberties Union (who wrote about the report for The Marshall Project) says that while he and other researchers have come to similar conclusions when it comes to federal facilities, at the state level, public prisons are not necessarily better than private facilities, since many state prisons are badly overcrowded. “You often get the same result, whether from the profit motive or just overall budgetary pressures,” Takei said.

Where will these inmates go?

Part of what made the new scrutiny possible was an overall decline in the federal prison population, which dropped from 220,000 prisoners in 2013, according to the memo, to 195,000 today. This means the federal Bureau of Prisons can begin shifting prisoners from private prisons to those run by the bureau itself.

What will these companies do in response?

The 13 federal private prisons under threat are run by three companies, Corrections Corporation of America (CCA), The GEO Group, and Management & Training Corporation. The first two, which are publicly traded, saw their stocks drop in price roughly 40 percent in the hours after the Washington Post first reported the news.

In recent years, following the overall decline of the prison population, these companies have shifted towards greater involvement with immigration detention — including the incarceration of women and children caught crossing the border — as well as reentry and rehabilitation services, including halfway houses. Last month, CCA announced a new contract with California to run a 120-bed “residential reentry facility” in San Diego, Calif. "We see the re-entry space as attractive because states are placing an increased emphasis on reducing recidivism back into prisons and utilizing re-entry services more commonly," analyst Tobey Sommer of SunTrust Robinson Humphrey told The Tennessean last year. The DOJ memo notes that it has no bearing on halfway houses run by these companies for men and women leaving federal prisons.

Will the new policy survive with a new president next year?

The Department of Justice could shift course on private prisons under a new administration next year. Donald Trump has said, “I do think we can do a lot of privatizations and private prisons. It seems to work a lot better.” Hillary Clinton’s relationship to the industry is more complex. Last October, facing pressure from primary opponent Bernie Sanders — who has proposed a total ban on private prisons — Clinton announced she would no longer accept donations from the industry. In April, she declared, “We should end private prisons and private detention centers.” Her political ties to the industry remain, however. Thurgood Marshall Jr., son of the civil rights crusader and Supreme Court justice, was President Bill Clinton’s cabinet secretary until 2001. In 2002, he joined the board of the Corrections Corporation of America, where he remains.