Biden to Order Justice Department to End Private Prison Use

(Bloomberg) --

The U.S. Justice Department will be required to end its use of privately run prisons under an executive order signed Tuesday by President Joe Biden.

Biden instructed the attorney general not to renew contracts with private prison operators, according to a White House statement.

“This is the first step to stop corporations from profiting off incarceration that is less humane and less safe,” Biden said in remarks at the White House Tuesday.

The move may hurt the country’s two largest operators of private prisons, GEO Group Inc. and CoreCivic Inc., which saw their share prices gain significantly after former President Donald Trump was elected in 2016. Trump ended an Obama-era prohibition on the Justice Department’s use of private prisons.

Both companies’ shares fell on the news Tuesday. GEO Group erased a gain to close down 7.8%. CoreCivic fell 5.9%.

Contracts with government agencies accounted for about 56% of GEO Group’s 2019 consolidated revenue. Payments by federal correctional and detention authorities made up 51% of CoreCivic’s 2019 revenue, according to company filings.

“Today’s executive order is a solution in search of a problem,” GEO Group spokesman Pablo Paez said in a statement. “Limiting the federal government’s options to deal with potential overcrowding challenges in the future could result in worsening and unsafe conditions for the men and women in federal custody.”

CoreCivic said in a statement that the move wasn’t surprising, since the federal prison population had been declining for several years. The company provides flexibility as prison populations rise and fall, and its goals are aligned with the administration’s, said Steve Owen, CoreCivic vice president, communications.

“Every day, CoreCivic helps nearly 1,500 inmates learn the life and vocational skills they need to find and keep employment once released,” Owen said. “In 2014, we made commitments to strengthen reentry programming unprecedented for the public or private sector.”

State Business

GEO and CoreCivic have sought to diversify from federal contracts by signing deals with states to build and operate prisons.

The executive order on prisons applies to Justice Department contracts with privately operated criminal detention facilities. There are 12 such facilities in the U.S., housing 14,095 federal prisoners, which are run by closely held Management and Training Corp. in addition to Geo Group and Core Civic, according to the Federal Bureau of Prisons.

MTC said in a statement that it “applauds the new administration’s focus on criminal-justice reform,” but that phasing out private prisons won’t help. “Blaming high incarceration rates on contractors is irresponsible because contractors have no say as to what laws are enacted and who is ultimately incarcerated. MTC has effectively prioritized programs which prepare offenders for re-entry and reduce the re-offending rate.”

At the end of 2019, there were about 116,000 prisoners held in privately operated facilities, which represented roughly 7% of all state prisoners and 16% of all federal prisoners, according to the Bureau of Justice Statistics.

The order doesn’t apply to U.S. Immigration and Customs Enforcement detention centers, which contract with private prison operators as well, or private prison contracts with agencies other than the Justice Department, Domestic Policy Council Director Susan Rice said in a Tuesday White House press briefing.

In its statement, GEO said it has “almost exclusively housed non-citizen criminal aliens convicted of federal crimes, thus allowing government-run facilities to care for U.S. citizens without significant overcrowding challenges.”

The American Civil Liberties Union called Biden’s order an “important first step.”

“Today’s executive order validates something we’ve been saying for years: No one should profit from the human misery that is caused by mass incarceration,” David Fathi, director of the ACLU’s National Prison Project, said in a statement.

©2021 Bloomberg L.P.