DOJ Reverses Ban on Private Prisons, Stocks Spike

By Kenrya Rankin Feb 24, 2017

Back in August, then-Deputy General Sally Yates issued a memo that signaled the Department of Justice’s (DOJ) intent to phase out the use of privately operated federal prisons. She wrote at the time that, “They 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.”

Yesterday (February 23), Attorney General Jeff Sessions announced a new guidance memo that reverses Yates’ directive. MSNBC’s Ari Melber tweeted a copy of it:


Dated February 21, it reads:

I hereby rescind the memorandum dated August 18, 2016, sent to you by former Deputy Attorney General Sally Q. Yates, entitled “Reducing Our Use of Private Prisons.” In that memorandum, former DAG Yates directed “that, as each contract reaches the end of its term, the Bureau should ever decline to renew that contract or substantially reduce its scope in a manner consistent with law and the overall decline of the Bureau’s inmate population.” The memorandum changed long-standing policy and practice, and impaired the Bureau’s ability to meet the future needs of the federal correctional system. Therefore, I direct the Bureau to return to its previous approach.

“Handing control of prisons over to for-profit companies is a recipe for abuse and neglect,” David C. Fathi, director of the ACLU’s National Prison Project, said in a statement. “The memo from Attorney General Sessions ignores this fact. Additionally, this memo is a further sign that under President Trump and Attorney General Sessions, the United States may be headed for a new federal prison boom, fueled in part by criminal prosecutions of immigrants for entering the country.”

As VICE reports, Trump expressed support for private prisons while campaigning for the presidency, and a complaint was issued in December alleging that GEO Corrections Holding Inc. illegally donated more than $225,000 to a pro-Trump super PAC. GEO Corrections is a subsidiary of the GEO Group, which operates 64 state and federal detention centers.

Fortune reports that prison stocks surged immediately after Trump won the election in November, adding more than $1 billion in market value—so it’s not surprising that Session’s memo is already impacting the private prison industry. Stocks for two of the largest corrections companies in the nation—GEO and CoreCivic (formerly known as Corrections Corporation of America)—have spiked over the last 24 hours.


This policy reversal will not impact detained immigrants, as Yates’ original memo did not pertain to privately run immigration detention centers—they fall under the purview of the Department of Homeland Security, not the DOJ’s Bureau of Prisons.