US Justice’s Decision Cuts the Legs Out from Prison REITs. Or Does It?

Department of Justice. Photo by Wikipedia.

WASHINGTON, DC—Last week, the US Justice Department delivered what undoubtedly was a blow to the three private-sector companies that operate prisons — two of which are REITs — when it announced that it would phase out or significantly limit its use of  these correctional facilities. Specifically, Deputy Attorney General Sally Q. Yates announced that she:

sent a memo to the Acting Director of the Bureau of Prisons directing that, as each private prison contract reaches the end of its term, the bureau should either 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.  This is the first step in the process of reducing—and ultimately ending—our use of privately operated prisons.

Officials made the decision, following an inspector general report that concluded these facilities had more safety and security incidents than the prisons operated by the federal Bureau of Prisons.

The report also found that in two of the three facilities the inspectors visited, new inmates were being housed in segregation or other cells normally used for disciplinary measures even though the inmates hadn’t violated any rules.  The prisons have corrected this later issue, according to the report.