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Bailing Out Private Prisons

DaaaihLoong writes:
September 10, 2001 [Volume 12, Issue 16]

Bailing Out Private Jails

By Judith Greene

The private-prison industry is in trouble. For close to a
decade, its business boomed and its stock prices soared
because state legislators across the country thought they
could look both tough on crime and fiscally conservative if
they contracted with private companies to handle the growing
multitudes being sent to prison under the new, more severe
sentencing laws. But then reality set in: accumulating press
reports about gross deficiencies and abuses at private
prisons; lawsuits; million-dollar fines. By last year, not a
single state was soliciting new private-prison contracts.
Many existing contracts were rolled back or even rescinded.
The companies' stock prices went through the floor.

Here was one experiment in the privatization of public
services that might have limped to a well-deserved close.
But instead, the federal government seems to be rushing to
the industry's rescue.

Consider just the last 12 months, and just the Corrections
Corporation of America (CCA), the country's largest
private-prison company:

* Last August two prisoners escaped from a CCA
prison in Bartlett, Texas. State investigators found that
doors had been left unlocked at the facility. No one was
watching the closed-circuit-TV surveillance monitors. When
the prisoners cut their way through the prison's perimeter
fence, a security alarm sounded, but staff in the prison's
control center turned it off and did nothing.

* In October two guards at a CCA prison in
Walsenburg, Colorado, who had repeatedly beat a prisoner
while he was handcuffed, shackled, and unable to resist
pleaded guilty in federal court.

* In November the Bartlett facility erupted in a
disturbance that left five prisoners injured. Two days
later, five guards were stabbed and three others were
injured when prisoners at a CCA prison in Estancia, New
Mexico, took them hostage.

* In December jurors in Columbia, South Carolina,
found that guards at a CCA juvenile prison had abused a
youth confined there and that their use of force was so
malicious it was "repugnant to the conscience of mankind."
The jury awarded $3 million in punitive damages.

* In April prison guards at CCA's Cibola County
Correctional Center in New Mexico teargassed nearly 700
prisoners who had staged a daylong nonviolent protest of
conditions at the facility. The same day, in Oklahoma, the
addiction-treatment manager at CCA's Tulsa Jail resigned.
The warden, she said, had directed her to make a "sales
pitch" to local judges, urging them to sentence offenders to
a treatment program in the jail even though the program had
been eviscerated in order to cut operating expenses.

* In May three prisoners were mistakenly released
from the same Oklahoma jail, and nine guards at CCA's
District of Columbia Correctional Treatment Facility were
indicted. Federal prosecutors alleged that they had accepted
money from an undercover FBI agent in exchange for smuggling
two-way pagers and cash into the prison.

* In June, back at the Tulsa Jail, a CCA guard
resigned his post after 10 Valium tablets were reportedly
found hidden in his sock during an employee shakedown.

* In July, 400 prisoners exported from Indiana to a
CCA prison in Wheelwright, Kentucky, started a riot in the
prison recreation area that spread to four housing units
before it was over, with inmates setting mattresses on fire
and tossing TVs and toilets through the windows. Two weeks
later, CCA fired the warden and his top assistant, citing
"policy violations."

CCA is not the only private-prison company with a record of
continuing abuses. Prisons run by the Wackenhut Corporation
in New Mexico have repeatedly erupted in violence and
disturbances. (Together, CCA and Wackenhut control 75
percent of the U.S. private-prison market.) Between December
1998 and August 1999, four inmate-on-inmate homicides were
committed in Wackenhut's New Mexico facilities; and then, in
August, a guard was murdered as well. Most people think that
kind of violence is the norm in America's prisons. But the
best available data on prison homicides -- compiled by the
Criminal Justice Institute, publishers of The Corrections
Yearbook -- show otherwise: In 1998, when American prisons
held 1.3 million prisoners, there were only 59
inmate-on-inmate homicides. That's a rate of one murder for
every 22,000 prisoners. The homicide rate in Wackenhut's New
Mexico facilities in those nine months was about one for
every 400 prisoners -- and that's not counting the death of
Ralph Garcia, Wackenhut's guard.

But if the company changed its ways after that explosion of
violence, it's hard to tell. Just last year, its Jena
Juvenile Justice Facility in Jena, Louisiana, was shut down.
A juvenile-court judge in New Orleans found that the
youngsters held there had been treated no better than

The Great Escape

Industry executives will tell you that these
prison-management disasters were isolated events, confined
to a handful of "underperforming" facilities. But the
available evidence suggests that the problems are structural
and widespread.

A research project I directed in 1999 compared the quality
of correctional services in a medium-security private prison
run by CCA in Minnesota with the three medium-security
prisons run by the state. We found many more operational
problems in the CCA prison -- from program deficiencies and
unreliable methods of classifying prisoners for security
purposes to high rates of staff turnover that resulted in
inadequate numbers of experienced, well-trained personnel.
And this was in a private prison that was not notoriously
troubled -- a facility that the company, in fact, considered
to be exemplary.

There have been few other studies of the quality (as opposed
to the cost) of private-prison services; but evidence is
mounting that serious operational problems are not confined
to just a few institutions:

* An industry-wide survey conducted in 1997 by James
Austin, a professor at George Washington University, found
49 percent more inmate-on-staff assaults and 65 percent more
inmate-on-inmate assaults in medium- and minimum-security
private facilities than in medium- and minimum-security
prisons run by government.

* National data reported in The Corrections Yearbook
indicate that correctional-officer turnover was 41 percent
for the private-prison industry in 1998, compared with 15
percent in publicly run prisons.

* A tally of news reports in 1999 showed at least 37
escapes of adult prisoners from secure private prisons that
year. (This did not count escapes from juvenile facilities,
from transportation vans, or during escorted hospital
visits.) For comparison, one can look at New York's state
prisons, which hold roughly the same number of inmates as
the entire system of private prisons in the United States.
Between 1995 and 1999, there were only eight escapes from
secure institutions in New York -- a rate of less than two
per year.

The problems seem to be endemic to the enterprise -- a
result, in great part, of the private companies' mission to
hold down costs. Most important, wages and benefits
substantially lower than those in government-run prisons
have resulted in significantly higher employee turnover,
with dramatic ill effects. But other kinds of corner cutting
have also taken a toll. Spending on inmate health care and
on staff training also tends to be inadequate at the private
prisons -- another reason why the industry has fallen behind
the public-prison system both in maintaining prisoners'
basic human right to a safe and humane environment and in
protecting the safety of the prison staff and the public.

Yet for all that, it's unlikely that the states will save
much, if any, money by contracting with the private
companies. Private-prison cost cutting primarily serves to
boost company profits. As early as 1996, a report of the
U.S. General Accounting Office thoroughly reviewed a series
of academic and state studies and concluded that there was
no clear evidence about cost savings. The most optimistic
academic advocate of privatizing prisons, Charles Thomas,
had claimed that savings of 10 percent to 20 percent could
be expected. But then it came to light that he'd been paid
$3 million in consulting fees by private-prison
corporations. He was penalized by the Florida Ethics
Commission, which enforces the state's conflict-of-interest
laws, and had to shut down his research institute at the
University of Florida.

Moreover, the financial advantage that may have been most
attractive to state legislators -- the private companies'
ability to construct prisons unhindered by public debt
limits or by the need to get voter approval for bonds -- has
turned out to be the industry's downfall. From 1991 to 1998,
according to Charles Thomas's data (unfortunately, the only
data available), the growth in private adult-prison beds
averaged 36 percent per year. But with the states pulling
back from the trouble-plagued facilities and Wall Street
reacting even more strongly to the deaths and scandals, the
companies have found themselves overleveraged and
undercapitalized -- CCA, in particular. It built new prisons
"on spec," assuming that contracts to fill them would
follow, and by my estimate the company now has more than
8,500 prison beds standing empty. The firm last year came
close to a financial meltdown: Its stock lost 93 percent of
its value in 2000, and its accountants reported a
fourth-quarter loss of more than a third of a billion

Human rights advocates, public employee unions, prisoners'
rights activists, and student groups have not let any of
this pass unnoticed. Thus, it should be no surprise that so
many states are now backing away from for-profit companies.

But while most state correctional managers are taking a hard
look at the private-prison industry, the federal government
has stepped up to fill the breach. Says Steven Logan, the
ceo of Cornell Corrections: "On the federal side, there's an
unprecedented [new market] -- to the tune of approximately
20,000 beds that are expected to be set out for people to
bid on over the next 24 months." If Logan is right, the feds
are poised to take up a lot of the slack -- and, in fact, to
spur new construction -- by showering the industry with
contracts that will be worth $4.6 billion over the next 10

Until recently, the Federal Bureau of Prisons (FBOP) had
moved relatively slowly down the road to privatization. It
awarded its first private-prison contract only in 1997 -- to
Wackenhut, to operate a 2,048-bed prison complex for low-
and minimum-security federal prisoners at Taft, California.
A second contract was awarded to CCA in 1998 for a 1,500-bed
facility at Eloy, Arizona. But as the industry's troubles
escalated, Congress required the FBOP to contract for more
private beds, insisting on private prisons for at least half
the prisoners at the District of Columbia's prison complex
at Lorton, Virginia, which was scheduled to shut down. And
then the FBOP launched a massive privatization initiative of
its own throughout the country.

In part this was a response to the rapid growth of the
federal inmate population. Between 1995 and 1999, while the
incarceration rate nationwide grew by 16 percent, in the
federal prison system it rose by 31 percent. By June of this
year, the FBOP was responsible for some 127,000 sentenced
criminals and perhaps 25,000 other detainees; its prisons
were operating at 33 percent over their capacity. And like
the state legislators before them, members of Congress were
madly building new prisons (26 are currently under
construction or in the development pipeline), searching for
cheap new private-prison beds, and refusing to consider
changes in the draconian sentencing laws that were causing
most of the increase in prisoners.

In fact, the new laws have conveniently created a special
population of prisoners -- immigrant prisoners -- whom the
feds seem comfortable segregating from the rest of the
prison population and turning over to the private companies.

Find and Deport

It's common knowledge that the harsh drug-sentencing laws
that Congress enacted in 1986 have greatly increased the
federal prison population. (In 1984 just 30 percent of
federal inmates were drug offenders; today 57 percent are.)
Less known is the impact of federal immigration policies.
Since at least 1994, Congress has put enormous pressure on
federal officials to find and deport troublesome immigrants
(both legal residents and undocumented immigrants). In the
1996 Immigration Reform Act, Congress widely expanded the
list of crimes for which a noncitizen must be deported after
serving his or her sentence. These crimes, called
"aggravated felonies," are now defined to include many
offenses that are neither aggravated nor even, in many other
jurisdictions, felonies. But together, the statute and the
political pressure have fueled an all-out law-enforcement
campaign to find crime-committing immigrants -- even
relatively small-time offenders and those whose only "crime"
is attempting to re-enter the country -- and with that has
come an explosion in the number of non-U.S. citizens in
federal prison, the so-called "criminal alien" population.

There were 35,629 noncitizens serving criminal sentences in
federal prisons on June 7 of this year, up from 18,929 only
seven years ago. About half of them were Mexican citizens,
10 percent Colombians, 7 percent Cubans, and the rest an
assortment of other nationalities. In addition, several
thousand other noncitizens are being held in federal
prisons, not as convicts serving criminal sentences but as
pretrial or predeportation detainees. These include many
"lifers" -- people who have completed their criminal
sentences in state or federal prison and are now supposed to
be deported but who remain incarcerated because no country
will take them. A U.S. Supreme Court ruling in June
prohibited the indefinite detention of certain lifers, but
according to Judy Rabinovitz, senior staff counsel at the
American Civil Liberties Union's Immigrants' Rights Project,
the decision is unlikely to affect most of those in FBOP

Information about the immigrant population in federal prison
is difficult to come by, but telling evidence of the
federal-law-enforcement campaign that is targeting
immigrants comes from Peter H. Schuck, a professor at Yale
Law School. In 1998 Schuck found that while immigrants
(legal as well as undocumented) made up 9.3 percent of the
American population and a roughly comparable 7.6 percent of
the prison population of the states, they made up a vastly
disproportionate 29 percent of those in federal prisons.

The "criminal aliens" in federal prison are apparently a
relatively unthreatening group of prisoners. According to
the federal Bureau of Justice Statistics (BJS), about a
third of them were sentenced for immigration violations, and
just 1.5 percent of them were sentenced for violent offenses
(compared with 15 percent of the U.S. citizens in federal
prison). A BJS research project found that even those
convicted of drug sales are likely to have played a lesser
role in the transaction than did U.S. citizens convicted on
drug-sale charges.

This may also help to explain why these prisoners have been
singled out for incarceration in privately run prisons.
Criminal aliens typically require only low-security prisons,
federal officials say. And as Mike Janus, privatization
administrator at the FBOP, points out, they face deportation
at the end of their sentences and therefore do not require
the kinds of education and counseling programs available in
regular federal prisons. Moreover, they have little if any
political clout.

Off the record, the FBOP officials say that they're
confident they can oversee the private companies better than
the states have. On the record, they say they are simply
seeking "management flexibility" to deal with this
burgeoning segment of the prison population in a less
program-rich environment than their other prisoners require.
But that's not far from acknowledging that they think they
can get away with providing second-class prisons for these
second-class prisoners.

The FBOP's first request for proposals to provide up to
7,500 low-security beds for this population was issued in
September 1999. As phase one of the plan for private
contractors to meet the prison system's "criminal alien
requirements," it was called CAR-I for short. The beds were
to serve California, Arizona, New Mexico, Texas, and

A CAR-I proposal by Cornell Corrections to house almost
2,000 prisoners at a facility near Santa Fe that the company
hoped to lease from the state of New Mexico was eliminated
from the competition as a result of vigorous opposition from
a local coalition of immigrant-rights advocates, civil
rights and church leaders, and prison reformers. But in June
of last year, two other CAR-I contracts were signed with CCA
-- one for 2,304 beds at the company's long-empty "spec"
prison at California City, California, and the other for
1,012 beds at its Cibola facility in Milan, New Mexico.
(This is the facility where, some months later, guards
teargassed hundreds of prisoners who were protesting
conditions.) These contracts are for an initial three-year
term, followed by seven one-year renewal options. They will
be worth about $760 million over 10 years.

For CCA, which carried more than $1 billion in outstanding
indebtedness last year and was in violation of its credit
agreements, the two contracts are providing a virtual
bailout. The company's many creditors were willing to extend
it waivers last year. But without the federal contracts,
John D. Ferguson, the company's new CEO, frankly admits, CCA
would likely have been forced into bankruptcy.

A second request for proposals -- CAR-II -- was issued last
year for up to 1,500 beds to be located in the Alabama,
Florida, Mississippi, and Georgia region. Five private
companies and one Mississippi county proposed 14 possible
CAR-II sites. The field has now been narrowed to three, and
draft environmental-impact statements have been issued for
public comment. The winners of this sweepstakes will be
announced in October, but CCA appears to have the inside
track: It has proposed a "spec" prison already built by the
company in McRae, Georgia -- while Cornell Corrections has
two sites in the running that would require new prison
construction from the ground up.

A CAR-III solicitation was also issued late last year -- for
three 1,500-bed facilities in California and Arizona. By the
January 2001 deadline, six companies, one town, and a
sheriff's department had submitted 20 prospective sites.
Less than a week later, the FBOP filed public notice that it
anticipates a CAR-IV as well, for the Delaware, Kentucky,
Ohio, Virginia, and West Virginia region.

This momentum is unlikely to let up any time soon. The
private-prison industry has excellent connections with the
federal government. Michael J. Quinlan, the chief operating
officer of CCA, served as the FBOP director under the first
President George Bush. Norman Carlson, a director of the
FBOP under President Ronald Reagan, sits on Wackenhut's
board of directors. Meanwhile, generous campaign
contributions and the best lobbyists that money can buy have
spread the influence of private-prison companies beyond the
personal networks of their executives and board members to
the halls of Congress. There are grass-roots pressures, as
well, coming from desperate pockets of rural America where
prisons are seen as a source of new jobs. And there is every
reason to expect that the current administration will go
along. With 42 private prisons located within its borders,
President Bush's home state of Texas is the world capital of
the private-prison industry.

To be sure, political opposition is swelling. The
private-prison industry's record of human rights violations,
violence, and inmate escapes has fueled an unusual alliance
between prison-reform advocates and correctional officers
(union members in government-run institutions), who are now
standing together with student groups and community
organizations to fight any further expansion of prisons for
profit. In most states, where prison-population growth is
finally slowing or halting, the coalition appears to have
turned the tide.

The same groups are now supporting the Public Safety Act,
introduced in Congress this year by Democratic Senator
Russell Feingold of Wisconsin, Democratic Congressman Ted
Strickland of Ohio, Republican Congressman John E. Sweeney
of New York, and 56 other House sponsors. This measure would
bar the FBOP from contracting with private prisons and would
deny federal funding for prisons to states that contract
with private facilities. But prison privatization is
unlikely to be halted in the federal system until the growth
of the federal prison population is curtailed. And that
means that the effort to reform federal sentencing and
immigration laws must continue.

It's a good cause. The anti-immigrant laws adopted by
Congress in 1996, especially as they interact with federal
drug laws, create particularly unfair punishments for
noncitizens, most of whom are subject to harsh and rigid
sentences for drug offenses, with no consideration of
mitigating circumstances or the offender's actual role in
the crime. And then they are further punished with
deportation. The federal plan to create and expand a huge
second tier of segregated immigrant prisons -- whether
public or private -- is an irrational and expensive way to
avoid coming to terms with those fundamental injustices."

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