U.S. Justice Department rescinds plan to phase out private prisons

U.S. Attorney General Jeff Sessions has rescinded an Obama-era memo that sought to phase out the federal government’s use of private prisons.

Sessions announced the move in a memo sent to the Federal Bureau of Prisons (BOP) on Thursday. “The memorandum changed long-standing policy and practice, and impaired the Bureau’s ability to meet the future needs of the federal correctional system,” he said.

Prison stocks jumped up in after-hour trade as news of the decision was made public. Shares of CoreCivic, Inc., which was previously known as the Corrections Corporations of America, jumped up nearly 4 percent.

The memo, which was issued by then-Deputy Attorney General Sally Yates in August 2016, directed the Federal Bureau of Prisons to reduce and ultimately end its use of privately-operated prisons. To achieve this, the bureau was directed to either allow contracts to expire or to substantially scale them down.

Last year’s announcement followed a critical report from the Justice Department’s Inspector General which found a higher rate of safety and security incidents at private prisons. It also found that some prisons were improperly housing new inmates in solitary confinement to deal with overcrowding.

As of December 2015, private prisons housed approximately 22,660 federal inmates at 14 facilities across the United States, or about 12 percent of the total inmate population of the Federal Bureau of Prisons.

The bureau began using private prisons in 1997 to help alleviate overcrowding and to respond to congressional mandates. The prisons – which were operating at 120 percent of its rated capacity as of December 2015 – are run by three private corporations, including CoreCivic.