CREW analysis: Will closing private federal prisons mean more money in state politics?

On August 18, the Justice Department (DOJ) announced it would end its use of private prisons. Eleven days later, Secretary of Homeland Security (DHS) Jeh Johnson announced a review to determine whether his agency should do the same for privately-owned immigration detention centers. The moves arrived on the heels of a report from the DOJ’s Office of the Inspector General, which concluded that privately owned facilities are less safe and less effective than their government-run counterparts. The DOJ’s newly announced policy aims to eventually end contracts held by the Bureau of Prisons (BOP) that currently account for the incarceration of 12 percent of federal inmates.

This decision is a surprising one, considering that private prison companies such as Corrections Corporation of America (CCA) and GEO Group Inc. (GEO) – which together control 75 percent of the for-profit prison market and take in a combined $3.2 billion of annual revenue – have poured an enormous amount of time and money into influencing the political system. The industry has been heralded as “the biggest lobby no one is talking about,” and the two companies have spent $14.6 million on federal lobbying efforts from 2010 to 2015.

The DOJ’s decision, however, will not end the role of private prisons in the criminal justice system. Far from it: while the announcement is undoubtedly a hit for private prisons, with CCA and GEO stock seeing their biggest drops since becoming publicly traded companies, the DOJ contracts are just the tip of the iceberg for so-called “corrections solutions” businesses. Ending private companies’ contracts with the BOP will not even end private prison contracts at the federal level: private prison companies also work with the DHS’s Immigration and Customs Enforcement (ICE) and the U.S. Marshals Service. As a result, only seven percent of CCA’s revenue and 16 percent of GEO’s will be affected by the decision, though this could change if the DHS review of privately-run immigration detention centers reaches a similar conclusion to its DOJ counterpart.

Over the years, CCA and GEO have concentrated much of their federal influence efforts on their ICE detention center contracts. Out of the ten lobbying firms CCA has employed from 2010 to 2016, including CCA’s in-house lobbyists, seven have either lobbied the DHS directly or lobbied on topics involving ICE and detention centers; since 2014, all of the lobbying firms employed by CCA, including CCA’s in-house lobbyists, listed ICE or detention centers as issues they lobbied on. GEO is even more focused. Out of 58 quarterly lobbying reports filed by firms hired by GEO from 2010 through the first quarter of 2016, only eight do not mention ICE or detention centers.

The lobbying was not for nothing. Though private prisons house about 12 percent of federal inmates, 62 percent of the country’s immigrant detainees are in privately-owned detention centers; GEO and CCA run nine of the ten largest detention centers in the United States. If the DHS decides to end its contracts with privately-run immigration detention centers, this overwhelming reliance on GEO and CCA raises some serious questions about the DHS’ ability to transition in any timely manner.

Even the DOJ, which has a substantially smaller percentage of privately-owned contracts than the DHS, will not end its relationships with private prisons overnight. The DOJ’s announcement does not come with a definite timeline: as Deputy Attorney General Sally Yates explained, none of the contracts will be ended prematurely, and a portion will be renewed with a reduction of the contract’s scope. Since some private prison contracts will not be up for renewal for five years, phasing out private prisons completely could very well take the better part of a decade.

The DOJ’s announcement does not even mean the DOJ will necessarily stop doing business with CCA and GEO, as both companies offer numerous services outside their brick-and-mortar institutions. As the announcement of the policy change specifically noted, it will likely not impact BOP’s existing contracts with private companies for “hundreds of community-based Residential Reentry Centers, or ‘halfway houses,’ across the country.” CCA and GEO have also vertically integrated their services to include prison transport, youth treatment facilities, electronic monitoring services, day reporting centers, and more. Every step of the imprisonment process, from transit to incarceration to parole, can be done using CCA and GEO services and products. This is to say nothing of companies like GEO Care, GEO’s in-house health care facility, which was divested from GEO Group proper in 2012 when GEO became a Real Estate Investment Trust (REIT) for tax-related purposes.

The federal government is not even the largest client of private prisons – that particular honor lies with the states. According to CCA’s 2014 annual report, state contracts constituted 48 percent of CCA’s revenue where federal contracts were 44 percent of CCA’s revenue; according to GEO’s 2015 annual report, 45 percent of its contracts were federal.

While individual stories about CCA and GEO’s state presence abound, little research has been done on their nationwide efforts to influence politics and policy. A CREW investigation into the two companies’ state-level lobbying and political contributions finds that CCA and GEO have invested in 39 states across the country, donating millions of dollars to political campaigns and hiring dozens of lobbyists.

State Lobbying

Between 2011 and 2015, CCA employed an average of 96 lobbyists each year who were active in 32 states during that period. GEO employed an average of 62 lobbyists each year who were active in 18 states during that period.

As the maps below show, CCA lobbies in a large number of states while GEO focuses the majority of its resources on a handful of states. In 2015, GEO had fourteen lobbyists in Florida, thirteen in Pennsylvania, and Texas trailing at five. Together, these three states accounted for sixty percent of GEO’s state lobbyists that year. Conversely, CCA’s top states were Vermont with ten lobbyists and Hawaii and Colorado tied at nine. These three states together represented less than a third of CCA’s lobbyists in 2015.

In states with a concentration of lobbyists, the two companies have seen favorable outcomes. Out of seven private prisons in Florida, five are owned by GEO; these facilities have the capacity to house seven percent of Florida’s 100,873 inmates. GEO has a long history with key Florida policymakers. In 2008, a Florida state representative returned from a trip to Boca Raton, the location of GEO’s global headquarters, and inserted language into the legislative budget for a $110 million prison project that eventually went to GEO. The dealings that led to the prison project were investigated by a federal grand jury, but no charges have been brought. The representative who inserted the language, Ray Sansom (R), denied meeting with the company before inserting the language. He later resigned in 2010 in the face of separate ethics allegations.

Similarly, it’s not surprising that CCA has focused lobbying resources in Hawaii. CCA won a $30-million-a-year contract with Hawaii in 2011, sending the state’s overflow prisoners to a prison in Arizona built specifically for Hawaiian inmates; Arizona is another lobbying target for CCA, averaging six lobbyists a year from 2011-2015. In fiscal year 2016, CCA housed a daily average of 1,388 Hawaiian prisoners in an Arizonan facility, or about a quarter of the state’s inmate population. The contract was renewed for another three years at $45 million annually in August 2016.

Campaign spending

CCA and GEO’s political action committees (PACs) collectively donated over $2.3 million from the start of the 2012 cycle through July 2016 to non-federal campaigns in 21 states, Puerto Rico, and DC as well as federal campaigns in 39 states. Overall, GEO nearly doubled CCA’s contributions, spending $1.5 million to CCA’s $806,576. GEO is much more heavily involved at the state level: $893,347 (59 percent) of its contributions were at the state level, compared to $46,830 (six percent) of CCA’s.

As the maps of the two companies’ PAC contributions show, CCA and GEO’s spending strategies mirror their state lobbying patterns in terms of geography. CCA has donated to races in a majority of states at relatively equivalent amounts. Over half of GEO’s spending is in its top three states: Texas ($340,100), Florida ($339,437) and Oklahoma ($174,100).

In Oklahoma, for example, GEO’s PAC donated to the campaigns of 38 state legislators from the start of the 2012 cycle to July 2016. This included 22 representatives and 16 senators, including current Speaker of the House Jeff Hickman (R) and Senate President Pro Tempore Brian Bingman (R). GEO also gave a direct corporate contribution of $25,000 to Gov. Mary Fallin’s (R) 2015 inauguration. In the past decade, private prison contracts in Oklahoma increased nearly 30 percent, from $71 million in 2005 to $92.2 million in 2014. In 2015, Oklahoma State Rep. Jon Echols (R), who received $7,500 from GEO’s PAC, championed legislation that reopened GEO’s Hinton prison, allowing the company to house federal prisoners.

While the vast majority of CCA’s campaign contributions go to federal legislators, $14,250 out of CCA’s $83,250 Texan donations went to seven state legislators, a sheriff, the lieutenant governor, and the governor. A recent examination of one of CCA’s biggest coups suggests why CCA decided to donate down ballot. A week before the DOJ’s announcement, a Washington Post exposé detailed the unusual circumstances surrounding ICE’s 2014 award of a four-year, $1 billion contract to build a detention center in Dilley, Texas. As the Post observed, ICE’s contract with CCA was particularly notable for two reasons. First, ICE agreed to pay CCA regardless of how many people were detained at the facility. Second, in order to allow ICE to award the contract without going through a bidding process, CCA convinced an Arizona town that held a prior CCA contract to amend that contract’s terms to include the Texas center, over a thousand miles away.

There is another important feature of this type of arrangement, not discussed in depth in the Post article. While the contract was with the federal government, the county where the center will be located still typically has to approve the building. This can sometimes be a hurdle, as recently seen when Dimmit County in south Texas shot down an ICE proposal to build a DHS Family Residential Facility there. Some of CCA’s down ballot spending may reflect an attempt to avoid this type of difficulty in Dilley. In the Texas legislature, Dilley’s Frio County was represented at the time by State Sen. Carlos Uresti (D) and State Rep. Tracy King (D). In 2014, both legislators received contributions from CCA, the same year the South Texas Family Residential Center was successfully constructed in Dilley.

Over a fifth of CCA PAC’s contributions — $180,000 — went to political committees that work to elect Republicans to federal office, such as the National Republican Congressional Committee (NRCC) and the National Republican Senatorial Committee (NRSC). CCA also donated $20,000 to the National Association of Real Estate Investment Trusts PAC (NAREITPAC).

Similarly, GEO donated to the NRCC and NRSC ($45,000) and to REIT PACs ($15,000). GEO, however, also contributed to the Democratic Congressional Campaign Committee ($25,000). Unlike CCA, these donations account for only six percent of GEO PAC’s total contributions. GEO’s PAC has also supported several super PACs connected to Republican presidential and senatorial candidates, including $50,000 contributions in July 2016 to both the pro-Marco Rubio Florida First Project and the pro-Donald Trump Rebuilding America Now. The GEO Group company directly contributed $100,000 to the pro-Jeb Bush Right to Rise USA super PAC while GEO Corrections Holdings, Inc. contributed $110,000 to the pro-Marco Rubio Conservative Solutions PAC.

The companies have also donated extensively to national organizations dedicated to state-level campaigns. From the start of the 2012 cycle to July 2016, CCA directly contributed $1.16 million to the Republican Governors Association, $585,000 to the Democratic Governors Association, and $60,000 to the Republican State Leadership Committee. During the same period, GEO directly donated $571,000 to the Republican Governors Association, $125,000 to the Democratic Governors Association, and $80,375 to the Republican State Leadership Committee.

More Influence to Come?

While the DOJ’s ruling was a blow for private prisons, CCA’s and GEO’s scope and influence means that they will continue to play a towering role in criminal justice systems across the country. The DOJ’s announcement does have the potential to create a snowball effect, potentially jeopardizing CCA and GEO’s contracts with ICE, the U.S. Marshals, and even the states. The DHS review of its use of private immigration detention centers, for instance, will “evaluate whether this practice should be eliminated.”

If anything, CCA and GEO may also see this as motivation to double down after years of relatively steady spending in the states, flooding even more money into the political arena to prevent the DOJ’s decision from affecting their other contracts—or to increase their state prison contracts to pick up the slack. Only time will tell, but the companies are unlikely to accept DOJ’s move without a fight. If one thing is sure, the private prison industry has the money, power, and connections to make this battle last for years to come. The market seems to agree: roughly 24 hours after GEO and CCA’s stocks took a historic drop, both stocks were already beginning to climb once more.

State heat maps created with Patrick Garvin’s generator.