The biggest problem with private prisons starts on Capitol Hill

Reuters/Jason Redmond

Immigrants rights supporters rally outside the US Immigration Customs Enforcement (ICE) Northwest Detention Center in Tacoma, Washington on March 11, 2014.

The Department of Justice announced on Thursday that it will phase out the use of private prisons for federal inmates in the wake of a blistering DOJ report last week, which found that private prisons are more dangerous than federal Bureau of Prisons facilities - both for inmates and guards.

Private prisons - also known as "contract prisons" - have come under heightened scrutiny in recent months, after high-profile exposès revealed disturbing conditions.

While such reports are no doubt disturbing, the most problematic aspect about private prison companies may be their efforts on Capitol Hill and in statehouses across the country to lobby for laws that expand demand for their own services.

The Corrections Corporation of America (CCA) and GEO Group, the country's two largest private prison companies, have contributed $10 million to candidates and pushed $25 million into lobbying efforts since 1989, a Washington Post report found last year.

While the CCA declares on its website that it doesn't lobby for policies that determine "the basis for or duration of an individual's incarceration or detention," the Justice Policy Institute has documented several pieces of federal legislation the CCA lobbied on in recent years, including funding related to private prisons and Immigrations and Customs Enforcement (ICE) detention.

For those in the private prison industry, the DOJ's decision likely came as little surprise, according to Christopher Petrella, a lecturer at Bates College and member of Grassroots Leadership, an advocacy group that studies private prisons. The federal prison population has decreased significantly over the last three years from 220,000 in 2013 to 197,000 in December 2015.

Private prison companies have been preparing for such a moment by shifting their focus to ICE facilities, many of which are already run by for-profit entities and house immigration detainees, according to Petrella.

"They've been lobbying the Department of Homeland Security, in particular, very heavily," Petrella told Business Insider. "ICE is the growth sector - and I am loathe to use that language because we're talking about human beings here. But from ICE and GEO's perspective, that's the discourse that they use."

In a statement to Business Insider, the CCA noted that the DOJ's directive would affect only 7% of the company's business, and will instead be focusing on "new, innovative opportunities we've been exploring in recent years in a proactive effort to meet their evolving needs."

There's evidence that the private prison industry's lobbying strategies have been working. Just two years ago, the Obama administration inked a $1 billion deal with CCA to build a facility in Dilley, Texas that would detain women and children from Central America seeking US asylum, according to a Washington Post report earlier this week. That facility alone generated 14% of CCA's revenue and helped earn the company record profits.

CCA and the GEO Group have been petitioning the government for years to craft regulations and exploit loopholes that allow them to maximize profits, Petrella said.

In 2013, for example, the companies petitioned the IRS to restructure as a Real Estate Investment Trust (REIT), switching from their previous designations as class C corporations and effectively reducing their corporate tax liabilities to zero.

"It actually kind of forces these companies to admit that they're kind of prison companies only incidentally - what they really are is real estate companies," Petrella said.

"That's a major, major problem. Because when we're talking about incarcerating human bodies, the language of real estate is just so grievously inappropriate ... That's bothersome, and problematic, and that needs to change."

The Center for Constitutional Rights also anticipated the DOJ's shift in tactics on Thursday in a statement, lauding the decision while calling for the Department of Homeland Security to also phase out use of private prisons.

"Locking up immigrants, including families and children fleeing extreme violence in Central America, should not be a source of profit for huge corporations, particularly given private contractors' terrible record providing inadequate medical and mental health care to dying immigrants," the statement said.