U.S. to stop using privately-operated prisons due to safety concerns

The U.S. Justice Department plans to phase out its use of privately-operated prisons, which it called less safe and less effective than government-run facilities, according to a memo released publicly by the department on Thursday.

In a move that hammered corrections company share prices, the Justice Department memo called for gradually phasing out the use of private prisons by letting contracts expire or by scaling them back.

Geo Group Inc shares fell about 28 percent while Corrections Corp of America shares sank about 20 percent.

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The Justice Department does not have jurisdiction over state prisons. Both Texas and Louisiana use private companies to run their prisons, according to the American Civil Liberties Union.

According to the memo, approximately 15 percent of federal prisoners were in private facilities in 2013.

Privately-run prisons “simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department’s Office of Inspector General, they do not maintain the same level of safety and security,” Deputy Attorney General Sally Yates wrote in the memo.

The Justice Department decided three weeks ago to end a private prison contract for 1,200 beds, Yates said in a blog post.