The Immigrant Gold Rush

For the savvy investor looking for a growth industry, South Texas offers a sure thing. The business calculus is simple: More immigrants than ever are being apprehended. That means the federal government needs more detention centers and more people to run them. No matter how the national debate on immigration plays out in Congress, the corporations that have moved into the business of building and operating detention centers are likely to see a steady stream of revenue for years to come.

The United States Marshals Service, for example, is now soliciting bids from private companies to build, own, and operate a 2,800-bed detention facility near Laredo. The "superjail," as it has come to be called, will serve the federal criminal court in downtown Laredo, which is loaded up with immigration-related cases in what the Marshals Service calls an "emergency [detention] situation." The $100-million superjail is expected to be one of the largest private detention centers in the nation, and will join a growing chain of county and local jails and private detention facilities all over Texas that coordinate with federal agencies to hold immigrants -- some destined for trials or hearings, others for deportation.

From downtown San Antonio to the banks of the Rio Grande in South Texas, for-profit companies run seven detention facilities for the Marshals Service and for Immigration and Customs Enforcement, a division of the Department of Homeland Security. ICE (formerly the Immigration and Naturalization Service) holds noncitizen detainees waiting for a hearing in the civil immigration courts, or facing immediate deportation. The Marshals Service is responsible for housing both citizens and noncitizens awaiting trial or sentencing in federal criminal court.

"It's the immigrant gold rush in South Texas," says Bob Libal, co-director of Grassroots Leadership, an Austin-based nonprofit that monitors the private prison industry. "In Texas, almost all of the current prison expansion is occurring to house immigrant detainees, and that's primarily located in South Texas along the border." There are at least 7,000 newly built or proposed ICE and Marshals Service beds in Texas for immigrant detainees, according to Corrections Professional, an industry journal. In the early 1980s, ICE (then INS) operated zero beds in Texas; the Marshals Service, no more than 3,000 in the entire country.

Nationwide, the number of ICE detainees went from 7,444 in 1994 to about 23,000 now; during the same period, the Marshals Service's population more than doubled to an estimated 63,000. Just in the last two years, Congress has authorized 40,000 new ICE beds over the next five years and given the Marshals Service funding for another 4,000 to 5,000. And the President's proposed 2007 budget calls for a $452 million increase in ICE funding, including money for another 6,700 beds. One of the companies to benefit from the government's building -- and privatizing -- binge is KBR, a Halliburton Co. subsidiary, which in January was awarded a contract worth up to $385 million to build temporary immigrant detention facilities for the Homeland Security Department in case of an "emergency influx of immigrants," according to a KBR press release. The top companies running South Texas detention centers are the Corrections Corp. of America (CCA), GEO Group Inc., and Emerald Correctional Management.

Libal says a "perfect storm" explains the growth in the detention industry. "First, you have this kind of anti-immigrant sentiment coming out of Washington at the federal level; second, you have increased zealotry from the U.S. Attorney's office to prosecute people criminally for extremely minor immigration crimes; and third, you have these private prison companies that are cashing in on the immigration incarceration boom."