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Lawsuit Over Alabama Private Mega-Prison Leases Dismissed

by Daniel A. Rosen

An Alabama judge recently ruled on a legal challenge seeking to block Governor Kay Ivey’s plan to lease three new privately-built mega-prisons in the state, siding with the Governor. Republican State Auditor Jim Ziegler and others had sued to block the leases, claiming they were an unconstitutional debt to the State that could only be approved by the Legislature.

The Governor’s plan calls for two 3,000-bed prisons built by and leased from CoreCivic (formerly Corrections Corporation of America) in Elmore and Escambia counties, which the state would then operate for 30 years. A third prison in Bibb County is still under negotiation. All three prisons would be owned by private companies but managed and staffed by Alabama’s state Department of Corrections (ADOC).

Montgomery County Circuit Court Judge Greg Griffin dismissed the plaintiffs’ claims that the $3 billion debt violated state law. “Specifically, this Court finds that the Leases do not constitute a debt to the state, and therefore are not unconstitutional,” Judge Griffin ruled.

Ziegler sued first in his capacity as the State’s Auditor, but the Court dismissed that claim, ruling that his standing was superseded by the Attorney General, who filed a petition to dismiss. The ruling was only related to Ziegler’s official capacity claims, and noted the AG’s “exclusive control over litigation filed by state officials.”

Ziegler then sued in his private capacity as a taxpayer, along with a Democratic state lawmaker, a local property owner near the proposed prison site, and a prison rights activist. The plaintiffs asked the judge to void the lease agreements, and stop the state from entering into any further lease deals. The judge dismissed those claims too.

Ziegler has been an outspoken critic of the leasing plan, and played a role in the recent withdrawal of financing for the scheme [See PLN, Jul. 2021, pg. 16]. He says he and the other plaintiffs may appeal. Plaintiff’s attorney Kenny Mendelson, from Montgomery, says he’s reviewing the court’s decision.

“We will continue our fight to block the prison plan by raising issues that would cause potential investors to withdraw. We believe that investors see the fatal flaws in this plan and will not touch it with a 10-foot pole,” Ziegler said.

The CoreCivic prisons were being financed by Barclays Bank, KeyBanc Capital, and Stifel, with bonds issued by the Wisconsin-based Public Finance Authority, until May of this year, when every element of the $850 million financing fell apart due to pressure from activists and industry groups.

Analysts have also said that the cost to taxpayers could go up, if the financing challenges lead to higher interest rates. Economist Kevin Deravi said that given the friction, “interest cost to the state would be higher than a traditional investment,” leading to higher overall costs than the initial $3 billion estimate.

In December of 2020, the Department of Justice sued Alabama over conditions in the state’s prisons that it says violate prisoners’ constitutional rights. It also cited serious problems with ADOC prisons in prior reports, including deadly violence among prisoners, the prevalence of drug use, overcrowding and understaffing, and excessive force by guards [See PLN, Apr. 2021, pg. 34].

Governor Ivey claims that the new prisons are key to overhauling the troubled system. She has said they will be safer and help facilitate rehabilitation efforts. Critics say the leases simply allow the state to ignore past problems, and don’t address understaffing, training issues, or prisoner violence.

The state corrections agency released an earlier statement defending the leases, calling the lawsuits “politically motivated,” and “intended only to distract,” while also accusing the litigants of opposing “progress and improvement within the State’s corrections system.” It also said that ADOC, “remains committed to building a more rehabilitative, therapeutic environment for our population of incarcerated people.”

In his ruling favoring the Governor’s position, Judge Griffin noted that Alabama law “does not prevent the State Defendants from leasing correctional facilities from private entities, and that the plain language of the leases does not prevent the ADOC from exercising direct and effective control over the management of the correctional facilities once built.” See: Ziegler v. Gov. Ivey, Montgomery County, Circuit Court, Case No. _____. 


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