The GEO Group Comments on Favorable Ruling by U.S. Court of Appeals for the Ninth Circuit Against California’s AB32 Law

Rhea-AI Summary

The GEO Group (NYSE: GEO) announced a favorable ruling from the U.S. Court of Appeals for the Ninth Circuit regarding California's Assembly Bill 32 (AB32), which sought to limit federal government contracts with private entities for immigration processing services. The court reversed a prior dismissal, affirming that AB32 conflicts with federal law. This ruling allows GEO to continue its civil detention support services contracts with the U.S. Department of Homeland Security, valid through December 19, 2034. This decision is critical in maintaining GEO's operational viability in California.

Positive

• Ninth Circuit Court's ruling allows continued federal contracts for immigration processing services.
• Contracts with the U.S. Department of Homeland Security are effective until December 19, 2034, ensuring revenue stability.

Negative

• Potential future judgments could adversely affect the Ninth Circuit's ruling on AB32.
• GEO's operations face significant risks from changes in federal immigration policy and public-private partnership regulations.

BOCA RATON, Fla.--(BUSINESS WIRE)-- The GEO Group (NYSE: GEO) (“GEO”) commented today on the favorable ruling by the U.S. Court of Appeals for the Ninth Circuit (the “Ninth Circuit Court of Appeals”) in relation to lawsuits filed by GEO and the United States for declaratory and injunctive relief challenging California’s enacted law, Assembly Bill 32 (“AB32”), which would bar the federal government from engaging government contractors to provide services at federal immigration processing centers.

On October 5, 2021, the Ninth Circuit Court of Appeals reversed a prior U.S. District Court decision dismissing the requests by GEO and the United States for declaratory and injunctive relief and ruled that AB32 conflicts with federal law in violation of the Supremacy Clause of the U.S. Constitution and discriminates against the federal government in violation of the intergovernmental immunity doctrine. The case is remanded to the U.S. District Court for further proceedings, consistent with the Ninth Circuit Court of Appeals ruling.

Commenting on the ruling, GEO’s Executive Chairman, George C. Zoley, said, “We are pleased with this ruling and anticipate it will allow the continuation of our California civil detention support services contracts for the U.S. Department of Homeland Security, which are effective through December 19, 2034.”

About The GEO Group
The GEO Group (NYSE: GEO) is a fully integrated equity real estate investment trust specializing in the design, financing, development, and operation of secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO is a leading provider of enhanced in-custody rehabilitation, post-release support, electronic monitoring, and community-based programs. GEO’s worldwide operations include the ownership and/or management of 114 facilities totaling approximately 90,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 20,000 professionals.

Safe-Harbor Statement
This press release contains forward-looking statements regarding future events and future performance of GEO that involve risks and uncertainties that could materially affect actual results, including statements regarding the favorable ruling, on October 5, 2021, by the Ninth Circuit Court of Appeals in relation to lawsuits filed by GEO and the United States for declaratory and injunctive relief challenging AB32, which would bar the federal government from engaging government contractors to provide services at federal immigration processing centers. Risks and uncertainties that could cause actual results to vary from current expectations and forward-looking statements contained in this press release include, but are not limited to: (1) any future judgments or orders that are adverse to the ruling by the Ninth Circuit Court of Appeals on AB32; (2) GEO’s ability to meet its financial guidance for 2021 given the various risks to which its business is exposed; (3) GEO’s ability to deleverage and repay, refinance or otherwise address its debt maturities in an amount or on the timeline it expects, or at all; (4) changes in federal and state government policy, orders, directives, legislation and regulations that affect public-private partnerships with respect to secure correctional and detention facilities, processing centers, and reentry centers, including the timing and scope of implementation of the January 2021 Presidential Executive Order to not renew U.S. Department of Justice contracts with privately-operated criminal detention facilities; (5) changes in federal immigration policy; (6) public and political opposition to the use of public-private partnerships with respect to secure correctional and detention facilities, processing centers and reentry centers; (7) the magnitude, severity, and duration of the current COVID-19 global pandemic, its impact on GEO, GEO's ability to mitigate the risks associated with COVID-19, and the efficacy and distribution of COVID-19 vaccines; (8) GEO’s ability to sustain or improve company-wide occupancy rates at its facilities in light of the COVID-19 global pandemic and policy and contract announcements impacting GEO’s federal facilities in the United States; (9) fluctuations in our operating results, including as a result of contract terminations, contract renegotiations, changes in occupancy levels and increases in our operating costs; (10) general economic and market conditions, including changes to governmental budgets and its impact on new contract terms, contract renewals, renegotiations, per diem rates, fixed payment provisions, and occupancy levels; (11) GEO’s ability to timely open facilities as planned, profitably manage such facilities and successfully integrate such facilities into GEO’s operations without substantial costs; (12) GEO’s ability to win management contracts for which it has submitted proposals and to retain existing management contracts; (13) risks associated with GEO’s ability to control operating costs associated with contract start-ups; (14) GEO’s ability to successfully pursue growth and continue to create shareholder value; (15) GEO’s ability to obtain financing or access the capital markets in the future on acceptable terms or at all; (16) other factors contained in GEO’s Securities and Exchange Commission periodic filings, including its Form 10-K, 10-Q and 8-K reports.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211007005522/en/

Pablo E. Paez (866) 301 4436

Executive Vice President, Corporate Relations

Source: The GEO Group, Inc.

FAQ

What was the Ninth Circuit's ruling related to AB32 and GEO?

The Ninth Circuit ruled that AB32 conflicts with federal law, allowing GEO to continue its contracts with the federal government.

How does the Ninth Circuit's ruling impact GEO's contracts with the U.S. Department of Homeland Security?

GEO can continue its civil detention support services contracts with the U.S. Department of Homeland Security, effective through December 19, 2034.

What are the risks associated with GEO's business following the recent ruling?

Future adverse judgments, changes in immigration policy, and public opposition to private partnerships could impact GEO's operations.

When was the Ninth Circuit ruling announced?

The ruling was announced on October 5, 2021.