IN RESPONSE TO INFORMATION FROM A NUMBER OF SOURCES, THE SENATE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS CONDUCTED A YEAR-LONG INVESTIGATION OF THE FEDERAL PENITENTITARY IN ATLANTA, A MAXIMUM-SECURITY PRISON HOUSING 1,300 ADULT INMATES. AFTER A PRELIMINARY INVESTIGATION, THE SUBCOMMITTEE CONDUCTED HEARINGS IN ATLANTA ON SEPTEMBER 29 AND OCTOBER 2, 1978. TESTIMONY FROM PRISON INMATES AND EMPLOYEES REVEALED THAT THE PENITENTIARY IS THE SETTING FOR INMATE MURDERS, EXTENSIVE NARCOTICS TRAFFICKING, AND VARIOUS OTHER CRIMINAL ACTIVITIES. ONE EMPLOYEE INDICATED THAT THE PRISON ADMINISTRATION ENCOURAGED EMPLOYEES TO OVERLOOK ILLEGAL ACTIVITIES AMONG INMATES IN THE INTEREST OF KEEPING THE INMATES UNDER CONTROL. IN RESPONSE TO THE REVELATIONS OF THE INVESTIGATION, THE PRISON ADMINISTRATION INSTITUTED SEVERAL MAJOR CHANGES IN PRISON MANAGEMENT. SUBCOMMITTEE STAFF MONITORING DISCLOSED, HOWEVER, THAT DESPITE EFFORTS TO INCREASE SECURITY, THERE HAS BEEN NO SIGNIFICANT CHANGE IN THE AMOUNT OF VIOLENCE AND NARCOTICS FLOW AMONG INMATES. THE ATLANTA PENITENTIARY IS CONCLUDED TO BE TOO OLD AND TOO LARGE TO PERMIT SAFE AND EFFICIENT PRISON MANAGEMENT. BECAUSE THE NECESSARY RENOVATION IS TOO EXPENSIVE, THE CLOSING OF THE PRISON AS SOON AS FEASIBLE AND NOT LATER THAN 1984 IS RECOMMENDED. CLOSURE OF THE PRISON HAS ALSO BEEN SUGGESTED BY THE HOUSE JUDICIARY COMMITTEE AND THE BUREAU OF PRISONS. SUPPLEMENTARY INFORMATION IS PROVIDED IN THE APPENDIXES. (AUTHOR ABSTRACT MODIFIED--RCB)