They need to fix up Alcatraz and use it for terrorists.
Alcatraz is a bad idea. First, the old prison, now a popular tourist site, would have to be bulldozed down to bedrock and a new prison would have to be built from scratch. This would take a few years.
Second, the highly visible island would be a magnet for protesters in boats with horns, flags, bullhorns etc. This is in the SF Bay area after all!
Much better (from the fedgoon perspective) to build Supermax prisons far out in the boondocks, away from all cities, where visitors, protesters and reporters will never come.