Loans to Railroads as Industrial Development Projects

58 Pa. D. & C.2d 405

• Court: Pennsylvania Department of Justice
• Decided: October 19, 1972
• Status: Published

Opinion

CREAMER, Attorney General,

You have requested our opinion as to whether projects for the reconstruction or repair of railroad facilities damaged by Hurricane Agnes and the resulting floods are “Industrial Development Projects” within the meaning of the Industrial Development Authority Act of May 17, 1956, P.L. (1955) 1609, as amended, 73 PS §301, et seq., thereby making such reconstruction and repair projects eligible for loans under the act. You have pointed out, and we note, that as a result of the hurricane and flood damage to railroad facilities, not only will there be a loss of employment on the damaged railroad lines themselves, but also a loss of employment from industries served by such railroad lines for which such service is crucial. We have been further advised that there has already been a detrimental effect on employment in areas where railroads have suffered hurricane and flood damage. Moreover, it is apparent that adequate railroad service is necessary to attract other industries and retain present industry in the Commonwealth of Pennsylvania.

It is our opinion, and you are so advised, that projects to reconstruct or repair railroad facilities damaged by hurricanes and floods are “Industrial Development Projects” within the meaning of the Industrial Development Authority Act, and, assuming all other requirements of the act are met, are eligible for industrial development loans. Sections 5 and 6 of the Industrial Development Authority Act, 73 PS § §305-306. “Industrial Development Project” is defined as:

“. . . any land, site, structure, facility or undertaking comprising or being connected with or being a part of (i) an industrial enterprise, (ii) a manufacturing enterprise, or (iii) a research and development enterprise, established or to be established by an industrial development agency in a critical economic area.”: Section 3(i), 73 PS §303(i). (Italics supplied.)

The term, “Industrial Enterprise,” in turn, is defined as:

“. . . an enterprise other than a mercantile, commercial or retail enterprise, which by virtue of its size requires substantial capital and which by its nature and size has created or will create substantial employment opportunities. . . .”: Section 3(n), 73 PS §303(n). (Italics supplied.)

The definition of “Industrial Enterprise” is certainly broad enough to cover certain railroad facilities. A railroad is “other than” a mercantile, commercial or retail enterprise; by virtue of its size it requires substantial capital; and by its nature and size it may create substantial employment opportunities. Whether a particular project would meet with the other requirement of the act noted above would, of course, depend on the findings of the Pennsylvania Industrial Development Authority on critical factors such as the level of unemployment in the area in which the project is undertaken, the incidence of public assistance dependency in the area, the number of new jobs created or saved by the project and the financial condition of the borrower.

We shall be pleased to deal with any further issues which implementation of this opinion may entail.