S.B. No. 2366 establishes a grant program aimed at funding specific projects related to short line railroads in Texas. The bill adds Section 201.981 to the Transportation Code, which defines "District" and "Short line railroad" and outlines the purpose of the grant program. The Texas Department of Transportation is tasked with administering this program to enhance public safety, promote economic development, and alleviate traffic congestion. Grants will be available to districts that own or operate short line railroads for projects such as replacing tracks or bridges, improving rail capacity, or restoring railways.

Additionally, the bill stipulates that grant funds can be used as matching funds for further financing of these projects, provided that at least 10% of the total project costs come from non-state sources. The Texas Transportation Commission must approve each grant, and the funding for the program will come from legislative appropriations and external gifts or grants, excluding state highway funds. The commission is also required to adopt necessary rules to implement this section by October 1, 2025. The act will take effect immediately upon receiving a two-thirds vote from both houses or on September 1, 2025, if that vote is not achieved.

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