S.B. No. 2366 establishes a grant program aimed at funding specific projects related to short line railroads in Texas. The bill introduces 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. Eligible projects include the replacement of railroad tracks or bridges, improvements to rail capacity, and restoration of railways. Districts that own or operate short line railroads can use the awarded funds as matching funds for additional financing.

The bill stipulates that each grant must be approved by the Texas Transportation Commission, which requires that at least 10% of the total project costs come from non-state sources. Funding for the program will come exclusively from legislative appropriations and external gifts or grants, explicitly prohibiting the use of state highway funds for these grants. The commission is also required to adopt necessary rules for implementation 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 threshold is not met.

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