Committee hears bill to create state grant program for short‑line railroads

Senator Bryan Hughes (presenting for the author, Senator Hughes) laid out Senate Bill 2366 to the Senate Transportation Committee as a proposal to create a state grant program to fund certain short‑line railroad projects. The bill would make funding available to rural rail transportation districts and short‑line operators for track and bridge replacement, capacity improvements and restoration of service to increase safety and support economic development.

Jeff Davis, rail division director at the Texas Department of Transportation, testified as a resource witness. Davis told the committee there are three classes of railroads in Texas — class 1, class 2 and class 3 — and that TxDOT currently does not operate a grant program like the one proposed for short lines. "There are no grant programs like this available today," Davis said, noting the only existing state funding targeted at short lines relates to grade crossing maintenance.

Local rail leaders urged passage. John Cloutier of the Rusk County Railroad District described the district’s purchase of a distressed 14‑mile spur and subsequent investments to revive traffic after a class‑1 carrier abandoned it. "We applied for every grant we could for over a decade," Cloutier told the committee; he said federal Consolidated Rail Infrastructure and Safety Improvements (CRISI) Grant money of $8.5 million, together with a local 10% match, was helping their project and that a state match would aid completion.

Peter Lacotte, president of Texas Rail Advocates, and Joey Evans, president of the Texas Short Line Regional Railroad Association, said short lines are the first‑mile/last‑mile links that move commodities such as lumber, chemicals, steel and frac sand to class‑1 carriers and that improving short lines removes heavy trucks from highways and supports rural economic development. Evans said short‑line operators have used their own revenue as matches for federal grants and that a state match would allow Texas to compete for more federal funding.

Committee members pressed for details on program structure. Senator West asked why the bill would target class‑3 short lines and not other classes; Davis and proponents said class‑1 carriers have federal programs and private resources, while class‑3 short lines operate on low‑density track and have limited access to matching funds. The committee discussed a drafting requirement: state funds cannot be provided directly to a railroad under current language, so proponents said they would ask a floor amendment to ensure funds flow to rail districts or public nonprofit entities that own the infrastructure rather than to private carriers.

Multiple witnesses, including district operators and TxDOT, described the program as intended to leverage federal grants, enhance public safety by improving track and bridge conditions, and spur local economic development. The committee left the bill pending; later in the hearing the committee reported SB 2366 favorably to the full Senate.