July 31, 2026 - TRA Newswire -

Texas rural rail districts that need help with replacing or upgrading tracks, bridges, restoring service or enhancing economic activity now have guidelines on how the grant program works and how they will be able to apply for funding.

The Transportation Commission put their stamp of approval on the rules and regulations that will govern short line grants at their monthly meeting in Austin on July 30th. 

At least 10% of any total project cost must be provided by a source other than the state as matching funds, by statutory requirement.  

One issue remains. When the legislature passed Senate bill 2366 in 2025, the grant program had no financial support attached to the legislation. Short line railroads in one of the three operating rural rail districts in Texas, will have to wait to file for matching funds when they are made available by lawmakers.

The law, as written, unfortunately shuts out the balance of some 50-odd short line railroads in Texas that serve dozens of towns and cities, many in rural areas that need an economic boost. Lawmakers did not feel it was appropriate to give funding directly to the "mom n pop" railroads and that limited the scope of the existing law.

The current law requires that a grant "be sponsored by a rural rail district that owns or operates a short line railroad and has the authority to undertake the project and enter into the required grant agreement." 

"That's why the short line grant program needs to be tweaked and expanded in scope in the upcoming 2027 session in Austin," according to Texas Rail Advocates President Peter LeCody. "By adding in a line or two to the existing legislation it should also allow a city, county, municipal planning organization or other government entity to be the grant administrator. That way the local governmental agency controls the project funding, arranges for the private short line operator to contribute their share of costs, makes sure the project is done within guidelines and on a timely basis and allows the project to also access federal and other local funding to offset costs, if it is available."

Under the program rules, projects will be selected on a competitive process to make best use of available funds. The TxDOT Rail Division Director would make final recommendations of selected projects to the Texas Transportation Commission for approval. 

Under the new grant program the grant allows for improving short line rail capacity, restoring railways that are out of service, reduce road freight traffic, rail planning, detailed design activities, environmental, right of way acquisition, and utility adjustments. 

Primary authors of Senate Bill 2366 in the 89th legislative session were Senators Bryan Hughes (R - Mineola) and Angela Paxton (R - McKinney)  and on the House side, the primary sponsor of the bill was Representative Cole Hefner (R - Mt Pleasant).

Photo credit: Sulphur Springs News Telegram