Access vs. Isolation

Preserving Appalachia’s Rail 

Connectivity in the 21st Century: Part One

Prepared for the Appalachian Regional Commission January 2016
1. 

Access vs. Isolation: Preserving 

Appalachia’s Railway Connectivity in the 

21st Century: Part One

January 2016

Over the past decade, increased natural gas production, heightened air quality 

considerations, and global market conditions have combined to reduce the demand for 

Appalachian coal and create serious challenges for coal-dependent railroads in the 

eastern United States. Reduced coal traffic is leading to railroad operating and service 

cuts, and facility closures. Even the most sanguine must admit that continued affordable 

freight access throughout the Appalachian Region is threatened. Moreover, unlike past 

cyclical disruptions in the demand for coal, the current trend appears to confirm a 

lasting structural shift with broad economic implications rather than a transient cyclical 

downturn. 

Within this context, a volunteer working group of academics, economic development 

professionals, and state transportation officials has taken up the question of how to best 

encourage continued rail transportation access in an Appalachia where the movement of 

coal is no longer a regional freight anchor. Authored by our working group, this

document aims to inform policy-makers and other concerned stakeholders of our initial

findings as we begin to seriously explore public-sector actions that can help form a 

cohesive regional policy response. 

The Diminished Role of Coal and Reduced Coal Transportation

Traditionally, in the post-World War II era, a little more than half of U.S. electricity 

production has relied on coal. Coal is also used in steel production and other industrial 

processes. Steam and metallurgical coal have both been routinely exported to 

international consumers. Within the past decade, however, each of these end-market 

uses for coal has diminished considerably, and any sort of meaningful rebound is 

unlikely.1 Moreover, while energy markets are global, the demand for any region’s coal 

1 Domestic consumption of steam coal peaked in 2008 and has fallen by nearly one-third since that year. 

This reflects the retirement or conversion to natural gas of 126 generating facilities across 31states

between 2010 and 2016. See Institute for Energy Research http://instituteforenergyresearch.org/wpcontent/uploads/2014/10/Power-Plant-Updates-Final.pdf. Further, while improvements in production and

transport efficiencies may, in the years ahead, make Appalachia’s metallurgical coal more competitive in 

the international marketplace, the lasting strength of those markets remains suspect.
2.

depends heavily on specific coal characteristics (primarily, Btu and sulfur content),

region-specific mining costs, and transportation costs to end-use markets. In all, the 

combination of these factors has led to particularly precipitous declines in the 

production, movement, and consumption of coal from Appalachia, where annual 

outputs have fallen from 390 million tons in 2008 to a projected volume of less than 224

million tons in 2016.

2

Figure 1 – Railroad Coal Volumes / Appalachian Coal Production

The effects of this diminished coal production and consumption on railroad 

transportation and their financial performance have been pronounced. Figure 1 depicts 

railroad coal car loadings in total tons between 2008 and 2015 for all U.S. carriers. This 

same figure also shows the total Appalachian coal production noted above.3 As a result 

of these outcomes, CSX estimates that total revenues over the three-year period from 

 2 Coal production volumes (historical and projected) were developed from various products discriminated 

through the U.S. Department of Energy’s Energy Information Administration. See: 

http://www.eia.gov/coal/

3 Railroad coal volumes are based on weekly data collected and discriminated by the Association of 

American Railroads, with total 2015 projections based on our assessment of the week-over-week declines 

between 2014 and 2015 observed to date. Appalachian coal production values are available through the 

U.S. Department of Energy’s Energy Information Administration, with 2014 and 2015 projected values 

obtained through a simple linear trend.
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2013 to 2015 are more than $1.3 billion less than it projected. Similarly, Norfolk 

Southern (NS) recently announced that 2015 Q3 year-over-year profits are down 19

percent, a result it attributes to declining coal revenues.4 As the Region moves forward, 

these types of impacts will likely worsen.

The Railroad Industry Response

Beginning in September 2015, both CSX and NS responded aggressively to the 

changing Appalachian landscape with an initial round of cuts. The results include

closed maintenance shops in Tennessee and Kentucky, mothballed line-segments in 

Tennessee, Kentucky, and West Virginia, and corresponding employee layoffs

throughout the Region. Industry experts also cite the weakened financial position of the 

eastern railroads as an explanation for the Canadian Pacific Railway’s recent actions to 

acquire Norfolk Southern. Importantly, however, neither CSX nor NS has taken any 

steps toward actual route abandonments, line sales, or the actual disposal of terminal 

facilities. Thus, neither carrier has yet to undertake any action that either requires 

regulatory approval or that cannot be reversed.

The looming question, of course, is what further railroad responses might be expected, 

and when. Both eastern carriers have indicated that, while the downward trend in coalrelated activity was expected, the decline in Appalachian coal traffic and losses in 

revenues came more quickly and with more force than anticipated. This may explain 

why the initial responses of both railroads seemed to come without warning. Now, 

however, all parties should be aware of the potential for further railroad service, facility, 

and employment cuts.

 4 See “Here's what caused the rail coal market to plummet — and how CSX plans to adapt,” Jacksonville 

Business Journal, September 28, 2015 and Robert McCabe, “Norfolk Southern reports 19% drop in 3rd

quarter profits,” Virginian-Pilot Online, October 29, 2015.

ROUTES AT RISK

One of the first to sound an alarm regarding the implications of declining coal traffic was noted railroad 

columnist, Fred Frailey. In an August 2015 TRAINS magazine column, regarding a likely railroad 

response, Frailey wrote,

“You can cut costs. With fewer trains on their coal routes, it doesn’t make sense to maintain them to the 

same high standard. . . .Trouble is cost cutting doesn’t always get you far. So next, you cut 

back[trackage].”

He then continues to predict the elimination of CSX’s Big Sandy Subdivision and its adjoining Clinchfield 

route – a prediction that largely came true only weeks later. Additionally, Frailey suggests that Norfolk 

Southern might consider selling or leasing its Heartland routing to a short-line or regional railroad.

Finally, with regard to both railroads’ financial vulnerability, Frailey writes,

“Both railroads must feel the hot breath of deep-pocketed, activist investors who would come in and make 

the cuts if they won’t.”
4.

Figure 2 depicts both CSX and Norfolk Southern mainline trackage and most of the 

short-lines operating within the region. While many of the routes portrayed in this 

figure are used to transport commodities other than coal, coal volumes are essential for 

financial viability. Because of this, a significant portion of the regional network is now 

threatened by the significant reduction of coal production and usage. Policy-makers and 

the regional stakeholders they represent should assume that the integrity of the existing 

network, and the connectivity it provides throughout Appalachia, may be further 

affected by declining coal traffic. Moreover, at least in the case of the Class I railroads, 

decisions regarding which segments should be retained and which parts are expendable 

may depend on traffic and network conditions that are not immediately obvious to the 

public.

Figure 2 – The Regional Rail Network

In addition to providing direct rail access to many communities, the Region’s Class I 

railroads (CSX and NS) serve two additional functions. First, it is the Class I railroads 

that link the Region’s short-line freight customers to the world beyond Appalachia. 

Second, CSX and NS are often an important means of moving freight to and from 

inland navigation terminals along the Ohio River, as well as its navigable tributaries. 

Without question, more than Class I rail freight service is at risk. Overall, the long-term 

concern for Appalachia must be one of becoming more isolated and disconnected from 

domestic and global markets and opportunities—essentially becoming an economic 

island unto itself.
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The Need for Regional Public Sector Involvement

Perhaps policy-makers—or those of us who advise them—could have anticipated and 

prepared for what is now referred to as the “post-coal” challenge, but that did not 

happen. Instead, the first realities of the changing freight landscape arrived just as the 

public awakened to the concern, leaving many questions, few answers, and little time to 

prepare. Ideally, decision-makers would have detailed information predicting the extent 

of further railroad cuts, the impacts of those cuts on freight mobility, the specific 

economic and employment implications of diminished or more expensive regional 

freight access, and potential alternative actions designed to reallocate regional resources 

and ameliorate impacts. This detailed information is not available at this time. In its 

place is the acute understanding that seriously reduced coal volumes may lead to a new 

era of physical and economic isolation, and that isolation of any kind can be devastating 

to Appalachia.

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Effective public sector involvement is in the public’s interest. Importantly, because of 

the geographic and multi-jurisdictional scope of Central Appalachia, such public 

involvement must feature a large degree of cooperation and coordination among the 

states and other jurisdictions interested in preserving effective and affordable railroad 

service. Each of us has jurisdictional allegiances and responsibilities, and forthcoming 

policy responses must reflect these. But freight moves beyond, and in spite of, 

jurisdictional boundaries. If there are to be public-sector responses aimed at mitigating 

the effects of reduced coal-related transportation activity, the most successful of these 

responses will respect and account for regional interdependence.

Developing a Program of Regional Response

All or part of 13 states lie within the Appalachian Region. This working group 

comprises individuals from five of these states where the effects of reduced coal-related 

railroad activity are likely to be greatest. Importantly, however, even among these five 

states, the purposes, content, and applications of existing state-level freight rail 

programs vary widely.6

 5 As evidenced by its history, isolation can cripple Appalachia’s economic future, destroying any hope of 

commercial growth and future employment opportunities. Given this risk, there is a need for the public 

sector to act quickly to meet the current challenge, rather than wait to react to the broader hardships that 

will almost certainly emerge in years ahead. 

6 The variations in state programs are notable. In some cases, rail programs are housed within state DOTs; 

in other cases these programs are free standing. Some states already provide ongoing financial support to 

short-line railroads; others do not. Some states have established and rail-inclusive state-level freight 

advisory committees; others do not.
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The aim of any new, supplemental regional assistance program should not be to replace, 

alter, or ignore existing state programs. Instead, a successful regional initiative will 

garner additional resources for existing state efforts and help guide the use of these new 

resources so that larger regional concerns are adequately reflected. Any regional interest 

involved in this process must respect the line between coordination and intrusion.

With this caveat noted, we envision a regional rail program that provides support for the 

following:

1. RAIL INDUSTRY INTERACTIONS: The need for additional state-level response is 

directly predicated on the future actions of both Class I and short-line railroads. 

Therefore, anticipating these actions is critical to evaluating potential state-level 

responses. Each of the states represented by the current working group already 

has relationships with the railroads that serve their respective states. However, a 

regional program sponsor may help facilitate additional interactions to secure

the best and most up-to-date information from affected railroads. Sustaining and 

strengthening relations with existing Class I rail carriers is essential to ensuring 

a successful and sustainable railway network for the future that will include a 

balance of Class I, short line, and (as in Virginia and West Virginia) Amtrak rail 

passenger services. 

2. EXISTING SHORT-LINE PRESERVATION: Today, Central Appalachia is home to 

more than a dozen short-line railroads. As noted above, these short-lines 

routinely depend on connections with Class I railroads when moving freight to 

and from local customers. Consequently, any regional changes that affect the 

availability or quality of these connections can affect a short-line’s viability. A

supplemental regional program could provide resources to preserve existing

connectivity or help short-lines establish different Class I connections.

3. NEW SHORT-LINE DEVELOPMENT: Most existing short-lines are spin-offs from 

Class I systems. Indeed, replacing Class I operations with those of a short-line 

railroad has proven to be an effective way to preserve freight rail access that 

would otherwise disappear. Consequently, as diminished coal traffic leads CSX 

and NS to consider relinquishing specific route segments, the potential for a 

short-line alternative may, in many cases, become important. In other cases, 

where existing branch-lines serve only coal producers, short-line conversion 

may not be possible. 

The Central Appalachian states have widely divergent approaches to short-line 

railroad development and support. Nonetheless, within the confines of these 

existing programs, a regional program could prove valuable to help states assist 
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and support the creation of additional short-line railroads, while emphasizing the 

importance of a sustainable, multi-state network to the Region’s economic 

future.

4. ALTERNATIVE INFRASTRUCTURE PRESERVATION: When short-line freight 

railroads are not a viable option for a route and a Class I railroad plans to 

relinquish operations, states often choose to retain the existing right-of-way and,

in some cases, infrastructure. Generically, this alternative is often referred to as 

“rail banking.” This type of capacity preservation can actually take many forms. 

At a minimum, rail banking involves preserving rights-of-way, which 

sometimes can be used to support broadband fiber, wireless/cell towers, 

electricity, and other utility co-location. In some places, such as North Carolina, 

corridor preservation may entail retaining the subject line in its entirety—

including trackage—and even maintaining the line (to some degree) so that 

renewed operations can be easily undertaken. Finally, while not in use for 

freight service, rights-of-way can be retained and used to support tourist train 

operations, helping to generate tourism-related economic opportunities for online or nearby communities. The envisioned regional program could provide 

resources and guidance for this approach to freight capacity preservation as well.

5. TERMINAL FACILITY PRESERVATION OR RE-USE: Disruptions to the status quo 

caused by reduced coal traffic may be extensive. Therefore, both CSX and NS 

may elect to permanently close terminal facilities, including maintenance shops. 

Already, CSX has ceased operations at shops in Erwin, Tennessee and Corbin, 

Kentucky. Ultimately, both former train yards and retired maintenance facilities 

can become redevelopment opportunities. Whenever possible, repurposing these 

potential assets should be consistent with continuing (or resumed) nearby 

railroad operations. 

6. INTERMODAL CONNECTIVITY: Above, we note the links between regional rail 

service and inland navigation. A similar interdependence exists between rail and 

truck freight transportation in the form of bulk transfer and other truck-rail 

intermodal facilities. Over the past fifteen years, the Appalachian Region has 

successfully created these intermodal opportunities and nurtured the commerce 

that intermodal transportation supports.

It is the continued integrity and forward-going robustness of the Region’s entire 

intermodal transport network that is challenged and that, for Appalachia’s 

economic future, must be addressed through a cohesive multi-state approach. 

Intermodal connectivity will almost certainly be a focus for individual state 
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activities. At the same time, well-coordinated intermodal transport must also be 

a principal objective of any forthcoming regional effort.

7. COORDINATION AND TECHNICAL SUPPORT: Each Central Appalachian state

has experience evaluating and addressing rail-related projects. However, the 

scale and scope of these emerging challenges will likely require a level of multistate coordination, planning, and investment that will surpass the capacity of 

most individual states.

7 Accordingly, as states engage in a larger regional 

initiative, multi-jurisdictional planning and coordination—including network 

data and analytical tools—will prove critical to preserving an effective and 

sustainable regional transportation network. 

Concluding Thoughts and Recommendations

Regulatory reforms enacted in the second half of the 20th century provided railroads 

with unprecedented freedoms to eliminate unprofitable freight routes and the local 

services those routes supported. As a result, between 1980 and 2012, Class I system 

route-miles fell from 164,822 to 95,391. This network rationalization is credited as a 

major contributor to the rail industry renaissance observed over the past three decades. 

While no one among our working group would choose to undo the ability to make such 

changes, the process of shrinking the nation’s rail system provided some important 

lessons.

The first and most powerful point is that railroad capacity, once fully abandoned, is 

difficult—or even impossible—to restore. The second lesson is that railroad decisions

about what to retain and what to abandon, while generally well-reasoned, are not

altogether perfect. A number of railroad route segments sacrificed during the 1980s and 

1990s would be exceedingly useful in 2015. It has been demonstrated, time and again, 

that nearly all such abandonments prove impossible to restore. Finally, short-line spinoffs and state-sponsored corridor preservation programs have yielded some amazing 

successes throughout Central Appalachia and across the United States. Accordingly, 

such success stories represent a sensible middle ground between compulsory railroad 

service and unfettered, market-driven outcomes.

When these results are combined with the fact that for generations, Appalachia suffered 

the crippling effect of physical and economic isolation, we are convinced that a

balanced and timely public-sector response to current rail industry retrenchments is 

critical to the Region’s future. While not every line segment can nor should be 

preserved, the future success of Appalachia’s economy will require an interconnected 

 7 For example the combined CSX Logan Subdivision and Clinchfield route (formally the Blue Ridge and 

Kingsport Subdivisions) stretch 400 miles across four states.
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rail freight network to maintain the Region’s access to both domestic and international 

opportunity. Should policy-makers fail to proactively respond, the results of such 

inaction or delayed action may well contribute to a devastating and irreversible loss of 

regional freight capacity and network connectivity that will serve to erode the economic 

and employment potential for Appalachia in the 21st century. The importance of 

addressing Appalachian isolation was discussed in Appalachia: A Report By the 

President’s Appalachian Regional Commission 1964 (p. 32):

“Developmental activity in Appalachia cannot proceed until the regional 

isolation has been overcome. It’s cities and towns, its areas of natural wealth, and its 

areas of recreation and industrial potential must be penetrated by a transportation 

network which provides access to and from the rest of the Nation and within the 

region itself...The Commission recommends a mix of investment and timing which 

gives the single problem of access a double priority of emphasis.”

As others before us, we have offered thoughts and ideas regarding the importance of the 

current challenge, and also introduced an array of potential public-sector responses. 

These are just suggestions—a starting point for a more formal and comprehensive 

approach to action. Broader discussions are clearly needed. We would warn, however, 

that these discussions should take place soon and be conducted efficiently. Time is not a 

friend.

APPALACHIAN RAIL ACCESS WORKING TEAM

This document was prepared by an ad hoc working team of academic, economic development, and transportation 

professionals from across Central Appalachia. The team has not been compensated for its work, nor does it 

formally represent any single organization or institution. Instead, the group has been organized and is working 

together out of a collective interest in the topic-area and a shared understanding of the issue’s importance to the 

economic future of Appalachia. Current group members include:

Mark Burton, PhD

The University of Tennessee

Mark McCaskill, AICP

Roanoke Valley Alleghany Valley Regional Commission

David Clarke, PhD

The University of Tennessee

Jennifer Shand, PhD

Marshall University

Patrick Donovan, MS

U.S. Army Corps of Engineers

Michael Smith, PhD

Western Carolina University

Ted Grossardt. PhD

The University of Kentucky

Reg Souleyrette, PhD

The University of Kentucky

Liza Joffrion, Director, Multimodal Division

Tennessee Department of Transportation

Kent Sowards, MBA

Marshall University