Class I Branch Line Operations...

Your guess is right on.  The branch lines were generally losers for the Class I's and they shed themselves of the branches as soon as deregulation would allow.  As one of the senior people at a class I told me "we are really good at running long trains fast for long distances.  We aren't good at serving small customers on small branch lines".

This trend still continues today.  More and more branches are passed from class 1's to regionals, short lines, or are abandoned.  Even many of the branches acquired by short lines or regionals have not survived.  For example, where I lived in Rhode Island a good many light density lines owned by the Providence and Worcester have been ripped up.  With more and more freight moving by intermodal or using transloads, any branch line without a major custoumer (ex: power plant, large chemical plant, etc.) is at risk of closeure. 

I guess I can understand the business decision in ditching certain branch lines (let a low cost operator do the dirty work as most of the freight ends up at a Class I at some point) but looking ahead...why not leave the door open to attract some new large customer to your branch line??  That can't be done once the track is ripped up and McDonalds is built over the ROW.

Maybe the gov should offer tax exemption for holding the property open for future use.  It would only be fair since trucks get a pay as you go infrastructure built for them...they can pick and choose any route at any time.