Many reasons. Although it is a much shorter route between the Pacific Northwest and points East, the downturn of rail-hauled traffic of the timber industry cannot support keeping the line for which it was intended. Also, the railroad can make more money via a longer route over other rails it owns. Even in its heyday the Modoc Line never saw more than a few through trains a day each way. The traffic was almost "loads South (East); empties North (West).

There are very few on line customers when compared to 40-50 years ago. South of Stronghold you have to go to Alturas and the connection with the Laveview Branch to find customers. Between Alturas and Flanigan there are no customers anymore... and that's a lot of mileage bringing in no additional revenue. This is the same situation with the Siskiyou Line between Medford and Weed.

Much of the rail and ties were of more value used elsewhere on the UP.

The positive side was it was sometimes used as an alternate route when other lines were plugged with traffic, or in case of line closure. Now that UP is everywhere they have more alternate routes to choose from. It's not cost effective to keep a line in shape for those rare emergencies.