Competition from high-producing western mines that can mine coal at a cheaper price is also putting economic pressure on Central Appalachia - which has long been associated with coal mining dating back to the early 20th Century, when entire towns sprung up around busy underground mines. The region remained the dominant source of coal in the U.S. until it was overtaken by western states, namely Wyoming, in the 1990s.
Last year, according to the U.S. Energy Information Administration, two massive surface mines in Wyoming accounted for 20 percent of the nation's coal output. By comparison, all the mines in Central Appalachia produced just 17 percent of U.S. coal in 2011.
The report also mentions tougher federal regulations being enforced by the Obama Administration, which coal supporters and some elected officials in the region cite as a key reason for slowed production.
Mines in Central Appalachia have undergone a level of scrutiny that coal operations in other areas haven't been subjected to, said Bill Bissett, president of the Kentucky Coal Association, an advocacy group.
"This action, along with other regulatory effects from the federal government, have created an unfair atmosphere in eastern Kentucky's coal production," Bissett said.
The federal government's halting of about 40 mining permits in eastern Kentucky has led to the loss of about 3,600 jobs in the mines and in businesses that benefit from the region's mining, Bissett said.
"We do recognize eastern Kentucky is facing significant hardships right now in coal production, but much like that market has decreased so quickly, there are analysts telling us it could uptick almost equally as quickly," he said.
Coal companies that operate mines in the region have echoed the report's concerns about the region to their investors.
Alpha Natural Resources of Bristol, Va., which operates 89 mines in Central Appalachia, said in its 2012 annual report that it expects production in those operations to decline by 10 percent by 2017.
St. Louis-based Arch Coal attributed slumping production in the region to cheaper natural gas, "depletion of economically attractive reserves, permitting issues, and increasing costs of production," according to its annual report.