I am sure there are many reasons, some contractual, some with a better sounding explanation, etc, but I believe it's because Railroads can, if there are not enough volunteers for engine service, force conductors to Engineer training. Pass or terminate prevents a forced conductor, who may prefer his Conductor Seniority/position to going back to the bottom of the board as an Engineer, from failing out of the class, just to go back to his CO seniority on purpose.