An imminent shutdown of three-quarters of the 9,800-mile Milwaukee Road was averted yesterday when a federal judge ruled in Chicago that he has no authority to order an embargo on shipping over the railroad.
In a surprise announcement, U.S. District Court Judge Thomas McMillan turned down a request by the trustee for the bankrupt Midwest-to-Pacific Northwest line to embargo shipments over all but 2,400 miles - the only portion of the railroad found by the trustee to have a future profit potential.
Milton Gray, a "special master" appointed by McMillan to hear arguments on Milwaukee trustee Stanley E. G. Hillman's shutdown plan, had recommended last week that such an embargo be put into effect.
Shutting down supposedly money-losing lines - virtually all service west of Minneapolis - "would avoid unnecessarily depleting essential resources of the Milwaukee during the period in which time consuming Interstate Commerce Commission hearings (on an embargo request) would take place and thereby enhance the possibility that a successful reorganization can be achieved," for the one-fourth of Milwaukee lines remaining, Gray had stated.
But McMillen agreed yesterday with the ICC itself and Upper Plains and Pacific Northwest states, as well as Milwaukee employes and union groups, that only the regulatory agency in Washington can order a shutdown and embargo.
"We cannot find any statutory or other authority for our entering the embargo order," the judge said in a conclusion that he said was reached "reluctantly."
McMillen said a shutdown would "indeed promote the public interest" but that under provisions of the law, the ICC has the responsibility for such action. Despite the fact that the Milwaukee Road (its formal name is the Chicago, Milwaukee, St. Paul and Pacific Railroad) has been losing money, current cash does not make running the railroad impossible, the judge declared.
Earlier this week, McMillen authorized the Milwaukee trustee to borrow $15 million from a profitable land subsidiary. Since that time, the railroad has not used up that sum, has not shown continuing losses of $500,000 a day and has not shown that there is no other source of money, McMillen said.
The Milwaukee Road had no immediate comment on yesterday's decision.