UPDATE 1-EXCLUSIVE-New Jersey railway put trains in Sandy flood zone despite warnings

* Damage estimated at $900 million, based on Reuters review

* 24 percent of NJ Transit fleet damaged

* Key Meadows complex had never flooded

* NJ Transit says equipment loss won't have significant hit

on service

(Adds New York Post comment)

NEW YORK, Nov 17 (Reuters) - New Jersey Transit's struggle

to recover from Superstorm Sandy is being compounded by a

pre-storm decision to park much of its equipment in two rail

yards that forecasters predicted would flood, a move that

resulted in damage to one-third of its locomotives and a quarter

of its passenger cars.

That damage is likely to cost tens of millions of dollars

and take many months to repair, a Reuters examination has found.

The Garden State's commuter railway parked critical

equipment - including much of its newest and most expensive

stock - at its low-lying main rail yard in Kearny just before

the hurricane. It did so even though forecasters had released

maps showing the wetland-surrounded area likely would be under

water when Sandy's expected record storm surge hit. Other

equipment was parked at its Hoboken terminal and rail yard,

where flooding also was predicted and which has flooded before.

Among the damaged equipment: nine dual-powered locomotive

engines and 84 multi-level rail cars purchased over the past six

years at a cost of about $385 million.

"If there's a predicted 13-foot or 10-foot storm surge, you

don't leave your equipment in a low-lying area," said David

Schanoes, a railroad consultant and former deputy chief of field

operations for Metro North Railroad, a sister railway serving

New York State. "It's just basic railroading. You don't leave

your equipment where it can be damaged."

After Reuters made numerous inquiries to state and local

officials this week about the decision to store equipment in the

yards, an unidentified senior transportation official told the

New York Post that NJ Transit had launched an internal probe,

the Post reported on Saturday.

NJ Transit Chairman James S. Simpson, the state's

transportation commissioner, told Reuters on Saturday he knew of

no such investigation. NJ Transit spokesman John Durso said the

agency had not launched a probe but would examine its response

to the storm, as "is standard procedure following any major

incident."

The Post said it stood by its story.

As of Friday, almost three weeks after the storm, the agency

was still struggling to restore full service for its 136,000

daily rail commuters, running just 37 trains into New York Penn

Station during the morning rush hour, rather than its usual

63. More service will be restored on Monday. The disruptions

have caused long delays and crowded trains for Jersey residents

who work in the biggest U.S. city.

James Weinstein, NJ Transit's executive director, said he

did not expect the loss of equipment to have a significant

effect on service in the coming weeks and months.

Sandy was a storm of rare ferocity, and some damage was

inevitable. High winds and a crushing storm surge damaged every

conceivable element of the rail system.

The massive, slow-moving storm, which came ashore near

Atlantic City, sent boats crashing into a key rail bridge and

gigantic trees toppling onto wires and tracks. A rush of

seawater washed out miles of coastline track and a switch that

directs some of NJ Transit's most heavily traveled rail lines

into New York City.

Floodwaters zapped the computer system that guides trains

and alerts passengers; damaged a substation that powers much of

the agency's main artery into the city; coursed into one of the

two tunnels that funnel its trains under the Hudson River; and

left a major hub in Hoboken under nine feet of water and five

feet of mud.

Still, some of the damage could have been avoided with

better planning, railroad experts say.

YARD IN A SWAMPY CROOK

Most of the avoidable damage came at NJ Transit's Meadows

Maintenance Complex, a sprawling 78-acre network of tracks and

buildings in an industrial area of Kearny that is surrounded by

wetlands. The complex is the primary maintenance center for the

agency's locomotives and rail cars, with both outdoor and indoor

equipment storage; repair, servicing, cleaning, inspection and

training facilities; and the agency's rail operations center,

which houses computers involved in the movement of trains and

communication with passengers.

The yard sits in the swampy crook where the Passaic and

Hackensack rivers come together. Elevation maps show that it

lies between 0 and 19 feet above sea level. The National

Hurricane Center was predicting a storm surge of 6 to 11 feet

along the New Jersey and New York coast on top of an unusual

tide that already had the rivers running high.

Forecasts were that the storm would make landfall on Monday,

Oct. 29, somewhere along the New Jersey or New York coast. On

Friday, Oct. 26, executives from the New York City subway system

and all of the region's commuter rail systems - NJ Transit, Long

Island Rail Road and Metro North Railroad - decided they would

halt all service Sunday night.

NJ Transit's last trains left their originating stations at

11 p.m. on Sunday, and workers spent the next 12 hours securing

equipment, said Weinstein.

At NJ Transit's emergency command center, reports streamed

in from the governor's command center in Trenton, county

emergency management officials and the National Weather Service,

which provided frequent updates on the storm's progress.

Monitoring those reports and advising the agency on what to

expect from the storm was NJ Transit Police Capt. Robert Noble,

who is well-versed and trained in monitoring storms, Weinstein

said.

Noble said he monitored weather reports for all of the

agency's bus lots and rail yards statewide. Flooding was

predicted for virtually every corner of the system, he said.

"Based upon the information we had at that hour, the complex

was not the highest-threat location that we had," he said.

Yet a Reuters review of information disseminated before the

storm found detailed maps issued by the National Hurricane

Center and the Federal Emergency Management Agency, all warning

that both the rail hub in Hoboken and the Meadows complex in

Kearny would flood. Asked if NJ Transit executives saw those

maps and factored the predictions into their decision-making,

Weinstein said the agency considered the storm surge predictions

but also relied on history and experience.

FORECASTS PROVED HIGHLY ACCURATE

The agency has been operating its Meadows complex since the

1980s, and it had never flooded, not even during Hurricane

Floyd, which caused record flooding in New Jersey in 1999, said

Kevin O'Connor, vice president and general manager of rail

operations. Several former NJ Transit employees who worked there

for decades said they could not recall any time it had flooded.

A map of the storm surge from Hurricane Irene in August

2011, prepared by the FEMA, shows water came within about 400

yards of the rail complex. O'Connor said employees had trouble

getting to the complex during that storm because surrounding

roads had flooded, but the water never encroached on the rail

yard.

"Our experience and all of the information we had led us to

conclude that our equipment was in the safest possible place,"

Weinstein said. "There was no reason for us to think that the

kind of flooding that we actually experienced would happen

there."

But this time, the weather forecasters proved right, and

history proved wrong. Maps of the forecasters' predictions,

compared with those of the actual storm surge, show the computer

models were remarkably accurate. Tides added another 4.5 feet of

water to the storm surge in the area, said Philip Orton,

research scientist in physical oceanography and specialist in

storm surges at Stevens Institute of Technology.

Given the value of the equipment stored at the Meadows yard

during the storm, it is hard to imagine why NJ Transit

executives gambled that history would repeat itself, said Alain

Kornhauser, director of the Transportation Research Center at

Princeton University.

Weinstein said he could not yet put a dollar amount on the

damage. A Reuters review of Board of Directors meeting minutes

and news accounts describing equipment purchases found the

damaged locomotives and passenger cars worth about $900 million.

Kornhauser was especially critical that nine new dual-motor

engines, which together cost more than $107 million, had been

left in an area predicted to flood. Even if the risk of flooding

had been infinitesimal, he said, the agency's newest, most

expensive equipment should have been moved to higher ground.

"What do you do with your personal valuable assets when you

hear a hurricane is coming?" he said. "You put them in your

pocket and get out of there, don't you? You don't need to be a

rocket scientist for that one, do you?"

NJ Transit's sister railroads in New York did move their

rolling stock to higher ground on the Sunday night before the

storm.

After consulting "slosh maps," which predicted which areas

would flood, Long Island Rail Road moved hundreds of train

engines and cars from its huge Westside Yard just west of Penn

Station in New York City and other low-lying yards scattered

across its system, said Joe Calderone, the railroad's vice

president of public affairs. Much of the equipment was moved to

a large rail yard at Jamaica, Queens. What wouldn't fit in yards

deemed safe from flooding was parked on the main line and other

high-elevation tracks.

No LIRR locomotives or rail cars were damaged, Calderone

said.

None of New York City's subway cars were damaged during

Sandy. The yards at Coney Island, the largest yard in the

system, and the Rockaways were emptied before the storm, with

equipment moved to other yards or parked on lines not vulnerable

to flooding, spokesman Kevin Ortiz said.

Metro North was so concerned about the potential storm surge

on the Hudson River that it asked National Weather Service

forecasters to run computer models to predict whether certain

yards would flood. Railroad executives then used those

predictions to decide where to move equipment, said Howard

Permut, the railroad's president.

"We had direct conversations with some of the forecasters

themselves," he said. "They ran a bunch of models for that."

Some stock was exposed nevertheless. North of New York City,

in Croton-on-Hudson, the storm surge from the Hudson River

flooded Metro North's Harmon rail yard. There, workers had moved

equipment to the northernmost point of the yard in an effort to

keep it dry, said spokeswoman Marjorie Anders. Still, two

locomotives and 11 passenger cars were damaged, she said.

SALTWATER, 5 FEET DEEP

NJ Transit's Meadows yard was particularly vulnerable. The

National Hurricane Center's models from 7 a.m. on the Saturday

before the storm predicted water would lap at its edge. By 7

p.m. Sunday, some models predicted most of the yard would flood.

That night, NJ Transit began moving rail cars and locomotives

there.

By 11 a.m. Monday, scores of locomotives and hundreds of

rail cars awaited the storm in the Meadows yard.

NJ Transit has 203 locomotives and 1,162 rail cars, and 62

locomotives and 261 rail cars were damaged. That amounts to 24

percent of the fleet.

All but 15 percent or 20 percent of the damaged stock was

flooded at the Meadows yard, said Durso, the NJT spokesman. The

rest were in Hoboken, which also saw severe flooding. Durso said

he could not provide specific counts of damaged equipment by

location.

Weinstein and O'Connor were at the Meadows complex on Monday

afternoon during the storm, Weinstein said, and they remained

confident in their decision. "There was no reason for anybody to

believe that the flooding was going to be anything close to what

we experienced," he said.

By late Monday night and early Tuesday morning, it became

clear they had miscalculated.

Water had surrounded the maintenance buildings by 10 p.m.,

Durso said. By 2 a.m., water had come inside, and employees

called O'Connor to tell him about it.

The water was as deep as five feet in some of the complex's

maintenance areas, Weinstein said. Out in the yard, it was deep

enough to submerge automobiles. Salt water rose above the wheel

wells of the locomotives and rail cars, engulfing brakes,

electrical systems, heating and air-conditioning units,

batteries and traction motors that help power the cars and

soaking insulation panels and seat cushions.

Some of the equipment, Weinstein said, had already been

taken out of service for repairs before the storm. Some of the

repair work is already under way.

He said he could not yet estimate the cost or time to repair

the equipment. Metro North expects to spend more than $100,000

repairing each of its damaged rail cars, Anders said. The

Southeastern Pennsylvania Transportation Authority spent about

$1.5 million repairing one locomotive and 12 passenger cars that

flooded during Hurricane Irene, said Ron Hopkins, SEPTA's

assistant general manager for operations. The work took more

than a year.

Should NJ Transit's costs be similar, they would face a

repair bill of more than $32 million.

Weinstein said all of his attention to date has been on

restoring service, and he has not had time to reflect on lessons

learned. But both he and Governor Chris Christie say there will

be a review of the agency's response to the storm.

"You can prepare for a worst-case scenario, but the standard

of preparedness was definitely raised by this storm," said

Christie spokesman Michael Drewniak. "As we did post-Hurricane

Irene, we will be evaluating how we did and where we can

improve, and make changes for the future. But, again, this was a

hit of historic proportions."

(Additional reporting by Melanie Hicken; research by Lisa

Schwartz; Editing by Maurice Tamman and Michael Williams)

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