13 Years Later, Taxpayers Still Paying for Mismanaged Hurricane Sandy Relief, OIG Audit Finds

Hurricane Sandy struck near Atlantic City, New Jersey, in October 2012, causing catastrophic flooding across the East Coast and producing estimated damages of $88.5 billion, according to a 2024 NOAA estimate. More than 13 years after the storm, a Transportation Department Office of Inspector General (OIG) audit concludes that federal mismanagement of recovery funds continues to burden taxpayers.

Key findings from the OIG audit

• Funding and scope: In January 2013, Congress approved more than $50 billion in disaster aid. The bill directed $10.9 billion to the Federal Transit Administration's (FTA) Public Transportation Emergency Relief Program, and the FTA allocated roughly $10 billion to states for recovery and resilience projects.
• Questioned costs: The OIG identified approximately $95.4 million in questionable or ineligible costs tied to Sandy grants. One example: an awardee received an $88.9 million grant in June 2017 to replace commuter and light-rail signal, power, and communications systems. The project was originally slated to finish in May 2018 and later extended to December 2021, but remained incomplete at the time of the audit. The recipient incurred about $52.5 million in project activity costs after the 2021 deadline; because the FTA had not authorized a further extension, those expenditures are deemed ineligible unless the agency later approves an extension.
• Unspent and delayed funds: The audit found $2.9 billion tied to 28 active, delayed projects. Recipients cited causes such as COVID-related supply chain disruptions, staffing shortages, contract rebidding and lengthy environmental or historic-preservation reviews. One large project that received $773.1 million in 2017 to replace a passenger-and-freight rail bridge—originally expected to finish in December 2024—has been delayed to July 2030, with the possibility of further extensions.
• Open but completed projects: Six grantees completed projects on time and under budget but still have their grants marked open, leaving more than $96 million unspent. In some cases grantees are waiting for FTA guidance on reprogramming residual funds or are finalizing insurance settlements and administrative closeout steps.

Recommendations and implications

The OIG recommends that the FTA strengthen oversight of Sandy spending, review and take corrective action on the roughly $95.4 million in questioned costs, standardize the process for extending project timelines, and update guidance for grant closeouts. More timely and effective closeouts could make up to about $117 million available for other uses.

Because the 2013 appropriation carries 'no‑year' authority for the FTA, the funds remain available until expended and cannot simply be returned to the Treasury. That restriction means unspent Sandy money must stay dedicated to Sandy-related projects, even if they are many years overdue.

Hurricane Sandy's immediate destruction was profound; the OIG's findings show the administrative and financial fallout continues to impose costs on taxpayers more than a decade later.