South Carolina, United States – The housing bust that has pockmarked America’s landscape with half-built construction projects has done more than crash home values.

Federal officials and environmentalists says abandoned developments are polluting nearby waterways with sediment, endangering fish and plant life and flooding areas where the silt has built up.

Case in point: Residents in a subdivision of two-story brick homes near the North Carolina state line say they were promised roads and ball fields and tennis courts. But the developer has vanished and the neighbors never came so, when the rains do, the ground crumbles.

The potholes at Edenmoor are big enough to swallow car tires these days. With every deluge, miniature Grand Canyons carve through the red clay of the abandoned home sites, clogging a nearby stream with dirt and adding to a growing environmental problem.

“We have some that are still not being taken over by anybody or they’re in limbo or they’re in litigation and they’re just sitting there, bleeding sediment into the state’s waters,” said Mell Nevils, director of the Division of Land Resources in North Carolina. He estimates that 40 halted and abandoned projects are polluting waterways in the state.

In April, the Environmental Protection Agency settled with one of the largest US homebuilders for sediment runoff at almost 600 sites in 18 states and the District of Columbia. Hovnanian Enterprises agreed to pay US$1 million and take steps to prevent runoff. The EPA, which monitors runoff as part of its enforcement of the Clean Water Act, said the agreement is expected to prevent the run off of 366 million pounds (166,000 tons) of sediment nationwide.

Erosion experts say a construction site will lose about 200 tons of sediment per acre per year compared with just five to seven tons per acre per year for a farm.

The EPA considers sediment the leading — and most costly to fix — cause of water pollution. Projects abandoned by their owners, also known as orphan sites, are tougher to penalize because nobody takes responsibility.

“Storm water is one of those chronic, almost invisible problems throughout the nation, throughout the developed world in general, because no one really thinks about rain as being a source of pollution,” said Janelle Robbins, staff scientist with the Waterkeeper Alliance, an international coalition of waterway advocates. “I have seen some horrific construction storm water sites from active sites … the housing bubble bursting has just exacerbated an already really bad situation.”

North Carolina-based Muddy Water Watch estimates that sediment pollution causes US$16 billion in environmental damage in the US every year, with about 70 per cent of the dirt pollution coming from human activities, such as land clearing for construction, logging and farming.

At Edenmoor, just south of Charlotte, North Carolina, the rivulets and pits on vacant dirt lots once home to pine trees give the impression its 70 residents live on a dangerous moonscape.

“We’ve got safety issues,” said Edenmoor resident Janis Tacy, a 61-year-old retired budget analyst. “We were told at one of our meetings in February by the fire marshal that we need to do something about these holes because if somebody falls in and its collapsed, EMS could not come out here in time to save the child. We’re going to have someone hurt here.”

South Carolina environmental regulators allege that the last-known owner of the property, Lawson’s Bend LLC, based in Virginia Beach, Virginia, is violating state law. No fines have been issued. The state’s enforcement notice, obtained through a public records request, states the company cleared 324 acres (131 hectares) of the 500-acre (202-hectare) site between July 2006 and February 2009.

State inspectors then alleged a dozen violations, including sediment washing into adjacent wetlands and Twelve Mile Creek — a tributary of the Catawba River, which supplies drinking water to communities in the region.

Phone messages left for Nathan Benson, who is listed on several state and bank documents as the contact for Lawson’s Bend, were not returned. A spokesman for Bank of America, which provided financing for Edenmoor, said the bank has not foreclosed on the property and does not own it.

With the project in limbo, its exposed red clay has washed into wetlands that used to would provide an outlet when Twelve Mile Creek floods. David Merryman, the Catawaba riverkeeper, said the silt-elevated creek bed will spell disaster as the water rises and gets faster.

“This summer, acres of Twelve Mile Creek’s banks will disappear,” Merryman said.

State law requires developers to seed land just weeks after grading is complete, but the cleared land at Edenmoor has been exposed with no grass for at least 18 months, he said. “This site needs to be taken care of now,” he said.

Dean Naujoks, a riverkeeper based in Winston-Salem, North Carolina, said inspectors struggle to hold developers responsible for sediment pollution on orphan sites. Like at Edenmoor, accused developers are tough to track down.

“There is no real accountability for enforcing erosion control laws on these sites,” he said. “It is just too hard and so the sites just sit open, many failing to comply with sediment pollution control laws and the Clean Water Act.”