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Another way to look at this is the pit mud is just the same as the mud on the street, so if that is hazardous the entire street system is polluted. Hire a kid to clean them (do it during the day) and toss in the dumpster.
Well you can be sure of one thing, whoever is running this does not want us to know what is going on. Could be many reasons for this. Should all come out soon.
Generally having waste water not going to city sewer is illegal in all 51 states. Federal regulations. Be very careful here. Could be BIG fines. If a lawyer says it might be fine get another lawyer.
Another thought. How’s your credit rating? Many manufacturers are real eager to sell machines. All would come with a 2 year warranty. Might simplify things.