toxic because of chemicals and toxic because of the release of untreated sewage (bacteria) are sufficiently different that I thought I'd point out that you kind of mix them here. Also, toxic because of high concentrations (e.g. pH) that will dilute vs toxic cumulative forever chemicals are different orders of magnitude altogether.

This incident you describe seems like a one-off and fairly benign compared to long term patterns that lead to superfund sites. Till this company dumped that batch, they weren't dumping batches, i.e. the system was working.

I'm not up on the latest, not a civil engineer or public health authority, but it is generally recommended in many seaside places not to swim at the beach after rainstorms. the influx of large volumes of water into the sewage treatment systems means that they overflow and raw sewage is released. These systems are being improved all the time, but it's a known problem and civilization hasn't collapsed. Some natural creatures like sewage outflow. When Boston moved their outflow pipe from the inner harbor to deeper water in Cape Cod bay, the lobster population collapsed. Maybe we should have called it the lobster poopulation.

I wonder if chemical plants have something similar, a way to contain an uncontrolled outflow of toxic stuff if the normal flow of neutralization fails.

BTW this likely means quite a bit of land used up by such a reservoir which is ideally never needed, but must be present.