Another lakefront parcel known to have pollution problems is the former Diamond Scrap Yard, a twelve-acre site that stretches along the east side of Market Street. The scrap yard operation began in the 1930's, and upon ceasing business left piles of junk and debris that festered until a T.O.W.N. suit forced their removal in the mid 1990's. Prior to the scrap yard, the parcel had been used to dispose of automobiles and drums, to burn wire and transformers, to store petroleum and coal, and to process iron and steel. In 1994 and 1999, this site was the subject of Illinois Environmental Protection Agency (IEPA) studies conducted at the request of the USEPA. An intervening health assessment was performed by the Illinois Department of Health (IDH) in 1995.

The 1994 study found the presence of a variety of volatiles, semi-volatiles, pesticides, PCB's, dioxins, and inorganic contaminants in the soil to a depth of at least four feet, and also found pesticide and inorganic contamination in the Waukegan River caused by surface water that drained off the site. Many of these contaminants were above public health and environmental protection benchmarks. At least seven of these substances exceeded the acceptable cancer risk levels for soil exposure, and seven also exceeded the thresholds for superfund cleanup action. Eight toxic substances attributable to surface water runoff were found in the Waukegan River in excess of sediment standards, and manganese and arsenic were found in the groundwater. When the IEPA returned in 1997, lead contamination had also spread into the groundwater.

Because of these serious pollution issues, and signs that vagrants and other visitors were frequenting the unsecured premises, the IDH was called upon to make a health assessment, which confirmed potential risks from contact with the soil that included a low-level cancer risk. Explaining "the health threat that exists in association with exposure to contaminated on-site soils," the health assessment cited "the potential for off-site human contact with on-site contaminants via fugitive dust" and recommended that public access be restricted. Yet two years later, when the follow-up IEPA study occurred, the site was still easily accessible and the dangerous levels of contaminants were still in the ground. No steps had been taken to remove or to contain the pollution, no liners had been put in the soil to protect the groundwater, and the free flow of surface water still carried contamination into the Waukegan River a short distance from its discharge into Lake Michigan.

Ambient air samples were not collected during this 1997 study, but it was again noted that "the potential does exist for contaminants to be carried away from the site found in surficial soil." Such soil "was observed throughout the site during sample collection," raising the concern that "a minimal amount of ground vegetation found in the areas where most of the salvaging activities occurred would allow windblown particles to be dispersed from the site." While soil contaminants were discovered in the near surface depths but not at the seven-foot depth, further investigation was required in order to determine the full vertical and horizontal extent of the contamination. If the records that have been furnished to us are complete, those further investigations have never been performed.