Thankfully there are not many "back street" producers of biodiesel now (2008) due to the high cost of vegetable oil, although waste veg oil is still obtainable from curry houses, takeaways and fish shops.
Biodiesel is made by a process known as transesterification which is a basic mixture of Veg oil, Methanol (CH3OH) and caustic soda (KOH) the waste is a bi-product precipitate called glycerol which can be used in pharmaceuticals and food industries by a complex purification processes.
I have been involved with the industry as a consultant for bio-fuels and I know first hand what the impact spillages would have on our fish stocks if allowed into water courses.
When biodiesel is first produced it is relatively safe and supposedly non-toxic as all the methanol and caustic soda if done correctly (to exact specifications) binds readily with the veg oil producing a biodegradable fuel which can be put directly into most modern diesel engines.
However because biodiesel has a limited shelf life (typically 10 days max at room temperature) it will break down rapidly and harbour many millions of growth bacteria and quickly becomes useless as a fuel. Also the precipitate glycerol often contains high proportions of unreacted methanol and lye, both of which I suspect will be thrown away down the drain.
The government allowes you to produce your own fuel legally at home for your own use and without penalty to 2,500 litres per year. Anyone still producing biofuels at home in need of further advice or information about disposal should contact me for a solution. I know of a safe route which is legal and responsible and the company in question actually buys the waste glycerol from you!