I think danohuiginn's question is more whether the bio-accumulation happens faster than whatever degradation.

This abstract suggests that bacteria are utilizing the thiodiglycol that the mustard gas ends up releasing into the water:

http://www.ncbi.nlm.nih.gov/pubmed/19481794

This one suggests that the thiodiglycol is still harmful:

http://www.ncbi.nlm.nih.gov/pubmed/16393936

But that it isn't nearly as harmful as the mustard gas.