Darigold is poised to upgrade the waste-water system at its Medford milk packaging plant.

Darigold is poised to upgrade the waste-water system at its Medford milk packaging plant.

The project, which involves the installation of two 16,500-gallon tanks, is part of a multiyear modernization of its 12 facilities in five states.

"Medford is an old facility and it is becoming more and more of a struggle to keep effective and efficient handling of waste water," said Steve Rowe, senior vice president of corporate affairs for the Seattle-based firm.

Daniel Scarpine of Aquarius Environmental of Portland, who is contracting with Darigold on the project, said the new tanks will position the plant for long-term environmental compliance.

"Projects like this don't contribute to the bottom line, but they do build the customer's faith in that Darigold is doing the right thing," Scarpine said.

Darigold is the fourth-largest dairy cooperative in the country, based on milk volume, and is among the largest privately held companies in Washington state.

The closely held firm said its annual revenue surpasses $2 billion and it employs close to 5,000 employees in the Northwest, including 35 at its Medford packaging plant across Riverside Avenue from the Rogue Valley Mall.

In 2009 (new figures will be out in a few weeks), Darigold's total export revenue exceeded $500 million, with significant sales in Mexico, Canada, South America, the Middle East, China, Japan, Thailand, the Philippines and Indonesia. The company's largest global competitor is New Zealand dairy giant Fonterra.

"We've set aside several millions of dollars specifically for environmental projects," Rowe said. "We didn't want to put our plant managers into a position where they would have to trade off dollars between operations and environmental projects."

A legal and regulatory crisis following a 2009 ammonia leak in the cooling system of its Issaquah, Wash., plant led to a major overhaul of the company's approach to environmental issues.

In June of 2011, Darigold plead guilty to violating the U.S. Clean Water Act when it illegally discharged an ammonia solution on the roof of the plant that found its way into a storm drain connecting to Issaquah Creek, killing more than 40 fish.

As part of its settlement with the government, Darigold agreed to develop and implement a corporate environmental compliance plan.

Darigold has hired 15 people whose focus is on environmental issues and has 10 to 12 environmental managers.

"Our company has gone through very good growth in awareness and commitment to this sort of triple bottom line balance of economic, social and environmental outcomes," Rowe said. "We've done our best to take the lemons and turn them into lemonade."

The dairy operation has been in place since the 1940s, but the city changed the zoning from industrial to commercial in 1980s. As a result, as part of its environmental upgrade, Darigold must get a conditional use permit for a nonconforming use.

"If the zoning hadn't changed, they would've just needed a building permit," said Kelly Aiken, a senior planner with the Medford Planning Department.

Aiken said the city's fees will be determined when a building permit is issued.

Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter @GregMTBusiness