Public investment preceded years of permit violations

by Compass Vermont

Vermont taxpayers provided $716,100 in federal American Rescue Plan Act funding to help Agri-Mark, Inc.—the billion-dollar dairy cooperative behind the Cabot Creamery brand—upgrade failing wastewater equipment at its Middlebury cheese plant. Despite this substantial public investment in 2023, the company remained in “significant non-compliance” with state environmental permits for years, culminating in a $60,000 civil penalty announced by the Vermont Department of Environmental Conservation in February 2026.

The enforcement action, incorporated into a Final Judicial Order by the Vermont Superior Court’s Environmental Division, addresses 15 violations of the facility’s Pretreatment Discharge Permit between July 2022 and 2025. The violations occurred both before and during the period when the publicly funded equipment was being installed, raising questions about whether private cooperatives should receive taxpayer assistance to fix infrastructure failures that caused documented harm to municipal systems.

The Public Subsidy: $716,100 to Replace Undersized Equipment

According to Middlebury town records, Agri-Mark applied for and received $716,100 in ARPA grant funding in 2023 to replace a Dissolved Air Flotation (DAF) unit that could process only 60% of the plant’s peak daily wastewater flow. In its grant application, the company stated it was “unlikely” the dairy farmers in the cooperative would fund the replacement without public assistance, despite the fact that the undersized system was already failing to protect the town’s wastewater treatment plant.

The ARPA-funded project included $435,000 for a new 400-gallon-per-minute DAF unit, $60,000 for engineering and planning, $80,000 for installation and building modifications, and $115,000 for grant administration and contingency costs. The new equipment was designed to handle 100% of the facility’s peak production flows and includes a 10,000-gallon sludge storage tank.

DAF technology works by dissolving air into wastewater under pressure and then releasing it to form micro-bubbles that carry suspended solids—primarily milk fats and proteins—to the surface where they can be removed. Without adequate capacity, these materials pass directly into the municipal system.

What the Taxpayers Were Paying to Fix

The Middlebury facility is the largest industrial user in the town’s wastewater system, accounting for approximately 62% of the total organic load and 84% of the phosphorus load processed by Middlebury’s Publicly Owned Treatment Works. The plant serves as the primary production hub for Cabot-branded cheddar cheese and powdered whey products.

When Agri-Mark’s pretreatment system failed, the municipal treatment plant received what regulators call “slug loads”—concentrated bursts of organic matter. According to Seven Days reporting, these discharges “gummed up the works” at the town’s facility, requiring municipal workers to manually shovel sludge from equipment. The industrial waste can overwhelm biological treatment processes that rely on bacterial colonies to break down nutrients, potentially leading to partially treated wastewater entering Otter Creek, a major tributary to Lake Champlain.

The violations meant that Middlebury taxpayers bore increased electricity and chemical costs at their municipal plant while also dealing with the physical burden of removing industrial waste that should have been pretreated at the Agri-Mark facility.

The Violations: What Happened During and After the Upgrade

The state enforcement order details 15 violations that occurred from July 2022 through 2025, spanning the period before, during, and after the ARPA-funded equipment installation. The violations include exceedances of Biological Oxygen Demand (BOD) limits, pH level violations, and the unpermitted discharge of “high-strength waste” into the municipal sewer system.

Beyond equipment failures, the judicial order found that Agri-Mark failed to maintain its facility in “good working order” and to employ adequate staff to manage its wastewater pretreatment system. This suggests the violations stemmed not only from undersized equipment but also from organizational and staffing deficiencies.

Agri-Mark has told reporters it has been “fully compliant” with permit requirements since the 2024 equipment upgrades, though the company remained in “significant non-compliance” status for several years while waiting for the publicly funded fix.

The Pattern: Four Decades of Avoiding Infrastructure Investment

The reliance on public funding to address wastewater problems follows a decades-long pattern. In 1986, Cabot officials sent a letter to Vermont’s District 5 Environmental Commission explicitly rejecting the construction of a multi-million dollar sewage disposal plant, arguing that such a facility would “bankrupt the company” and would likely be “technologically obsolete by the time it was completed.”

Rather than investing in standalone treatment systems over the past 40 years, the facility has consistently relied on pretreatment system upgrades, often pursued through public subsidies or mandated by regulatory enforcement after violations occurred.

This history includes a 2005 ammonia spill in the Winooski River that destroyed aquatic life for 5.5 miles, resulting in a $50,000 fine and $50,000 in supplemental environmental projects. Additional penalties followed in 2011 and 2013 for unrelated violations.

Agri-Mark operates as a billion-dollar cooperative representing approximately 800 dairy farmers. The $60,000 fine represents roughly 0.006% of the company’s annual revenue.

Physical Violations, Not Just Paperwork

The Vermont DEC’s 2024 Significant Non-Compliance report provides important context for evaluating the Agri-Mark case. While Ben & Jerry’s ice cream plant in Waterbury recorded the highest violation count at 137 incidents, state officials explained to VTDigger that those violations were almost entirely related to “personnel issues” and reporting lapses—missed paperwork and sampling reports.

In contrast, Agri-Mark’s 14 violations in the 2024 reporting cycle involved actual “impacts to the municipal wastewater treatment facility”. This distinction means Agri-Mark’s failures required physical labor from municipal employees and increased operational costs for the town, representing a direct transfer of industrial expenses to the public sector.

Other significant violators in 2024 included New England Precision in Randolph with 72 violations and St. Albans Creamery with 23 violations, according to state records.

Lake Champlain Context: Why Phosphorus Matters

The enforcement against Agri-Mark occurs within a broader regulatory crackdown on the dairy industry’s impact on Lake Champlain. The lake suffers from excessive phosphorus, which triggers harmful cyanobacteria blooms. The Environmental Protection Agency established a Total Maximum Daily Load (TMDL) for phosphorus, dictating exactly how much nutrient load each segment can handle.

Because Agri-Mark contributes 84% of the phosphorus load to Middlebury’s municipal plant, any failure in its pretreatment system directly affects the town’s ability to meet its own National Pollutant Discharge Elimination System permit limits. The facility discharges into the Otter Creek watershed, which flows into Lake Champlain.

State regulators face mounting pressure from environmental advocates. In December 2025, the Conservation Law Foundation filed a federal lawsuit against Vorsteveld LLP, a 2,300-cow dairy operation in Addison County, alleging pesticide dumping at levels 50 times higher than federal standards. The same organization has criticized Vermont’s Agency of Natural Resources for failing to issue a single Clean Water Act permit to Concentrated Animal Feeding Operations in 50 years.

Seeking Regulatory Relief While Facing Enforcement

While facing environmental enforcement in Middlebury, Agri-Mark is simultaneously engaged in legislative advocacy to reduce regulatory burdens. The cooperative has joined with the Vermont Farm Bureau and Rural Vermont to support a “Right to Grow Food” initiative and the reinstatement of municipal exemptions for farming.

These groups argue that recent Vermont Supreme Court rulings have created a “confusing and complex patchwork of regulatory frameworks” threatening agricultural viability. The dual approach—seeking public subsidies for industrial upgrades while lobbying for regulatory exemptions at the farm level—represents the cooperative’s strategy for operating in Vermont’s increasingly strict environmental regulatory environment.

Beyond the Fine: Required Operational Changes

The judicial settlement requires more than just the $60,000 payment. Agri-Mark must hire an independent consultant to evaluate all waste management procedures and develop a formal compliance and operations manual subject to approval by the Agency of Natural Resources.

The state’s emphasis on management protocols and staffing levels suggests regulators identified organizational deficiencies—not just mechanical failures—as root causes of the violations. The requirement for independent oversight indicates a lack of confidence that the company can self-correct without external monitoring.

The upgraded pretreatment system is now linked to the Middlebury Resource Recovery Center, where captured organic sludge is converted into biogas, aligning with Vermont’s renewable energy goals while reducing phosphorus discharge.

What Happens Next

The success of the enforcement order depends on whether Agri-Mark maintains adequate staffing and operational standards as mandated by the Superior Court. The facility will remain under regulatory scrutiny as Lake Champlain TMDL requirements continue to tighten and new legislation restricts agricultural chemical use.

The DEC will monitor compliance through regular sampling and reporting requirements outlined in the corrective action plan. The independent consultant’s evaluation and the development of the operations manual represent the next immediate steps, with both requiring state approval before implementation.

For Middlebury residents and Vermont taxpayers, the question remains whether the $716,100 public investment will permanently resolve the industrial waste problems that forced municipal workers to manually shovel sludge, or whether future production increases could overwhelm even the upgraded system. The case highlights ongoing tensions over who should bear the financial burden of environmental compliance when private industrial operations generate waste that affects public infrastructure and natural resources.