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This paper describes the design, construction and preliminary operation of a covered lagoon-type methane recovery system for the California Polytechnic State University (Cal Poly) Dairy. The dairy houses 300 cows, heifers and calves. A new lagoon was constructed with a liquid volume of 14,000 cubic meters. This lagoon was covered with a flexible membrane incorporating buoyant material so that the cover floats on the surface, and a gas collection system. The output of the lagoon for the present population of animals ranged from 200 to 300 cubic meters of biogas per day. The biogas will fuel 30 KW micro-turbine electric generator, which will be grid-connected with the utility system. Odor control is the most important non-economic benefit. This project will provide environmental benefits - odor control by capturing the odorous gases that result from dairy manure storage; methane, a significant greenhouse gas is kept out of the atmosphere, and water pollution is reduced through the reduction in organic matter in the lagoon. Economic benefits including electricity and process heat are estimated to be worth $16,000 per year.