Bion Announces First Commercial Application of Second-Generation Bion NMS.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 6, 2003

Bion Environmental Technologies, Inc. (OTCBB:BNET) (PHLX:BNO) announced today a letter of intent to install and operate a Bion NMS(TM) at the DeVries Dairy, near Stephenville, Texas ("the Agreement").

The system will be one of three high-rate, second-generation systems that Bion anticipates installing in the first half of calendar 2003. This installation has been selected to demonstrate the nutrient reduction capability of the Bion NMS in the Bosque River watershed, one of the EPA's top phosphorous pollution hotspots, nationwide. Construction on the project is expected to begin within six weeks.

The DeVries Dairy is located in Erath County, which is home to 126 dairy farms totaling approximately 90,000 cows. Erath County is situated in the Bosque River watershed. The North Bosque River, from which the city of Waco receives 75% of its drinking water, is on the EPA's impaired watershed list. As a result, it is subject to a TMDL (Total Maximum Daily Load) implementation plan in an effort to reduce phosphorous, attributed in large part to the dairy industry and a municipal waste water treatment facility. Additionally, Erath County sits atop the recharge zone for the Paluxy and Trinity aquifers. In 2001, the Texas legislature enacted new rules that allow the Texas Commission on Environmental Quality (TCEQ) to adopt more stringent permit requirements for dairy CAFOs (Confined Animal Feeding Operations) in the Bosque Watershed. These rules allow the state to initiate enforcement actions against those facilities that discharge into the state's waters.

Under terms of the Agreement, a Bion NMS will be installed to treat the waste from the DeVries Dairy's existing herd of 1,200 animals by retrofitting the existing lagoon system. The performance of the system, relative to nutrient removal efficiency, will be assessed for a three- to six-month period by Bion and the DeVries Dairy. The Bion NMS will employ a computerized, on-line monitoring system based on Bion's patented and proprietary intellectual property. The sampling protocol requires that all samples be analyzed by local independent labs and the test results will be made available to the TCEQ, as well as other governmental agencies.

System performance data will then be utilized by the DeVries Dairy to file an amended nutrient management plan that will enable them to secure a permit to significantly expand the dairy's herd size. Under current CAFO regulations, expansion of the dairy without the Bion NMS would not be possible without the acquisition of significantly more land on which to spread the additional waste.

David Mitchell, Bion's CEO, stated: "The DeVries Agreement is a significant step forward for Bion on multiple fronts. While this installation was selected by Bion to demonstrate the Bion NMS' nutrient reduction capabilities in a very high-profile area relative to phosphorous discharge, the previously announced California State, Fresno installation was selected to demonstrate the reduction in air emissions achieved by the Bion system in an area where air emissions are the largest issue facing both the dairy industry and the local environment.

"We anticipate the third major installation planned for the first half of 2003 to be the Fair Oaks Dairy Farm installation in Indiana, which will be a larger, commercial size installation of 3,500 cows. The Fair Oaks system will include an integrated Bion NMS and digester system operating on a dairy that utilizes sand bedding. We expect to complete engineering and secure local approvals within 45 days, then execute contracts and commence construction in March 2003. The completion of these three installations will enable Bion to commence full-scale commercial application of its technology in the dairy industry, nationwide, regardless of bedding, weather conditions or whether the local environmental driver is nutrients, air emissions or both. R & D relating to the integration of supplementary technologies into the NMS platform will continue.

"We are pleased that George DeVries has chosen to work with Bion to achieve his business and environmental goals by utilizing Bion's comprehensive waste management solution. The project will afford Bion the opportunity to demonstrate that by using a Bion NMS to manage its waste, a dairy farm can be expanded (or a new one built) in compliance with the new CAFO regulations and without the acquisition of large amounts of land to support nutrient management."

About Bion

Founded in 1989, Bion provides waste management solutions to agriculture, focusing on livestock waste from confined animal feeding operations (CAFOs), such as large dairy and hog farms. The Bion NMS is a proprietary and patented waste treatment system that remediates animal waste in a manner that is both economical and consistent with existing and proposed environmental regulatory requirements. The Bion NMS achieves a 98% reduction of ammonia discharged to the atmosphere coupled with very low (to frequently undetectable) levels of VOCs, hydrogen sulfide and the greenhouse gases (methane and nitrogen oxides), as well as an 80%, or greater, reduction of nutrients (phosphorous, nitrogen and potassium) in the water effluent.

Due to its platform design, Bion's NMS is capable of generating revenue not only from the products and services it produces (waste removal, soil production and potentially environmental credits), but also from supplementary technologies that can be integrated into the platform such as anaerobic digestion, which produces energy, and membrane filtration, which produces reusable water.

This material includes forward-looking statements based on management's current reasonable business expectations. In this document, the words "anticipate," "will (be)," "expect," "can (be)" and similar expressions identify certain forward-looking statements. These statements are made in reliance on the Private Securities Litigation Reform Act, Section 27A of the Securities act of 1933, as amended. There are numerous risks and uncertainties that could result in actual results differing materially from expected outcomes. The material should be read in conjunction with the Company's current annual and quarterly reports filed with the SEC, which contain discussions of currently known factors that could significantly impact the Company's future expectations.