Bion Announces Letter of Intent to Build and Operate First Commercial System Using New Advanced Technology Platform.

Business/Technology Editors, Environmental Writers

NEW YORK--(BUSINESS WIRE)--March 1, 2002

Bion Environmental Technologies, Inc. (OTCBB:BION), a leader in the development of innovative livestock waste management systems, announced today that it has signed a Letter of Intent with Fair Oaks Dairy, located in Fair Oaks, Indiana.

The agreement calls for Bion to install, own and operate its newly-developed, second generation (2G) Bion NMS(R) (Nutrient Management System) for a term of twenty years. The system will be built and operated to provide waste treatment for a 3500-head dairy facility. The NMS will incorporate technology advances developed at Bion's Dream Maker Dairy pilot system over the last two years. Fair Oaks will pay Bion an annual, per dairy cow, fee which includes a technology license and O & M fee. The Letter of Intent is subject to a number of terms and conditions including final documentation.

The Fair Oaks installation will be the first Bion NMS to incorporate methane digestion to produce energy into Bion's NMS Technology Platform. This energy is produced in the form of methane gas, which can either be combusted, to produce heat energy, or converted into electricity, or both.

David Mitchell, Bion's Chairman and Chief Executive Officer stated, "We are very pleased to announce this first step in our association with Fair Oaks Dairy. We look forward to an ongoing relationship that provides substantial economic benefits to both Fair Oaks and Bion. This agreement has added significance in that it marks the beginning of the commercial rollout of Bion's technology to the livestock industry. We anticipate further deployment of our systems and services in other parts of the country, as well."

The 2G Bion NMS is the result of thirteen years of research and development, culminating in the transition of the core NMS technology to a platform-based system. The 2G system is more efficient than first generation systems and capable of integration with complementary technologies. The 2G system is consistent in its design and operation and provides cost-effective reductions in nutrients and air emissions. The Bion NMS now supports the same functions as a utility for large-scale CAFOs (Confined Animal Feeding Operations): waste and water treatment, solids removal and energy production. These comprehensive services create multiple revenue streams for Bion that currently include waste management fees and BionSoil sales. The system utilizes computerized monitoring equipment, capable of remote reporting, to verify and quantify the reductions that are achieved.

A recently completed analysis of the containerized 2G Dream Maker pilot system demonstrates a 98% reduction of ammonia discharges to the atmosphere and very low (to frequently undetectable) levels of hydrogen sulfide and the greenhouse gases (methane and nitrogen oxides). The system achieves an 80% reduction of nutrients (nitrogen, phosphorous and potassium) in the waste stream. Further nutrient reductions, if needed, can be achieved through the use of secondary treatment which can be readily integrated into the 2G NMS platform. These reductions will enable large livestock producers to comply with new and proposed CAFO regulations, as well as anticipated applications of the Federal Clean Air Act. These EPA-mandated regulations are intended to reduce the environmental impacts of large livestock facilities on air and water quality.

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 livestock industry is under pressure from state and federal regulatory agencies, the media, environmental groups and the public to reduce their role as a major source of harmful air emissions and nutrient pollution. Bion has invested 13 years and $40 million into developing the state-of-the-art Bion NMS in response to this need. The NMS uses patented biological processes to achieve substantial and verifiable reductions of nutrients and air emissions produced by CAFOs. The system converts the waste into commercially-desirable, environmentally-friendly soil and fertilizer products (BionSoil(TM)). With the NMS ready for commercial deployment, the Company is rolling out its systems and BionSoil products into a vast, untapped market with urgent needs for solutions and few competitors.

This material includes forward-looking statements based on management's current reasonable business expectations. In this document, the words "will," "anticipates," 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.