Bion Responds to Questions About Farm Bill, EPA Actions.

Business Editors

NEW YORK--(BUSINESS WIRE)--May 23, 2002

Bion Environmental Technologies, Inc. (OTCBB: BION), a leader in the development of innovative livestock waste management systems, responded today to questions concerning provisions of the new Farm Bill, as well as actions taken by the EPA last week that are designed to curb air and water pollution from agriculture.

The 2002 Farm Bill, signed into law on May 13, significantly strengthens the Environmental Quality Incentives Program (EQIP - Title II, Subtitle D) The purpose of EQIP is to "promote agricultural production and environmental quality as compatible goals, and to optimize environmental benefits by assisting producers in complying with local, State, and national regulatory requirements concerning soil, water, and air quality." The program is intended to assist producers, through cost-sharing and incentive payments, to make environmentally beneficial, cost-effective changes to cropping systems, grazing management, and nutrient management associated with livestock production. The Bill specifically states, "the Secretary may accord great significance to a practice that promotes residue, nutrient, pest, invasive species, or air quality management."

The Farm Bill allocates $1.3 billion per year to EQIP with 60% targeted at practices relating to livestock production. Qualifying management practices can receive up to 75% cost-sharing (90% in certain cases) for a maximum benefit of $450,000 under the program. Bion believes the BionNMS(R) will qualify for cost-sharing money under EQIP guidelines, providing a substantial offset to the cost of installation of the system.

On May 14, the Environmental Protection Agency announced that it had settled a lawsuit, filed by a number of environmental groups, by ending the exemption from the Clean Air Act that had been afforded California's agriculture and livestock industries. The suit, filed against the EPA, asserted that the Agency improperly allowed farmers in the state to operate in violation of the Clean Air Act. Under terms of the settlement, the EPA will institute a schedule to phase in regulation under the Act, which will require farmers to obtain permits for sources of harmful air emissions. Which pollution sources are to be covered will be determined by state and federal officials, but specific mention was made that "many of the farms in the (San Joaquin) Valley are so large, particularly dairy farms, that even the amount of manure produced by cows has become a major source of pollution." The San Joaquin Valley is home to approximately 800,000 of California's 1.3 million dairy cows, making it the most concentrated dairy-farming region in the nation. Five of the six worst ozone-polluted areas in the country are located in or near the San Joaquin Valley.

The Agricultural Air Quality Task Force, made up of representatives of the EPA and USDA, as well as leaders in farming, industry, health, and science, was formed to study the impact of air emissions from agriculture and livestock facilities and recommend a plan of action. At the January, 2002, meeting, the committee issued a position paper that proposes "emission reduction credits (ERC's) as an incentive to voluntary compliance" (available at the AAQTF website: http://fargo.nserl.purdue.edu/faca/aaqtf.html). The AAQTF also recommended criteria for establishing and encouraging the generation of agriculturally generated ERC's. These criteria indicate to Bion that the BionNMS produces air pollution reductions that are compliant with proposed guidelines.

David Mitchell, Bion's Chairman and Chief Executive Officer stated: "Bion believes that the trend toward regulation of large livestock facilities under the Clean Air Act (and their potential inclusion in the air credit trading program) will become a reality in the near future. If so, the almost total reduction achieved by the BionNMS of the large amounts of air emissions from these facilities could become a significant source of emission reduction credits. These credits could be sold, providing the potential for a substantial source of revenue for Bion and its customers."

On May 15, the EPA issued a press release, "EPA Proposes Enhanced Approach to Cleaning up America's Waters," proposing a system of pollution-credit trading to reduce nutrient and sediment discharges from industrial, municipal and agricultural sources into U.S. waterways. The system would be based on establishing "total maximum daily loads" (TMDL's - pollution limits) for a particular waterway then allocating the contributions for given pollutants to each of the polluting entities that discharge into the waterway. If a polluter is able to reduce his contributions below the allocated level, he receives a credit which he can then sell to recoup some of the cost of implementing the reduction. Those polluters that can not economically reduce their discharges can purchase the credit to meet their allocation, assuring overall water-quality improvement in of the waterway. The new program will take effect after a 45-day public comment period.

David Mitchell added: "As with air credits, the implementation of the proposed nutrient (pollution) credit trading program creates the potential for additional revenues to Bion and its customers. The implementation of credit trading, coupled with the reduction in system capital cost through cost-sharing and incentives available under the Farm Bill EQIP, will serve to significantly enhance Bion's business model.

"On a broader scale, these events underscore the government's commitment to finding effective solutions to the waste management issues faced by agriculture and the livestock industry. The BionNMS offers solutions to livestock air and water pollution problems that are proven, effective and economically-feasible. The reductions can be verified and quantified so that they can become eligible for proposed air and nutrient credits."

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," "could," "believe," "potential," 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.