Bion and California State University to Build Dairy Waste Treatment System at CSU, Fresno.

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 12, 2002

Bion Environmental Technologies, Inc. (PHLX:BNO)(OTCBB:BNET) and the California Agricultural Technology Institute (CATI) at California State University, Fresno, announced today that they will work together in a collaborative manner to design, construct, operate, maintain, and evaluate the performance of a Bion NMS(TM) dairy waste treatment system at the university's dairy.

The research program is being conducted to provide independent evaluation and verification of the performance of the Bion NMS waste treatment system by CATI researchers. Construction on the project is anticipated to begin in the first calendar quarter, 2003.

Initial project goals include completion of a detailed mass balance assessment of the Bion NMS waste treatment process, including documentation of the fate of nitrogen and phosphorus in the treatment process and quantification of gaseous air emissions from the system. Process monitoring and control parameters will be correlated with operational results to model and predict Bion NMS waste treatment system nutrient removal and air emission performance. On a long-term basis, the Bion NMS waste treatment facility will serve as a day-to-day waste management system for the university's dairy and provide a location for testing various waste handling and treatment equipment.

David Mitchell, Bion's CEO, stated: "We are very pleased that CATI has chosen to partner with Bion to provide waste management for CSU Fresno's dairy. We are confident that CATI's evaluation and verification of the Bion NMS's performance will demonstrate reductions of nutrients and air emissions that are comparable to those produced by our system at the Dream Maker Dairy in New York (previously announced January 29, 2002, see below for summary data).

"With the current focus on air and water quality issues, the California dairy industry is facing unique challenges that can potentially be solved by the Bion System. California has over 1.4 million milking cows, making it the leading milk producer in the United States. Independent verification of the Bion NMS should help position the Company to move forward with the commercialization of its technology, as well as establish baseline measurements and quantify the reductions in air emissions and nutrients -- data that will be required to determine any potential environmental credits that may become available."

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. 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 (anaerobic digestion, which produces energy; and membrane filtration, which produces reusable water).

Summary of Dream Maker mass balance analysis: Mass balance analysis is a scientific protocol that can be used to specify and quantify all materials present in the livestock waste stream and their ultimate fate throughout the remediation process. The Bion NMS demonstrated a 98% reduction of ammonia discharged to the atmosphere coupled with very low (to frequently undetectable) levels of 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.

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