Bion's Public Response to an Editorial by Robin McLellan
To Rob McClellan and the Bion Working Group (BWG):

Bion understands your concerns with our project and both respects and supports your right to raise questions regarding its impact on your region. What is not clear, however, is whether questions are being raised for the purpose of getting a better understanding of the project or to undermine the project by creating confusion and fear throughout St. Lawrence County based upon personal bias? That is certainly an approach that we've all seen practiced on occasion by those with "long-term experience in environmental politics." We know that you are intelligent and knowledgeable of science, so therefore have difficulty in accepting the apparent disconnect between facts in the public domain and some of your statements and comments.

Your unwillingness to sit down with us in the interest of obtaining answers also gives us cause for concern as it could have avoided both misrepresentation of the project and inflammatory rhetoric that may further polarize and confuse the St. Lawrence County community. Bion is committed to openly addressing the community's questions regarding our project. You chose not to meet with us, stating that you did not care to speak directly with Bion, but preferred to engage in a public process. Public process is certainly needed, but it does not substitute for, nor does it preclude, an honest effort to secure and acknowledge answers to questions when they are offered so that the public can focus on real issues and not be misled by mischaracterizations of the project.

A number of County Legislators did take advantage of the opportunity to meet with us. They used that occasion to obtain information relative to the project and to have their questions directly addressed. Those were very valuable meetings which certainly did not answer all questions, but provided a starting point for constructive dialogue moving forward. They also successfully clarified a number of misunderstandings about Bion and the proposed project.

Consistent with Bion's ongoing commitment to an open dialogue with the community, we have addressed below many of the more obvious concerns raised in your editorial.

• BWG: "The problem is that there are few safeguards in place, the promises are handshake agreements binding on no one and the people's questions are just beginning."
To accept that statement as true one needs to assume that St. Lawrence County is located in a third world country with no laws, regulations or public processes. Were that the case, rather than consider Bion's project in a vacuum, the Bion Working Group (BWG) should be focusing on all of the existing manufacturing activity throughout the County using chemicals and other potentially harmful substances that would also be operating without oversight. But obviously that is not the case -- as it will not be the case with the Bion project.

The ethanol plant must obtain the full spectrum of permits required and after a thorough public review process will be subject to the same regulations and oversight as any other manufacturing operation.

The cattle facilities will be subject to the state CAFO regulations for nutrient discharge. It is true that those regulations do not specifically include air emissions. However, the potential for nuisance odors from air emissions was independently assessed on behalf of St. Lawrence County officials by a team of scientists led by a world renowned air emissions expert from Clarkson University. Their report concluded that with appropriate setbacks and/or other mitigating activities, the Bion project could be implemented without significant odor impacts. Bion has voluntarily committed to performing supplementary detailed odor and air emissions assessments as specific sites are identified and to share the results of those reviews with the community.

Okay, that's fine as far as it goes, but the question remains, since farm air emissions are not regulated, how can the residents of the County be assured that Bion will operate its facilities at those levels? The Bion Working Group author would have had that question answered and many others had he accepted the invitation from the Chamber of Commerce to meet with Bion's representatives at the Chamber's offices in November.

The comprehensive nutrient management plan to be submitted to the NYSDEC will require that Bion's environmental management technology achieve substantial reductions in the level of nutrients in the farm effluent based upon the requirements of a state confined animal feeding operations (CAFO) permit. The state DEC will be responsible for ongoing enforcement of permitted nutrient reductions. As a consequence, Bion will be in violation of its own comprehensive nutrient management plan if it does not achieve the required nutrient reductions on an ongoing basis.

Again, that's fine, but what does enforcing nutrient reductions have to do with voluntary compliance on non-regulated air emissions? In a word, everything! Biological process engineers who have studied Bion's process understand that it is not possible to achieve the required level of nutrient reduction without having a complimentary impact on air emissions, because the reduction in air emissions is a direct and unavoidable consequence of the biological processes that achieve nutrient reductions -- these are not independent processes.

And so, given Bion's total environmental management system, as the state DEC monitors and enforces our comprehensive nutrient management plan, the unavoidable consequence will be achieving or surpassing odor levels as projected in the independently conducted odor assessment.

• BWG: "[concerned about] doubling the number of cattle in the county"
Doubling the number of cattle in the county would certainly be a concern if the County did not enjoy abundant resources available for supporting such an increased herd. But in reality, St. Lawrence County is and has been suffering from underutilization of its agricultural resources. A properly planned and executed doubling or greater of the cattle population in the County should not be a concern. Bion's proposed herd increase will create a long-term market for forage from an estimated 25,000 – 30,000 acres. Perhaps the question should have been "will this increase in herd be sufficient to utilize the potential agricultural production from the approximately 250,000 acres of farmland that is currently lying fallow in St. Lawrence, Franklin and Jefferson Counties?"

• BWG: "How will the 14 million bushels of corn arrive here"?
This is another question that has been publicly addressed by Bion on more than one occasion. The actual corn requirements for the project will be 18 to 20 million bushels per year. The ethanol facility will require approximately 14 million while the beef cattle feed operations will need an additional 5 million. The vast majority of corn needed for both the ethanol facility and herd rations will either be obtained via the St. Lawrence Seaway with wintertime requirements secured and stored in advance of the Seaway's annual maintenance closure or it can be secured by rail. The availability of viable transport alternatives is a strong advantage for doing business in St. Lawrence County.

• BWG: "How much of the ethanol's potential energy will be used in this transportation?"
This is an interesting variation on the traditional "net energy balance" question that asks: "What is the net energy balance in the production of ethanol?" Studies using a "life cycle analysis" assessment now conclude that ethanol produced from corn results in a net energy balance of about 1.35:1 to 1.40:1. In other words, growing corn, transporting it to a production facility and converting it to ethanol results in 35% - 40% more energy in the form of ethanol than has been expended in its production. See the following links for examples of studies addressing the energy balance question in a rigorous holistic manner:

• MIT ethanol analysis confirms benefits of biofuels
• Biofuels: Energy Balance
• How Much Energy Does It Take to Make a Gallon of Ethanol?
• New study confronts old thinking on ethanol's net energy value

It has been shown that a few studies that resulted conclusions of a lower energy balance erred by either using outdated assumptions for the production of corn, from ignoring the energy implication of ethanol's co-product (distiller grains), or from using non-traditional and/or inconsistent boundaries in performing the life cycle analysis.

Bion's integrated project will result in an approximate doubling of the traditional net energy balance to 2.6:1 (resulting in energy content for ethanol produced that is about 2.6 times that of the "life cycle energy" used in its production). Integrating a nearby herd capable of consuming the produced distiller grains eliminates the need to dry or ship that product any great distance. Drying distiller grains at a traditional ethanol production facility accounts for close to one-third of the total thermal energy required in the production process.

Bion's integrated technology platform will also generate more than sufficient renewable energy from the livestock manure stream to provide the remaining thermal needs of the production facility, thus completely eliminating the need to use fossil fuel.

As an additional consequence, project integration will generate greenhouse gas credits (issued to those who reduce carbon emissions in their operations above and beyond the amount existing industries typically produce). An independent review of integrated project activities concluded that the project in St. Lawrence County would generate in excess of half a million Greenhouse Gas Credits per year based upon stringent international (Kyoto) protocols. That is the equivalent of removing approximately 80,000 automobiles from service.

Although the "net energy balance" studies cited likely do not reflect the added expenditure of energy to transport corn to the northeast, neither do they likely take into consideration the energy for transporting the finished product from Midwest ethanol facilities to the 400 million gallon per year New York State market. Energy that is expended in obtaining the feedstock from the Midwest (keeping in mind that transport of grain by ship / barge is the most energy efficient mode available) will be offset to some extent by regional delivery of the finished product.

However, the more critical consideration is the question that is almost never asked when looking at the net energy balance of ethanol: "What is the net energy balance of the gasoline that ethanol is replacing?" The answer, based upon published "life cycle analysis", is 0.80:1. That is to say that every gallon of gasoline produced contains only 80% of the energy required to produce it. And that calculation also does not likely take into account the transportation of finished gasoline from the refineries in Texas and Louisiana, nor does it begin to reflect the cost of dependence on Mideast oil fields, etc.

When stated another way, that the net energy balance of Bion's ethanol will be more than triple that of the gasoline it is replacing, it starts to look like a very good idea!

• BWG: "Cattle need hay and supplemental feed –where will it come from?"
We have on numerous occasions and in many forums explained that the forage portion of the cattle diet will be (and must be) sourced from local / regional farms. Forage is high in water content and therefore cannot economically be shipped any great distance. At the same time, Cornell Extension has established that there are approximately 100,000 acres of former cropland lying fallow in St. Lawrence County alone, with close to a quarter of a million acres of fallow cropland in the three county region.

As noted earlier, Bion's proposed herd will create a long-term local market for forage from a projected 25,000 to 30,000 acres. Returning some of the County's fallow cropland to agricultural production to provide the vast majority of local inputs for the project represents at least a part of the "opportunity" that several farm representatives have referred to when asked about the Bion project. We believe that this perspective accurately reflects that of a great many farm families throughout the region.

• BWG: "Will it drive up land prices so that the expanding dairy farms, the backbone of the county's agricultural economy will be adversely affected?"
Certainly as noted above, Bion's project will create a long-term market for 25,000 to 30,000 acres of agricultural inputs that must be sourced locally. Might establishing an economic purpose for otherwise fallow cropland result in an increase in its value? Almost definitely there will be an overall increase in land values as a result of this new economic activity.

Frankly we are quite perplexed by this question. Is the BWG arguing for maintaining the economic status quo? Does the BWG believe that increasing land prices in St. Lawrence County would be a bad thing? If so, would a reduction in agricultural land prices be seen as a positive for the County?

Is BWG suggesting that increased farmland prices will adversely impact the dairy industry? Since the dairy industry is one of the largest owners of farmland in the county, wouldn't they benefit disproportionately? Won't any increase in land values immediately result in increased equity and a stronger balance sheet for their business? Aren't these precisely the kinds of economic trends that businesses everywhere celebrate? Despite agricultural land prices in California, the biggest dairy state in the nation, increasing from $2,000 per acre to between $7,000 and $12,000 per acre, that state's dairy industry experienced record profits in 2007.

Or is BWG suggesting that the benefit from keeping land prices low for area dairy farms will compensate for the economic burden that low land prices place on the backs of the County's farm families who own the 100,000 acres of fallow cropland? Why haven't St. Lawrence County's cheap farmland prices attracted California dairy farmers if cheap land is so important to a successful and expanding dairy industry? Obviously cheap land prices and the dairy industry alone are not the answer to what ails St. Lawrence County's agricultural economy, the effects of which can be clearly seen in the 100,000 acres of farmland lying fallow.

Agricultural prices have risen throughout the nation. These increases are driven by a number of factors including rising demand for commodities from agricultural energy markets such as ethanol and bio-diesel, as well as the depreciated dollar and related increases in international demand for U.S. commodities. These rising commodity values in turn create a rising value for agricultural land because farmers of all kinds (including dairy) are able to make money at these elevated prices. Dairy exports have risen from 3% of milk production (historically) to 12% of milk production (today).

The point is that nationally the agricultural community has experienced increased agricultural land prices while at the same time expanding their economies, creating jobs and increasing profits for themselves and their communities.

Some dairy farmers have contacted Bion regarding the possibility of terminating their dairy operations and using their facilities and crops to raise young stock for Bion's livestock project. The reasons are varied but obviously these dairies are seeking an alternative to their existing seven day a week work schedule that will enable them to continue to operate their farms while bettering themselves financially.

The BWG argument seems to be that maintaining the status quo in St. Lawrence County is preferable to creating an expanding economy that increases the wealth of the county's property owners while providing an opportunity for many more to directly participate by creating long-term markets for local agricultural crops.

• BWG: "If the ethanol subsidies end, will the plant fold and leave us holding the bag?"
There are really two questions to be answered here. First, if for whatever reason any part of the proposed project goes out of business, it will actually be the investors who are left "holding the bag", no one else. And it is on that basis that as prospective investors do their "due diligence" review of a project, they work very hard to assure themselves that it represents a good investment with an acceptable level of risk. So, the ability to generate investment capital will be the first indication that the marketplace recognizes something significantly different and positive about Bion's ethanol project.

Today, sophisticated investors are no longer interested in what is described as "plain vanilla ethanol". At the same time, especially given the recently passed federal energy legislation substantially raising the renewable fuel standard for ethanol from corn, investors continue to look favorably on corn-to-ethanol projects that incorporate a significant competitive advantage. Bion's integrated ethanol project offers just such an investment opportunity. Lower energy usage (elimination of the need to dry distiller grains), reduced forward pricing risk for energy (long-term pricing contract for renewable energy from the livestock operations), increased value for co-product (based upon long-term established pricing contracts) and reduced market risk for the co-product are among the reasons that Bion's ethanol facility will consistently experience superior cash flows as compared with traditional facilities in the Midwest competing for New York State's 400 million gallon per year ethanol marketplace. Investors are interested in Bion's integrated project based upon these quantifiable advantages.

There is actually an even stronger reason why Bion's ethanol project will be a winner in any "last-man-standing" analysis: Bion's ethanol facility is not a "stand alone" economic venture. Rather it is designed primarily as a feed mill for the herd, producing a significant portion of the ration at a very competitive cost, with ethanol as its co-product. Potentially weakened cash flows for Bion's ethanol facility will nevertheless remain superior to competing production facilities. Neither will weakened cash flows alter the facility's value in supporting the remaining integrated economic activity that will continue to be attractive.

• BWG: "Conservatively, these cattle will consume about 10 gallons of water per day. That's 840,000 gallons a day. Where will it come from?"
A study entitled "Farm Water Supply Requirements" updated in 2004 by Alberta Agriculture & Food indicates that beef cattle in sheltered housing on a high moisture diet (high forage) will consume 5 to 7 gallons per day (gpd) of water as they grow out from 500 lb to 900 lb. Bion's projections assume a more conservative requirement for 9 gallons per day (with an additional 3 gpd provided through a high moisture ration). On that basis, each 14,000 head facility will need to source 126,000 gpd of water. Sourcing will be determined on a site specific basis as candidate farm sites are identified and evaluated. The ongoing requirements of these facilities necessitate a site selection process that carefully screens for sites that can support long-term operations without adverse impacts.
At the same time, Bion's manure management process will treat and be able to return close to 6 gpd or 84,000 gallons per farm module to the local watershed. In this case, the total net withdrawal would be 42,000 gallons per day.

By way of comparison, a 2,500 head modern dairy operation using 30 to 50 gallons of water per head for lactating cows plus replacement heifers would require the same amount of water, approximately 126,000 gpd.

• BWG: "The ethanol plant will require another 400-500,000 gallons of water per day… Where will it come from?"
You are basically correct, although a bit on the high side. Ethanol process technology has improved rapidly over the past 3 to 5 years with a particular focus on the reduction in water usage. As a result, the standard water requirement for a new ethanol facility is now less than 3 gallons of water per gallon of ethanol produced or less than 350,000 gpd for a 42 million gallon per year facility. Additionally, Bion is currently working with design engineers on process alternations that would enable the recycle of a large portion of process water resulting in an additional decrease in water requirements. Sourcing the needed water will be site specific and fully vetted through the regulatory review process of New York State DEC.

• BWG: "Where does the waste water go?"
As noted above, about six gallons per day per head will be available after treatment for use on associated cropland under a state approved comprehensive nutrient management plan. The quantity of N & P remaining in the final effluent is a very small fraction of that found in the effluent from traditional anaerobic lagoons treating similar waste streams. The process can be adjusted to provide nutrient loading as needed for fertilizing crops depending on the final use of the effluent.

In the case of Bion's beef cattle facilities, if effluent after treatment is to be applied via irrigation to field crops, nutrients available from captured solids during the treatment process will actually need to be added back into irrigation waters to meet the nutrient requirements of the crops being grown. It is important to note that the vast majority of these returned captured nutrients will be in particulate form, highly resistant to leaching into groundwater or nearby surface water bodies when used as a fertilizer product.

1. In the case of ethanol production, ongoing design improvements support increasing recycle of process water throughout the production cycle. Treated process water remaining for release from the facility will meet stringent NYSDEC standards and monitoring under a surface water discharge permit.

• BWG: "Huge concentrated animal feeding operations like this are covered by the state's "Right to Farm" law that exempts them from nuisance odor suits…."
The cattle facilities will be subject to the state CAFO regulations for nutrient discharge. It is true that those regulations do not specifically involve air emissions. The potential for odors from air emissions was independently reviewed by a team of distinguished experts from Clarkson University on behalf of St. Lawrence County officials and they have issued a detailed report entitled: "Probability of Nuisance Odors from the Proposed Feeding Operations of Bion Technologies." The report concluded that the Bion project could be implemented without significant odor impacts with an appropriate implementation of set backs and/or other mitigating activities. Bion has voluntarily committed to performing supplementary detailed odor and air emissions assessments as specific sites and designs are identified and to share the results of those reviews with the community.

The comprehensive nutrient management plan to be submitted to the NYSDEC will require Bion's environmental management technology achieve substantial reductions in the level of nutrients in the farm effluent based upon the requirements of a state issued CAFO permit. The NYS DEC will be responsible for ongoing enforcement of permitted nutrient reductions. As a consequence, Bion will be in violation of its own comprehensive nutrient management plan if it does not achieve the required nutrient reductions on an ongoing basis.
Bion cannot achieve the required level of nutrient reduction without having a complimentary impact on air emissions because the reduction in air emissions is a direct and unavoidable consequence of the biological processes that achieve nutrient reductions -- these are not independent processes.

Based upon implementation of Bion Project's total environmental management system, DEC monitoring and enforcement of a comprehensive nutrient management plan will naturally result in achieving or surpassing odor levels as projected in the independently conducted odor assessment.

• BWG: "The ethanol plant isn't a teddy bear factory, either."
An ethanol facility is subject to the same set of regulatory reviews and permit requirements as a "teddy bear factory". Regulatory authorities issue permits for manufacturing operations that establish specific standards for impacts such as air emissions, water sourcing and discharge, storm water runoff and other requirements that must be met by everyone. That regulatory process and those standards will not be different for an ethanol plant or a "teddy bear factory". On the other hand, it is unlikely that a "teddy bear factory" could serve as the keystone to an integrated agricultural project that establishes long-term markets for local agricultural production and more generally provides significant economic benefit throughout the County.

• BWG: "Their interest in this project is to have a platform to showcase their technology."
Bion has invested $20 million since 2000 to develop a comprehensive environmental management and renewable energy technology for livestock operations. In complete candor, it is Bion's interest to implement that technology in an environmentally and economically sustainable business that will begin to provide a return on that R&D investment.

The livestock facilities along with the ethanol plant will require project investment of roughly $200 million. Were our intent merely to create a "platform to showcase our technology", we would be totally unable to attract the capital required! Along with its technology, Bion has developed a business model that employs its intellectual property to create economically sustainable livestock operations by achieving environmentally sustainable scale in livestock herds. It is the development, construction and ongoing operation of those businesses that justify the investment in R&D and project capital expense.

• BWG: "retrofitting existing dairies."
Existing dairy operations can capture economic benefit from Bion's technology when they are interested in expanding their herd. Treatment technology is a relatively expensive approach to manure management and can only be economically implemented at scale, just as the on-farm generation of renewable energy requires either scale or significant public support to create economic viability.

An alternate opportunity available to existing area dairy operations for capture of benefit from adoption of Bion's technology would flow from achieving the required scale by pooling waste from multiple farms, depending upon geography and associated costs. In this manner, Bion's comprehensive waste treatment technology could be used as the basis for a "central processing facility" approach to treating manure from a group of nearby dairies.

• BWG: "Why is Bion here?"
This is another question that has been publically addressed and would have been specifically answered had the author accepted our offer to meet in person last November. The availability of 100,000 acres of fallow cropland in St. Lawrence County (250,000 acres in a three county area) capable of supplying forage and other local agricultural inputs without disrupting existing markets is one reason for locating the project in St. Lawrence County. We have consistently described the advantage of access to the St. Lawrence Seaway as a logistics alternative to rail for securing necessary corn from the Midwest as another prime value of locating an integrated project in St. Lawrence County. We have also discussed additional substantive reasons including proximity to marketplace for locating our project in St. Lawrence County. In additional, we have also pointed out that New York State has established an attractive environment for the generation of renewable energy at agricultural operations through the mechanism of a renewable portfolio standard which creates a market as well as through NYSERDA and other state programs that support the activities of renewable energy generation. Many Midwest states that predominately use coal as a feedstock for energy simply do not have programs in place that support renewable energy.

An implication that Bion has not addressed the question "why St. Lawrence County" simply ignores the reality of our public statements. Bion has addressed this question on many occasions, although it continues to be raised as though we had not done so. Certainly the respectful dialogue that you call for and we seek would anticipate that answers to questions be acknowledged when offered as opposed to ignored.

CONCLUSION

There is little question that Bion's large scale integrated beef cattle and ethanol project represents a significant economic benefit for St. Lawrence County. What is not so readily seen is that these benefits can be achieved within the standards already in place throughout the County for environmental acceptability. That becomes possible through the implementation of unique but proven environmental management technology.

Bion's challenge is to effectively communicate the impact of that technology based upon its proven capabilities. Bion's responsibility is to explain that the result of its implementation, along with careful execution of effective solutions can and will reduce risks well below that of many existing activities already commonly accepted by the community. For example, each 14,000 head beef cattle facility will have comparable environmental impacts to modern dairy operations as follows:

1. Water usage: a 2,500 head dairy
2. Potential for nuisance odors: a 400 head dairy (or smaller) that does not spread manure (Anecdotally, anyone who has spent time near a working dairy knows that it is during manure spreading when you get the preponderance of nuisance odors).
3. Ammonia emissions: a 200 to 300 head dairy
4. Release of nutrients to area waters: a dairy with fewer than 100 head

It is important to keep these comparisons in mind as the project's economic benefits are evaluated against potential impacts to the community.

Yes, Bion seeks to develop a project based upon our technology that can result in a return on investment. At the same time, we deeply believe that this project achieves great alignment with the interests of the community. It makes sense because the community will also benefit based upon the project's reliance on the highest and best use of its agricultural and natural resources. Bion's opportunity is based upon the county's opportunity: underutilized farmland, the Saint Lawrence Seaway in addition to rail services, and proximity to large, high-value commodity markets.