Bush administration rejected a request from Texas's gov. to loosen a federal biofuels mandate that critics say is contributing to soaring food prices.

From The Wall Street Journal:

U.S. Environmental Protection Agency Administrator Stephen Johnson on Thursday denied a request to cut by half the amount of ethanol that must be blended into the nation's fuel supply, a victory for the nation's corn growers and ethanol makers.

The EPA chief found that a 2007 law that ramped up ethanol production wasn't posing severe economic harm, brushing aside complaints from Texas Gov. Rick Perry that the diversion of corn to ethanol production was damaging the state's beef, chicken and dairy industries, which use corn as a food staple.

The support for ethanol has frustrated chicken and hog producers, who blame the mandate in part for increasing the costs of feeding their livestock as corn is diverted to make ethanol. Earlier this year, Gov. Perry petitioned the EPA to reduce the requirement by half, from nine billion gallons of renewable fuels mandated for 2008 and 11.1 billion mandated for 2009. By law, the EPA may waive the mandate after determining that it would severely harm the economy or environment in a state or region.

Even if the EPA were to have cut back on ethanol requirements, it might not have had much effect, as gasoline companies are already blending in more ethanol than required, encouraged by new production and the recent fall in corn prices from highs reached after floods in the Midwest earlier this year.
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The New York Times also notes:

The existing target requires not only more ethanol but also new cars and new filling station equipment.

The long-term hope, backed with generous government incentives, is to make motor fuel from cellulosic, or nonfood, sources. Private companies are feverishly pursuing technologies for using wood chips, wheat straw, waste plastic and even municipal garbage to make ethanol and other liquid vehicle fuels. But none of these is commercially practical now.