The EPA is responsible for evaluating the impact of the use of corn for ethanol production on the price of corn. According to a recent EPA news release, "waiving the mandate would only reduce corn prices by approximately one percent." Thus the market effects of using corn for ethanol are small and don't meet the requirement for a waiver (severe economic harm). This is quite surprising given the large mandates and the large portion of the corn crop used for ethanol. The short EPA report seems to suggest that there supply inelasticity may be a key factor - ethanol producers are unlikely to change practices for a short-term (1 year) change in policy or food producers and livestock feeders are unlikely to be able to absorb the corn that would (presumably) become available at a lower price. 



See a recent NYT article here.