Texas Gov. Rick Perry, left, and Gregg Doud, an economist with the National Cattleman's Beef Association, at the National Press Club in Washington, Tuesday, June 24, in this photo from The Associated Press.

WASHINGTON, D.C. - Federal mandates that require diverting significant portions of corn crops to ethanol production are hurting the Texas economy, Gov. Rick Perry told government officials Tuesday.

Perry was joined by industry leaders from across the country in Washington, D.C., on June 24, urging the U.S. Environmental Protection Agency to grant a 50 percent waiver from its Renewable Fuel Standards mandate for grain-based ethanol.

"While I have no doubt this mandate was a well-intentioned effort to move our country toward energy independence, it is doing more harm than good and must be modified before our livestock industry suffers permanent damage," Perry said. "Granting this waiver will provide much needed relief to families, while enabling Texas to continue feeding and fueling the nation."

Since the vast majority of livestock feed products are corn-based, cattle industry leaders feel the pressure created by the mandate could irreparably damage livestock operations across the country.

In 2007, 25 percent of the U.S. corn crop was diverted to produce ethanol, according to the U.S. Department of Agriculture, which projects that 30 to 35 percent will be diverted in 2008. The RFS mandate was established by the federal government through the Energy Policy Act of 2005.

It was amended in 2007 by the Energy Independence and Security Act, which increased the RFS mandate, requiring 9 billion gallons of grain-derived ethanol be blended into our nations fuel supply in 2008, almost twice the amount from 2007.

Opponents say that RFS mandates the levels of renewable fuel usage regardless of market signals and that the artificial demand for grain-derived ethanol is devastating the livestock industry in Texas while contributing to higher food prices around the world.

According to a press release from the Governor's Office, Texas is America's largest beef producer and one of the top 10 states in poultry/egg and dairy production. The livestock industry generates around $75 billion to the Texas economy.

But, according to the press release, Texas cattle feeders haven't seen profits since June 2007 and small family ranches, which make up two-thirds of Texas cattle producers, face potential bankruptcy.

"The federal ethanol policy is causing a crisis in our industry," said Jim Schwertner, President and CEO of Capitol Land & Livestock, who has spent his life in the cattle business. "Corn is a staple product for feeding livestock, and its rising cost is taking a toll on the entire industry."

Perry and others believe a partial waiver of the grain-based ethanol mandate is the most efficient way to halt the economic damage caused by the rising cost of corn.

However, the Renewable Fuels Association calls Perry's request "frivolous," and said it falls short of showing that the mandates cause severe harm to the economy.

In written comments to EPA Administrator Stephen Johnson, the RFA opposed the waiver request stating, "To obtain a waiver [of the RFS], Texas, or any other petitioner, must show that there is severe harm to its or to the U.S. economy, that the harm is being directly caused by implementation of the RFS, and that reducing the RFS as requested in the waiver would redress the severe harm that is claimed to be occurring. Even if the statutory requirements were lax and did not require the showings listed above, the Texas request is so lacking in factual support that it would have to be denied."

In a press release, RFA President Bob Dinneen said, "The complete failure of Governor Perry's request to meet the explicit criteria of a waiver lays bare the true motivation behind the Governor's action, which has more to do with protecting the profits of integrated oil and livestock companies than with the economic well being of Texans and Americans around the country."

Dinneen continued that "any slight reduction in the price of corn achieved by a waiver would quickly be erased by the resulting meteoric rise in gasoline, diesel and oil prices."

The RFA argues that Perry's waiver request does not take into account the benefits that Texas receives from the RFS program in terms of lower prices at the pump, and claims that the 31 percent increase in gas costs that would result if this waiver were granted could cause Texans to pay an additional $15.7 billion for gasoline.

"Thus, the failure to consider the benefits of the RFS (including the negative effects of relaxing it) is a major flaw in the Governor's analysis that on its own warrants rejection of the State's request," the association wrote.

The RFA states that even if Perry's assertions as to the severe economic harm being seen in Texas were true, the waiver request provides no information that demonstrates the RFS is the cause of the alleged harm.

"Since implementation of the RFS is not causing the harm claimed by Texas, no waiver can be granted."

The Texas governor first requested a waiver in late April, prompting the EPA to grant a comment period ending June 23 to consider the appeal. A decision on the request is expected later this summer.

In support of the waiver, Gov. Perry was joined by representatives of the National Cattleman's Beef Association, National Chicken Council, Campbell Soup Company, Tyson Foods, American Meat Institute, National Turkey Federation, American Bakers Association, Dean Foods, National Pork Producers Council, Grocery Manufacturers Association, Hispanic Institute, American Beverage Association, National Restaurant Association, American Conservative Union, Kraft Foods and Pepsi Co.