* Business interests and law enforcement opposed bill
* Texas legislation less restrictive than Arizona's
By Karen Brooks
AUSTIN, Texas, June 29 (Reuters) - Powerful business interests helped to scuttle proposed immigration restrictions in Texas on Wednesday, further evidence that Republicans in some states are facing resistance among their own supporters to an immigration clampdown.
The "sanctuary cities" bill would have barred cities from stopping police departments from asking about immigration status of people who are detained or arrested. It died when the Texas legislature adjourned without passing it.
Since Arizona enacted sweeping restrictions on immigration last year and blamed the federal government for failing to pass national reforms, civil rights activists have feared that the crackdown would spread across the country.
Many watched Texas closely because it is the nation's second most populous state, shares a long border with Mexico, has a rapidly growing Hispanic population, and like Arizona, Republicans control its legislature and governorship.
The sanctuary cities bill was far less restrictive than the measure passed in Arizona, and it was championed by Texas Republican Governor Rick Perry, who is considering running for president.
Political analysts expected it to sail through the Republican-dominated legislature.
While Republican party infighting and rivalry between the two chambers of the legislature were factors in its demise, shocked conservatives and Tea Party supporters blamed "Country Club" Republicans with close ties to business.
"I don't, for one minute, blame the Democrats for this one," an angry Mike Openshaw, Texas Tea Party activist, told Reuters on Wednesday.
Two powerful Texas businessmen joined the lobbying against the bill, legislative sources told Reuters.
Houston homebuilder Bob Perry and grocery chain magnate Charles E. Butt hired one of Austin's most powerful lobbyists to oppose the legislation.
Bob Perry has long been known as the top Republican donor in Texas. Last year alone, he gave some $7 million to political candidates, mainly Republicans, according to the Texas Ethics Commission. Some $2.5 million of that went to Governor Rick Perry. Bob Perry is not related to the governor.
Butt, who owns the H-E-B grocery store chain, donated close to $1 million to political candidates on both sides of the aisle last year, according to the commission.
"They had real reservations about it," Bill Miller, the lobbyist hired by the influential businessmen, told Reuters. "They wanted some changes made, and we expressed the reservations they had about it to members, which kind of slowed it down,"
Miller would not say what those concerns were, and calls to homebuilder Perry for comment were not returned late Wednesday. But lawmakers said business interests worried that the law would allow police to harass their workers. The construction and retail industries employ thousands of immigrants in Texas and across the nation.
Another factor in the bill's demise may have been opposition from Texas law enforcement groups.