House votes for tighter Iran energy sanctions

WASHINGTON (Reuters) - Legislation mandating sanctions on foreign energy companies doing business with Iran was passed on Tuesday by the House of Representatives, which approved removing the president's power to waive the penalties as previous administrations have done.

Bush administration officials and some business groups have expressed unease over the bill, which could hit European energy groups. It passed by 397-16, easily enough to overcome any presidential veto. However, its future is murky in the Senate, where similar legislation has 69 co-sponsors but has yet to have a hearing.

Speaking to the House on the same day Iranian President Mahmoud Ahmadinejad was to address the United Nations General Assembly in New York, the legislation's author, Rep. Tom Lantos, said U.S. law had to be strengthened to put a stop to Iran's "headlong pursuit" of nuclear weapons. Critics argue Iran's nuclear program is funded by oil and gas revenue.

Iran's economy relies on oil to bring in 80 to 90 percent of the country's export earnings, according to the U.S. Energy Department. Iran holds 10 percent of the world's proven oil reserves and it has the second-largest natural gas reserves.

Although current law imposes sanctions in the U.S. market on any foreign company that invests $20 million or more in the Iranian energy sector, the law lets the executive branch waive those sanctions, and presidential administrations of both parties have done so for years, Lantos said.

"Since 1999, giant companies such as Royal Dutch Shell, France's Total, Italy's ENI and Inpex of Japan have invested over $100 billion -- over $100 billion in the Iranian energy industry, and the United States has done nothing to stop them," Lantos, a California Democrat, said.

"If we wish to impose serious and biting sanctions on Iran -- effective measures that will change the behavior of the regime in Tehran -- it is clear what we must do," he said. "We must take away the power from the administration to waive the sanctions we pass."

A presidential executive order already prohibits U.S. companies and their foreign subsidiaries from conducting business with Iran, banning any "contract for the financing of the development of petroleum resources located in Iran."

The legislation also would impose a total ban on Iranian imports. It would eliminate some tax breaks for companies investing in Iran, decrease U.S. contributions to the World Bank if the bank invests in Iran, and bar a nuclear cooperation agreement with Russia if Moscow continues to assist Tehran's nuclear program.

Iran insists its nuclear program is for peaceful purposes, but the West suspects the Islamic Republic of enriching uranium to develop a nuclear weapons capability.