The Bush administration is leaning toward a renewal of a law that sanctions foreign companies that invest in Iran's energy industry, according to government and industry officials.

The law, which drew the objections of European and Asian countries when it passed in 1996 with the backing of the pro-Israel lobby, aims to halt the flow to Iran of hard currency that it can use to support terrorism. Business groups, who insist that the sanctions do not affect Iranian behavior, hope that the administration will fight an extension of the law and allow it to lapse on Aug. 5 as part of a broader review of policy toward Iran. But the administration, though it has not formally come down on the issue, has sent strong signals that it would not stand in the way of a vote in Congress to extend the law, which also applies to Libya. Deputy Secretary of State Richard Armitage said at his March 15 confirmation hearing that he saw little evidence that either country's behavior warranted a change in sanctions. Since then, the administration has privately hinted it might seek minor changes that would increase the president's flexibility in administering the law, but that it would not oppose extension, a source close to the issue said. A senior administration official told a House subcommittee last week that a decision on the sanctions law would await the outcome of a broader review of policy toward Iran. Broad bipartisan coalitions are forming in Congress to re-authorize the law, congressional sources said. Sens. Gordon H. Smith, Oregon Republican, and Charles E. Schumer, New York Democrat, plan to introduce legislation this summer, and expect to add 30 co-sponsors to the 12 they already have lined up, a staffer said.