"The Iranian regime has engaged in serious human rights abuses against its own citizens, funded terrorist activity throughout the Middle East, and pursued illicit nuclear activities posing a serious threat to the security of the United States and our allies," said Democratic Senator Chris Dodd.
"With passage of this bill, we make it clear that there will be appropriate consequences if these actions continue," said Dodd, the chairman of the Senate Banking Committee and a key sponsor of the legislation.
The sweeping measure, which passed by voice vote, must now be blended with a similar bill in the House of Representatives to forge a compromise measure for both sides to approve and send to President Barack Obama.
The Senate bill aims to punish non-Iranian firms that do business in Iran's energy sector or help the Islamic republic produce or import refined petroleum products like gasoline by blocking them from doing business in the US market.
Oil-rich Iran, which denies the West's charges that it seeks to develop nuclear weapons, lacks refining capability and relies on imports to satisfy 40 percent of its thirst for gasoline.
US Senators have increasingly favored unilateral sanctions as Obama's year-old offer of engagement has failed to get Tehran to freeze its uranium enrichment program, which can be a key step towards an atomic arsenal.
"The Iranian regime has shown no interest in limiting its nuclear ambitions. And an entire year was lost as Iran moved closer and closer to its goal," said Republican Senate Minority Leader Mitch McConnell.
"Iran is closer to realizing its nuclear aspirations, and the US has nothing to show for the outreach," he said.
The bill would close US markets to Iranian carpets, caviar, and pistachio nuts — which then-president Bill Clinton exempted from a US trade embargo in an olive branch to Tehran.
It also requires that the president report to congress when non-US companies become eligible for sanctions, under a 1996 law that punishes investments of more than 20 million dollars in Iran's energy sector.
Iran gets most of its gasoline imports from the Swiss firm Vitol, the Swiss/Dutch firm Trafigura, France's Total, the Swiss firm Glencore and British Petroleum, as well as the Indian firm Reliance.
The measure also expands the 1996 law to cover oil and gas pipelines and tankers, and requires the administration to freeze the assets of any Iranians, including members of Iran's Revolutionary Guard Corps, found to be active in weapons proliferation or terrorism.
It would also enable US investors, including states' pension funds, to divest from energy firms that do business with Iran.
It would prohibit the US government from purchasing goods from firms that do business in Iran's energy sector, or provide sensitive communications technology to Iran — a measure that could affect telecommunications giants Siemens and Nokia.
US lawmakers have also expressed growing frustration at resistance from other countries — notably China — to impose new UN sanctions on Iran, and have even accused Beijing of expanding its commercial interests there.
But the Senate bill could yield results "with America alone, not having to depend upon cooperation of other countries that tend to be less concerned about whether Iran ultimately becomes armed with nuclear weapons," said McConnell.
