A jurisdictional battle broke out in the U.S. House of Representatives on Wednesday over which government department — and by extension, which lawmakers — should oversee decisions on foreign investment.

Business lobbyists said the argument could delay progress on reforms to the foreign takeover process that lawmakers began drafting after the furor over Dubai Ports World gaining control of the management of several U.S. port terminals.

The House Energy and Commerce Committee voted on Wednesday to put the Commerce Department, which it oversees, in charge of the inter-agency panel that does government reviews of foreign takeovers, the Committee on Foreign Investments in the United States (CFIUS).

But the House Financial Services Committee last month voted to keep the Treasury Department, which it oversees, as chairman of the CFIUS panel.

Several of the House bill’s bipartisan sponsors were not pleased by Energy and Commerce’s move.

“Giving the chair position to Commerce, which has neither enough expertise nor a national security mission, totally defeats the purpose of the bill and invites recent history to repeat itself,” said New York Democrat Carolyn Maloney.

Legislation tightening rules on foreign investment appeared ready to race through Congress earlier this year when lawmakers were outraged the Bush administration had not thought the ports management contract raised national security concerns. The Dubai company defused the controversy by saying it would sell the ports assets.

But the friction between the two House committees is only the latest hurdle to congressional action.

In the Senate, a bill by Alabama Republican Richard Shelby also stalled after objections from some senators.

Business groups tend to prefer the House bill to the tougher Senate version — and so were unhappy to see the House bill stumble.

“This action by the Energy and Commerce Committee is regrettable, because it will delay legislative progress on positive reform to the CFIUS process,” said Todd Malan, president of the Organization for International Investment.

Usually committee disputes in the House are resolved in the Rules Committee, which merges different committee versions into one bill before it goes to the floor. It was unclear how soon that could happen.

New York Rep. Joseph Crowley, another Democratic co- sponsor, said he would work with Majority Whip Roy Blunt, a Republican co-sponsor, for approval of the version that passed the Financial Services Committee.

“It’s a glitch in the road here, but not anything that can’t be overcome,” Crowley added.

© 2006 Reuters