REYKJAVIK, Iceland (AP) — The Biden administration imposed sanctions Wednesday on Russian companies and ships for their work on a European natural gas pipeline opposed by the U.S., but chose not to punish the German company overseeing the project.

The decision to spare the German company and its CEO for their involvement in the Nord Stream 2 project, made public in a report to Congress, comes as President Joe Biden looks to mend relations with a key ally that were unsettled during the Trump administration.

But the decision angered U.S, lawmakers and other critics of Nord Stream 2 who hoped to stop the project by targeting the company and its top executive.

The U.S. has long opposed the project, which would bring natural gas from Russia to Germany. It argues the pipeline threatens European energy security and poses risks to Ukraine and Poland in bypassing both countries.

“I’ve made it clear to the Biden administration from day one that every effort should be made to prevent completion of the Nord Stream 2 pipeline," Sen. Jeanne Shaheen, a New Hampshire Democrat and a senior member of the Senate Foreign Relations Committee. Shaheen said she was disappointed with the administration's decision to spare the German company.

“Completion of this pipeline poses a threat to U.S. security interests and the stability of our partners in the region,” Shaheen said in a statement.

The Biden administration said its opposition to the pipeline, which Russia is racing to finish, remains. “The Biden administration has been clear that Nord Stream 2 pipeline is a bad deal; it’s a Russian geopolitical project that threatens European energy security,” White House principal deputy press secretary Karine Jean-Pierre said.

The administration was making its sanctions decision public as Secretary of State Antony Blinken sits down in Iceland for his first face-to-face meeting with Russian Foreign Minister Sergey Lavrov.

Their meeting was already expected to be contentions amid a sharp deterioration in ties between Washington and Moscow.

Congressional aides said the administration was imposing sanctions on eight Russian ships and companies involved. The German company, Nord Stream 2 AG, and its German chief executive will were identified as violating U.S. law. But Biden is using presidential authority to waive sanctions on them under a national interest exemption in the legislation, according to the aides and German Foreign Minister Heiko Maas.

Maas, who spoke with Blinken by phone about the issue on Tuesday, praised the decision.

“We perceive this to be a constructive step that we will gladly continue to discuss with our partners in Washington,” Maas told reporters in Berlin on Wednesday.

German Chancellor Angela Merkel has defended the project, noting that Russian gas already flows freely into Europe along other routes, including the existing Nord Stream 1 pipeline under the Baltic Sea to Germany.

Nord Stream 2 is owned by Russian state company Gazprom, with investment from several European companies. Domestic critics in Germany have argued the pipeline should be abandoned because of Russia's treatment of opposition leader Alexey Navalny.

Maas said Germany would discuss with U.S. officials what further steps are necessary to ensure that the waiver remains in place when the next report is due in three months.

“We understand the decision that was made in Washington to be one that takes into consideration the really extraordinarily good relations that have been established with the Biden administration,” he said. “And we naturally also understand it to indicate that Germany (is seen as) an important partner for the United States on which one counts in the future.”

In choosing not to hit Germany with sanctions and focus on Russian companies, the administration has exacerbated a battle with lawmakers, some of whom have now placed holds on the nominations of several of the administration’s picks for senior State Department positions and are threatening to block others.

Nord Stream 2 has attracted bipartisan opposition on Capitol Hill, with administration critics such as Sen. Ted Cruz, R-Texas, and Rep. Michael McCaul, R-Texas, joining Democrats such as New Jersey Sen. Robert Menendez, Delaware Sen. Chris Coons, and Shaheen.

In Germany, the two leading contenders to succeed Merkel after the country's Sept. 26 general election have contrasting positions on the pipeline. The project is 95% complete although construction has not yet begun on its final leg in German waters.

The candidate of the environmentalist Greens party, Annalena Baerbock, said recently that she would have withdrawn support for Nord Stream 2.

Armin Laschet, the candidate of Merkel's center-right party, backs Germany's existing stance.

“I think the German government's position is right, that it has granted the project all its permits," Laschet said Wednesday at a discussion event on foreign policy. “'It can't happen' isn't a foreign policy response, because it is happening,” he said.

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Lee reported from Reykjavik, Iceland. Knickmeyer reported from Oklahoma City. Geir Moulson in Berlin contributed to this report.