Pipeline Sanctions in Defense Bill Could Take Effect Quickly

Sanctions on the Nord Stream 2 pipeline from Russia to Germany are set to go into effect once the 2021 defense bill passed by Congress becomes law.

The sanctions were included in the National Defense Authorization Act that the Senate approved Friday on an 84-13 vote, after the House voted 335-78 on Wednesday to pass it. Although President Donald Trump threatened to veto the bill because it didn’t have a technology-related provision he wanted, strong bipartisan support for the defense measure suggests Congress could override his veto.

The Nord Stream 2 sanctions are written such that they could almost immediately go into effect, according to two people familiar with the matter. While the provision requires the U.S. to consult with allies on the sanctions, it doesn’t specify a timeline for that process, and it could be as short as a five-hour heads up, one of the people said.

“I am pleased that this year’s NDAA further expands the scope of sanctionable activities to prevent the completion of the NS2 pipeline,” Senator Jim Risch, an Idaho Republican and the chairman of the Foreign Relations Committee, said after the Senate approved the bill. “These sanctions are important tools in countering Russia’s malign influence and protecting the integrity of our allies’ security.”

Trump threatened to veto the underlying defense bill because it doesn’t include a repeal of the law that protects technology companies from liability for most of their user-generated content. He also objected to the inclusion of a provision that would rename bases that honor Confederate generals.

However, even many of Trump’s closest allies in Congress voted for the defense bill that contains the sanctions, and both chambers would probably have enough votes to override his veto.

‘Consultation’

The Nord Stream 2 provision in the bill requires the secretary of State to “consult with the relevant governments of Norway, Switzerland, the United Kingdom, and member countries of the European Union with respect to the imposition of such sanctions.”

But a “consultation” is different from other terms in legislative language that apply to working with allies in such situations and doesn’t require allies to consent to the action, according to one of the people, who asked for anonymity to discuss the background of the legislation. It only means that the U.S. has to let the nations know that it is moving forward with the sanctions. That notification can happen just hours before the sanctions go into effect, the person said.

German industry responded with anger to the move to expand sanctions. The Eastern Business Association of around 350 European firms said in a note that there’s no “basis under international law for a U.S. sanctions bill that violates the sovereignty of the EU and targets European companies.”

While the increased willingness of the U.S to consult with Europeans is positive, “purely European projects” should be conducted by European countries involved, and should not be subject to interference by the U.S., the note said.

The Nord Stream 2 provision in the defense bill also gives the president the ability to issue a waiver if he “determines that the waiver is in the national interest of the United States” and notifies Congress of his intent to issue one. Another provision specifies that the sanctions should not apply to the governments and government officials of the European Union, Norway, Switzerland, the U.K. or any other member country of the E.U.

©2020 Bloomberg L.P.

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