Ex-BP Executive Won’t Face a Charge of Lying About Spill

Former BP Plc (BP/) executive David Rainey won a bid to dismiss a charge he obstructed a congressional investigation into the 2010 oil spill because his indictment was flawed, a U.S. judge ruled.

BP’s former vice president of Gulf of Mexico exploration still must face a New Orleans jury in October on one count of lying to investigators about the size of the spill.

U.S. District Judge Kurt D. Engelhardt in federal court in New Orleans yesterday threw out one of two obstruction counts. In a pre-trial ruling, Engelhardt found Rainey lacked sufficient knowledge he was responding to an official congressional inquiry when he prepared flow-rate estimates the government claims understated the size of the spill in May 2010.

“Because it is an essential element of this crime that the defendant knew of this inquiry and investigation, the indictment must allege such knowledge. It does not,” Engelhardt said in his ruling. “Even construing the allegations strongly in the government’s favor, it is simply impossible to ascertain from the indictment whether this essential element was presented to and found by the grand jury.”

Reid Weingarten, Rainey’s lawyer, said in a telephone interview that the ruling “gutted the government’s case. Ninety percent of the evidence against Rainey went to count one, and now count one is gone. This is a huge development.”

Photographer: Derick E. Hingle/Bloomberg

In November, BP Plc agreed to pay $4 billion and plead guilty to 14 felony counts to resolve all criminal allegations stemming from its involvement in the disaster caused by the explosion of the Deepwater Horizon rig. Close

In November, BP Plc agreed to pay $4 billion and plead guilty to 14 felony counts to... Read More

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Photographer: Derick E. Hingle/Bloomberg

In November, BP Plc agreed to pay $4 billion and plead guilty to 14 felony counts to resolve all criminal allegations stemming from its involvement in the disaster caused by the explosion of the Deepwater Horizon rig.

“We’re reviewing the decision and will decline to comment further at this time,” Peter Carr, a Justice Department spokesman, said in an e-mail.

Oil Gushing

Rainey was indicted in November on two counts of making false statements that understated the volume of oil gushing from BP’s blown-out well during the worst offshore spill in U.S. history. Rainey was at the time of the allegations deputy incident commander of a joint U.S. and BP command task force that led efforts to stop the spill.

Prosecutors claimed Rainey told Congressman Edward Markey in a letter, and federal investigators in an interview, that he had calculated the well’s flow rate at 5,000 barrels a day while failing to disclose internal BP estimates that pegged the rate at more than 60,000 barrels a day, according to court papers.

In November, BP agreed to pay $4 billion and plead guilty to 14 felony counts to resolve all criminal allegations stemming from its involvement in the disaster caused by the explosion of the Deepwater Horizon rig. Eleven rig workers died and more than 4.1 million barrels of crude gushed into the Gulf of Mexico after the rig exploded and sank while drilling BP’s well off the Louisiana coast.

Stock Price

BP also agreed to pay $525 million to resolve separate allegations by the U.S. Securities and Exchange Commission that the company lied about the size of the spill in its regulatory filings in order to prop up its stock price.

One count of BP’s guilty plea deals with the false flow-rate estimates Rainey allegedly helped prepare and provide to Congress in May 2010. Scott Dean, BP’s spokesman, declined to comment on the judge’s ruling in Rainey’s case.

Markey, a Democrat from Massachusetts who led the investigation into the BP spill, said in an e-mailed statement that the Justice Department should appeal the judge’s ruling.

‘Deeply Troubling’

“This was a congressional investigation, plain and simple, and this kind of narrow and off-the-wall interpretation of how Congress investigates wrongdoing is deeply troubling,” Markey said in the statement.

A different federal judge concluded testimony in April in the first phase of a separate civil trial over liability for billions of dollars in economic and medical injuries resulting from the oil spill. That trial will apportion fault between BP and its subcontractors, Transocean (RIG), which owned the Deepwater Horizon rig, and Halliburton Co. (HAL), which provided cementing services on the well.

The case is U.S. v. Rainey, 2:12-cr-00291, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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