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Court Sides With State About STORM'S Controversial Lease for Texas Oyster Reefs

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For more than two years now, private oyster lease holders in Texas have been fighting over whether a navigation district had the right to issue a lease to Sustainable Texas Oyster Resource Management (STORM) — ceding control of a large portion of oyster reefs in Galveston Bay to just one family. Last year, the state waded into the fray, filing a lawsuit against STORM contending the navigation district commissioners didn't have the right to issue the controversial lease in the first place.

Now, an appeals court has backed the state up. In an opinion issued last week, the Third Court of Appeals in Austin sided with the state against STORM and the commissioners who had originally signed off on the deal. 

As we wrote in our cover story, "Murky Waters," in 2015, this all started back in early 2013 when oystermen Tracy Woody and his father-in-law, Ben Nelson, the owners of Jeri's Seafood, set up a separate company, STORM. That summer, word got out that the Chambers Liberty Counties Navigation District had granted STORM a 30-year lease for more than 23,000 acres of submerged land — paying $1.50 per acre for the first three years of the lease — without getting the public's attention until the lease was signed and approved in April 2014. The lease was granted despite the fact that the navigation district was giving STORM rights to land that was already privately leased through the state. 

In April 2015, opponents of the STORM plan — Johnny and Lisa Halili, along with Clifford Hillman, of Hillman's Seafood, Michael Ivich, owner of Misha's Seafood, and oystermen Jure Slabic and Ivo Slabic, all big names in the small world of the Texas oyster industry — filed a lawsuit against the company, contending that STORM violated the Texas Open Meetings Act, a move that the plaintiffs claim allowed STORM to quietly arrange to get the lease without getting the public's attention.

That lawsuit is ongoing. Nelson died earlier this year, but Woody has said he has no intention of backing down on this. "It would be one thing if I thought I was wrong, but I know I'm not wrong, and I'm going to fight for this all the way through," Woody says. 

Meanwhile, the state hasn't exactly been twiddling its thumbs. In August 2015, state Attorney General Ken Paxton filed a suit on behalf of Texas Parks and Wildlife against STORM, the navigation district and Terry Haltom, as both a commissioner and chairman of the navigation district, Allen Herrington, Ken Coleman, Ken Mitchell and Dave Wilcox, all district commissioners of the Board of Navigation and Canal Commissioners.

Texas Parks and Wildlife officials made it clear in the lawsuit filed against STORM and the navigation district commissioners that they felt the whole endeavor was encroaching on the state agency's territory since the Legislature gave Parks and Wildlife the sole authority and jurisdiction to regulate the conservation and harvesting of oysters, mussels and clams from state waters. Essentially, STORM's controversial lease should never have been granted, according to the state's lawsuit.

The navigation district commissioners responded to the state's lawsuit by filing claims that as government employees they're immune to such prosecution, and asked for a motion to dismiss. District Court Judge Rhonda Hurley wasn't having that. The court denied both the plea of immunity and the motion to dismiss.

So the case bounced up to the Third Court of Appeals. If the navigation district commissioners were hoping the appeals court judges would be more open to their arguments, they were ultimately disappointed.

Last Friday, the appeals court issued its opinion, finding that because the law says a person or a governmental entity may be sued for unlawful possession of fish or, say, oysters, the navigation district commissioners don't have governmental immunity in this case. The court ruled the commissioners "acted beyond their statutory authority by entering into a lease with STORM." The court also found that the state laws "do not authorize the commissioners to grant STORM the right to use the leased lands to cultivate oyster beds, harvest oysters, or protect the leased lands, oyster beds and oysters against trespassers."

(We've asked the CLCND commissioners for comment on the ruling. We'll update as soon as we hear back.)

Lisa Halili was thrilled by the news. “Now, what this ruling means for us is that we now have a court opinion saying this isn't legal. I'm hoping this is going to be a way to end this finally,” she says.

The case the Halilis and a handful of other local oystermen filed against STORM is still in the works, but the decision on the state lawsuit makes Halili feel confident about their own case. “Tracy started this mess, and he could have stopped it a long time ago,” Halili says. “We just want it resolved. We want this to end, but I think Tracy is going to fight this all the way. I just want to get back to business.”

Woody was puzzled by the ruling. "I don't know why they mentioned STORM at all. This wasn't about us. We weren't even involved in the trial or giving testimony or anything. Where's the due process in that?" he says. “We're going to pursue this as far as we can. We don't have any intention of giving up. If I was wrong that would be one thing, but I'm not and this is ridiculous.”

In addition to all of this court business, Woody, the Halilis and the rest of the Texas oystermen have been dealing with setbacks from the heavy rains that washed over the area this spring. Fresh water rushing down the rivers and into the bays is good because it washes away a lot of the natural predators of the oyster. But the freshwater also kills off a lot of the oysters when they're exposed to the low-salinity levels for a long enough time, Woody says.

The Memorial Day flood last year killed off a lot of oysters, and now this year's floods have killed a lot of the oyster spats that were growing in to replace the old ones. "It's been like being on a roller coaster, because we went through all of this last year too, and now here it is again," Halili says. 

Woody is kind of Zenlike about the current state of the Texas oyster beds. “That's the way this industry goes,” he says. “We know we're going to have good years, bad years, some really good years where you can make some money, and then a lot of years where we'll just be squeaking by.” 

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