Murky Waters: Oystermen Battle Over the Future of Texas Oyster Reefs

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Lisa Halili had to scream into the phone to get her old friend and longtime competitor in the Texas oyster industry, Mihael Ivic, to calm down enough so that she could understand what he was saying.

"The Nelsons are stealing the bay!" Ivic yelled. Lisa's stomach knotted and her hands grew slick with sweat as she handed the phone to her husband, Johnny Halili, to see if he could get Ivic to make sense. The story Ivic told seemed like some kind of sick joke. After everything they'd been through the past few years -- the hurricanes, the drought, the oil spill, an entire litany of disasters -- even Ben Nelson, known curmudgeon that he was, couldn't really do this.

But Nelson's son-in-law, Tracy Woody, confirmed it when Johnny Halili called him.

Yeah, we've got a lease and now we own your leases, Woody told him.

You really think you're going to kick my fishermen off of our beds and that you're going to control these beds? Johnny asked.

Yeah, I own the beds, Woody said.

Woody and Nelson had set up a separate company in early 2014, Sustainable Texas Oyster Resource Management (also known as STORM). Then they'd obtained a 30-year lease through the Chambers-Liberty Counties Navigation District for more than 23,000 acres of submerged land in Trinity Bay and Galveston Bay. They were paying $1.50 an acre for the land for the first three years, about $34,000 total, with the cost rising to $3 an acre after that, about $69,000 total, and the lease stated they had exclusive rights to the bay bottoms and any oyster reefs connected to the submerged land. Woody had called Ivic up on a morning in mid-June and told him that the lease was signed and approved on April 15, 2014.

According to Woody's interpretation of the law, the private leases the Halilis, Ivic and a few others had purchased from retiring oystermen over the years were now null and void, but Woody told Ivic he would cut him in and let him sublease if Ivic went along with the plan. Woody had also asked Ivic to call Johnny and Lisa to see if they were interested in subleasing. Ivic furiously rejected the proposal. Now he was on the phone, gasping and sputtering, convinced he was about to lose the business he'd worked on building his entire life.

Lisa watched her husband talk to Ivic, and then he hung up and made a call to Woody, his voice getting louder and his face turning redder with every word. Woody was claiming that a 131-acre lease the Halilis had paid $430,000 for, or about $3,200 per acre, now belonged to him. Things had been tense between the Nelson clan and the Halilis for years, but this was something new. "I have to go now, Tracy," Johnny barked into the phone, his accent thickening as he struggled to keep his temper. "I am having dinner with my family." Johnny stormed out of the room and went and bought a pack of a cigarettes -- even though he'd quit smoking about four years earlier -- filling his lungs with clouds of nicotine until he felt his pulse slow.

Lisa called her son Ruz and sent him to the Chambers County Courthouse to grab a copy of the lease. According to a 1957 bill of sale in which the state granted navigable rights to the 23,000 acres of submerged land to the navigation district, it looked as if somehow the Chambers-Liberty Counties Navigation District might actually have the right to hand out such a lease. Still, Lisa couldn't believe it. She immediately started calling every-one she could think of, including fellow oystermen and local and national politicians, to make them aware of the deal.

Nelson has been known in the industry as a tough man -- he was even charged with and convicted of slavery for an incident involving some illegal immigrants in the early 1980s -- but STORM has set Nelson and Woody at odds with the people they've worked with and competed against for decades.

Woody and Nelson say they aren't making a power grab but simply stepping in and taking control of some land to grow oyster reefs on. While some observers blame the current situation in the oyster industry on many factors, Woody and Nelson say they believe the problems are being caused by inept and un-informed management by the state and by overfishing. "We have about 100 years of experience in this industry between the two of us. Now, would you rather see state officials who don't know what they're doing building these reefs, or would you rather see this land in private hands, controlled by people who know what they're doing?" Woody asks.

"It's hell. We've been fighting the same problems for years," Nelson says. "If we don't do this, we're all going to be out of jobs."

Still, the rest of the industry suspects this isn't so much a virtuous do-gooder mission as it is a move to control significant portions of some of the best oyster reefs in Texas. Private lease holders like the Nelsons, the Halilis and Ivic dominate the Texas oyster industry because they can harvest oysters all year. Nelson already owns the bulk of the private leases in Texas, and the 23,000-acre lease adds about 3,000 acres of public reefs and 452 acres of private reefs to his holdings. Most of the private leases in question belong to Ivic and the Halilis.

For people who like eating oysters or protecting the environment, the debate goes far beyond whether just one family should control an immense portion of the oyster industry to questions about whether that establishes precedents for allocation of the state's public land rights in the future.

So far, no government agency at the state level has recognized the lease granted by the navigation district. "It's all about greed. Tracy talks about how they're just doing this for the resource and how they're going to build oyster reefs out there on this land, but there are already reefs out there and I know because we helped build them," Ruz Halili says.

Other oystermen haven't responded well to Woody's offers to let them come work for him. Clifford Hillman called Nelson up as soon as he heard about the lease and gave the man -- they've known each other for decades -- his thoughts. "I told him what he was doing was morally and ethically wrong and I would have no part of it," says Hillman, who sold his leases and is now on the packaging side of the industry. Woody turned around and called Hillman's son anyway, telling him that if he got Hillman in line, Woody and Nelson would let the Hillmans come work for them. "Work for them? I'm the one who came up with the technology they based their business on!" Hillman says, his normally well-measured voice rising and rattling in his throat.

The oyster reefs in Texas have been nestled on the bay bottoms for centuries. The Karankawas dined on the slick meat of the Crassostrea virginica, commonly known as the Eastern oyster, long before white settlers arrived. Galveston Bay and the other waters along the edge of the Gulf are among the last places where wild oysters are harvested. The once-legendary reefs in Chesapeake Bay and New York Harbor were overharvested, polluted and almost destroyed decades ago (though there are efforts under way to restore those reefs), but the oyster reefs along the Gulf have endured.

Despite what one official with the Texas Parks & Wildlife Department describes as "staggering declines" in the oyster reefs in recent years, the people who depend on oystering have always been able to survive. Now a simple lease might finally drive them off.

The Nelsons have lived on Smith Point, an isolated peninsula on the east side of Galveston Bay, for generations. The tiny unincorporated community comprises a massive, rambling building that is Jeri's Seafood, the docks and a handful of weather-beaten homes that house the Nelson family and employees. Nelson owns virtually everything in the area and has made it through the rough years in oystering with the help of income from oil leases and running cattle. Still, when it comes down to it, the Nelsons define themselves as an oystering family. "We love this business. This is what we choose to do and we couldn't do anything else," Woody says.

The Halilis and Ivic oyster out of San Leon on the other side of Galveston Bay from the Nelsons, with about eight to ten miles of water between them. The shrimp-boat docks were destroyed in a recent hurricane, but the oyster docks are crowded with boats and the place is always busy with oystermen and deckhands while workers in the processing houses pack oysters to go to market. "In this industry, we all have disagreements from time to time, but we also help each other out when we need to. We're like a big family," Lisa says. Most of the oystermen in Texas are confined to harvesting from the 22,760-acre public reefs located in Galveston, San Antonio and Matagorda Bay from November 1 to April 30 each year. The state has become increasingly stringent about who has access to the public reefs as it tries to reduce the strain on the resource. The state issued a moratorium in 2007 on new oyster licenses -- at the moment there are only about 500 licenses left in the state and only 360 are being actively used -- and in recent years, oystermen have gone from being able to collect up to 150 sacks per day to only 50. However, private lease holders get to harvest oysters year-round, which provides a huge advantage to the few who own a section of the 2,400 acres the state still offers up for lease. The owners start with muddy bay bottoms that they have to cultivate into healthy oyster reefs. That process takes years and millions of dollars.

Standing on the deck of one of the family oyster trawlers, Ruz Halili eyed the dredge as it swung out of the murky water and dumped about 50 mud-slick oysters onto the sorting table. "This is our lease, and it's the one that we won't have any rights to if Tracy and Ben get their way. We've spent more than $3 million in the last few years alone dropping cultch [rocks and oyster shells for baby oysters to grow on] and building this reef up, and now they're saying it's not ours."

For years Ruz, 28, planned on moving to Europe to try to get into one of the top professional soccer leagues. However, after college he changed his mind and decided to come home to San Leon and take his place in the family business, Prestige Oysters. In an industry that can seem mired in the past and loath to try anything new, Ruz was a young guy ready to try different things. One of his bright ideas was to approach Sysco, a Texas-based company that is the world's largest food distributor, about selling oysters. It took more than a year of making calls and connections to get an appointment, and then it took months to set up an actual meeting, but he walked in and got a deal.

Lisa Halili was thrilled when she learned her son had secured a contract with Sysco, but she got a strange call from Woody. Woody told her she needed to caution her son and remind him that he didn't know how things worked and he was making business deals he didn't understand. "He told me, 'You need to send him back to oyster school for a few years; you should put him back downstairs running the machines until he learns a few things,'" Lisa says now. She was puzzled, but she told Woody there was no way she was going to step in when her son was finding ways to take an interest and make the business his own.

Oystering used to be an industry in which anyone could make it if he or she worked hard enough. Johnny Halili emigrated from Albania to the United States in the 1970s to escape the brutal living conditions under that country's communist government. One of his first jobs was as a dishwasher in Chicago, but within a few months, he was down in Louisiana working as a deckhand on an oyster boat, despite the fact that Johnny had been on a boat only once in his life and it was only a ferry.

The way Johnny remembers those first days on an oyster boat, there were mosquitoes the size of quarters, the work was physical and rough and he was always covered in mud and grime from culling oysters all day long. "That dishwashing job was the best I ever had," he says now. "I was warm and fed and it was easy. But the money on this was so good, $30 a day. I couldn't make that kind of living doing anything else." Halili had a fourth-grade education, but he was sharp and canny and he worked hard to learn the industry. Soon he was working Texas waters as a captain for Ivic, Hillman and even Nelson.

"I always told him he wouldn't be working for me or anyone else for long, though," Ivic says, grinning. Ivic's story is similar to Johnny's. Ivic came to the United States from Croatia in the 1970s. That was a golden time in the oyster industry -- a good economy meant a solid market, and there were plenty of oysters to dig out of the ancient reefs in Galveston, San Antonio and Matagorda Bay and up and down the Gulf Coast. Ivic started out as a deckhand in Louisiana while earning his engineering degree from the University of New Orleans, but oystering got into his blood and he never used the degree.

Ivic bought boats and started acquiring private leases in Texas waters. The state stopped issuing new private leases in the 1980s, but people can buy the 15-year leases from their current owners. In the Texas oyster industry, those private leases mean the difference between the small-time fishermen who can oyster only six months out of the year off public reefs during the open season, and the few high rollers in the game. The private lease owners are the heart and power behind the industry because they usually own armadas of oyster boats, have locations set up in every key bay in the region and harvest about 30 percent of all the oysters that come out of Texas. Ivic built up his business to become one of the top powers in the industry.

Johnny soon followed in Ivic's footsteps, purchasing private leases in Texas and acquiring about 15,000 acres of leases in Louisiana. Lisa met him when she was working at a Red Lobster in Clear Lake. He always smiled and talked with her when he came in, and he was always scrupulously clean. "Still, I would look at those white rubber boots and I knew he was a fisherman."

Eventually Johnny talked Lisa into working as his deckhand. They tried to get into shrimping, but that business -- full of secretive men who don't give away any tricks of the trade to outsiders -- was almost impossible to learn. "We got stuck out in the Gulf more than I care to remember, and we did so many things wrong. Johnny loved shrimping, but eventually he had to give in and go back to oystering because at least there we knew what we were doing."

Lisa worked as a deckhand for years, but eventually things turned romantic between the two and they married. From there Lisa became a partner in the business. "I was awful at math when I was in school, but I figured out how to do bookkeeping pretty quick because I had to," she says. Within a few years, they had three children and a business that employed dozens of people on the San Leon docks, and were on their way to establishing an oystering empire.

While Ivic and the Halilis are relative newcomers to the industry -- Nelson refers to them as "the immigrants," while Woody calls them "our competitors" -- Woody and Nelson come from the old school of Texas oystermen. Nelson's family has been in the business since the 1920s, and he used to catch oysters as a kid and sell them to his schoolteacher. Back then the bays were so clear you could see straight to the bottom about eight feet below, and the waters were full of dolphins and fish and shrimp and the oyster reefs that had been growing down there for centuries. Fish darted through the waters, and entire microcosmic worlds lived in the marsh grasses on the shores of Smith Point.

After high school, Nelson decided he wanted to see the world, so he signed up for a hitch in the Navy. While stationed in Florida, he met his wife, Jeri, at a dance and the pair married three months later. It wasn't until they were heading back to Texas to work in the family business that she thought to ask what line of work he was in. Nelson laughed and told her his family was in fishing. The pair worked in the family oyster house on the other side of Smith Point, but after a few years, they decided they wanted to be in control, so they left the family business and started Jeri's Seafood on the other side of the peninsula. "We only had $35 between us, but we got a loan," Jeri Nelson says. "I told him we should build a big place, that we should do it big if we were going to do it. It was a fight just to get this place started." But Nelson had been acquiring his own private leases since the 1960s, and by the 1970s they were thriving.

Still, there were some strained times. For one thing, Nelson was arrested, charged and convicted on charges of human trafficking and slavery in the 1980s -- Nelson says he just picked up some guys who were working for him and gave them a ride back to Smith Point. But other reports say he was holding illegal immigrants, paying them $10 a day and forcing them to return to Smith Point at gunpoint. "Oh, yeah, I keep people as slaves. Can't you hear the clinking chains?" Nelson roars, laughing and rolling his eyes. "One of the guys I supposedly enslaved still works here!"

There's a story about Nelson that people love to tell. Clifford Hillman first heard it from Nelson and his brother Joe when the trio were in Austin lobbying the state legislature in the 1980s. Back when Nelson and Joe were kids on Smith Point, their mother baked an apple pie and told the boys to each cut themselves a piece. The way Hillman tells it, Ben offered his younger brother the pie, and Joe cut a wedge for himself. Then Ben scooped up the rest of the pie and started to eat it. According to Hillman, Joe looked at his older brother and protested. "Why are you eating the whole thing?" he asked.

"Well, when you cut yourself a slice, you cut as much as you wanted, right?" Ben asked. Joe said he had.

"Well, you got what you wanted and then I got mine," Ben said.

Before the brothers had a falling-out, they would tell that story and laugh over it. However, in the final years of Joe's life, he and Ben communicated mainly through their wives, Hillman says. When Joe was getting ready to retire, he called Johnny Halili and asked him to buy his private leases. Johnny asked why he wasn't selling to his brother, and Joe replied he would sooner give the leases back to the state than sell them to Ben. "He told me, 'Johnny, he'll kick my kids off the oyster reefs before the ink is even dry if I sell to him, but I know you won't do that.'" Johnny bought the leases, and the tensions between the east side and the west side increased.

Woody has developed the same fearless drive that his father-in-law is known for. Woody, a fifth-generation oysterman, married Nelson's daughter and joined the business in the 1980s. The two admit they don't always agree on things, but they've built a solid partnership over the years. "Neither of us went off and got fancy college degrees, but we know everything there is to know about this business," Woody says, grinning at his father-in-law.

Sitting in the kitchen at the back of Jeri's Seafood in Smith Point, Woody spreads a map of the Texas bays across the table. He pokes his finger at the acres that he and Ben Nelson have leased from the CLCND. "Keep in mind that of these acres, we're probably only to get about 1,000 acres where we can actually build up some good reefs," he says. The reefs they've leased are mostly in Trinity and Galveston bays, on either side of Smith Point.

Texas usually owns the bay bottoms on the coast, but doesn't in this case. The CLCND worked out a deal and began purchasing the tracts, more than 23,000 acres of submerged land by the time the district was done. The deal gave the navigation district the rights to the land only for navigation purposes, but Nelson thought there was an opening and about ten years ago, he got Woody to start working on the problem. "I've been kicking it around for about 50 years," Nelson says.

The state has had the responsibility of issuing leases, originally known as certificates of location, since the 1880s. For a price, leaseholders receive an interest in a defined area and are responsible for cultivating and maintaining the oyster reefs in that area. The leases don't grant any rights to the actual submerged land beneath the oyster reefs, and the leases are reviewed by the state every 15 years, with all rights going back to the state at that time for reconsideration.

Woody tends to hedge when asked directly about how long he and Nelson had planned to lease the land from the navigation district, but Nelson says he's had the idea in the back of his mind since the district started buying up these tracts of land in the 1950s. Back then, the Six-Year Drought was creating hard times for the oystermen working the bays. Meanwhile, oil drilling was booming in Texas and the drillers were dumping their waste directly into the rivers and bays, Nelson says. He felt the waters he'd known since he was a boy were being destroyed.

However, Woody says, he and Nelson didn't really get serious about the idea until Hurricane Ike hit in 2008. He got the family attorneys started on drafting a lease, then took it to a fleet of lawyers, asking each of them to analyze the lease and rip it apart to show where he and Nelson were vulnerable. The lease was signed and filed in April 2014. Aside from being posted on the Chambers-Liberty Counties Navigation District website, no public notice was sent out before it was approved.

Once the Nelsons' lawyers gave STORM the go-ahead, Woody went to work drawing up the lease. After going over how much the CLCND actually owned, he decided to go ahead and lease everything he could. "We realized the uphill battles we were going to have to fight about whether it was legal -- which it is -- and all of what we were going to have to do to get approval. We decided that if we have to fight all the legal battles, why do all the work and leave something out there for someone else to get after we're done fighting for them?"

"The lease that they have is a valid lease as far as we can tell, but it's the purpose for which the lease was intended that we don't think is valid," Lance Robinson, regional director of the Coastal Fisheries Division of Texas Parks & Wildlife, says. In July, TPW issued a letter to that effect, saying it doesn't believe the lease is valid because CLCND lacked the authority to enter into a lease that would exclude the rights of current oyster leaseholders or that would keep the public from publicly owned reefs. The letter warned STORM that it does not have the right or authority to plant or harvest oysters in the area. Similar letters followed from the Texas General Land Office and the Port of Houston.

That led the company to hold off its work on the oyster beds, but on November 1, the opening day of the public oyster season, Woody was out in a speedboat circling around the oystermen trawling through the contested waters. "It got so bad my guys were calling in saying he was buzzing their boats. And that's really dangerous because you can't exactly hit the brakes when it's a boat," Lisa Halili says. Just before the start of the public oyster season, Texas Parks & Wildlife issued a letter to STORM saying that the state agency would not recognize the lease with the navigation district. The General Land Office issued a similar opinion, and the Army Corps of Engineers shot down Woody's application for a massive oyster-reef restoration project. Even Terry Haltom, chairman of the navigation district, told Fox 26 that he isn't sure if the CLCND had the right to enter into the lease but he agreed to do it because STORM assured him it would pay all legal costs.

However, Mary Beth Stengler, general manager for the CLCND, says the district had been talking about the lease with STORM since 2010 and CLCND lawyers approved the agreement. "We issued the lease in good faith to promote navigation and commerce within the submerged boundaries," she says. She also points out that Texas Parks & Wildlife also has a lease with the navigation district, although she admits that one is significantly smaller. The navigation district was able to issue the lease to Woody and Nelson without having to make any specific public notifications because it was only for 30 years, according to Texas statutes.

The navigation district started buying up submerged acres in 1953 -- the bulk of the land was purchased in 1957 -- and Stengler says the district believes STORM can use the land to build up oyster reefs and still be within the boundaries of the CLCND rights purchased from the state. "We feel there's no reason we shouldn't be able to do it, and we're just going to keep on going and see what happens," she says. "They have to work with us on dredging and moving the oysters, and we feel comfortable about it. It will be up to STORM if the lease is invalid, though. It's up to them to handle any of that."

Woody firmly believes he has the law on his side. "I've looked at common law; I've looked at case law and every angle there is. Unlike our competitors, we don't say things without having it all backed up. We have proof for everything we say," he explains, thumping his hand on the four-inch-thick blue binder he has filled with all sorts of documents to counter every anticipated argument. "This is about preserving the resource. Do you want the state running things or do you want private industry run by people who know what they're doing preserving these reefs? Just because you catch oysters doesn't mean you know the business. We've got a pretty good track record, though."

Meanwhile, everything is on hold. Woody hasn't started any improvements on the acres he's leased, and the private lease owners in the contested areas have stopped dropping cultch to build up the beds, since there's a chance they could lose the leases entirely. Woody says he expects the issue will ultimately be decided in court. However, he's also working another angle. "I think what we need is to have things codified and clarified about what the rules really are," Woody says. He says he has drafted language on a bill to be submitted to the 2015 session of the Texas Legislature to "clarify" things as far as the lease is concerned. Woody is still shopping around for a legislator who will file a bill that will further back up his lease.

Woody insists his plan wasn't cooked up just to benefit the Nelsons on Smith Point. While he has no intention of paying out the leases that he says are invalidated by his lease on the same property, STORM doesn't aim to keep all the submerged land. "It's not just for us. We want to sublease it. We need to. That's a lot of acres, and I don't want to try and build them up by myself."

Everyone wore sharp, polite smiles as they settled into a small conference room in Austin to talk about the industry on Thursday, January 15. Lance Robinson had made it clear before he scheduled the meeting that no one would be allowed to discuss STORM. "He knew we'd never get anything else done if we started in on that," Clifford Hillman says. And there were too many other things they needed to address.

With the state legislature in session, Robinson wanted the attendees to sit down and talk about what kind of language they should put together to help protect the industry. They needed to talk about what to do next. Would they be in favor of a voluntary buyback program for oyster licenses? Enhanced penalties for oystermen who bring in too many undersized oysters?

The committee, which includes the Halilis, Ivic and Woody, among others, argued over the details of every proposed bit of legislation. The one thing they all agreed on was that the resource needs to be protected.

Woody has been a Chambers County Justice of the Peace for years, and he understands enough about how government works that he can translate regulatory jargon into what it will mean in practical terms for the oyster industry. Throughout the meeting, he spoke in a calm and clear voice as the group worked to figure out what to do to help preserve the industry. For those few hours, even though there were arguments, everyone was working together to figure out how to protect it. But when the meeting ended, the Halilis, Ivic and Hillman grouped together and laughed and talked, while Woody nodded at the state officials, grabbed his briefcase and left.

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