The Board of Public Works shall adopt regulations establishing procedures and standards for awarding any oil or natural gas lease for production or reserve under lands or waters of the State. An area leased for reserve may not be put into production until the lessee obtains a lease for production pursuant to § 5-1702 of this subtitle. The Board of Public Works shall adopt regulations establishing a system by which persons may periodically nominate areas beneath lands or waters of the State for possible leasing for production or reserve of oil or natural gas. The Board of Public Works may not enter into any lease under this section that would preclude or interfere with the public or private harvesting of finfish or shellfish.

Before the Board of Public Works may solicit bids for or award any lease for production of oil or natural gas from beneath lands or waters of the State, and after receiving the written recommendation of the Critical Area Commission for the Chesapeake and Atlantic Coastal Bays (if the leased area is located in the State’s critical areas) and the advisory comments of the Secretaries of Budget and Management, Natural Resources, the Environment, and Commerce and the Secretary of Planning, the Board of Public Works shall direct the Secretary of Natural Resources in consultation with the Secretaries of the Environment, Commerce, and Budget and Management and the Secretary of Planning to prepare a statement of environmental, fiscal, and economic impact of the proposed lease. The statement of environmental, fiscal, and economic impact shall be prepared and filed within 6 months after the direction of the Board of Public Works. However, the Board of Public Works may extend this time limit for not more than an additional 12 months for good cause. The statement of environmental, fiscal, and economic impact and any written background and supporting material shall be available for public inspection. The Board of Public Works shall provide by regulation for recovery by the Department of Natural Resources from bidders or lessees, as appropriate, of the costs of preparing a statement of environmental, fiscal, and economic impact. The statement of environmental, fiscal, and economic impact shall include the following information: An assessment of the probable deleterious effects of the proposed drilling operation and production facilities, including the probabilities and consequences of accidental discharge of oil or gas to the environment during drilling, production, and transportation, on: Finfish, shellfish, and other marine or freshwater organisms; Birds and other wildlife that use the air and water resources; Air and water quality; and Land and water resources; An areawide environmental impact statement, including, where applicable, the probable environmental effects of pollution on the Chesapeake Bay, its tributaries, and the areas surrounding the proposed lease site; An inventory of existing economic and environmental conditions at the proposed lease site and in the immediate area; A project description of what is to be constructed, the manner and construction schedule, and the method of construction; A complete description of any proposed production facility, including at least its anticipated size, effluent load, and production levels; Recommendations for minimizing any adverse economic, fiscal, or environmental impacts; An examination of the secondary environmental effects of induced economic development due to the drilling and production; and An evaluation of the need for the production facility and the relative merit of other possible sites.

Any person who drills for oil or gas on the lands or in the waters of the State is strictly liable for any damages that occur in exploration, drilling, or producing operations or in the plugging of the person’s oil or gas wells, including liability to the State for any environmental damage.