SAPPI LIMITED

SAPPI
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued)
for the year ended September 2010
32. ENVIRONMENTAL MATTERS
We are subject to a wide range of environmental laws and regulations in the various jurisdictions in
which we operate, and these laws and regulations have tended to become more stringent over time.
Violations of environmental laws could lead to substantial costs and liabilities, including civil and criminal
fines and penalties. Environmental compliance is an increasingly important consideration in our
businesses, and we expect to continue to incur significant capital expenditures and operational and
maintenance costs for environmental compliance, including costs related to reductions in air emissions
such as carbon dioxide (‘‘CO2’’) and other greenhouse gases (‘‘GHG’’), wastewater discharges and
waste management. We closely monitor the potential for changes in pollution control laws and take
actions with respect to our operations accordingly.
North America
Sappi Fine Paper North America is subject to stringent environmental laws in the United States.
These laws include the Federal Clean Air Act, the Clean Water Act, the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act and their
respective state counterparts and implementing regulations. On June 29, 2009, the Commissioner of the
Department of Inland Fisheries and Wildlife, State of Maine (the ‘‘Commissioner’’), issued a decision
requiring Sappi Fine Paper North America to install a fish passage at the Cumberland mills dam
associated with the Westbrook mill, the most downriver dam on the Presumpscot River. On May 12,
2010, the Commissioner accepted a conceptual design for the fish passage jointly proposed by the
state, several non-governmental organizations and Sappi Fine Paper North America, and final detailed
design drawings were submitted to the Commissioner on September 24, 2010. A final order approving
the design was issued to Sappi Fine Paper North America on October 5, 2010. Pursuant to the order,
construction of the fish passage must be completed by May 1, 2013. Costs associated with construction
and relating engineering of this fish passage are estimated to be approximately US$4 million to
US$5 million. Fish passage at the next dam upstream, the Saccarappa dam, must be operational two
years after the Cumberland mills dam fishway is completed, or during the spring of 2015. Installation of
the Cumberland mills dam fishway may also trigger, over a period of approximately ten years, the
obligation to install fishways for at least some of Sappi Fine Paper North America’s other four upstream
dams as well, to allow natural fish migration and thus promote the restoration of native species to the
river. The total cost of all fishways associated with Sappi’s dams along the Presumpscot River is
estimated to be in the range of approximately US$18 million to US$28 million, which includes costs
expected to be incurred in the next several years for the fish passage on the Cumberland mills and
Saccarappa dams as well as estimated costs for upstream fishways which may be incurred in the future.
Because construction of additional fishways depends on several future contingencies, including the
results of data gathering on fish populations in the river, we do not know the precise timing for incurring
related future costs, assuming such obligations are triggered.
We closely monitor state, regional and Federal GHG initiatives and other regulatory developments
in anticipation of any potential effects on our operations. Although the United States has not ratified the
Kyoto Protocol, and has not yet adopted a Federal program for regulating GHG emissions, Congress is
considering comprehensive Federal legislation regarding climate change, and various regional
initiatives regarding emissions associated with climate change are in effect or proposed. In addition, the
U.S. Environmental Protection Agency has finalised or proposed several rules relating to emissions
reporting and emissions reductions, including a proposed rule known as the ‘‘Boiler MACT’’ which
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