28 CFR Parts 35 and 36, Nondiscrimination on the Basis of Disability by Public Accommodations - Movie Theaters; Movie Captioning and Audio Description (NPRM)

1.  Small Business Threshold Assessment—Methodology and Summary of Results

Consistent with the provisions of the Regulatory Flexibility Act, the Department has also carefully considered the likely impact of the proposed regulation on small businesses in the movie exhibition industry.  See 5 U.S.C. 605(b); Memorandum for the Heads of Executive Departments and Agencies, Regulatory Flexibility, Small Business, and Job Creation, 76 FR 3827 (Jan. 18, 2011).  The Department has determined that this proposed rule will have a significant economic impact on a substantial number of small businesses.

For motion picture theaters, small businesses constitute the vast majority of firms in the industry.  The current size standard for a small movie theater business is $35.5 million dollars in annual revenue.  In 2007, the latest year for which detailed breakouts by industry and annual revenue are available, approximately 98 percent of movie theater firms met the standard for small business, and these firms managed approximately 53 percent of movie theater establishments.⁴⁵  As noted earlier, the Department is considering two options for analog screens.  Option 1 would delay the compliance date for analog screens for four years after publication of the final rule.  Option 2 would defer rulemaking altogether for analog screens until a later date. The IRFA estimates for Option 1 the average initial capital costs per firm for firms that display digital or analog movies.  The average costs for small firms are estimated to be between 0.7 percent to 2.1 percent of their average annual receipts for firms with digital theaters, and between 2.0 percent to 5.7 percent of average annual receipts for firms with analog theaters.  The Department has used the IRFA to examine other ways, if possible, to accomplish the Department’s goals with fewer burdens on small businesses.  The vast majority of theaters with analog screens are small businesses and the Department believes that both of the options for analog screens under consideration in the proposed rule will result in fewer burdens on small movie theater businesses with analog screens.

45. The size standard of $35.5 million can be found in U.S. Small Business Administration, Table of Small Business Size Standards Matched to North American Industry Classification System Codes at 28, available at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf (last visited July 14, 2014).