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

A.  Executive Orders 13563 and 12866—Summary of Initial Regulatory Assessment

1.  Background

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity).  Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

In keeping with Executive Order 12866 the Department has evaluated this proposed rule to assess whether it would likely “[h]ave an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.”  E.O. 12866, § 3(f)(1).  The Department’s Initial RA shows that this proposed regulation does not represent an economically “significant” regulatory action within the meaning of Executive Order 12866.  See E.O. 12866, §§ 3(f)(1), 6(a)(3)(C).  The Department’s full Initial RA can be found in the docket for this proposed rule at http://www.Regulations.gov.

2.  Costs—Summary of Likely Economic Impact

The Initial RA provides estimates of the total cost of the rule under Option 1 (a six-month compliance date for digital screens and a four-year compliance date for analog screens) and Option 2 (a six-month compliance date for digital screens and a deferral of new regulatory requirements on analog screens) over a 15-year time horizon.  For Option 1, we estimate that the cost of the rule will range from $177.8 million to $225.9 million when using a 7 percent discount rate, and from $219.0 million to $275.7 million when using a 3 percent discount rate.  For Option 2, we estimate that the cost of the rule will range from $138.1 million to $186.2 million when using a 7 percent discount rate, and from $169.3 million to $226.0 million when using a 3 percent discount rate. 

The range of cost estimates for both options depends on the assumptions used regarding the extent to which theaters are or soon will be providing closed movie captioning and audio description as proposed in this rule, but independently of this rulemaking.  This Initial RA estimates costs using three different baselines due to a lack of information regarding the extent to which theaters are already providing captioning and audio description as proposed in this rule.  Under Option 1, each baseline assumes that 2 percent of analog theaters currently meet the requirements of this proposed rule.  Under Option 2, the baselines do not make assumptions about analog screens because the rule would defer requirements on such screens to future rulemaking.  See Initial RA section 4 for details.

• Baseline 1 (One Screen )—This baseline assumes that on average, every movie theater with digital screens has one screen that is captioning enabled³⁹ (based on an assumption of at least some compliance with the existing ADA requirements that public accommodations provide effective communication to persons with hearing and vision disabilities).  This assumption leads to an estimate of about 13 percent of all digital screens having captioning capabilities.  For Option 1, this baseline also assumes that 2 percent of analog screens are captioning enabled.

• Baseline 2 (Litigation-Based)—This baseline is derived using available data regarding movie theater companies that are now providing captioning and that have been involved in recent litigation challenging their failure to comply with existing ADA effective communication requirements.  This baseline assumes that 42 percent of digital screens are captioning enabled.  For Option 1, this baseline also assumes that 2 percent of analog screens are captioning enabled. 

• Baseline 3 (2013 NATO Survey-Based)—This baseline uses data provided in testimony by officials from the NATO before Congress in May 2013, in which 53 percent of digital screens were described as already captioning enabled.  For Option 1, this baseline also assumes that 2 percent of analog screens are captioning enabled.

Costs are estimated over a 15-year period, beginning with the year in which the rule becomes effective (assumed to be 2015).  For both options, costs are estimated for theaters with digital screens beginning in the first year after publication of the final rule (2015).  For Option 1, costs are estimated for theaters with analog screens beginning in the fourth year after publication of the final rule (2018).

The estimated costs primarily consist of the following: (1) the purchase of hardware and software to send the captions to users’ individual devices; (2) the purchase of individual devices as per the scoping requirements specified in the rule; (3) periodic costs to replace hardware, software, and devices; (4) annual operations and maintenance costs to cover storage, management, staff training, and other recurring costs; (5) any additional hardware costs to transmit audio description to individual devices; and (6) any additional costs associated with the purchase of additional of individual audio-description listening devices.  The costs do not include the costs to theaters to convert their screens from analog to digital, because this rule does not require any movie theater to convert to digital cinema, and doing so is not necessary to comply with the proposed requirements.

Estimated Costs Under Option 1 (2015 Dollars, 15-year Time Horizon)

Estimated Costs Under Option 2 (2015 Dollars, 15-year Time Horizon)

Under Option 1, the estimated annualized costs of the proposed regulation under each of the three baseline scenarios range from $19.5 million to $24.8 million when using a 7 percent discount rate, and from $18.3 million to $23.1 million when using a 3 percent discount rate. Under Option 2, the estimated annualized costs of the proposed regulation under each of the three baseline scenarios range from $15.2 million to $20.4 million when using a 7 percent discount rate, and from $14.2 million to $18.9 million when using a 3 percent discount rate.⁴⁰

The Initial RA shows that estimated annual costs for this proposed rule will not exceed $100 million in any year under any of three baseline scenarios, irrespective of which option the Department selects for analog screens.  Annual costs for each year during the 15-year expected term of the proposed regulation are depicted in the following figures:

Annual Costs of Rule Under Option 1, Discounted at 7 Percent

Annual Costs of Rule Under Option 2, Discounted at 7 Percent

Because movie theater complexes vary greatly by number of screens, which significantly impacts overall costs per facility, the analysis breaks the movie exhibition industry into four theater types based on size—Megaplexes (16 or more screens), Multiplexes (8-15 screens), Miniplexes (2–7 screens), and Single Screen Theaters—and by digital or analog system.  Per-facility costs were then calculated for each theater type.  The largest costs per year for any single movie theater would occur in the first year due to the purchase of necessary equipment.  The first year’s costs for digital Megaplex theaters are estimated to total $38,547, while comparable costs for digital single screen theaters would total $3,198.⁴¹

Per Digital Theater Initial Capital Costs for Captioning and Audio Description (Equipment (hardware, software and devices), 2015 Dollars*

Note: These initial capital costs include the costs to purchase and install: (1) captioning hardware and software (one per screen); (2) individual devices for captioning (ranging from 4 for Single Screens to 34 for Megaplexes); (3) additional hardware, if needed, to transmit audio description (from none to one device per screen); and (4) additional devices for audio description (ranging from 2 for Single Screens to 18 for Megaplexes). 

* Because unit costs for captioning and audio description equipment have either remained steady or declined between 2010 and 2013, they are assumed to remain constant from 2013 (when last researched) to 2015, when the final rule is expected to be published.

Should the Department proceed under Option 1 and cover analog screens, per theater costs for analog theaters would be higher than those for digital theaters for each type/size.⁴²  The first year costs for analog single screen theaters, which are measured in year four, would total $8,172.  The first year costs for digital single screen theaters, which are measured in year one, would average $3,198.

Per Analog Theater Initial Capital Costs of Captioning and Audio Description Equipment (hardware, software and devices), 2015 Dollars*

Note: These first year costs include (1) the costs to purchase and install: captioning hardware and software (one per screen); (2) individual devices for captioning (ranging from 4 for Single Screens to 34 for Megaplexes); (3) additional hardware, if needed, to transmit audio description (from none to one device per screen); and (4) additional individual audio description listening devices (ranging from 2 for Single Screens to 18 for Megaplexes).

* Since unit costs for captioning and audio description equipment have either remained steady or declined between 2010 and 2013, they are assumed to remain constant from 2013 (when last researched) to 2015, when the final rule is expected to be published.

** Note that the Initial RA assumes that all Megaplexes and Multiplexes have transitioned to digital projection systems by the time this rule goes into effect.

In addition, the Initial RA uses a value equivalent to 3 percent of all the captioning and audio-descriptive equipment owned by the theater to capture any operations and maintenance costs including the incremental increase to staff time, the costs of adding information that captioning or audio description is available when preparing communications regarding movie offerings, and other potential increases in administrative costs.  These costs are annual.  This 3 percent is a factor commonly used in construction and equipment maintenance.  See Regulatory Impact Analysis for the Final Revised Regulations Implementing Titles II and III of the ADA, app. 3.I (Sept. 15, 2010), available at http://www.ada.gov/regs2010/RIA_2010regs/ria_appendix03.htm#ai (last visited July 14, 2014).  

In dollar terms, operations, maintenance, and training costs for analog theaters are estimated on an annual basis to average from a low of $245 for Single Screens to a high of $957 for Miniplexes; for digital theaters’ operations, maintenance and training costs are estimated to average from a low of $96 for Single Screens to a high of $1,156 for Megaplexes.

Question 16: The Department invites comment on the Initial RA’s methodology, cost assumptions, and cost estimates, including the specific costs of purchasing, installing and replacing captioning and audio description equipment, and the costs of complying with the training and notice requirements of the rule.  The Department is particularly interested in receiving comments about the frequency with which captioning and audio description devices need to be replaced.  The Department is also interested in estimates of how much time it would take for theaters to acquire the equipment needed to comply with this rule.

39. The three baselines described in this section use the term “captioning enabled.”  This term refers to the extent to which movie theaters and movie screens currently have the hardware and captioning devices needed to comply with this NPRM.  Each baseline includes assumptions for what this term means, and those assumptions can be found in the initial regulatory impact analysis that accompanies this NPRM.

40. Annualized costs were calculated in a Microsoft Excel model using the PMT function (-PMT(discount rate, years of analysis, present value of total costs)).

41. Unless a dollar figure in the text or the tables specifically identifies a particular baseline, the default baseline for general dollar figures uses Baseline 1.

42. The Department’s analysis assumes that at the time this rule takes effect, theaters will either be exclusively digital or exclusively analog (that is, all of the screens in a theater will be either digital or analog).

3.  Benefits—Qualitative Discussion of Benefits

The benefits of this rule are difficult to quantify for multiple reasons.  The Department has not been able to locate robust data on the rate at which persons with disabilities currently go to movies shown in movie theaters.  In addition, as a result of this rule, the following number of persons will change by an unknown amount: (1) the number of persons with disabilities who will newly go to movies, (2) the number of persons with disabilities who will go to movies more often, (3) the number of persons who will go to the movies as part of a larger group that includes a person with a disability, and (4) the number of persons with disabilities who would have gone to the movies anyway but under the rule will have a fuller and more pleasant experience.  In addition, the Department does not know precisely how many movie theaters currently screen movies with closed captioning and audio description, or how many people with hearing or vision disabilities currently have consistent access to movie theaters that provide closed captioning and audio description.  Finally, the Department is not aware of any peer reviewed academic or professional studies that monetize or quantify the societal benefit of providing closed captioning and audio description at movie theaters

The individuals who will directly benefit from this rule are those persons with hearing or vision disabilities who, as a result of this rule, would be able for the first time to attend movies with closed captioning or audio description in theaters across the country on a consistent basis.  Individuals who will indirectly benefit from this rule are the family and friends of persons with hearing and vision disabilities who would be able to share the movie-going experience more fully with their friends or loved ones with hearing and vision disabilities. 

Data on movie-going patterns of persons who are deaf or hard of hearing or are blind or have low vision is very limited, making estimations of demand very difficult.  However, numerous public comments suggest that many persons who are deaf or hard of hearing or are blind or have low vision do not go to the movies at all, or attend movies well below the national average of 4.1 annual admissions per person, because of the lack of auxiliary aids and services that would allow them to understand and enjoy the movie. 

Though we cannot confidently estimate the likely number of people who would directly benefit from this proposed rule, we have reviewed data on the number of people in the United States with hearing and vision disabilities.  The Census Bureau estimates that 3.3 percent of the U.S. population has difficulty seeing, which translates into a little more than eight million individuals in 2010, and a little more than two million of those had “severe” difficulty seeing.⁴³  At the same time, the Census Bureau estimates that 3.1 percent of people had difficulty hearing, which was a little more than 7.5 million individuals in 2010, and approximately one million of them had “severe” difficulty hearing.  Not all of these people would benefit from this proposed rule.  For example, some people’s hearing or vision disability may not be such that they would need closed captioning or audio description.  Some people with hearing or vision disabilities may not use the equipment for a variety of reasons, including finding the equipment uncomfortable to use.  Some people with hearing or vision disabilities may already have consistent access to theaters that screen all their movies with closed captioning and audio description.  And some theaters may not provide closed captioning and audio description for all their movies because it would be an undue burden under the ADA to do so.  Meanwhile, some people with hearing or vision disabilities would not attend public screenings of movies even if theaters provided closed captioning and audio description simple because they do not enjoy going out to the movies—just as is the case among persons without disabilities.⁴⁴

In recent years, a large number of movie theaters have already invested in equipment to provide closed captioning and audio description.  As noted earlier in this NPRM, NATO estimates that 53 percent of digital screens are already captioning and audio description enabled.  However, this does not translate into an estimate that about half (or 53 percent) of persons who are deaf or hard of hearing or are blind or have low vision are now benefiting from captioning or audio description.  There are multiple reasons why, even if we accept this estimate of the current availability of captioning and audio description, that it does not translate into direct benefits for all those who could benefit. Such reasons include the following: (1) only some screens at some theaters may have closed captioning and audio description capabilities and those may not be showing the movie the person wants to see, (2) the theater may not be showing the desired movie with closed captions and audio description on a convenient day or at a convenient time, (3) the theater may be located much farther away from where the person with a disability resides than other, less accessible theaters, which may result in a decision not to go to a movie theater at all, or (4) a person may live in a community that has theaters with closed captioning and audio description capability but may travel (for vacation, to visit relatives, for work, or other reasons) to a community that does not have theaters that are captioning and audio description enabled.

Not only is the estimate of the number of who might directly benefit from the proposed rule uncertain, but the individual benefits are not uniform because persons who are deaf or hard of hearing or are blind or have low vision are likely to benefit from this proposed rule in different ways and realize benefits in different amounts.  The type and amount of benefits can depend on personal circumstances and preferences, as well as proximity to movie theaters that otherwise would not offer captioning or audio description but for this proposed rule.  Some persons with vision and hearing disabilities have effectively been precluded from going to movies at theaters because the only theaters available to them did not offer closed captioning or audio description, offered open captioning but only at inconvenient times (such as the middle of the day during the week), or offered captioning or audio description for only a few films and not for every screening of those films.  For these persons, the primary benefit will be the ability to see movies when released in movie theaters along with other movie patrons that they otherwise would not have had the opportunity to do.  They will have the value of that movie-going experience, as well as the opportunity to discuss the film socially at the same time as the rest of the movie-viewing public.  The amount of benefit experienced by a person with a vision or hearing disability who previously had no access to a theater that provided closed captioning or audio description at all its screenings will be different than the amount experienced by a person with a hearing or vision disability who previously had access to a theater that did consistently provide closed captioning and audio description at its screenings.  In addition, the amount of benefit from this rule experienced by a person who cannot follow a movie at all without the assistance of closed captioning is likely to be greater than the amount of benefit experienced by a person who can follow parts of a movie without the assistance of closed captioning. 

In addition to the direct beneficiaries of the proposed rule discussed above, others may be indirect beneficiaries of this rule.  Family and friends of persons with these disabilities who wish to go to the movies all together as a shared social experience will now have greater opportunities to do so.  More adults who visit elderly parents with hearing or sight limitations would presumably be able to take their parents on outings and enjoy a movie at a theater together, sharing the experience as they may have in the past.

The Department received numerous comments from individuals who are deaf or hard of hearing or blind or have low vision in response to its 2010 Advance Notice of Proposed Rulemaking on Movie Captioning and Video Description in Movie Theaters describing how they were unable to take part in the movie-going experience with their friends and family because of the unavailability of captioning or audio description.  Many individuals felt that this not only affected their ability to socialize and fully take part in family outings, but also deprived them of the opportunity to meaningfully engage in the discourse that often surrounds movie attendance.  Parents with disabilities also complained that they could not answer their children’s questions about a movie they saw together because the parents did not understand what had happened in the movie.

Of perhaps greater significance to the discussion of the benefits of this rule, however, are issues relating to fairness, equity, and equal access, all of which are extremely difficult to monetize, and the Department has not been able to robustly quantify and place a dollar value on those benefits.  Regardless, the Department believes the non-quantifiable benefits justify the costs of requiring captioning and audio description at movie theaters nationwide. 

Annualized Costs and Benefits of Proposed Rule (2015 Dollars, 15-year Time Horizon)

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Question 17: The Department invites comment on methods and data for monetizing or quantifying the societal benefits of the proposed regulation, including benefits to persons who are deaf or hard of hearing or blind or have low vision, as well as to other members of the movie-going public or other entities.  For example, the Department invites comments on methods and data for estimating the number of people with vision or hearing disabilities who would benefit from this rule, and addressing the challenges noted above in developing such an estimate, as well as comments on methods and data that could be used to estimate the value of the different types of benefits noted above.  The Department also invites comments on its qualitative discussion of the benefits of this rule, which include equity, human dignity, and fairness.

43. The Census defines “[d]ifficulty seeing” as “experiencing blindness or having difficulty seeing words and letters in ordinary newsprint, even when wearing glasses or contact lenses (if normally worn).”  U.S. Census Bureau, U.S. Department of Commerce, P70-131, Americans with Disabilities: 2010 Household Economic Studies at 8 (2012), available at http://www.census.gov/prod/2012pubs/p70-131.pdf (last visited July 14, 2014).  It defines “[d]ifficulty hearing” as “experiencing deafness or having difficulty hearing a normal conversation, even when wearing a hearing aid.”  Id.

44. In 2012, a little more than two thirds (68 percent) of the U.S. and Canadian population over two years old went to a movie at a movie theater at least once that year.  See Motion Picture Association of America, Theatrical Market Statistics at 11 (2012), available at http://www.mpaa.org/wp-content/uploads/2014/03/2012-Theatrical-Market-Statistics-Report.pdf (last visited July 14, 2014).