Final Regulatory Assessment and Final Regulatory Flexibility Analysis Final Rule - Nondiscrimination on the Basis of Disability by Public Accommodations - Movie Theaters; Movie Captioning and Audio Description

Given the assumed 15-year term of the final rule, captioning and audio description equipment will require replacement one or more times during this period.  The analysis estimates replacement costs for movie theaters purchasing new equipment as a direct result of the rulemaking.  The replacement costs that movie theaters incur for equipment purchased prior to this rulemaking cannot be directly attributed to this rule and have not been included in the cost estimation in the Final RA. 

As shown in Section 3.1.3, the number of auditoriums operated in Miniplex and Single-Auditorium movie theaters is expected to decline over the period of analysis in contrast to the positive growth rates projected for auditoriums in Megaplex and Multiplex movie theaters.  The replacement cost calculations are adjusted for movie theaters that may close during the analysis period because such movie theaters have no need for replacements.

Section 3.6.1 explains the replacement schedule that is used to estimate the time and extent of hardware replacement over the analysis period.  Section 3.6.2 discusses the assumptions and research regarding the rate of device replacement.

Public comments on the 2014 NPRM, as well as information provided by manufacturers, suggest that captioning and audio description hardware is expected to last about 10 years.  The Final RA uses a “replacement schedule” for captioning and audio description hardware in the cost estimation.  The Final RA assumes that all hardware will be replaced 9-11 years after the initial installment.  Within this replacement schedule, it is likely that more equipment will need replacement near the mid-point of the replacement time frame (as opposed to “earlier” or “later” years).  Thus, the cost estimation employs weighted percentages in the respective rolling replacement schedules for captioning and audio description hardware, as shown in Table 3-24.

Table 3-24 : Captioning and Audio Description Hardware Replacement Schedule

In practice, the replacement schedules for captioning and audio description hardware mean that in any given regulatory year after the ninth year, some proportion of hardware is being replaced.  Hardware replaced in any particular year simply follows a consistent pattern depending on the year in which the equipment was originally purchased.  For instance, for movie theaters purchasing and installing hardware in 2017, 15 percent would be replaced in 2026, 70 percent in 2027, and 15 percent in 2028.  The estimation of the hardware replacements costs in the primary analysis is presented in Section 4.1.3.

Because patrons will handle the captioning and audio description devices on a regular basis, the devices will require replacement more often than the hardware.  According to movie theaters, approximately 2.5 to 15 percent of devices need to be replaced each year due to mishandling, breakage, and patrons’ failure to return the devices.²⁵  Additionally, this estimate does not account for the fact that the individual devices eventually become unusable and need to be replaced over time.  As Department research indicates, individual devices have an average lifespan of four to seven years.

To account for the ongoing costs associated with the replacement of devices prior to the end of their lifespan and the replacement of these devices at the end of their lifespan, the primary analysis assumes that 20 percent of captioning and audio description devices acquired as a result of the rulemaking are replaced annually.  As previously discussed, the replacement costs incurred for devices purchased prior to the rulemaking cannot be directly attributed to this rulemaking.