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

Table 6-1 : Two-Year Compliance Date Alternative, Discounted at 7 Percent ($ millions)

Table 6-2 shows the impact of changing the compliance date to six months instead of 18 months in the primary analysis.  Overall, the total costs increase by $5.6 million to $94.1 million over the 15-year period of analysis when discounted at 7 percent.  This is a 6 percent increase compared to the cost estimation in the primary analysis.  A compliance date of six months increases costs because all movie theaters would purchase equipment in one year (2016) instead of over two years (2016, 2017) in the primary analysis.

Table 6-2 : Six-Month Compliance Date Alternative, Discounted at 7 Percent ($ millions)

The Department ultimately decided that an 18-month compliance date was the most appropriate choice.  The Department’s decision regarding the 18-month compliance date in the final rule is based on the Department’s independent research and the information provided in comments on the 2014 NPRM.  Based on this information, the Department determined that six months may be an insufficient amount of time for movie theaters to comply with the requirements of this rulemaking.  However, the Department believes that an 18-month compliance date sufficiently accounts for potential delays that may result from manufacturer backlogs, installation waitlists, and other circumstances outside a movie theater’s control.  One major movie theater chain in particular recommended an 18-month compliance date, stating that this is the amount of time that the process currently takes, and this compliance date also gives small movie theaters struggling financially as a result of the unrelated costs of digital conversion a sufficient amount of time to plan and budget accordingly.  The Department believes that a two-year compliance date is too long and will further delay important accessibility benefits to individuals who are deaf or hard of hearing, or blind or have low vision.

Table 6-3 : Device Scoping Requirements for Primary Analysis and Initial RA

As shown in Table 6-4, using the original scoping from the 2014 NPRM increases the captioning and audio description device acquisition costs.  The replacement costs also increase because more devices are replaced annually due to the higher number of devices required per movie theater.  Finally, the installation and maintenance and administrative costs increase as they are estimated relative to the equipment acquisition costs.  Overall, using the scoping requirements from the Initial RA increases the total costs by 75 percent to $154.8 million over the 15-year period of analysis when discounted at 7 percent.

Table 6-4 : Original Scoping Alternative, Discounted at 7 Percent ($ millions)

In the final rule, the Department implemented scoping requirements for captioning and audio description devices that it believes will obligate movie theaters to provide the optimum number of devices sufficient to provide accessibility to individuals with disabilities who will need and use them, without requiring movie theaters to purchase unnecessary equipment.  Because movie theaters are rarely at 100 percent occupancy, the Department determined that the number of seats within a movie theater is an inappropriate proxy for determining the number of captioning devices required.  Additionally, usage data indicates that audio description devices are used less frequently than the proposed scoping required.  As a result, the Department adopted lower scoping requirements for both captioning and audio description devices based on the number of auditoriums showing digital movies within a movie theater.  The scoping requirements for captioning devices are based on the proposed scoping suggested in the Joint Comment, submitted by NATO and multiple disability advocacy groups representing individuals who are deaf and hard of hearing.  The scoping requirements for audio description devices are based on the proposed scoping suggested by NATO and supported by movie theater usage data.

Number of Analog Auditoriums
Section 3.1.4 shows how the number of auditoriums exhibiting digital and analog movies is calculated.  As explained, industry research indicates that most auditoriums exhibiting analog movies are operated in smaller movie theaters.  Therefore, all auditoriums exhibiting analog movies exclusively are assumed to be in Miniplex and Single-Auditorium movie theaters.  Table 6-5 below shows how the projected number of analog auditoriums is calculated according to the assumptions previously explained in Section 3.1.  Due to recent industry trends and the rapid conversion to digital projection systems, this alternative analysis assumes that no new analog movie theaters will open over the period of analysis.

Table 6-5 : Calculation of Number of Indoor Auditoriums Exhibiting Analog Movies

Compliance Date
As discussed previously, the compliance period analyzed for auditoriums exhibiting analog movies is four years. This is longer than the 18-month compliance date for auditoriums exhibiting digital movies in the primary analysis (Section 2.1.2).  With the longer compliance date, movie theaters with analog auditoriums will have more time to purchase the necessary equipment.

Baseline
Industry research indicates that fewer auditoriums exhibiting analog movies are equipped to provide closed movie captioning and audio description than auditoriums exhibiting digital movies.  Unlike digital captioning equipment (Section 3.4), there is currently only one commercially-available product—the Rear Window® Captioning system (“RWC”) developed and marketed by WGBH—that enables analog systems to display closed movie captions to moviegoers on individual captioning devices.  The Department’s research indicates that some movie theaters have already purchased the Rear Window® systems for their auditoriums.  As a result, this alternative analysis assumes that two percent of all auditoriums exhibiting analog movies are equipped to provide closed movie captioning.  However, because the Department does not have any data on the number of auditoriums exhibiting analog movies that are equipped to provide audio description, the analysis assumes that no auditoriums are equipped to do so.

Unit Costs
As explained above, there is one technology provider (Rear Window®) of captioning technology for auditoriums exhibiting analog movies.³⁴  Unit costs for analog captioning equipment are based on retail prices provided to the Department by manufacturers of captioning equipment via telephone interviews or available on Web sites or brochures.

Similar to auditoriums exhibiting digital movies, auditoriums exhibiting analog movies also require captioning hardware, audio description hardware, captioning devices, and audio description devices to provide closed movie captioning and audio description.  The unit costs for the components of the Rear Window®³⁵ system are presented in Table 6-6.

Table 6-6 : Unit Costs for Rear Window® System for Analog Theaters

Though the unit costs differ, the scoping requirements for movie theaters with auditoriums exhibiting analog movies are nearly identical to those exhibiting digital movies (Section 3.3).  The one exception is that the audio description hardware used in the Rear Window® system requires one unit per auditorium, instead of one unit per movie theater for digital auditoriums in the primary analysis (Section 3.3.2).

Cost Estimation
The cost estimation for auditoriums exhibiting analog movies is presented in Table 6-7.  These cost estimates include the costs of providing closed movie captioning and audio description in auditoriums that exhibit analog movies exclusively.  Overall, the total costs for analog auditoriums are $4.6 million over the 15-year period of analysis when discounted at 7 percent.  The largest expense is for acquiring the Rear Window captioning hardware, which accounts for $2.6 million.  This is because of the high unit cost associated with Rear Window® captioning hardware previously shown in Table 6-6.

Table 6-7 : Total Costs by Cost Category for Auditoriums Exhibiting Analog Movies in Analog Alternative ($ millions)

The total costs of the final rule if auditoriums exhibiting analog movies exclusively are subject to the captioning and audio description requirements are presented in Table 6-8.  The total costs would be $93.1 million over the period of analysis when discounted by 7 percent.  This is a 5 percent increase over the estimated total costs in the primary analysis ($88.5 million).

Table 6-8 : Analog Alternative, Discounted at 7 Percent ($ millions)

Based on public comments and analysis of the most current data, the Department ultimately decided to defer analog auditoriums from coverage of this rule.  As previously discussed, the movie industry continues to undergo significant changes in the production and distribution of movies, resulting in the near elimination of first-run movies in analog film format.  Most movie theaters have converted to digital projection systems to the extent that they are financially able to do so, and as a result, small theaters that still have analog projection systems tend to have fewer financial resources than other movie theaters.  Because very few analog movie theaters remain and there is tremendous uncertainty surrounding the future of analog film with the industry’s digital conversion, the Department rejected the alternative four-year compliance date for analog movie theaters.  Therefore, the Department has deferred until a later date application of the rule’s requirements to movie theater auditoriums exhibiting analog movies exclusively.