28 CFR Part 36 Nondiscrimination on the Basis of Disability by Public Accommodations and in Commercial Facilities NPRM: Preamble (2008 Title III NPRM Preamble)

Safe harbor for qualified small businesses regarding what is readily achievable. (Section-by-Section Analysis)

The Department is offering for public comment a modification to the barrier removal requirement at § 36.304(d)(5) that provides a safe harbor for qualified small businesses as defined in § 36.104.  Pursuant to this safe harbor, a qualified small business would have met its readily achievable barrier removal obligations for a given year if, in the preceding tax year, it spent at least one percent (1%) of its gross revenues on barrier removal.  In so doing, the Department wishes to promulgate a rule that will benefit a broad class of small businesses by providing a level of certainty in short-term and long-term planning with respect to barrier removal.  An effective rule would also provide some protection, through diminished litigation risks, to small businesses that undertake significant barrier removal projects.  The Department received many comments from the small business community urging it to consider changing its approach to barrier removal.

The Department seeks public input on this safe harbor for readily achievable barrier removal, and, specifically, solicits advice on whether one percent (1%) is the appropriate level of expenditure.  Another business group, which proposed a similar scheme, suggested that the Department propose that small businesses spend five percent (5%) of their net revenues.  The Department believes from its experience in enforcing the ADA that the relevant expenditure should be a percentage of gross, rather than net, revenues in order to avoid the effect of differences in bookkeeping practices and to maximize accessibility consistent with congressional intent.  The Department recognizes, however, that entities with similar gross revenues may have very different net revenues, and that this difference may significantly affect what is readily achievable for a particular entity.  Such an approach places significant importance on getting the right percentage of revenues that should be considered.            

Any formulaic approach, even for a subset of the public accommodations covered by the ADA, is a departure from the Department's current position on barrier removal.  During the Department's rulemaking for the regulation published in 1991, the issue of barrier removal received significant attention.  Advocacy groups both for individuals with disabilities and private businesses requested specific guidance on what measures were required for barrier removal.  Commenters were concerned that, absent a standard, unsafe or ineffective design practices might be undertaken.  The Department's current rule reflects the view of many commenters that requiring public accommodations to comply with the alteration standards, where readily achievable to do so, promotes certainty and good design.

SBREFA requires the Department to consider alternative means of compliance for small businesses.  5 U.S.C. 603(c).  To comply with this obligation, the Department is soliciting public comment on the possibility of providing a safe harbor to qualified small businesses that have spent at least one percent (1%) of their gross revenues to remove architectural, communication, or transportation barriers.

Question 46:  Should the Department adopt a presumption whereby qualifying small businesses are presumed to have done what is readily achievable for a given year if, during the previous tax year, the entity spent at least one  percent (1%) of its gross revenues on barrier removal?  Why or why not?  Is one percent (1%) an appropriate amount?  Are gross revenues the appropriate measure?  Why or why not?