28 CFR Parts 35 and 36 Amendment of ADA Title II and Title III Regulations To Implement ADA Amendments Act of 2008 - Final Rule

B. Regulatory Flexibility Act

In the NPRM, the Department stated that, based on its analysis, it ‘‘can certify that the rule will not have a significant economic impact on a substantial number of small entities.’’ The Department sought public comment on this proposed certification and its underlying analysis, including the costs to small entities, but received no public comments on these issues. The Attorney General has again reviewed this regulation in accordance with the Regulatory Flexibility Act, 5 U.S.C. 605(b), and by approving it hereby certifies that it will not have a significant economic impact on a substantial number of small entities for the reasons discussed more fully below.

First, the ADA Amendments Act took effect on January 1, 2009; all covered entities have been required to comply with the Act since that date and thus should be familiar with the requirements of the law. Second, the rule does not include reporting requirements and imposes no new recordkeeping requirements. Third, as shown above, the only title II and title III entities that would be significantly affected by the proposed changes to the ADA regulations are national testing entities and postsecondary institutions. The type of accommodations that most likely will be requested and required by those whose coverage has been clarified under titles II and III of ADA Amendments Act will be additional time in testing situations. While many of these national testing or postsecondary institutions are small businesses or small governmental entities, the costs associated with additional testing time are minimal; therefore, the Department believes the economic impact of this rule will be neither significant for these small entities nor disproportionate relative to the costs for larger entities.

The Department estimates that approximately 7,234 postsecondary institutions could be impacted based on data from the U.S. Department of Education National Center for Education Statistics.¹⁵ The Department used data from the U.S. Census Bureau¹⁶ from 2012 for Junior Colleges (NAICS¹⁷ 6112) and Colleges, Universities, and Professional Schools (NAICS 6113) to estimate the proportion of those entities that would meet the Small Business Administration’s criteria for small business or small governmental entity.¹⁸ As shown in Table 18 and Table 19 below, small postsecondary institutions are estimated to account for approximately 35.3 percent of all postsecondary institutions. Therefore, the Department estimates that 2,556 small postsecondary institutions would be impacted by this rule.

The overall costs of this rule for postsecondary institutions were calculated based on the number of entities and number of postsecondary students affected. The cost of processing additional accommodation requests for extra exam time and the cost of additional time spent proctoring exams depend on the number of students. This methodology assumes that per-student costs are roughly the same for institutions of differing sizes. Because larger entities have more students on average than smaller ones, the Department used the proportion of the industry sub-group’s revenues for small and large entities as a proxy for the number of students. Thus, using receipts for Junior Colleges (NAICS 6112) and Colleges, Universities, and Professional Schools (NAICS 6113) as a proxy for number of students, small postsecondary institutions are estimated to bear 4 percent of the processing and proctoring costs for providing additional exam time for that industry sub-group—or approximately $726,534 of the $17.95 million first-year costs. Additionally, postsecondary institutions are expected to incur one-time costs for additional training of $1,371 per entity (see Tables 6–8 in the Final RA). In total, small postsecondary institutions would incur $4.2 million in costs in the first year, which would average approximately $1,655 for each of the 2,556 small postsecondary institutions. The average annual revenue for each these small postsecondary institutions is $501,600. The cost is 0.33 percent of their revenue. Therefore, the costs will not be substantial for these small entities.

In comparison to the number of small postsecondary entities, there are approximately 4,678 postsecondary institutions (64.7 percent of the 7,234) that would be considered larger entities, and these larger entities would incur $23.6 million in costs during the first year, which would average out to approximately $5,053 per large postsecondary institution during the first year. This $5,053 per large postsecondary institution during the first year is approximately 3.1 times higher than the cost that would be incurred by small postsecondary institutions during that same time.

TABLE 16—FIRM, ESTABLISHMENT, AND RECEIPTS DATA FOR JUNIOR COLLEGES (NAICS 6112) IN 2012

* SBA small business standard is $20.5 million; small business totals here include those with receipts under $25 million. This is due to data being reported in size categories that do not exactly match industry small business classifications: i.e. from $10 million to $14.99 million, and from $15 million to $19.99 million; and from $20 million to $24.99 million, and from $25 million to $29.99 million.
Source: Calculated from data provided by the U.S. Census Bureau, Statistics of U.S. Businesses. See SBA Office of Advocacy and U.S. Census Bureau, Statistics of U.S. Businesses, Table 2—Number of firms, establishment, receipts, employment, and payroll by firm size (in receipts) and industry, 2012, available at https://www.sba.gov/advocacy/firm-size-data (last visited April 22, 2016).

TABLE 17—FIRM, ESTABLISHMENT, AND RECEIPTS DATA FOR COLLEGES, UNIVERSITIES, AND PROFESSIONAL SCHOOLS (NAICS 6113) IN 2012

* SBA small business standard is $27.5 million; small business totals here include those with receipts under $30 million. This is due to data being reported in size categories that do not exactly match industry small business classifications: i.e. from $10 million to $14.99 million, and from $15 million to $19.99 million; and from $20 million to $24.99 million, and from $25 million to $29.99 million.
Source: Calculated from data provided by the U.S. Census Bureau, Statistics of U.S. Businesses. See SBA Office of Advocacy and U.S. Census Bureau, Statistics of U.S. Businesses, Table 2—Number of firms, establishment, receipts, employment, and payroll by firm size (in receipts) and industry, 2012, available at https://www.sba.gov/advocacy/firm-size-data (last visited April 22, 2016).

TABLE 18—FIRM, ESTABLISHMENT, AND RECEIPTS DATA FOR BOTH JUNIOR COLLEGES (NAICS 6112) AND SMALL COLLEGES, UNIVERSITIES, AND PROFESSIONAL SCHOOLS (NAICS 6113), COMBINED, IN 2012

* SBA small business standard for Junior Colleges is $20.5 million; small business totals here include Junior Colleges with receipts under $25 million. This is due to data being reported in size categories that do not exactly match industry small business classifications: i.e. from $10 million to $14.99 million, and from $15 million to $19.99 million; and from $20 million to $24.99 million, and from $25 million to $29.99 million. The SBA small business standard for Colleges, Universities, and Professional Schools is $27.5 million; small business totals here include Colleges, Universities, and Professional Schools with receipts under $30 million. This is due to data being reported in size categories that do not exactly match industry small business classifications: i.e. from $10 million to $14.99 million, and from $15 million to $19.99 million; and from $20 million to $24.99 million, and from $25 million to $29.99 million.
Source: Calculated from data provided by the U.S. Census Bureau, Statistics of U.S. Businesses. See SBA Office of Advocacy and U.S. Census Bureau, Statistics of U.S. Businesses, Table 2—Number of firms, establishment, receipts, employment, and payroll by firm size (in receipts) and industry, 2012, available at https://www.sba.gov/advocacy/firm-size-data (last visited April 22, 2016).

TABLE 19—ESTIMATED SMALL ENTITY ESTABLISHMENTS FOR POSTSECONDARY INSTITUTIONS IN 2011–12

U.S. Department of Education, National Center for Education Statistics, (2015), Digest of Education Statistics, 2013 (NCES 2015–011), available at https://nces.ed.gov/fastfacts/display.asp?id=84 (last visited Feb. 3, 2016).
** Derived from Tables 16–18 above.
*** Estimated using percentage of small establishments for NAICS sectors 6112 and 6113.

In addition to postsecondary institutions, some national testing entities would also be impacted. The Department used data on Educational Test Development and Evaluation Services (NAICS 6117102)¹⁹ to estimate the number of affected entities. Approximately 1,397 national testing entities would be impacted by this rule, irrespective of size. Small entity establishments are estimated to account for 923 (66.1 percent) of these.

TABLE 20—FIRM AND RECEIPTS DATA FOR NATIONAL TESTING ENTITIES IN 2007: EDUCATIONAL TEST DEVELOPMENT AND EVALUATION SERVICES (NAICS 6117102)

* Includes only those entities which were categorized by annual revenue in the available data.
** Data is reported in size categories that do not exactly match industry small business classifications: i.e. from $5 million to $9.99 million, and from $10 million to $24.99 million. SBA small business standard is $15.0 million for all Educational Support Services; small business totals here include those with receipts under $25 million.
*** Applying the estimated percentage of small entities to the total number of entities. Source: Calculated from data provided by the U.S. Census Bureau. See U.S. Census Bureau, 2007 Economic Census, Educational Services: Subject Series—Estab and Firm Size: Receipts/Revenue Size of Establishments for the United States: 2007 (EC0761SSSZ4), available at http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_61SSSZ1&prodType=tableE: (last visited Feb. 3, 2016).

Small entity establishments in the Educational Test Development and Evaluation Services industry group account for 24.8 percent of that industry’s receipts. If receipts are used as a proxy for number of test takers in a manner similar to that described above for postsecondary institutions, then small national testing entities can be expected to bear 24.8 percent of the industry’s $9.49 million first-year costs of processing additional accommodation requests for extra exam time and additional time spent proctoring exams—or approximately $2.35 million. Additionally, national testing entities are expected to incur a fixed cost for additional training of $1,371 per entity. Thus, for the approximately 923 small national testing entities, total costs in the first year are estimated to average $3,918 each. Average revenue for these entities is $780,264. The cost is 0.50 percent of their revenue. Therefore, the costs will not be substantial for these small entities.

In comparison to the number of small testing entities, approximately 474 national testing center establishments (33.9 percent of the 1,397) would be considered larger entities, and they would incur $7.79 million in costs during the first year, which would average out to approximately $16,440 per large national testing center establishment during the first year. This $16,440 per large national testing center establishment is approximately 4.2 times as high as the cost that would be incurred by small national testing center establishments during that same time.

As explained above, the Department estimates that approximately 2,556 small postsecondary establishments and 923 small national testing establishments would be impacted by this rule, for a total of approximately 3,479 small business establishments. The estimates were based on average estimates for all entities, irrespective of size. The Department notes that the average first-year cost estimates presented above for small entities are higher than the first-year cost estimates presented in the NPRM because the Department’s estimates for the initial training costs (which will be incurred during the first year) are now higher based on public comment and further research and analysis conducted by the Department. However, the overall costs of this rule for small entities over the 10-year period are lower because the Department’s final overall cost estimates in the Final RA are lower as a result of refinements made to the analysis in response to public comment and based on further research conducted by the Department.

Based on the above analysis, the Attorney General can certify that the rule will not have a significant economic impact on a substantial number of small entities.