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

This section discusses public comments on the Initial RA that accompanied the 2014 NPRM, as well as changes made to the estimation of likely costs of this rule in response to those comments.  

The Department received 436 comments during the 2014 NPRM comment period, and many directly addressed the assumptions, data, or methodology used in the Initial RA.  The Department received comments from movie industry representatives, individuals with disabilities, advocacy groups representing individuals with disabilities, State and Federal entities, academic organizations, private companies, and other private individuals.  The preamble to this rule provides the primary forum for substantive responses to these comments.  This section discusses comments only to the extent that they implicated the Initial RA-related estimates, assumptions, or methodologies.  A summary and discussion of comments as they relate to small entities can be found in Section 7.2.

General Comments Regarding the Initial RA’s Cost Estimation

The Department reviewed a number of comments suggesting that the Department underestimated the costs of complying with this rule.  Commenters disagreed with a variety of cost estimates provided in the Initial RA.  As a threshold matter, the Department agrees that in some instances, the estimates provided did not accurately capture a particular cost of compliance.  For example, after reviewing the public comments, the Department determined that the staff training costs estimated in the Initial RA did not adequately capture the costs to comply with the operational requirements of the rule, and the equipment unit costs used in the Initial RA did not represent the most current market price of the available equipment.  As a result, the Department has updated these estimates in response to the public comments received.  However, the Department is confident that other estimates were reasonable and remain supported by the Department’s independent research.  In consideration of all comments, the Department has made adjustments where appropriate.  The comments at issue and related comments are specifically addressed below. 

Comments Regarding the Cost of Captioning and Audio Description Equipment

In the Initial RA, the Department estimated the costs of compliance with the proposed rule by estimating the number of hardware units and device units the average movie theater within each venue type⁶ would need in order to comply with the scoping requirements, which determine the number of captioning devices and audio description devices a movie theater is required to have and maintain.  Because the proposed scoping for captioning devices was based on the number of seats within a movie theater, the Department estimated the average seat count across each venue type.  The Department also estimated the average number of auditoriums across each venue type to estimate the number of audio description devices and hardware units needed.  One commenter noted that the Department’s estimates regarding the number of seats and auditoriums were too low, especially for Single-Auditorium and Miniplex movie theaters.  Because of this underestimation, the commenter believed that small movie theater establishments would be required to purchase many more captioning devices than the Department assumed in its cost analysis.  Based on industry survey information provided by the National Association of Theater Owners (NATO) in its individual comment, the Department has updated the Final RA cost estimation to reflect new data regarding average auditorium counts across venue types.  Data concerning average seat count is no longer relevant because the final rule’s scoping for captioning devices is based on the number of auditoriums, rather than the number of seats, within a movie theater (Section 3.3). 

The Department also received multiple comments concerning the unit costs for the hardware and individual devices as well as the Department’s methodology regarding these estimates.  NATO provided the most recent unit cost data for all captioning and audio description equipment currently available on the market, and the Department has updated its cost estimates in the Final RA to reflect this updated information (Section 3.4). 

In the Initial RA, the Department estimated the upfront costs for the captioning and audio description equipment by averaging the hardware and device unit costs of some equipment available on the market.  One commenter stated that the Department’s methodology concerning the average hardware and device unit costs for captioning and audio description equipment was insufficient because it only averaged the costs of the less expensive equipment.  According to the commenter, many movie theaters purchase the more expensive captioning glasses offered by Sony to satisfy audience demand, and as a result, the Initial RA substantially underestimated the cost of compliance by excluding the cost of Sony’s equipment from the average cost estimates.  A second commenter pointed out that the intent of the RA is to estimate the minimum cost of compliance, indicating that the Department’s methodology and estimate regarding the upfront costs were reasonable. 

Executive Order 12866 requires the Department to estimate the costs that movie theaters will incur as a result of this rulemaking.  Currently, there is more than one manufacturer of the equipment necessary to provide captioning and audio description, and the cost for the equipment varies among the manufacturers.  The Department has not specified the manufacturer from which movie theaters must purchase the equipment, and movie theaters retain the discretion to purchase the equipment of their choice.  As a result, the Department has included the cost for all available equipment, including the Sony equipment, in its estimate of the captioning and audio description equipment unit costs for Miniplex, Multiplex, and Megaplex movie theaters.  The Department has not added the cost of the Sony equipment to its estimate of hardware and device unit costs for Single-Auditorium movie theaters because the Department remains convinced that small movie theater establishments are highly unlikely to purchase the more expensive equipment.  As the Department’s independent research indicates, the less expensive cup holder captioning devices account for the largest percentage of the captioning device market share, and NATO advised the Department that few movie theaters outside of the top movie theater chains actually use Sony’s captioning glasses.  Therefore, while other large movie theater establishments may choose to use Sony’s technology, the Department has excluded this equipment from its estimate of the upfront costs for Single-Auditorium movie theaters (Section 3.4).

Comments Regarding Other Cost Estimates: Staff Training, Notice, Installation, Replacement, and Operation & Maintenance

In addition to the comments addressing the captioning and audio description equipment cost estimates, the Department received a number of comments addressing other cost estimates provided in the Initial RA.  These comments addressed the Department’s estimate of staff training costs, notice costs, acquisition and installation costs, replacement costs, and operation and maintenance costs.  Overall, commenters indicated that the Department either failed to include these costs in its estimates or that the Department’s estimate for these costs was too low.

The Department originally included staff training costs associated with the rule in its estimate of the annual operations and maintenance costs, but the Department sought public comment on the amount of additional time movie theaters would spend training their employees to operate the captioning and audio description devices and to assist patrons in their use.  The Department received a single comment in response to this question.  One movie theater anticipated that movie theaters would spend an additional fifteen minutes on employee training to ensure that their staff was knowledgeable about the equipment and in compliance with the rule’s operational requirements.  In consideration of this comment, the Department has included a separate estimate for the staff training costs associated with the operational requirements of the final rule.  The information provided by the movie theater commenter serves as the basis for the staff training costs estimate (Section 3.7). 

The Department received only a few comments regarding its position that any cost associated with the notice requirement would be de minimis.  One commenter argued that requiring notice in all places where movie times are listed would cost the industry millions of dollars annually because theaters would be required to invest in software upgrades, the purchase of new signage on an ongoing basis, the purchase of digital display sets, and increased advertising space to accommodate more text.  However, this commenter did not provide any information or data to support this position, and the only other commenter on this issue, a movie theater, agreed with the Department’s conclusion that notice costs would be de minimis.  According to this movie theater, the notice costs associated with the rule would be minimal for most exhibitors considering that the industry has largely separated itself from print advertising in favor of online advertising and that adding icons for captioning and audio description would not be very difficult. 

Based on the Department’s independent research and the comments received, the Department maintains its position that the costs associated with the notice requirement are de minimis.  The notice requirement does not require a movie theater to implement a specific form of notice.  Movie theaters routinely use “CC” and “AD” or “DV” to indicate the availability of closed movie captioning and audio description in their communications currently, including on their Web sites and mobile apps, and the Department’s research indicates that the inclusion of such symbols does not increase the cost of advertisements already placed or require software upgrades as one commenter indicated (Section 2.4.4.2). 

The Department also disagrees with commenters who criticized the Department’s failure to include accurate equipment unit costs and installation costs in the Initial RA.  As the Department indicated in the Initial RA, the unit cost estimates of the available equipment included the cost to install the equipment, and these unit cost estimates were based on the most up-to-date data available to the Department during the development of the Initial RA.  The Department has updated the equipment unit cost estimates, now referred to as “acquisition costs” in the Final RA, to reflect the most recent data concerning the unit costs for all available hardware and devices.  The Final RA also now calculates installation costs as a separate cost based on a movie theater’s upfront costs (Section 3.5). 

A couple of comments addressed the replacement costs estimated in the Initial RA, specifically the replacement costs of the individual devices.  One commenter estimated that the useful life of the captioning devices is about 5 years.  According to NATO, industry data indicates that between 2.5 percent and 15 percent of individual devices must be replaced annually.  The Department has updated the estimate of individual device replacement costs to reflect the industry data provided by NATO.  To incorporate the individual devices’ estimated 4–7-year useful life, the Department estimates that 20 percent of all captioning and audio description devices purchased as a result of this rulemaking will be replaced annually (Section 3.6). 

Several commenters also argued that the Department’s estimate regarding operation and maintenance costs was too low.  According to these commenters, the maintenance costs include costs associated with replacement batteries, periodic system testing, and upgrading software, and because these costs are relative to the cost of the equipment, the Department should consider the high cost of the devices when estimating this cost.  A few comments seemed to express confusion that the operations and maintenance cost estimate in the Initial RA encompassed the costs associated with installation, replacement, and staff training.  The Department has considered these comments and has included separate cost estimates for the costs associated with installation, replacement, and staff training.  However, the Department’s independent research confirms that 3 percent of total equipment acquisition costs represents an accurate estimate of the annual operation and maintenance costs associated with this rule, especially now that installation, replacement, and staff training costs are estimated separately (Section 3.8).  The relevant cost category has been renamed “maintenance and administrative costs” in the Final RA.

Comments Regarding the Benefits Estimate

The Department qualitatively discussed the benefits associated with this rule in the Initial RA.  Without reliable information about the number of individuals who would go to the movies as a result of this rule or the number of captioned and audio-described screenings already shown, the Department determined that the benefits of the rule were difficult to quantify.  Nonetheless, the Department determined that many individuals, both those with and without disabilities, would benefit as a result of the rule, and that such benefits justified any associated costs.  Furthermore, the Department fully expected that the guarantee of access to movies screened at movie theaters for individuals with hearing or vision impairments would spur some level of new demand for movie attendance and, therefore, lead to increased box office receipts.

A majority of commenters addressing the Department’s benefit analysis recognized the difficulty in quantifying the benefits of the rule but agreed with the Department’s conclusions concerning the direct and indirect beneficiaries that this rule would serve.  Many comments focused on the number of individuals with hearing and vision disabilities, arguing that the U.S. Census vastly underestimates the number of individuals who are deaf or hard of hearing, or blind or have low vision.  Commenters also stated that in addition to helping individuals who are deaf or hard of hearing, movie captioning has the potential to increase the access and enjoyment of movies for a wide variety of people, including individuals with cognitive-communication disorders, language-based learning disabilities, aphasia, central auditory processing disorders, or individuals who are learning English or may be working to improve their literacy skills.  Organizations representing individuals with hearing and vision disabilities commented generally that captioning and audio description provide the keys to American culture to the extent that these services help individuals with hearing and vision disabilities to be more familiar with “everyday events,” thus allowing them to be more socially integrated into society.

One commenter, however, criticized the Department’s benefit analysis.  This commenter asserted that the Department failed to justify the rule with relevant, evidence-based research to demonstrate that the proposed rule would advance the intended benefits.  The commenter further recommended that the Department conduct an industry-wide survey of movie theaters and individuals with hearing and vision disabilities to determine the number of individuals currently seeking captioning and audio description and their willingness to pay for such services.

The Department maintains its position that the non-quantifiable benefits of this rule justify the costs of requiring captioning and audio description at movie theaters nationwide.  The Department received a number of comments from individuals with hearing and vision disabilities, as well as advocacy groups, indicating that individuals with disabilities are currently seeking these accessibility services, but that these services are either consistently unavailable or insufficient to meet their needs.  With the information received from such comments and the Department’s independent research, the Department does not believe that conducting a nationwide survey is necessary to confirm that this rulemaking will advance the intended benefits.  As section 1(c) of Executive Order 13563 highlights, agencies would be remiss to overlook the benefits “that are difficult or impossible to quantify, including equity, human dignity, [and] fairness.”  With respect to such benefits, this rulemaking will not only ensure that individuals who are deaf or hard of hearing, or blind or have low vision, are afforded equal access to movie theaters across the country, but it will also ensure that such individuals are afforded the opportunity to participate in the social experiences that accompany a new movie’s release.  As a result, the Department remains convinced that this rulemaking will significantly advance the achievement of the intended benefits, and that such benefits justify the costs associated with this rulemaking.  See Chapter 5 for a more detailed discussion of the benefits of this rulemaking.