Read the Signs: New Ruling Clarifies On-/Off-Premises Sign Regulation

In April 2022, the United States Supreme Court (Court) ruled in favor of the City of Austin, Texas, in a challenge to the city’s off-premises sign regulations in the case City of Austin v. Reagan National Advertising.

The decision clarified a question that local governments had been grappling with since the 2015 Reed v. Town of Gilbert case: Whether on-/off-premises sign regulations (i.e., regulations that regulate off-premises signs such as billboards differently than on-premises signs) are “content-based” and therefore presumptively unconstitutional.

The Court held that the city’s on-/off-premises sign regulations were not subject to the “strict scrutiny” standard of review that applies to content-based restrictions, but instead that the regulations were content neutral and therefore subject to the “intermediate scrutiny” standard of review — a much lower burden for a regulation to pass muster under the First Amendment.

Facts

The plaintiffs, owners of two billboard companies, applied for permits to digitize some of their existing billboards. Austin had a regulation prohibiting new billboards but allowing existing billboards to remain. Owners of existing billboards could change the face of the sign but could not increase the degree of nonconformity, including changing the method or technology used to convey a message. Based on this regulation, the city denied the permits. The city’s regulations did allow digitization of on-premises signs in some circumstances.

The billboard companies filed a lawsuit, arguing that the on-/off-premises distinctions were content based and therefore unconstitutional pursuant to Reed. The plaintiffs relied on the implication in Reed that “if you have to read the sign to regulate it,” a regulation is content based. In other words, you would have to read the sign in order to know whether it is to be located on the same premises as the person, place, or thing being discussed. The district court upheld the city’s permit decision, but the Fifth Circuit Court of Appeals reversed, holding that the off-premises sign regulation was content based, failed the “strict scrutiny” test, and therefore violated the First Amendment.

Analysis

In reversing the Court of Appeals decision, U.S. Supreme Court Justice Sonia Sotomayor wrote for the majority:

The Court of Appeals interpreted Reed to mean that if “[a] reader must ask: who is the speaker and what is the speaker saying” to apply a regulation, then the regulation is automatically content based… This rule, which holds that a regulation cannot be content neutral if it requires reading the sign at issue, is too extreme an interpretation of this Court’s precedent. Unlike the regulations at issue in Reed, the City’s off-premises distinction requires an examination of speech only in service of drawing neutral, location-based lines. It is agnostic as to content. Thus, absent a content-based purpose or justification, the City’s distinction is content neutral and does not warrant the application of strict scrutiny.

See Austin at 6.

The Court distinguished on-/off-premises sign regulations from the type of regulations at issue in Reed. In Reed, the Town of Gilbert’s sign code included 23 categories of signs, with signs subject to different limitations based on the subject matter of the sign — such as ideological, political, or directional. The Reed Court had reasoned that “a speech regulation targeted at specific subject matter is content based even if it does not discriminate among viewpoints within that subject matter.” See Reed at 169.

In distinguishing the current case from Reed, the Austin Court wrote:

Unlike the sign code at issue in Reed, however, the City’s provisions at issue here do not single out any topic or subject matter for differential treatment. A sign’s substantive message itself is irrelevant to the application of the provisions; there are no content-discriminatory classifications for political messages, ideological messages, or directional messages concerning specific events, including those sponsored by religious and nonprofit organizations. Rather, the City’s provisions distinguish based on location: A given sign is treated differently based solely on whether it is located on the same premises as the thing being discussed or not. The message on the sign matters only to the extent that it informs the sign’s relative location. The on-/off-premises distinction is therefore similar to ordinary time, place, or manner restrictions. Reed does not require the application of strict scrutiny to this kind of location-based regulation.

See Austin at 8.

Justice Sotomayor emphasized this country’s long history of regulating signs based on the on-/off-premises distinction, including the federal Highway Beautification Act of 1965, state laws, and thousands of local codes throughout the country. The Court also cited several of its own decisions upholding off-premises sign regulations and location-based rules.

The Court remanded the case back to the Court of Appeals to determine whether the regulations could meet the intermediate scrutiny test for content-neutral regulations.

What Does This Mean for Local Governments?

Local governments have been scrambling since Reed to scrub their sign codes of content-based regulations, including regulations that apply based on the specific subject matter of a sign (a practice that had been typical in comprehensive sign codes prior to Reed). Many have struggled with whether to maintain on-/off-premises distinctions in their codes since Reed’s formalistic test seemed to call this into question. After Austin, local governments can feel confident in retaining (or reinstating) reasonable on-/off-premises sign regulations.

Additional MRSC Resources

• Sign Regulation
• Sign Regulation Court Decisions
• MRSC Insight blogs on sign control