Can a sign ordinance distinguish between on-premises and off-premises signs? The answer is yes according to U.S. Supreme Court’s decision in City of Austin v. Reagan National Advertising of Austin, LLC, 142 S. Ct. 1464 (2022). This blog outlines the case and some lessons for moving forward.

The Austin Ordinance

Like many local sign codes, the City of Austin, Texas, sign code defined “off-premise sign” to mean “a sign advertising a business, person, activity, goods, products, or services not located on the site where the sign is installed, or that directs persons to any location not on that site.” The ordinance prohibited new off-premises signs but allowed existing off-premises signs to continue as lawful nonconformities. The ordinance allowed owners of on-premises signs to convert those signs to digital signs but prohibited digitization of off-premises signs.

Sign companies challenged the on-premises/off-premises distinction as content-based and unconstitutional under the rubric of Reed v. Gilbert, 576 U. S. 155 (2015).

Implications from Reed

Sign regulations may be desirable for traffic safety, community aesthetics, and otherwise, but sign regulations burden speech and are subject to constitutional review to ensure the regulations do not violate the First Amendment protections of free speech. Under the First Amendment caselaw, content neutral regulations (regulating the size, location, height, and other characteristics of signs) are subject to intermediate scrutiny. Regulations of commercial speech are similarly subject to intermediate scrutiny. Intermediate scrutiny demands that the regulation advance a substantial governmental interest and be no more restrictive than necessary to further that interest. Content-based regulations (regulating the message on the sign) are subject to strict scrutiny, the highest level of judicial review. Under strict scrutiny, a regulation is presumed to violate the First Amendment right to free speech unless it is narrowly tailored to serve a compelling state interest.

The Reed v. Town of Gilbert decision, which was a few years prior to the Austin case, had significant impacts on the rules for free speech and the practical application to local sign ordinances. Prior to Reed many ordinances treated different categories of signs differently. So, for example, the Town of Gilbert regulations treated campaign signs differently than temporary event signs.  Reed held that such a distinction is a content-based regulation subject to strict scrutiny. The Court found that the town’s code was not narrowly tailored and struck it down as unconstitutional.

The Reed decision made some things very clear: A local sign code may not give preference to some noncommercial messages over other noncommercial messages. But, as outlined in this blog, the Reed decision left some questions open: May a sign code still distinguish between commercial and noncommercial signs, or is that a content-based distinction subject to strict scrutiny? What about distinguishing between on-premises and off-premises signs? If a zoning officer has to read the sign to apply the rule, does that mean the rule is automatically content-based?

Since the Reed decision those questions have been working their way through the courts. In Austin v. Reagan National, the federal Fifth Circuit Court of Appeals ruled that Austin’s distinction between on-premises and off-premises signs was a content-based regulation subject to strict scrutiny under Reed. The city appealed to the U.S. Supreme Court.

Decision of the Court in City of Austin

The Supreme Court distinguished the regulations in Reed from the regulations in Austin. Writing the majority opinion, Justice Sotomayor emphasized that the Town of Gilbert ordinance at issue in Reed singled out particular topics for different treatment. Ideological signs were treated more favorably than political signs which, in turn, were treated more favorably than directional signs for religious and charitable events. The Austin ordinance, in contrast, distinguished based on location—a content-neutral distinction. As noted in the Court’s opinion, “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 [content neutral] time, place, or manner restrictions.” As such, the Austin ordinance was not subject to strict scrutiny in the way that the Gilbert ordinance was.

The Court offered examples of permissible, content-neutral restrictions on speech that require some evaluation of the speech. Prior Supreme Court speech and sign cases have permitted the on-/off-premises distinctions and commercial/noncommercial distinctions, including Suffolk Outdoor Advertising Co. v. Hulse, 439 U.S. 808 (1978), Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N. Y., 447 U. S. 557 (1980), Metromedia, Inc. v. San Diego, 453 U.S. 490 (1981), and Members of City Council of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789 (1984). The Court directly states that “Reed did not purport to cast doubt on these cases.” Moreover, Reed did not “cast doubt on the Nation’s history of regulating off-premises signs.”

Responding to arguments by the sign company and the dissenting opinion, the majority opinion gives some clarity and contours to the scope of the Reed decision. The sign company asked the Court to read Reed such that if an ordinance defines speech by its function or purpose, the ordinance is automatically content-based. The Reed decision included language that “[s]ome facial distinctions based on a message are obvious, defining regulated speech by particular subject matter, and others are more subtle, defining regulated speech by its function or purpose.” The sign company argued that that language should extend to this case, automatically subjecting the Austin ordinance to strict scrutiny. The majority responds that such a reading of the function or purpose language stretches Reed too far and would contravene prior precedent. As clarified by the majority in Austin, under the Reed decision, “[A] regulation of speech cannot escape classification as facially content based simply by swapping an obvious subject-matter distinction for a ‘function or purpose’ proxy that achieves the same result. That does not mean that any classification that considers function or purpose is always content based.”

Even though it is not subject to the nearly impossible burden of strict scrutiny for content-based restrictions, Austin’s ordinance must still meet intermediate scrutiny. “If there is evidence that an impermissible purpose or justification underpins a facially content-neutral restriction, for instance, that restriction may be content based. Moreover, to survive intermediate scrutiny, a restriction on speech or expression must be narrowly tailored to serve a significant governmental interest.” (citations and quotations omitted). The Court remanded the case for the lower courts to resolve if the ordinance met intermediate scrutiny.

While the justices voted 6-3 to uphold the Austin sign ordinance, there were differing opinions. Justice Breyer joined the majority but offered a concurring opinion to highlight his view that the Reed decision was wrong. Justice Alito concurred in the judgment but dissented in part arguing the Court of Appeals failed to apply the proper test for the claim that the sign code was unconstitutional on its face. Justice Thomas, who authored the majority opinion in Reed, dissented from the decision in Austin. Justice Thomas, joined by Justices Gorsuch and Barrett, would have found the on-/off-premises distinction unconstitutional under Reed.

Implications Going Forward

So what does this mean going forward? Here are some key questions and answers.

Can a sign code distinguish signs based on the content of the sign’s message? Generally, no. This was made clear in Reed and is reaffirmed in Austin: “[I]t is regulations that discriminate based on ‘the topic discussed or the idea or message expressed’ that are content based.” (citing Reed, 576 U. S., at 171) Such regulations are subject to strict scrutiny. A local sign ordinance cannot give preference to political signs over other noncommercial signs. A local zoning ordinance cannot permit American flags but prohibit other noncommercial flags. Such content-based restrictions would not meet the high standard of strict scrutiny, and likely would be struck down as unconstitutional.

To be sure, local ordinances may still impose an array of content-neutral regulations on signs and other speech. Reasonable limits on the size, number, and location of signs are permissible. Similarly, reasonable limits on the size, number, and location of flags are permissible. These are constitutional, content-neutral regulations of the time, manner, and place of the speech, not regulations of the content of the speech.

So, if the enforcement officer must read the sign to apply the code, is the code automatically content-based? No. The Austin decision allows that some ordinance distinctions may necessitate that the officer read the sign. Such distinctions are not automatically subject to strict scrutiny. But be mindful. The Court draws a clear line between the rules at issue in Reed and the rules at issue in Austin:

“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.”

Can the sign code distinguish between on-premises and off-premises signs? Generally, yes. This is the heart of the dispute in the Austin case. The Supreme Court affirms that Austin’s distinction between on-premises and off-premises signs is not a content-based regulation. While the regulation is based to an extent on the message of the sign, “[t]he message on the sign matters only to the extent that it informs the sign’s relative location.” The regulation is content-neutral—a common time, place, or manner regulation—subject to intermediate scrutiny.

Can the sign code distinguish commercial messages from noncommercial messages? Generally, yes. The Austin case did not directly present the question of commercial/noncommercial distinctions, but the discussion of the case clarifies the Reed decision in a way that limits the impact on prior precedent. Reed did not explicitly overrule prior precedent, but the breadth of the language in the opinion left open arguments that a commercial/noncommercial distinction might be treated as content-based and subject to strict scrutiny. In Austin, the majority opinion cites precedent affirming the commercial/noncommercial distinction (Central Hudson and Metromedia) and clearly states that “Reed did not purport to cast doubt on these cases.” While the commercial/noncommercial distinction might not be subject to strict scrutiny, it is still a regulation of speech and must meet intermediate scrutiny.

One Final Note

While we are talking about signs, let me emphasize another important lesson from a state court case: Local governments must clean up contradictory ordinance sections and take care with terminology in sign regulations and all land use regulations.

In Visible Props., LLC v. the Village. of Clemmons, case no. COA21-398 (N.C. App. August 2, 2022), the North Carolina Court of Appeals resolved a dispute between a sign company and a local government. The sign company proposed a digital billboard. The local sign ordinance had four different sections with seemingly contradictory provisions about whether a billboard was allowed on the property. Given the ambiguity, the court interpreted the ordinance in favor of the free use of land and permitted the billboard.

Moreover, the court rejected that town’s argument that a billboard with digital changeable copy was a “moving and flashing sign” or an “electronic message board.” Neither of those terms were defined and the court applied dictionary definitions to determine that the proposed billboard was permitted because it was not moving or flashing and was not a message board.

Ordinance drafters—of sign ordinances and all ordinances—must take care to avoid contradictory provisions and use clear, defined terminology. As noted in Visible Properties, “zoning regulations are not intended to be a system of murky, ambiguous rules where the permitted uses of property ultimately depend on the interpretive discretion of government bureaucracy.”