Sign Industry Impact of ‘Austin v. Reagan’

Introduction

The Supreme Court of The United States (SCOTUS) is involved in a case that weighs content-based regulation under the First Amendment. SCOTUS heard oral arguments on November 10, 2021, from the parties involved in City of Austin v. Reagan National Advertising of Texas, a case that could potentially change the landscape of the sign industry. It may come as a shock that the Supreme Court is stepping in to determine the merits of a case involving a city sign ordinance in the first place. However, this particular case actually raises a very important First Amendment issue that has far-reaching implications.

How Did We Get Here?

Reagan National Advertising of Austin and Lamar Advantage Outdoor Company own and operate signs and billboards that display commercial and non-commercial messages. Back in 2017, they filed applications with the City of Austin to digitize existing billboards, but the city denied the applications because its sign code does not allow the digitization of off-premises signage. Reagan and Lamar then sued the City of Austin, arguing that the code’s distinction between on-premises and off-premises signs violates the first amendment.

In July 2017, the City of Austin moved the proceedings from state court to the U.S. District Court for the Western District of Texas. The district court conducted a bench trial and ruled that the sign code was content neutral and ruled in favor of the City. Reagan then appealed to the United States Court of Appeals for the 5^th Circuit. On appeal, the 5^th Circuit reversed the District Court’s judgment and remanded the case for further proceedings, ruling that the ordinance’s distinction between on and off premises signage was content-based and failed under strict scrutiny review which therefore violated the First Amendment.

What is being litigated?

The fundamental issue at play is where to draw the line between the distinction of content-based law and content-neutral laws. When a law is content-based, it will receive strict scrutiny, but if it is content-neutral, it receives intermediate scrutiny. This distinction is crucial because content-based laws are far more likely to be considered unconstitutional. A content-based law requires a government to have a compelling interest in the law. Content-neutral laws on the other hand only require a government to have an important interest in the law. The City of Austin’s ordinance allows on-premises, but not off-premises signage to be digitized. Austin argues this distinction is a content-neutral based law. Raegan National Advertising of Texas refutes this argument by citing Reed v. Town of Gilbert which includes a content-based restriction. SCOTUS will consider whether a city sign code’s differential treatment of on-premises and off-premises signage constitutes a content-based regulation of speech.

How Does This Impact The Sign Industry?

The International Sign Association (ISA) supports the City of Austin which favors maintaining regulatory certainty and the status quo. The on-premises/off-premises distinction and the Highway Beautification Act of 1965 has guided business models like Persona’s for decades. The ISA argues that eliminating on-premises/off-premises distinctions will lead to an unruly amplification of digital billboards which will force governments to impose restrictions on billboards. They ultimately worry that governments will have to pick between allowing too many or restricting too many signs. Nicole Bergstrom, President of SmithCraft worries of a “sign code apocalypse” which would invalidate signage code. As a result, sign companies will have to choose between litigating regulations or complying.