May/June 2022 Issue

Also in this issue: Court of Appeals Examines Limits on Municipal Exactions     |     Determining WRS Reportable Earnings with Employee Separations and Settlements     |     Wisconsin Supreme Court: Board of Review Properly Classified Nudo Holdings, LLC Property

Supreme Court Upholds Municipal Sign Ordinance

05.24.22

In a significant victory for municipalities, the United State Supreme Court upheld the traditional municipal distinction between regulation of on-premises and off-premises advertising signs. The Court rejected a claim that such distinctions necessarily involve discrimination based on content, finding that that the on-/off-premises distinction is a neutral regulation based on place. City of Austin v. Reagan National Advertising of Austin, LLC, ___ U.S. ____, 2022 WL 1177494 (No. 20 – 1029, April 21, 2022).

The City of Austin has an ordinance regulating signs, particularly advertising signs. Like thousands of other municipalities across the country, the ordinance distinguishes between on-premises advertising – a sign located on the very property of the business it is advertising – and off-premises advertising, usually billboards along highways on property unrelated to the company being advertised. Austin subjected off-premises signs to greater regulation, including that such signs could not be expanded or changed to a digital sign. 

Reagan Advertising challenged the ordinance when Austin refused a request to change an off-premises sign from a static sign to a digital sign. Reagan relied on the Court’s decision in Reed v. Town of Gilbert, 576 U.S. 155 (2015). In Reed, the Court struck down an ordinance that had extensive sign regulations based on their purpose, finding that it was a content-based violation of the First Amendment, and thus subject to strict scrutiny. The fact that one of the signs at issue in Reed was directing people to a religious service could not have benefited the Town of Gilbert’s argument.

Since Reed, municipal lawyers wondered about future challenges to sign ordinances. Here, Reagan Advertising made a tellingly simple argument: In order to enforce its on-/off-premises distinction, the City of Austin had to read the actual words on the sign in question. That is the only way the City could determine whether it was an on-premises sign. Since the regulation depended on reading the sign to see what it said, it was necessarily a ​“content” based regulation, subject to strict scrutiny. Subjecting any regulation to strict scrutiny means the regulation almost always falls.

The Court in City of Austin rejected this argument forcefully and, in a 5−1−3 decision, upheld the ordinance. The Court stated (2022 WL 1177494, at 4 – 5): 

Justice Sotomayor delivered the opinion, and was joined by Justices Roberts, Breyer, Kagan and Kavanaugh. Justice Alito concurred in the judgment, but dissented on the grounds that some of the majority opinion was stretching Reed beyond what was intended. Justices Thomas, Gorsuch and Barrett dissented, arguing the case was controlled by Reed.

While this ruling gives municipalities comfort that the on-/off-premises distinction remains valid – having been adopted by thousands of municipalities and in place for decades – expect further challenges to sign ordinances seeking broad interpretation of the Reed Decision.