December 7, 2021


On November 10, 2021, the U.S. Supreme Court heard oral arguments in City of Austin, Texas v. Reagan National Advertising, 141 S. Ct. 2849 (2021), a First Amendment case concerning Austin’s restrictions on “off-premise” signs. The Court’s decision in this case may significantly restrict local governments from distinguishing between off- and on-premise messages in their sign codes, regardless of legitimate aesthetic and traffic concerns. This is a case to watch because most local government zoning codes in Illinois do contain some form of the signage distinction that is in the Austin, Texas code.

Background: The Evolving Test for Freedom of Speech Claims Regarding Signs

Reagan National Advertising marks the first time the Supreme Court has returned to the freedom of speech issues raised by sign ordinances since its landmark decision in Reed v. Town of Gilbert, 135 S. Ct. 2227 (2015). In Reed, the Court held that the Town of Gilbert’s sign code violated the First Amendment by drawing “content-based” distinctions between temporary, political, and ideological signs. Writing for a unanimous Court, Justice Thomas declared that “content-based laws”—laws that apply differently based on the viewpoint, topic, function, or purpose of a particular message—are presumptively unconstitutional and unenforceable unless they narrowly serve compelling state interests (a standard known as “strict scrutiny” that can be very difficult to satisfy). The opinion explained that content-neutral sign regulations—those, for example, that limit the size, materials, and lighting of signs—will be held to a more forgiving standard.  However, in Reed, several other Justices filed their own opinions, each attempting to justify the main decision. In one concurring opinion, Justice Alito listed “rules distinguishing between on-premise and off-premise signs” among various regulations that he considered not content-based and thus not subject to strict scrutiny under Reed.

American courts have since grappled with applying Reed’s rigid rule to freedom of speech challenges. Courts have had a particularly difficult time deciding three important sign regulation issues: (1) whether ordinances that treat on-premise and off-premise signs differently are content-based and thus subject to strict scrutiny; (2) whether ordinances that primarily restrict commercial speech (such as billboards) are entitled to the full protection of the Reed rule; and (3) whether a municipality’s interests in aesthetics and traffic safety are “compelling” enough to survive strict scrutiny.

The Lower Court Opinion in Reagan National Advertising

The Fifth Circuit Court of Appeals confronted all three questions when billboard operator Reagan National Advertising (“RNA”) challenged an Austin, Texas sign ordinance that specifically prohibits the digitization of any “off-premise sign”—defined in the City’s Code as a sign concerning an organization, product, service, or event that “occurs elsewhere than on the premise where the sign is located.”

RNA filed suit after the City denied the permit that RNA needed to replace some of its fixed-image billboards with digital screens. RNA claimed that Austin’s off-premise digitization prohibition is content-based because officials must analyze a sign’s content (whether it concerns on-site activities) in order to determine whether the prohibition applies. The Fifth Circuit agreed. It held that the regulation violates the First Amendment because whether or not a sign’s message concerns on-site activities is a content-based inquiry into the sign’s “function or purpose.” The court then determined that the regulation fails strict scrutiny because the City’s concerns that digital signs are aesthetically displeasing and pose safety risks are not specific to off-premise signs. The Fifth Circuit implicitly endorsed a strict interpretation of Reed: that a signage regulation is content-based when officials “need to read” a sign to determine how the regulation applies. See Reagan National Advertising v. City of Austin, 972 F.3d 696 (5th Cir. 2020).

The Fifth Circuit avoided the question of whether or not Reed applies with equal force to commercial speech regulations because Austin’s off-premise digitization restriction applies regardless of whether digital content is commercial (e.g., business promotions) or non-commercial (e.g., religious or political messages). Courts have traditionally subjected commercial speech restrictions to a less scrutinizing First Amendment test. See Central Hudson Gas & Electric Corporation v. Public Service Commission of New York, 447 U.S. 557, 566 (1980).

Oral Arguments before the US Supreme Court

The US Supreme Court agreed to consider the Fifth Circuit’s decision earlier this year and grilled the parties’ representatives in person at oral argument on November 10.

Attorneys for the City argued that Austin’s off-premise distinction “turns on the relationship of a sign to its location, not the content of its message.” Justice Thomas appeared to disagree. He pointed out that, for instance, the ordinance would allow McDonald’s to digitize a sign advertising its own hamburgers but not a sign promoting barbeque offerings at a restaurant nearby. That sort of analysis, according to Thomas, is content-based and subject to strict scrutiny under Reed. Justices Gorsuch, Kavanaugh, and Barrett seemed to generally agree, each suggesting that ordinances focused on the size, placement, or brightness of signs would be less content-driven.

Justices Roberts, Sotomayor, Alito, and Beyer expressed concern that the Court might subject a vast array of American laws to invalidation if it drifts towards a “need to read” standard for First Amendment scrutiny in this case.  Justice Breyer warned that any laws compelling the disclosure of specific information could be at risk, such as regulations that require companies to publish pollution or nutritional statistics. Chief Justice Roberts specifically warned that ruling in favor of RNA could invalidate portions of the federal Highway Beautification Act. Justices Alito and Sotomayor implied that Austin’s regulation is the sort of on- vs. off-premise distinction that they characterized as content-neutral in their Reed concurrence.

If the oral arguments are any indication, the Court is even more divided over this case than it was in Reed. If the Court strikes down Austin’s ordinance, it will expose thousands of similarly crafted municipal regulations to First Amendment challenges under the strict scrutiny standard and thus could require municipalities to once again review signage regulations that expressly or implicitly vary by topic (such as rules tailored to specific events, political campaign seasons, or holidays). Sign regulations could be at risk even if they (1) predominantly affect commercial advertisements, (2) preserve aesthetic consistency, or (3) promote traffic safety.

A decision in the case is expected by spring of 2022.

For questions about the evolving First Amendment standards for sign ordinances, contact any Elrod Friedman attorney.