The City of Austin’s sign ordinance allows for signs to be located on – site, advertising businesses on the property where a sign is located but generally banning any new off-site signs that have no connection to the business where the sign is located.  In this instance, the City’s sign ordinance further prohibited the conversion of already existing off-premises signs to digital signs, while allowing on-premise signs to be converted. When the City of Austin denied a permit to a sign company to convert its existing off-premises sign to a digital sign with changing, illuminated text, the sign company sued for its permit contending the ban on digitizing off-premises signs, while allowing the digitization of on-premises signs, violated the First Amendment as a prohibited “content-based” regulation because a person would have to read the sign to determine whether the sign advertises matters related or unrelated to the sign location.  In its decision in City of Austin v Reagan National Advertising, the U.S. Supreme Court rejected that argument and ruled that a municipal ordinance that treats signs differently depending on whether they are “on or off-site”, i.e. whether they have a connection to the site where they are located, does not regulate speech based on its content and is not subject to the highest level of scrutiny and special protection under the First Amendment. The Court found that the on-premise, off-premise distinction in the City of Austin regulation was not content based and is authorized consistent with other time, place and manner sign regulations.

[The Supreme Court has returned this matter to the federal district court for that Court to analyze the sign regulation involved under the appropriate intermediate scrutiny test.] 

The full decision can be accessed at the following link:

City of Austin, Texas v. Reagan National Advertising of Austin, LLC et al. 

A more detailed summary of the decision is set forth hereinbelow.

Summary of Decision

City of Austin v Regan National Advertising (U.S. Supreme Court April 2022)

Facts

The City of Austin adopted a sign ordinance which generally prohibits off-premise signs, i.e. signs that do not advertise the products or services of a business at the site where the sign is located. The ordinance further prohibits the conversion of an existing off-premise sign to a changing, illuminated digital sign. When the City denied the application for a permit to convert its off-premise sign to a digital sign, the sign company Reagan National sued the City contending that the City’s ordinance created an unlawful content-based regulation on its signage, without a compelling basis for such a regulation, in violation of the First Amendment. The federal court of appeals for the 5^th Circuit agreed with the sign company and struck down the ordinance as a content-based regulation because a person would have to read the content of the sign to determine whether it was promoting activities or services which were located on or off premises. As a content-based regulation it would have to pass the highest level of scrutiny under the First Amendment and, without the showing of a compelling need for such regulation,  would therefore be unlawful. The U. S. Supreme Court reversed that decision finding that such an interpretation was an unwarranted reading and extension of the Court’s prior decision in Reed v Town of Gilbert (which found a regulation on signs in the right-of-way which treated “church” services less favorably to be unconstitutional).

Supreme Court Reasoning: 

The Court noted that when a municipal sign regulation is found to be a content-based restriction on speech the regulation is presumptively unconstitutional and subject to strict scrutiny, the highest form of judicial review. Content neutral regulations regarding speech generally are subject to the less exacting intermediate scrutiny analysis. In distinguishing the sign regulation in the City of Austin from the regulation in the Town of Gilbert the Court reasoned that the City of Austin ordinance only takes the speech into account to determine whether the sign is located on- or off-premises but importantly does not regulate based on any particular topic or subject matter, i.e. the “content”. The Court concluded that while the Town of Gilbert sign regulation required the Town to distinguish among ideological signs, political signs, and temporary directional signs, the City of Austin regulations did not require such precise classification or treat them differently. The Court emphasized that it has consistently found that a regulation is content based if it “applies to particular speech because of the topic discussed or the idea or message expressed,” and that this regulation only addresses location, not speech content. Since such a regulation is not content-based, it would not be subject to strict scrutiny.

The Court found that the appropriate analysis applicable to this type of municipal sign regulation would be “intermediate scrutiny”. An intermediate scrutiny analysis still requires a municipality to show that its sign code or regulation is drawn narrowly to advance a significant government interest.  

The Supreme Court returned this matter to the federal district court for that Court to analyze the sign regulation involved under the appropriate intermediate scrutiny test. 

Further, while the Supreme Court ruled that this sign regulation did not create an improper content-based restriction, there could be an additional issue as to whether there might be “an impermissible purpose or justification” behind this sign regulation which is neutral on its face.   

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