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The On-Premise/Off-Premise Sign Distinction Is Here to Stay

    Client Alerts
  • June 2022

Most local governments have regulations that treat signs differently if they are on-premise or off-premise, but this regulation method was called into question in 2015 when the Supreme Court issued its opinion in Reed v. Town of Gilbert.

In Reed, the court attempted to create a “common sense,” bright-line rule that, if a reader of a sign must ask “who is the speaker and what is the speaker saying?” in order to know how to apply a regulation, then the regulation is automatically content-based and, therefore, likely to fail a constitutional challenge.

On April 21, 2022, the Supreme Court issued City of Austin v. Reagan National Advertising of Austin, LLC and found that Reed did not impact on-premise/off-premise regulation. The court reasoned that “interpreting” Reed to mean “if you have to read a sign to know whether it is regulated or not” was “too extreme.” The court emphasized that many local governments regulated on-premise signs differently from off-premise signs, that they had done so for a long time, and that there is a long-standing Supreme Court precedent concerning the regulation of on-premise versus off-premise signs.

With City of Austin v. Reagan, any question about what may be considered “common sense” in the world of sign regulation was decided in the local government’s favor.

A Deeper Dive Into the Supreme Court Opinion

Many people hoped City of Austin v. Reagan would help clarify some of the confusion surrounding Reed and determine whether or how Reed should apply in other contexts.

Opening the court’s opinion, Justice Sotomayor distinguished the regulation at issue in City of Austin v. Reagan from the regulation at issue in Reed. In Reed, the town was regulating non-commercial signs differently based on the speaker. In City of Austin v. Reagan, conversely, the court reasoned that the city was regulating based on location, whether something was off-premise or on-premise, and the “message on the sign matters only to the extent that it informs the sign’s relative location.” That reading that the message on the sign matters only to the extent you need to know whether it’s regulated is exactly what the broad holding in Reed said was forbidden.

So, City of Austin v. Reagan hasn’t clarified or changed Reed but simply limited when its holding should apply.

The concurring opinions of Justice Breyer and Justice Alito discuss how the court’s opinion in City of Austin v. Reagan continues the confusion that has been created as a result of Reed. Justice Breyer thinks Reed was flat-out wrong and that there was no way to square it with another precedent. His concurring opinion lists numerous precedents that cannot be squared with Reed. Justice Alito would have found the Austin ordinance unconstitutional on other basic tests of constitutionality, including overbreadth. Perhaps the most important part of Justice Alito’s concurrence for local governments is the acknowledgment that “regulations of commercial speech are analyzed differently” in case law precedent.

What to Expect Next

While it is now settled that local governments can regulate based on whether a sign is on-premise or off-premise, the court’s rationale, the two concurring opinions, and the dissent confirm that there is still a lack of consensus about how much influence Reed should have on sign ordinances and on First Amendment case law in general.

Local governments and courts will need to revisit or distinguish the opinions issued since Reed in areas from panhandling to robocalls. The Fourth Circuit has already started doing that. For example, following Reed in 2015, the Fourth Circuit stated in Cahaly v. LaRosa that Reed “conflicted with, and therefore abrogated, our Circuit’s previous formulation for analyzing content neutrality.” However, the Fourth Circuit’s case Recht v. Morrisey, issued soon after City of Austin v. Reagan, limited Reed to its sign ordinance, non-commercial regulation context and found that “it cannot be distorted to so unsettle the Central Hudson regime. After all, the Supreme Court ‘does not normally overturn, or so dramatically limit, earlier authority sub silentio.’”

So, can jurisdictions simply go back to the old way of doing things or find a euphemism for disfavored topics so that those topics broadly can be regulated without referring to the idea or message expressed? No. The opinion in City of Austin v. Reagan pointed out that, consistent with Reed, “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.” Additionally, the court reminded jurisdictions that “if there is evidence that an impermissible purpose or justification underpins a facially content-neutral restriction, for instance, that restriction may be content-based.”

That means, for example, that an ordinance regulating “panhandling,” many of which came under scrutiny following Reed, is still unconstitutional, as is something like an ordinance that regulates “solicitation of funds for immediate use.” And jurisdictions that are still interested in regulating solicitation generally? Those run the risk of violating overbreadth issues in an attempt to escape content-based issues.