Recently, the Supreme Court addressed a challenge from two private entities related to the constitutionality of a sign bylaw (“Bylaw”) instituted by the City of Austin (“City”).  In City of Austin v. Reagan National Advertising of Austin, LLC, et. al., Reagan National Advertising of Austin, LLC, and Lamar Advantage Outdoor Company, L.P. (“Respondents”) challenged the City’s Bylaw which prohibited the placement of new off-premises signs.  Off-premises signs are those that advertise things not located on the same premises as the sign.  The Bylaw provided that an owner of a pre-existing off-premises sign could “continue or maintain [it] at its existing location” but prohibited an “increase in the degree of nonconformity . . . or increase the illumination of the sign.”  Respondents had pre-existing signs within the City of Austin and sought permits to digitize some of them.  The City denied the permit applications on the grounds that digitizing them would run astray of the Bylaw.  Respondents filed suit against the City, alleging that the Bylaw violated the First Amendment. 

The leading case precedent in this context is Reed v. Town of Gilbert.  In Reed, the bylaw at issue involved restrictions on the size, number, duration, and location of certain types of signs, including temporary directional ones, to prevent improper signage.  Respondent in that case rented space at a school and placed signs in the area announcing the time and location of their upcoming church services.  The Court held that the ordinance was subject to strict scrutiny because they were content-based restrictions.  In other words, one must read the substance of the sign in order to determine whether the bylaw applied, making it a content-based restriction.  To withstand strict scrutiny, the government must show that the regulation is narrowly tailored to achieve a compelling government interest.  This is the highest standard of judicial review.  Accordingly, most bylaws are struck down when subject to strict scrutiny. 

In City of Austin, the Court distinguished Reed and indicated that bylaws which distinguish between on-premises versus off-premises signs are instead subject to intermediate scrutiny.  The Court commented that “[a] sign’s message matters only to the extent that it informs the sign’s relative location.  Thus, the City’s on/off premises distinction is more like ordinary time, place, or manner restrictions, which do not require the application of strict scrutiny.”  In other words, the Court held that the Bylaw was content-neutral as opposed to content-based, subjecting it to a lesser standard of judicial review.  The Bylaw only applied to the physical location of signs:  off-premises versus on-premises.  The substance of the particular sign at issue is irrelevant.  To satisfy intermediate scrutiny, the government need only advance a substantial or important government interest in a narrowly tailored manner.                 

The Court’s holding opens up the possibility of further sign regulation by municipalities.  Municipalities may want to take a look at their sign bylaws and see whether they distinguish between on-premises and  off-premises signs.  If they do, City of Austin indicates that this form of regulation is an acceptable practice