In a big win for local government, the United States Supreme Court ruled in favor of the City of Austin in their case concerning their on/off premises sign code, and in so doing, clarified its interpretation of Reed v. Town of Gilbert (2015). Reed was also a sign code case, but its holding has been understood as applying to content-based restrictions on speech more generally. The Court rejected the Fifth Circuit’s “need to read test” in applying Reed to the case, explaining that it “stretches Reed’s ‘function or purpose’ language too far.”

In City of Austin v. Reagan National Advertising of Austin the U.S. Supreme Court held that the distinction between on/off premises signs are content neutral under Reed and, therefore, not subject to strict scrutiny, which is a very high bar, but rather subject to intermediate scrutiny.

Austin’s sign code prohibits any new off-premises signs but allows such existing signs to remain as “grandfathered” nonconforming signs. On-premises signs, but not off-premises signs, may be digitized. Reagan National Advertising argued that this distinction violates the First Amendment’s Free Speech Clause.

Per Reed, a regulation of speech is content based, meaning strict scrutiny applies and it is almost certainly unconstitutional, if the regulation “applies to particular speech because of the topic discussed or the idea or message expressed.” In short, under the previous interpretation, if you had to read the sign to enforce the city’s sign code, then the regulation is content based. According to the Fifth Circuit, because the city’s on-/off premises distinction required a reader to determine “who is the speaker and what is the speaker saying,” the distinction was content based.

However, according to the Court, the lower court’s interpretation of Reed was “too extreme.” In Reed, the Town of Gilbert’s sign code “applied distinct size, placement, and time restrictions to 23 different categories of signs.” For example, ideological signs were treated different than political signs, and temporary directional signs were most restricted. The Court reasoned these categories were content based because Gilbert “single[d] out specific subject matter for differential treatment, even if it [did] not target viewpoints within that subject matter.”

Justice Sotomayor, writing for the majority, opined:

Unlike the sign code at issue in Reed . . . the city’s provisions at issue here do not single out any topic or subject matter for differential treatment. A sign’s substantive message itself is irrelevant to the application of the provisions; there are no content-discriminatory classifications for political messages, ideological messages, or directional messages concerning specific events, including those sponsored by religious and non-profit organizations. Rather, the city’s provisions distinguish based on location: A given sign is treated differently based solely on whether it is located on the same premises as the thing being discussed or not. The message on the sign matters only to the extent that it informs the sign’s relative location. The on-/off-premises distinction is therefore similar to ordinary time, place, or manner restrictions. Reed does not require the application of strict scrutiny to this kind of location-based regulation.

Considering this ruling, cities are encouraged to review their sign codes and panhandling ordinances with their legal counsel.