The US Supreme Court on Wednesday heard oral arguments in a case with critical implications for the Highway Beautification Act. City of Austin v. Reagan Advertising considers whether the Austin city code’s distinction between on-premise signs, which may be digitized, and off-premise signs, which may not, is a facially unconstitutional content-based regulation under the First Amendment. 

In 2017, Reagan National Advertising and Lamar Advantage Outdoor Company applied for permits from the City of Austin to convert static off-premises billboards to digital signs. However, the city sign code prohibited the digitization of such off-premise signs. As a result, Reagan sued the City of Austin.

Regan argued that the sign code’s distinction between the digitization of on-premises and off-premises signs violated the First Amendment in that it was an unconstitutional content-based speech restriction, that the sign code was invalid and unenforceable and that Reagan should be permitted to digitize their signs without permits. The federal district court ruled in favor of the City of Austin and upheld the sign ordinance.

Reagan appealed the case to the US Court of Appeals for the Fifth Circuit which reversed the lower court’s decision in October 2020. The Court of Appeals concluded that the sign code was not content-neutral and was thus subject to “strict scrutiny.” Strict scrutiny is a form of judicial review that courts use to determine the constitutionality of certain laws. To pass strict scrutiny, the legislature must have passed the law to further a compelling governmental interest and must have narrowly tailored the law to achieve that interest. According to the Fifth Circuit, the city did not provide sufficient arguments that off-premise signs created more visual blight than on-premise signs, nor that they posed a greater threat to public safety.

If the Supreme Court upholds the decision favoring Reagan, billboard bans and sign ordinances in communities throughout America will be unenforceable, limiting the ability of state and local governments to restrict billboard advertising and undoing much of the Highway Beautification Act.

A ruling on the case is expected in early 2022.