Third Circ. Clarifies First Amendment Level of Scrutiny of Billboards

The Legal Intelligencer

(by Blaine Lucas and Alyssa Golfieri)

Land use disputes arising from the regulation of outdoor advertising signs (i.e., billboards) are not foreign in Pennsylvania, and over the past several decades, have become an increasingly common source of litigation in both state and federal court. Most recently, the U.S. Court of Appeals for the Third Circuit added Adams Outdoor Advertising v. Pennsylvania Department of Transportation, 2019 U.S. App. LEXIS 20841 (3d. Cir. 2019), to the billboard case law progeny.

By way of background, in 1965 the Federal Highway Beautification Act, 23 U.S.C. Section 131 et seq., was enacted to establish a framework for federal-state agreements related to the regulation of outdoor advertising signs near highways. In order to meet the commonwealth’s obligations under the act, in 1971 the Pennsylvania General Assembly enacted the Outdoor Advertising Control Act, 36 Pa. Stat. Section 2718.101-115, which sets forth land use and permitting regulations applicable to outdoor advertising signs near the commonwealth’s interstate and primary highways. The Outdoor Advertising Act charges the Pennsylvania Department of Transportation (PennDOT) with administration of the Outdoor Advertising Act.

At issue in Adams Outdoor is a provision in the Outdoor Advertising Act known as the “interchange prohibition.” The interchange prohibition bars the construction of outdoor advertising signs within 500 feet of a highway interchange or “safety rest area.” The interchange prohibition expressly exempts “official” signs (i.e., directional or other official signs or notices erected and maintained by public officers or agencies for the purpose of carrying out official duty or responsibility) and “on premises” signs (signs that advertise the sale or lease of, or activities being conducted upon, the real property where the signs are located).

Pursuant to the Outdoor Advertising Act, Adams Outdoor Advertising applied to PennDOT for a permit to construct and maintain an off-premises outdoor advertising sign along a regulated highway and within 500 feet of an interchange. After waiting over a year for PennDOT to render a decision on its application, Adams Outdoor initiated a lawsuit with the U.S. District Court for the Eastern District of Pennsylvania challenging the constitutionality of the Outdoor Advertising Act’s permitting scheme and interchange prohibition. Adams Outdoor argued, among other things, that the interchange prohibition is impermissibly vague in violation of the First Amendment; the interchange prohibition is a content-based regulation that on its face cannot survive a First Amendment challenge under a strict scrutiny test; and the Outdoor Advertising Act’s permitting scheme is unconstitutional for failing to impose a timeframe by which PennDOT must render a decision on permit applications.

The district court dismissed Adams Outdoor’s vagueness challenge on the pleadings and granted PennDOT summary judgment on Adams Outdoors’ First Amendment scrutiny challenge. However, the court granted Adams Outdoor summary judgment on its permit timeframe challenge, and simultaneously issued an injunction prohibiting PennDOT from enforcing the Outdoor Advertising Act’s permitting scheme until it established a timeframe by which decisions must be made. Adams Outdoor appealed to the U.S. Court of Appeals for the Third Circuit.

On appeal, the Third Circuit upheld the district court’s conclusion that the interchange prohibition was not impermissibly vague, noting the regulation provides people of ordinary intelligence a reasonable opportunity to understand what conduct is prohibited and does not authorize or encourage arbitrary and discriminatory enforcement. The Third Circuit also upheld the district court’s grant of an injunction barring enforcement of the Outdoor Advertising Act’s permitting scheme until a reasonable time limit for permit decisions was imposed. Finally, the Third Circuit reversed the district court’s conclusion that the interchange prohibition satisfies the First Amendment, and remanded the matter back to the district court. Before doing so, however, the Third Circuit clarified the level of scrutiny appropriate under the circumstances.

In this regard, the Third Circuit addressed three arguments—that the Outdoor Advertising Act violated the First Amendment because of the the official signs exemption: the for sale or lease exemption; and the on- versus off-premises sign distinction. The court quickly disposed of the first argument, finding that the exemption for directional or other official signs or notices erected and maintained by public officers or agencies are forms of government speech, and an exemption for them does not trigger strict scrutiny.

As to the latter two exemptions, Adams Outdoor pressed the Third Circuit to follow the U.S. Supreme Court’s decision in Reed v. Town of Gilbert, 135 S. Ct. 2218 (2015), where the court applied strict scrutiny to an Arizona town’s sign ordinance imposing inconsistent regulations on different types of temporary outdoor signs. See “Content Neutrality in the Government Regulation of Free Speech,” published by The Legal Intelligencer on Sept. 1, 2015, for a summary of the Supreme Court’s Reed v. Town of Gilbert decision. Disagreeing with Adams Outdoor, the Third Circuit distinguished Town of Gilbert on the basis that it did not establish a specific legal standard by which to evaluate laws regulating on- and off-premises signs differently. The Third Circuit further emphasized Justice Samuel Alito’s and Justice Elena Kagan’s concurring opinions in Town of Gilbert, where the justices stated that laws distinguishing between on- and off-premises signs would not trigger strict scrutiny due to the lack of government censorship or viewpoint discrimination contained therein.

Declining to apply Town of Gilbert, the Third Circuit turned to its 1994 precedent in Rappa v. New Castle County, 18 F.3d 1043, (3d. Cir. 1994), where the Third Circuit set out a framework for reviewing the constitutionally of outdoor advertising regulations that distinguish between on- and off-premises signs, such as the Interchange Prohibition challenged in Adams Outdoor. In Rappa, the Third Circuit concluded that:

  • Laws exempting on-premises signs advertising activities taking place on the property are subject to intermediate scrutiny—”the law must be narrowly tailored to serve a significant governmental interest, and … leave open ample alternative channels for communication of the information.”
  • Laws exempting on-premises signs advertising the sale or lease of real property on which the signs are located are subject to a special “context-specific” scrutiny—the exemption must be substantially related to advancing an important state interest that is at least as important as the interests advanced by the overall prohibition, no broader than necessary to advance the special goal, and narrowly drawn so as to impinge as little as possible on the overall goal.

Under either of these standards, the secretary of PennDOT bore the burden of proving that the challenged exemption survived the applicable level of First Amendment scrutiny. Finding that she had failed to meet her burden with respect to either, the Third Circuit reversed the district court’s ruling and remanded the case to litigate further the secretary’s justification for the exemptions.

While the Third Circuit’s decision in Adams Outdoor provides a significant amount of guidance and clarification as to the scrutiny standard applicable to state and local regulatory activity governing outdoor advertising signs, such regulations will likely remain a topic of much debate and controversy. Accordingly, it is critical that local municipalities remain cognizant of the ever-evolving laws, at both the state and federal level, to ensure they are appropriately justified in imposing regulations on outdoor advertising signs.

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