The city of Austin allows on-premises billboards to be digitized but not off-premises billboards. In City of Austin, Texas v. Reagan National Advertising of Texas Inc. two outdoor advertising companies claim that this distinction is “content-based” under the First Amendment. The city of Austin disagrees.

In Reed v. Town of Gilbert (2015), the Supreme Court held that content-based restrictions on speech are subject to strict scrutiny, meaning they are “presumptively unconstitutional” under the First Amendment. In Reed, the Court defined content-based broadly to include distinctions based on the “function or purpose.”   

Per Austin’s sign code, “off-premises” signs advertise “a business, person, activity, goods, products or services not located on the site where the sign is installed.”

The city argued that the definition of off-premises is a time, place, or manner restriction based on the location of signs. The Fifth Circuit disagreed, stating: “Reed reasoned that a distinction can be facially content based if it defines regulated speech by its function or purpose. Here, the sign code defines ‘off-premises’ signs by their purpose: advertising or directing attention to a business, product, activity, institution, etc., not located at the same location as the sign.”

Justice Alito wrote a concurring opinion in Reed, joined by Justices Kennedy and Sotomayor, stating “[r]ules distinguishing between on-premises and off-premises signs” should not be considered content based. The Fifth Circuit concluded that Justice Alito’s opinion didn’t support Austin. “[A] regulation that defines an off-premise[s] sign as any sign within 500 feet of a building is content-neutral. But if the off-premises/on-premises distinction hinges on the content of the message, it is not a content-neutral restriction. A contrary finding would read Justice Alito's concurrence as disagreeing with the majority in Reed.”

The Fifth Circuit pointed out that the Sixth Circuit has agreed with its interpretation of Reed. In a similar Sixth Circuit case, the Sixth Circuit reasoned: “The fact that a government official had to read a sign's message to determine the sign's purpose was enough to subject the law to strict scrutiny even though the sign's location was also involved.” According to the Fifth Circuit, “So here too. To determine whether a sign is ‘off-premises’ and therefore unable to be digitized, government officials must read it. This is an ‘obvious content-based inquiry,’ and it ‘does not evade strict scrutiny’ simply because a location is involved.”

The Fifth Circuit acknowledged that the D.C. Circuit has read Reed differently. Specifically, the D.C. Circuit concluded that a distinction between event-related signs and those not related to an event was content neutral because it was “not a ‘regulation of speech,’ but a ‘regulation of the places where some speech may occur.’” According to the D.C. Circuit, even though “officials may look at what a poster says to determine whether it is ‘event-related,’” that did “not render the District's [regulation] content-based,” and “the fact that a [government] official might read a date and place on a sign to determine that it relates to a bygone demonstration, school auction, or church fundraiser does not make the [regulation] content based.” The D.C. Circuit concluded such “cursory examination” does not render regulations content based.

The Fifth Circuit responded: “We do not see, as the D.C. Circuit does, an exception for mere ‘cursory’ inquiries into content in the holding of Reed. But even if we did, the sign ordinance here does not depend on merely a cursory inquiry into content.”