The federal appeals court based in Denver ruled on Tuesday that Colorado’s rules governing paid advertising along highways do not violate the First Amendment, as they do not discriminate based on the content of the billboards.

Two outdoor advertising companies challenged the state’s recently enacted regulations that require billboard owners to obtain a permit from the Colorado Department of Transportation if they receive compensation to display highway-adjacent advertising.

A three-judge panel of the U.S. Court of Appeals for the 10th Circuit concluded the U.S. Supreme Court’s interpretation of the First Amendment allowed CDOT to treat paid signage differently, and that the state had good reason to do so.

“Rather than targeting the content of the advertisement, the regulatory scheme regulates the posting of billboards based on whether the speaker compensated the owner of the billboard,” wrote Judge Timothy M. Tymkovich in the Aug. 22 opinion. “Regardless of the message or content on the sign, only for-compensation signs visible from a state highway trigger the regulation.”

Case: StreetMediaGroup, LLC v. Stockinger

Decided: August 22, 2023

Jurisdiction: U.S. District Court for Colorado

Ruling: 3-0

Judges: Timothy M. Tymkovich (author)

Harris L Hartz

Scott M. Matheson Jr.

Background: Judge dismisses First Amendment challenge to new Colorado billboard law

The Colorado Outdoor Advertising Act is linked to a 1965 federal law, the Highway Beautification Act, that requires states to maintain “effective control” of outdoor advertising visible from highways. The purpose of the mandate was to “protect the public investment” in the new interstate highway system, as well as to enhance safety and “preserve natural beauty.”

Colorado, like other states, categorized billboards as “on-premise” or “off-premise” signage, based on whether the billboard advertised for products or services that were available at the specific location of the sign. Only off-premise signs required a CDOT permit.

In 2020, StreetMediaGroup, LLC and Turnpike Media, LLC filed a federal lawsuit alleging Colorado’s restrictions were based on the content of the signage and, therefore, were unconstitutional. They cited a 2015 Supreme Court decision, Reed v. Town of Gilbert, in which the justices struck down an Arizona town’s differing rules for signage depending on the message.

In response, Colorado lawmakers amended the Outdoor Advertising Act in 2021. They replaced the off-premise, on-premise distinction with a new dividing line: whether billboard owners received compensation, “directly or indirectly,” for putting up an advertisement. If so, a CDOT permit was required.

Shortly afterward, U.S. District Court Senior Judge R. Brooke Jackson considered whether StreetMedia and Turnpike Media had credibly shown the regulations amounted to a First Amendment violation. He believed the rules did not single out specific messages for unfavorable treatment, but instead asked whether compensation was involved. Moreover, Jackson rejected the argument that the regulations were so vague that CDOT employees could not tell whether signage was paid or unpaid simply by looking at it.

“For example, automotive experts cannot, by studying a picture of a car, determine whether it meets emissions standards. But that does not mean that emissions standards are incomprehensibly vague,” Jackson wrote in December 2021, dismissing the lawsuit.

The plaintiffs appealed to the 10th Circuit. A few months before oral arguments, the Supreme Court clarified in a decision out of Texas that government regulations treating off-premise signs differently from on-premise signs are constitutional. The plaintiffs argued the decision should not affect their lawsuit, but the appellate judges pressed them to explain why Colorado’s new regulations discriminated against content.

“In this case, if a CDOT enforcement official is driving down the street and they see a ‘Michael Bennet is good’ or ‘Michael Bennet is bad’ billboard,” said attorney Todd G. Messenger, referring to Colorado’s senior U.S. senator, “that CDOT enforcement official, if he disagrees with that message, can say, ‘My understanding is these billboards are usually paid for.'”

Then, Messenger said, CDOT could undertake an invasive investigation into the billboard’s status.

Tymkovich countered that Colorado’s law would not necessarily lead to content discrimination. If there were two “Bennet is good” signs, he said, but one is paid for and unpermitted, CDOT would treat that billboard differently.

“One’s licensed and one’s not. It’s not because of the Bennet message. It’s the fact of compensation,” he added.

The panel agreed that the Supreme Court’s recent rulings led to the conclusion that Colorado’s regulations were not content-based. Tymkovich wrote that Colorado had a legitimate interest in “highway safety and reducing visual clutter” by controlling the proliferation of paid billboard advertising.

Still, he cautioned, the law was not a “model of clarity.”

“Ultimately, every sign is erected by someone in the sign business, no matter whether the sign is advertising a commercial product, a church, or a business,” Tymkovich wrote. “Colorado seems to suggest this is not so, but the plain text of the Act says otherwise.”

The case is StreetMediaGroup, LLC et al. v. Stockinger et al.