62localregulation.pdf

Frayda

S.

Bluestein

Local ordinances regulating billboards, like other local

land use regulations,

must

strikeabalance

between

achieving aregulatorypurpose

and

minimizinginterferencewith

pri-vate propertyrights.Sincebillboardscontain constitution-allyprotected speech,both

commercial

and noncommercial,

an additional layerof legal principles

must

be taken into

account in developing billboard regulations. In addition,

evaluatingtheimpactof regulations

on

propertyrightshas

become

complicated

and

unsettled

due

to several recent federalcourt decisions dealingwithclaims thatlocal

regula-tions containing amortization or removal provisions for

nonconforming

signs effect an unconstitutional taking of

property without compensation.

As

in any other area of

regulation,settledlawgives clearguidancetotheordinance

drafter;unsettledlaw

makes

fordifficultdrafting

and

policy

decisions.

The

purposeofthisarticleisto

summarize

some

of

thelegal issuesthat have

been

raised in federal

and

North

Carolinastatecourt cases involving challengestobillboard regulations,to identify

some

oftheissuesthatappeartobe

settled,

and

todiscuss

some

thatarenot.

Statutory

Authority

and

Public

Purpose

A

localregulation,tobevalid,

must

serve a publicpurpose and

must

bewithin thescopeof astatestatutegranting the

local

government

the

power

toregulate the subject matter.

The

publicpurposeslocal

governments

havecited insupport

of billboard regulations have evolved along with the

bill-boardstructureitself

and

changingsocialvalues.Earlysign

ordinances

were

designed toprotect againstsafety

and

fire

hazardsposed by

wooden

signsplacedlowtotheground.

As

signshave

become

larger,higher

and

more

numerous

along

FraydaS.Bluesteinisanattorney

who

haspracticed primarily inthe fieldsoflocalgovernment

and

landuselaw.

roadways, the basis forregulating

them

has changed.

The

primarypurposesidentifiedinsupport of

modern

billboard

regulationsaretrafficsafety

and

aesthetics.Related regula-tory goals include

economic

development,

promotion

of tourism,historic preservation,

and

protectionofthe public

investmentinthehighways.

Any

ofthesepurposesislikelyto

beupheldasa legitimate public

purpose

forbillboard

regu-lations,aslongasthey are articulated

and

rationallyrelated

tothe

means

usedtoregulate(ascontainedinthe ordinance).

When

local ordinances are challenged, the courts are careful not to second guess the legislative decisions

and

policychoices

made

bythelocalgovernment, instead defer-ring to the

judgment

ofthe legislative body. Accordingly,

earlydecisionsdealingwithbillboardregulations

summarily

approved

the health

and

safety justifications for regulating

signs.1Later,

when

reviewingregulationsbased

on

aesthet-ics,the courts

were

initiallyhesitant to find that aesthetics

alone

was

a sufficient public

purpose

to justify billboard

regulation.

Most

billboardordinancesarebased

on

aesthet-icsalong with other purposes,usuallytrafficsafety,socourts

could

uphold

the ordinance without having to directly

ad-dress the strengthofthe aestheticsbasis.

In 1981,perhaps reflectinga

change

insocialvalues

and

the growing environmental

movement,

the

United

States

Supreme

Court

handed

down

the

landmark

billboardcaseof

Metromedia

v.Cityof

San

Diego,upholding,forthe

most

part,

a

comprehensive

localbillboard ordinance.2

The

Metrome-diadecisionheld,

among

otherthings,thatthecity'sinterest inavoidingvisual clutter

was

a legitimate public

purpose

for

billboard regulation.

Both

federal

and

statecourtsin

North

Carolina havealso

now

expresslysanctionedbillboard

regu-lation foraestheticpurposes,along with othertypesof

regu-lation that

may

be justified by aesthetic concerns

remain

uncertain,itis

now

wellsettledthataestheticsisalegitimate public

purpose

upon

which

regulation

may

bebased.

Sincelocal

governments

deriveallregulatory authority,by

way

of delegation,

from

thestate legislature,billboard

regu-lation

must

be withinthescope ofastatestatuteauthorizing such regulation.

Most

sign regulations are contained in

zoning ordinances

and

have uniformly

been

considered to

fall within the scope ofthe zoning enabling legislation.

A

recent

North

Carolina caseaddressed the question ofwhether

billboard regulations

adopted

outsideofazoning ordinance

arestatutorilyauthorized.

Henderson

County, like

most

North

Carolina counties,

does not have zoning throughoutthe county. Nonetheless,

the county sought to regulate billboards county-wide by

adoptingabillboardordinance

under

itsgeneral

ordinance-making

authority rather than its zoning authority.4

A

bill-board

company

challenged the ordinance

on

the grounds,

among

others, that the zoning authority,

which

requires consistencywitha

comprehensive

plan,public hearing,

no-tice

and

other proceduralprotections,is theonlyauthority

pursuanttowhichlocalbillboardregulations

may

beadopted.

The

court rejectedthis

argument and

ruled that thegeneral

ordinance-makingstatuteauthorizes billboard regulation.5

It isimportant to notethatin the

Henderson County

case,

publichearing

and

notice

were

provided,even

though

they

were

not required as

would

have

been

the case

had

the

regulation

been

a zoning ordinance.

Thus

there

was no

evidence that the general

ordinance-making

authority

was

usedtoavoidtheproceduralprotectionsbuiltintothe

zon-ing enabling statute. If the general

ordinance-making

au-thority

were

used

under

circumstances

where

zoning

was

in

place

and

couldhave

been

used,aquestioncould beraised

about

whether

the intent

was

to avoid the procedural

re-quirements ofzoning,

and

a court might reach a different

decision.Furthermore,ifabillboardordinance

were

struc-turedaccordingto districtsorotherwiseestablished distinc-tions justifiableonlybyreferencetoa

comprehensive

plan, useof the general, ratherthan the zoning, authoritycould

exposetheordinancetoaconstitutionalequalprotectionor

due

process challenge. Bearing in

mind

these precautions, billboard regulationscan bevalidlyenactedpursuanttothe generalordinance-making,aswellasthe zoning, authority.

The

Outdoor

Advertising

Control

Act

Another

statestatuteindirectly affects localregulationof

billboards:

North

Carolina's

Outdoor

AdvertisingControl

Act.Thisactprohibitsthe erectionofbillboards within

660

feet of, or that

would

be visible from, federal aid primary

highways.6Signs locatedin

commercial

or industrialzones andareasareallowed within

660

feetofthe highway

under

the statute. Local

governments

are not prohibited

from

regulating in areas outside of the coverage of the act, or

through

means

thatare

more

strict than those containedin

theact.7

With

respect to

removal

oramortization of

noncon-forming billboards, discussed in

more

detail below, local

government

authorityisexplicitlylimitedbyN.C.G.S.

§136-131.1,a partofthestate

Outdoor

Advertising ControlAct.

That

section requires

payment

of

compensation

forremoval

ofanysign thatisallowed

under

theact

and

for

which

avalid

permit has

been

obtained.

To

avoidpotentialconflictswith

thestatelaw,

some

localordinances

exempt

signslocated

on

federalaid primary highways

from

amortization

and

other

provisions.

The

state

Outdoor

Advertising Control Act,along with

the various enabling statutes governing local regulatory authority, are, ofcourse, subject to change,

and

should be

reviewed beforedraftingor adoptinglocalbillboard

regula-tions.

Constitutional

Issues:

Free

Speech

Unlike other land useregulations, signregulationsaffect

communication

thatisprotected by boththestate

and

federal constitutions. Regulations affecting speech fall into two

major

categories for purposes ofjudicial review: content-neutral

and

content-based.

The

standards ofjudicialreview

are

more

stringentifa regulationiscontent-based,thatis, if

the.regulation targets a particular message.

On

the other

hand,regulations thatrestrictthe time, place

and

manner

of

speech

on

acontent-neutralbasis,that is,withoutreference

to the particular message, are less strictly reviewed by the courts

and

are likelyto be upheld as long as they have a rational basis. In addition, although the Constitution

pro-tectsboth

commercial

speech(advertising)

and

noncommer-cialspeech,

commercial

speechreceiveslessprotectionthan

noncommercial

speech.This

means

thatthe courts scrutinize

more

closely regulations that affect

noncommercial

speech

and

will require a strongerjustification for restrictions

on

noncommercial

thanfor

commercial

speech.

Most

billboardordinancesarecontent-neutral time,place,

and

manner

regulations,designed toregulatethe impact of

the structure,notthecontent ofthe

message

itdisplays.

The

courts have determined that regulations based

on

distinc-tions

between commercial

and

noncommercial

signs are content-neutral. Similarly, regulations that distinguish

be-tween

on-premise

and

off-premise8 signs are considered

content-neutral. In contrast, in the

Metromedia

case,

dis-cussed above,the

United

States

Supreme

Court

made

itclear

that narrower categories ofsigns are considered

content-basedand,inthatcase,didnot withstandthestricter levelof

scrutiny.

The

San Diego

ordinance exempted,

among

other

categories,

government

signs, religious symbols, time or

temperaturesigns,

commemorative

plaques,

and

temporary

political signs.

The

Court

heldthat,

"Although

thecity

may

distinguish

between

therelativevalue ofdifferentcategories of

commercial

speech, thecitydoes not havethe

same

range

interests."9Thus, courts

may

give

more

leeway for distinc-tions

among

types of

commercial

speech, sinceitisafforded

lessprotectionunderthe constitution,aslongasthe distinc-tionshavea rational basis.

But

distinctions

among

typesof

noncommercial

speech are likely to be invalidated unless

supported bya very stronggovernmentaljustification.

Another

extremely important rule

emanating

from

the

Metromedia

decision relates to the comparativeeffect ofa billboard regulation

on commercial

signs

and

noncommer-cialsigns.

The

ordinancethat

was

the subjectofihe

Metrome-dia decision prohibitedalloff-premise

commercial

signs,but

allowed on-premise

commercial

signs. Certain

narrow

cate-gories of

noncommercial

signs

were exempt from

the ordi-nance,asdiscussed above.Ingeneral,however,theeffectof

theordinance

was

tofavor

commercial

over

noncommercial

expression because on-premise

commercial

signs

were

al-lowed but an on-premise sign containing a

nonexempt,

noncommercial

message

would

be prohibited.

The

court heldthatthisreversed thepriorityof protection

mandated

by

the constitution

which

has beenheld toaffordthe greatest protectionto

noncommercial

(usuallypoliticalorreligious)

expression,

and

onlya lesser degree to

commercial

expres-sion.

To

avoidthisunconstitutionalreversalofprioritiesan

ordinancecan allow

noncommercial

speechinany

forum and

under at least equal conditions as

commercial

speech.

An

ordinance does not violate the constitutionally

mandated

hierarchyifitcontains astatement thattheordinance does

notapplyto

noncommercial

signs,or thatanysignallowed

undertheordinance

may

display

noncommercial

in lieu of

commercial messages.

Signregulations oftendonotdistinguishbetween on-premise andoff-premisesigns.

An

on-premisesign(shownatleft)advertises

a business oractivitylocatedonthesamelotor parcel asthesign.

Constitutional

Issues:

Takings

The

major

unsettled area of law relating to billboard regulationsarisesout ofthe constitutionalrequirementthat

property

may

notbe takenfor

governmental

purposes

with-outjustcompensation. Regulationsthat substantially

inter-ferewithprivate propertyrights have

been

heldto effect a regulatory taking, thatis,atakingwithouttheformalexercise of the

condemnation

power,

and

are unconstitutional if

compensation

is not paid to the affected property owner. Takingsclaims increasinglyhave

become

a basisfor challeng-inglocallanduseregulations thatfail tostrikethe balance, discussed above,

between

regulatory goals

and

individual

propertyrights.

A

takingsclaimisverydifficulttoestablish

becauseitrequires a

showing

thatallornearlyalluseofthe

propertyis restricted bythe challenged regulation.

No

re-ported

North

Carolina case has ever held (and withstood

appeal) that a local regulation effected a taking. Several

recent federalcourtcases arisingout of

North

Carolinahave

refusedtodismiss takingsclaims asserted againstlocal

bill-boardordinances,

and

the

outcome

of thosecases,

which

are

still pending, is uncertain.

The

takings analysisapplied in

those cases is important to review

and

follow as

much

as

possibleindevelopingfuture billboard

and

otherlocal

regu-lations.

The

courtshavedevelopedadescriptivetestfor

determin-ing

when

alaweffectsaregulatory taking.In

North

Carolina, the"law oftheland"clausecontainedinArticleI,Section19

ofthestateconstitution (thestateequivalentofthe federal takings clause)has

been

interpretedbythe courts to require

thata regulation

must

be reasonablyrelatedtoalegitimate public

purpose

and

may

not

completelydeprive property

owners

ofthe beneficialuse

of their property. Stated

another way, a regulation

effectsatakingifitdeprives

the

owner

of all practical

use of property

and

the

propertyis rendered of

no

reasonable

value.

The

United

States

Supreme

Court

has articulated the

standard for purposes of

federal constitutional

tak-ings analysisbystatingthat

an ordinanceeffectsa

tak-ing ifit does not

substan-tially advance a legitimate public

purpose

or ifit de-nies

an

owner

economically

viable use ofhis land.

The

federal

and

statestandards

are viewed to

be

The

first

element

ofthe takingsstandardisessentially

an

ends-means

analysis.

The

issueis

whether

the

means

chosen

arereasonablynecessarytoaccomplishthe statedpurpose of

the regulation.

The

second partofthe test focuses

on

the interferencewith property rights, in determining

whether

thatinterference is reasonable in degree. Obviously,these

judicial testsarenotsusceptibletoformulaicapplication,but

must

be applied

and

evaluated

on

acase-by-casebasis.

Al-though the tests, as applied in previous cases, give

some

guidance,itisoftendifficultto

know

when

an

ordinancewill

beruled to have

gone

too farin interferingwith property

rightssoas to effectanunconstitutionaltaking.

In1987, the

United

States

Supreme

Court

handed

down

severalimportanttakingscases.10

The

case

most

relevantto

billboardregulations isKeystoneBituminous

Coal

Associa-tion v. DeBenedictits.11 In that case the

Court

revisited the

stateofPennsylvania'seffortsto restrictthe

amount

of coal

removed from

heavily

mined

areasinordertoprevent

subsi-dence of the surface land estate.

A

1922

Supreme

Court

decision striking

down

a similar law

was

the first case to establishthe regulatory takingdoctrine.12

The

Keystone court

upheld the

modern

law,

which

had undoubtedly

been

care-fullyresearched,supported

and

draftedtoavoidthepitfalls

thatled tothe invalidation oftheearlierlaw.

The

Keystone

opinion reemphasizes

two

significant elements oftakings

law.

The

firstelementisthatthe takings analysisisa balanc-ing test.

Thus

a strong public

purpose

may

justifya

more

intrusiveregulationthanwillalesscompelling purpose.

The

second element is that to satisfy the second

prong

ofthe

takings test, a property

owner must

demonstrate that the challenged regulationcauses a deprivation of aggregate property

rights,notjustadecreaseinprofitsthat

may

be gained

from

useofthe property,

and

notjustthe

complete

eliminationof

isolated

segments

ofproperty.

Neither Keystone northe other recent takings cases

de-cided by the

Supreme

Court changed

the substance ofthe takingsanalysis. Nonetheless,they

seem

to have inspireda

move

towarda

more

thorough

evaluationoftakings claims.

This shift in judicial attitude can be seen in the billboard cases

now

pending in the

North

Carolina federal district

courts.

In 1986, the

Fourth

Circuit

Court

of

Appeals

upheld a

Raleigh sign ordinance against,

among

others, a takings

challenge.

The

ordinance limited the size

and

location of

billboards

and

required that billboards not brought into

conformity withtheordinancewithinfive

and

one-halfyears

must

be removed.

On

a

summary

judgment

motion.a

motion

filedbeforetrial,thecourtheld that there

was no

evidencein

the recorddemonstrating that the ordinance deprived the

plaintiffbillboard

company

ofalluse ofitsproperty.

The

five

and one-halfyear period, calledan amortization provision,

washeldtobeareasonable

means

of allowingtheproperty

owner

torecover

some

oftheinvestmentinthesignspriorto

removal.13Amortizationprovisions areused inother land

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Unlike otherlanduseregulations, signregtlationsaffectcommunicationthatis

protectedbythe stateandfederalconstitutions. In reviewingsigiordinances, courtslookattheeffectoflheordinanceonnon-commercial(signattop)aswell ascommercialspeech(signatbottom).

useregulations

and

have

been

sanctionedbythe courtsas a

way

of decreasing the impact of regulations

on

affected

property owners,

and

as a

way

of achieving the necessary

balance

more

equitably than ifthe regulation

were

totake

immediate

effect.14

The

cities of

Durham

and

Waynesville adopted

ordi-nances

banning

alloff-premisesigns

and

providingfive

and

one-halfyear

and

four-year amortization periods,

respec-tively.

Both

ordinances have

been

challenged,

and

bothcases

have

been

appealedtothe

Fourth

Circuit Courtof

Appeals

and

have

been

remanded

to the lowercourt foradditional evidentiary proceedings. In the

Durham

case, the lower

court,likethecourtintheRaleighcase,

had

decidedinfavor

ofthecity

on

a

summary

judgment

motion.

The

Waynesville

ordinance

was

held to be invalid

on

a

summary

judgment

motion.

Both

cases

were

remanded

bythe appellate court

Although

thestandard for

what

constitutes a taking has

not

changed

sincethe decisionin theRaleighcase

and

the decisionsinthe

Durham

and

Waynesvillecases, itappears

thatthecourt's

approach

tothese cases has

changed

some-what,perhapsshiftinga

burden

tothelocal

government

to

show

that an ordinance is reasonable, rather than relying

solely

on

theabilityorfailureoftheclaimantto

come

forward

with evidence of a taking.

The

Durham

court of appeals

decisionstates that,

"Recent

casesdecided bythe

Supreme

Courtraisequestionsaboutthe proprietyof

summary

judg-ment

of takings claims without a fully developed factual

record."16Inother words,thecourtcannot decideifan

ordi-nance goes toofarwithoutdetailedevidenceas to

how

farthe

ordinancegoes.

The

Courtof

Appeals

has givenspecificinstructionstothe

lowercourts in the

Durham

and

Waynesvillecases

on

the

factstobe reviewed indeterminingthe impact ofthe chal-lengedordinances

on

the claimants' property.

The

laundry

listreadsas follows:

The

courtshould

make

findingspertainingtoevery aspect of[theclaimant's]business thatwillbeaffectedbythe

or-dinance, including the

number

ofbillboards that can

be

economically used for

noncommercial

advertising, the

number

that are economicallyuseless, the terms of[the

claimant's] leases for billboard locations, the land [the

claimant]

owns

forlocations

and whether

ithasany other

economic

use,the costofbillboards that cannot beused, the depreciationtaken

on

these billboards

and

theiractual

life expectancy, the

income

expected during the grace

period, the salvagevalueofbillboards thatcannot beused, the loss of sharing revenue, the percentage of affected

signs

compared

totheremainingsignsin[theclaimant's] businessunit,therelativevalue ofaffected

and

remaining

signs,

whether

theamortization periodisreasonable,

and

any other evidence presented bythe partiesthatthe court

deems

relevant.17

Motions on

various legal issuesare currentlypendingin

bothof thesecases.

Perhapsthe

most

unsettled

and

difficult issueraisedinthe

Durham

caseis

one

that

must

beresolvedbeforeany ofthe

factual inquiries listed

above

cantakeplace.

The

court

must

first identifytheappropriate unitofpropertyto

which

the takings analysis is to be applied.

The

plaintiff billboard

company

arguedthattheappropriateunitofpropertyiseach

individual billboard that

must

be

removed under

the ordi-nance.

The

court rejectedthisargument,statingthat,aswith

thepillarsofcoalintheKeystonecase,propertyrightsarenot viewedinsegmentsforpurposes oftakingsanalysis.Instead, thecourtappearstosuggest that the claimant's businessor

aggregate sign holdingsinthe areacovered bytheordinance

istheappropriatefocusoftheinquiry.

Thus

the parties

may

alsohavetopresentevidencerelatingtothe particular cor-porate structure

and

marketingpracticesoftheclaimantin

orderto characterize a propertyinterestthat isentitled to

constitutional protection.

Although

the

outcome

ofthese

and

other pending

bill-board cases cannot

be

predicted, the factual disputes

and

legal issues being argued in these cases should be closely

monitored

byplanners,drafters,

and

policy-makers consid-ering billboard regulations. Settled issues

and

ordinances upheldinearliercasescanbe usedasguidepostsin

identify-ingprovisions

and

regulatory

schemes

that are likelytobe

upheldifchallenged. Ineachcase,however, ordinance

pro-visions

and

stated purposes

must be

tailored to the condi-tionsexisting inthe regulating

community.

Despite

numer-ousunsettledissues inapplyingthe takingsanalysis,theclear

message

ofthe recent billboard casesisthattakingsanalysis

requires a detailed factual inquiry. Local

governments

are well advisedto

perform

as

much

ofthis inquiryaspossible

and

evaluate the potentialimpact of theordinancewithin the

community

duringthe period before adoption ofbillboard regulations,ratherthanto riskhavingtodevelopthe record

forpurposes oflitigation.

Notes

1. See,Schlossv.Jamison,262 N.C.108,136S.E.2d691(1964). 2. 453U.S.490(1981).

3. See,GeorgiaOutdoorAdvertising,Inc.v.Waynesville,833F.2d43,46

(4thCir. 1987); Statev.Jones,305 N.C.520, 290S.E.2d675 (1982) (junkyards);A-S-P Associatesv. City of Raleigh,298 N.C. 207, 258

S.E.2d444(1979)(historicpreservation). 4. N.C.G.S.§153A-121.

5. Summeyv. HendersonCounty, 96 N.C. App.533,386S.E.2d 439(1989),

cert,denied,326 N.C.486,392S.E.2d 101 (1990). 6. N.C.G.S.§136-126etseq.

7. Foranin-depth discussion of the federalandstate signcontrolprograms,

seeR.Ducker, "FederalandStateProgramstoControlSignsand Out-doorAdvertising,"inPopular Government,Spring 1987,pp.28-42. 8.

An

off-premise signisonethatdoesnot advertise a business oractivity

locatedonthesamelotor parcel as thesign.

9. 453U.S.at514.

10. FirstEnglish EvangelicalLutheranChurchv.CountyofLosAngeles,

482U.S.304(1987) (heldthatthe violation of the takings clause requires

compensation,invalidationoftheordinanceeffecting the takingis insuf-ficient);Nollanv.CaliforniaCoastalCommission, 483U.S.825(1987) (conditiononpermit requiring dedication ofeasementforpublic access constituted unconstitutional exaction);Hodelv. Irving,481 U.S. 704

(1987)(statuteescheatingfractional interest inIndian allotments

con-stitutedunconstitutional taking ofinterestswithoutcompensation).

11. 480U.S.470(1987).

12. PennsylvaniaCoal Co.v.Mahon,260U.S.393(1922).

13. Major Mediaof theSoutheastv.Cityof Raleigh,792F.2d1269(4thCir.

1986),cert,denied,479U.S.1102(1987).

14. See, Statev.Joyner,286 N.C.366,211S.E.2d 320, appeal dismissed,42

U.S. 1002,95S.Ct.2618,45L.Ed.2d666(1975)(three-year amortization periodforremovalofjunkyard);Cumberland Countyv.EasternFederal Corp., supra, (three -year amortization period for billboard removal);

R.O. GivensCompany,Inc.v.TownofNags Head,58N.C.App. 697,294

S.E.2d 388,cert,denied,307 N.C.127,297S.E.2d400(1982)(fiveand

one-halfyear amortizationforbillboardremoval).

15. Naegelev.CityofDurham,844F.2d172(1988); GeorgiaOutdoor

Ad-vertisingv.City of Waynesville,900 F.2d 783(1990).

16. 844 F.2dat175.