Senator Orrin Hatch Discusses Signs and Property Rights

Excerpts from Sen. Orrin Hatch’s keynote address at the National Sign Users’ Conference on Sign Regulation and Marketing

The following article originally appeared in the August 1998 issue of Signs of the Times magazine.

By Wade Swormstedt

“I believe government regulation [of signs] has been burdensome, often times unconstitutional.”

At the Intl. Sign Assn.’s (ISA) Sign Expo ’98 in Orlando, Sen. Hatch questioned the constitutionality of sign regulation.

The above-mentioned conference, held concurrent with the Intl. Sign Assn. ‘s (ISA) Sign Expo ’98 in Orlando, FL, included a marvelous compilation of sign-regulation topics on value, First Amendment rights, variances, amortization, appraisals and more. Sen. Hatch’s  speech provided a fitting highlight to end the full day. ST previously published some of Sen. Hatch s comments (see “ISA Report: Sen. Hatch’s Address Upholds Property Rights,” ST, June 1998, page 172). Here is a more complete transcript, approximately half of his entire speech. Our attempt here is to provide the most relevant comments and to minimize partisanship. Consequently, the transition between sections won ‘t always be smooth.

Using signage to communicate
My topic today is the state of the law, particularly constitutional law as it applies to commercial communications. The term “commercial communications,” of course, includes signs, billboards and the like, legitimate means of communication which the Signage Foundation was formed to protect and, of course, promote. I want to look at both the First Amendment and the Fifth Amendment — taking aspects of government regulation of signs, particularly the spade of local sign codes that have proliferated recently. It would surprise no one here that I believe government regulation has been burdensome, often times unconstitutional. The law is fairly clear. The question that I pose to you, therefore, is: Exactly what is the best way to safeguard your rights, recognized by the Constitution, as interrupted by our courts?”

Let’s look at the First Amendment aspects of commercial-speech restrictions. Advertising has been a part of our culture since colonial times. Early newspapers displayed advertisements for goods and services on front pages in the English manner, while town criers trumpeted the availability of goods and their prices in town squares. Defense of political and commercial speech was recognized by the common law. It has been recognized from day one in this country. In America, the printed word was given greater protection by the courts than it was in Mother England. Indeed, respect for the printed word was so great that printers were often considered heroes of the Revolutionary War and the new republic. Witness Ben Franklin, for example.

In regard to commercial speech, it was recognized at the time that legislatures could only prohibit advertising that was fraudulent or misleading. It was not until 1975 in the Bigelow v. Virginia case, and in 1976 in Virginia Board of Pharmacy v. Virginia Consumer Council, Inc., that the Supreme Court held that the First Amendment protected truthful and non-misleading commercial messages. I believe the policy behind these cases is a recognition that the public has an interest in receiving accurate, commercial information, and that the government has little or no correlative interest in censoring the content of the message.

Nevertheless, the Supreme Court recognized that a state may regulate commercial advertising more freely than political speech. Thus, the state may require additional information, such as warnings and disclosures, to be disseminated. A state may also impose a content-neutral set of restrictions on the time, place or manner of speech. But it may not completely ban the speech or foreclose alternative means of disseminating information, at least according to the Covecks v. Cooper case in 1949.

The content-neutral time, place or manner restrictions are what localities rely on in promulgating sign codes and the like. But often, these restrictions are used merely as an excuse. Some sign codes are not content neutral, with officials denying permits based on the message of the advertisement. Other sign codes are honorees because they delegate almost unfettered discretion to bureaucrats, who typically will withhold consent for effectively any advertisements.

In challenging these restrictions, it’s necessary to apply the commercial-speech test enunciated by the Supreme Court in more recent years. I’m talking about the first, the Central Hudson Gas & Electric Corp.  v. Public Service Commission case in 1980. It’s interesting to note that under the Central Hudson case, the government bears the burden of justifying a restriction on commercial speech. Thus, it appears that unfettered discretion by local bureaucrats to deny permits may be, and probably is, unconstitutional.

Protecting commercial speech
There are two other very important cases. One is Rueben v. Coors Brewing Co. in 1995. Under Central Hudson, the Supreme Court has enunciated a four-part test governing the validity of commercial-speech restrictions:

  1. Whether the commercial speech at issue is protected by the First Amendment. It must be a lawful activity and not misleading.
  2. Whether the asserted governmental interest in restricting it is substantial. If both inquiries yield positive answers, then No. 3 comes into play:
  3. Does the restriction directly advance the governmental interest asserted?
  4. Is the restriction not more than is necessary to serve that interest?

The second, I think, most important case is Forty-Four Liquor Mart, Inc. v. Rhode Island in 1996. There, the Supreme Court increased the protection that the Central Hudson case guarantees to commercial speech. The court made it clear that a prohibition on “the dissemination of truthful, nonmisleading commercial message, for reasons unrelated to the preservation of a fair bargaining process,” will be subject to a stricter review by the courts — a stricter review than the regulation designed to “protect consumers from misleading, deceptive or aggressive sales practices.”

Now courts have shown that the fourth prong of the Central Hudson test, often termed the “reasonable fit” requirement, is the most contentious. In Forty-Four Liquor Mart, for example, the Supreme Court struck down a prohibition on advertising the price of alcoholic beverages. The court found it “perfectly obvious that alternative forms of regulation would be more likely to achieve the state’s goal of promoting temperance.” I believe that a de facto ban on sign advertisements would most likely run afoul of Forty-Four-Liquor Mart, depending on whether effective and alternative means of advertising are available. I also believe that, after Four-Liquor Mart, prohibitions on truthful and non-misleading advertising will receive greater scrutiny by the courts. So I think you are in better shape.

Recently, I learned of the Blockbuster case that just occurred some three days ago in the Ninth Circuit Court of Appeals. I have to study that case — it will be interesting to see where it goes. They’ll probably have to take it up to the Supreme Court. However, I do think the case can be straightened out possibly in the lower court.

Upholding property rights
Besides First Amendment implications, regulation of sign advertisements raises Fifth Amendment property-rights concerns. Our founders knew, from the beginning of the creation of this republic, the importance of property rights. This nation has heralded property rights, as far as I’m concerned, more than any other nation in the world. And it’s one reason why we have our tremendous wealth and free-market system. Our founders knew from the beginning that these property rights were extremely important. They feared that the government they helped form might use its power to abuse the people it was designed to protect.

John Adams, for instance, in his defense of the Constitutions of Government, admonished, “The moment the idea is admitted into a society, that property is not as sacred as the laws of God and as there is not force of law and public justice to protect it, anarchy and tyranny commenced.” Those old founding fathers knew what they were talking about. They really did. But I’m worried about our fathers today. Indeed, James Madison, the author of the Fifth Amendment and the Bill of Rights, wrote in his celebrated essay on property in 1772, that the very purpose of government is to protect private property. There’s Madison, who’s called the Father of the Constitution, saying that is one of the most important purposes of government. He also said, “Government is instituted to protect property of every sort, this being the end of government. That alone is a just government, which impartially secures to every man whatever is his own.”

Now the need for justice, therefore, was why the last clause of the Fifth Amendment was added to the Bill of Rights. The clause, called the “Takings Clause,” states that, “Nor shall private property be taken for public use without due process of law, nor shall private property be taken for public use without just compensation.” Now you and I both know that the clause has been honored in the breach in this country a great deal. It’s one of the great battles that we have before us, and it’s a very difficult battle. Perhaps before I’m through, I’ll talk about the politics of it.

Prohibiting aesthetic bias
I want to first talk about the law and a little bit about what’s going on. With the growth of government at all levels, federal, state or local, private property has become increasingly under attack. That’s why I’ve sponsored legislation containing substantive standards for federal agencies to follow, which would safeguard private property before unconstitutional encroachments by the federal government really are upheld. But I also recognize that states and localities may abuse that power. Too often, as you know, localities abuse zoning powers by restricting sign advertising on so-called “aesthetic” grounds. Too often, localities misuse the nuisance doctrine to prohibit otherwise legal advertising. But the Supreme Court, in 1992’s Lucas v. South Carolina Coastal Council, noted that the Constitution protects property no matter how minute the intrusion, and no matter how great the public purpose behind that intrusion.

Although the Supreme Court, since 1926’s Euclid v. Ambler Realty Company, has recognized the constitutionality of local zoning, it has also recognized that local zoning powers are not absolute. In Lucas, for example, the courts struck down zoning regulations that would have forbid the building of a beachfront home. Lucas is a very narrow case, and it’s very tough to extrapolate it into a much greater one. But the fact is, it’s an important case, and we can’t ignore it. The court held that compensation for the restrictions imposed by the regulations must be paid off if:

  • The restrictions constituted a confiscation of property or a prohibition of property use that substantially reduces the value of a property or,
  • The restrictions were not substantially related to the purpose of the underlying statute.

The court also looked at the validity of the title — whether the regulation involved pre-existed purchase or creation of the property. If the restrictions pre-existed the ownership of the property, the title contains those restrictions. Courts since then have struck down aesthetic zoning ordinances or required compensation on vagueness grounds because the restrictions post-dated the acquisition of property and substantially diminished the value of the property.

Likewise, the nuisance doctrine has been misused. In common law, property comprises a bundle of right that encompass the so-called “unities” of acquisition, use and dominion or “enjoyment,” which includes the right to keep others from using one’s property and the disposition of one’s acquisitions. Any limitation on those rights was considered an unjustified interference with property. That goes way back to Supreme Court Justice Harry Blackmum. It was universally understood that this definition of property did not encompass nuisance actions that deprive or disturb another in the enjoyment of his property. Nor did it include the right-to-use property in a way that damages the property rights of a third party. But the Supreme Court’s Lucas decision makes clear that, to avoid compensation, government must demonstrate that its regulations were designed to prevent harm and, in fact, do prevent harm, in order to justify non-compensation. In other words, the locality must factually demonstrate that the use of private property is engendering some concrete danger.

Now, mere aesthetics may not be enough. Indeed, following Lucas, numerous subsequent court cases have rejected police power, general welfare or purely environmental values — such as mere protection of open spaces, aesthetic views, wildlife habitat or wetlands — as a sufficient basis to justify resorting to a nuisance exception. Courts require that harm to health, safety and the environment be factually demonstrated to justify a regulation being classified under a nuisance exception to the compensation requirement. But that’s easier said than done. You know it and I know it. What does this all mean to you? How are these problems to be resolved?

Resorting to local levels
Since the rise of The New Deal, there has grown an almost reflex action of attempting to resolve all problems on the federal level. Many Americans, including members of the bench and bar who should know better, look to the Bill of Rights as the only protection of individual rights, ignoring the all-important safeguards contained in the rest of the body of the Constitution. This misses the salient fact that the Constitution was designed to be, as in the words of Alexander Hamilton in the Federalist No. 84, “in every rational sense and to every useful purpose a Bill of Rights.” The American Constitutional System balances order and liberty in five specific ways:

  1. Through the functioning of the democratic process by putting into place that government may only govern the consent of the governed.
  2. Through the diffusion of power among the executive, legislative and judicial branches on the national level, undergirded by a system of separation of powers and checks and balances, which prevents the undue accumulation of power while preserving stability and order.
  3. Through limiting legislative authority to explicitly enumerated powers.
  4. Through the vertical diffusion power between the federal, state and local governments, which protects local traditions, morals and beliefs from federal intrusions. This is called federalism.
  5. And finally, through the judicial enforcement of certain explicit liberties primarily contained in the Bill of Rights, leaving other controversies to be resolved through the working of the democratic system.

I want to emphasize the importance of the fourth prong, federalism. Alexander Hamilton, in the Federalist Papers No. 17, defined roles of the states. He said the states must be concerned with “the ordinary administration of criminal and civil justice” that makes the states “the visible guardian of life and property.” I urge you to look for solutions on the local levels first. Your problems, while perhaps nationwide in scope, are essentially local in nature. Resorting to federal legislation may result in a one-size-fits-all regulation that’s clumsy and unworkable. Let me give you just one example. It has been suggested that the federal landmark bill, the trademark act, the amended 1982 Lanham Act, be further amended to protect signs as well as specific trademarks or trademarks included within signs. I’m personally concerned that this would result in a federal preemption of almost all local zoning of signs — an unintended consequence I’m sure none of us would like. Moreover, I don’t believe that it’s politically viable.

There’s an exception to the general rule against initially seeking federal legislative solutions to what are essentially state and local problems. This is in situations where access to federal and state court is denied. In those cases, you ought to seek that solution. We could go on and on about this.

Voting for the right(s) bill
That’s why I’ve found the Property Rights Bill. We’ve been finding that in Utah and elsewhere — under the guise of wetlands protection, environmental protection and so many phony concerns – they’ve been taking people’s properties without just compensation. You intellectually understand it better than any other group, at least as far as I’m concerned. That’s why I think you’ve got to work to help us pass that bill. I believe that this legislation may help you in situations where local, administrative and judicial proceedings drag on for years. It’s terrible; it’s pathetic. And of course, the mayor and the county commissioners are fighting this across this country because they don’t want their power taken away from them. The fact is, it’s politics; it’s raw power politics that makes these people not want to enforce the law that our founding fathers believed was critical to a free and open society. Well, when the property owner has to run through a maze of red tape before the property owner’s rights can be vindicated, you know it’s a bad situation. The legislation is now pending on the Senate floor, and I hope that we’ll have time to debate this in Congress. In fact, just yesterday, I signed two petitions to allow this bill to come to the floor.

How do we get this Property Rights Bill through? I want your people to write me about this recent  [Blockbuster] case in the Ninth Circuit Court of Appeals – it’s an interesting case. I just cursorily looked at it. It seems to me that although they can’t change the format of the trademark through local regulation, they can ban the trademark display. It also seems to me there has to be some overwhelming justification for them to do that. I’d like to have your top legal people give me their best analysis of that case.

Again, I ask, how do we get the Property Rights Bill through? Do you realize the influence you people in this room have? How many states are involved here? I’ll bet there are 30 or more states involved. Do you have someone from all 50 states at this conference? Let me tell you how to deal with members of Congress. This, I think, may be one of the most important things I could talk about with you today. Within your states, you need to get 8 or 10 people. It’s hard to be turned down when you have that many people. It’s always helpful to get somebody who has supported that person to help you make the appointment. When you get in there, don’t take more than 15 minutes. Make it very, very clear what your position is, that you need their help. Ask them, ‘Will you help us on this?” Don’t just let them sauce you around. This is important, this Property Rights Bill. Will you vote for it? Will you vote for closure?

See, when they file closure petitions, that means we know there’s going to be a filibuster, and we know we have to have 60 votes to break the filibuster. If we have 60 votes to break it, it’s going to be one grand day in the United States Senate. I question whether we do, but you could help change that. Sometimes, when you have something really important, as important as the Property Rights Bill, it can take years.

Maintaining good business sense
You’re in business. The business you do is important to this country. I think it has enriched the country in many respects. I could give some notable examples, as you can, where it hasn’t. But the fact is, by and large, it has. It’s critical to our country. You have a legitimate business. But you’re only one large group that’s really getting shafted on property rights in this country. I think you owe it to yourself to meet with every senator and every member of the House in your district to tell them you want some changes. This is something that has to happen. You’d be shocked by what will happen if we can get all the groups out there doing this. The problem is that they get the unions, the environmentalists, the gays and lesbians, sometimes the radical feminists and the trial lawyers. Those are all formidable groups that pony up an awful lot of money for the left. Let’s not talk Democratic Republican, let’s talk about left versus center right. And frankly, that is where the battle is in this country. You can’t be in your business and be totally left; you just can’t, unless you’re nuts. So those of you who are nuts, please be careful. Don’t make them heads of your organization. Or, if you do, do it so that they will be educated to get rid of the nut-cake attitude. We need both good Democrats and Republicans. There are a lot of good business Democrats who are horrified at what goes on in Congress with some of the left in their own party. They need to start influencing more; they need to start finding people who can run, who are decent people, who literally will try and change these things.

I have to say that I deal with the toughest of the tough in Congress. It’s no secret that Edward (Ted) Kennedy and I have been at each other’s throats from the day I got there – when we do get together, everybody tends to get out of the way. And we do get together every once in a while. He’ll never be for property rights, and he’ll demagogue that issue right down the line. I’m willing to take him on every step of the way. But, I’ve got to have help, and you need to give that help.

Preparing for future leaders
We’ve now confirmed something like 260 federal judges that President Clinton has nominated. There’s no use kidding. Those judges are far more liberal; they’re far more plaintiffs-oriented; they’re far more likely to uphold cases against you, and they’re far more likely to find that the “wetlands” applies everywhere without compensation, just to cite one illustration. They’re far more willing to find affirmative-action quotas acceptable. That just puts a chill into your spines today. There’s a rumor that Supreme Court Justice John Paul Stephens is ready to retire this summer. I don’t know that he will, and I’m hoping that he won’t. I heard that he would not retire until the year 2000 because he feels he’s a loyal Republican. If he retires, I guarantee that you will get the most liberal judge you’ve seen in history. These 54 decisions on preferential rights and quotas are going to go the other way. That’s only part of it.

You see, the Ninth Circuit Court of Appeals, which is the largest circuit with 28 judges, is asking for 10 more. It includes the poster judge of all liberal-activist poster judges — a judge who doesn’t recognize the role of judging, which is to interpret the laws made by those elected to make them. Not to make the laws as a super legislator from the bench; they don’t have that power. They shouldn’t. They are nominated, confirmed for life, and we keep them independent. We give them full salary when they retire to keep them independent, which has been a great concept and a great system in our government. But people like Circuit Judge Stephen Reinhardt, who serves on the Ninth Circuit Court of Appeals, could care less what the law is. Can you imagine if every judge had that attitude? The Constitution would be a worthless rag. Your rights would be down the drain. if Clinton gets the next Supreme Court Justice, a lot of your rights are going to go down the drain, period.

I personally believe you’re going to have a number of 5-4 decisions go the other way. But the Ninth Circuit Court of Appeals and the other circuits hear thousands of cases the Supreme Court never hears. The Ninth Circuit is the most reversed court in the country with 26 out of 27 reversals last year. It has an average reversal rate of 75% since Reinhardt has been on the court. And he’s not the only one, by any stretch of the imagination. He’s the brightest of the activists, very, very bright. He’s a very interesting man. His wife is the head of the American Civil Liberties Union (ACLU) in California. Not that that’s bad, but it just kind of gives you an idea that they’re not conservatives. But then it comes down to the district court judges, too.

From a business man’s standpoint, it’s really important that we get a president the next time who’s not just going to load the courts up with people who are antagonistic to business. Now it’s not just business. It’s crime, it’s antitrust, it’s 101 other things that really are important. So, that’s why we have to be concerned.

Wade Swormstedt

Wade Swormstedt

Wade is Executive Director of the Foundation for the Advancement of the Sign Industry. Formerly he was Editor and Publisher of Signs of the Times magazine.

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Posted in Amoritzation, Content Neutrality (Reed v. Gilbert), Copyright Protection (Lanham Act), Sign Codes, Signs' Advertising Value, Supreme Court.