Tuesday, July 8th, 2008 ::: USA: New York City

The biggest illegal billboard issue in New York City is not Fuel Outdoor’s mini-posters but illegal third-party signs within 200 feet of the City’s highways operating under first-party permits. Take a cab from LaGuardia to Midtown, and virtually every billboard you see within 61 metres of the highway, like these, is illegal:

New York City passed comprehensive outdoor advertising regulations under the Guiliani administration (Local Law 14), but it wasn’t until five years later that the Buildings Department wrote the required regulations (Rule 49). Those regulations are specifically designed to attack illegal billboards within 200 feet of highways.

Since the 1940s, outdoor advertising companies have been building non-accessory signs on accessory permits in New York City. In 1979, New York City grandfathered illegal non-accessory signs operating on accessory permits along New York’s highways and continued to ban the development of new signs. The conversion of illegal signs built after 1979 is now the subject of this lawsuit.

Here are the key documents filed in the case:

Clear Channel’s Motion for Preliminary Injunction [PDF]

New York City’s Motion for Summary Judgment [PDF]

The Municipal Art Society’s Amicus Curiae [PDF]

Here are the highlights from the Clear Channel motion:

• NYC has enforced the ban on arterial highway billboards only intermittently since the 1940s, against a general backdrop of tolerance and acquiescence, yet Local Laws 14 and 31 and Rule 14 seek to put in place a vigorous enforcement regime which would require Clear Channel to remove advertising from the very signs that NYC has tacitly condoned for decades. This checkered regulatory structure means NYC’s regulations are fatal to Supreme Court precedents because Central Hudson says the regulatory structure for First Amendment issues cannot be pierced by exemptions and inconsistencies. Page 2 and 3.
• Clear Channel earns revenues of $10 Million/year from illegal arterial signs. Page 48.
• Rule 49 requires Clear Channel to show extensive documentation to prove that a sign existed as a non-accessory sign prior to 1979, including lapsed leases, and the City won’t even accept the cashiers receipts that NYC issued for these signs in 1980. It requires evidence that the sign existed in 1979, evidence of the size of sign in 1979, and evidence that the sign showed advertising copy in 1979. These rules are draconian. Clear Channel would have no reason to keep lapsed leases for more than one year, and some of these documents may have been destroyed by fire. Page 41 and 42.
• The City has built and operated bus shelter signs within 200 feet of the highways. Page 6.
• Between 1940 and 1979, accessory signs were frequently converted into non-accessory signs. In 1979, these illegal signs were legalized. Page 8 and 9.
• Between 1979 and 1999, the building of arterial signs continued unabated. There is no evidence of meaningful enforcement by the City against arterial signs during this 20-year period.  Page 9.
• In 2001, size limitations on accessory signs were imposed to prevent their conversion into non-accessory signs. Page 10.
• When Clear Channel acquired Universal Outdoor Holdings (82 of CC’s 95 highway signs come from Universal) it assumed that Universal’s New York City arterial signs were legal because Universal didn’t report any violations in its SEC filings. Page 14.
• The government is duplicitous. There are over 80 illegal billboards on Metro Transit Authority, Port Authority, and Amtrack properties within 200 feet of an arterial highway in New York City. Most of the signs are on MTA property, which is controlled by the State of New York. Page 16. In regulating outdoor advertising, New York City is acting as an instrumentality or agent of the State of New York. Page 7, 8 and 34. MTA recently issued an RFP which would appear to call for construction of an additional 16 billboards alongside the arterial highways. Page 17
• For example, an illegal 6000 square foot advertising sign has recently been built on the LaGuardia Airport garage within 200 feet of Grand Central Parkway.  Page 17.
• NYC has taken the view that signs on railroad and transit authority property are not within the jurisdiction of the Department of Buildings. However, the New York State Attorney General issued an Informal Opinion in 1982 which states: “The City of New York may remove commercial billboards erected in violation of the zoning laws on property owned by the MTA.” Page 18.
• There are illegal highway billboards on property owned by the City itself, namely along the High Line. In 2005, NYC acquired ownership of the High Line, then completed negotiations with Clear Channel itself to maintain Clear Channel’s illegal billboard on the High Line in exchange for hefty fees. With the full knowledge of the Law Department, a lease was signed with Clear Channel for a payment of $80,000 a year for the illegal sign. There are two more illegal Clear Channel billboards on City property along the Belt Parkway in Brooklyn. Page 19.
• The contract with Cemusa shows that the City’s willingness to enter into a street furniture agreement permitting the display of advertising belies the City’s purported concerns over the impact of arterial signs on aesthetics and raises questions about the City’s motives. Page 21.
• The 2001 amendments to the Zoning Resolution contain a provision, opposed by the Planning Department, legalizing illegal highway signs operated by New York Bus. The convoluted exemption was created in response to lobbying by Edward Arrigoni, chairman of New York Bus. Page 22 and 23.
• New York City buses and taxis all contain ads on their exterior and are in ample supply on arterial highways. Page 24.
• Clear Channel is entitled to a preliminary injunction because it is likely to succeed on the merits since the regulations don’t pass the Central Hudson test. The government cannot use one seemingly substantial interest as a front in order to legitimize a speech restriction that is, in fact, based on insubstantial interests. The checkered regulatory scheme and the exemptions for city property and for special interests indicate that the City’s interests in safety and aesthetics are a front to illegally quash Clear Channel’s speech. Page 25.
• The record reveals an irrational and inconsistent scheme. This case is starkly similar to Metro Lights. The regulations’ loopholes and inconsistencies uniformly favor the government. Page 39.
• The sign structures will not be removed if advertising copy is required to be removed. They will revert to first-party signs. Therefore, the City’s interests in aesthetics will not be served by enforcing the law. Page 36.
• The Bruckner Expressway, the BQE, and the Lincoln Tunnel approach are neither Vermont nor Montana, where a lonely billboard on farm land or the open range would stand out against the landscape. Page 38.

From New York City’s motion:

• The only signs that were legalized in 1979 were the ones that failed to comply with the more stringent City standards. Those that didn’t comply with the federal and state standards were not grandfathered. Page 2.
• All of the Plaintiffs entered the market after the enactment of the arterial highway regulations. Page 3.
• Complaints against highway signs became prevalent in the mid-late 1990s. The plaintiffs admitted that the rate at which sign structures were built after the end of 1997 was greater than the rate they were built in the period between 1979 and 1997. The City’s actions are the result of widespread community concern. Page 4.
• Infinity Outdoor litigated on the very same issues in this case and lost when a federal judge found that the arterial highway regulations advance the City’s interests in traffic safety and aesthetics, and are narrowly tailored to achieve those goals. Page 5. The laws are exactly the same as when Infinity lost their case; the only thing that has changed is that the DOB now has the tools to enforce the law. Page 7.
• Street furniture facilitates an important public purpose, and the Cemusa signs are not inconsistent with the purpose of the arterial highway regulations. They are also regulated by their own set of controls. Page 10 and 11.
• While the City previously misinterpreted the law to conclude that it does not have the authority to take action against illegal MTA signs, if the City successfully defends this litigation the DOB will seek to treat advertising signs on MTA property in the same manner as the signs on private property. Page 12. The City has taken steps to remove the illegal highway billboards from its own property. Page 12.
• The New York Bus exemption was not based on lobbying by Arrigoni. It was designed to allow New York advertising companies to be competitive with those immediately outside the borders of the City. It’s a narrowly tailored and rational exception. Page 13.
• A municipality is not estopped from enforcing its zoning laws by laches. Page 45.
• Since the 1970s, the Supreme Court has repeatedly reaffirmed that the protection afforded commercial speech is less extensive than that granted to non-commercial speech. Page 15.
• Clear Channel’s insinuation that NYC is motivated to enforce the highway regulations to maximize its revenue is specious at best. Raising revenue for the City did not play any part in the City’s decision to promulgate or enforce the highway regulations. Page 17.
• Sign structures will indeed be removed once the regulations are enforced and are unlikely to be converted into legal first-party signs. At no time in 2005 or 2006 did any of the Clear Channel signs display accessory copy. Page 23.
• The so-called “exceptions and inconsistencies” noted by Clear Channel fall into two categories: 1) programs advanced by the City for a public purpose that allow ads under careful controls, and 2) outdoor ads that are excluded from regulation under legitimate government interest or state law. Page 25.
• This is very different from Metro Lights. In Metro Lights, all non-accessory signs were banned, but in NYC non-accessory signs are permitted in many areas. Clear Channel is free to enter into an agreement to post advertising on the City’s pay telephones. This is not a monopoly. The Metro Lights ordinance was enacted after the City entered into the Street Furniture contract, whereas the NYC regulations date from the 1940s. There will be no more than 3500 bus stop shelter signs in NYC, unlike in Los Angeles where there would be signs permitted on 18,500 stops. The scope of the NYC street furniture contract is therefore much more narrow than the Los Angeles contract. Besides, billboards are 21 to 36 times larger than transit shelter signs. Page 31 and 32.
• Clear Channel has available numerous alternative sites to display their messages in areas where billboards are permitted in NYC. Page 34.
• The City does not favor its own speech over commercial speech. To the extent that there are exceptions to the arterial advertising prohibitions that benefit the City, the exceptions are for speech on City-owned property and anyone who wants to do so can arrange to advertise on the City’s property. Page 35 and 36.
• Clear Channel’s challenge to the documentary requirements of Rule 49 are not ripe for judicial review because the harm is hypothetical. The DOB will review the information submitted by Clear Channel in support of its position that the signs are nonconforming. This review has not been completed, and Clear Channel is merely hypothesizing that the DOB will find that its nonconforming signs are not entitled to protection. Clear Channel can appeal a DOB decision to the NYC Standards and Appeals Board. Page 40 and 41.
• Based upon the industry’s history of submitting false statements to the DOB in order to obtain permits for what became arterial advertising signs, the DOB reasonably determined that the City’s interest in ensuring the accuracy of outdoor advertising company submissions outweighed any perceived difficulties articulated by the industry. Page 44, 45 and 46.
• In 1980, the DOB issued permits to legalize nonconforming advertising signs separate and apart from cashiers receipts. Page 47.

One thing is clear in reading these documents. Clear Channel has very good lawyers.

Here are highlights from the Municipal Art Society’s Amicus Curiae:

• The City is not required to cure its billboard problem in one broad sweep. A city may pursue partial solutions to its problems. Page 3.
• The City’s past difficulty in enforcing the outdoor advertising industry’s illegal conversion of legal accessory signs to advertising signs does not make the City’s now-stronger enforcement powers an improper restriction on free speech. If a government is not allowed to enforce a law simply because it failed to do so in the past, one administration would be able to limit the actions of future administrations with regard to many ills plaguing our society. The First Amendment does not give Clear Channel the right to dictate the appearance of NYC by violating valid and constitutional laws and subsequently arguing that those restrictions are unconstitutional because past violations were not sufficiently punished. Page 4.
• MAS has been involved in signage control issued since 1902. One hundred years later, the problem has not been solved. New York City is struggling to control the blizzard of signs that assaults its citizens and masks the city’s charm. Page 5.
• The MAS law committee is gravely concerned that this challenge would severely limit the City’s right to reasonably control the proliferation of commercial billboards for the public good. Page 5.
• Clear Channel is attempting to rehash what the federal court upheld in Infinity. Page 7.
• Solving a complex problem requires not only intelligent policy analysis, but also painstaking efforts to build a political constituency. Both take time and often require an incrementalist approach. If the City were required to take an all-or-nothing approach, its ability to regulate would be diminished. Page 8.

Stay tuned.